IFMR Investment Managers Private Limited
Transcription
IFMR Investment Managers Private Limited
2013-14 IFMR Investment Managers Private Limited First Annual Report “Our Group’s mission is to ensure that every individual and every enterprise has complete access to financial services” Corporate Information Board of Directors: Registered Office Puneet Gupta, Chairperson David Ira Wallack Anand Sahasranaman Vijayaraghavan V 10th Floor-Phase 1, IIT-Madras Research Park Kanagam Village, Taramani Chennai 600 113, India CIN: U74120TN2014PTC095064 Bankers Contact Details ICICI Bank, Chennai Dhanlaxmi Bank, Chennai Phone: +91 44 6668 7000 Fax: +91 44 6668 7010 Email: [email protected] Website: http://ims.ifmr.co.in Auditors Deloitte Haskins & Sells, Chennai Page 2 Annual Report 2013-14 Key Milestones and Achievements Message from the Chairperson Directors’ Report Report on Corporate Governance Independent Auditors’ Report Balance Sheet Statement of Profit and Loss Cash Flow Statement Notes Forming Part of Financial Statements Board of Directors IFMR Investment Managers Private Limited Page 3 4 5 8 11 14 15 16 18 24 Message from the Chairperson Dear Shareholders, It gives me immense pleasure to introduce to you IFMR Investment Managers Private Limited, an entity incorporated in February 2014 with the objective of promoting and managing investment funds that are trying to reach financial services to sectors that still depend primarily on informal or non-banking channels for meeting their requirements of on-lending funds. IFMR Investment Managers is an important addition to the IFMR Trust Group. Access to medium and long term funds as well as mezzanine funds has always been a challenge for several high quality originators in the country. In the last few years access to senior debt and short duration debt has been increasing. Partly accelerated by another IFMR Trust Group Company, IFMR Capital, that helped its partners raise nearly Rs.3,504 crores from various investors in the financial year 2013-14 alone. However, access to subordinated tranches and longer term debt so essential for orderly growth of financial intermediaries has remained elusive. This Fund will be followed by other funds focused on retail finance sectors such as affordable housing, small business and micro enterprise finance and used commercial vehicle finance etc. IFMR Investment Managers will leverage on the vast experience within the IFMR Trust Group in working with these sectors. Many of the partners of the IFMR Trust Group companies have reached out for support in helping raise long term and subordinated tranches. With a strong presence of the IFMR Trust Group in this space, IFMR Investment Managers will hit the ground running. We are already in the process of seeking an external Fund Manager rating. In ensuring further transparency, IFMR Investment Managers will also explore getting ratings for Funds managed. We have a long journey ahead and I am sure you will all join me in wishing IFMR Investment Managers all the best for its endeavours. Puneet Gupta Chairperson Through focused funds that seek to address such gaps, we believe IFMR Investment Managers will play an important role in deepening financial access within the country. IFMR Investment Managers has been appointed by IFMR Finance for Freedom Social Venture Fund, acting through its Trustee, SBI Cap Trustee Company Ltd, to act as the Investment Manager for its proposed “IFMR FImpact Investment Fund” focussed on the microfinance sector. The Fund has made an application to SEBI for registration as a Social Venture Fund under Category I of the AIF regulations in March 2014 with a target fund size of Rs.100 crores and is expected to launch post approval. Page 4 Annual Report 2013-14 Directors’ Report Dear Shareholders, Deposits: Your Directors have immense pleasure in presenting the first annual report of your Company, together with the audited financial statements for the period ended March 31, 2014. The Company has not accepted any deposits from the public for the period under review. Background: The company is yet to commence operations. The company was incorporated on February 17, 2014. The company was formed with the objective of providing high quality investment management services in asset classes that impact the financially excluded. Some of the highlights for the period ended March 31, 2014 are: Financial Results: Particulars Period ended March 31, 2014 Amount in INR Income 109,055.00 Expenses 322,489.00 (Loss)/Profit Before Tax (213,434.00) Less: Tax Expenses 0.00 (Loss)/Profit After Tax (213,434.00) Add: Brought forward Profit / 0.00 (Loss) Less: Transfer to reserves 0.00 Balance Carried Forward (213,434.00) Earnings per share (basic) (213.43) Earnings per share (diluted) (213.43) Dividend: Your