IDFC
Home > Investor Relations  > Corporate Governance

Corporate Governance Report

IDFC’s philosophy on Corporate Governance

Being a professionally run enterprise with no single promoter or promoter group, effective board oversight and sound Corporate Governance practices are fundamental to the quest of IDFC Limited ("IDFC" or "the Company") in delivering long-term value to all its stakeholders. Good Corporate Governance is intrinsic to the management of the affairs of IDFC.

IDFC is fundamentally a financial intermediary. Its businesses focus on maximising return on assets, while managing inherent risks. The Company believes that sound Corporate Governance is critical for enhancing and retaining investor trust. Therefore, it always seeks to ensure that its performance goals are met with integrity. By adopting such a framework as it does, IDFC is renowned for exemplary governance standards since inception and continues to lay a strong emphasises on appropriate and timely disclosures and transparency in its business dealings.

Corporate Governance is a continuous process at IDFC. It is about commitment to values and ethical business conduct. Systems, policies and frameworks are regularly upgraded to meet the challenges of rapid growth in a dynamic external business environment. Governance practices not only deal with the growing size of the business, but also increase in complexities of the organisational structure that supports such growth.

In India, Corporate Governance standards for listed companies are regulated by the Securities and Exchange Board of India ("SEBI") through Clause 49 of the Listing Agreement with the Stock Exchanges. The Companies Act, 2013 is brought in line with certain provisions of Clause 49 of the Listing Agreement. As a Company, which believes in implementing Corporate Governance practices that go beyond just meeting the letter of law, IDFC not only meets with the Companies Act, 2013 and mandated elements of Clause 49, but also incorporates certain non-mandatory recommendations.

This chapter, read with the chapters on Management Discussion & Analysis, Board's Report and Additional Shareholder Information, reports IDFC’s compliance with Clause 49 of the Listing Agreement.


 

BOARD OF DIRECTORS

COMPOSITION
As on March 31, 2015, IDFC’s Board consisted of 10 Directors, comprising (i) two whole-time Directors consisting of an Executive Chairman and a Managing Director & CEO;  (ii) six Independent Directors ("IDs"); (iii) one Nominee Director of an institution which has invested in the Company and (iv) one Nominee Director of the Government of India ("GoI"). The Directors bring to the Board a wide range of experience and skills which include banking, global finance, accounting and economics. None of the Directors of the Company is related to each other.

During the year, Mr. Shardul Shroff, ID of the Company resigned from the Board with effect from June 3, 2014. Mr. Vinod Rai was appointed on the Board of the Company on June 30, 2015 as an Additional Director in the category of ID.

As per the provisions of Section 149(4) of the Companies Act, 2013, every listed company shall have at least one-third of the total number of Directors as IDs. However, Clause 49 states that where the Chairman is an Executive Director, at least half of the Board should comprise IDs. The Chairman of IDFC is an Executive Director and accordingly, majority of the Board consists of IDs. Thus, the composition of the Board of Directors of the Company is in compliance with the Companies Act, 2013 and Clause 49 of the Listing Agreement.

The Directors oversee the management functions to ensure that these are effective and enhance Shareholder value. The Board’s mandate inter alia is to have an oversight of the Company’s strategic direction, to review corporate performance, assess the adequacy of risk management and mitigation measures, to authorise and monitor strategic investments, to ensure regulatory compliance as well as high standards of governance and safeguard interests of all stakeholders.

Table 1 gives details of the composition of Board of Directors for FY15 including their other Directorships and Memberships / Chairmanships of Committees.

01 Composition of Board of Directors for FY15

NAME OF THE DIRECTOR DIN NO. POSITION NO. OF MEETINGS
HELD IN FY15
NO. OF MEETINGS ATTENDED IN FY15 WHETHER ATTENDED LAST AGM
ON JULY 29, 2014
NO. OF DIRECTORSHIPS OF OTHER PUBLIC COMPANIES1 NUMBER OF COMMITTEES (INCLUDING IDFC)2
Dr. Rajiv B. Lall 00131782 Executive
Chairman
6 6 YES 7 2 (including 1 Chairmanship)
Mr. Vikram Limaye 00488534 Managing
Director &
CEO
6 6 YES 8 2
Ms. Snehlata Shrivastava 06478173 Nominee of
Ministry of
Finance, GoI,
Non-Executive
6 3 NO 3 4
Mr. Joseph Dominic Silva 06388807 Nominee of Domestic and Foreign Institutional Shareholders, Non-Executive 6 2 NO
Mr. S. S. Kohli 00169907 Independent Director 6 6 YES 8 9 (including 4 Chairmanship)
Mr. Donald Peck 00140734 Independent Director 6 4 YES 1
Mr. S. H. Khan 00006170 Independent Director 6 6 NO3 6 9 (including 4 Chairmanship)
Mr. Shardul Shroff4 00009379 Independent Director 2 2 N.A. N.A. N.A.
Mr. Gautam Kaji 02333127 Independent Director 6 6 YES 2 2 (including 1 Chairmanship)
Dr. Omkar Goswami 00004258 Independent Director 6 5 YES 8 9 (including 1 Chairmanship)
Ms. Marianne Økland 03581266 Independent Director 6 6 YES 1 1
  1. Excluding Directorship in Foreign Companies, Private Limited Companies, Companies under Section 8 of the Companies Act, 2013 (Section 25 under the erstwhile Companies Act, 1956) and Companies in which the Directors hold office as an Alternate Director.
  2. Includes membership and chairmanship of only Audit Committee and Stakeholders’ Relationship Committee as mandated by Clause 49 of the Listing Agreement.
  3. Mr. S. H. Khan, Chairman of the Audit Committee and Stakeholders' Relationship Committee, owing to his health reasons, could not attend the AGM of the Company held on July 29, 2014. However, he attended the Board and other committees meetings, held on that day through Video Conferencing.
  4. Resigned as an ID w.e.f. June 3, 2014.

