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Year End :2018-03 

The Directors are pleased to present the Thirty-Third Annual Report together with the Audited Accounts of your Company for the financial year ended March 31, 2018. The summarised consolidated and standalone financial performance of your Company is as follows:

FINANCIAL SUMMARY (Rs. in Lacs)

Consolidated

Standalone

Year ended 31st March, 2018

Year ended 31st March, 2017

Year ended 31st March, 2018

Year ended 31st March, 2017

Total Income

5,26,187

4,66,576

1,77,362

2,29,962

Total Expenses (including depreciation etc.)

4,22,820

3,54,921

1,49,654

1,60,370

Profit before bad debts and advances written off (net) / Provisions, Contingencies, Diminutions & Tax

1,03,367

1,11,655

27,708

69,592

Bad Debts and Advances written off (net) / Provisions, Contingencies, Diminutions

44,190

77,207

9,495

54,756

Profit Before Exceptional Items & Tax

59,156

34,448

18,213

14,836

Adjustment on disposal / cessation of Subsidiaries and Step-down Subsidiaries

33

1,561

-

-

Current Tax

15,496

10,768

7,226

6,582

Mat Credit entitlement (including in respect of earlier years)

(2,895)

(5,715)

-

(1,112)

Deferred Tax

6,615

6,680

(1360)

(241)

Profit After Tax but before Share of Loss of Associate and Minority Interest

39,973

24,276

12,347

9,607

Share of Loss / (Profit) of Associate

1,547

(5)

-

-

Minority Interest

(29)

(55)

-

-

Profit After Tax after adjustment for Minority Interest

38,455

24,336

12,347

9,607

Surplus brought forward from Previous Year

31,513

28,649

20,679

27,120

Profit Available For Appropriation

69,968

52,985

33,026

36,727

Paid up Equity Share Capital

50,324

50,324

50,324

50,324

Amount transferred to Reserves

17,030

20,358

8,761

15,218

Reserves and Surplus

4,76,509

4,41,550

2,45,877

2,36,174

Earning Per Share (Rs.)

7.64

4.84

2.45

1.91

Note: The above figures are extracted from the standalone and consolidated financial statements for the financial year ended on March 31, 2018

OPERATIONAL REVIEW

Your Company is one of the leading private sector infrastructure financing institutions in India. Some of the key highlights of your Company’s performance during the year under review are:

- The gross profit (before bad debts and advances written off (net) / Provisions, Contingencies, Diminutions & Tax) is Rs. 27,708 Lacs as against Rs. 69,592 Lacs in the last year.

- Profit before taxation is Rs. 18,213 Lacs as against Rs. 14,836 Lacs in the last year.

- Net profit after taxation is Rs. 12,347 Lacs as against Rs. 9,607 Lacs in the last year.

- The total assets under management of the Srei Group is Rs. 47,05,035 Lacs as against Rs. 37,41,290 Lacs in the last year.

The Capital to Risk Assets Ratio (CRAR) of your Company stood at 17.60 per cent as on March 31, 2018, well above the regulatory minimum level of 15 per cent prescribed by the Reserve Bank of India for systemically important non-deposit taking NBFCs (NBFCs-ND-SI). Of this, the Ter I CRAR was 13.71 per cent.

The Financial Statements of your Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 211(3C) of the Companies Act, 1956 (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014) and the relevant provisions of the Companies Act, 1956 / Companies Act, 2013, as applicable and Regulation 48 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as ‘SEBI Listing Regulations, 2015’). 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 ongoing basis. Your Company discloses standalone and consolidated unaudited financial results on a quarterly basis, which are subjected to limited review, and standalone and consolidated audited financial results on an annual basis.

Your Company has complied with all the norms prescribed by the Reserve Bank of India (RBI) including the Fair practices, Anti Money Laundering and Know Your Customer (KYC) guidelines.

CLASSIFICATION AS INFRASTRUCTURE FINANCE COMPANY (IFC) AND PUBLIC FINANCIAL INSTITUTION (PFI)

The Reserve Bank of India (RBI) has classified your Company as an ‘Infrastructure Finance Company’ within the overall classification of ‘Non-Banking Finance Company’. Your Company is also notified as a Public Financial Institution (PFI) by the Ministry of Corporate Affairs (MCA), Government of India.

DIVIDEND

In accordance with Regulation 43A of SEBI Listing Regulations, 2015, a Dividend Distribution Policy is adopted by your Company, covering, inter alia, the parameters for declaration of dividend, utilization of retained earnings, procedure for dividend declaration etc. The Dividend Distribution Policy is available on your Company’s website at https://www.srei.com/investor/corporate-policies/pdf/dividend-distribution-policy. pdf.