Directors do not recommend for any dividend for the period under review. Transfer to Reserves: In the absence of profits, your Company has not made any transfers to reserves during the period under review. IFMR Investment Managers Private Limited Operational Highlights: 1) The company has entered into an Investment Management agreement with SBICAP Trustee Company Limited for being the Investment Manager for the proposed IFMR FImpact Investment Fund, an Alternate Investment Fund under Category 1 of the SEBI (Alternate Investment Fund) Regulations which is awaiting approval from SEBI. 2) The company has entered into an Investment Adviser agreement with IFMR Investment Adviser Services Private Limited in March 2014 for obtaining the investment adviser services towards the proposed IFMR FImpact Investment Fund, an Alternate Investment Fund under Category 1 of the SEBI (Alternate Investment Fund) Regulations which is awaiting approval from SEBI. Future Outlook: The company has started its focus with the microfinance asset class and it has already taken efforts to move into other asset classes like housing finance, SME etc. Even though the investors are risk averse given the underlying factors related to the current economic scenario as well as the underlying asset class, we plan to provide comfort through sponsor commitment which is more than required under regulations. Also, the company will seek independent review of its fund management capabilities through rating from rating agencies on Page 5 the fund management quality and also seeks to avail rating of the fund at an appropriate stage. The comfort level of the Investors in looking at locking-in investment for a medium to long term is linked closely with the Government’s policy action in enabling investments on one hand and outcome of various initiatives to improve economic growth on the other. These will be key determinants to the timelines associated with your Company’s plans for obtaining investor commitments into the fund post its launch. Your Company, however, on receipt of SEBI approval will reach out to many potential investors who are looking at investments in social sector over a medium to long term duration and, in a ‘business as usual’ scenario, expects to go live during the first half of financial year 2014-15. Capital Infusion: The company mobilized Rs. 136 lakhs of capital funds during the period ended March 31, 2014 by issuance of 1,000 equity shares of Rs.100 each to its promoter IFMR Trust and 135,000 preference shares of Rs.100 each to IFMR Mezzanine Finance Private Limited, a company which is wholly owned by IFMR Trust. Directors: During the year, David Ira Wallack and Puneet Gupta were appointed as Additional Directors, on February 18, 2014 and March 1, 2014 respectively. Subject to the Companies Act, 1956 and as per the Articles of Association of the Company, none of the Directors shall retire by rotation. Auditors: M/s. Deloitte Haskins & Sells, Chartered Accountants, First Auditors of the Company retire at the ensuing Annual General Meeting and are eligible for re-appointment. The company has received confirmation that their appointment, if made, will be within the limits prescribed under Section 139 (1) of the Companies Act 2013 read with Rule 4 of the Companies (Audit and Auditors) Rules, 2014. Subsidiary Company: As on March 31, 2014, the Company does not have any subsidiaries. Compliance: Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo: The Company has complied with all the mandatory regulatory compliances as required under the Companies Act, various tax statutes and other regulatory bodies. The Company has no activity relating to conservation of energy and technology absorption. There were no foreign exchange earnings or outflow during the period under review. The Company does not have a Whole Time Secretary and accordingly, pursuant to the second proviso of Section 383A, a compliance certificate is obtained from a practicing Company Secretary for the period ended March 31, 2014. Particulars of Employees: Corporate Governance: The provision under Section 217(2A) of the Companies Act, 1956 and the rules framed there under are not applicable since none of the employees were in receipt of remuneration in excess of the limits prescribed therein. A report on corporate governance is attached and forms part of this report. Page 6 Annual Report 2013-14 Directors Responsibility Statement: records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities. To ensure this, the company has established internal control systems, consistent with its size and nature of operations. These systems are reviewed and updated on an on-going basis. To the best of their knowledge and belief, and according to the information and explanations obtained by them, your Directors confirm the following in terms of Section 217(2AA) of the Companies Act, 1956: 1) that in preparation of the financial statements the generally accepted accounting principles (GAAP) of India and applicable accounting standards issued by Institute of Chartered Accountants of India have been followed. 