IFMR Investment Managers Private Limitedinvestments.ifmr.co.in/wp-content/uploads/2016/02/... · the IFMR Trust Group in this space, IFMR Investment Managers will hit the ground running

2013-14

First Annual Report

IFMR Investment Managers Private Limited

“Our Group’s mission is to ensure that every individual and every enterprise has

complete access to financial services”

Page 2

Annual Report 2013-14

Corporate Information

Board of Directors: Puneet Gupta, Chairperson

David Ira Wallack

Anand Sahasranaman

Vijayaraghavan V

Bankers ICICI Bank, Chennai

Dhanlaxmi Bank, Chennai

Auditors Deloitte Haskins & Sells, Chennai

Registered Office 10th Floor-Phase 1,

IIT-Madras Research Park

Kanagam Village, Taramani

Chennai 600 113, India

CIN: U74120TN2014PTC095064

Contact Details Phone: +91 44 6668 7000

Fax: +91 44 6668 7010

Email: [email protected]

Website: http://ims.ifmr.co.in

IFMR Investment Managers Private Limited Page 3

Key Milestones and Achievements

Message from the Chairperson 4

Directors’ Report 5

Report on Corporate Governance 8

Independent Auditors’ Report 11

Balance Sheet 14

Statement of Profit and Loss 15

Cash Flow Statement 16

Notes Forming Part of Financial Statements 18

Board of Directors 24

Page 4


Message from the Chairperson

Dear Shareholders,

It gives me immense pleasure to introduce to you

IFMR Investment Managers Private Limited, an

entity incorporated in February 2014 with the

objective of promoting and managing investment

funds that are trying to reach financial services to

sectors that still depend primarily on informal or

non-banking channels for meeting their

requirements of on-lending funds.

IFMR Investment Managers is an important

addition to the IFMR Trust Group. Access to

medium and long term funds as well as mezzanine

funds has always been a challenge for several high

quality originators in the country. In the last few

years access to senior debt and short duration debt

has been increasing. Partly accelerated by another

IFMR Trust Group Company, IFMR Capital, that

helped its partners raise nearly Rs.3,504 crores

from various investors in the financial year 2013-14

alone. However, access to subordinated tranches

and longer term debt so essential for orderly

growth of financial intermediaries has remained

elusive.

Through focused funds that seek to address such

gaps, we believe IFMR Investment Managers will

play an important role in deepening financial access

within the country.

IFMR Investment Managers has been appointed by

IFMR Finance for Freedom Social Venture Fund,

acting through its Trustee, SBI Cap Trustee

Company Ltd, to act as the Investment Manager

for its proposed “IFMR FImpact Investment

Fund” focussed on the microfinance sector. The

Fund has made an application to SEBI for

registration as a Social Venture Fund under

Category I of the AIF regulations in March 2014

with a target fund size of Rs.100 crores and is

expected to launch post approval.

This Fund will be followed by other funds focused

on retail finance sectors such as affordable housing,

small business and micro enterprise finance and

used commercial vehicle finance etc. IFMR

Investment Managers will leverage on the vast

experience within the IFMR Trust Group in

working with these sectors. Many of the partners

of the IFMR Trust Group companies have reached

out for support in helping raise long term and

subordinated tranches. With a strong presence of

the IFMR Trust Group in this space, IFMR

Investment Managers will hit the ground running.

We are already in the process of seeking an external

Fund Manager rating. In ensuring further

transparency, IFMR Investment Managers will also

explore getting ratings for Funds managed.

We have a long journey ahead and I am sure you

will all join me in wishing IFMR Investment

Managers all the best for its endeavours.

Puneet Gupta Chairperson


Directors’ Report

Dear Shareholders,

Your Directors have immense pleasure in

presenting the first annual report of your

Company, together with the audited financial

statements for the period ended March 31, 2014.

Background:

The company was incorporated on February 17,

2014. The company was formed with the objective

of providing high quality investment management

services in asset classes that impact the financially

excluded.

Financial Results:

Particulars Period ended

March 31, 2014

Amount in INR

Income 109,055.00

Expenses 322,489.00

(Loss)/Profit Before Tax (213,434.00)

Less: Tax Expenses 0.00

(Loss)/Profit After Tax (213,434.00)

Add: Brought forward Profit /

(Loss)

0.00

Less: Transfer to reserves 0.00

Balance Carried Forward (213,434.00)

Earnings per share (basic) (213.43)

Earnings per share (diluted) (213.43)

Dividend:

Your Directors do not recommend for any

dividend for the period under review.

