<dhhead>Directors’ Report</dhhead>
DEAR MEMBERS,
The Reserve Bank of India (RBI) vide Press Release dated October 4, 2021 in exercise of the powers conferred under Section 45-IE(1) of the Reserve Bank of India Act, 1934 (RBI Act) had superseded the Board of Directors of your Company on October 4, 2021 and appointed Mr. Rajneesh Sharma, as the Administrator of your Company under Section 45-IE (2) of the RBI Act.
On October 8, 2021, vide order of the Hon’ble National Company Law Tribunal, Kolkata Bench (Hon’ble NCLT/Adjudicating Authority) Corporate Insolvency Resolution Process (CIRP) was initiated against your Company as per the Insolvency and Bankruptcy Code, 2016 (IBC/IBC Code/Code) and the appointment of the Administrator was confirmed to perform the functions of an interim resolution professional/resolution professional and to complete the CIRP of your Company as required underthe provisions ofthe Code.
Thereafter, RBI vide its Press Release dated October 11, 2021, in exercise of the powers conferred under Section 45-IE 5(a) of the RBI Act, constituted a three (3) member Advisory Committee to assist the Administrator in discharge of his duties and to advise the Administrator in the operations of your Company during the Corporate Insolvency Resolution Process (CIRP).
In accordance with the provisions of the Code and with the approval ofthe Committee of Creditors (CoC) of your Company, the Administrator on February 25, 2022 invited expressions of interest (EOI) from prospective resolution applicants on the basis of the Request for Resolution Plan (RFRP), as approved by the CoC.
All the resolution plans were duly presented by the Administrator to the CoC at its 33rd meeting held on January 21,2023 for CoC’s consideration. All the plans submitted by the PRA’s were duly given consideration to and the plan submitted by National Asset Reconstruction Company
Limited (NARCL) in respect of your Company was approved by 89.2% votes and was chosen as a successful resolution plan under Section 30(4) ofthe Code (Resolution Plan).
The Administrator had filed an application under Section 30(6) of the Code before the Hon’ble National Company Law Tribunal (NCLT), Kolkata on February 18, 2023 for its approval ofthe Resolution Plan.
The Hon’ble NCLT vide the Order passed on August 11,2023, approved the Resolution Plan submitted by NARCL under Section 31 of the Code.
In accordance with the terms of the Approved Resolution Plan, an Implementation and Monitoring Committee (IMC) was constituted for conducting the affairs of your Company and supervising the implementation of the Resolution Plan until all the steps and actions contemplated therein have been completed.
As per the Approved Resolution Plan, the Implementation and Monitoring Committee stands dissolved with the re-constitution of the Board on February 26, 2024.
Accordingly, your Directors are pleased to present the Thirty Ninth Annual Report together with the Audited Accounts of your Company for the Financial Year ended March 31,2024.
COMPANY OVERVIEW
Your Company is registered with the Reserve Bank of India as a NonBanking Financial Company - Investment and Credit Company (NBFC- ICC). Further, as per the Master Direction - Reserve Bank of India (NonBanking Financial Company-Scale Based Regulation) Directions, 2023, the Company is categorised as a Middle Layer NBFC. Your Company have not availed any public funds and does not have any customer interface. More details about the Company and its operations are available in the Management Discussion and Analysis Report.
The summarised consolidated and standalone financial performance of your Company is as follows:
KEY FINANCIALS
FINANCIAL SUMMARY & STATE OF AFFAIRS (Rs in Lacs)
Consolidated |
Standalone |
|||
Particulars |
Asat March31,2024 |
As at March 31,2023 |
As at March 31,2024 |
As at March 31,2023 |
Total Income |
73,961 |
1,56.289 |
1,347 |
2,143 |
Total Expenses (including impairment on financial instruments, depreciation etc.) |
8,52,765 |
2,51,554 |
3,201 |
2,419 |
Profit/(Loss) Before Exceptional Items & Tax |
(7,78,804) |
(95,265) |
(1,854) |
(276) |
Exceptional Items |
- |
(10,15,593) |
50,000 |
- |
Profit/(Loss) Before Tax |
(7,78,804) |
(11,10,858) |
48,416 |
(276) |
Current Tax |
- |
49 |
- |
5 |
Income Tax in respect of earlier year |
19 |
6 |
20 |
- |
Deferred Tax |
(88) |
(14) |
- |
- |
Profit/(Loss) After Tax before adjusting Minority Interest |
(7,78,735) |
(11,10,899) |
48,126 |
(281) |
Non-Controlling Interest |
(1) |
1 |
- |
- |
Profit/(Loss) After Tax after adjusting Minority Interest |
(11,10,734) |
(11,10,900) |
48,126 |
(281) |
Surplus broughtforward from previousyear (Retained Earnings) |
(27,52,019) |
(15,95,424) |
(2,56,374) |
(2,56,117) |
Other Comprehensive Income (net oftax) |
(9,156) |
14,722 |
(8,850) |
15,626 |
Profit Available for Appropriation (Retained Earnings) |
(10,91,239) |
(27,52,019) |
82,886 |
(2,56,374) |
Paid up Equity Share Capital |
100 |
50,309 |
100 |
50,309 |
Other Equity excluding Revaluation Reserves |
(10,74,756) |
(17,52,324) |
1,01,724 |
(62,376) |
Earnings Per Share (?) |
(216.07) |
(220.82) |
13.35 |
(0.06) |
OPERATIONAL REVIEW:
Some of the key highlights of your Company’s standalone performance during the year under review are:
• Total Income is X 1,347 Lacs as against X 2,143 Lacs in the last year.
• Profit before taxation is X 48,146 Lacs as against loss before taxation X 276 Lacs in the lastyear.
• Net profit after taxation is X 48,126 Lacs as against Net loss of X 281 Lacs in the lastyear.
The Capital to Risk Assets Ratio (CRAR) of your Company stood at 159.41 per cent (entire being Tier I) as on March 31, 2024, well above the regulatory minimum level of 15 per cent prescribed by the Reserve Bank of India.
Standalone
During the Financial Year under review, the standalone and consolidated financial statements for the year ended March 31, 2024 have been prepared as per the Ind AS. For the Financial Year under review, your Company has a Profit Before Taxes of X 48,146 Lacs as against X (276) Lacs in the previous Financial Year and Profit/Loss After Tax for the year under review is X 48,126 Lacs as against a Profit/Loss of X (281) Lacs in the previous Financial Year.
Consolidated
During the Financial Year under review, your Company’s total revenue on consolidated basis stood at X 73,961 Lacs as compared to X 1,56,289 Lacs in the previous Financial Year. The overall operational expenses for the Financial Year under review were X 8,52,765 Lacs, as against X 2,51,554 Lacs in the previous Financial Year. Operating Loss Before Tax for the year under review stood at X 7,78,804 Lacs as compared to X 95,265 Lacs in the previous Financial Year. The Loss After Tax for year under review stood at X 7,78,735 Lacs as against X 11,10,899 Lacs in the previous Financial Year.
The Financial Statements of your Company have been prepared in accordance with Ind AS and the relevant provisions of the Companies Act, 2013 and rules made therein, as applicable.
Accounting policies have been consistently applied except where a newly issued accounting standard, if initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. Management evaluates all recently issued or revised accounting standards on an on-going basis.
Your Company has been complying with all the norms prescribed by the Reserve Bank of India (RBI) including the Fair Practices, Anti Money Laundering and Know Your Customer (KYC).
DELISTING
The Securities of your Company were listed on BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE), however, in terms of the Approved Resolution Plan the Securities of your Company have been delisted from both BSE and NSE w.e.f. December 14, 2023.
TRANSFER TO RESERVES
Your Company has not transferred any amount to reserves during the Financial Year ended March 31,2024.
CLASSIFICATION AS INVESTMENT AND CREDIT COMPANY (ICC) AND PUBLIC FINANCIAL INSTITUTION (PFI)
Your Company had been classified as an ‘Infrastructure Finance Company’ (‘IFC’). However the Reserve Bank of India has re-designated your
Company as an ‘Investment and Credit Company’ (‘ICC’). The Approved Resolution Plan also takes cognizance of the change in registration of your Company so that your Company can carry on business as an asset finance company. Your Company has taken the required steps with the Reserve Bank of India for obtaining the new Certificate of Registration (‘CoR’) reflecting your Company’s modified classification as an ICC. Your Company is also notified as a Public Financial Institution (PFI) by the Ministry of Corporate Affairs (MCA), Government of India.