2) that appropriate accounting policies have been selected and applied consistently and judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for that period; 4) that they have prepared the annual accounts on a going concern basis. Acknowledgement: Your Directors take this opportunity to thank the shareholders, employees, bankers, auditors, Securities and Exchange Board of India, other Regulatory authorities for their co-operation and continued support to the Company. We look forward to their continued patronage and encouragement in all our future endeavours. 3) that they have taken proper and sufficient care for the maintenance of adequate accounting On behalf of the Board Place: Chennai Date: May 2, 2014 IFMR Investment Managers Private Limited Puneet Gupta Chairperson Page 7 Report on Corporate Governance Corporate Governance is the commitment of an organization to follow ethics, fair practices and transparency in all its dealings with its various stakeholders such as Employees, Investors, Government and the Community at large. Sound corporate governance is the result of external marketplace commitment and legislation plus a healthy board culture which directs the policies and philosophy of the organization. Your Company is committed to good Corporate Governance in all its activities and investment management processes. of strategic supervision of the Company as trustees of the Shareholders. The Board currently consists of four Directors. All the members of the Board are non-executive directors and the Company is in the process of inducting independent directors. During the period ended March 31, 2014, three Board Meetings were held with a gap of not more than four months between any two meetings. Particulars of the Directors’ attendance to the Board Meeting and particulars of their other company directorships are given in the table below. Corporate Governance Philosophy Changes in Board Constitution IFMR Investment Managers Private Limited’s (IIMPL) philosophy on corporate governance envisages adherence to the highest levels of accountability, transparency and fairness, in all areas of its operations and in all interactions with its stakeholders. The Board shall work to ensure the success and continuity of the Company’s business through the appointment of qualified management and through on-going monitoring to assure the Company’s activities are conducted in a responsible, ethical and transparent manner. During the period ended March 31, 2014, the following changes took place in the constitution of the Board. David Ira Wallack was appointed as an additional director with effect from February 18, 2014. Puneet Gupta was appointed as an additional director with effect from March 1, 2014. Committees of the Board During the year, the Investment Committee of the Board was constituted. The Board fixes the terms of reference of sub-committees and also delegated powers from time to time. The minutes of the meetings of the committee are circulated to the Board for its information and confirmation. Board of Directors In terms of the Corporate Governance philosophy all statutory and other significant material information is placed before the Board of Directors to enable it to discharge its responsibility Particulars of Directors’ Attendance Name Nature of Directorship Anand Sahasranaman Non-Executive Director No. of directorships excluding IIMPL 1 Board Meetings attended (Meetings held) 3 (3) Vijayaraghavan V Non-Executive Director 7 3 (3) David Ira Wallack* Non-Executive Director 8 1 (2) Puneet Gupta** Non-Executive Chairman 9 1 (1) * Appointed as additional director w.e.f February 18, 2014 ** Appointed as additional director w.e.f March 1, 2014 Page 8 Annual Report 2013-14 Investment Committee Composition & Meetings The Investment Committee prescribes investment criteria on the basis of which IFMR Investment Managers will make investments. The Investment Committee also evaluates the investment proposals for approving investments in eligible securities issued by potential investee companies. The Investment Committee consists of the following members, namely, Terms of reference 1. Anand Sahasranaman, Member 2. Vijayaraghavan V, Member The Committee met once during 2013-14 on March 25, 2014. Name Nature of Membership Anand Sahasranaman Member Meetings attended (Meetings held) 1 (1) Vijayaraghavan V Member 1 (1) This Committee’s goals and responsibilities shall be: To review and approve, if deemed fit and proper, the underwriting