Your Company follows a consistent dividend policy that balances the dual objectives of appropriately rewarding Members through dividends and retaining capital, in order to maintain a healthy capital adequacy ratio to support long term growth of your Company. Consistent with this Policy, your Board has recommended a dividend of Re. 0.50 per Equity share (5 per cent) for the financial year 2017-18 to the Members of your Company. The proposal is subject to the approval of the Members at the 33rd Annual General Meeting (AGM) of your Company scheduled to be held on July 21, 2018. The dividend together with the dividend distribution tax will entail a cash outflow of Rs. 3,032 Lacs (previous year Rs. 3,028 Lacs).

The dividend payout for the year under review is in accordance with your Company’s policy to pay sustainable dividend linked to long-term growth objectives of your Company to be met by internal cash accruals.

PUBLIC DEPOSITS

Your Company decided not to accept any further public deposits or renew such maturing deposits in any manner w.e.f. April 20, 2010 and the entire amount of outstanding public deposits as on April 19, 2010 together with interest promised to the depositors, has been kept in an Escrow Account with a scheduled commercial bank for the purpose of making payment to the depositors as and when they raise the claim. Despite sustained efforts to identify and repay unclaimed deposits, the amount payable to the depositors as on March 31, 2018 is Rs. 1,33,191.35.

Being a 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.

PUBLIC ISSUE OF SECURED AND UNSECURED SUBORDINATED REDEEMABLE NON-CONVERTIBLE DEBENTURES

During the year under review, your Company accessed retail public markets through its public issue of Secured and Unsecured Subordinated Redeemable NonConvertible Debentures (the “Debentures”) of face value of Rs. 1,000 each which mobilized Rs. 336.78 Crores, as per the details given hereunder:

Date of opening of Issue

Base Issue Size (Rs. in Crores)

Total Issue Size including Green Shoe Option (Rs. in Crores)

Maturity Period

Allotment Date

Amount (Rs. in Crores)

09.02.2018*

200

Upto 2000

400 days / 3 years / 5 years / 10 years

16.03.2018

336.78

*Issue w.r.t. Tranche 1 Prospectus dated February 05, 2018 read together with Shelf Prospectus dated February 05, 2018.

As on March 31, 2018, the total shareholding of the Promoters’ Group of your Company is 60.7984 per cent and none of the Promoter / Promoters’ Group shareholding is under pledge.

Debenture Trustee Agreement(s) for the aforesaid issue was duly executed with Axis Trustee Services Limited. The said Debentures are listed on the Debt Segment of BSE Limited (BSE) and National Stock Exchange of India Limited (NSE). The entire proceeds have been utilised for the purpose of lending / repayment of existing loans and for general corporate purposes.

The public issue of the said Debentures has not only facilitated diversification of your Company’s sources for mobilising long term resources but has also provided the retail Investors an opportunity to participate in India’s infrastructure development and progress. Through the public issue launched in FY 2017-18, your Company has acquired nearly 16,000 retail investors. Along with previous issues, your Company now enjoys a retail base of nearly 86,000 investors. The various communication efforts of your Company surrounding the Debentures played a meaningful role in enhancing your Company’s brand image amongst relevant constituencies.

PROMOTERS’ GROUP SHAREHOLDING

As on March 31, 2018, the total shareholding of the Promoters’ Group of your Company is 60.7984 per cent and none of the Promoter / Promoters’ Group shareholding is under pledge. Further, in compliance with Regulation 31(2) of SEBI Listing Regulations, 2015, the entire shareholding of promoter(s) and promoter group is in dematerialised form.

WHITE LABEL ATMs

The RBI has granted licences to private non-bank companies to set up, own and operate their own brand of ATMs in the Country, known as White Label ATMs (WLAs). Your Company was issued Certificate of Authorisation (CoA) from RBI under the Payment and Settlement Systems Act, 2007 for setting up, owning and operation of WLAs in the year 2014.

Your Company has decommissioned the existing WLAs and has accordingly communicated to the Department of Payment and Settlement System, Reserve Bank of India (RBI) that it would like to surrender the CoA.