BOARD MEETINGS

The Board meets at least once a quarter to review the quarterly results and other items on the agenda and also on the occasion of the Annual General Meeting ("AGM") of the Shareholders. Additional meetings are held whenever necessary.

In consultation with the Chairman, the Company Secretary prepares the agenda and the explanatory notes and circulates these in advance to the Directors. Members of the Board are also free to recommend inclusion of any matter in the agenda for discussion.

Since the Board of IDFC includes Directors from various parts of the world, the Company does make use of video conferencing facility and other audio-visual means, when necessary, to enable larger participation of Directors in the meetings.

Members of the Senior Management are invited to attend the Board Meetings, make presentations and provide additional inputs to the items under discussion. The Minutes of each Board / Committee Meeting are recorded in the Minutes Book. The Minutes of Board Meetings of unlisted subsidiary companies of IDFC are periodically tabled at the Company’s Board Meetings. A statement of all significant transactions and arrangements entered into by the unlisted subsidiary companies is also placed before the Board. Based on the recommendation of the Audit Committee, the Board of Directors at its meeting held on January 29, 2015, adopted the Policy on Related Party Transactions in compliance of the provisions of the Companies Act, 2013 and Listing Agreement. The Boards of the respective subsidiaries of IDFC also adopted the Group policy on Related Party Transactions.

During FY15, the Board met six times and the gap between any two meetings was less than one hundred and twenty days. The dates of the meetings were: April 25, 2014; June 3, 2014, July 29, 2014, October 30, 2014, January 29, 2015 and March 20, 2015.

INFORMATION PROVIDED TO THE BOARD

The Board has complete access to all the information about the Company. Moreover, the following information, whenever it occurs, is regularly provided to the Board as a part of the agenda papers which are sent well in advance of the Board Meetings or when considered appropriate, tabled in the course of the meeting:

  • Annual operating plans, budgets and updates thereof.
  • Capital budgets and updates thereof.
  • Quarterly results of the Company, its operating divisions and business segments. These results are reviewed by the Audit Committee and recommended to the Board.
  • Minutes of the meetings of the Audit and other Committees of the Board and circular resolutions passed.
  • Minutes of the Board Meetings of subsidiary companies.
  • Information on recruitment and terms of appointment of the Executive Directors (“EDs”), the Chief Financial Officer (“CFO”) and the Company Secretary. The terms of appointment of the CFO are also considered by the Audit Committee of the Company.
  • Materially important show cause, demand, prosecution notices and penalty notices, if any.
  • Fatal or serious accidents, dangerous occurence, any material effluent or pollution problems, if any.
  • Any material default in financial obligations to and by the Company, or substantial non-payment for services rendered by the Company, if any.
  • Any issue, which involves possible public or product liability claims of substantial nature, including any judgment or order which, may have passed strictures on the conduct of the Company or taken an adverse view regarding another enterprise that can have negative implications on the Company.
  • Details of any joint venture or collaboration agreements.
  • Transactions that involve substantial payment towards goodwill, brand equity or intellectual property.
  • Significant labour problems and their proposed solutions. Any significant development in Human Resources/Industrial Relations front like signing of wage agreement, implemenation of Voluntary Retirement Scheme etc.
  • Sale of a material nature, of investments, subsidiaries, assets, which is not in the normal course of business.
  • Quarterly details of foreign exchange exposures and the steps taken by the Management to limit the risks of adverse exchange rate movement, if and where material.
  • Non-compliance of any regulatory, statutory or listing requirements and Shareholders service such as non-payment of dividend, delay in share transfer etc., if any.
  • Various policies adopted at IDFC and group level.

The Board periodically reviews compliances of all the laws applicable to IDFC, as well as steps taken to rectify instances of non-compliances, if any.

FAMILIARISATION PROGRAMMES FOR BOARD MEMBERS
The Board members are provided with necessary documents, reports and internal policies to enable them to familiarise with the Company's procedures and practices.
Periodic presentations are made at the Board and Board Committee Meetings, on business and performance updates of the Company/group subsidiaries, global business environment, business strategy and risks involved. Detailed presentations on the Company's business segments were made at the meetings of the Directors held during the year.

