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rdXXIII Annual Report 2017-18
FARTHESTLEAP
GET READY TO TAKE THE
Religare Finvest Limited
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Content
Notes forming part of the financial statements for the year ended March 31, 2018 ....................................... 78-145
Balance Sheet as at March 31, 2018 ........................................................................................................... 74
Statement of Profit and Loss for the year ended March 31, 2018 .................................................................. 75
Annexure to Independent Auditor's Report ................................................................................................. 69-73
Cash flow statement for the year ended March 31, 2018 .............................................................................. 76-77
Directors' Report ........................................................................................................................................ 22-45
Independent Auditor's Report ..................................................................................................................... 66-68
Company Information ................................................................................................................................. 01
Leadership Team ........................................................................................................................................ 04-07
About Religare Finvest ............................................................................................................................... 02
Industry Overview ...................................................................................................................................... 08-12
Our Businesses .......................................................................................................................................... 14-18
Financial Declaration - Religare Finvest Limited ......................................................................................... 20
Annexure to Directors' Report ..................................................................................................................... 46-65
Consolidated Cash flow statement for the year ended March 31, 2018 ........................................................ 226-228
Financial Declaration - Religare Housing Development Finance Corporation Limited ................................ 146
Consolidated Statement of Profit and Loss for the year ended March 31, 2018 ............................................ 225
Cash flow statement for the year ended March 31, 2018 .............................................................................. 171-172
Annexure to Independent Auditor's Report ................................................................................................. 166-168
Consolidated Financials ............................................................................................................................. 216
Consolidated Balance Sheet as at March 31, 2018 ..................................................................................... 223-224
Independent Auditor's Report ..................................................................................................................... 164-165
Independent Auditor's Report on Consolidated Financial Statements ......................................................... 218-220
Statement of Profit and Loss for the year ended March 31, 2018 .................................................................. 170
Notes .......................................................................................................................................................... 285-287
Notes forming part of the financial statements for the year ended March 31,2018 ........................................ 173-214
Annexure to Directors' Report ..................................................................................................................... 158-163
Directors' Report ......................................................................................................................................... 148-157
Balance Sheet as at March 31, 2018 ........................................................................................................... 169
Notes forming part of the consolidated financial statements for the year ended March 31, 2018 ................... 229-284
Annexure to Independent Auditor's Report on Consolidated Financial Statements ..................................... 221-222
Religare Finvest Limited
rdXXIII Annual Report 2017-18
-
Content
Notes forming part of the financial statements for the year ended March 31, 2018 ....................................... 78-145
Balance Sheet as at March 31, 2018 ........................................................................................................... 74
Statement of Profit and Loss for the year ended March 31, 2018 .................................................................. 75
Annexure to Independent Auditor's Report ................................................................................................. 69-73
Cash flow statement for the year ended March 31, 2018 .............................................................................. 76-77
Directors' Report ........................................................................................................................................ 22-45
Independent Auditor's Report ..................................................................................................................... 66-68
Company Information ................................................................................................................................. 01
Leadership Team ........................................................................................................................................ 04-07
About Religare Finvest ............................................................................................................................... 02
Industry Overview ...................................................................................................................................... 08-12
Our Businesses .......................................................................................................................................... 14-18
Financial Declaration - Religare Finvest Limited ......................................................................................... 20
Annexure to Directors' Report ..................................................................................................................... 46-65
Consolidated Cash flow statement for the year ended March 31, 2018 ........................................................ 226-228
Financial Declaration - Religare Housing Development Finance Corporation Limited ................................ 146
Consolidated Statement of Profit and Loss for the year ended March 31, 2018 ............................................ 225
Cash flow statement for the year ended March 31, 2018 .............................................................................. 171-172
Annexure to Independent Auditor's Report ................................................................................................. 166-168
Consolidated Financials ............................................................................................................................. 216
Consolidated Balance Sheet as at March 31, 2018 ..................................................................................... 223-224
Independent Auditor's Report ..................................................................................................................... 164-165
Independent Auditor's Report on Consolidated Financial Statements ......................................................... 218-220
Statement of Profit and Loss for the year ended March 31, 2018 .................................................................. 170
Notes .......................................................................................................................................................... 285-287
Notes forming part of the financial statements for the year ended March 31,2018 ........................................ 173-214
Annexure to Directors' Report ..................................................................................................................... 158-163
Directors' Report ......................................................................................................................................... 148-157
Balance Sheet as at March 31, 2018 ........................................................................................................... 169
Notes forming part of the consolidated financial statements for the year ended March 31, 2018 ................... 229-284
Annexure to Independent Auditor's Report on Consolidated Financial Statements ..................................... 221-222
Religare Finvest Limited
rdXXIII Annual Report 2017-18
-
COMPANY INFORMATION
C-101, 247, Park, L.B.S. Marg, Vikhroli (West), Mumbai- 400083
REGISTRAR & SHARE TRANSFER AGENTLinkintime India Private Limited
Tel: 022-49186000; Email: [email protected], www.linkintime.co.in
STATUTORY AUDITORSS.S. Kothari Mehta & Co.
Plot No. 68, Okhla Industrial Area, Phase- III, New Delhi- 110020
Vistra ITCL(India) Limited Axis Trustee Services Limited
*September 11, 2018 ** As on March 31, 2018
(Formerly IL&FS Trust Company Limited) 2nd Floor, Axis House, Bombay Dyeing Mills Compound
The IL&FS Financial Centre, Pandurang Budhkar Marg, Worli
TRUSTEE CONTACT DETAILSDebenture Trustee for NCD Public Issue Debenture Trustee for NCD Private Placement
Email Id:[email protected]
Plot C-22, G Block, Bandra-Kurla Complex Mumbai-400 025
Bandra (East), Mumbai 400 051 Telephone Number : 022 24255215/ 5216
Telephone Number : 022-26593927 Email Id: [email protected]
COMPANY SECRETARY
Mr. Vikram Talwar
nd2 Floor, Rajlok Building, 24, Nehru Place, New Delhi-110019
BOARD OF DIRECTORS AS ON THE DATE OF ADOPTION OF DIRECTORS’ REPORT*
CORPORATE OFFICE
Ms. Sabina Vaisoha
CHIEF EXECUTIVE OFFICER
Mr. Punit Arora
Mr. Sanjay D. Palve
th9 Floor, Tower B, Paras Twin Towers, Sector 54, Golf Course Road, Gurugram-122002 (Haryana),Phone No. +91 124 6180200E-Mail: [email protected], [email protected], Website: www.religarefinvest.comCIN NO: U74999DL1995PLC064132
Mr. Malay Kumar Sinha
REGISTERED OFFICE
Syndicate Bank
Central Bank of India
Vijaya Bank
State Bank of India
Karnataka Bank
Oriental Bank of Commerce
Punjab National Bank
SIDBI
Union Bank of IndiaICICI Bank
IDBI Bank Limited United Bank of India
Punjab & Sind Bank
Jammu & Kashmir Bank
Corporation Bank
South Indian Bank
Uco Bank
Dena Bank
Karur Vaysya Bank
Federal Bank Limited
Aditya Birla Finance Limited
Andhra Bank
Bank of Baroda
Bank of Maharashtra
Canara Bank
Bank of India
LIST OF BANKERS/ FIs / NBFCs TO THE COMPANY**
RFL’s culture which is driven by its five core values - passion, teamwork, diligence, innovation and ambition, not only
accelerates the success of its customers but also of its employees. RFL was certified by the Great Place To Work Institute® for
FY 17-18 and this recognition is a testimony of a high trust and high performance culture that the company cultivates thereby
making it a winning workplace!
Religare Enterprises Limited established Religare Finvest Limited (RFL) as its subsidiary in the year 2006, and since its
inception, the company has been delivering steadily and strongly on its vision of setting the standards of excellence for the
commercial financial services industry. RFL is a non-deposit taking systemically important Non-Banking Finance Company
with a robust vintage of twelve years. To propel the growth of SMEs and MSMEs remains at the core of your company’s
ideology and we have year on year fuelled and nurtured the dreams of small business owners.
With an ISO certification 9001:2008 and a wide network of 35 branches across India, RFL is committed to providing debt
capital in the form of small and medium enterprises (SMEs) financing, retail capital market financing and corporate loans.
The experienced leadership is complemented with a committed employee base and together the organisation has strived to
provide value-based innovative products and services through streamlined processes, bolstered by robust underwriting
capabilities and high standards of customer service. With the strong belief that the customer’s success is our success, your
company has played a vital role in nurturing its customer’s business while growing to a book size of over (value as on March
31, 2018).
Change is the only constant and with changing times, one has to evolve to thrive. And RFL has been in the forefront of
embracing these changes with ease. The socio-economic, political and regulatory changes come with its own set of
challenges but our agile framework and committed mindset has insulated us from deep impacts. While the changes outside
are not under our control but internally we have constantly aimed to improve and evolve our processes, services and
offerings. In FY 17-18, we envisioned and formulated various strategic initiatives at different levels in the organisation. We
were successful in creating a sturdy system replete with contemporary policies and practices in areas pertaining to
technology, innovation and automation. This zeal of ours has helped us to maintain cost optimisation and has put us at par
with other competitive players in the industry.