OPERATIONS
In terms of the Approved Resolution Plan, the Board of Directors of your Company has been re-constituted on February 26, 2024. Subsequent to the re-constitution of the Board of Directors of your Company on February 26, 2024, the Board has appointed the Managing Director & CEO who has assumed charge on April 15, 2024.
The present management of your Company under the guidance of the Managing Director & CEO is taking necessary steps to resume business of your Company as an asset finance company and has undertaken various efforts to strengthen the policies and processes, functioning of the IT System, legal, internal audit, internal financial controls and updating risk control matrixes, information security, operational and credit management risk and fraud risk management, through in-house resources and engagement of external professional experts/consultants. The management team has also initiated steps for compliance of various applicable rules and regulations within your Company.
DIVIDEND
In order to conserve capital, the Board of Directors of your Company have not recommended any dividend on Equity Shares of the Company for the Financial Year ended March 31,2024.
PUBLIC DEPOSITS
Your Company being a Non-Banking Non Deposit taking Company, your Company has not accepted any deposits from the public/members under Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014 during the year and within the meaning of the provisions of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016 and on March 31,2024 your Company does not have any unpaid/unclaimed deposits payable to the depositors.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
ECONOMIC REVIEW
Global Outlook
The global economy is facing heightened risks from elevated public debt, longer stance of monetary policy, bouts of volatility unsettling financial markets on incoming data & the slow progress in the last mile of disinflation. Prolonged geopolitical tensions & potential shocks to logistics & supply chains remain a clear & present threat with spillovers to commodity prices, the ongoing disinflation & eventually to the global economic outlook. However, the balance of risks for global financial stability has improved.
The goal of bringing inflation down to targets remains the key focus of monetary policy authorities the world over, although headwinds are being encountered from sticky services inflation, elections across half the world’s population, & the recent firming up of commodity prices, besides persisting geopolitical tensions. Despite these challenges & as market expectations about the future course of monetary policy re-aligned with policy guidance, financial conditions have stabilized & risks of a hard landing have receded. The global headline inflation is expected to fall to 4.4% in FY25 from 5.8% in FY24.
The need is for global cooperation to safeguard trade, support greer & digital transitions, provide debt relief, & enhancing food security Growth in major advanced economies is also becoming more alignec as output gaps are closing. The USA shows increasing signs of cooling especially in the labor market. The Euro area, meanwhile, is poised to pick up after a nearly flat performance last year. Real GDP growth is on a rising trajectory, supported by macroeconomic & financial stability The domestic financial system is well buffered with strong capital & liquidity ratios, declining levels of asset impairment & rising profitability World trade volume is also expected to recover as per the IMF’; assessment, potentially easing the constraint from net exports. Agains this backdrop, the International Monetary Fund (IMF) has projected the global growth to remain steady at 3.3% in FY25 from 3.2% in FY24
Indian Scenario
The Indian economy remains robust & resilient, anchored by macroeconomic & financial stability. With improved balance sheets banks & financial institutions are supporting economic activity through sustained credit expansion. Real GDP rose to 8.2% in FY24 up from 7% in FY23, despite muted private & governmentfinal consumption & external demand as a drag. With monsoons expected to be above normal, RBI has projected real GDP at 7.2% during FY25 & kept the repo rate at 6.50%, noting domestic economic resilience.
There are several positives for the Indian economic outlook viz., favorable demographic dynamics, strengthening of domestic demand conditions highest business optimism, government’s sustained focus on capita expenditure, firms utilising high profits to augment investible resources while bringing down leverage, gathering pace of real estate activity which, alongside public investment on infrastructure, is driving a construction activity cycle, rising of services exports, fiscal consolidation as per Budget estimates in FY25, fiscal deficit is estimated to be 5.1% in FY25 against 5.8% of GDP in FY24, with buoyant tax collections & deepening of credit growth. Downside risks to this outlook stem from global slowdown & spillovers, geopolitical risks & their impact on supply conditions & commodity prices, slack in the rural economy & uncertainties related to weather conditions.
In an uncertain global economic & financial environment, India remains an attractive investment destination. In FY24, net inflows of foreign portfolio investments into India, recorded a sharp turnaround, reaching its 2nd highest level ever at USD 44.6 billion. Overall, capital flows are expected to remain strong, supported by macroeconomic stability
Non-Banking Financial Companies (NBFCs) in India
As per the Regulatory Structure under Scale Based Regulation - Mastei Direction-RBI (Non-Banking Financial Company-Scale Based Regulation Directions - updated as on 21st Mar’24 for NBFCs shall comprise o four layers based on their size, activity & perceived riskiness.
Indian NBFCs help to fill the credit gap by providing loans & othei services to the corporate houses, unincorporated retail traders, MSMEs small traders & local small businesses in addition to the structured credit market thereby helping in the generation of wealth, extension o credit, improvement of business capacity & creation of employmem opportunities. NBFCs have undergone remarkable growth within the countrys financial landscape & the sector has reached an impressive size of USD 326 billion, underscoring its expanding influence in the financial domain.
Credit growth in respect of the investment & credit companies (NBFC- ICCs) & infrastructurefinance companies (NBFC-IFCs) have multiplied many folds. NBFCs were the largest net borrowers of funds from the financial system, with gross payables of INR 16.58 Lac Crores & gross receivables of INR 1.61 Lac Crores as at end-Mar 24. A breakup of theii
gross payables reveals that the bulk of funds were sourced from SCBs, followed byAMC-MFs & insurance companies.
Budgetary Push by the Government and Project Outlays
The Union Budget FY24 proposed a steep increase in capital investment outlay envisioning that it would be the driver of growth & jobs. The proposal was to increase it for the 3rd year in a row, by 33% to INR 10 Lac Crores, which would be 3.3% of GDP & almost three times the outlay in 2019-20. Going by the trend the infrastructure outlay for the year FY25 will augur well for the Construction Equipment Industry & will aid Indias growth trajectory. The outlay is INR 2.78 Lac Crores for Roads & Highways, INR 2,134 Crores for Mining & Quarrying, INR 77,524 Crores for Housing & Urban Affairs, INR 2,346 Crores for Ports & Waterways, INR 2,300 Crores for Airports & INR 2.55 Lac Crores for Railways. Further, to spur investment in infrastructure & to incentivize States for complementary policy actions, it is proposed to continue the 50-year interest free loan to State Governments for one more year - with the outlay in this regard being enhanced significantly to INR 1.3 Lac Crores.
The National Infrastructure Pipeline (NIP) projected investment of INR 111 Lac Crores for FY20-25 will include infrastructure projects of more than INR 100 Crore covering Greenfield & brownfield investments. The NIP currently has 8,964 projects with a total investment of more than INR 108 Lac Crores under different stages of implementation. Given the quantum of funding involved, a creative financing option such as asset monetisation was also envisaged through the INR 5 Lac Crores National Monetisation Pipeline.
Industry Structure and Development
India has to enhance its infrastructure to reach its 2025 economic growth target of US$ 5 trillion. Indias population growth & economic development require improved transport infrastructure, including investments in roads, railways, and aviation, shipping & inland waterways. As per RBI, in the past 4 years until Mar’24, Real Estate Investment Trusts (REITs) & Infrastructure Investment Trusts (InvITs) have amassed USD 15.60 billion (INR 1.3 Lac Crores). In Mar’24, multiple connectivity projects have been inaugurated in Kolkata totaling USD 1.8 billion and the Civil Aviation has announced inauguration of 15 airport projects worth USD 12.1 billion by 2028.
The Indian governments Budget for FY25 has seen a significant uplift in allocation forthe infrastructure sector, with a pronounced focus on Energy Transition. This will imply higher deal activity as a significant part of this infra will be built on PPP model (Public-Private Partnership) & it will need equity from sponsors and investors & project finance from lending institutions. This will also be a big boost for all in the value chain from EPC players to equipment suppliers. The current budget outlines an ambitious capital expenditure target of USD 133 billion, representing 3.4 percent of the GDP as infra spend.
The Indian Construction Equipment (CE) industry recorded 26% growth in sales volume over FY24 with a record breaking annual sales of 1.35 Lac units. The industry is projected to triple in size by 2030. This landmark sales growth comprises a positive performance by all 5 equipment segments, especially the 21% increase in sales of Earthmoving Equipment comprising a large share of 70% in total CE sales, followed by Material Handling Equipment with a growth of 61%. To implement the long-term target of renewable energy installation capacity i.e. 500 GW by 2030, additional 300 GW needs to be commissioned & this would entail capex of USD 160 Billion over next 5 years with an equity outlay of USD 40 Billion. Infrastructure development will need active participation of the states, especially for urban infrastructure & last mile connectivity & to accelerate that, the budget has allocated USD 18 Billion financing for states.