MEETINGS OF INDEPENDENT DIRECTORS
The Company's IDs met once without the presence of Executive Directors and management personnel. This meeting was conducted informally to enable IDs to discuss matters pertaining to the Company's affairs.

 

CODE OF CONDUCT

The Board of Directors have laid down a Code of Conduct for all Directors and designated Senior Management Personnel ("SMP") of the Company. The code is available on the website of the Company www.idfc.com. All Board members and designated SMP have affirmed their compliance with the Code. A declaration to this effect duly signed by the Chief Executive Officer is enclosed at the end of the chapter on Additional Shareholder Information.

All the IDs of the Company have given a declaration of Independence pursuant to Section 149(6) and 149(7) of the Companies Act, 2013, read with Rule 5 of Companies (Appointment and Qualification of Directors) Rules, 2014 alongwith their affirmance to the Code of Independent Directors as prescribed under Schedule IV of the Companies Act, 2013.

 

ADVISORY COUNCIL

The Advisory Council of IDFC is a high level consultative body that provides support and advice to the Management and the Board of Directors of IDFC on issues pertaining to business strategy including, but not limited to, foray into new business areas, acquisitions and diversification of the business, corporate citizenship and corporate governance. The vast experience of the members of the Council and their insights add great value to the Board of Directors and Management to appropriately advance IDFC’s mission and business goals.

The Advisory Council members provide unique industry insights and support the exploration of new business ideas. The Council helps the Board of Directors to understand external environment, potential risks and future drivers of growth. The Council provides guidance for active leadership on operational, environment and sustainability related matters, relevant to the business through outreach to network of contacts. The Council helps to increase stakeholder confidence in the Company, including among investors, government, regulators and other public organisations. The members of the Council met three times during FY15: April 14, 2014, October 29, 2014 and February 27, 2015. Table 2 gives details of the Advisory Council.

02 Composition of Advisory Council for FY15

NAME DESIGNATION
Mr. Deepak Parekh Chairman
Mr. R. Chandrashekhar Member
Mr. Vinod Rai Member
Dr. Jaimini Bhagwati Member

 

 

COMMITTEES OF THE BOARD

As of March 31, 2015, IDFC had the following Board-level Committees: (i) the Audit Committee; (ii) the Nomination & Remuneration Committee; (iii) the Risk Committee; (iv) the Stakeholders’ Relationship Committee (v) the Corporate Social Responsibility Committee and (vi) the Credit Committee. All decisions pertaining to the constitution of committees, appointment of members in different committees and fixing of terms of reference for the committees are taken by the Board of Directors.

These Committees help to delegate particular matters that require greater and more focused attention. They also prepare the groundwork for decision making and recommend their views to the Board. Majority of the members of all the above Committees consist of IDs. Mr. Mahendra N. Shah officiates as the Secretary to all the Committees.

Details on the role and composition of these committees, including the number of meetings held during FY15 and the attendance of each member, are given here in after.

A.

AUDIT COMMITTEE
As on March 31, 2015, the Audit Committee comprised five members, four of whom are IDs and one Nominee Director. The Committee met four times during FY15: on April 25, 2014, July 29, 2014, October 30, 2014 and January 29, 2015. The time gap between any two meetings was less than four months. Attendance details of the Audit Committee Meetings are given in Table 3.

The CFO and the representatives of the Statutory Auditors and Internal Auditors are permanent invitees to the Audit Committee Meetings. Mr. Mahendra N. Shah, Company Secretary of IDFC, is the Secretary to the Committee. The quorum of the meeting is three members.

The Minutes of the Audit Committee are circulated to the Members of the Board regularly and are taken note of.

All members of the Audit Committee are financially literate and have accounting and related financial management expertise.

03 Attendance details of Audit Committee Meetings for FY15

NAME OF THE MEMBER POSITION STATUS NO. OF MEETINGS HELD NO. OF MEETINGS ATTENDED
Mr. S. H. Khan Independent Director Chairman 4 4
Mr. Gautam Kaji Independent Director Member 4 4
Mr. Shardul Shroff 1 Independent Director Member 1 1
Dr. Omkar Goswami Independent Director Member 4 3
Ms. Marianne Økland Independent Director Member 4 4
Ms. Snehlata Shrivastava Nominee Director Member 4 3

1. Resigned as an ID and Member of the Committee w.e.f June 3, 2014

The role of the Audit Committee includes the following:

  • Oversight of the Company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible;
  • Recommending to the Board, the appointment, reappointment and, if required, the replacement or removal of the Statutory Auditors and the fixation of audit fees;
  • Approving appointment of the CFO after assessing the qualifications, experience and background, etc. of the candidate;
  • Approving payment to Statutory Auditors for statutory audits and any other services rendered by them;
  • Reviewing, with the Management, the annual financial statements and Auditors' Report before submission to the Board for approval, with particular reference to:
    1. Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms of clause (c) of sub-Section 3 of Section 134 of the Companies Act, 2013;
    2. Changes, if any, in accounting policies and practices and reasons for the same.
    3. Major accounting entries involving estimates based on the exercise of judgment by Management;
    4. Significant adjustments made in the financial statements arising out of audit findings, if any;
    5. Compliance with listing and other legal requirements relating to financial statements;
    6. Disclosure of related party transactions, where these exist;
    7. Qualifications in the draft audit report, if any.
  • Reviewing, with the Management, the quarterly financial statements before submission to the Board for approval;
  • Reviewing, with the Management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter;
  • Review and monitor the auditor’s independence and performance and effectiveness of audit process;
  • Approval or any subsequent modification of transactions of the company with related parties;
  • Scrutiny of inter-corporate loans and investments;
  • Valuation of undertakings or assets of the company, wherever it is necessary;
  • Evaluation of internal financial controls and risk management systems;
  • Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems;
  • Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit;
  • Discussion with internal auditors of any significant findings and follow up there on;
  • Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board;
  • Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern;
  • To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, Shareholders (in case of non-payment of declared dividends) and creditors;
  • To oversee the Vigil Mechanism and review the functioning of the Whistle Blower policy;
  • Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.

Review of information by Audit Committee

The Audit Committee mandatorily reviews the following information:

  • Management discussion and analysis of financial condition and results of operations;
  • Statement of significant related party transactions (as defined by the Audit Committee), submitted by the management;
  • Management letters / letters of internal control weaknesses issued by the statutory auditors, if any;
  • Internal audit reports relating to internal control weaknesses if any; and
  • The appointment, removal and terms of remuneration of the Chief Internal Auditor shall be subject to review by the Audit Committee;
  • Reviewing with Management, performance of Statutory and Internal Auditors, adequacy of the internal control systems;
  • Any other terms of reference as may be, included from time to time in Clause 49 of the Listing Agreement.

The Audit Committee is also empowered to: (i) investigate any activity within its terms of reference and seek any information it requires from any employee and (ii) obtain legal or other independent professional advice and to secure the attendance / services of outsiders with relevant experience and expertise, when necessary.

IDFC has systems and procedures in place to ensure that the Audit Committee mandatorily reviews:

  • Statement of significant related party transactions, submitted by the Management;
  • Management letters / letters of internal control weaknesses issued by the Statutory Auditors;
  • Internal audit reports relating to internal control weaknesses, if any;
  • The appointment, removal and terms of remuneration of the Internal Auditor;
  • Whenever applicable, monitoring the end use / application of funds raised through public issues, rights issues, preferential issues by major category, as part of the quarterly and annual declaration of financial results;
  • If applicable, on an annual basis, statement certified by the Statutory Auditors, detailing the use of funds raised through public issues, rights issues, preferential issues for purposes other than those stated in the offer document / prospectus / notice;
  • The Management Discussion & Analysis of the financial condition and results of operations;
  • In addition, the Audit Committee also reviews the financial statements, in particular, the investments made by the unlisted subsidiary companies;

The Audit Committee is also appraised on information with regard to related party transactions by being presented and having its views taken on:

  • A statement in summary form of transactions with related parties in the ordinary course of business and carried out at arm's length basis;
  • Details of materially significant individual transactions with related parties which are not in the normal course of business; and
  • Details of materially significant individual transactions with related parties or others, which are not on an arm's length basis along with Management’s justification for the same, if any.
   

B.

NOMINATION & REMUNERATION COMMITTEE
The Board at its meeting held on June 3, 2014 combined the Nomination Committee and Compensation Committee which was named as Nomination & Remuneration Committee ("NRC"). One meeting of the erstwhile Compensation Committee was held on April 25, 2014.

As of March 31, 2015, the NRC of IDFC comprised four Directors, three of whom are IDs and Executive Chairman of the Company. The Committee met two times during FY15: on June 3, 2014 and January 29, 2015. Dr. Omkar Goswami, ID, the Chairman of the NRC, was present at the AGM held on July 29, 2014. The quorum for any meeting of this Committee is two members. Attendance details of the NRC are given in Table 4.

04 Attendance details of Nomination & Remuneration Committee Meetings for FY15

NAME OF THE MEMBER POSITION STATUS NO. OF MEETINGS HELD NO. OF MEETINGS ATTENDED
Dr. Omkar Goswami Independent Director Chairman 2 2
Mr. Gautam Kaji Independent Director Member 2 2
Mr. Donald Peck Independent Director Member 2 1
Dr. Rajiv B. Lall Executive Chairman Member 2 2

The role of the committee includes the following:

  • Formulation of the criteria for determining qualifications, positive attributes and independence of a Director and recommend to the Board a policy, relating to the remuneration of the Directors, Key Managerial Personnel and other employees;
  • Formulation of criteria for evaluation of IDs and the Board;
  • Devising a policy on Board diversity;
  • Identifying persons who are qualified to become Directors and who may be appointed in senior management in accordance with the criteria laid down, and recommend to the Board their appointment and removal;
  • Succession planning of the Board of Directors and SMP.