ADOPTION OF NEW ARTICLES OF ASSOCIATION

The Ministry of Corporate Affairs (MCA) has notified and brought into force most of the Sections and corresponding Rules of the Companies Act, 2013 (‘the Act’) which replaces the provisions of the Companies Act, 1956. In order to bring the Articles of Association (AOA) of your Company in lines with the provisions of the Act, your Company recommended that the Members adopt a new set of AOA in substitution of and to the complete exclusion of the existing AOA. The resolution to adopt the new AOA was passed by requisite majority by the Members of your Company through postal ballot which concluded on December 10, 2017.

INTRODUCTION OF FUTURES & OPTIONS (F&O) CONTRACTS

The National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) have vide Circular Ref. No. 64 / 2017 dated 23rd June, 2017 and Notice No. 20170627-5 dated 27th June, 2017, respectively, included the securities of your Company under the symbol SREINFRA and scrip code 523756 under Futures & Options (F&O) Contracts for trading on the Exchanges w.e.f. 30th June, 2017.

VOLUNTARY DELISTING OF EQUITY SHARES OF THE COMPANY FROM THE CALCUTTA STOCK EXCHANGE LIMITED (CSE)

Your Company’s Equity Shares are presently listed on the National Stock Exchange of India Limited (NSE), BSE Limited (BSE) and The Calcutta Stock Exchange Limited (CSE). Since there was no trading in the equity shares of your Company at CSE from considerable time, your Company has decided to voluntarily delist the equity shares from CSE in terms of the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 (“Delisting Regulations”).

SREI WEBSITE

The website of your Company www.srei. com has been developed on the new responsive technology based platform known as ‘Drupal’, 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, employees and other stakeholders. The website of your Company also has ‘Live Stock Ticker’ with dynamic display of current stock prices in BSE and NSE with respective market caps, along with a link to your Company’s YouTube channel. The site carries a comprehensive database of information of interest to the investors including the financial results of your Company, dividend declared, unclaimed dividend list, shareholding pattern, any price sensitive information disclosed to the regulatory authorities from time to time, analysts’ reports, investor presentations, standard downloadable forms, media coverage, corporate profile and business activities of your Company and the services rendered by your Company to its investors. Some useful features like Online Resume Management System to pull the best talents and Online NCD Application Form download system as a part of fund raising initiatives are functional in the system. An auto generate functionality with unique form ID for Non-Convertible Debenture (NCD) form was created in 2017. Your Company’s integration of the customer portal in the corporate website still enables customers to access their account and download the essential documents directly from the website. By introducing the download facility of MySREIApp mobile application from the website, your Company extends the digital services and creates an ‘anywhere anytime’ experience like never before. The multiplatform mobile app empowers customers to raise service request, contact relationship managers, send request for new finance etc. The links to different social media i.e. Facebook, YouTube, Twitter, LinkedIn is embedded in the home page of the website to get access of the key initiatives and achievements of your Company.

SUBSIDIARY COMPANIES

The Statement in Form AOC-1 containing the salient features of the financial statement of your Company’s subsidiaries and associates pursuant to first proviso to Section 129(3) of the Companies Act, 2013 (Act) read with Rule 5 of the Companies (Accounts) Rules, 2014, forms part of the Annual Report. Further, in line with Section 129(3) of the Act read with the aforesaid Rules, SEBI Listing Regulations, 2015 and in accordance with the Accounting Standard 21 (AS-21), Consolidated Financial Statements prepared by your Company includes the financial information of its subsidiary and associate companies.

A Report on the performance and financial position of each of the Subsidiaries and Associate Companies included in the Consolidated Financial Statements prepared by your Company as per Rule 8(1) of the Companies (Accounts) Rules, 2014, forms part of the annual accounts of each of the Subsidiary and Associate Companies which have been placed on the website of your Company www.srei. com and also forms part of Form AOC-

1 pursuant to Rule 5 of the Companies (Accounts) Rules, 2014, which is set out as an annexure to the Directors’ Report and forms part of this Annual Report. Members interested in obtaining a copy of the annual accounts of the Subsidiaries and Associate Companies may write to the Company Secretary at your Company’s Registered Office. The said Report is not repeated here for the sake of brevity.

The names of companies which have become or ceased to be subsidiaries, joint ventures or associate companies during the year are given below:

Status

Bharat Road Network Limited

Ceased to be an associate w.e.f. 14.09.2017.

Srei Infrastructure Advisors Limited

Ceased to be a wholly owned subsidiary w.e.f. 12.03.2018.

Bengal Srei Infrastructure Development Limited

Ceased to be a step down subsidiary and became a subsidiary w.e.f. 12.03.2018.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION

There is no such material change and commitment affecting the financial position of your Company which have occurred between the end of the financial year of your Company to which the financial statements relate and the date of the Report.

