GLOBAL ECONOMIC SCENARIO:
The year 2022-23 was a turbulent and most challenging year for the global economy in
general and the banking industry. The global economy was on the path of recovery after
waning of the
COVID-19 pandemic until the Russia-Ukraine conflict broke out in February 2022. The
conflict further disrupted the global supply chains and led to a spike in prices of
critical commodities, leading to uptick in inflationary pressures. To restrain the
consequent inflation, major central banks around the world undertook monetary tightening
resulting in tightening of financial conditions.
The impact of increased borrowing costs and stubbornly high inflation is beginning to
show in multiple leading indicators of global economic activity. Towards the end of
financial year, there was Global Financial crisis on account of the collapse of the
systemically important banks outside the country. This caused concerns of potential risks
of contagion, which in turn resulted in increased turbulence across global markets. Banks
across the world remained watchful and cautious and continued to withdraw their
accommodative stance in a regulated manner which led to shrinking of liquidity across
global markets and an increase in interest rates. As per IMF projections, world growth
will bottom out at 2.8 percent this year before rising to 3.0 percent in 2024.
INDIAN ECONOMIC SCENARIO:
Indian economy recorded a strong growth of 7.2 percent in FY 23 much higher than
expected. Despite the global economy facing heightened uncertainty due to failure of
banking system in certain countries, persisting geopolitical tensions and moderating but
elevated inflation, the Indian economy and the domestic financial system remain resilient
supported by strong macroeconomic fundamentals as stated by the Reserve Bank of India
(RBI) in its Financial Stability Report. Indian economy continues to be one of the fastest
growing major economies in FY 2023, which reflects Indias inflationary strong economic
fundamentals. With surging pressures, the RBI increased the Repo rates by 250 basis points
and tightened liquidity, exerting pressure on deposit rates, competitive which turned
positive in real terms and intensified pressures. The RBI paused the rate hikes in April
2023. FY23 witnessed volatility on liquidity front. However, RBIs fine operations through
conduct of variable rate repo and reverse repo supported liquidity.
INDIAN CAPITAL MARKETS:
After stellar returns in the preceding two financial years, the equity markets took a
pause in FY 23 with the benchmark Sensex and
Nifty 50 finishing nearly flat. Sustained rate hikes by global central banks, the
Russia-Ukraine war, stubborn inflation and the banking crisis in the developed World
Banking, restrained the stock price performance in the outgoing financial year. The
markets witnessed intense volatility during the year. It had poor performance in the the
fiscal 2022-23, gained momentum in the second first half and declined after the release of
the adverse report by a research firm which was another highlight. The Sensex finished FY
23 at 58,991 and NIFTY 50 index ended at 17,360 over the previous financial years close.
The Indian rupee declined by 8.4 percent against the US dollar over the last fiscal and
was Asias worst performing currency. Global head winds led to sustained selling by
foreign portfolio investors (FPIs) who pulled out Rs 38,377 crores from Indian
equity market. Domestic institutional investors bought shares worth 1.73 trillion in FY
23.
BUSINESS OVERVIEW OF THE COMPANY, ITS SUBSIDIARIES, ASSOCIATE COMPANIES AND JOINT
VENTURE:
Your Company is registered with Reserve Bank of India (RBI) as a Non-Deposit taking
Non-Banking Financial Company. In terms of provisions of Non-Banking Financial
(Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions,
2007, your Company is categorized as a ‘Systemically Important Non-Deposit taking
Non-Banking Financial Company. It is primarily a Holding company, holding investments in
its subsidiaries and other group companies. The activities of the Company comprises of
Investment in equity shares, quoted as well as unquoted, units of mutual funds, Fixed
deposits with renowned banks, Government Securities (G secs), Inter Corporate deposits and
loans to its Group Entities.
The Company through its subsidiary viz., IITL Projects Limited (IITLPL) and the joint
ventures of subsidiary are in the business of real estate. The residential projects which
have been undertaken by them are located in Noida and Greater Noida region and Yamuna
Express way. (The details of projects undertaken by IITLPL and through Joint ventures have
been provided in the Directors Report).
The subsidiary company, IIT Investrust Limited (IITIL) was into Stock Broking and
Depository business. In June 2019, IITIL had applied for Surrender of membership of Stock
Broking and Depository Participant business. Upon surrender IITIL ceases to be the Stock
Broker as well as Depository Participant.
Besides that, IITIL is also in the business of providing Advisory and Consultancy
services to Body Corporates.