The details of the evaluation criteria form part of this Annual Report.

IDFC pays remuneration to EDs by way of salary, perquisites and retirement benefits (fixed component) and a variable component based on the recommendation of the NRC and approval of the Board and the Shareholders of the Company, which is separately disclosed in the financial statements. The remuneration paid to EDs is determined keeping in view the industry benchmark and the relative performance of the Company vis-à-vis industry performance. The minutes of the Committee are reviewed by the Board.

The Non-Executive Directors (“NEDs”) are paid remuneration by way of commission and sitting fees. The Board at its meeting held on July 29, 2014 approved the increase in the sitting fees to be paid to its Directors to H 75,000 per Board meeting and H 25,000 per Committee Meeting.

Commission is paid as per the limits approved by the Shareholders of the Company at the 16th AGM held on July 29, 2013. The Commission is distributed on the basis of attendance and contribution at the Board and Committee Meetings as well as Chairmanship of the Committees. The Company has not granted any stock options to NEDs / IDs. The criteria for payment of commission to NEDs are given in Table 5. For FY15, IDFC will pay a sum of H 13,475,000/- as commission to its NEDs.

Table 6 gives details of remuneration paid to the Directors during FY15. The Company did not advance loans to any of its Directors during FY15. None of the Directors is entitled to severance fee and none of the NEDs held any stock options as at March 31, 2015. The notice period for Dr. Rajiv B. Lall, the Executive Chairman and Mr. Vikram Limaye, Managing Director & CEO is three months. None of the employees of the Company is related to any of the Directors.

There are no inter-se relationships between Board members.

05 Criteria for payment of commission to Non-Executive Directors

PARTICULARS PROPOSED AMOUNT (J PER ANNUM)
Fixed Remuneration for member of the Board 1,050,000
Chairman of the Board 1,050,000
Chairman of the Audit Committee 300,000
Chairman of Other Committees 150,000
Member of the Audit Committee 150,000
Member of Other Committees 75,000
Variable remuneration (Depending on attendance at Board Meetings) 450,000

 

06 Details of the remuneration paid to the Directors AMOUNT IN K

NAME OF THE DIRECTOR SITTING FEES SALARY AND PERQUISITES CONTRIBUTION TO PROVIDENT AND OTHER FUNDS PERFORMANCE LINKED INCENTIVE COmMISSION
FOR FY14
paid during FY15 TOTAL
Mr. Deepak Parekh 1       306,250 306,250
Dr. Rajiv B. Lall 2 27,632,425 1,402,771 15,000,000 44,035,196
Mr. Vikram Limaye 2 24,328,824 1,280,766 13,500,000 39,109,590
Ms. Snehlata Shrivastava
Mr. Donald Peck 450,000 1,575,000 2,025,000
Mr. S. H. Khan 950,000 2,175,000 3,125,000
Mr. Shardul Shroff 3 250,000 1,587,500 1,837,500
Mr. Gautam Kaji 700,000 1,725,000 2,425,000
Dr. Omkar Goswami 600,000 2,006,250 2,606,250
Mr. S. S. Kohli 800,000 1,718,750 2,518,750
Ms. Marianne Økland 650,000 1,725,000 2,375,000
Mr. Joseph Dominic Silva 150,000 1,200,000 1,350,000
1 Ceased to be a Director and Non-Executive Chairman of the Company w.e.f. May 1, 2013.
2 During the year, no stock options were granted to Dr. Rajiv B Lall and Mr. Vikram Limaye.
3 Resigned from the Board as an ID w.e.f. June 3, 2014

Performance Evaluation of Directors
The evaluations for the Directors and the Board is proposed to be done through circulation of two questionnaires, one for the Directors and the other for the Board which would assess the performance of the Board on select parameters related to roles, responsibilities and obligations of the Board and functioning of the Committees including assessing the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

Remuneration Policy for the Directors, Key Managerial Personnel, Senior Management and Other Employees
IDFC is in the process of developing a Remuneration Policy for the Directors, Key Managerial Personnel, Senior Management and Other Employees. The remuneration of the EDs is recommended by the NRC to the Board for it's approval.

   

C.

RISK COMMITTEE
IDFC has in place mechanisms to inform the Board about its risk assessment and minimisation procedures with periodical reviews to ensure that the Management controls risk through a Board-approved properly defined framework. The Board is responsible for framing, implementing and monitoring the risk management plan for the Company. This is done through its Board-level Risk Committee and it monitors and reviews risk management of the Company on a regular basis.
The Risk Committee reviews and monitors mainly three types of risks across the organisation: credit risk, market risk and operational risk. This is done under the overall framework of the Enterprise Risk Management System. The quorum for any meeting of this Committee is three members. Mr. Gautam Kaji, Chairman of the Committee, reports the findings / observations of the Committee to the Board. All the members of the Committee consist of members of the Board of Directors. Senior Executives of the Company are permanent invitees to the said Committee meeting.
The Committee met four times during the year under review on April 25, 2014, July 29, 2014, October 30, 2014, and January 29, 2015. Attendance details of Risk Committee Meetings are given in Table 7.