ABOUT RELIGARE FINVEST LIMITED
Religare Finvest Limited
rdXXIII Annual Report 2017-18
02
rdXXIII Annual Report 2017-18
Religare Finvest Limited01
-
COMPANY INFORMATION
C-101, 247, Park, L.B.S. Marg, Vikhroli (West), Mumbai- 400083
REGISTRAR & SHARE TRANSFER AGENTLinkintime India Private Limited
Tel: 022-49186000; Email: [email protected], www.linkintime.co.in
STATUTORY AUDITORSS.S. Kothari Mehta & Co.
Plot No. 68, Okhla Industrial Area, Phase- III, New Delhi- 110020
Vistra ITCL(India) Limited Axis Trustee Services Limited
*September 11, 2018 ** As on March 31, 2018
(Formerly IL&FS Trust Company Limited) 2nd Floor, Axis House, Bombay Dyeing Mills Compound
The IL&FS Financial Centre, Pandurang Budhkar Marg, Worli
TRUSTEE CONTACT DETAILSDebenture Trustee for NCD Public Issue Debenture Trustee for NCD Private Placement
Email Id:[email protected]
Plot C-22, G Block, Bandra-Kurla Complex Mumbai-400 025
Bandra (East), Mumbai 400 051 Telephone Number : 022 24255215/ 5216
Telephone Number : 022-26593927 Email Id: [email protected]
COMPANY SECRETARY
Mr. Vikram Talwar
nd2 Floor, Rajlok Building, 24, Nehru Place, New Delhi-110019
BOARD OF DIRECTORS AS ON THE DATE OF ADOPTION OF DIRECTORS’ REPORT*
CORPORATE OFFICE
Ms. Sabina Vaisoha
CHIEF EXECUTIVE OFFICER
Mr. Punit Arora
Mr. Sanjay D. Palve
th9 Floor, Tower B, Paras Twin Towers, Sector 54, Golf Course Road, Gurugram-122002 (Haryana),Phone No. +91 124 6180200E-Mail: [email protected], [email protected], Website: www.religarefinvest.comCIN NO: U74999DL1995PLC064132
Mr. Malay Kumar Sinha
REGISTERED OFFICE
Syndicate Bank
Central Bank of India
Vijaya Bank
State Bank of India
Karnataka Bank
Oriental Bank of Commerce
Punjab National Bank
SIDBI
Union Bank of IndiaICICI Bank
IDBI Bank Limited United Bank of India
Punjab & Sind Bank
Jammu & Kashmir Bank
Corporation Bank
South Indian Bank
Uco Bank
Dena Bank
Karur Vaysya Bank
Federal Bank Limited
Aditya Birla Finance Limited
Andhra Bank
Bank of Baroda
Bank of Maharashtra
Canara Bank
Bank of India
LIST OF BANKERS/ FIs / NBFCs TO THE COMPANY**
RFL’s culture which is driven by its five core values - passion, teamwork, diligence, innovation and ambition, not only
accelerates the success of its customers but also of its employees. RFL was certified by the Great Place To Work Institute® for
FY 17-18 and this recognition is a testimony of a high trust and high performance culture that the company cultivates thereby
making it a winning workplace!
Religare Enterprises Limited established Religare Finvest Limited (RFL) as its subsidiary in the year 2006, and since its
inception, the company has been delivering steadily and strongly on its vision of setting the standards of excellence for the
commercial financial services industry. RFL is a non-deposit taking systemically important Non-Banking Finance Company
with a robust vintage of twelve years. To propel the growth of SMEs and MSMEs remains at the core of your company’s
ideology and we have year on year fuelled and nurtured the dreams of small business owners.
With an ISO certification 9001:2008 and a wide network of 35 branches across India, RFL is committed to providing debt
capital in the form of small and medium enterprises (SMEs) financing, retail capital market financing and corporate loans.
The experienced leadership is complemented with a committed employee base and together the organisation has strived to
provide value-based innovative products and services through streamlined processes, bolstered by robust underwriting
capabilities and high standards of customer service. With the strong belief that the customer’s success is our success, your
company has played a vital role in nurturing its customer’s business while growing to a book size of over (value as on March
31, 2018).
Change is the only constant and with changing times, one has to evolve to thrive. And RFL has been in the forefront of
embracing these changes with ease. The socio-economic, political and regulatory changes come with its own set of
challenges but our agile framework and committed mindset has insulated us from deep impacts. While the changes outside
are not under our control but internally we have constantly aimed to improve and evolve our processes, services and
offerings. In FY 17-18, we envisioned and formulated various strategic initiatives at different levels in the organisation. We
were successful in creating a sturdy system replete with contemporary policies and practices in areas pertaining to
technology, innovation and automation. This zeal of ours has helped us to maintain cost optimisation and has put us at par
with other competitive players in the industry.
ABOUT RELIGARE FINVEST LIMITED
Religare Finvest Limited
rdXXIII Annual Report 2017-18
02
rdXXIII Annual Report 2017-18
Religare Finvest Limited01
-
rdXXIII Annual Report 2017-18
Religare Finvest Limited Religare Finvest Limited
rdXXIII Annual Report 2017-18
TEAMLEADERSHIP
03 04
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rdXXIII Annual Report 2017-18
Religare Finvest Limited Religare Finvest Limited
rdXXIII Annual Report 2017-18
TEAMLEADERSHIP
03 04
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Religare Finvest Limited
rdXXIII Annual Report 2017-18
Religare Finvest Limited
rdXXIII Annual Report 2017-18
Mr. Sanjay D PalveCEO
Mr. Sanjay D Palve holds total post qualification experience of 21 years in Financial Services business such as Corporate Banking, Corporate Finance, Structured Finance, Financial Restructuring, Investment Banking, Retail Asset Lending and Loan Syndication with an excellent track record in building and leading large financial businesses. He has worked with reputed organizations such as Yes Bank Ltd., ICICI Bank Ltd, L&T etc.
He holds an engineering degree from VJTI, University of Mumbai and a Masters in Management (Finance) degree from Jamanalal Bajaj Institute of Management, University of Mumbai.
He joined Yes Bank in 2004, when the bank just started commercial operations, and over his Tenure of 13+ years, he handled various businesses such as corporate finance, corporate banking, structured finance, priority sector lending and loan syndication. He was part of the core team that steered bank’s growth over the years since its inception. In his last assignment with Yes Bank, he was the Global Business Head - corporate banking, Infrastructure Banking and MNC Banking (multinational clients). He was also nominated as the whole time Director on the board of the bank. At ICICI Bank, he worked in the area of project finance, mainly handling transportation sector.
He was a member of various industry associations, including Infrastructure Sector and Energy Sector Committees of Bombay Chamber of Commerce & Industry (BCCI), Infrastructure Committee of Confederation of Indian Industry (CII) for Southern Chapter, Sub-committee of Indian Bank’s Association (IBA) on Infrastructure and CII National Committee on Bio & Wind Energy 2017-18.
He firmly believes in the philosophy of working hard, team work and creating work-life balance culture. He likes reading, adventure sports and travelling to remote places.
05 06
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Religare Finvest Limited
rdXXIII Annual Report 2017-18
Religare Finvest Limited
rdXXIII Annual Report 2017-18
Mr. Sanjay D PalveCEO
Mr. Sanjay D Palve holds total post qualification experience of 21 years in Financial Services business such as Corporate Banking, Corporate Finance, Structured Finance, Financial Restructuring, Investment Banking, Retail Asset Lending and Loan Syndication with an excellent track record in building and leading large financial businesses. He has worked with reputed organizations such as Yes Bank Ltd., ICICI Bank Ltd, L&T etc.
He holds an engineering degree from VJTI, University of Mumbai and a Masters in Management (Finance) degree from Jamanalal Bajaj Institute of Management, University of Mumbai.
He joined Yes Bank in 2004, when the bank just started commercial operations, and over his Tenure of 13+ years, he handled various businesses such as corporate finance, corporate banking, structured finance, priority sector lending and loan syndication. He was part of the core team that steered bank’s growth over the years since its inception. In his last assignment with Yes Bank, he was the Global Business Head - corporate banking, Infrastructure Banking and MNC Banking (multinational clients). He was also nominated as the whole time Director on the board of the bank. At ICICI Bank, he worked in the area of project finance, mainly handling transportation sector.
He was a member of various industry associations, including Infrastructure Sector and Energy Sector Committees of Bombay Chamber of Commerce & Industry (BCCI), Infrastructure Committee of Confederation of Indian Industry (CII) for Southern Chapter, Sub-committee of Indian Bank’s Association (IBA) on Infrastructure and CII National Committee on Bio & Wind Energy 2017-18.
He firmly believes in the philosophy of working hard, team work and creating work-life balance culture. He likes reading, adventure sports and travelling to remote places.
05 06
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Mr. Pankaj SharmaPresident & CRO
Mr. Pankaj Sharma has over 27 years of rich experience in Credit and Risk of which he has been with Citibank N.A. / Citicorp Finance (India) Ltd for about 15 years. He started his career from L&T Ltd. in 1989 as Branch Engineer finalizingmerchandising plans for their entire range of construction and earthmoving equipment. In 1997, he moved to RPG Itochu Finance Ltd in the role of Business Development for construction equipment. It was in 1999 that he joined Citicorp Finance (CFIL) and managed transportation and equipment finance businesses thereby underwriting credits, managing portfolio within program parameters of net credit losses & delinquencies and applied rehabilitation and remedial measures for stressed accounts. He has also handled various roles in Citicorp Finance including Portfolio and Operational Risk Manager, Risk Head of Asset Backed Finance and Head of Equipment Management Group. He was last designated as Managing Director in CFIL.