POLICY FOR DETERMINING ‘MATERIAL’ SUBSIDIARIES

As on March 31, 2018, Srei Equipment Finance Limited (SEFL), a wholly owned subsidiary of your Company is a listed ‘material’ subsidiary of your Company with its, debt securities being listed on the Stock Exchanges in India. However, your Company does not have any material unlisted subsidiary. Your Company has formulated a Policy for determining Material Subsidiaries in accordance with SEBI Listing Regulations, 2015. The said Policy was last revised on October 26, 2017 and is available on your Company’s website at https://www.srei.com/investor/ corporate-policies/pdf/policy-on-determining-material-subsidiaries.pdf.

KEY MANAGERIAL PERSONNEL (KMPs)

The following directors / executives of your Company are whole-time Key Managerial Personnel (KMPs) as on March 31, 2018 in accordance with the provisions of Section 203 of the Companies Act, 2013 -

Name

Designation

Mr. Hemant

Chairman & Managing

Kanoria

Director

Mr. Sameer

Chief Executive Officer

Sawhney

Mr. Sandeep

Company Secretary

Lakhotia

During the year, Mr. Kishore Lodha, Key Managerial Personnel (KMP) of your Company resigned as Chief Financial Officer (CFO) in order to pursue other career opportunities. Mr. Lodha has since been relieved from the services of your Company as per Company’s Policy. Further, pursuant to the provisions of Section 2(51) of the Companies Act, 2013 (‘Act’) as amended by the Companies (Amendment) Act, 2017 read with Section 203 of the Act and rules made thereunder, the Board of Directors of your Company at their meeting held on April 28, 2018, designated the following Executives of your Company as wholetime Key Managerial Personnel (KMPs) of your Company w.e.f. April 28, 2018, in addition to the existing KMPs:

Name

Designation

Mr. Sanjeev

Chief Strategy

Sancheti

Officer

Mr.

Group Chief People

Chandrasekhar

Officer

Mukherjee

Mr. Debashis

Internal Auditor

Ghosh

Mr. Samir

Senior Vice

Kumar Kejriwal

President

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 read with Regulation 19 of SEBI Listing Regulations, 2015. The Board of Directors, at its meeting held on July 22, 2017, reconstituted the Nomination and Remuneration Committee, consequent to resignation of Mr. Salil K. Gupta, Chief Mentor and Independent Director, and designated Mr. Shyamalendu Chatterjee, Independent Director, as the Chairman of the Committee. Further, Ms. Tamali Sengupta, Independent Director, was inducted as a Member of the Committee. The Board of Directors, at its meeting held on October 26, 2017, further reconstituted the Nomination and Remuneration Committee consequent to resignation of Ms. Tamali Sengupta, Independent Director and induction of Mr. S. Rajagopal, Independent Director, as a Member of the Committee. The Committee comprises Mr. Shyamalendu Chatterjee, Mr. S. Rajagopal, Independent Directors and Mr. Sunil Kanoria, Non-Executive Director. Mr. Shyamalendu Chatterjee acts as the Chairman of the Nomination and Remuneration Committee. Mr. Sandeep Lakhotia, Company Secretary 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 of this Report.

3 (Three) meetings of the Nomination and Remuneration Committee of your Company were held during the year 2017-18 on May 08, 2017, October 25, 2017 and January 17, 2018.

The Committee has formulated the Nomination and Remuneration Policy (‘Srei Nomination and Remuneration Policy’) which broadly laid down the various principles of remuneration being support for strategic objectives, transparency, internal & external equity, flexibility, performance-driven remuneration, affordability and sustainability and covers the procedure for selection, appointment and compensation structure of Board members, Key Managerial Personnel (KMPs) and Senior Management Personnel (SMPs) of your Company. The said Policy is available on your Company’s website at https://www.srei. com/investor/corporate-policies/pdf/srei-nomination-and-remuneration-policy. pdf.

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 of the Companies Act, 2013 and Regulation 22 of SEBI Listing Regulations, 2015, in order to encourage Directors and Employees of your Company to escalate to the level of the Audit Committee any issue of concerns impacting and compromising with the interest of your Company and its stakeholders in any way. 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 victimisation, for whistle blowing in good faith. The said Policy is available on your Company’s website at https:// www.srei.com/investor/corporate-policies/pdf/whistle-blower-policy.pdf.