guidelines for each asset class, prepared by the Investment Origination and Management Team (including any other person/entity to whom the responsibility has been entrusted to) To identify, review and recommend new fund opportunities to the Board for its approval To review and approve, if deemed fit and proper, the investment proposals made by the Investment Origination and Management Team (including any other person/entity to whom the responsibility has been entrusted to) To evaluate and approve, if deemed fit and proper, terms and conditions of all investments To review and approve periodically, policies and guidelines governing the Company’s investments and monitor compliance with these policies To review and approve, if deemed fit and proper, exit strategies for the investments made by the any fund managed by the Company To perform such other responsibilities regarding the Company’s investment activities or policies or other matters as the Board may from time to time assign the Committee. IFMR Investment Managers Private Limited An independent member representing Investors will be inducted after the launch of the proposed IFMR FImpact Investment Fund. Remuneration of Non-Executive Directors As a policy, the Company does not pay any sitting fee or other remuneration to non-executive Directors or other members of any committee constituted of the Board. General Body Meetings During the period ended March 31, 2014, no General Meetings were held. Compliance Report The board reviews the compliance of all applicable laws every quarter and gives appropriate directions, wherever necessary. Code of Conduct The Board has adopted a code of conduct, corporate governance policy and whistle blower policy applicable to all directors and employees of the Company. Page 9 Risk Management The Company keeps the Board informed periodically of the significant risks associated with the business of the company and the various risk identification and mitigation processes put in place by the management. Disclosures Shareholding pattern as on March 31, 2014 Category Number % of of Shares total Promoters: IFMR Trust (including 1,000 100.0 its nominee) Total 1,000 100.0 Address for Correspondence The particulars of transactions between the Company and its related parties, as defined in Accounting Standard 18, are set out the financial statements. There were no material transactions with related parties i.e., transactions of the company of material nature, with its promoters, the directors or the management, their subsidiaries or relatives etc. that may have potential conflict with the interest of company at large. IFMR Investment Managers Private Limited 10th Floor-Phase 1, IIT-Madras Research Park, Kanagam Village, Taramani, Chennai - 600 113 Tel.: +91 044 6668 7000 Fax: +91 044 6668 7010 E-mail: [email protected] Website: http://ims.ifmr.co.in General Shareholder Information Financial year: April 1st to March 31st Current period: February 17, 2014 to March 31, 2014 (being the first financial year from the date of incorporation) On behalf of the Board Place: Chennai Date: May 2, 2014 Puneet Gupta Chairperson Page 10 Annual Report 2013-14 Independent Auditors’ Report TO THE MEMBERS OF IFMR INVESTMENT MANAGERS PRIVATE LIMITED Report on the Financial Statements We have audited the accompanying financial statements of IFMR INVESTMENT MANAGERS PRIVATE LIMITED (“the Company”), which comprise the Balance Sheet as at 31st March, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the period then ended, and a summary of the significant accounting policies and other explanatory information. Management’s Responsibility for the Financial Statements The Company’s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 (“the Act”) (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs) and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: IFMR Investment Managers Private Limited Page 11 (a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2014; (b) in the case of the Statement of Profit and Loss, of the loss of the Company for the period ended on that date; and (c) in the case of the Cash Flow Statement, of the cash flows of the Company for the period ended on that date. Report on Other Legal and Regulatory Requirements 1. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the Central Government in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order. 