Prior to joining Religare Finvest Limited, Pankaj was working as Director and Risk Head- Citibank N.A. for Asset Backed Finance under Commercial Banking Group. He is a B.Tech from REC Kurukshetra- batch of 1989.
Mr. Ashish AnandGroup Head – Human Resources
Having joined the Religare Group in 2008 to set up its training and development function, he thereafter managed the Business HR function for retail financial services businesses (NBFC, Health Insurance & Capital Market). He has diverse & multi industry experience of over 16 years in areas such as Org design & scale up, system thinking, employee engagement, organisational development, performance management, ESOP & Compensation management, etc.
Ashish started his career at Piaggio and later worked at Dabur India, where in his last role, he was simultaneously managing various portfolios such as - international business as HR head, HR Business Partner-Sales (West & South) and Corporate HR.
He holds a bachelor’s degree in commerce from Pune University and is an alumnus of Symbiosis Institute of Business Management. Besides work, Ashish loves the game of golf and gymming.
Mr. Ashish Anand is responsible for driving all strategic HR plans such as Culture building, PMS, Compensation & Benefits, R&R, Employee Engagement, Hiring & On-Boarding, OD & Training. All his efforts are guided towards making Religare Finvest Limited & its subsidiary, an Employer of Choice. Besides HR function, he is also responsible for Admin & Infrastructure functions.
Religare Finvest Limited
rdXXIII Annual Report 2017-18
Religare Finvest Limited
rdXXIII Annual Report 2017-18
INDUSTRY
OVERVIEW
07 08
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Mr. Pankaj SharmaPresident & CRO
Mr. Pankaj Sharma has over 27 years of rich experience in Credit and Risk of which he has been with Citibank N.A. / Citicorp Finance (India) Ltd for about 15 years. He started his career from L&T Ltd. in 1989 as Branch Engineer finalizingmerchandising plans for their entire range of construction and earthmoving equipment. In 1997, he moved to RPG Itochu Finance Ltd in the role of Business Development for construction equipment. It was in 1999 that he joined Citicorp Finance (CFIL) and managed transportation and equipment finance businesses thereby underwriting credits, managing portfolio within program parameters of net credit losses & delinquencies and applied rehabilitation and remedial measures for stressed accounts. He has also handled various roles in Citicorp Finance including Portfolio and Operational Risk Manager, Risk Head of Asset Backed Finance and Head of Equipment Management Group. He was last designated as Managing Director in CFIL.
Prior to joining Religare Finvest Limited, Pankaj was working as Director and Risk Head- Citibank N.A. for Asset Backed Finance under Commercial Banking Group. He is a B.Tech from REC Kurukshetra- batch of 1989.
Mr. Ashish AnandGroup Head – Human Resources
Having joined the Religare Group in 2008 to set up its training and development function, he thereafter managed the Business HR function for retail financial services businesses (NBFC, Health Insurance & Capital Market). He has diverse & multi industry experience of over 16 years in areas such as Org design & scale up, system thinking, employee engagement, organisational development, performance management, ESOP & Compensation management, etc.
Ashish started his career at Piaggio and later worked at Dabur India, where in his last role, he was simultaneously managing various portfolios such as - international business as HR head, HR Business Partner-Sales (West & South) and Corporate HR.
He holds a bachelor’s degree in commerce from Pune University and is an alumnus of Symbiosis Institute of Business Management. Besides work, Ashish loves the game of golf and gymming.
Mr. Ashish Anand is responsible for driving all strategic HR plans such as Culture building, PMS, Compensation & Benefits, R&R, Employee Engagement, Hiring & On-Boarding, OD & Training. All his efforts are guided towards making Religare Finvest Limited & its subsidiary, an Employer of Choice. Besides HR function, he is also responsible for Admin & Infrastructure functions.
Religare Finvest Limited
rdXXIII Annual Report 2017-18
Religare Finvest Limited
rdXXIII Annual Report 2017-18
INDUSTRY
OVERVIEW
07 08
-
Religare Finvest Limited
rdXXIII Annual Report 2017-18
Religare Finvest Limited
rdXXIII Annual Report 2017-18
Many NBFCs started focusing on the wholesale segment about five years ago. While NBFCs would continue to do well in their traditional stronghold of retail finance, they are seen growing fastest in the wholesale finance segment, which would provide a kicker to their overall credit growth. Owing to the RERA implementation and the rising demand for mid-corporate promoter financing, the opportunity in realty and the structured credit space has gone up materially. The report also stated that the home loans will grow at 18 per cent over the next three fiscals on a sharper focus by the housing finance companies on the self-employed borrowers and lower ticket size segments.
India’s gross domestic savings (GDS) as a percentage of Gross Domestic Product (GDP) has remained above 30 per cent since 2004. It is projected that national savings in India will reach US$ 1,272 billion by 2019. Over 95 per cent of household savings in India are invested in bank deposits and only 5 per cent in other financial asset classes.
The micro and small enterprises will be the key growth drivers for banks and NBFCs in the coming years as the segment is highly under-served and has managed to maintain its creditworthiness. The MSME credit demand still remains hugely unmet and the NBFCs share in MSME financing will continue to grow but the competitive intensity will rise owing to the entry of the small finance banks.
According to a report published by BCG, NBFCs are becoming the go-to lenders for youngsters in India. Of the total loans given by financial institutions in India to persons aged between 21 and 35 years, NBFCs had the maximum market share of 49%. NBFCs, with their focus on lower ticket and early credit lifestage products, have gained close to 50% share of loans in the youth segment.
On the asset quality front, which has been one of the most worrying factors for the banking system, it said the share of dud assets have been stable so far on a better understanding of customers, product innovation and differentiated value proposition for NBFCs. But the NBFCs will have to balance the risk-reward ratio as increasing competition puts pressure on yields.
The Government of India has introduced several reforms to liberalise, regulate and enhance this industry. The Government and Reserve Bank of India (RBI) have taken various measures to facilitate easy access to finance for Micro, Small and Medium Enterprises (MSMEs). These measures include launching Credit Guarantee Fund Scheme for Micro and Small Enterprises, issuing guideline to banks regarding collateral requirements and setting up a Micro Units Development and Refinance Agency (MUDRA). With a combined push by both government and private sector, India is undoubtedly one of the world's most vibrant capital markets. In 2017,a new portal named 'Udyami Mitra' has been launched by the Small Industries Development Bank of India (SIDBI) with the aim of improving credit availability to Micro, Small and Medium Enterprises' (MSMEs) in the country. India has scored a perfect 10 in protecting shareholders' rights on the back of reforms implemented by Securities and Exchange Board of India (SEBI).
India has a diversified financial sector undergoing rapid expansion, both in terms of strong growth of existing financial services firms and new entities entering the market. The sector comprises commercial banks, insurance companies, non-banking financial companies, co-operatives, pension funds, mutual funds and other smaller financial entities. The banking regulator has allowed new entities such as payments banks to be created recently thereby adding to the types of entities operating in the sector. However, the financial sector in India is predominantly a banking sector with commercial banks accounting for more than 64 per cent of the total assets held by the financial system.
The share of non-banking financiers in the overall loan market will go up to 19 per cent by the fiscal 2020 from 16 per cent last fiscal year, primarily because of a strong play in the wholesale segment and this will be possible on the back of an 18 per cent annual growth in non-banking finance companies (NBFCs) loan books over the next three years, as per a CRISIL report. The NBFCs will be able to increase their share in the overall pie despite increasingly aggressive play by private sector banks in the retail segment, and also a possible toughening of stance from the state-run ones after the recently announced capital infusion.
The growth of fin-techs can be viewed as an opportunity for collaboration for NBFCs as it can aid in better quality and lower cost of origination, stronger underwriting norms, more focused identification of customers, and expansion of the target market segment.
Industry Structure & Development
09 10
-
Religare Finvest Limited
rdXXIII Annual Report 2017-18
Religare Finvest Limited
rdXXIII Annual Report 2017-18
Many NBFCs started focusing on the wholesale segment about five years ago. While NBFCs would continue to do well in their traditional stronghold of retail finance, they are seen growing fastest in the wholesale finance segment, which would provide a kicker to their overall credit growth. Owing to the RERA implementation and the rising demand for mid-corporate promoter financing, the opportunity in realty and the structured credit space has gone up materially. The report also stated that the home loans will grow at 18 per cent over the next three fiscals on a sharper focus by the housing finance companies on the self-employed borrowers and lower ticket size segments.
India’s gross domestic savings (GDS) as a percentage of Gross Domestic Product (GDP) has remained above 30 per cent since 2004. It is projected that national savings in India will reach US$ 1,272 billion by 2019. Over 95 per cent of household savings in India are invested in bank deposits and only 5 per cent in other financial asset classes.
The micro and small enterprises will be the key growth drivers for banks and NBFCs in the coming years as the segment is highly under-served and has managed to maintain its creditworthiness. The MSME credit demand still remains hugely unmet and the NBFCs share in MSME financing will continue to grow but the competitive intensity will rise owing to the entry of the small finance banks.