Business Outlook and Future Plans
India’s investment cycle should be on a medium-term uptrend supported by rising government investment in infrastructure & recovery in the real estate cycle. Higher private investments in renewable energy & related supply chains, localization of higher-end technology components, & India becoming a more meaningful part of global supply chains to supportfastergrowth.
After a healthy GST collection of INR 20.02 Lac Crores in FY24, the amount collected in the 4 months from Apr’24 to July’24 is INR 7.25 Crores giving a boost to the government’s expected GST collection of INR 24 to 27 Crores in FY25, which would pave way for higher spending by the central & state governments. Liquidity, which remained negative for most of the month, has turned positive on the back of on-going Government spending & G-Sec maturities. Both RBI & the Government have given soft signals on improving liquidity conditions & it should remain a key theme going forward.
The USD 1.3 trillion, national master plan for infrastructure, Gati Shakti, has been a forerunner to bring about systemic & effective reforms in the sector, & has already shown a significant headway. Infrastructure support to the nation’s manufacturers also remains one of the top agendas as it will significantly transform goods & exports movement making freight delivery effective & economical. The "Smart Cities Mission" & "Housing for All" programmes have benefited from these initiatives.
The Construction Equipment verticals in FY24 viz., YoY Earthmoving - grew up 21%, Material handling - grew up 61%, Road construction, Material processing & Concrete equipment grew up19% & are poised to grow in line with the many projects announced by the government in FY25. To meet India’s aim of reaching a USD 5 trillion economy by 2025, infrastructure development is the need of the hour. The government has launched the National Infrastructure Pipeline (NIP) combined with other initiatives such as ‘Make in India’ & the production-linked incentives (PLI) scheme to augment the growth of the infrastructure sector.
The management of your Company is closely tracking these developments in order to source new business opportunities and make the business verticals ready to start concentrating on the construction & mining equipment business. The above strategic initiatives position SIFL amid India’s promising economic space. SIFL remains committed to focussing on innovative financing solutions in order to generate long term value for the shareholders and stakeholders alike through good governance and adhering to policy compliance.
BUSINESS REVIEW
A. Asset Finance Company
Your Company is registered with the Reserve Bank of India (RBI) as a NBFC-Middle Layer. Your Company had discontinued the NBFC activities due to establishment of TRA Account and initiation of CIRP. The Approved Resolution Plan statesthatyour Company shall resume business as an asset finance company. The management of your Company under the guidance of the Managing Director & CEO is taking steps to resume business in your Company during the current financial year.
B. Infrastructure Project Advisory Aboutthe Division
The Infrastructure Project Advisory Division of your Company continues to play a pivotal role in the infrastructure spectrum as strategic advisors to Central/State Governments, Statutory Bodies, PSUs and Urban Local Bodies in India and abroad. Your Company has been offering advisory, consultancy and other allied value added services from concept to commissioning in different domains
of Infrastructure - majorly Urban and Industrial precincts. Some of the significant projects undertaken are given hereunder:
¦ Multilateral Funded Projects/Assignments
Your Company has been a part of the Asian Development Bank (ADB) funded project for development and preparation of a comprehensive strategy for integrated urban infrastructure development in 7 (seven) District Headquarter (DHQ) towns and 13-Urban Local Bodies (ULBs) in Tripura.
¦ Smart City Mission Programme
Your Company has been working as Project Management and Development Consultant for Smart City projects under Smart City Mission at Bareilly in Uttar Pradesh.
¦ Atal Mission for Rejuvenation and Urban Transformation (AMRUT):
• As Independent Review and Monitoring Agency (IRMA), your Company has successfully completed periodic review and monitoring of projects under AMRUT for Rajasthan cluster during the year;
• Your Company has been engaged for (i) Creation of Base Maps for 25 towns and Formulation of GIS based Master Plan for 8 towns under 2 (two) clusters in West Bengal and (ii) Creation of Base Maps and Preparation of GIS based Master plan for 14towns under 2 (two) clusters in Odisha.
¦ Jal Jeevan Mission (JJM)
As part of the Central Government’s ambitious mission programme "Jal Jeevan Mission", your Company has been working as Third Party Inspection Agency in Kargil District with the objective to cover maximum possible households under tap water supply.
¦ Food Processing
For the Ministry of Food Processing Industries, Government of India, your Company has been working as Programme Management Agency (PMA) for:
• Mega Food Park Scheme to facilitate establishment of Mega Food Parks in "Cluster" approach for creation of state-of-the- art support infrastructure in a well-defined agri/horticultural zone for setting up of modern food processing units;
• The Scheme for creation of infrastructure for Agro Processing Clusters under the Central Sector Scheme - Kisan Sampada Yojana which aims at development of modern infrastructure and common facilities to encourage group of entrepreneurs to set up food processing units based on cluster approach;
• The Scheme of Creation/Expansion of Food Processing/ Preservative Capacities (CEFPPC) under the Central Sector Scheme - Scheme for Agro-Marine Produce Processing and Development of Agro Clusters (SAMPADA).
¦ Tourism
Your Company has been successfully providing Project Management Consultancy Services for development of Manipur Mega Ecotourism Project1 in Manipur.
¦ Other Infrastructure Engagements
Your Company continues to work for the following projects in the Urban Infrastructure domain:
• Project Management Consultant (PMC) for implementation of 3 (three) specific Sewerage Schemes in Goa;
• Independent Engineer & Auditor for Food Corporation of India to oversee/supervise setting up of Silos on Design, Build,
Finance, Own & Operate (DBFOO) basis for storage of food grains at Sangrur in Punjab and Kannauj in Uttar Pradesh.
¦ International Engagements
During the year under review, your Company has successfully provided Comprehensive Training Services on PPP in Bangladesh sponsored by the PPP Authority, Govt. of Bangladesh with the aim of institutionalizing the PPP capacity building program in the country.
¦ Ushering into a new era of growth and value creation
This FY 2023-24 has been a challenging one for the business owing to finalization of the Company’s resolution plan wherein the main focus had been on astute consolidation and focussed cash flow management - through effective operational management, cost rationalization. Your Company has since adopted the principle of maintaining positive bottom-line through "doing more with less". As a result, your Company has been able to register robust profit highlighting operational efficiency. Compared to last fiscal, the business registered a growth of 46% in its contribution and has stabilized the business module in the CIRP period. It was able to secure fresh mandates worth registering a growth of 153% on this parameter vis-a-vis the earlier fiscal. Under the new leadership and management, this Division of your Company is pursuing the consolidation process. Now, with the resolution plan adopted and new management team taking over, the Division has been able to retain its self-sustainability model. Further, based on this strategic approach, this business registered a growth of more than 150% in new business procurement which has been the essence of creation of a platform for future growth. Coupled with right mix of professionals, this business is now geared up to look ahead with stronger business fundamentals and operational efficacy.
In this fiscal also, your Company continued on its strategic path that it embarked upon since the initiation of CIRP process which has led to:
• Effective use of resources with multi-tasking in terms of delivery and business procurement.
• Initiation of process of treating each project as SBUs in terms of its P&L.
• More focus on acquiring new mandates.
¦ Looking Forward
The Advisory & Government consulting space appears to be thriving with opportunities owing to the policies and mission programmes as adopted/launched by Govt. of India. In recognition of "Cities" being the "Growth Engines" of India (3% of aggregate land area of cities contributes to 60% of GDP with rate of Urbanization being 38%), renewed focus on Urban Infrastructure through Smart City Mission 2.0, AMRUT 2.0, Rental Housing Scheme for Urban Poor etc. been launched. Further, Government spending in Consultancy & Advisory domain has been registering robust year on year growth and it is envisaged that future spending in sectors like Urban Development, Transport, Highways, Logistics, Railways etc. will have a direct positive growth & sustainability of this business domain. Your Company has its strength in its 2 decades of operational experience, handling of major assignments successfully, having right mix of professionals to kick start growth along with a network of partners & associates who are now energized owing to the Company coming out of CIRP. With future outlook being positive and cross mapping the business’s strength areas, it is evident that through right mix of optics, future growth can be obtained through focusing on: Urban Planning, Urban Development,
Tourism, Urban Transport, Logistics, Food Processing, Railways, Civil Aviation, etc.
SREI EQUIPMENT FINANCE LIMITED
Srei Equipment Finance Limited (SEFL), a wholly owned subsidiary of your Company, the gross profit/(loss) before depreciation, amortization, impairment, Net loss on derecognition of financial instruments under amortized cost category, Impairment on financial instruments (Net), Loss/write-off on Repossessed Assets and Assets acquired in satisfaction of debt and exceptional items, net tax expenses for the year was X (51,836) Lacs as against X (9,06,360) Lacs last year.
