DIRECTORS' REPORT TO THE MEMBERS The Directors have pleasure in presenting before you the Fifteenth Annual Report of the Company together with the Audited Statement of Accounts for the year ended 31 March 2015. DIVIDEND Your Directors recommend a dividend of Rs.1.50 per equity share of face value of Rs.10.00 each for the year ended 31 March 2015. The dividend payout ratio for the year is 9.19% (amounting to Rs. 11.31 crore, inclusive of Tax on dividend) as against 7.93% (amounting to Rs. 8.73 crore, inclusive of Tax on dividend) in the previous year. TRANSFER TO RESERVES During the year under review, your Company transferred Rs.20 crore to the General Reserve, Rs.41.13 crore to the Statutory Reserve under Section 36(1)(viii) of the Income Tax Act, 1961 read with Sec 29 C of NHB Act, 1987 and Rs. 24.62 crore to additional reserve under Sec 29 C of NHB Act, 1987, out of the amount available for appropriation. An amount of Rs. 115.60 crore is proposed to be retained in the profit and loss account. CHANGES IN SHARE CAPITAL During the financial year, the paid up capital increased consequent to the allotment of 1,96,600 equity shares of face value of Rs.10 each upon exercise of employee stock options under ESOS (Phase-I). Consequently, the equity share capital of the Company has increased from Rs. 62,16,10,470 divided into 6,21,61,047 Equity shares of Rs. 10 each to Rs.62,35,76,470 divided into 6,23,57,647 Equity shares of Rs. 10 each. STATE OF AFFAIRS OF THE COMPANY The Company endeavors towards adopting the benchmark underwriting practices backed up by robust monitoring and recovery mechanisms. The Company is committed in its efforts towards improving efficiency and service level in its operations. LENDING OPERATIONS 1) Sanctions During the year, loan approvals stood at Rs.2,398.88 crore as compared to Rs.1,822.51 crore in the previous year registering a growth of 31.63%. The cumulative loan sanctions since inception of the Company stood at Rs.9,644.81 crore at the end of the financial year 2014-15. 2) Disbursements During the year under review, the Company disbursed loans to the extent of Rs. 2,181.15 crore as against Rs.1,715.26 crore in the previous year, a growth of 27.16%. The Cumulative disbursements stood at Rs.8,880.84 crore in respect of 83,435 accounts at the end of the financial year 2014-15. 3) Loans Outstanding The loan book of the Company at the end of financial year 2014-15 was Rs.6012.92 crore as against Rs.4,661.86 crore in the previous year representing a growth of 28.98%. NON PERFORMING ASSETS As of 31 March 2015, the gross NPA of the company was Rs.79.12 crore (previous year Rs.68.55 crore) constituting 1.32% (previous year 1.47%) of the total loans outstanding. Net NPA of the Company as at March 31, 2015 was 0.50% as against 0.72% in the corresponding period the previous year. The NPA provision coverage ratio stood at 62.37% (previous year 51.50%) as at 31st March 2015. The Company carries a provision of Rs.49.34 crore (previous year Rs.35.30 crore) towards its Non Performing Assets at the end of the financial year 2014-15. During the period under review, the Company has written off Rs.0.13 crore (previous year Rs. 0.29 crore) in respect of loans where recovery had been rendered impracticable. REGULATORY COMPLIANCE The Company is in compliance with the guidelines, circulars and directions of National Housing Bank. The Company is also in compliance with the Companies Act 2013, guidelines, directions and circulars of MCA, SEBI etc. The company complied with Accounting Standards issued by the ICAI and other related statutory Guidelines / Directions as applicable to the Company from time to time. The Company is registered with the Central Registry of Securitization, Asset Reconstruction and Security Interest of India (CERSAI) and furnishes information in respect of its loans. Compliance of all regulatory guidelines of NHB / other compliances are periodically reviewed by the Audit Committee / Board of the Company. The Company's capital adequacy ratio as on 31 March 2015 was 20.26% (previous year 24.50%) which is well above the prescribed 12% threshold as per NHB Directions. This consisted entirely of Tier 1 capital. As per the directions of the National Housing Bank, a provision of Rs. 5.76 crore (previous year Rs.4.72 crore) was charged to the Profit & Loss Account of the financial year 2014-15 in respect of standard assets and the cumulative provision in respect of standard assets stood at Rs.25.49 crore (previous year Rs.19.73 crore) as at 31st March 2015. During the year, National Housing Bank vide their circular 65/2014-15 dated August 22, 2014 directed Housing Finance Companies (HFCs) to provide for DTL in respect of amount transferred to "Special Reserve" created under Section 36(1)(viii) of the Income Tax Act 1961. NHB further advised the HFCs that the DTL on Special Reserve as at March 31, 2014 