07 Attendance details of Risk Committee Meetings for FY15

NAME OF THE MEMBER POSITION STATUS NO. OF
MEETINGS HELD
NO. OF
MEETINGS ATTENDED
Mr. Gautam Kaji Independent Director Chairman 4 4
Mr. Shardul Shroff 1 Independent Director Member 1 1
Mr. S. H. Khan Independent Director Member 4 4
Ms. Marianne Økland Independent Director Member 4 4
Dr. Rajiv B. Lall Executive Chairman Member 4 4
Mr. Vikram Limaye Managing Director & CEO Member 4 4
1 Resigned as an ID and Member of the Committee w.e.f. June 3, 2014
   

D.

STAKEHOLDERS’ RELATIONSHIP COMMITTEE (SRC)
As of March 31, 2015, the SRC consists of three Directors, one being Independent. The Committee met four times during the year on April 25, 2014, July 29, 2014, October 30, 2014 and January 29, 2015. The quorum for any meeting of this Committee is two members. Attendance details of SRC meetings are given in Table 8.

08 Attendance details of Stakeholders’ Relationship Committee Meetings for FY15

NAME OF THE MEMBER POSITION STATUS NO. OF
MEETINGS HELD
NO. OF
MEETINGS ATTENDED
Mr. S. H. Khan Independent Director Chairman 4 4
Mr. Shardul Shroff 1 Independent Director Member 1 1
Dr. Rajiv B. Lall Executive Chairman Member 4 4
Mr. Vikram Limaye Managing Director & CEO Member 4 4
1 Resigned as an ID and Member of the Committee w.e.f. June 3, 2014

The Committee is empowered to perform the functions of the Board in relation to handling of Shareholders’ and other investors’ complaints and grievances. The Committee considers and resolves the grievances of the security holders of the company including complaints related to transfer of securities, non-receipt of balance sheet, non-receipt of declared dividends etc.

It primarily focuses on:

  • Review of investor complaints and their redressal;
  • Review of queries received from investors;
  • Review of work done by the share transfer agent;
  • Review of corporate actions related to investor issues; and
  • To perform any other function, duty as stipulated by the Companies Act, Reserve Bank of India, Securities & Exchange Board of India, Stock Exchanges and any other regulatory authority or under any applicable laws, as amended from time to time.

Additionally, a Share Transfer Committee comprising of Dr. Rajiv B. Lall, Mr. Vikram Limaye and Mr. Mahendra N. Shah looks into share transfer and related applications received from Shareholders, with a view to accelerate the transfer procedures. The quorum for any meeting of this Committee is two members.

Mr. Mahendra N. Shah, the Company Secretary is designated as the Compliance Officer in terms of the Listing Agreement with the Stock Exchanges. In terms of Clause 47(f) of the Listing Agreement, the designated e-mail address for investor complaints is mahendra.shah@idfc.com.

Details of queries and grievances received and attended by the Company during FY15 for Equity Shares and Infrastructure Bonds are given in Table 8A and Table 8B respectively. No complaints were received in respect of the bonds issued by the Company on private placement basis.

8A Nature of complaints received and attended during FY15 for Equity Shares

Sr.
No.
NATURE OF COMPLAINT PENDING
AS ON
APRIL 1, 2014
RECEIVED
DURING
THE YEAR
ANSWERED
DURING
THE YEAR
PENDING
AS ON
MARCH 31, 2015
1. Non-receipt of Dividend NIL 420 420 NIL
2. Non-receipt of Annual Report NIL 234 234 NIL
3. Complaints received from:        
  - SEBI NIL 7 7 NIL
  - Stock Exchange NIL 3 3 NIL
4. Non-receipt of Refund NIL 3 3 NIL
5. Non-receipt of Electronic Credit(s) NIL 1 1 NIL

8B Nature of complaints received and attended during FY15 for Infrastructure Bonds issued u/s 80CCF of Income Tax Act, 1961

Sr.
No.
NATURE OF COMPLAINT PENDING
AS ON
APRIL 1, 2014
RECEIVED
DURING THE YEAR
ANSWERED
DURING THE YEAR
PENDING
AS ON
MARCH 31, 2015
1. Non-receipt of Bond Certificate(s) NIL 2,999 2,999 NIL
2. Non-receipt of Electronic Credit NIL 2 2 NIL
3. Non-receipt of Refund order NIL 11 11 NIL
4. Status of Application NIL 1 1 NIL
5. Non-receipt of Interest NIL 6,503 6,503 NIL
6. Complaints received from:        
  - SEBI NIL 34 34 NIL
  - Stock Exchange NIL 3 3 NIL
   

E.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
As per the Companies Act, 2013, all companies having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year were required to constitute a Corporate Social Responsibility (“CSR”) Committee of the Board consisting of three or more Directors, out of which atleast one Director shall be an ID. Accordingly, the Board of Directors of the Company, at its meeting held on April 25, 2014 constituted the “CSR Committee” pursuant to Section 135 of the Companies Act, 2013 and corresponding Rules pertaining to CSR. The Composition of CSR Committee is given in Table 9. The quorum for any meeting of this Committee is two members.