Profit/(loss) before taxation for the year was X (7,64,729) Lacs as against X (11,21,928) Lacs in the last year.
Net profit/(loss) after taxation for the year was X (7,64,729) Lacs as against X (11,21,928) Lacs in the last year.
RESOURCES
Private Placement of Equity Shares
In terms of the Approved Resolution Plan, National Asset Reconstruction Company Limited (NARCL), India Debt Resolution Company Limited (IDRCL) Approving Financial Creditors (as defined in the Approved Resolution Plan) and Kairos ESOP Welfare Trust (as defined in the Approved Resolution Plan) have subscribed to 4,60,000 equity shares having a face value of INR 10/- each, 2,40,000 equity shares having a face value of INR 10/- each, 2,00,000 equity shares having a face value of X 10/- each and 1,00,000 equity shares having a face value of INR 10/- each respectively.
The members of the Company have at the Extra Ordinary General Meeting held on May 7, 2024 approved the restructuring ofthe Share Capital of the Company by sub-dividing the existing equity shares into face value of X 1/- (Rupee One only) per share in place of X 10/- (Rupees Ten only) per share in terms of the Approved Resolution Plan.
Further, in terms of the Approved Resolution Plan, an amount equivalent to total outstanding constituting perpetual debt ofthe Company, and other liabilities less any recovery pursuant to the Resolution Plan had been converted into 49,00,06,197 (Forty Nine Crores Six Thousand One Hundred and Ninety Seven) equity shares having a face value of X 10/- (Rupees Ten) each, aggregating to X 490,00,61,970/- (Rupees Four Hundred and Ninety Crores Sixty One Thousand Nine Hundred and Seventy only) equity shares of the Company and thereafter, cancelled by way of Capital Reduction.
Moreover in terms of the Approved Resolution Plan, the issued equity share capital of the Company held by the shareholders of the Company and any right to subscribe to, or be allocated such equity shares, including any employee stock options, pre-emptive subscription rights or convertible instruments held by any person other than the equity shares held by NARCL, IDRCL, Approving Financial Creditors ("AFCs") (as defined in the Approved Resolution Plan) and Kairos ESOP Welfare Trust (as defined in the Approved Resolution Plan) has been entirely cancelled and extinguished by way of capital reduction, without payment of any price to the erstwhile shareholders.
Accordingly, your Company’s present shareholding is of 1,00,00,000 equity shares at X 1/- each amounting to X 1,00,00,000/- (Rupees One Crore Only) in terms of the Approved Resolution Plan.
Public Issue of Secured and Unsecured Subordinated Redeemable Non-Convertible Debentures (NCDs)
During the year under review, your Company has not mobilised any additional resources through non-convertible debentures (‘NCDs’), External Commercial Borrowings, Masala Bonds, Subordinate Debt, Perpetual Debt Instruments (PDI), Bank Borrowings, etc.
As regards to NCDs issued earlier, as intimated earlier all creditors shall be paid as pertheApproved Resolution Plan.
ESOPTRUST
The Approved Resolution Plan envisaged the creation of SIFL ESOP Trust and issuance of Equity Shares to SIFL ESOP Trust. Accordingly a registered trust in the name of Kairos ESOP Welfare Trust has been established for the benefit of the employees of your Company and its subsidiaries with Mr. Vishnu Gopal Agarwal, Ms. Romita Singh and M/s. KP Corporate Solutions Limited as Trustees. 1,00,000 (One Lac) equity shares of the Company having a face value of INR 1/- each, aggregating to INR 10,00,000/- (Indian Rupees Ten Lacs) is being held by Kairos ESOP Welfare Trust in accordance with the Approved Resolution Plan.
RISK MANAGEMENT
The risk policies and procedures of your Company are derived from the guidance and relevant directives provided from time to time by the Reserve Bank of India (RBI) applicable for designated classifications of Non-Banking Finance Companies (NBFCs) that your Company is included in and other regulatory authorities and continuously bench marked with industries best practices.
Your Company’s risk management strategies are well defined to identify, measure and mitigate various risks associated with the operating business module, adherence assessment procedures followed with continuous monitoring.
Risk management continues to be an important area of your Company’s operations especially in an environment which is characterized by increasing uncertainties like pandemic, changes in operational procedures owing to market alignment, etc.
The risk strategy of your Company is enunciated and overseen by the Risk Management Committee, an independent Committee that strives to put in place specific policies, frameworks and systems for effectively managing the various risks. Policies approved from time to time by the Board of Directors or the Risk Management Committee in consultation with other Committees, viz. the Asset Liability Management Committee (ALCO), constitutes the governing framework for various types of risk and business activities undertaken within this policy framework.
Your Company is striving to manage its risks in a proactive manner and has put in place a Risk Management Policy for comprehensive coverage of Risks and adopted structured approach to risk management by developing and implementing risk management framework. While the earlier policies have been continued to be in effect, Board is in the process of reviewing & approving all the Policies including Credit Risk, Operational Risk, Market Risk, Liquidity Risk, IT Risk etc.
In addition, to managing operational risk prudently, ‘Know Your Customer’ (KYC) and ‘Anti-Money Laundering (AML) Policy’ are in place, which helps to prevent your Company from being used intentionally or unintentionally by criminal elements for money laundering.
Your Company’s has its Data Center (DC) on AWS (Amazon Web Services) Cloud. As part of the implemented policies in AWS, automated AMI (Amazon Machine Image) backups are performed for all application and database servers. Such backups are periodically restored to check their usability. Servers can be restored from the AMIs in case of a disaster.
Information/Cyber Security risks include the risks arising from unauthorized access, use, disclosure, disruption, modification or destruction of information or information systems, including the probability of exposure or loss resulting from a cyber-attack or data breach on the Company. Your Company has put in place an Information Security & Cyber Security Policy to establish a robust Information Security Risk Management Framework.
Your Company has implemented endpoint, email & web security solutions to detect & prevent security threats at various levels.
Your Company’s Cyber Security Operations Centre (C-SOC) continues to monitor and improve its security posture while preventing, detecting, analyzing and responding to cyber security incidents. Your Company has not yet experienced any material losses relating to cyber-attacks.
Your Company also conducts periodic training to increase user awareness about different facets of information/cyber security.
HUMAN RESOURCES ACTIVITIES
The completion of the Corporate Insolvency Resolution Process (CIRP) was a milestone achievement, bolstering our commitment to financial stability and fostering avenues for future growth. The Financial Year 2023-24 witnessed the infusion of new investment which revitalized company operations, introduced innovative working methodologies, and substantially elevated morale and motivation throughout the organization.
The strategic reorganization has resulted in a more streamlined, dynamic, and agile operational structure, proving to be exceedingly beneficial in navigating the contemporary business climate. Regular town hall meetings played a critical role in maintaining an informed, reassured, and confident internal stakeholder base, managed with the utmost professionalism. The leaderships flexibility and the collaborative efforts led by the C-suite team instilled a constant sense of positivity, revival, and rejuvenation across all levels and grades, reinforcing faith in the potential for a turnaround and a bright future focused on recovery and new business development.
During the year, new initiatives such as the introduction of a Quarterly Staff Welfare Fund and revisions in conveyance claims for Feet on Street staff were implemented. These were complemented by role enrichment opportunities and the introduction offlexible working hours and work- from-home options for those with dire need of support on medical grounds, further supported our staff during these times. The organization also took care of financial incentives; even during the CIRP, increments and incentives were awarded, highlighting our commitment to employee welfare. Other benefits included the bearing of Group Mediclaim premiums by the organization, the provision of a holiday home facility for staff at subsidized rates, and the establishment of an Emergency Medical Corpus for staff.
The philosophy of our Company this year was encapsulated by the principle, "Empower and Connect: Building a Unified Workforce." A diverse array of staff engagement activities were rolled out, significantly boosting employee morale and fostering a collaborative spirit across departments. These initiatives extended beyond professional spheres, involving employees in philanthropic efforts and creating a stress-free workplace where individuals felt valued and engaged.
A resolute commitment to diversity and inclusion remained a guiding principle of our HR strategy. International Womens Day was prominently celebrated, acknowledging and appreciating the contributions of our women employees at all levels of the organization. The health of our employees and their families was prioritized as the greatest asset. Comprehensive health check-ups and wellness workshops were conducted throughout the year, reflecting our commitment to the holistic well-being of our workforce.