Transfer to Reserves:

In the absence of profits, your Company has not

made any transfers to reserves during the period

under review.

Deposits:

The Company has not accepted any deposits from

the public for the period under review.

Operational Highlights:

The company is yet to commence operations.

Some of the highlights for the period ended March

31, 2014 are:

1) The company has entered into an Investment

Management agreement with SBICAP Trustee

Company Limited for being the Investment

Manager for the proposed IFMR FImpact

Investment Fund, an Alternate Investment

Fund under Category 1 of the SEBI (Alternate

Investment Fund) Regulations which is

awaiting approval from SEBI.

2) The company has entered into an Investment

Adviser agreement with IFMR Investment

Adviser Services Private Limited in March

2014 for obtaining the investment adviser

services towards the proposed IFMR FImpact

Investment Fund, an Alternate Investment

Fund under Category 1 of the SEBI (Alternate

Investment Fund) Regulations which is

awaiting approval from SEBI.

Future Outlook:

The company has started its focus with the

microfinance asset class and it has already taken

efforts to move into other asset classes like housing

finance, SME etc. Even though the investors are

risk averse given the underlying factors related to

the current economic scenario as well as the

underlying asset class, we plan to provide comfort

through sponsor commitment which is more than

required under regulations. Also, the company will

seek independent review of its fund management

capabilities through rating from rating agencies on

Page 6


the fund management quality and also seeks to

avail rating of the fund at an appropriate stage.

The comfort level of the Investors in looking at

locking-in investment for a medium to long term is

linked closely with the Government’s policy action

in enabling investments on one hand and outcome

of various initiatives to improve economic growth

on the other. These will be key determinants to the

timelines associated with your Company’s plans for

obtaining investor commitments into the fund post

its launch. Your Company, however, on receipt of

SEBI approval will reach out to many potential

investors who are looking at investments in social

sector over a medium to long term duration and, in

a ‘business as usual’ scenario, expects to go live

during the first half of financial year 2014-15.

Capital Infusion:

The company mobilized Rs. 136 lakhs of capital

funds during the period ended March 31, 2014 by

issuance of 1,000 equity shares of Rs.100 each to

its promoter IFMR Trust and 135,000 preference

shares of Rs.100 each to IFMR Mezzanine Finance

Private Limited, a company which is wholly owned

by IFMR Trust.

Compliance:

The Company has complied with all the mandatory

regulatory compliances as required under the

Companies Act, various tax statutes and other

regulatory bodies.

The Company does not have a Whole Time

Secretary and accordingly, pursuant to the second

proviso of Section 383A, a compliance certificate is

obtained from a practicing Company Secretary for

the period ended March 31, 2014.

Corporate Governance:

A report on corporate governance is attached and

forms part of this report.

Directors:

During the year, David Ira Wallack and Puneet

Gupta were appointed as Additional Directors, on

February 18, 2014 and March 1, 2014 respectively.

Subject to the Companies Act, 1956 and as per the

Articles of Association of the Company, none of

the Directors shall retire by rotation.

Auditors:

M/s. Deloitte Haskins & Sells, Chartered

Accountants, First Auditors of the Company retire

at the ensuing Annual General Meeting and are

eligible for re-appointment. The company has

received confirmation that their appointment, if

made, will be within the limits prescribed under

Section 139 (1) of the Companies Act 2013 read

with Rule 4 of the Companies (Audit and Auditors)

Rules, 2014.

Subsidiary Company:

As on March 31, 2014, the Company does not have

any subsidiaries.

Conservation of Energy, Technology

Absorption, Foreign Exchange Earnings and

Outgo:

The Company has no activity relating to

conservation of energy and technology absorption.

There were no foreign exchange earnings or

outflow during the period under review.

Particulars of Employees:

The provision under Section 217(2A) of the

Companies Act, 1956 and the rules framed there

under are not applicable since none of the

employees were in receipt of remuneration in

excess of the limits prescribed therein.


Directors Responsibility Statement:

To the best of their knowledge and belief, and

according to the information and explanations

obtained by them, your Directors confirm the

following in terms of Section 217(2AA) of the

Companies Act, 1956:

1) that in preparation of the financial statements

the generally accepted accounting principles

(GAAP) of India and applicable accounting

standards issued by Institute of Chartered

Accountants of India have been followed.