could be created directly from the Reserves over a period of three years starting with the current financial year, in a phased manner in the ratio of 25:25:50. However the company has provided for the entire DTL of Rs.45.73 crore on account of Special Reserve outstanding as at 31st March 2014 out of the general reserves outstanding at the beginning of the year. Further in respect of Special Reserve under section 36(1)(viii) created during the current year, the company has recognized DTL of Rs.14.23 crore on such Special Reserve and charged to the profit and loss account in accordance with the NHB guidelines. FINANCIAL RESOURCES REFINANCE FROM NHB During the year, the Company had received a refinance sanction of Rs. 300 crore (previous year "NIL") from National Housing Bank. The company availed refinance from National Housing Bank aggregating to Rs.450 crore (previous year Rs.100 crore) and refinance outstanding at the end of the year was Rs.1,094.80 crore (previous year Rs.975.23 crore). TERM LOANS FROM BANKS The outstanding bank borrowings (terms loans and overdraft) at the end of the financial year stood at Rs.3,849.63 crore (previous year Rs. 2,926.78 crore). SECURED NON CONVERTIBLE DEBENTURES In its continuing efforts to reduce the cost of fund, the Company during the year, started mobilising funds through issuing Secured, Redeemable, Non-Convertible, Non-Cumulative, Taxable Debentures (SRNCD) and Commercial Paper (CP). During the year, the company has issued SRNCDs aggregating to Rs.100 crore (previous year "NIL") with a coupon rate of 9.55% per annum and tenor of three years. The outstanding SRNCDs as on 31st March 2015 was Rs.100 crore (previous year "NIL"). These instruments have been rated "ICRA AA-" by M/s. ICRA Ltd., and "CARE AA - " by M/s. CARE Ltd., COMMERCIAL PAPERS The Company's commercial paper is rated A1+ by M/s. ICRA Ltd., and CARE Ltd., implying highest safety. As at 31 March 2015, the outstanding commercial paper was Rs.60 crore. UNCLAIMED NCDs According to section 125 of the Companies Act , 2013, NCDs and interest thereon remaining unclaimed and unpaid for a period of seven years from the date they became due are required to be credited to the Investor Education and Protection Fund (IEPF) set up by the Government of India. As at 31 March 2015 there are no non convertible debentures amount or interest thereon remaining unpaid or unclaimed. UNCLAIMED DIVIDENDS As of 31 March 2015, dividend amounting to Rs.25,673 (previous year Rs.6,452) has not been claimed by the investors. According to section 125 of the Companies Act, 2013, dividends remaining unclaimed for a period of seven years from the date they became due are required to be credited to the Investor Education and Protection Fund (IEPF) set up by the Government of India. In accordance with the Investor Education Fund (Uploading of information regarding unpaid and unclaimed amount lying with the Companies) Rules 2012, the Company has uploaded this information on www.iepf.gov.in <http://www.iepf.gov.in> and unclaimed.php. RISK MANAGEMENT The Company has in place a risk management policy framework which has been approved by the Board of Directors. The framework codifies the various risks and the methodologies to ensure such risks are mitigated. The Company has in place a Management & Risk Management Committee comprising of Shri. Thomas Paul Diamond (Chairman), Shri. G.R. Sundaravadivel (Director), Shri. V. Nadanasabapathy (Director) and Shri. R. Varadarajan (Managing Director). HUMAN RESOURCES The objective of human resources development in an organization is to enhance human productivity through progressive and consistent policies in knowledge & skill upgradation and betterment of employment conditions at all levels. Human resource management's objective is to maximize the return on investment from the organization's human capital. It is the responsibility of human resources development department in a corporate context to conduct these activities in an effective, legal, impartial and cohesive manner. Your Company worked tirelessly towards the performance upgradation of its employees by introducing objective based performance appraisal mechanism and performance linked incentive structure. Employees are also nominated regularly to attend various training programmes conducted by NHB, ICSI & other capacity building institutions besides in-house training programmes for constant skill upgradation. During the financial year, the Company conducted 8 in-house training programmes and employees were nominated for 24 external programmes. The Company provides a professional work environment and maintains a healthy relation with its employees. As on 31 March 2015, the number of people employed by the company stood at 545. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of women at the workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. The following is a summary of sexual harassment complaints received and disposed off during the year 2014-15 a. No. of complaints received:1 b. No of complaints disposed off: 1 In accordance with the provisions of Section 197 of the Companies Act, 2013, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the name and other particulars of such employees are set out in the table above. CORPORATE SOCIAL RESPONSIBILITY As per Section 135 of the Companies Act, 2013 and the rules framed thereunder, the Company has in place a Corporate Social Responsibility Committee of Directors comprising of Shri.Thomas Paul Diamond-Chairman, Shri.B.Anand, I.A.S. , Shri.G.R.Sundaravadivel and Shri.V.Nadanasabapathy and has inter alia formulated a Corporate Social Responsibility Policy. This Committee envisages the activities to be undertaken in pursuance of CSR initiatives. During the year, the Company spent a sum of Rs.0.13 crore towards CSR initiatives. The Annual Report on CSR activities forming part of the Directors' Report is furnished as Annexure-1 to this report. EMPLOYEE STOCK OPTION SCHEME The employee stock options have been granted to the eligible employees and the Managing Director in pursuance of "Repco Home Finance Limited Employees Stock Option Scheme -2013". There are no material changes to this scheme and the said scheme is in compliance with the extant regulations prescribed by the Securities and Exchange Board of India in this regard. The disclosures as prescribed by the "Guidance Note on accounting for employee share based payments" issued by ICAI and the Diluted EPS on issue of shares pursuant to the Scheme in accordance with the Accounting Standard 20- Earnings per share" issued by ICAI are disclosed on the website of the Company and the web-link is www.repcohome.com/ESOR The disclosures as required by the Securities and Exchange Board of India (Share Based Employee Benefits ) Regulations 2014 are furnished as Annexure 2 to this report. PARTICULARS RELATING TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND EXPENDITURE Particulars relating to conservation of energy and technology absorption stipulated in the Companies (Accounts) Rules 2014 are not applicable to the Company and further the Company has no foreign exchange earnings but incurred foreign exchange expenditure to the extent of Rs.0.10 crore (previous year Rs.0.04 crore) towards travelling expenses. DIRECTORS In accordance with Section 152 of the Companies Act, 2013, Shri.B.Anand I.A.S., Director of the Company is liable to retire by rotation at the ensuing annual general meeting and is eligible for reappointment. The resolution for his re-appointment forms a part of the notice convening the annual general meeting. The details pertaining to the re-appointment are elucidated in the explanatory statement to the notice convening the annual general meeting. During the year, the Board of Directors had appointed Shri.Munishwar Ganesan and Smt.Sanjeevanee Kutty, I.A.S. as Additional Directors on 02 February 2015 and 27 March 2015 respectively. Shri.Dilip Kumar,I.A.S. has been appointed as Additional Director on 07 August 2015. They hold office till the conclusion of the ensuing annual general meeting. The resolutions for the appointments of Shri.Munishwar Ganesan, Smt.Sanjeevanee Kutty, I.A.S. and Shri.Dilip Kumar,I.A.S. as Directors forms a part of the notice convening the annual general meeting. The details pertaining to these appointments are elucidated in the explanatory statement to the notice convening the annual general meeting. The Company has obtained a confirmation from the aforesaid directors that they have not incurred any disqualification prohibiting their appointment as Directors as envisaged under Section 164 of the Companies Act, 2013. DETAILS OF MANAGERIAL REMUNERATION AS REQUIRED UNDER COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014 The particulars of managerial remuneration as required under Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given as Annexure-3. AUDITORS M/s. R.Subramanian And Company retire at the conclusion of the forthcoming annual general meeting The Board of Directors recommend the appointment of M/s.R.Subramanian And Company for the financial year 2015-16. The Company has received a confirmation from M/s. R.Subramanian and Company, Chartered Accountants to the effect that their appointment if made, at the ensuing Annual General Meeting would be in accordance with Sections 139 and 141 of the Companies Act 2013. SECRETARIAL AUDIT REPORT In accordance with Section 204 of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, Shri.G. Ramachandran of M/s. G. Ramachandran & Associates, Company Secretaries was appointed by the Company to undertake Secretarial Audit of the Company. The Secretarial Audit Report is annexed to this report as Annexure-5. Explanation on comments by the Board on Every qualification, reservation