According to a report published by BCG, NBFCs are becoming the go-to lenders for youngsters in India. Of the total loans given by financial institutions in India to persons aged between 21 and 35 years, NBFCs had the maximum market share of 49%. NBFCs, with their focus on lower ticket and early credit lifestage products, have gained close to 50% share of loans in the youth segment.
On the asset quality front, which has been one of the most worrying factors for the banking system, it said the share of dud assets have been stable so far on a better understanding of customers, product innovation and differentiated value proposition for NBFCs. But the NBFCs will have to balance the risk-reward ratio as increasing competition puts pressure on yields.
The Government of India has introduced several reforms to liberalise, regulate and enhance this industry. The Government and Reserve Bank of India (RBI) have taken various measures to facilitate easy access to finance for Micro, Small and Medium Enterprises (MSMEs). These measures include launching Credit Guarantee Fund Scheme for Micro and Small Enterprises, issuing guideline to banks regarding collateral requirements and setting up a Micro Units Development and Refinance Agency (MUDRA). With a combined push by both government and private sector, India is undoubtedly one of the world's most vibrant capital markets. In 2017,a new portal named 'Udyami Mitra' has been launched by the Small Industries Development Bank of India (SIDBI) with the aim of improving credit availability to Micro, Small and Medium Enterprises' (MSMEs) in the country. India has scored a perfect 10 in protecting shareholders' rights on the back of reforms implemented by Securities and Exchange Board of India (SEBI).
India has a diversified financial sector undergoing rapid expansion, both in terms of strong growth of existing financial services firms and new entities entering the market. The sector comprises commercial banks, insurance companies, non-banking financial companies, co-operatives, pension funds, mutual funds and other smaller financial entities. The banking regulator has allowed new entities such as payments banks to be created recently thereby adding to the types of entities operating in the sector. However, the financial sector in India is predominantly a banking sector with commercial banks accounting for more than 64 per cent of the total assets held by the financial system.
The share of non-banking financiers in the overall loan market will go up to 19 per cent by the fiscal 2020 from 16 per cent last fiscal year, primarily because of a strong play in the wholesale segment and this will be possible on the back of an 18 per cent annual growth in non-banking finance companies (NBFCs) loan books over the next three years, as per a CRISIL report. The NBFCs will be able to increase their share in the overall pie despite increasingly aggressive play by private sector banks in the retail segment, and also a possible toughening of stance from the state-run ones after the recently announced capital infusion.
The growth of fin-techs can be viewed as an opportunity for collaboration for NBFCs as it can aid in better quality and lower cost of origination, stronger underwriting norms, more focused identification of customers, and expansion of the target market segment.
Industry Structure & Development
09 10
-
327
440
643
830
1,079
40%
34%
46%
39% 30% 32%
2013-14 2014-15 2015-16 2016-17 2017-18 P 2018-19 P
200
400
600
800
1,000
1,200
1,400
NBFCs to continue registering impressive growth
Note: LAP portfolio also included for NBFCs where bifurcation is not available;
Source: RBI. CRISIL Research
Commercial vehicle finance excluded
Over the years, the NBFCs share in MSME financing has grown substantially as compared to the public sector banks, private sector banks and foreign banks. The NBFC share in MSME Financing is expected to grow to 6.7 per cent in FY 17 as compared to 5.6 per cent in the previous year.
70.4%
22.8%
3.3%5.6%
69.8%
23.1%
3.1%4.1%
67.1%
24.7%
2.5%
5.6%
64.5%
25.7%
3.0%
6.7%
NBFCs gain share in MSME financing
FY14E FY15E FY16E FY17E
Note: LAP portfolio also included for NBFCs where bifurcation is not available;
Commercial vehicle finance excluded
Source: RBI. CRISIL Research
Religare Finvest Limited
rdXXIII Annual Report 2017-18
Religare Finvest Limited
rdXXIII Annual Report 2017-18
• Overall domestic credit: Size, Composition and Growth Trends
The Indian retail credit market stood at `32.5 trillion as on December 31, 2017 registering a y-o-y growth of about 20%. The growth dipped post demonetisation and remained subdued till Q2 FY2018. The credit growth for SCB and NBFC revived in Q3 FY2018 and registered a 19% y-o-y growth. The key target borrower segments for the NBFCs are the self-employed and small businesses, and their sizeable share of business is based on cash transactions. Owing to demontisation, their growth dipped and remained subdued because of the uncertainties around the impact of GST implementation. This in turn impacted the growth of the NBFC retail credit. With some stabilisation of the GST processes and improvement in demand, the credit growth rose sharply in Q3 FY2018 and it expanded by about 6.0% during the quarter vis-a-vis an average sequential Q-o-Q growth of about 3.7% over the previous four quarters. As on December 31, 2017, the total managed retail NBFC credit stood at Rs. 7.0 trillion (`6.1 trillion in March 2017) and grew by about 18.3% over December 31, 2016 ("15.5% in FY2017 and "18.8% in FY2016). The overall NBFC-retail credit growth was supported by revival in credit growth in some key asset classes, namely, commercial vehicles (CV), unsecured credit (including microfinance) and LAP+SME. These segments together accounted for about 60% of the total NBFC retail credit as of December 2017. The HFC (retail) grew by a healthy 23%, continuing its strong growth trend. Supported by the revival in retail credit growth, share of retail credit in the overall credit (SCB+NBFC+HFC) improved to 33% as compared with ~31% in December 2016.
ICRA expects retail credit growth in FY2018 to be at ~20% and about 18-19% in FY2019 as uptick witnessed in the key asset segments in NBFCs, namely -CV, SME and unsecured/ microfinance during FY2018 is likely to hold up while HFC and bank credit growth is expected to expand at about 20-22% and 17-19% respectively. Growth in HFC’s credit is likely to be supported by strong growth.
Figure 1: Share of the Pie: Total Industry Credit as on December 31, 2017
Note: Retail Credit includes that of scheduled commercial banks (SCB), non-banking financial companies and housing finance companies
Figure 2 : Size of the Retail Credit Market
Public Sector Banks Private Sector Banks Foreign Banks NBFCs
Source: RBI, financials of NBFCs & Mortgage lenders; ICRA research
SCB Retail18%
HFC-Others2%
HFC-Retail8%
NBFC-Retail7%
NBFC-Infra& Corporate
9%SCB-Others
56%
Source: RBI, financials of NBFCs & Mortgage lenders; ICRA researchSCB retail as per the Rbi sectoral break-up
0%
5%
10%
15%
20%
25%
30%
35%
0
5
10
15
20
25
30
35
Se
p-1
4
De
c-1
4
Ma
r-1
5
Jun
-15
Se
p-1
5
De
c-1
5
Ma
r-1
6
Se
p-1
6
Jun
-16
De
c-1
6
Ma
r-1
7
Jun
-17
Se
p-1
7
De
c-1
7
Retail Credit Retail Credit Growt Retail Credit as % of credit
12
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
11
-
327
440
643
830
1,079
40%
34%
46%
39% 30% 32%
2013-14 2014-15 2015-16 2016-17 2017-18 P 2018-19 P
200
400
600
800
1,000
1,200
1,400
NBFCs to continue registering impressive growth
Note: LAP portfolio also included for NBFCs where bifurcation is not available;
Source: RBI. CRISIL Research
Commercial vehicle finance excluded
Over the years, the NBFCs share in MSME financing has grown substantially as compared to the public sector banks, private sector banks and foreign banks. The NBFC share in MSME Financing is expected to grow to 6.7 per cent in FY 17 as compared to 5.6 per cent in the previous year.
70.4%
22.8%
3.3%5.6%
69.8%
23.1%
3.1%4.1%
67.1%
24.7%
2.5%
5.6%
64.5%
25.7%
3.0%
6.7%
NBFCs gain share in MSME financing
FY14E FY15E FY16E FY17E
Note: LAP portfolio also included for NBFCs where bifurcation is not available;
Commercial vehicle finance excluded
Source: RBI. CRISIL Research
Religare Finvest Limited
rdXXIII Annual Report 2017-18
Religare Finvest Limited
rdXXIII Annual Report 2017-18
• Overall domestic credit: Size, Composition and Growth Trends
The Indian retail credit market stood at `32.5 trillion as on December 31, 2017 registering a y-o-y growth of about 20%. The growth dipped post demonetisation and remained subdued till Q2 FY2018. The credit growth for SCB and NBFC revived in Q3 FY2018 and registered a 19% y-o-y growth. The key target borrower segments for the NBFCs are the self-employed and small businesses, and their sizeable share of business is based on cash transactions. Owing to demontisation, their growth dipped and remained subdued because of the uncertainties around the impact of GST implementation. This in turn impacted the growth of the NBFC retail credit. With some stabilisation of the GST processes and improvement in demand, the credit growth rose sharply in Q3 FY2018 and it expanded by about 6.0% during the quarter vis-a-vis an average sequential Q-o-Q growth of about 3.7% over the previous four quarters. As on December 31, 2017, the total managed retail NBFC credit stood at Rs. 7.0 trillion (`6.1 trillion in March 2017) and grew by about 18.3% over December 31, 2016 ("15.5% in FY2017 and "18.8% in FY2016). The overall NBFC-retail credit growth was supported by revival in credit growth in some key asset classes, namely, commercial vehicles (CV), unsecured credit (including microfinance) and LAP+SME. These segments together accounted for about 60% of the total NBFC retail credit as of December 2017. The HFC (retail) grew by a healthy 23%, continuing its strong growth trend. Supported by the revival in retail credit growth, share of retail credit in the overall credit (SCB+NBFC+HFC) improved to 33% as compared with ~31% in December 2016.