2) that appropriate accounting policies have been

selected and applied consistently and

judgments and estimates that are reasonable

and prudent have been made so as to give a

true and fair view of the state of affairs of the

company at the end of the financial year and of

the profit or loss of the company for that

period;

3) that they have taken proper and sufficient care

for the maintenance of adequate accounting

records in accordance with the provisions of

the Companies Act, 1956 for safeguarding the

assets of the company and for preventing and

detecting fraud and other irregularities. To

ensure this, the company has established

internal control systems, consistent with its

size and nature of operations. These systems

are reviewed and updated on an on-going

basis.

4) that they have prepared the annual accounts on

a going concern basis.

Acknowledgement:

Your Directors take this opportunity to thank the

shareholders, employees, bankers, auditors,

Securities and Exchange Board of India, other

Regulatory authorities for their co-operation and

continued support to the Company. We look

forward to their continued patronage and

encouragement in all our future endeavours.

On behalf of the Board Place: Chennai Date: May 2, 2014


Page 8


Report on Corporate Governance

Corporate Governance is the commitment of an

organization to follow ethics, fair practices and

transparency in all its dealings with its various

stakeholders such as Employees, Investors,

Government and the Community at large. Sound

corporate governance is the result of external

marketplace commitment and legislation plus a

healthy board culture which directs the policies and

philosophy of the organization. Your Company is

committed to good Corporate Governance in all its

activities and investment management processes.

Corporate Governance Philosophy

IFMR Investment Managers Private Limited’s

(IIMPL) philosophy on corporate governance

envisages adherence to the highest levels of

accountability, transparency and fairness, in all

areas of its operations and in all interactions with

its stakeholders. The Board shall work to ensure

the success and continuity of the Company’s

business through the appointment of qualified

management and through on-going monitoring to

assure the Company’s activities are conducted in a

responsible, ethical and transparent manner.

Board of Directors

In terms of the Corporate Governance philosophy

all statutory and other significant material

information is placed before the Board of

Directors to enable it to discharge its responsibility

of strategic supervision of the Company as trustees

of the Shareholders. The Board currently consists

of four Directors. All the members of the Board

are non-executive directors and the Company is in

the process of inducting independent directors.

During the period ended March 31, 2014, three

Board Meetings were held with a gap of not more

than four months between any two meetings.

Particulars of the Directors’ attendance to the

Board Meeting and particulars of their other

company directorships are given in the table below.

Changes in Board Constitution

During the period ended March 31, 2014, the

following changes took place in the constitution of

the Board.

David Ira Wallack was appointed as an additional

director with effect from February 18, 2014.

Puneet Gupta was appointed as an additional

director with effect from March 1, 2014.

Committees of the Board

During the year, the Investment Committee of the

Board was constituted. The Board fixes the terms

of reference of sub-committees and also delegated

powers from time to time. The minutes of the

meetings of the committee are circulated to the

Board for its information and confirmation.

Particulars of Directors’ Attendance

Name Nature of Directorship No. of directorships

excluding IIMPL

Board Meetings attended

(Meetings held)

Anand Sahasranaman Non-Executive Director 1 3 (3)

Vijayaraghavan V Non-Executive Director 7 3 (3)

David Ira Wallack* Non-Executive Director 8 1 (2)

Puneet Gupta** Non-Executive Chairman 9 1 (1)

* Appointed as additional director w.e.f February 18, 2014 ** Appointed as additional director w.e.f March 1, 2014


Investment Committee

The Investment Committee prescribes investment

criteria on the basis of which IFMR Investment

Managers will make investments. The Investment

Committee also evaluates the investment proposals

for approving investments in eligible securities

issued by potential investee companies.

Terms of reference

This Committee’s goals and responsibilities shall

be:

To review and approve, if deemed fit and

proper, the underwriting guidelines for each

asset class, prepared by the Investment

Origination and Management Team (including

any other person/entity to whom the

responsibility has been entrusted to)

To identify, review and recommend new fund

opportunities to the Board for its approval


proper, the investment proposals made by the

Investment Origination and Management

Team (including any other person/entity to

whom the responsibility has been entrusted

to)

To evaluate and approve, if deemed fit and

proper, terms and conditions of all

investments

To review and approve periodically, policies

and guidelines governing the Company’s

investments and monitor compliance with

these policies


proper, exit strategies for the investments

made by the any fund managed by the

Company

To perform such other responsibilities

regarding the Company’s investment activities

or policies or other matters as the Board may

from time to time assign the Committee.