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 Complaint Committee constituted for this purpose. The said Policy is available on your Company’s website at https:// www.srei.com/investor/corporate-policies/pdf/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.

During the year, your Company has not received any complaint on sexual harassment.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Your Company is exempted from the applicability of the provisions of Section 186 of the Companies Act, 2013 read with Rule 11 of the Companies (Meetings of Board and its Powers) Rules as your Company is engaged in the business of financing of companies or of providing infrastructural facilities.

PERFORMANCE EVALUATION

The Nomination and Remuneration Committee (NRC) of your Company has formulated and laid down criteria for Performance Evaluation of the Board (including Committees) and every Director (including Independent Directors and Chairman & Managing Director) pursuant to provisions of Section 134, Section 149 read with Code of Independent Directors (Schedule IV) and Section 178 of the Companies Act, 2013 and Regulation 19(4) read with Part D of Schedule II of SEBI Listing Regulations, 2015 covering inter-alia the following parameters namely:

i) Board Evaluation: degree of fulfillment of key responsibilities; Board culture and dynamics.

ii) Board Committee Evaluation: effectiveness of meetings; Committee dynamics.

iii) Individual Director Evaluation (including IDs): contribution at Board Meetings.

Further, the Chairman and Managing Director is evaluated on key aspects of the role which includes inter-alia effective leadership to the Board and adequate guidance to the CEOs.

During the year under review, the Board carried out annual evaluation of its own performance as well as evaluation of the working of various Board Committees viz. Audit Committee, Stakeholders’ Relationship Committee, Nomination and Remuneration Committee and Corporate Social Responsibility Committee. This exercise was carried out through a structured questionnaire prepared separately for Individual Board Members (including the Chairman) and Board Committees based on the criteria as formulated by the NRC and in context of the Guidance note dated January 05, 2017 issued by SEBI. The said questionnaire was circulated to the Directors in physical mode and the same was also made available to the Directors on their i-Pads under the ‘Diligent Boards’ (Diligent) Application to carry out performance evaluation for the Financial Year 2017-18 on the broad parameters as laid down by the NRC.

Based on these criteria, the performance of the Board, various Board Committees viz. Audit Committee, Stakeholders’ Relationship Committee, Nomination and Remuneration Committee and Corporate Social Responsibility Committee, and Individual Directors (including Independent Directors and Chairman) was evaluated and found to be satisfactory.

During the year under review, the Independent Directors of your Company reviewed the performance of NonIndependent Directors and Chairperson of your Company, taking into account the views of Executive Director and NonExecutive Directors.

Further, the Independent Directors hold unanimous opinion that the NonIndependent Directors as well as the Chairman and Managing Director bring to the Board, abundant knowledge in their respective field and are experts in their areas. Besides, they are insightful, convincing, astute, with a keen sense of observation, mature and have a deep knowledge of your Company.

The Board as a whole is an integrated, balanced and cohesive unit where diverse views are expressed and dialogued when required, with each Director bringing professional domain knowledge to the table. All Directors are participative, interactive and communicative.

The Chairman has abundant knowledge, experience, skills and understanding of the Board’s functioning, possesses a mind for detail, is meticulous to the core and conducts the Meetings with poise and maturity.

The information flow between your Company’s Management and the Board is complete, timely with good quality and sufficient quantity.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS (IDs)

In terms of Regulation 25(7) of SEBI Listing Regulations, 2015, your Company is required to conduct Familiarisation Programme for Independent Directors (IDs) to familiarise them about your Company including nature of industry in which your Company operates, business model of your Company, roles, rights and responsibilities of IDs and any other relevant information. Further, pursuant to Regulation 46 of SEBI Listing Regulations, 2015, your Company is required to disseminate on its website, details of familiarisation programme imparted to IDs including the details of i) number of programmes attended by IDs (during the year and on a cumulative basis till date), ii) number of hours spent by IDs in such programmes (during the year and on a cumulative basis till date), and iii) other relevant details.

3 (Three) such specific familiarisation programmes were conducted on October 26, 2017 and January 17, 2018. As a part of the first programme, presentation on Ind-AS was made to the Independent Directors inter alia covering responsibility and reporting requirements fundamental changes & significant GAAP differences covering new concepts and statements;

key implementation challenges; disclosure requirements etc.

As a part of the second programme, presentation was circulated to the Independent Directors highlighting the key amendments to Secretarial Standards on Meetings of the Board of Directors (SS-1) and on General Meetings (SS-2) issued by The Institute of Company Secretaries of India (ICSI) and effective from October 01, 2017.