ICRA expects retail credit growth in FY2018 to be at ~20% and about 18-19% in FY2019 as uptick witnessed in the key asset segments in NBFCs, namely -CV, SME and unsecured/ microfinance during FY2018 is likely to hold up while HFC and bank credit growth is expected to expand at about 20-22% and 17-19% respectively. Growth in HFC’s credit is likely to be supported by strong growth.
Figure 1: Share of the Pie: Total Industry Credit as on December 31, 2017
Note: Retail Credit includes that of scheduled commercial banks (SCB), non-banking financial companies and housing finance companies
Figure 2 : Size of the Retail Credit Market
Public Sector Banks Private Sector Banks Foreign Banks NBFCs
Source: RBI, financials of NBFCs & Mortgage lenders; ICRA research
SCB Retail18%
HFC-Others2%
HFC-Retail8%
NBFC-Retail7%
NBFC-Infra& Corporate
9%SCB-Others
56%
Source: RBI, financials of NBFCs & Mortgage lenders; ICRA researchSCB retail as per the Rbi sectoral break-up
0%
5%
10%
15%
20%
25%
30%
35%
0
5
10
15
20
25
30
35
Se
p-1
4
De
c-1
4
Ma
r-1
5
Jun
-15
Se
p-1
5
De
c-1
5
Ma
r-1
6
Se
p-1
6
Jun
-16
De
c-1
6
Ma
r-1
7
Jun
-17
Se
p-1
7
De
c-1
7
Retail Credit Retail Credit Growt Retail Credit as % of credit
12
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
11
-
Religare Finvest Limited
rdXXIII Annual Report 2017-18
Religare Finvest Limited
rdXXIII Annual Report 2017-18
OUR
BUSINESSES
13 14
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rdXXIII Annual Report 2017-18
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rdXXIII Annual Report 2017-18
OUR
BUSINESSES
13 14
-
SME – Unsecured (INR Crore) (ENR)
2010 2011 2012 2013 2014 2015 2016 2017
303
672
1,066 931881 1,096
1,921
1,059
522
2018
As on March 31, 2018, RFL’s SME Working Capital Loan book stood at `522 Crore with 5,913 live accounts. Under this the Company acquired 2343 customer from Short Term Trade Finance (STTF) offering and 1387 customers under SME financing.
Segment Wise – Product Wise Performance
The Company has stated its objective to be an SME lending company. The SME financing constitutes over 72% of RFL’s lending business. The Company offers SME Loans for working capital and capacity expansion requirements and therefore acts as a ‘growth capital provider’ to the SME segment. RFL’s SME loan book has decreased to `6,934 Crore as of March 31, 2018 from ̀ 11,385 Crore in FY 2017. Several measures were undertaken during FY 17-18 as a part of portfolio consolidation and the need to build a more granular portfolio. 2343 Short Term Trade Finance & 1564 SME customers were acquired during the financial year by the Company.
SME - Secured: This product enables our customers to acquire funds against their residential or commercial property. Loans offered under this product may be utilised towards different business purposes including business expansion and purchase of plant and machinery. This product caters to individuals and corporates across various sectors & industries.
As on March 31, 2018, RFL’s SME Mortgage loan book was at ̀ 6,412 Crore with 3697 no. of active accounts.
SME FINANCING
SME - Secured (`Crore) (ENR):
SME - Unsecured: This product caters to the working capital and other financial requirements of medium and small enterprises. Loans are granted following an in-depth and detailed financial analysis and credit underwriting of the SME. This is a high yielding product and is non- revolving in nature with a maximum tenor of up to 3 years.
SME - Secured (INR Crore) (ENR)
2010 2011 2012 2013 2014 2015 2016 2017
909
2,892
5,913 5,8187,218
10,163
13,119
10,321
6,412
2018
Religare Finvest Limited
rdXXIII Annual Report 2017-18
Religare Finvest Limited
rdXXIII Annual Report 2017-18
15 16
-
SME – Unsecured (INR Crore) (ENR)
2010 2011 2012 2013 2014 2015 2016 2017
303
672
1,066 931881 1,096
1,921
1,059
522
2018
As on March 31, 2018, RFL’s SME Working Capital Loan book stood at `522 Crore with 5,913 live accounts. Under this the Company acquired 2343 customer from Short Term Trade Finance (STTF) offering and 1387 customers under SME financing.
Segment Wise – Product Wise Performance
The Company has stated its objective to be an SME lending company. The SME financing constitutes over 72% of RFL’s lending business. The Company offers SME Loans for working capital and capacity expansion requirements and therefore acts as a ‘growth capital provider’ to the SME segment. RFL’s SME loan book has decreased to `6,934 Crore as of March 31, 2018 from ̀ 11,385 Crore in FY 2017. Several measures were undertaken during FY 17-18 as a part of portfolio consolidation and the need to build a more granular portfolio. 2343 Short Term Trade Finance & 1564 SME customers were acquired during the financial year by the Company.
SME - Secured: This product enables our customers to acquire funds against their residential or commercial property. Loans offered under this product may be utilised towards different business purposes including business expansion and purchase of plant and machinery. This product caters to individuals and corporates across various sectors & industries.
As on March 31, 2018, RFL’s SME Mortgage loan book was at ̀ 6,412 Crore with 3697 no. of active accounts.
SME FINANCING
SME - Secured (`Crore) (ENR):
SME - Unsecured: This product caters to the working capital and other financial requirements of medium and small enterprises. Loans are granted following an in-depth and detailed financial analysis and credit underwriting of the SME. This is a high yielding product and is non- revolving in nature with a maximum tenor of up to 3 years.
SME - Secured (INR Crore) (ENR)
2010 2011 2012 2013 2014 2015 2016 2017
909
2,892
5,913 5,8187,218
10,163
13,119
10,321
6,412
2018
Religare Finvest Limited
rdXXIII Annual Report 2017-18
Religare Finvest Limited
rdXXIII Annual Report 2017-18
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rdXXIII Annual Report 2017-18
Religare Finvest Limited
rdXXIII Annual Report 2017-18
CMF – Promoter Funding (INR Crore) (ENR)
ð CAPITAL MARKET FINANCING
In line with the Company’s SME focused strategy, incremental lending under capital market products was discontinued during the year and the portfolios under Loans against Securities (LAS) and Promoter Finance stood at INR 1 cr. and INR 363 cr. respectively. The portfolios will run-off with loan maturity and attrition.
CMF – Loans Against Securities (INR Crore) (ENR)
SME Portfolio by Zone
BANGALORE BHUBANESWAR CHANDIGARH CHENNAI
HYDERABADHOGUJARAT_SOUTHGUJRAT_NORTH
INDORE KOLKATA MUMBAI NAGPUR
PUNJABPUNENEW DELHINASHIK
RAIPUR RAJASTHAN NORTH
6.11% 9.54% 0.00%
5.02%
9.56%
6.11%
5.48%
0.03%
5.56%3.26%3.50%14.34%
1.93%
1.58%
14.17%
6.13%
2.21%
1.30%4.15%
SME Portfolio by Industry segment
Services
Manufacturer
Primary & Allied
Others
CRE26.72%
7.47%3.07% 1.78%
60.96%
204
908
798
612665
735793
425363
2010 2011 2012 2013 2014 2015 2016 2017 2018
2010 2011 2012 2013 2014 2015 2016 2017
1
160
287
1,0481,111
1,317
1,519
1,227
811
2018
The primary target segment for RFL are the self-employed borrowers who mobilise loans for business needs. In a scenario, where the business environment is not conducive, there is likelihood of an impact on the repayment capacity of these borrowers, thereby resulting in asset quality issues. In challenging operating environments, these medium to small enterprises are more prone to high volatility in cash flows, with the result that the level of default tends to be higher for them. As part of the risk control mechanism, there is a continued focus on obtaining information on industries as well as micro and macro-economic developments on a real time basis. There is also a real time evolution of the due diligence/ underwriting parameters for better on-boarding quality.
ð Business Outlook
The sudden announcement of demonetisation opened the floodgates of digital payments and forced the common man to do a double take on digitisation. With GST on the anvil, the push for digitisation will be further strengthened and will help streamline even the most unorganised sectors of the economy. The MSME sector has long been regarded as the backbone of the economy and the above initiatives will push them to evolve and compete on a global platform. The introduction of the ‘One Nation –One Tax’ GST Bill was a watershed moment in the history of India’s economy and revolutionize the MSME sector to compete on an equal footing. RFL looks to FY 18-19, with a positive outlook riding on the back of the above progressive reforms.
The Indian Economy is poised to emerge as one of the leading economies of the world with a $5trillion economy by 2025. The present government’s impetus on ‘Make in India’ to strengthen the manufacturing sector, has given the MSME sector a major push.