2. As required by Section 227(3) of the Act, we report that: (a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. (b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books. (c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account. (d) In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards notified under the Act (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs). (e) On the basis of the written representations received from the directors as on 31 st March, 2014 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2014 from being appointed as a director in terms of Section 274(1)(g) of the Act. For DELOITTE HASKINS & SELLS Chartered Accountants (Firm’s Registration No. 008072S) Bhavani Balasubramanian (Partner) (Membership No. 22156) CHENNAI, May 2, 2014 Page 12 Annual Report 2013-14 ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT (Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date) Having regard to the nature of the Company’s business / activities / results during the year, clauses (i), (ii), (vi), (vii), (viii), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi),(xvii), (xix) and (xx) of paragraph 4 of the Order are not applicable to the Company. (i) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. (ii) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business and during the course of our audit we have not observed any continuing failure to correct major weaknesses in such internal control system. (iii) To the best of our knowledge and belief and according to information and explanations given to us, there are no contracts or arrangements that need to be entered in the register maintained in pursuance to Section 301 of Companies Act, 1956. (iv) According to the information and explanations given to us, in respect of statutory dues: (a) The Company has generally been regular in depositing undisputed statutory dues, including Income-tax, Service Tax, Cess and other material statutory dues applicable to it with the appropriate authorities. The statutory dues relating to Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Sales Tax, Wealth Tax, Customs Duty and Excise Duty are not applicable to the Company. (b) There were no undisputed amounts payable in respect of Income-tax, Service Tax, Cess and other material statutory dues in arrears as at 31st March, 2014 for a period of more than six months from the date they became payable. (c) There were no disputed amounts due in respect of Income-tax, Service Tax and Cess which have not been deposited as on 31st March 2014. (v) According to the information and explanations given to us, the Company has made preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956 at a price which, in our opinion, is prima facie not prejudicial to the interest of the Company. (vi) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year. For DELOITTE HASKINS & SELLS Chartered Accountants (Firm’s Registration No. 008072S) Bhavani Balasubramanian (Partner) (Membership No. 22156) CHENNAI, May 2, 2014 IFMR Investment Managers Private Limited Page 13 Balance Sheet Particulars Note No. March 31, 2014 (Amount in INR) A. (1) (2) Equity and Liabilities Shareholders’ funds (a) Share Capital (b) Reserves and Surplus 3 4 13,600,000 (213,434) 13,386,566 Current Liabilities (a) Trade Payables (b) Other current Liabilities 5 6 604,047 114,973 719,020 14,105,586 7 8 9 13,648,951 436,736 19,899 14,105,586 Total B. Assets (1) Current Assets (a) Cash and Cash Equivalents (b) Short Term Loans and Advances (c) Other Current Assets Total 14,105,586 See accompanying notes forming part of the financial statements In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants For and on behalf of the Board of Directors Bhavani Balasubramanian Partner Puneet Gupta Chairman Vijayaraghavan V Director Place: Chennai Date: May 2, 2014 Page 14 Annual Report 2013-14 Statement of Profit and Loss Particulars Note No. Income Revenue from Operations Other Income Total Revenue (I) 10 Expenses Employee Benefits Expense Depreciation Other Expenses Total Expenses (II) 11 Loss for the Period Before Tax (I-II) For the period from February 17, 2014 to March 31, 2014 Amount in INR 109,055 109,055 322,489 322,489 (213,434) Tax Expenses: a) Tax Expenses for the Current Period b) Deferred Tax (213,434) Loss for the Period Earnings per share (of Rs.100 each) Basic Diluted 14 14 (213.43) (213.43) See accompanying notes forming part of the financial statements In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants For and on behalf of the Board of Directors Bhavani Balasubramanian Partner Puneet Gupta Chairman Place: Chennai Date: May 2, 2014 IFMR Investment Managers Private Limited Page 15 Vijayaraghavan V Director Cash Flow Statement For the period from February 17, 2014 to March 31, 2014 Amount in INR Particulars Cash Flow From Operating Activities: Loss for the period before Tax (213,434) Adjustments for: Interest Income from Banks (109,055) Operating Profit before Working Capital Changes (322,489) Changes in working capital: Adjustments for (increase)/decrease in Operating Assets Short Term Loans and Advances (423,776) Other current assets (19,899) Adjustments for increase/(decrease) in