<p ALIGN=JUSTIFY>A thorough reassessment of internal policies was undertaken to enhance compliance and risk mitigation. Management meet-ups underscored our on-going commitment to operational sustainability. A renewed focus was placed on building in-house capabilities to adapt to new business models and operational enhancements. Although the Learning and Development (L&D) initiatives last year were limited, the Company remains committed to leveraging technology to expand reach, speed,and scope, significantly contributing to operational efficiencies. The team ensured and achieved full compliance with all mandatory regulatory training requirements through our robust e-learning platforms.
Throughout the year, the HR team emphasized providing timely and effective support to each employee, fostering a culture of resilience and wellness. The HR Business Partner team played a crucial role in maintaining open lines of communication, ensuring that the workforce was connected, supported, and heard.
Further, pursuant to the Approved Resolution Plan, since the Company would be spearheading the new business activities, it was proposed to transfer specific employees from Srei Equipment Finance Limited (‘SEFL’), wholly owned subsidiary of the Company to the Company in a phased manner.
Based on the recommendations of the Nomination and Remuneration Committee, the Board has approved the transfer of specific employees from Srei Equipment Finance Limited (SEFL) to the Company and the revised Organisation Structure of the Company. Accordingly, certain specific employees have been transferred from SEFL to your Company.
In this moment of reflecting on the past year, it is clear that the focus on human capital has not only sustained but also enriched the corporate ecosystem, instilling a profound sense of pride and belonging among the employees. The HR team’s dedication to excellence and strategic initiatives has been central to the organization’s achievements and will continue to drive success in the upcoming years.
INFORMATION TECHNOLOGY
Information Technology plays a pivotal role in your Company’s journey. Your Company continues to leverage its technology to implement a resilient and secure infrastructure.
Your Company manages a variety of risks that can significantly affect its performance and ability to meet the expectations of its customers, regulators and other stakeholders. In the past year, your Company’s focus has primarily been on maintaining & optimizing the existing IT infrastructure. While significant new developments have been limited, it has been ensured that the IT systems continue to support the operations effectively & securely.
The primary objective of your Company has been to ensure the stability & reliability of its IT systems. Regular maintenance & support activities, including routine updates, patch management and system performance monitoring have been carried outto ensurethatthe IT systems remain operational & efficient. Your Company has continued to prioritize data security & compliance with regulatory standards.
Your Company runs regular awareness campaigns to educate its employees regarding the various aspects of Information Security, through various modes like periodic advisories and online trainings.
INTERNAL CONTROL AND AUDIT
Your Company’s vision, mission and core values have laid the foundation for internal controls. On the administrative control side, your Company has a proper reporting structure, oversight Committees and rigorous performance appraisal system to ensure checks and balances. On the financial control side, your Company has in place segregation of duties and reporting mechanism to deter and detect misstatements in financial reporting.
Your Company’s internal control system is commensurate with the nature of its business and the size and complexity of its operations and ensures compliance with policies and procedures. The Internal Control Systems are being constantly updated with new as well as revised Standard Operating Procedures.
Your Company has an Internal Audit Department, which provides comprehensive audit coverage of functional areas and operations of your Company to examine the adequacy of and compliance with policies, procedures, statutoryand regulatory requirements.
Your Company has a dedicated and independent Internal Audit Department which is accountable to the Audit Committee of the Board. The purpose, scope, authority and responsibility of the Internal Audit Department are delineated in the Risk Based Internal Audit Policy approved by the Board/Audit Committee of the Board. Internal Audit Department influences and facilitates improvements in the control environment by constantly evaluating the internal control systems. Significant deviations are brought to the notice of the Audit Committee/Board. Status of compliances of audit observations and follow up actions taken thereon are reported to the Audit Committee of the Board. The Audit Committee reviews and evaluates adequacy and effectiveness of your Company’s internal control environment and monitors the implementation of audit recommendations.
Further, in accordance with the regulatory guidelines, your Company’s Internal Financial Controls (IFC) have been reviewed and actions have been taken to strengthen financial reporting and overall risk management procedures. Further, an Information System (IS) Audit of the internal information technology (IT) systems and processes is conducted at least once in a year to assess IT risks faced by your Company.
Based on the internal audit report, process owners undertake corrective action in their respective areas. All these measures help in maintaining a healthy internal control environment.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has in place a Corporate Social Responsibility Policy (CSR Policy), as per the provisions of the Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014 which, inter-alia lays down the guidelines and mechanisms for undertaking socially useful projects for welfare and sustainable development of the Community at large. The said policy is available at the website of the Company at https://www.srei.com/sifl_corporate policies/Corporate_ Social_Responsibility_CSR_Policy.pdf.
During the Financial Year 2020-21, your Company had sanctioned contribution of ? 78,15,000/- (Rupees Seventy Eight Lacs and Fifteen Thousand only) for disbursement to various entities. However, as on March 31, 2021, your Company could disburse an amount of ? 24,95,000/- (Rupees Twenty Four Lacs and Ninety Five Thousand only), being 0.66 per cent of the average net profits of last 3 (three) immediate Financial Years preceding Financial Year 2020-21, towards CSR activities pursuant to CSR Policy of your Company. The balance sanctioned amount of ? 53,20,000/- (Rupees Fifty Three Lacs and Twenty Thousand only) could not be disbursed till March 31,2021 due to the establishment of Trust and Retention Account (TRA) whereby all the business payments of your Company were being controlled by the Bankers and your Company had no control on the cash flows. Several requests were made to the Bankers to disburse the aforesaid amount as committed to the concerned entities. However, the Bankers did not disburse the entire sanctioned amount. Thereafter, the Corporate Insolvency Resolution Process (CIRP) of your Company commenced from October 8, 2021 pursuant to which your Company was further unable to disburse the balance sanctioned amount of ? 53,20,000/- (Rupees Fifty Three Lacs and Twenty Thousand only). Furthermore, due to the on-going CIRP, your Company did not sanction any further contribution towards CSR activities. Your Company is however committed
to remain a socially responsible organization supporting the national aspirations and missions.
Further, in terms of the Approved Resolution Plan, the aforesaid payment has been waived off. Accordingly, your Company does not have to make any payment arising of the aforesaid obligations.
SREI WEBSITE
The website of your Company www.srei.com has been developed on the new responsive technology based platform known as ‘Laravel’, ensuring uniform display across all devices like mobile, tablet, desktop etc. and all the operating systems. The website has an inbuilt sophisticated and customized content management system for easy change in content. A simple, improved navigation system needs a lesser number of clicks to reach the information available in the different sections of the website. The contemporary and smart look of the website ensures a customer centric approach catering to the requirements of prospective customers, investors and employees. The website carries a comprehensive database of information of interest to the investors including regulatory disclosures, financial results, financial products, corporate codes and policies, corporate presentations, stock exchange intimation and business activities of your Company and the services rendered by your Company. The customers can also download essential documents directly from the website.
SUBSIDIARY COMPANIES
The Statement in Form AOC-1 containing the salient features of the
financial statement of your Company’s subsidiaries pursuant to first proviso to Section 129(3) ofthe Companies Act, 2013 (Act) read with Rule 5 of the Companies (Accounts) Rules, 2014, forms part of the Annual Report. Further, inline with Section 129(3) of the Act read with the aforesaid Rules, and in accordance with the Companies (Indian Accounting Standards) Rules, 2015 (Ind AS Rules) read with Schedule III to the Companies Act, 2013, Consolidated Financial Statements prepared by your Company includes the financial information of its subsidiary companies.
A Report on the performance and financial position of each of the subsidiaries included in the Consolidated Financial Statements prepared by your Company as per Rule 8(1) ofthe Companies (Accounts) Rules, 2014, forms part of the annual accounts of each of the subsidiary companies and also forms part of Form AOC-1. The said Report is not repeated here forthe sake of brevity. Members interested in obtaining a copy of the annual accounts of the subsidiaries may write to the Company Secretary at the email id investor.relations@srei.com.
In accordance with Section 136 ofthe Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of your Company and audited accounts of each of its subsidiaries, are available on your Company’s website www.srei.com.