ð Risks and concerns
17 18
-
Religare Finvest Limited
rdXXIII Annual Report 2017-18
Religare Finvest Limited
rdXXIII Annual Report 2017-18
CMF – Promoter Funding (INR Crore) (ENR)
ð CAPITAL MARKET FINANCING
In line with the Company’s SME focused strategy, incremental lending under capital market products was discontinued during the year and the portfolios under Loans against Securities (LAS) and Promoter Finance stood at INR 1 cr. and INR 363 cr. respectively. The portfolios will run-off with loan maturity and attrition.
CMF – Loans Against Securities (INR Crore) (ENR)
SME Portfolio by Zone
BANGALORE BHUBANESWAR CHANDIGARH CHENNAI
HYDERABADHOGUJARAT_SOUTHGUJRAT_NORTH
INDORE KOLKATA MUMBAI NAGPUR
PUNJABPUNENEW DELHINASHIK
RAIPUR RAJASTHAN NORTH
6.11% 9.54% 0.00%
5.02%
9.56%
6.11%
5.48%
0.03%
5.56%3.26%3.50%14.34%
1.93%
1.58%
14.17%
6.13%
2.21%
1.30%4.15%
SME Portfolio by Industry segment
Services
Manufacturer
Primary & Allied
Others
CRE26.72%
7.47%3.07% 1.78%
60.96%
204
908
798
612665
735793
425363
2010 2011 2012 2013 2014 2015 2016 2017 2018
2010 2011 2012 2013 2014 2015 2016 2017
1
160
287
1,0481,111
1,317
1,519
1,227
811
2018
The primary target segment for RFL are the self-employed borrowers who mobilise loans for business needs. In a scenario, where the business environment is not conducive, there is likelihood of an impact on the repayment capacity of these borrowers, thereby resulting in asset quality issues. In challenging operating environments, these medium to small enterprises are more prone to high volatility in cash flows, with the result that the level of default tends to be higher for them. As part of the risk control mechanism, there is a continued focus on obtaining information on industries as well as micro and macro-economic developments on a real time basis. There is also a real time evolution of the due diligence/ underwriting parameters for better on-boarding quality.
ð Business Outlook
The sudden announcement of demonetisation opened the floodgates of digital payments and forced the common man to do a double take on digitisation. With GST on the anvil, the push for digitisation will be further strengthened and will help streamline even the most unorganised sectors of the economy. The MSME sector has long been regarded as the backbone of the economy and the above initiatives will push them to evolve and compete on a global platform. The introduction of the ‘One Nation –One Tax’ GST Bill was a watershed moment in the history of India’s economy and revolutionize the MSME sector to compete on an equal footing. RFL looks to FY 18-19, with a positive outlook riding on the back of the above progressive reforms.
The Indian Economy is poised to emerge as one of the leading economies of the world with a $5trillion economy by 2025. The present government’s impetus on ‘Make in India’ to strengthen the manufacturing sector, has given the MSME sector a major push.
ð Risks and concerns
17 18
-
rdXXIII Annual Report 2017-18
Religare Finvest Limited
RELIGARE FINVEST LIMITEDFINANCIAL DECLARATION
rdXXIII Annual Report 2017-18
19 20
-
rdXXIII Annual Report 2017-18
Religare Finvest Limited
RELIGARE FINVEST LIMITEDFINANCIAL DECLARATION
rdXXIII Annual Report 2017-18
19 20
-
Religare Finvest Limited
rdXXIII Annual Report 2017-18
Religare Finvest Limited
rdXXIII Annual Report 2017-18
FINANCIAL RESULTS
Religare Finvest Limited
Dear Members,
rdYour Directors have pleasure in presenting their 23 Annual Report on the business and operations of the Religare Finvest
Limited (“the Company”/“RFL”) along with the Audited Financial Statements for the financial year ended March 31, 2018.
year ended 2017-2018 year ended 2016-2017
Particulars For the financial For the financial
Standalone Consolidated Standalone Consolidated (Audited) (Audited) (Audited) (Audited)
( In Lakh)`
The annual disclosure as per Clause 53 (f) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached herewith as Annexure- A and forms an integral part of this Report.
Profit before Tax (133,138.53) (131,940.20) 28,266.68 30,796.13
Profit / (Loss) before Tax after (133,138.53) (131,940.20) (51,100.52) (48,571.07)exceptional items
- Current Tax - 299.40 - 986.33
Profit / (loss) After Tax (110,275.46) (109,460.32) (34,093.21) (32,456.99)
Profit available for Appropriation (98,866.38) (90,822.66) 11,409.08 18,739.55
Total Income 142,989.19 157,267.56 241,712.96 256,942.69
Total Expenditure 276,127.72 289,207.76 213,446.28 226,146.56
Exceptional Items
Loans / Sundry Balances written off - - 79,367.20 79,367.20
Provision for Tax
- Taxes for Earlier Years - (10.73) 311.11 315.25
- Deferred Tax (22,863.08) (22,768.55) (17,318.42) (17,415.66)
Balance brought forward 11,409.08 18,739.55 45,502.29 51,401.07
Share of Profit Transferred to Minority - (101.89) (204.53)
Appropriations:
Tax on Distributed Profits - - - -
Transfer to Statutory Reserve - - - - Fund u/s 45 -IC of the RBI Act, 1934
Balance as at the end of the year (98,866.38) (90,822.66) 11,409.08 18,739.55
DIRECTORS' REPORT
21 22
-
Religare Finvest Limited
rdXXIII Annual Report 2017-18
Religare Finvest Limited
rdXXIII Annual Report 2017-18
FINANCIAL RESULTS
Religare Finvest Limited
Dear Members,
rdYour Directors have pleasure in presenting their 23 Annual Report on the business and operations of the Religare Finvest
Limited (“the Company”/“RFL”) along with the Audited Financial Statements for the financial year ended March 31, 2018.
year ended 2017-2018 year ended 2016-2017
Particulars For the financial For the financial
Standalone Consolidated Standalone Consolidated (Audited) (Audited) (Audited) (Audited)
( In Lakh)`
The annual disclosure as per Clause 53 (f) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached herewith as Annexure- A and forms an integral part of this Report.
Profit before Tax (133,138.53) (131,940.20) 28,266.68 30,796.13
Profit / (Loss) before Tax after (133,138.53) (131,940.20) (51,100.52) (48,571.07)exceptional items
- Current Tax - 299.40 - 986.33
Profit / (loss) After Tax (110,275.46) (109,460.32) (34,093.21) (32,456.99)
Profit available for Appropriation (98,866.38) (90,822.66) 11,409.08 18,739.55
Total Income 142,989.19 157,267.56 241,712.96 256,942.69
Total Expenditure 276,127.72 289,207.76 213,446.28 226,146.56
Exceptional Items
Loans / Sundry Balances written off - - 79,367.20 79,367.20
Provision for Tax
- Taxes for Earlier Years - (10.73) 311.11 315.25
- Deferred Tax (22,863.08) (22,768.55) (17,318.42) (17,415.66)
Balance brought forward 11,409.08 18,739.55 45,502.29 51,401.07
Share of Profit Transferred to Minority - (101.89) (204.53)
Appropriations:
Tax on Distributed Profits - - - -
Transfer to Statutory Reserve - - - - Fund u/s 45 -IC of the RBI Act, 1934
Balance as at the end of the year (98,866.38) (90,822.66) 11,409.08 18,739.55
DIRECTORS' REPORT
21 22
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Religare Finvest Limited
rdXXIII Annual Report 2017-18
4. RFL’s Assets under Management (AUM) declined by 31% to ̀ 1,016,826 Lakh.
5. Loan book size declined by 30% to ̀ 979,669 Lakh.
3. Loss after Tax for the year increased by 223% to ̀ 110,275 Lakh.
STATE OF THE COMPANY’S AFFAIRS
Owing to external as well as internal structural factors, the financial year FY 2017-18 was subdued for your company. With a view to improve its portfolio management, your company consolidated the losses of this tough financial year. Some key facts are shared below:
2. Loss before Tax for the year increased by 161% to ̀ 133,139 Lakh.
The revenue of your Company has decreased from `241,712.96 Lakh in financial year 2016-17 to `142,989.19 Lakh in financial year 2017-18. Loss before Tax has increased from ̀ 51,100.52 Lakh in financial year 2016-17 to ̀ 133,138.53 Lakh in financial year 2017-18. The Net Loss after Tax has also increased from ̀ 34,093.21 Lakh to ̀ 110,275.46 Lakh. Loss before tax has increased majorly on account of increase in Gross Non Performing Assets and due to reduction in total Loan Portfolio during the financial year under review. Total loan portfolio has decreased from `1,397,373.19 Lakh as at March 31, 2017 to `979,668.71 Lakh as at March 31, 2018. Gross Non Performing Assets has increased from `65,100.49 Lakh to ` 335,934.35 Lakh as at March 31, 2018.
RESULTS OF OPERATIONS (STANDALONE BASIS)
The last financial year was an unprecedented year for the finance industry with multiple challenges.
1. In Financial Year 2017-2018, RFL’s total income declined by 41% to ̀ 142,989 Lakh.
` 815.14 Lakh (FY 2016-17: ̀ 1,636.22 Lakh). As on March 31, 2018, RHDFCL paid-up equity share capital was ̀ 3,999.80 Lakh and Shareholders' Funds were ̀ 19,777.23 Lakh.