Composition & Meetings

The Investment Committee consists of the

following members, namely,

1. Anand Sahasranaman, Member 2. Vijayaraghavan V, Member

The Committee met once during 2013-14 on

March 25, 2014.

Name Nature of

Membership

Meetings

attended

(Meetings

held)

Anand Sahasranaman Member 1 (1)

Vijayaraghavan V Member 1 (1)

An independent member representing Investors

will be inducted after the launch of the proposed

IFMR FImpact Investment Fund.

Remuneration of Non-Executive Directors

As a policy, the Company does not pay any sitting

fee or other remuneration to non-executive

Directors or other members of any committee

constituted of the Board.

General Body Meetings

During the period ended March 31, 2014, no

General Meetings were held.

Compliance Report

The board reviews the compliance of all applicable

laws every quarter and gives appropriate directions,

wherever necessary.

Code of Conduct

The Board has adopted a code of conduct,

corporate governance policy and whistle blower

policy applicable to all directors and employees of

the Company.

Page 10


Risk Management

The Company keeps the Board informed

periodically of the significant risks associated with

the business of the company and the various risk

identification and mitigation processes put in place

by the management.

Disclosures

The particulars of transactions between the

Company and its related parties, as defined in

Accounting Standard 18, are set out the financial

statements. There were no material transactions

with related parties i.e., transactions of the

company of material nature, with its promoters, the

directors or the management, their subsidiaries or

relatives etc. that may have potential conflict with

the interest of company at large.

General Shareholder Information

Financial year: April 1st to March 31st

Current period: February 17, 2014 to March 31,

2014

(being the first financial year from the date of

incorporation)

Shareholding pattern as on March 31, 2014

Category Number

of Shares

% of

total

Promoters:

IFMR Trust (including

its nominee)

1,000 100.0

Total 1,000 100.0

Address for Correspondence

IFMR Investment Managers Private Limited

10th Floor-Phase 1, IIT-Madras Research Park,

Kanagam Village, Taramani,

Chennai - 600 113

Tel.: +91 044 6668 7000

Fax: +91 044 6668 7010

E-mail: [email protected]

Website: http://ims.ifmr.co.in

On behalf of the Board Place: Chennai Date: May 2, 2014



Independent Auditors’ Report

TO THE MEMBERS OF IFMR INVESTMENT MANAGERS PRIVATE LIMITED

Report on the Financial Statements

We have audited the accompanying financial statements of IFMR INVESTMENT MANAGERS

PRIVATE LIMITED (“the Company”), which comprise the Balance Sheet as at 31st March, 2014, the

Statement of Profit and Loss and the Cash Flow Statement for the period then ended, and a summary of the

significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

The Company’s Management is responsible for the preparation of these financial statements that give a true

and fair view of the financial position, financial performance and cash flows of the Company in accordance

with the Accounting Standards notified under the Companies Act, 1956 (“the Act”) (which continue to be

applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated

13th September, 2013 of the Ministry of Corporate Affairs) and in accordance with the accounting principles

generally accepted in India. This responsibility includes the design, implementation and maintenance of

internal control relevant to the preparation and presentation of the financial statements that give a true and

fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted

our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of

India. Those Standards require that we comply with ethical requirements and plan and perform the audit to

obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in

the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment

of the risks of material misstatement of the financial statements, whether due to fraud or error. In making

those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair

presentation of the financial statements in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the

reasonableness of the accounting estimates made by the Management, as well as evaluating the overall

presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid

financial statements give the information required by the Act in the manner so required and give a true and

fair view in conformity with the accounting principles generally accepted in India:

Page 12


(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2014;

(b) in the case of the Statement of Profit and Loss, of the loss of the Company for the period ended on

that date; and

(c) in the case of the Cash Flow Statement, of the cash flows of the Company for the period ended on that

date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the Central

Government in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the

matters specified in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, we report that:

(a) We have obtained all the information and explanations which to the best of our knowledge and

belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so

far as it appears from our examination of those books.

(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by

this Report are in agreement with the books of account.

(d) In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow

Statement comply with the Accounting Standards notified under the Act (which continue to be

applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular

15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs).

(e) On the basis of the written representations received from the directors as on 31st March, 2014

taken on record by the Board of Directors, none of the directors is disqualified as on 31st March,

2014 from being appointed as a director in terms of Section 274(1)(g) of the Act.