Operating Liabilities Current Liabilities 719,020 Cash used in operations (47,144) Net income taxes Paid - Net Cash used in Operations Activities (A) (47,144) Cash Flow From Investing Activities: Interest Income from Bank 96,095 Net cash generated from Investing Activities (B ) 96,095 Cash Flow From Financing Activities: Proceeds from issue of Equity Shares 100,000 Proceeds from issue of Preference Shares 13,500,000 Net cash generated from Financing Activities (C ) 13,600,000 Net Increase in Cash and Cash Equivalents (A+B+C) 13,648,951 Cash and Cash Equivalents at the beginning of the period Cash and Cash Equivalents at the end of the period Page 16 13,648,951 Annual Report 2013-14 For the period from February 17, 2014 to March 31, 2014 Amount in INR Particulars Reconciliation of Cash and Cash equivalents: Cash and Cash Equivalents as per Balance sheet (Refer Note 7) Less: Bank balances not considered as Cash and cash equivalents as defined in AS 3 Cash Flow Statements Net Cash and cash equivalents (as defined in AS 3 Cash Flow Statements) 13,648,951 13,648,951 Cash and cash equivalents at the end of the period comprises of: Balances with banks in Current Account 13,648,951 See accompanying notes forming part of the financial statements In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants For and on behalf of the Board of Directors Bhavani Balasubramanian Partner Puneet Gupta Chairman Place: Chennai Date: May 2, 2014 IFMR Investment Managers Private Limited Page 17 Vijayaraghavan V Director Notes Forming Part of Financial Statements Note 1 - Corporate Information IFMR Investment Managers Private Limited was incorporated on February 17, 2014, under the Companies Act, 1956 as a wholly owned subsidiary of IFMR Trust with the aim to carry on the business of investment Company and also to provide portfolio management services to offshore funds and all kinds of investment funds. Note 2 - Significant Accounting Policies 2.1 Basis of accounting and preparation of financial statements: The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified Section 211(3C) of the Companies Act, 1956 (“the 1956 Act”) (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 (“the 2013 Act”) in terms of General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act/ 2013 Act, as applicable. The Financial statements have been prepared on accrual basis under the historical cost convention. The Company is a subsidiary of IFMR Trust, which is not a Small and Medium Sized entity (SMC) as defined in the General Instructions in respect of Accounting Standards notified under the Companies Act, 1956. Accordingly, the Company has also been classified as non-SMC and has complied with the accounting standards as applicable to a non - SMC. 2.2 Use of estimates The preparation of the financial statements in conformity with the Generally Accepted Accounting Principles requires the management estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the period. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise. 2.3 Employee benefits: During the period from February 17, 2014 to March 31, 2014, the company did not have any employees on rolls. 2.4 Taxes on Income: i) Current Tax: Current tax is determined in accordance with the provisions of the Income Tax Act, 1961 Page 18 Annual Report 2013-14 ii) Deferred Tax: Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Balance Sheet date for their realisability. 2.5 Provisions and Contingencies: Provisions are recognised only when the Company has a present or legal or constructive obligation as a result of past events for which it is probable that an outflow of economic benefit will be required to settle the transaction and a reliable estimate can be made for the amount of the obligation. Contingent liability is disclosed for (i) Possible obligation which will be confirmed only by future events not wholly within the control of the company or (ii) Present obligation arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Note 3 - Share Capital Particulars March 31, 2014 Amount in INR Authorised 1,000 Equity Shares of Rs.100 each with voting rights 135,000 Redeemable Preference Shares of Rs.100 each Total 100,000 13,500,000 13,600,000 Issued, Subscribed and Fully Paid up 1,000 Equity Shares of Rs.100 each with voting rights 135,000 Redeemable Preference Shares of Rs.100 each Total 100,000 13,500,000 13,600,000 (a) Details of Shares held by each Shareholder more than 5% of Shares Name of the Shareholder March 31, 2014 No. of Shares % of held Shareholding IFMR Trust (Controlling Entity) and its nominee - Equity Shares 1,000 100.00 IFMR Mezzanine Finance Private limited ( Fellow subsidiary ) 135,000 100.00 Preference Shares IFMR Investment Managers Private Limited Page 19 Movement in Equity shares Particulars