As a part of the third programme, presentation was circulated to the Independent Directors highlighting the key amendments proposed under the Companies (Amendment) Act, 2017. Further, actionables arising therefrom was also specifically highlighted to all Directors, including Independent Directors.

In addition to the above, the Board of Directors is encouraged to participate in various training sessions to ensure that the Board members are kept up to date.

At the time of appointment, a new Director is welcomed to the Board of Directors of your Company by sharing an Induction Kit containing inter-alia the Organization Chart, brief profile of all Directors and Key Managerial Personnel (KMPs), Policy Compendium, Investor Presentation, Investor call transcripts amongst others.

Further, the management of your Company makes various presentations to the Independent Directors on an ongoing basis which inter-alia includes Company overview, various business verticals, latest key business highlights, financial statements, evolution as well as business model of the various business of your Company, as part of the familiarisation programme for Independent Directors.

Significant Statutory updates are circulated on a quarterly basis as a part of the agenda of the Board Meetings through which Directors are made aware of the significant new developments and highlights from various regulatory authorities viz. Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Ministry of Corporate Affairs (MCA), etc.

The Company Secretary also regularly apprises the Board about their roles, rights and responsibilities in your Company from time to time as per the requirements of SEBI Listing Regulations, 2015, Companies Act, 2013 read together with the Rules and Schedules thereunder and Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016.

The Board has open channels of communication with executive management which allows free flow of communication among Directors in terms of raising query, seeking clarifications and other related information. Directors are also informed of the various developments in your Company through e-mails, newsletters, internal magazines, etc. The same is made available on their i-Pads as well.

As a part of e-initiatives adopted by your Company, latest news and events including regulatory alerts are made available through a smartphone knowledge application “Srei Chanakyaa”. This app also serves as a means to enhance compliance awareness and contains detailed do’s and don’ts, FAQ’s for Insider Trading, presentations on SEBI Listing Regulations, 2015, NBFC Compliance Dashboard & other relevant matters.

The details of familiarisation programmes imparted to Independent Directors, as required under Regulation 46 of SEBI Listing Regulations, 2015, are available on your Company’s website at https://www.srei.com/investor/corporate-policies/pdf/familiarisation-programme-for-independent-directors.pdf.

EXTRACT OF ANNUAL RETURN

An extract of Annual Return as on the financial year ended on March 31, 2018 in Form No. MGT-9 as required under Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014 is set out as an annexure to the Directors’ Report and forms part of this Annual Report.

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 and SEBI Listing Regulations, 2015. 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 FY 2017-18 without requisite approval of the shareholders. 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, sectoral specialization and your Company’s long-term strategy for sectoral investments, optimization of market share, profitability, legal requirements, liquidity and capital resources of subsidiaries and associates.

In terms of Regulation 23(2) of SEBI Listing Regulations, 2015, your Company obtained prior approval of the Audit Committee for entering into transactions 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 and terms and conditions of the transactions. The statement is supported by the Certificate from the Chief Financial officer (CFO) of your Company.

A Related Party Policy has been devised by your Company for determining the materiality of transactions with related parties and dealings with them. The said Policy is available on your Company’s website at https://www.srei.com/investor/ corporate-policies/pdf/related-party-transactions-policy.pdf.

PARTICULARS OF EMPLOYEES

The prescribed particulars of remuneration of employees pursuant to Section 197(12) read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are set out as annexures to the Directors’ Report and forms part of this Annual Report.

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 Rs. 6,383 Lacs, respectively (previous year Rs. NIL and Rs. 7,921 Lacs, respectively).

AUDIT COMMITTEE

The Audit Committee has been constituted in line with the provisions of Section 177 of the Companies Act, 2013 read with Regulation 18 of SEBI Listing Regulations, 2015. Mr. Salil K. Gupta, Chief Mentor and Independent Director resigned from the Board of Directors of your Company w.e.f. July 22, 2017 and consequently, the Audit Committee of your Company was reconstituted w.e.f. that date. The Audit Committee presently comprises Mr. Shyamalendu Chatterjee, Mr. Srinivasachari Rajagopal, Independent Directors and Mr. Sunil Kanoria, NonExecutive Director. Mr. Shyamalendu Chatterjee, Independent Director of your Company is the Chairman of the Audit Committee.

The Company Secretary 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 part of this Report.

4 (Four) meetings of the Audit Committee were held during the year 2017-18 on May 09, 2017, July 22, 2017, October 26, 2017 and January 17, 2018.