on adverse remark or disclaimer mode by Auditor / Secretariat Auditor. Neither the statutory auditor nor the secretarial auditor have made any qualification, reservation or adverse remark or disclaimer in their respective reports. DIRECTORS' RESPONSIBILITY STATEMENT In pursuance of section 134 (3) (C) of the Companies Act, 2013, and based on the information provided by the Management, your Directors hereby confirm that: a) in the preparation of the annual accounts, the applicable accounting standards had been followed; b) Accounting policies selected were applied consistently. Reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the company as at 31 March 2015 and of the profit and loss of the company for that date; c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; d) The annual accounts of the Company have been prepared on a going concern basis; e) Internal financial controls have been followed by the company and such internal financial controls are adequate and were operating effectively. f) Systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively. INTERNAL CONTROL SYSTEMS The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board every quarter or at periodic intervals. EXTRACTS OF THE ANNUAL RETURN (FORM MGT-9) As required pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in form MGT 9 is annexed as a part of this report (Annexure-4). DETAILS OF LOANS GIVEN, GUARANTEES GIVEN OR SECURITY PROVIDED The provisions contained in Section 186 of the Companies Act,2013, relating to loans, guarantees or securities do not apply to the Company. INVESTMENTS The Company has investments in the equity of unlisted associate companies, Repco Micro Finance Limited and Repco Infrastructure Development Company Limited to the extent of Rs.12.40 Crore (1,24,00,000 equity shares of Rs.10/- each ) and Rs.0.05 crore (50,000 equity shares of Rs.10/- each) respectively PUBLIC DEPOSITS The Company has not accepted deposits from the public during the financial year 2014-15. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188(1) OF THE COMPANIES ACT, 2013 The Company has not entered into Contracts or Arrangements with Related parties referred to in Section 188(1) of the Comapnies Act, 2013 during the year under review. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION OF THE COMPANY BETWEEN 31ST MARCH 2015 AND THE DATE OF BOARD'S REPORT There has been no material changes and commitment, affecting the financial position of the Company which has occurred between the end of the financial year to which the financial statements relate and the date of the report. The Company does not have any subsidiary. There has been no change in the nature of business of the Company. No significant or material orders have been passed by the regulators or Courts or Tribunals impacting the going concern status of the Company and / or the Company's operations in future. MANAGEMENT DISCUSSION AND ANALYSIS Management Discussion and Analysis Report for the year under review, as stipulated by Clause 49 of the Listing Agreement with the stock exchanges is presented in a separate section which forms a part of this report. REPORT ON CORPORATE GOVERNANCE The report on corporate governance for the year under review, as stipulated by Clause 49 of the Listing Agreement with the stock exchanges is presented in a separate section which forms a part of this report. DISCLOSURES The disclosures on Number of meetings of the Board, including dates of Board and Committee meetings held indicating the number of meetings attended by each Director, Declaration by Independent Directors, the details of various Committees, their scope and constitution and establishment of Whistle Blower Policy/Vigil Mechanism are furnished in the Report on Corporate Governance. ACKNOWLEDGEMENTS The Directors of your Company wish to place on record their sincere gratitude to the National Housing Bank and its Executives for continuous guidance and support. We also record our gratitude to our bankers, financial institutions and insurance companies for their continued trust, support and assistance given to the Company. The Board places on record its sincere gratitude to Ministry of Home Affairs, GOI, SEBI, NSE, BSE, Department of Company Affairs, REPCO Bank, shareholders, Government, local/statutory authorities, customers and all the other stakeholders for their patronage and support for the achievements by the Company, despite the most competitive environment in the market. Your Directors take this opportunity to thank all the executives and employees of the Company and wish to place on record their commendable hard work, team spirit and dedicated service to the customers which enabled the Company to achieve an appreciable level of business performance during the year. For and on behalf of the Board of Directors (T.S.KrishnaMurthy) Chairman Date : 07.08.2015 Place : Chennai |