Highlights of the performance of subsidiaries and their contribution to the overall performance of your Company during the period under report are given below:
Name of the Subsidiary/Associate |
Turnover/Total Income for the Financial Year ended 31.03.2024 (?in Lacs) |
Profit AfterTax (PAT) forthe Financial Year ended 31.03.2024 (Rs in Lacs) |
% Contribution on Turnover/ Total Income for the Financial Year ended 31.03.2024 |
% Contribution on PAT for the Financial Year ended 31.03.2024 |
Srei Capital Markets Limited |
8.12 |
(21.19) |
0.01 |
(0.00) |
Srei Asset Leasing Limited |
||||
(Formerly Srei Finance Limited) |
8.18 |
6.94 |
0.01 |
0.00 |
Bengal Srei Infrastructure Development Limited |
5.46 |
(0.81) |
0.01 |
0.00 |
Controlla Electrotech Private Limited |
436.15 |
(44.37) |
0.59 |
0.00 |
Srei Mutual Fund Trust Private Limited |
0.27 |
(0.22) |
0.00 |
0.00 |
Srei Mutual Fund Asset Management Private Limited |
78.63 |
1.20 |
0.11 |
0.00 |
Srei Insurance Broking Private Limited |
222.54 |
(247.64) |
0.30 |
0.00 |
Srei Equipment Finance Limited (SEFL) |
72,750.00 |
(7,64,729.00) |
98.36 |
0.00 |
‘The Company has not received the Board approved Financial Statements from Trinity Alternative Investment Managers Limited (TAIML) and its two step down subsidiaries viz., Hyderabad Information Technology Ventures Enterprises Limited and Cyberabad Trustee Company Private Limited forthe Financial Year ended March 31,2024 and accordinglythe Financial Statement ofthese three Companies has not been considered forconsolidation as on March 31,2024.
MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION
During the Year under review the following material changes affecting the Financial Position of your Company had taken place in terms of the Approved Resolution Plan:
> Delisting of Securities of your Company;
> Extinguishment of Liabilities and Reduction of Share Capital of your Company;
> Reconstitution of the Board of your Company;
> Transfer of 122 employees to the Company; and
> Application for conversion of your Company from IFC to ICC.
Each ofthe abovementioned points have been covered in detail in this report hence, the same is not repeated here for the sake of brevity.
KEY MANAGERIAL PERSONNEL (KMPs)
The following executives of your Company are whole-time Key Managerial
Personnel (KMPs) in accordance with the provisions of Section 2(51 read with Section 203 of the Companies Act, 2013 as on the date o this report:
Name |
Designation |
Mr. Hardayal Prasad* |
Managing Director & CEO |
Mr. Manoj Kumar** |
Company Secretary & CCO |
Mr. Vishnu Gopal Agarwal# |
Chief Financial Officer |
*Mr. Hardayal Prasad has been appointed as the Managing Director & CEO of the Company w.e.f. April 15, 2024.
**Mr. Manoj Kumar was appointed as the Company Secretary w.e.f. April 1, 2021 and was later appointed as the Chief Financial Officer (CFO) of the Company w.e.f. December 8, 2021. Further, Mr. Kumar was appointed as the CCO of the Company w.e.f. December 01, 2023 accordingly, ceased be a CFO w.e.f. December 01,2023.
#Mr. Vishnu Gopal Agarwal was appointed as the CFO of the Company w.e.f. December 01, 2023.
Mr. Syed Faisal Aquil was appointed as the Manager of the Company w.e.f. November 30, 2023. Further, Mr. Aquil ceased to be the Manager of the Company w.e.f. April 15, 2024.
NOMINATION AND REMUNERATION COMMITTEE
The Board of Directors of your Company have constituted a Nomination and Remuneration Committee in accordance with the provisions of Section 178 of the Companies Act, 2013 at its meeting held on February 26, 2024. The Committee was further re-constituted on May 28, 2024. The Committee presently comprises of Mr. Sunil Srivastav as the Chairman and Mr. N. Sivaraman, Mr. P Santhosh and Mr. Avinash Kulkarni as its members. Mr. Manoj Kumar, Company Secretary & CCO of your Company acts as the Secretary to the Nomination and Remuneration Committee. The Terms of Reference of the Committee has been provided in the Corporate Governance Section forming part ofthis Report.
1 (one) meeting of the Nomination and Remuneration Committee of your Company was held during the year 2023-24 on March 27, 2024. Another meeting ofthe Nomination and Remuneration Committeewas held on June 05, 2024.
The Committee has formulated the Nomination and Remuneration Policy (‘Nomination and Remuneration Policy’) which broadly laid down the various principles of remuneration being well-balanced and performance-related compensation package taking into account shareholder interests, industry standards and relevant Indian corporate regulations, to ensure that the interests of executives are aligned with the business strategy and risk tolerance, objectives, values and longterm interests of the Company and consistent with the "pay-for- performance" principle and to ensure that remuneration to executives of the Company involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the Company and its goals.
The said Policy was last revised by the Board of Directors of your Company at its meeting held on June 5, 2024 and is available on your Company’s website at www.srei.com.
WHISTLE BLOWER POLICY (VIGIL MECHANISM)
Your Company has formulated a codified Whistle Blower Policy incorporating the provisions relating to Vigil Mechanism in terms of Section 177 ofthe Companies Act, 2013 and the Scale Based Regulation (SBR): A Revised Regulatory Framework for NBFCs’ dated October 22, 2021 issued by the Reserve Bank of India (‘SBR’), to formulate a whistle
blower mechanism for directors and employees to report genuine concerns Your Company is committed to adhere to highest possible standards of ethical, moral and legal business conduct and to open communication and to provide necessary safeguards for protection of employees from reprisals or victimization, for whistle blowing in good faith.
The said Policy as approved by the Board is available on your Company’s website at https://www.srei.com/sifl-corporate-policies/Whistle_ Blower_Policy.pdf.
A Whistle blower committee is in place that reviews all matters and guides the management to implement the relevant guidelines in true spiritand keepavigil.
Further, no complaints were reported under the Vigil Mechanism during the Financial Year 2023-24.
POLICY AGAINST SEXUAL AND WORKPLACE HARASSMENT
Your Company is committed to provide and promote a safe, healthy and congenial atmosphere irrespective of gender, caste, creed or social class of the employees. Your Company in its endeavour to provide a safe and healthy work environment for all its employees has developed a policy to ensure zero tolerance towards verbal, physical, psychological conduct of a sexual nature by any employee or stakeholder that directly or indirectly harasses, disrupts or interferes with another employee’s work performance or creates an intimidating, offensive or hostile environment such that each employee can realize his/her maximum potential.
Your Company has put in place a ‘Policy on Prevention of Sexual Harassment’ as per The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Policy is meant to sensitize the employees about their fundamental right to have safe and healthy environment at workplace. As per the Policy, any employee may report his/her complaint to the Internal Complaints Committee constituted forthis purpose. The said Policy is available on your Company’s website at https://www.srei.com/sifl-corporate-policies/ Policy_on_Prevention_of_Sexual_Harassment.pdf.
Your Company affirms that during the year under review adequate access was provided to any complainant who wished to register a complaint under the Policy and that your Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
During the year, your Company has not received any complaint on sexual harassment from any of the employees of your Company.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Your Company is exempted from the applicability ofthe provisions of Section 186 of the Companies Act, 2013 read with Rule 11 of the Companies (Meetings of Board and its Powers) Rules, 2014 as your Company is engaged in the business of financing of companies or of providing infrastructural facilities.
Details of the investments made by your Company are given in Note No. 5 in the Notes to accounts forming part of the audited (standalone) financial statements for the Financial Year ended March 31, 2024.
ANNUAL RETURN
Pursuant to Section 92(3) read with Section 134(3)(a) ofthe Companies Act, 2013, the Annual Return of your Company is available at www.srei.com.
PARTICULARS OF CONTRACTS/ARRANGEMENTS WITH RELATED PARTIES
All the related party transactions of your Company are entered in the ordinary course of business and are on arm’s length basis and are in compliance with the applicable provisions of the Companies Act, 2013. There are no materially significant transactions entered into by your Company with Promoters, Directors or Key Managerial Personnel (KMPs), which have potential conflict with the interest of your Company at large. Your Company has not entered into any material related party transactions with any of its related parties during the Financial Year 2023-24. Members may refer to the notes to the financial statements for details of related party transactions.
Since all related party transactions entered into by your Company were in the ordinary course of business and were on an arm’s length basis, Form AOC-2 is not applicable to your Company. The related party transactions are entered into based on considerations of various business exigencies, such as synergy in operations, sectorial specialisation and your Company’s long-term strategy for sectorial investments, optimisation of market share, profitability, legal requirements, liquidity and capital resources of subsidiaries.
In terms of Section 177 of the Companies Act, 2013 your Company obtained approval of the Audit Committee for entering into any transaction with related parties as applicable. A statement of all related party transactions is presented before the Audit Committee on a quarterly basis, specifying the nature, value, terms and conditions of the transactions.
A Related Party Policy has been formulated by your Company for determining the materiality of transactions with related parties and dealings with them. The said Policy is available on your Companys website at https://www.srei.com/ sifl-corporatepolicies/Related_Party_ Transactions_(RPTs)_Policy.pdf.
PARTICULARS OF EMPLOYEES
The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended by the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 forms part of this Report.