The subsidiary company, IIT Insurance Broking and Risk Management Private Limited (IIT
Insurance) was in the business of Direct Insurance Broking. (Life and Non-Life). During
the year 2019-20, IIT Insurance had applied to Insurance Regulatory and Development
Authority of India (IRDAI) for voluntary surrender of Insurance Broking license. IRDAI
vide its letter dated June 17, 2021 granted Certificateof approval for voluntary
surrender Registration. Consequent to this, IIT Insurance ceased to be an tuning Insurance
Broker.
Subsequently, IIT Insurance changed its name to IITL Management and Consultancy Private
Limited and also changed its Object Clause. The same were approved by Ministry of
Corporate Affairs. Consequent to this, IIT Insurance ceased to be an Insurance Broker.
IITL Corporate Insurance Services Private Limited (IITL Corporate Insurance) was
incorporated in the year 2014. The Company did not commence any business and applied to
Ministry of Corporate Affairs for removal of its name from the Register of Members. IITL
Corporate Insurance Services Private Limited has been struck off from the Register of
Companies w.e.f. August 23, 2021 and the Company stands dissolved.
The Company had made an investment of Rs. 340 crore in Future Generali India Life
Insurance Company Limited (FGILICL), a Joint venture Company acquiring 22.5 percent of
equity capital in March 2013. Future Generali India Life Insurance Company Limited made
several Rights Issues. The company did not participate in any of the Rights Issues, due to
which the companys stake reduced to 16.62 percent. Since couple of years, the Company had
been exploring to divest its stake in FGILICL. In December 2021, the Company received
offer from Generali Participations Netherlands N.V. (Generali), one of the Joint Venture
partners of FGILICL, to acquire Equity holding of 16.62 percent (equivalent to
32,67,00,000 equity shares) at a total consideration of 225 crores. On December 18,
2021, the Company entered into Share Purchase Agreement with Generali. Upon receiving
approvals from Insurance Regulatory and Development Authority of India (IRDAI), Registrar
of Companies, Competition Commission of India (CCI), Reserve Bank of India, Shareholders
and all other Statutory / Regulatory Authorities the transaction was consummated on March
28, 2022. The Associate Company, World Resorts Limited is in the business of hospitality
and owns and operates a Deluxe Five Star Resort by the name Golden Palms Hotel and Spa at
off. Tumkur Road, Bangalore. The hospitality and travel industry were hard-hit by Covid-19
and incurred immense losses in the last couple of years. The Reserve Bank of India (RBI)
vide its Letter dated June 25, 2018 had prohibited the Company from expanding its credit /
investment portfolio other than investment in Government Securities till Net NPAs are
brought down to below 5%. Pursuant to the restrictions imposed by RBI, the Company did not
expand its credit / investment portfolio.
During the year under review, the Company entered into One Time Settlement with the
Joint Ventures of the subsidiary Company, IITL Projects Limited. All outstanding loans
have been recovered and the NPAs have become NIL. The company has parked 225 crores in
Government Securities received from the sale of equity stake of Future Generali.
The Company informed RBI regarding the status of the loans and investments. The Company
made necessary submissions to RBI with regard to their Supervisory concerns.
RISKS AND CONCERNS:
The Company is exposed to specific risks that are particular to its business and the
environment within which it operates, including interest rate risk, market risk, credit
risk, liquidity risk, geo-political risk or uncertain economic conditions. Besides that
the equity markets become extremely volatile due to various other factors like policy
changes, capital inflows/outflows etc. The Company manages these risks by maintaining
conservative financial profile and by following prudent business and risk management
practices. The Company manages the risks through proper frame work of policy and
procedures approved by the Board of Directors from time to time. The Company has
formulated a Risk Management Policy The Company has formed a seperate Risk analyses
Management Committee which identifies, and prioritize risks in order to address and
minimize such risks. This exercise facilitates identifying high level risks and implement
appropriate solutions for minimizing the impact of such risks on the business of the
Company. The Company is exposed to Credit risk which can be on account of loss of interest
income and the Companys inability to recover the principal amount of the loan disbursed
to the borrowers.
The assets are classified from time to time as performing and non-performing in
accordance with RBI guidelines. Provisions are made on standard, sub-standard and doubtful
assets at rates prescribed by RBI. An asset is classifiedas non-performing if any amount
of interest or principal remains overdue for the number of stipulated days.
The Companys subsidiary and its joint ventures are in the business of real estate and
their financial performance will have impact on the Groups business results and financial
condition.