During the year under review, there were no such instances wherein the Board had not accepted the recommendation of the Audit Committee.

AUDITORS

At the 30th Annual General Meeting (AGM) of your Company held on August 01, 2015, Haribhakti & Co. LLP, Chartered Accountants, having registration No. 103523W / W100048 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 5 (Five) years from the conclusion of 30th AGM (subject to ratification of such appointment by the Members at every AGM) till the conclusion of the 35th AGM of your Company. Accordingly, the appointment of Haribhakti & Co. LLP, Chartered Accountants, as Statutory Auditors of your Company, is placed for ratification by the Members. Your Company has received a confirmation from Haribhakti & Co. LLP, Chartered Accountants, to this effect that their appointment, if ratified, would be within the limits prescribed under Section 139 of the Companies Act, 2013 and the rules framed thereunder and in accordance with Section 141 of the Companies Act, 2013. They have also confirmed that they hold a valid peer review certificate as prescribed under Regulation 33(1) (d) of SEBI Listing Regulations, 2015. The Audit Committee and the Board of Directors of your Company recommend ratification of their appointment from the conclusion of this AGM upto the conclusion of the 34th AGM of your Company.

The Auditors’ Report does not contain any qualification, reservation or adverse remark or disclaimer. Further, the Statutory Auditors have not reported any incident of fraud during the year under review to the Audit Committee of your Company.

SECRETARIAL AUDIT REPORT

Your Company appointed Dr. K. R. Chandratre, Practising Company Secretary, holding membership of The Institute of Company Secretaries of India (Membership No. FCS 1370; Certificate of Practice No. 5144) as the Secretarial Auditor of your Company for FY 2017-18 to conduct the Secretarial Audit pursuant to Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

The Secretarial Audit Report confirms that your Company has complied inter alia with all the applicable provisions of the Companies Act, 2013 and the Rules made thereunder, Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder, Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Secretarial Standards issued by The Institute of Company Secretaries of India (Secretarial Standards with respect to Meetings of Board of Directors (SS-1) and General Meetings (SS-2)), Securities Contracts (Regulation) Act, 1956 and all the Regulations and Guidelines of the Securities and Exchange Board of India (SEBI) as applicable to your Company, including the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, the SEBI (Prohibition of Insider Trading) Regulations, 2015, the SEBI (Issue and Listing of Debt Securities) Regulations, 2008, the SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 and the Reserve Bank of India Directions, Guidelines and Circulars applicable to Systemically Important Non-Deposit Accepting or Holding NBFCs (NBFC -ND - SI).

The Secretarial Audit Report for the financial year ended March 31, 2018 does not contain any qualification, reservation or adverse remark or disclaimer and the same forms part of the Annual Report.

CORPORATE GOVERNANCE

Your Company has always practised sound corporate governance and takes necessary actions at appropriate times for enhancing and meeting stakeholders’ expectations while continuing to comply with the mandatory provisions of Corporate Governance.

As required under Regulation 34(3) read with Schedule V of SEBI Listing Regulations, 2015, a separate section on Corporate Governance and a Certificate from the Auditors of your Company confirming compliance with the requirements of Corporate Governance, forms part of the 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.

4 (Four) Board meetings were held during the year 2017-18 on May 09, 2017, July 22, 2017, October 26, 2017 and January 17, 2018. The maximum time gap between any two consecutive meetings did not exceed 120 (One Hundred Twenty) days.

DIRECTORS

During the year under review, your Company appointed Mr. Malay Mukherjee (DIN 02272425) as an Additional Director (Category - Non Executive and Independent Director) of your Company with effect from October 26, 2017 to hold office as such upto the date of 33rd (Thirty-Third) Annual General Meeting (AGM) of your Company. Subject to approval of the Members of your Company, the Board recommends appointment of Mr. Malay Mukherjee as Independent Director of your Company for a period of 5 (five) consecutive years from date of the Thirty-Third AGM of your Company.

Based on the recommendation of the Nomination and Remuneration Committee and subject to approval of the Members of your Company, the Board of Directors of your Company recommends re-designation of Mr. Ram Krishna Agarwal (DIN 00416964) as an Independent Director of your Company for a period of 5 (five) consecutive years from the date of the Thirty-Third AGM of your Company.

In accordance with the provisions of Section 152 of the Companies Act, 2013 (Act) and the relevant Rules and your Company’s Articles of Association, Mr. Hemant Kanoria (DIN 00193015) retires by rotation at the ensuing AGM and being eligible, offers himself for reappointment.