For DELOITTE HASKINS & SELLS

Chartered Accountants

(Firm’s Registration No. 008072S)

Bhavani Balasubramanian

(Partner)

CHENNAI, May 2, 2014 (Membership No. 22156)


ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT

(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our

report of even date)

Having regard to the nature of the Company’s business / activities / results during the year, clauses (i), (ii),

(vi), (vii), (viii), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi),(xvii), (xix) and (xx) of paragraph 4 of the Order are not

applicable to the Company.

(i) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

(ii) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business and during the course of our audit we have not observed any continuing failure to correct major weaknesses in such internal control system.

(iii) To the best of our knowledge and belief and according to information and explanations given to us, there are no contracts or arrangements that need to be entered in the register maintained in pursuance to Section 301 of Companies Act, 1956.

(iv) According to the information and explanations given to us, in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed statutory dues, including Income-tax, Service Tax, Cess and other material statutory dues applicable to it with the appropriate authorities. The statutory dues relating to Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Sales Tax, Wealth Tax, Customs Duty and Excise Duty are not applicable to the Company.

(b) There were no undisputed amounts payable in respect of Income-tax, Service Tax, Cess and other material statutory dues in arrears as at 31st March, 2014 for a period of more than six months from the date they became payable.

(c) There were no disputed amounts due in respect of Income-tax, Service Tax and Cess which have not been deposited as on 31st March 2014.

(v) According to the information and explanations given to us, the Company has made preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956 at a price which, in our opinion, is prima facie not prejudicial to the interest of the Company.

(vi) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

For DELOITTE HASKINS & SELLS


(Firm’s Registration No. 008072S)

Bhavani Balasubramanian

(Partner)

CHENNAI, May 2, 2014 (Membership No. 22156)

Page 14


Balance Sheet

Particulars Note No. March 31, 2014

(Amount in INR)

A. Equity and Liabilities

(1) Shareholders’ funds

(a) Share Capital 3 13,600,000

(b) Reserves and Surplus 4 (213,434)

13,386,566

(2) Current Liabilities

(a) Trade Payables 5 604,047

(b) Other current Liabilities 6 114,973

719,020

Total 14,105,586

B. Assets

(1) Current Assets

(a) Cash and Cash Equivalents 7 13,648,951

(b) Short Term Loans and Advances 8 436,736

(c) Other Current Assets 9 19,899

14,105,586

Total 14,105,586

See accompanying notes forming part of the financial statements

In terms of our report attached For Deloitte Haskins & Sells For and on behalf of the Board of Directors


Bhavani Balasubramanian Puneet Gupta Vijayaraghavan V

Partner Chairman Director

Place: Chennai Date: May 2, 2014


Statement of Profit and Loss

Particulars Note No.

For the period from February 17, 2014 to

March 31, 2014

Amount in INR

Income

Revenue from Operations -

Other Income 10 109,055

Total Revenue (I) 109,055

Expenses

Employee Benefits Expense -

Depreciation -

Other Expenses 11 322,489

Total Expenses (II) 322,489

Loss for the Period Before Tax (I-II) (213,434)

Tax Expenses:

a) Tax Expenses for the Current Period -

b) Deferred Tax -

-

Loss for the Period (213,434)

Earnings per share (of Rs.100 each)

Basic 14 (213.43)

Diluted 14 (213.43)







Page 16


Cash Flow Statement

Particulars


March 31, 2014

Amount in INR

Cash Flow From Operating Activities:

Loss for the period before Tax (213,434)

Adjustments for:

Interest Income from Banks (109,055)

Operating Profit before Working Capital Changes (322,489)

Changes in working capital:

Adjustments for (increase)/decrease in Operating Assets

Short Term Loans and Advances (423,776)

Other current assets (19,899)

Adjustments for increase/(decrease) in Operating Liabilities

Current Liabilities 719,020

Cash used in operations (47,144)

Net income taxes Paid -

Net Cash used in Operations Activities (A) (47,144)

Cash Flow From Investing Activities:

Interest Income from Bank 96,095

Net cash generated from Investing Activities (B ) 96,095

Cash Flow From Financing Activities:

Proceeds from issue of Equity Shares 100,000

Proceeds from issue of Preference Shares 13,500,000

Net cash generated from Financing Activities (C ) 13,600,000

Net Increase in Cash and Cash Equivalents (A+B+C) 13,648,951

Cash and Cash Equivalents at the beginning of the period -

Cash and Cash Equivalents at the end of the period 13,648,951


Particulars


March 31, 2014

Amount in INR

Reconciliation of Cash and Cash equivalents:

Cash and Cash Equivalents as per Balance sheet (Refer Note 7) 13,648,951

Less: Bank balances not considered as Cash and cash equivalents as defined in AS 3 Cash Flow Statements

-

Net Cash and cash equivalents (as defined in AS 3 Cash Flow Statements) 13,648,951

Cash and cash equivalents at the end of the period comprises of:

Balances with banks in Current Account 13,648,951







Page 18


Notes Forming Part of Financial Statements

Note 1 - Corporate Information

IFMR Investment Managers Private Limited was incorporated on February 17, 2014, under the Companies

Act, 1956 as a wholly owned subsidiary of IFMR Trust with the aim to carry on the business of investment

Company and also to provide portfolio management services to offshore funds and all kinds of investment

funds.

Note 2 - Significant Accounting Policies 2.1 Basis of accounting and preparation of financial statements:

The financial statements of the Company have been prepared in accordance with the Generally

Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards

notified Section 211(3C) of the Companies Act, 1956 (“the 1956 Act”) (which continue to be

applicable in respect of Section 133 of the Companies Act, 2013 (“the 2013 Act”) in terms of General

Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs) and the relevant

provisions of the 1956 Act/ 2013 Act, as applicable. The Financial statements have been prepared on

accrual basis under the historical cost convention.

The Company is a subsidiary of IFMR Trust, which is not a Small and Medium Sized entity (SMC) as

defined in the General Instructions in respect of Accounting Standards notified under the Companies

Act, 1956. Accordingly, the Company has also been classified as non-SMC and has complied with the

accounting standards as applicable to a non - SMC.

2.2 Use of estimates

The preparation of the financial statements in conformity with the Generally Accepted Accounting

Principles requires the management estimates and assumptions to be made that affect the reported

amounts of assets and liabilities on the date of financial statements and the reported amount of

revenues and expenses during the period. Management believes that the estimates used in preparation

of the financial statements are prudent and reasonable. Future results could differ due to these

estimates and the differences between the actual results and the estimates are recognised in the periods

in which the results are known / materialise.

2.3 Employee benefits:

During the period from February 17, 2014 to March 31, 2014, the company did not have any

employees on rolls.

2.4 Taxes on Income:

i) Current Tax:

Current tax is determined in accordance with the provisions of the Income Tax Act, 1961


ii) Deferred Tax: Deferred tax is recognised on timing differences, being the differences between the taxable income

and the accounting income that originate in one period and are capable of reversal in one or more

subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or

substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing

differences. Deferred tax assets are recognised for timing differences of items other than

unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists

that sufficient future taxable income will be available against which these can be realised. Deferred

tax assets and liabilities are offset if such items relate to taxes on income levied by the same

governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax

assets are reviewed at each Balance Sheet date for their realisability.

2.5 Provisions and Contingencies:

Provisions are recognised only when the Company has a present or legal or constructive obligation as a

result of past events for which it is probable that an outflow of economic benefit will be required to

settle the transaction and a reliable estimate can be made for the amount of the obligation. Contingent

liability is disclosed for (i) Possible obligation which will be confirmed only by future events not wholly

within the control of the company or (ii) Present obligation arising from past events where it is not

probable that an outflow of resources will be required to settle the obligation or a reliable estimate of

the amount of the obligation cannot be made.

Note 3 - Share Capital

Particulars March 31, 2014

Amount in INR

Authorised

1,000 Equity Shares of Rs.100 each with voting rights 100,000

135,000 Redeemable Preference Shares of Rs.100 each 13,500,000

Total 13,600,000

Issued, Subscribed and Fully Paid up

1,000 Equity Shares of Rs.100 each with voting rights 100,000

135,000 Redeemable Preference Shares of Rs.100 each 13,500,000

Total 13,600,000

(a) Details of Shares held by each Shareholder more than 5% of Shares

Name of the Shareholder March 31, 2014

No. of Shares

held

% of

Shareholding

IFMR Trust (Controlling Entity) and its nominee - Equity Shares 1,000 100.00

IFMR Mezzanine Finance Private limited ( Fellow subsidiary ) -

Preference Shares

135,000 100.00

Page 20


Movement in Equity shares

Particulars As at March 31, 2014

No. of shares Amount in

INR

Opening Balance - -

Fresh Issue 1,000 100,000

Closing Balance 1,000 100,000

Movement in Preference shares

Particulars

As at March 31, 2014

No. of shares Amount in

INR

Opening Balance - -

Fresh Issue 1,35,000 13,500,000

Closing Balance 1,35,000 13,500,000

Terms / rights attached to Equity Shares: The Company has only one class of Equity Shares having par value of Rs.100 per share. Each holder of

equity shares is entitled to one vote per share.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining

assets of the Company. The distribution will be in proportion to the number of equity shares held by the

shareholders.