The subsidiaries of the Company also manage their business risks by following proper
risk management policies to avoid any adverse impact on the holding company
SIGNIFICANT FINANCIAL RATIOS
As per the provisions of SEBI Listing Regulations, 2015, the significant financial
ratios are given below:
Particulars |
|
2022-2023 |
2021-2022 |
|
| Net Profit margin |
% |
321.18% |
59.88% |
Due to Increase in Net Profit and Turnover |
| Operating Profit margin |
% |
322.32% |
63.99% |
Due to increase in operating profit |
| Current ratio |
Times |
15.36 |
0.45 |
Due to increase in Current Assets |
| Return on Net worth |
% |
12.10% |
(31.88%) |
he change in Return on Net Worth ratio has happened majorly because of
reversal of impairment provision on account of repayment of loan by borrowers amounting to
Rs 4405.46 lakhs. |
| EPS |
|
19.07 |
(44.17) |
Due to Increase in Net Profit |
| PE Ratio |
|
4.54 |
(1.80) |
Due to change in Market price and Earning Per Share value |
FINANCIAL PERFORMANCE:
The Company has incurred a profit after tax of 4,299.38 lakhs during the year compared
to loss of Rs 9,960.31 lakhs in the previous year. The revenue from operations during the
year is Rs 1,527.67 lakhs compared to Rs 677.78 lakhs in the previous year.
During the current year the company has rectified the presentation and disclosure
relating to the notional interest and impairment in fair value of investments in
preference shares in Associates, in accordance with Ind AS 8, read with Ind AS 27. However
this does not have any impact on the profits / losses determined in the previous periods,
networth and the carrying amount of the investments. Net gain on fair value changes for
the above transaction in the current year is Rs 59.03 lakhs compared to previous year of
Rs 354.35 lakhs.
HUMAN RESOURCE:
Your company considers Human Resource as key drivers to the growth of the Company. The
Company has performance-based appraisal system. As on March 31, 2023, the total number of
employees including subsidiaries was 18.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company maintains appropriate systems of Internal Control, including monitoring
procedures, to ensure that all assets are safeguarded against loss from unauthorised use
or disposition. Company policies, guidelines and procedures provide for adequate checks
and balances and are meant to ensure that all transactions are authorized, recorded and
reported correctly. The Company has established appropriate Internal control framework in
its operations and financial accounting and reporting practices to ensure due adherence to
the Internal Financial Control over Financial Reporting under section 143(3) of The
Companies Act 2013.
The Board of Directors have adopted Related Party Transactions
Policy and Whistle Blower /Vigil Mechanism for ensuring efficient conduct of the
business of the Company, the safeguarding of its assets, the prevention and detection of
frauds and errors, the accuracy and completeness of the accounting records and the timely
preparation of reliable financial information.
The internal control is supplemented by an effective internal audit carried out by an
external firm. The management regularly reviews the findings of the Internal Auditors and
takes appropriate steps to implement the suggestions and observations made by them. The
management ensures adherence to all internal control policies and procedures as well as
compliance with all regulatory guidelines. The Audit
Committee of the Board of Directors reviews the adequacy of Internal Controls. The
Internal Auditors are present at the Audit Committee Meetings where Internal Audit Reports
are discussed alongside of management comments and the final observation of the Internal
Auditor. All these measures assist in timely detection of any irregularities and remedial
steps that can be taken to avoid any pecuniary loss.
OUTLOOK:
The global economy continues to gradually recover from the pandemic and Russias
invasion of Ukraine. The COVID-19 health crisis is over, and supply-chain disruptions have
returned to pre-pandemic levels. While Financial 2023 has brought many challenges, it can
be considered as a year of change and opportunity. Inflation is gradually easing, but the
US Federal Reserve continues to raise interest rates, leading to an economic slowdown.
However, the worlds battle against inflation is not over.
IMF has raised Indias growth forecast to 6.1 percent for FY 24 citing strong domestic
investment, while compared to RBIs estimate of 6.5 percent and expects inflation to
decline in FY 24.
DISCLAIMER:
The information and opinion expressed in this section of the Annual Report may contain
certain statements, which the Management believes are true to the best of its knowledge at
the time of its preparation. The Company and the Management shall not be held liable for
any loss, which may arise as a result of any action taken on the basis of the information
contained herein.
|
On Behalf of the Board of Directors, |
|
Dr. Bidhubhusan Samal |
|
Chairman |
|
(DIN: 00007256) |
| Place: Mumbai |
|
| Date: August 18, 2023 |
|
+91-9892691696