Further, information on the Business Overview and Outlook and State of the affairs of the Company is discussed in detail in the Management Discussion & Analysis Report (MDNA).
Your company holds 87.50% of the paid up equity share capital of Religare Housing Development Finance Corporation Limited (RHDFCL). RDHFCL is a Housing Finance Company registered with the National Housing Bank under section 29A of the National Housing Bank Act, 1987 and primarily engaged in lending of Housing Loans.
The key highlights of financial performance of Religare Housing Development Finance Corporation Limited, a subsidiary of RFL whose financials have been consolidated, are given below:
6. Capital Adequacy Ratio (CRAR) as on March 31, 2018 was 17.54%
In FY 2017-18, RHDFCL recorded a Total Income of ̀ 14,442.43 Lakh (FY 2016-17: ̀ 15,490.64 Lakh) and Profit After Tax of
PERFORMANCE OF THE SUBSIDIARIES
There is no change in the nature of business of the Company for the year under review.
7. RFL’s net NPAs were contained at 20.41% of total Book Size.
Particulars For the year ended March 31, 2018 For the year ended March 31, (` in Lakh) 2017 (` in Lakh)
-Deferred Tax 94.52 (97.24)
Profit before Tax 1,198.33 2,529.45
Profit after Tax 815.14 1,636.22
Appropriations have been madeas under:-ok
Total Income 14,442.43 15,490.64
Total Expenditure 13,244.10 12,961.18
Taxation-Current Tax 288.66 990.47
Balance transferred to Balance Sheet 652.11 1,308.98
Transfer to Special Reserve [under 163.03 327.24 Section 29C of the National Housing Bank Act, 1987]
Religare Finvest Limited
rdXXIII Annual Report 2017-18
DIVIDEND
RFL had made certain fixed deposits with Lakshmi Vilas Bank (“LVB”) in November 2016 and January 2017. LVB vide its letter dated 7th February 2018 had confirmed fixed deposits of ̀ 79,144.77 Lakh to the Company.
Management's Discussion and Analysis Report for the year under review as stipulated under the Revised Regulatory Framework for NBFCs issued by the Reserve Bank of India on November 10, 2014, is presented in a separate section under Annexure - B and forms an integral part of this Report.
In accordance with the provisions of section 45-IC of the RBI Act, 1934, the Company is required to transfer an amount equivalent to 20% of profit after tax, to its Statutory Reserve. During the current and previous year, no amount has been transferred to the said Reserve account due to loss occurred during the current and previous year.
Your Company is a Systemically Important Non-Deposit Accepting NBFC (ND-SI- NBFC). The Company did not hold any public deposits at the beginning of the year nor it has accepted any public deposits during the year under review.
Accordingly the Company has transferred `Nil (previous year `Nil) to DRR out of Profit After Tax after transfer to Statutory Reserve, if applicable.
As against the minimum prescribed Capital Adequacy Ratio (CAR) of 15% as set out by the Reserve Bank of India (RBI), the Company has a Capital Adequacy Ratio of 17.54% as on March 31, 2018 (Previous Year 21.20%).
Your Board of Directors would like to state that there has been no Material Changes and Commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate (March 31, 2018) and the date of the Board’s Report (i.e. September 11, 2018) which may impact the financial position of the Company.
PUBLIC DEPOSITS
TRANSFER TO RESERVES
CAPITAL ADEQUACY RATIO
The Company made Public issue of Series-1 of Non-Convertible Debentures (NCDs) (‘Series-1’) aggregating `7,538,049,000 during financial year 2011-12 and Series-2 of Non-Convertible Debentures (NCDs) (‘Series-2’) aggregating `3,320,489,000 during financial year 2012-13, of which Series-1 has been fully redeemed during the financial year 2016-17 and principal outstanding balance of Series -2 is `369,344,000 as on March 31, 2018. In terms of the provisions of Section 71 of the Companies Act, 2013 read with General Circular no.9/2002 dated April 18, 2002 as amended by General Circular No. 4/2013 dated February 11, 2013 issued by the Ministry of Corporate Affairs, the Company has created Debenture Redemption Reserve (DRR) on all outstanding publicly placed debentures.
As on March 31, 2018, your Company has Religare Housing Development Finance Corporation Limited as its subsidiary.
Pursuant to Section 129(3) of the Companies Act, 2013, the Company has prepared a consolidated financial statements of the Company which shall be laid before the ensuing Annual General Meeting of the Company.
The audited Consolidated Financial Statements together with Auditors’ Report form part of the Annual Report.
a) Fixed Deposits of RFL with Lakshmi Vilas Bank
The details of the transfer to other reserves as part of regulatory requirements are given below:
RFL received a letter dated February 9, 2018 from LVB purporting to allude to certain loans disbursed by LVB to third parties allegedly in consideration of security of the RFL’s Fixed Deposits (“FDs”) with LVB. By means of this letter, LVB also purported to call upon RFL to execute the security documentation in connection with the alleged loans.
Since the Company has incurred the losses during the financial year 2017-18, therefore the Company has not transferred any amount out of its profits to its General Reserve during the current financial year.
a. Statutory Reserve Fund
However, the Board of Directors of your Company would like to draw your attention towards the following matters:
MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
b. Debenture Redemption Reserve
SUBSIDIARY COMPANY
Your Company did not declare any interim dividend / final dividend during the year under review.
The statement containing salient features of the financial statement of subsidiaries/associate companies/joint ventures pursuant to first proviso to sub-section (3) of Section 129 read with Rule 5 of Companies (Accounts) Rules, 2014, in Form AOC-1, forms part of the consolidated financial statements of the Company and hence not repeated here for the sake of brevity.
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Religare Finvest Limited
rdXXIII Annual Report 2017-18
4. RFL’s Assets under Management (AUM) declined by 31% to ̀ 1,016,826 Lakh.
5. Loan book size declined by 30% to ̀ 979,669 Lakh.
3. Loss after Tax for the year increased by 223% to ̀ 110,275 Lakh.
STATE OF THE COMPANY’S AFFAIRS
Owing to external as well as internal structural factors, the financial year FY 2017-18 was subdued for your company. With a view to improve its portfolio management, your company consolidated the losses of this tough financial year. Some key facts are shared below:
2. Loss before Tax for the year increased by 161% to ̀ 133,139 Lakh.
The revenue of your Company has decreased from `241,712.96 Lakh in financial year 2016-17 to `142,989.19 Lakh in financial year 2017-18. Loss before Tax has increased from ̀ 51,100.52 Lakh in financial year 2016-17 to ̀ 133,138.53 Lakh in financial year 2017-18. The Net Loss after Tax has also increased from ̀ 34,093.21 Lakh to ̀ 110,275.46 Lakh. Loss before tax has increased majorly on account of increase in Gross Non Performing Assets and due to reduction in total Loan Portfolio during the financial year under review. Total loan portfolio has decreased from `1,397,373.19 Lakh as at March 31, 2017 to `979,668.71 Lakh as at March 31, 2018. Gross Non Performing Assets has increased from `65,100.49 Lakh to ` 335,934.35 Lakh as at March 31, 2018.
RESULTS OF OPERATIONS (STANDALONE BASIS)
The last financial year was an unprecedented year for the finance industry with multiple challenges.
1. In Financial Year 2017-2018, RFL’s total income declined by 41% to ̀ 142,989 Lakh.
` 815.14 Lakh (FY 2016-17: ̀ 1,636.22 Lakh). As on March 31, 2018, RHDFCL paid-up equity share capital was ̀ 3,999.80 Lakh and Shareholders' Funds were ̀ 19,777.23 Lakh.
Further, information on the Business Overview and Outlook and State of the affairs of the Company is discussed in detail in the Management Discussion & Analysis Report (MDNA).
Your company holds 87.50% of the paid up equity share capital of Religare Housing Development Finance Corporation Limited (RHDFCL). RDHFCL is a Housing Finance Company registered with the National Housing Bank under section 29A of the National Housing Bank Act, 1987 and primarily engaged in lending of Housing Loans.
The key highlights of financial performance of Religare Housing Development Finance Corporation Limited, a subsidiary of RFL whose financials have been consolidated, are given below:
6. Capital Adequacy Ratio (CRAR) as on March 31, 2018 was 17.54%
In FY 2017-18, RHDFCL recorded a Total Income of ̀ 14,442.43 Lakh (FY 2016-17: ̀ 15,490.64 Lakh) and Profit After Tax of
PERFORMANCE OF THE SUBSIDIARIES
There is no change in the nature of business of the Company for the year under review.
7. RFL’s net NPAs were contained at 20.41% of total Book Size.
Particulars For the year ended March 31, 2018 For the year ended March 31, (` in Lakh) 2017 (` in Lakh)
-Deferred Tax 94.52 (97.24)
Profit before Tax 1,198.33 2,529.45
Profit after Tax 815.14 1,636.22
Appropriations have been madeas under:-ok
Total Income 14,442.43 15,490.64
Total Expenditure 13,244.10 12,961.18
Taxation-Current Tax 288.66 990.47
Balance transferred to Balance Sheet 652.11 1,308.98
Transfer to Special Reserve [under 163.03 327.24 Section 29C of the National Housing Bank Act, 1987]
Religare Finvest Limited
rdXXIII Annual Report 2017-18
DIVIDEND
RFL had made certain fixed deposits with Lakshmi Vilas Bank (“LVB”) in November 2016 and January 2017. LVB vide its letter dated 7th February 2018 had confirmed fixed deposits of ̀ 79,144.77 Lakh to the Company.