As at March 31, 2014 No. of shares Opening Balance Fresh Issue Closing Balance 1,000 1,000 Amount in INR 100,000 100,000 Movement in Preference shares As at March 31, 2014 Amount in No. of shares INR 13,500,000 1,35,000 13,500,000 1,35,000 Particulars Opening Balance Fresh Issue Closing Balance Terms / rights attached to Equity Shares: The Company has only one class of Equity Shares having par value of Rs.100 per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company. The distribution will be in proportion to the number of equity shares held by the shareholders. Terms / rights attached to Preference Shares: Preference Shares are redeemable at par at the end of 4 years from the date of allotment i.e. 24th February 2018. The preference shareholder is entitled to vote only on resolution placed before the Company which directly affects the rights attached to such preference shares as set out in Section 87 of the Companies Act, 1956. The right to entitlement for dividend on preference shares not declared in a financial year shall be carried forward to the subsequent financial years. Preference Dividend Arrears of Fixed cumulative Dividend on Preference shares as at March 31, 2014 Rs. 106,521. Note 4: Reserves and Surplus March 31, 2014 Amount in INR Deficit in Statement of Profit and Loss Opening Balance - Add: Loss for the Year (213,434) Closing balance (213,434) Page 20 Annual Report 2013-14 Note 5: Trade Payables March 31, 2014 Amount in INR Sundry Creditors 2,809 Advance from Related Parties (Refer Note 12) 601,238 Total 604,047 Note 6: Other Current Liabilities March 31, 2014 Amount in INR Statutory Liabilities 2,613 Other Liabilities 112,360 Total 114,973 Note 7: Cash and Cash Equivalents March 31, 2014 Amount in INR Cash and cash equivalents as defined in AS-3 Balance in Current account 13,648,951 Total 13,648,951 Note 8: Short Term Loans and Advances March 31, 2014 Amount in INR Advance Taxes and tax deducted at source net of provision of tax 12,960 Advance to Related Parties (Refer Note 12) 423,776 Total 436,736 Note 9: Other Current Assets March 31, 2014 Amount in INR - Interest Accrued but not due 19,899 - on Fixed Deposits 19,899 Total IFMR Investment Managers Private Limited Page 21 Note 10: Other Income Period ended March 31, 2014 Amount in INR Interest on Fixed Deposits 109,055 Total 109,055 Note 11: Other Expenses Period ended March 31, 2014 Amount in INR 3,008 29,434 177,687 Printing and Stationery Legal and Professional Charges Registration & Filing charges Auditors' Remuneration For Statutory Audit (inclusive of Service Tax) Total 112,360 322,489 Disclosures under Accounting Standards Note 12: Related party disclosures Information relating to related party transaction for the period ended March 31, 2014 (as identified by management and relied upon by Auditors) a) Parties where control exists: Controlling entity : IFMR Trust - Represented by IFMR Trusteeship Services Private Limited b) Fellow Subsidiaries with whom the Company had transactions during the period: IFMR Mezzanine Finance Private Limited c) Associate Entities with whom the Company had transactions during the period: IFMR Investment Adviser Services Private Limited IFMR Finance for Freedom Social Venture Fund Transactions with related parties during the period: Related Party Transaction IFMR Trust IFMR Investment Adviser Services Private Limited IFMR Mezzanine Finance Private Limited IFMR Finance for Freedom social venture fund Equity Shares Allotted Reimbursement of expenses Reimbursement of expenses Preference Shares Allotted Reimbursement of expenses Page 22 Period ended March 31, 2014 Amount in INR 100,000 177,462 423,776 13,500,000 423,776 Annual Report 2013-14 Outstanding balances with related parties as on balance sheet date: Related Party Transaction IFMR Trust IFMR Investment Adviser Services Private Limited IFMR Finance for Freedom social venture fund Advances payable Advances payable Advances Receivable March 31, 2014 Amount in INR 177,462 423,776 423,776 Note 13: Earnings per share – Basic and Diluted: Period ended March 31, 2014 Amount in INR Loss for the period attributable to equity shareholders (213,434) Weighted average shares outstanding during the period 1,000 Basic Earnings per Share (213.43) Diluted Earnings per Share (213.43) Note 14: The Company has entered into an agreement with SBICAP Trustee Company Limited, Trustee of IFMR Finance for Freedom Social Venture Fund to act as an Investment Manager for proposed fund and upon registration of the said fund with SEBI, the company will contribute 2.5% of the fund size or Rs. 5 crores whichever is less. Note 15: The company has entered into an agreement with IFMR Investment Adviser Services Private Limited for providing investment adviser services for the proposed IFMR