However, as per first proviso to Section 136(1) of the Act and second proviso of Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Report and Financial Statements are being sent to the Members of your Company excluding the said statement. Any Member interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered Office of your Company.
PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTFLOW
Your Company has no activity relating to Conservation of Energy and Technology Absorption as stipulated in Rule 8(3) of Companies (Accounts) Rules, 2014. However, your Company uses information technology extensively in its operations and also continues its endeavour to improve energy conservation and utilisation, safety and environment.
During the year under review, the total foreign exchange earnings and expenditure of your Company was ? Nil and ? Nil, respectively (previous year? Nil and ? Nil, respectively).
CREDIT RATINGS
Credit rating agencies have taken cognizance of various factors, mainly
continuing delays in debt servicing, significant losses incurred, cash flow mismatch and erosion of net worth of the Company etc. and hence Brickwork Ratings India Pvt. Ltd. has reaffirmed the rating assigned to Perpetual Debt Instrument (PDI) of your Company to "BWR D Reaffirmed Issuer not cooperating" on June 13, 2022.
DETAILS OF TRANSFER OF UNCLAIMED AMOUNTS AND SHARES TO THE INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
As per Section 124(5) of the Companies Act, 2013, a Company is required to transfer the amount lying in the unpaid dividend account, for 7 years, to the Investor Education Protection Fund ("IEPF"). However, pursuant to the Order dated October 8, 2021 passed by the Hon’ble NCLT, Kolkata, CIRP had been initiated for your Company and in adherance with the General Circular No. 08/2020 issued by the Ministry of Corporate Affairs (MCA) dated March 6, 2020 captioned "Filing of forms in the Registry (MCA-21) by the Insolvency Professional (Interim Resolution Professional (IRP) or Resolution Professional (RP) or Liquidator) appointed under Insolvency Bankruptcy Code, 2016 (IBC, 2016)" which states that in respect of companies which are marked under CIRP in the Registry, Annual Return (e-form No.MGT-7) and Financial Statement (e-form AOC-4) and other documents under the provisions of the Act, in accordance with directions issued by the NCLT/NCLAT/Courts, shall be filed as attachments with e-form GNL-2 against the payment of one time normal fee only, till such time the Company remains under CIRP, the Company had filed IEPF-1, IEPF-2 and IEPF-4, as an attachment of eform GNL-2. However, since the GNL-2 form is not linked with IEPF-1, IEPF-2 and IEPF-4, the Company was unable to generate the individual SRN’s for payment to IEPF authorities. Due to said technical difficulty the Company was unable to transfer the unpaid and unclaimed dividend amount pertaining to the Financial Year 2014-15 and 2015-16 under the provisions of Section 125 & other applicable provisions of the Act. The Company had approached the Registrar of Companies and IEPF for their guidance.
Further, the Hon’ble NCLT vide its Order dated August 11, 2023 had approved the Resolution Plan submitted by National Asset Reconstruction Company Limited (NARCL) with respect to the Corporate Insolvency Resolution Process of the Company under Section 31 of the Code, upon the approval of the Order the CIRP against the Company ended. The Company once again re-initiated the filing of the independent IEPF eforms and amounts pertaining to the Financial Year 2014-15 i.e. ? 4,84,877/- and 2015-16 i.e. ? 4,88,973.50/- respectively, were transferred to the designated bank account of IEPF authorities. A total 1,15,350 number of shares pertaning to the Financial Year 2014-15 were also transferred to the IEPF.
Please note that the Company was unable to transfer the shares pertaining to the Financial Year 2015-16, as on the date of the transfer of the said shares to IEPF, the shares were cancelled/extinguished, i.e. the shares of the existing shareholders were nullified pursuant to the implementation of the Approved Resolution Plan. Post which the shares were allotted to the Resolution Applicants, AFC’s and ESOPTrust.
AUDIT COMMITTEE
The Audit Committee of your Company has been constituted in line with the provisions of Section 177 of the Companies Act, 2013. The Committee was re-constituted bythe Board of Directors ofyour Company attheir meeting held on February 26, 2024 and was further re-constituted on May 28, 2024. The Audit Committee presently comprises of Mr. N. Sivaraman as the Chairman and Mr. Sunil Srivastav, Ms. Anuradha Mitra and Mr. Avinash Kulkarni as its members.
Mr. Manoj Kumar, Company Secretary & CCO of your Company acts as the Secretary to the Audit Committee. The Terms of Reference of the Audit Committee has been provided in the Corporate Governance Section forming partofthis Report.
1 (one) meeting of the Audit Committee was held on June 5, 2024.
Further, in case of exigencies or urgency of matters, resolutions are passed by circulation.
During the year under review, there were no such instances wherein the Board had not accepted any recommendation of the Audit Committee.
AUDITORS
At the 38th AGM held on September 30, 2023, S. K. Agrawal and Co., Chartered Accountants LLP, having firm Registration No. 306033E/E300272 allotted by the Institute of Chartered Accountants of India (ICAI), were appointed as Statutory Auditors of your Company to hold office for a term of 1 (One) year from the conclusion of 38th AGM till the conclusion of the 39th AGM of your Company.
Hence, the current Statutory Auditors S. K. Agrawal and Co., Chartered Accountants LLP, having firm Registration No. 306033E/E300272 shall cease to hold office with the conclusion of the ensuing AGM. However, since S. K. Agrawal and Co., Chartered Accountants LLP are eligible they are being recommended for appointment as the Statutory Auditors of your Company from the conclusion of 39th AGM till the conclusion of 41st AGM.
Members are requested to consider their appointment as Statutory Auditors of your Company to hold office from the conclusion of 39th AGM until the conclusion of 41st AGM of the Company by way of passing of an ordinary resolution.
S. K. Agrawal and Co., Chartered Accountants LLP have confirmed their eligibility, qualifications and other requirements of the Auditors as specified in the Companies Act, 2013 and a certificate to this effect has also been furnished by them along with their consent to hold office as the Statutory Auditors of your Company. Your Company has received a confirmation from S. K. Agrawal and Co., Chartered Accountants LLP to the effect that their appointment as the Statutory Auditors of your Company, if made, would be within the limit prescribed under Section 141 of the Companies Act, 2013 and further that they are not disqualified to be appointed as the Statutory Auditors in terms of Sections 139 and 141 of the Act. The proposed Statutory Auditors hold a valid peer review certificate.
AUDITORS REPORT
The Board of Directors of the Company, at its meeting held on June 05, 2024 thereafter adjourned and held on June 06, 2024 have inter-alia, considered and taken on record the Ind AS Audited Financial Results (Standalone & Consolidated) of your Company for Financial Year ended March 31, 2024, in compliance with Section 129 of the Companies Act, 2013 and the Ind AS as per the provisions of the Companies (Indian Accounting Standards) Rules, 2015.
The Report of the Statutory Auditors to the Members for the Financial Year under review contains Qualified opinion Report on the Audited Consolidated Financial Statements and unmodified Report on Standalone Financial Statements of the Company for the Financial Year ended March 31,2024. Further, the Statutory Auditors have drawn attention to few matters in their Auditors’ Report on the Audited Standalone and Consolidated Financial Statements of the Company for the Financial Year ended March 31, 2024. The same forms a part of the Statutory Auditors’ Report and are given in the notes to accounts which are selfexplanatory, the same is not repeated here for the sake of brevity.
CORPORATE POLICIES
The details of Policies adopted by your Company along with salient features are provided as annexure to this Report and forms part of this Annual Report.
MEETINGS OF THE BOARD
The Board meets at regular intervals to discuss and decide on policy and strategy apart from other Board business. However, in case of a special and urgent business need, the Board’s approval is taken by passing resolutions through circulation, as permitted by law, which are confirmed in the subsequent Board meeting.
The Board of the Company was reconstituted on February 26, 2024 and held its first meeting after its re-constitution on February 26, 2024. The maximum time gap between any two consecutive meetings did not exceed 120 (one hundred twenty) days. Further, two Board Meetings were held on April 05, 2024 and June 05 2024, which was adjourned and held on June 06, 2024.
DIRECTORS
During the year under review, the Board of your Company was reconstituted in terms of the approved resolution plan by appointment of Mr. Avinash Kulkarni (DIN: 02982164) and Mr. P. Santhosh (DIN: 08515964) as Nominee Directors and Mr. N. Sivaraman (DIN: 00001747), Independent Director.