Terms / rights attached to Preference Shares: Preference Shares are redeemable at par at the end of 4 years from the date of allotment i.e. 24th February

2018.

The preference shareholder is entitled to vote only on resolution placed before the Company which directly

affects the rights attached to such preference shares as set out in Section 87 of the Companies Act, 1956. The

right to entitlement for dividend on preference shares not declared in a financial year shall be carried forward

to the subsequent financial years.

Preference Dividend

Arrears of Fixed cumulative Dividend on Preference shares as at March 31, 2014 Rs. 106,521.

Note 4: Reserves and Surplus

March 31, 2014

Amount in INR

Deficit in Statement of Profit and Loss

Opening Balance -

Add: Loss for the Year (213,434)

Closing balance (213,434)


Note 5: Trade Payables

March 31, 2014

Amount in INR

Sundry Creditors 2,809

Advance from Related Parties (Refer Note 12) 601,238

Total 604,047

Note 6: Other Current Liabilities

March 31, 2014

Amount in INR

Statutory Liabilities 2,613

Other Liabilities 112,360

Total 114,973

Note 7: Cash and Cash Equivalents

March 31, 2014

Amount in INR

Cash and cash equivalents as defined in AS-3 Balance in Current account 13,648,951

Total 13,648,951

Note 8: Short Term Loans and Advances

March 31, 2014

Amount in INR

Advance Taxes and tax deducted at source net of provision of tax 12,960

Advance to Related Parties (Refer Note 12) 423,776

Total 436,736

Note 9: Other Current Assets

March 31, 2014

Amount in INR

Interest Accrued but not due -

- on Fixed Deposits 19,899

Total 19,899

Page 22


Note 10: Other Income

Period ended March 31, 2014

Amount in INR

Interest on Fixed Deposits 109,055

Total 109,055

Note 11: Other Expenses


Amount in INR

Printing and Stationery 3,008

Legal and Professional Charges 29,434

Registration & Filing charges 177,687

Auditors' Remuneration For Statutory Audit (inclusive of Service Tax) 112,360

Total 322,489

Disclosures under Accounting Standards

Note 12: Related party disclosures

Information relating to related party transaction for the period ended March 31, 2014 (as identified by

management and relied upon by Auditors)

a) Parties where control exists:

Controlling entity : IFMR Trust - Represented by IFMR Trusteeship Services Private Limited

b) Fellow Subsidiaries with whom the Company had transactions during the period:

IFMR Mezzanine Finance Private Limited

c) Associate Entities with whom the Company had transactions during the period:

IFMR Investment Adviser Services Private Limited

IFMR Finance for Freedom Social Venture Fund

Transactions with related parties during the period:

Related Party Transaction


Amount in INR

IFMR Trust Equity Shares Allotted 100,000

Reimbursement of expenses 177,462

IFMR Investment Adviser Services Private Limited Reimbursement of expenses 423,776

IFMR Mezzanine Finance Private Limited Preference Shares Allotted 13,500,000

IFMR Finance for Freedom social venture fund Reimbursement of expenses 423,776


Outstanding balances with related parties as on balance sheet date:

Related Party Transaction March 31, 2014

Amount in INR

IFMR Trust Advances payable 177,462

IFMR Investment Adviser Services Private Limited Advances payable 423,776

IFMR Finance for Freedom social venture fund Advances Receivable 423,776

Note 13: Earnings per share – Basic and Diluted:

Period ended

March 31, 2014

Amount in INR

Loss for the period attributable to equity shareholders (213,434)

Weighted average shares outstanding during the period 1,000

Basic Earnings per Share (213.43)

Diluted Earnings per Share (213.43)

Note 14: The Company has entered into an agreement with SBICAP Trustee Company Limited, Trustee of IFMR

Finance for Freedom Social Venture Fund to act as an Investment Manager for proposed fund and upon

registration of the said fund with SEBI, the company will contribute 2.5% of the fund size or Rs. 5 crores

whichever is less.