Finance for Freedom Social Venture Fund. The agreement shall be operational subsequent to the registration of the said fund and launch of the same. Note 16: Preliminary expenses amounting to Rs. 202,240 have been expensed completely during the period ended March 31, 2014. Note 17: The Company was incorporated on February 17, 2014 and the first accounts have been prepared for the period February 17, 2014 to March 31, 2014. Consequently, there are no comparative figures to be disclosed. For and on behalf of the Board Place: Chennai Date: May 2, 2014 IFMR Investment Managers Private Limited Puneet Gupta Chairman Page 23 Vijayaraghavan V Director Board of Directors Puneet Gupta is a Founder member of IFMR Trust and represents the Trust as a promoter director on the board of several group companies. Puneet also serves on the board of IIT Madras’ Rural Technology Business Incubator. Puneet was also involved in setting up IFMR Mezzanine Finance, a company that makes investments in the form of medium to long term capital to MFIs to enable them to grow. Puneet Gupta Chairperson He began his formal career with ICICI Bank where he worked for a period of 7 years in various roles including coordinating the work of the micro finance practice at ICICI Bank. His responsibilities at ICICI Bank included identification and development of new channels and products for reaching out micro financial and rural financial services. He has worked extensively towards the creation of facilitative infrastructure for the delivery of micro financial services. In addition he has worked with microfinance related equity funds to help them raise capital. Puneet has significant experience of working closely with NGO, academicians, State Governments and donor agencies. Puneet also has experience in running and managing his family business for a period of 4 years. He is a commerce graduate with a Master’s degree in Rural Management from Institute of Rural Management Anand. David Ira Wallack is a Director of IFMR Investment Managers Private Limited and a founding trustee of IFMR Trust. He currently leads innovation and leadership development across the IFMR Holdings group. David previously led IFMR Trust's qualitative research and design effort supporting the design of the KGFS model and IFMR Trust's broader work on livelihood enhancement. Before coming to India, David was a political campaign consultant in the United States serving progressive advocacy organisations and Democratic candidates at the statewide and federal levels. He completed graduate work in Demography and Population Studies at Georgetown University and his MBA at Stanford University. Page 24 David Ira Wallack Director Annual Report 2013-14 Anand Sahasranaman Director Anand Sahasranaman is a Director of IFMR Investment Managers Private Limited with over 10 years’ experience in financial markets. He currently heads the IFMR Finance Foundation which is a policy research institution focused on issues of financial systems design. In 2008, he was a founding member of IFMR Capital and worked on structuring the first microfinance securitisation transaction in India. Between 2003 and 2007 he worked in the fixed income desks at Broadstreet Group and Pali Capital, New York based investment banks, on multiple structured credit transactions such as CLOs and synthetic CDSs. He holds a MBA in Finance from Carnegie Mellon University and a bachelor’s degree in engineering from Bharathiar University. Vijayaraghavan is a Director of IFMR Investment Managers Private Limited. He has been with IFMR Trust since 2011, and heads its Corporate Centre, overseeing the Trust’s investments and overall compliance. Apart from this, he has also been on the Board of Pudhuaaru Financial Services Pvt Ltd, which ensures financial inclusion through the KGFS model, and continues to serve on the Board of IFMR Mezannine Finance Pvt. Ltd. Previously, he was the Chief Financial Officer at GMAC Financial Services India, which is a part of the General Motors group, and also served on its Board. His role as Chief Financial Officer encompassed all aspects of Indian and US GAAP reporting, treasury, internal controls and audit. Prior to GMAC, he had a brief stint with GE Capital Transportation Financial Services in 1999. Vijayaraghavan is a qualified Cost Accountant and has close to 15 years of experience, primarily in the financial services industry. IFMR Investment Managers Private Limited Page 25 Vijayaraghavan V Director Notes Notes Notes CORPORATE AND REGISTERED OFFICE 10th Floor Phase I, IITM Research Park, Kanagam Village, Taramani, Chennai – 600113, India Tel: +91 44 66687000; Fax: +91 44 66687010 Email: [email protected], Website: http://ims.ifmr.co.in © Copyright, 2014 IFMR Investment Managers Private Limited. All Rights Reserved.