Mr. Sunil Srivastav (DIN: 00237561) and Ms. Anuradha Mitra (DIN: 00123320) were appointed as Independent Director(s) of your Company to hold office for a period of 5 (five) consecutive years from the date of the Extra-ordinary General Meeting (EGM) of your Company held on May 07, 2024. In this regard, your Company issued formal letter(s) of appointment to the said Directors stating inter alia the terms and conditions of their appointment.
Based on recommendation of the Nomination and Remuneration Committee, the Board of Directors ofyour Company further appointed Mr. Hardayal Prasad (DIN: 08024303) as a Non-Executive and Non-Independent Director ofyour Company liable to retire by rotation to hold office as such upto the date of 39th (Thirty Ninth) Annual General Meeting (AGM) of your Company.
In accordance with the provisions of Sections 152,196,197,198, 203 read with Schedule V and all other applicable provisions of the Companies Act, 2013 and the relevant Rules and your Company’s Articles of Association, Mr. Hardayal Prasad (DIN: 08024303) has been appointed as the Managing Director & CEO of your Company for a period of 3 (Three) years with effect from 15th April, 2024 at the Extra Ordinary General Meeting of your Company held on May 7, 2024.
Mr. Hardayal Prasad (DIN: 08024303) retires by rotation at the ensuing AGM and being eligible, offers himself for re-appointment. The Board of Directors of your Company recommends his re-appointment as Director of your Company.
Your Company has received declaration from each of the Independent Directors under Section 149(7) of the Companies Act, 2013 that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and that he/she is not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact his/her ability to discharge his/her duties with an objective independent judgment and without any external influence. All requisite declarations were placed before the Board.
Further, pursuant to Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2019 ("the Rules") effective from December 01,2019, the Independent Directors ofyour Company have
registered themselves with the Databank maintained by the Indian Institute of Corporate Affairs (IICA) and their names presently stands included in the Databank of IICA. A declaration to this effect has been obtained from all the Independent Directors and the same was presented before the Board of Directors. Further, the Independent Directors of your Company have also furnished declarations w.r.t. Online Proficiency Self-Assessment Test for Independent Director’s Databank conducted by the IICA. Based on the declarations received, it was noted that Ms. Anuradha Mitra and Mr. N. Sivaraman are exempted from undertaking the Online Proficiency Self-Assessment Test. Further, Mr. Sunil Srivastav has successfully qualified the test.
Further, based on the core skills/expertise/competencies of the present Board Members as reviewed by the Nomination and Remuneration Committee and the Board, the Board of Directors of your Company is of the opinion that the Independent Directors of your Company possess the requisite expertise and experience (including proficiency) and are the persons of high integrity and repute. They fulfil the conditions specified in the Companies Act, 2013 and the Rules made thereunder and are independent ofthe management.
SIGNIFICANT AND MATERIAL EVENTS AND ORDERS PASSED BY THE REGULATORS/COURTS/TRIBUNALS
I. The Hon’ble NCLT vide its Order dated August 11, 2023 had approved the Resolution Plan submitted by National Asset Reconstruction Company Limited (NARCL) with respect to the Corporate Insolvency Resolution Process ofthe Companies under Section 31 ofthe Code. With the passing ofthe order by the Hon’ble NCLT, the Corporate Insolvency Resolution Process againstyour Company ended.
II. Receipt of Notice for Inspection U/S 206 of the Companies Act, 2013.
The Company is in receipt of a Notice of MCA inspection u/s 206 ofthe Companies Act, 2013 vide letter Ref. No. File No. 1/60/2018/ CL-II(ER) dated April 18, 2023.
The Company has submitted its reply.
III. The Company has received a letter dated June 15, 2023, from Serious Fraud Investigation officer (SFIO) w.r.t., investigation into the affairs of Gujarat NRE Coke Limited u/s 212 of the Companies Act, 2013 calling for information u/s 217(2).
The Company has submitted its reply.
INSTANCES OF FRAUD DETECTED IN THE MATERIAL WHOLLY OWNED SUBSIDIARY COMPANY
The Administrator had appointed BDO India LLP (BDO/Transaction Auditor) to review transactions of the Company and its wholly owned subsidiary, qualified under Sections 43 to 51, and Sections 65 and 66 of the Code. Accordingly, the Administrator of the Company received a report from the Transaction Auditor, indicating thatthere are certain transactions which are allegedly fraudulent in nature as per Section 66 ofthe Code.
On the basis of the findings and observations of the Transaction Auditor necessary reports and intimation with the Reserve Bank of India and the Stock Exchanges were filed. Accordingly, applications have also been filed before the Hon’ble National Company LawTribunal, Kolkata Bench in respect ofthe alleged fraud.
Re-statement of accounts of subsidiary
SIFL has not received Board approved financial results of 01 subsidiary,
viz. Trinity Alternative Investment Managers Limited and 02 subsidiaries of Trinity (step down subsidiaries of SIFL), viz. Hyderabad Information Technology Venture Enterprises Limited and Cyberabad Trustee Company Private Limited for the quarters ended June 30, 2022, September 30, 2022, December 31,2022, March 31, 2023, year ended March 31, 2023 and for the Year ended March 31, 2024 despite written request and follow ups and accordingly, the financial statements of these companies have not been considered for consolidation as on March 31, 2023 and March 31, 2024. Accordingly, the consolidated financial statements for the year ended March 31,2024 are not comparable with the consolidated financial statements for the year ended March 31,2023. We are unable to comment on the possible impact of the same on the consolidated financial statements for the year ended March 31, 2024 or any other consequences arising out of such non-compliance on the Consolidated Financial Statements.
The audited consolidated financial statements of the Group for the year ended March 31, 2024 contain the unaudited financial statements of 1 subsidiary, viz. Trinity and two subsidiaries of Trinity (step down subsidiaries of SIFL), viz. Hyderabad Information Technology Venture Enterprises Limited and Cyberabad Trustee Company Private Limited since the report and audited accounts were not received within the annual account approval date of SIFL. The management of these subsidiaries had not provided audited financial statements of these aforesaid companies despite many reminders and accordingly, the financial statements of these subsidiaries were considered for consolidation based on the approved and certified financial statements provided by the management of the respective companies.
SECRETARIAL STANDARDS
The Company is in compliance with SS-1 i.e. Secretarial Standard on Meetings ofthe Board of Directors and SS-2 i.e. Secretarial Standard on General Meetings issued by the Institute of Company Secretaries of India.
GREEN INITIATIVE
Section 136 of the Act and the Rules framed thereunder allows the Company to send its Financial Statements by electronic mode to such Members whose shareholding is in dematerialized format and whose email addresses are registered with the Depositories for communication purposes. Members who have not updated their email address with the Depositories are requested to register the updated email ID. In compliance with the circulars issued by the Ministry of Corporate Affairs in this regard, the Notice of the AGM including the Annual Report of the Company is being sent only through electronic mode to all the Members whose e-mail addresses are registered with the Depositories. A copy of this Annual Report is also available on the website of the Company, www.srei.com.
BOARD S RESPONSIBILITY STATEMENT
In terms of provisions of Section 134(5) ofthe Companies Act, 2013 (Act), your Board of Directors to the best of their knowledge and ability confirm that:
(i) in the preparation of the annual accounts for the financial year ended March 31,2024, the applicable accounting standards have been followed along with proper explanation relating to material departures;
(ii) they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the financial year and of the profit and loss of your Company for the year;
(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities;
(iv) they have prepared the annual accounts for the financial year ended March 31, 2024 on a going concern basis;
(v) they have devised proper systems to ensure compliance with the provisions of all applicable laws to your Company and the systems are adequate and operating effectively.
Your Company has complied with all applicable provisions of the Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) on Board Meetings and General Meetings.
GENERAL DISCLOSURES
Your Board states that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:
> Issue of equity shares with differential rights as to dividend, voting or otherwise;
> Issue of sweat equity shares;
> Your Company does not have any scheme of provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees;
> There was no revision in the Financial Statements;
> There was no change in the nature of business;
> Maintenance of Cost records is not applicable to your Company. ACKNOWLEDGEMENT
Your Board would like to express its grateful appreciation for the excellent support and co-operation received from the Financial Institutions, Banks, Central & State Government Authorities, RBI, SEBI, MCA, Stock Exchanges, Depositories, Credit Rating Agencies, Customers, Vendors, Suppliers, Business Associates, Members, Debenture holders, Debenture Trustees and other Stakeholders during the year under review.
Your Board also place on record its deep appreciation forthe valuable contribution of the employees for the progress of your Company and look forward to their continued co-operation in realisation of the corporate goals intheyears ahead.
On behalf of the Board of Directors
Sd/- |
Mr. N. Sivaraman |
Chairman |
(DIN: 00001747) |
Place: Kolkata |
Date: August 7,2024 |
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