Note 15: The company has entered into an agreement with IFMR Investment Adviser Services Private Limited for

providing investment adviser services for the proposed IFMR Finance for Freedom Social Venture Fund.

The agreement shall be operational subsequent to the registration of the said fund and launch of the same.

Note 16: Preliminary expenses amounting to Rs. 202,240 have been expensed completely during the period ended

March 31, 2014.

Note 17: The Company was incorporated on February 17, 2014 and the first accounts have been prepared for the

period February 17, 2014 to March 31, 2014. Consequently, there are no comparative figures to be disclosed.

For and on behalf of the Board

Place: Chennai Puneet Gupta Vijayaraghavan V

Date: May 2, 2014 Chairman Director

Page 24


Board of Directors


Puneet Gupta is a Founder member of IFMR Trust and represents the Trust as a

promoter director on the board of several group companies. Puneet also serves on

the board of IIT Madras’ Rural Technology Business Incubator. Puneet was also

involved in setting up IFMR Mezzanine Finance, a company that makes

investments in the form of medium to long term capital to MFIs to enable them to

grow.

He began his formal career with ICICI Bank where he worked for a period of 7

years in various roles including coordinating the work of the micro finance practice

at ICICI Bank. His responsibilities at ICICI Bank included identification and

development of new channels and products for reaching out micro financial and

rural financial services. He has worked extensively towards the creation of

facilitative infrastructure for the delivery of micro financial services. In addition he

has worked with microfinance related equity funds to help them raise capital.

Puneet has significant experience of working closely with NGO, academicians,

State Governments and donor agencies. Puneet also has experience in running and

managing his family business for a period of 4 years.

He is a commerce graduate with a Master’s degree in Rural Management from

Institute of Rural Management Anand.

David Ira Wallack is a Director of IFMR Investment Managers Private Limited and

a founding trustee of IFMR Trust. He currently leads innovation and leadership

development across the IFMR Holdings group. David previously led IFMR Trust's

qualitative research and design effort supporting the design of the KGFS model

and IFMR Trust's broader work on livelihood enhancement. Before coming to

India, David was a political campaign consultant in the United States serving

progressive advocacy organisations and Democratic candidates at the statewide and

federal levels. He completed graduate work in Demography and Population Studies

at Georgetown University and his MBA at Stanford University. David Ira Wallack

Director


Anand Sahasranaman Director

Anand Sahasranaman is a Director of IFMR Investment Managers Private Limited

with over 10 years’ experience in financial markets. He currently heads the IFMR

Finance Foundation which is a policy research institution focused on issues of

financial systems design. In 2008, he was a founding member of IFMR Capital and

worked on structuring the first microfinance securitisation transaction in India.

Between 2003 and 2007 he worked in the fixed income desks at Broadstreet Group

and Pali Capital, New York based investment banks, on multiple structured credit

transactions such as CLOs and synthetic CDSs. He holds a MBA in Finance from

Carnegie Mellon University and a bachelor’s degree in engineering from Bharathiar

University.

Vijayaraghavan is a Director of IFMR Investment Managers Private Limited. He

has been with IFMR Trust since 2011, and heads its Corporate Centre, overseeing

the Trust’s investments and overall compliance. Apart from this, he has also been

on the Board of Pudhuaaru Financial Services Pvt Ltd, which ensures financial

inclusion through the KGFS model, and continues to serve on the Board of IFMR

Mezannine Finance Pvt. Ltd.

Previously, he was the Chief Financial Officer at GMAC Financial Services India,

which is a part of the General Motors group, and also served on its Board. His role

as Chief Financial Officer encompassed all aspects of Indian and US GAAP

reporting, treasury, internal controls and audit. Prior to GMAC, he had a brief stint

with GE Capital Transportation Financial Services in 1999.

Vijayaraghavan is a qualified Cost Accountant and has close to 15 years of

experience, primarily in the financial services industry.

Vijayaraghavan V

Director

Notes

Notes

Notes

CORPORATE AND REGISTERED OFFICE

10th Floor Phase I, IITM Research Park, Kanagam Village, Taramani, Chennai – 600113, India

Tel: +91 44 66687000; Fax: +91 44 66687010

Email: [email protected], Website: http://ims.ifmr.co.in © Copyright, 2014 IFMR Investment Managers Private Limited. All Rights Reserved.

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