Management's Discussion and Analysis Report for the year under review as stipulated under the Revised Regulatory Framework for NBFCs issued by the Reserve Bank of India on November 10, 2014, is presented in a separate section under Annexure - B and forms an integral part of this Report.
In accordance with the provisions of section 45-IC of the RBI Act, 1934, the Company is required to transfer an amount equivalent to 20% of profit after tax, to its Statutory Reserve. During the current and previous year, no amount has been transferred to the said Reserve account due to loss occurred during the current and previous year.
Your Company is a Systemically Important Non-Deposit Accepting NBFC (ND-SI- NBFC). The Company did not hold any public deposits at the beginning of the year nor it has accepted any public deposits during the year under review.
Accordingly the Company has transferred `Nil (previous year `Nil) to DRR out of Profit After Tax after transfer to Statutory Reserve, if applicable.
As against the minimum prescribed Capital Adequacy Ratio (CAR) of 15% as set out by the Reserve Bank of India (RBI), the Company has a Capital Adequacy Ratio of 17.54% as on March 31, 2018 (Previous Year 21.20%).
Your Board of Directors would like to state that there has been no Material Changes and Commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate (March 31, 2018) and the date of the Board’s Report (i.e. September 11, 2018) which may impact the financial position of the Company.
PUBLIC DEPOSITS
TRANSFER TO RESERVES
CAPITAL ADEQUACY RATIO
The Company made Public issue of Series-1 of Non-Convertible Debentures (NCDs) (‘Series-1’) aggregating `7,538,049,000 during financial year 2011-12 and Series-2 of Non-Convertible Debentures (NCDs) (‘Series-2’) aggregating `3,320,489,000 during financial year 2012-13, of which Series-1 has been fully redeemed during the financial year 2016-17 and principal outstanding balance of Series -2 is `369,344,000 as on March 31, 2018. In terms of the provisions of Section 71 of the Companies Act, 2013 read with General Circular no.9/2002 dated April 18, 2002 as amended by General Circular No. 4/2013 dated February 11, 2013 issued by the Ministry of Corporate Affairs, the Company has created Debenture Redemption Reserve (DRR) on all outstanding publicly placed debentures.
As on March 31, 2018, your Company has Religare Housing Development Finance Corporation Limited as its subsidiary.
Pursuant to Section 129(3) of the Companies Act, 2013, the Company has prepared a consolidated financial statements of the Company which shall be laid before the ensuing Annual General Meeting of the Company.
The audited Consolidated Financial Statements together with Auditors’ Report form part of the Annual Report.
a) Fixed Deposits of RFL with Lakshmi Vilas Bank
The details of the transfer to other reserves as part of regulatory requirements are given below:
RFL received a letter dated February 9, 2018 from LVB purporting to allude to certain loans disbursed by LVB to third parties allegedly in consideration of security of the RFL’s Fixed Deposits (“FDs”) with LVB. By means of this letter, LVB also purported to call upon RFL to execute the security documentation in connection with the alleged loans.
Since the Company has incurred the losses during the financial year 2017-18, therefore the Company has not transferred any amount out of its profits to its General Reserve during the current financial year.
a. Statutory Reserve Fund
However, the Board of Directors of your Company would like to draw your attention towards the following matters:
MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
b. Debenture Redemption Reserve
SUBSIDIARY COMPANY
Your Company did not declare any interim dividend / final dividend during the year under review.
The statement containing salient features of the financial statement of subsidiaries/associate companies/joint ventures pursuant to first proviso to sub-section (3) of Section 129 read with Rule 5 of Companies (Accounts) Rules, 2014, in Form AOC-1, forms part of the consolidated financial statements of the Company and hence not repeated here for the sake of brevity.
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Religare Finvest Limited
rdXXIII Annual Report 2017-18
In view of RBI concerns, the first step the new Board/Management has taken immediately after taking charge was that it has reviewed the portfolio and the financial reports of the borrowers to determine the recover ability of the said loans. As a part of the recovery process, the management issued legal notices to the borrowers and has initiated corporate insolvency resolution process under Insolvency and Bankruptcy Code, 2016, against the said entities comprising the Corporate Loan Book.
Vide its letter dated February 16, 2018, LVB was expressly informed that not only RFL was not party to any loans that were allegedly sanctioned or granted by LVB to any third party, as also that no authorization, sanction or approval had ever been provided by RFL to LVB permitting the creation of any security or encumbrance of the FDs for any third party loans or borrowings. LVB was also forewarned that any attempt to subject the FDs to illegal encumbrance would not only be violative of RFL’s rights, but also constitute deliberate contempt by LVB of the Order dated January 5, 2018 passed by the Hon’ble Delhi High Court, a copy of which was served on LVB vide Legal notice dated February 16, 2018.
RFL at no point in time, instructed, authorized or consented to the liquidation of the fixed deposits or the adjustment thereof against loans availed of by any third parties or the creation of any encumbrance on the fixed deposits, whether by way of a lien, security, charge or pledge in connection with the loans availed of by any third parties. RFL has filed a suit for recovery of the Fixed Deposit amounts aggregating `79,144.77 Lakh appropriated by LVB before the Hon’ble Delhi High Court on May 31, 2018. On the next date of hearing i.e. July 19, 2018, LVB filed its written statement and served a copy to RFL. Matter was posted to July 31, 2018. On July 31, 2018 RFL pressed for the injunction applications pending before the court and both the parties were heard at length. RFL has filed its replication to the written statement filed by LVB. On August 14, 2018, case was partly argued by RFL and now the case is kept for further arguments on 7th September, 2018.
RFL has an exposure of `203,670 Lakh towards the Corporate Loan Book. RBI has raised concerns in the past about the credit worthiness of the borrowers, credit appraisal and loan sanctioning mechanism followed by RFL in respect of this book.
Thereafter, in the financial year under reporting, RFL had entered into the Settlement Agreement with the counter parties pursuant to which the various cases against each other at various courts and tribunals were withdrawn on consent terms, however RFL retained its right to recover the amounts due from SCCPL and Perpetual. However, despite the settlement agreement, SCCPL has again filed suits against RFL at various forums. The matters are sub-judice as on date.
While things stood thus, RFL came to be in receipt of a copy of the letter dated April 24, 2018 addressed by LVB to the statutory auditors of RFL that LVB had “closed the said deposits on 20.02.2018 to liquidate the loans availed” by third parties. This was contrary to the confirmation received by the Statutory Auditors in November 2017 via email confirming the fixed deposits.
RFL has also appointed a reputed law firm to undertake a detailed diligence on this loan book. Post submission of the report and the steps outlined for recovery, RFL intends to pursue all legal means for recovering the loans.
b) Corporate Loan Book of RFL
As disclosed in previous year Annual Report 2016-17, in the Statement of Profit and Loss for the half year ended September 30, 2016, RFL has written off the entire ̀ 5,199,151,636 due from SCCPL. Further, the loans given to Perpetual Credit Services Private Limited (“Perpetual”), (a group company of SCCPL) and loan Purchase from Nishu Finlease Pvt. Ltd. of ̀ 2,737,568,540 were also written off.
RFL is in the process of detailed diligence on these and connected transactions and is pursuing appropriate legal remedies to recover the amounts due to it and expect that there will not be any obligation on RFL out of these cases.
Further, in this regard, your Board has decided to initiate all legal actions against SCCPL & its related parties including but not limited to filing insolvency petitions as may be advised by its external legal counsels in the matter and to re-open the SCCPL assignment transaction,
ANNUAL RETURN
https://www.religarefinvest.com/Extract-of-Annual-Return.aspx
c) Settlement Agreement with Strategic Credit Capital Private Limited(“SCCPL”)
Note: Corporate Loan Book herein refers to loans given to the erstwhile promoter group entities (excluding the loans given to Religare Enterprises Limited, Religare Comtrade Limited and Bharat Road Networks Limited).
In the interim based on the security available, maturity dates of the loans, recovery steps instituted and the financial reports of the borrowers, the RFL, on a prudent basis, made a provision of ̀ 101,285.00 Lakh against this portfolio.
No changes have occurred in the Authorized and Paid-Up Share Capital of the Company during the Financial Year 2017-2018.
CHANGES IN CAPITAL STRUCTURE
The Annual Return extract in Form No. MGT 9 as required to be prepared in terms of Section 92(3) of the Companies Act, 2013(‘Act’) is being uploaded on the website of the Company and can be accessed through the link
Religare Finvest Limited
rdXXIII Annual Report 2017-18
During the Financial Year 2017-18, your Company continued its focus on Debt Capital Markets (DCM) to meet its funding requirement. To this end, short-term debt through commercial papers aggregating to ̀ 120 Crore was raised during the financial year 2017-18. Further additional subscription for an amount aggregating to ̀ 665 Crore was received in financial year 2017-18 pursuant to the partly paid Non-Convertible Debentures (NCDs) issued on private placement basis in