09 Composition of Corporate Social Responsibility Committee for FY15

NAME OF THE MEMBER POSITION STATUS NO. OF MEETINGS HELD NO. OF
MEETINGS
ATTENDED
Dr. Rajiv B. Lall Executive Chairman Chairman 1 1
Dr. Omkar Goswami Independent Director Member 1 1
Mr. Vikram Limaye Managing Director & CEO Member 1 1

The purpose of the Committee is to formulate and monitor the CSR policy of the Company. One meeting of the CSR Committee was held on January 29, 2015, where the CSR Policy was approved by the Committee and recommended to the Board for adoption. This policy was also adopted by the subsidiaries to which provisions relating to CSR were applicable. The Board at its meeting held on January 29, 2015 adopted the CSR Policy recommended by the CSR Committee. A copy of the said CSR policy is also placed on the website of the Company www.idfc.com

Details of the CSR contribution made by IDFC during the year are given as an Annexure to the Board’s Report.

SHARES AND CONVERTIBLE INSTRUMENTS HELD BY NEDs
As on March 31, 2015, none of the NEDs held any shares or convertible instruments of the Company.

APPOINTMENT / RE APPOINTMENT OF DIRECTORS
Pursuant to the provisions of Section 152(6) of the Companies Act, 2013, Mr. Joseph Dominic Silva (DIN: 06388807) would be retiring by rotation and being eligible, offers himself for re appointment at the ensuing AGM.

The Shareholders at the 17th AGM held on July 29, 2014 approved the appointment of Mr. S.H. Khan, Mr. Gautam Kaji and Mr. Donald Peck as IDs of the Company. Further, on March 30, 2015, the Shareholders of the Company by way of postal ballot approved the appointment of Mr. S.S. Kohli, Ms. Marianne Økland and Dr. Omkar Goswami as IDs of the Company.

Based on the recommendation of the NRC of the Company and subject to the approval of the Members at the AGM, the Board has, on June 30, 2015, appointed Mr. Vinod Rai (DIN: 01119922) as an Additional Director in the category of ID of the Company. It is proposed to appoint him for a period of three (3) consecutive years at the ensuing AGM to hold office from the conclusion of the 18th AGM till the conclusion of the 21st AGM of the Company.

Brief profiles of the Directors getting appointed / re appointed is given in the Exhibit to the Notice of the AGM.

   

 

 

MANAGEMENT

MANAGEMENT DISCUSSION & ANALYSIS

The Annual Report has a separate chapter titled Management Discussion & Analysis.

DISCLOSURES
During the year, there were no materially significant related party transactions that could have any potential for conflict with the interest of the Company at large. Details of related party transactions are included in the notes to the Financial Statements which forms part of this Annual Report.

DISCLOSURE OF ACCOUNTING TREATMENT IN PREPARATION OF FINANCIAL STATEMENTS
The Financial Statements of the Company have been prepared in accordance with Generally Accepted Accounting Principles in India (“Indian GAAP”) to comply with the Accounting Standards as specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules 2014 and relevant provisions of the Companies Act, 2013 / Companies Act, 1956, as applicable.

CONFIRMATION OF COMPLIANCE
IDFC has complied with all the requirements of regulatory authorities. No penalties or strictures were imposed on the Company by Stock Exchanges or SEBI or any statutory authority on any matter related to capital market during the last three years.

ANTI-MONEY LAUNDERING AND KNOW YOUR CUSTOMER POLICY
In keeping with specific requirements for a Non-Banking Financial Company, the Company has formulated an Anti-Money Laundering and Know Your Customer Policy.

SUBSIDIARY COMPANIES
Clause 49 defines a material non-listed Indian subsidiary as an unlisted subsidiary, incorporated in India, whose Income or net worth (i.e. paid-up capital and free reserves) exceeds 20% of the consolidated Income or net worth, respectively, of the listed holding company and its subsidiaries in the immediately preceding accounting year. By this definition, IDFC does not have any material non-listed Indian subsidiary. The Audit Committee reviews the financial statements of the subsidiary companies and the investments made by its unlisted subsidiaries. The audited Annual Financial Statements of the subsidiary companies have been provided to the Audit Committee and Board of IDFC.