Mr. Salil K. Gupta (DIN 00651223) resigned as a Director of your Company w.e.f. July 22, 2017 due to advanced age. Dr. Tamali Sengupta (DIN 00358658) resigned as a Director of your Company w.e.f. October 26, 2017 in terms of Section 164(2) of the Companies Act, 2013. Further, Mr. T.C.A. Ranganathan (DIN 03091352) resigned as a Director of your Company w.e.f. December 07, 2017 in terms of Regulation 20(1) of Banking Regulation Act, 1949. The Board wishes to place on record its sincere appreciation of the contribution, advice and guidance extended by them during their tenure as Directors of your Company.

The brief resume / details relating to Director who is proposed to be reappointed are furnished in the Notice of the ensuing AGM. The Board of Directors of your Company recommends the appointment / re-appointment of the above Directors.

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 Regulation 16 of SEBI Listing Regulations, 2015. All requisite declarations were placed before the Board.

Pursuant to Regulation 16(b) of SEBI Listing Regulations, 2015 and Section 197 of the Act read with the Rules framed thereunder, your Company has approved payment of remuneration of Rs. 75 (Seventy Five) Lacs by way of commission on net profits computed under Section 198 of the Act to NonExecutive Directors and Independent Directors of your Company for the financial year 2017-18. The payment is within the limit of 1 (One) per cent of the net profits of your Company for the financial year 2017-18 as approved by the Members of your Company at the AGM held on August 02, 2014 and in accordance with the applicable provisions of SEBI Listing Regulations, 2015 and the Act read with the Rules framed thereunder.

Further, Mr. Hemant Kanoria, Chairman and Managing Director (CMD) and Mr. Sunil Kanoria, Vice Chairman (NonExecutive Director) of your Company, are also the CMD and Vice Chairman, respectively, of Srei Equipment Finance Limited (SEFL), a wholly owned subsidiary of your Company and are in receipt of remuneration (including commission) during the Financial Year 2017-18 from SEFL as per the details given below:

Name of

Remuneration (Rs.

Director

in Lacs)

Hemant Kanoria

678.46

Sunil Kanoria

684.56

Further, Mr. Shyamalendu Chatterjee, Independent Director of your Company, is an Independent Director of SEFL and Chairman (Non - Executive) of Srei Capital Markets Limited, both wholly owned subsidiaries of your Company and is in receipt of sitting fees from the said subsidiary companies.

Apart from the above, Mr. Hemant Kanoria, Mr. Sunil Kanoria and Mr. Shyamalendu Chatterjee have not received any remuneration or commission from any of your Company’s subsidiaries or holding company during the Financial Year 2017-18.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS / TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND YOUR COMPANY’S OPERATIONS IN FUTURE

There are no such orders passed by the regulators / courts / tribunals impacting the going concern status and your Company’s operations in future.

DIRECTORS’ RESPONSIBILITY STATEMENT

In terms of provisions of Section 134(5) of the 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, 2018, 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 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, 2018 on a going concern basis;

(v) they have laid down internal financial controls to be followed by your Company and that such internal financial controls are adequate and are operating effectively;

(vi) 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 Directors state 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.

AWARDS AND RECOGNITION

During the year, your Company has been adjudged as the winner of “Golden Peacock Award for Excellence in Corporate Governance” for the year 2017. Your Company has also completed the assessment conducted by Great Place to Work Institute, India and has been certified as a “Great Place to Work” for the period May, 2017 to April, 2018. Further, your Company has been globally certified as a ‘Healthy Workplace’ for the period of 2017-19 making your Company an employer of choice while demonstrating sound ethical business principles, performance and value to stakeholders.

ACKNOWLEDGEMENT

Your Directors would like to express their grateful appreciation for the excellent support and co-operation received from the Financial Institutions, Banks, Central & State Government Authorities, RBI, SEBI, MCA, Registrar of Companies, Indian Stock Exchanges, Depositories, Credit Rating Agencies, Customers, Manufacturers, Vendors, Suppliers, Business Associates, Members, Debenture holders, Debenture Trustees and other Stakeholders during the year under review. Your Directors also place on record their deep appreciation for the valuable contribution of the employees for the progress of your Company during the year and look forward to their continued co-operation in realisation of the corporate goals in the years ahead.

On behalf of the Board of Directors

Hemant Kanoria

Chairman & Managing Director

DIN 00193015

Kolkata, April 28, 2018

 
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