RELATED PARTY TRANSACTIONS
During FY15, all transactions entered into with Related Parties as defined under the Companies Act, 2013 and Clause 49 of the Listing Agreement, were in the ordinary course of business and on an arm's length pricing basis and do not attract the provisions of Section 188 of the Companies Act, 2013. There were no materially significant transactions with related parties during the financial year which were in conflict with the interest of the Company. Suitable disclosure as required by the Accounting Standards (AS18) has been made in the notes to the Financial Statements. The details of the transactions with related parties, if any, are placed before the Audit Committee from time to time.

The Board of Directors at its Meeting held on January 29, 2015 has adopted a policy on Related Party Transactions in compliance with the provisions of the Companies Act, 2013 and Listing Agreement. The same is displayed on the website of the Company www.idfc.com

MD & CEO AND CFO CERTIFICATION
The MD & CEO and CFO certification on the financial statements and internal controls relating to financial reporting for FY15 is enclosed at the end of the chapter on Additional Shareholder Information.

CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company.

 
 

 

SHAREHOLDERS

MEANS OF COMMUNICATION WITH SHAREHOLDERS
As per Clause 54 of the Listing Agreement, IDFC maintains a website (www.idfc.com) containing basic information about the Company, such as details of its business, financial information, shareholding pattern, compliance with corporate governance, contact information of the designated officials who are responsible for assisting and handling investor grievances. It also displays all official press releases and presentation to analysts made by the Company. Information on this website is regularly updated.

Pursuant to Clause 52 of the Listing Agreement, information about the financial results, shareholding pattern and other specified details are now electronically filed through the Corporate Filing & Dissemination System (“CFDS”). Investors can visit the website www.corpfiling.co.in to view such data. NSE and BSE have introduced their respective electronic platforms namely NSE Electronic Application Processing System ("NEAPS") and BSE Listing Centre Online Portal for submission of various filings by listed companies. IDFC ensures that the requisite compliances are also done / filed through these systems in addition to dissemination of information by e-mail and fax.

The quarterly, half-yearly and annual results of IDFC’s performance are published in leading newspapers like the Hindu Business Line & Makkal Kural in Chennai and are also displayed on the website of the Company.

SPECIAL RESOLUTIONS SOUGHT TO BE PASSED AT THE ENSUING AGM
IDFC seeks the approval of Members of the Company by way of Special Resolution in respect of the following proposal:
Offer & Issue Non-Convertible Securities under Private Placement
Detailed explanatory statement pursuant to Section 102 of the Companies Act, 2013 in respect of the above item forms part of the Notice of the 18th AGM.

ANNUAL AND EXTRA-ORDINARY GENERAL MEETINGS OF SHAREHOLDERS
Table 10 gives the details of the AGM held in last three financial years.

No Extra-Ordinary General Meeting of the Company was held during the last three financial years.

10. Annual General Meetings held during the last three years

FINANCIAL YEAR LOCATION OF THE MEETING DATE TIME SPECIAL RESOLUTIONs PASSED WITH REQUISITE MAJORITY
FY12 The Music Academy,
New No. 168
(Old No. 306),
T.T.K. Road, Royapettah,
Chennai - 600 014.
July 09, 2012 11.00 a.m. (i) Appointment of Statutory Auditors;
(ii) Change of Name of the Company; and
(iii) Alteration of Articles of Association of the Company.
FY13 The Music Academy,
New No. 168
(Old No. 306),
T.T.K. Road, Royapettah,
Chennai - 600 014.
July 29, 2013 2.30 p.m. (i) Appointment of Statutory Auditors;
(ii) Payment of commission to Non-Executive Directors;
(iii) Additional 2% equity shares under the Employee Stock Option Scheme;
(iv) Decrease in limit of Foreign holding in the equity share capital from 74% to 54%.*
FY14 The Music Academy,
New No. 168
(Old No. 306),
T.T.K. Road, Royapettah,
Chennai - 600 014.
July 29, 2014 2.00 p.m. (i)  Approval of the Borrowing Limits of the Company;
(ii) Offer and Issue Non-Convertible Securities under Private Placement;
(iii) Further Issue of Securities
(iv) Alteration of the Object Clause of Memorandum of Association of the Company
* The Shareholders approved the reduction in ceiling limit on the aggregate foreign shareholding from 54% to 49.9% by passing a Special Resolution by way of Postal Ballot Notice dated December 23, 2013.

 
 

 

COMPLIANCE

STATUS OF COMPLIANCE WITH THE LISTING AGREEMENT
Table 11 gives the data. As is evident, IDFC is fully compliant.

11 Compliance with the Listing Agreement

 

PARTICULARS CLAUSE OF LISTING AGREEMENT COMPLIANCE STATUS
II BOARD OF DIRECTORS 49 (II) Compliant
  A. Composition of Board 49 (IIA) Compliant
  B. Independent Directors 49 (IIB) Compliant
  C. Non-executive Directors Compensation & Disclosures 49 (IIC) Compliant
  D. Other provisions as to Board and Committees 49 (IID) Compliant
  E. Code of Conduct 49 (IIE) Compliant
  F. Whistle Blower Policy 49 (IIF) Compliant
III AUDIT COMMITTEE 49 (III) Compliant
  A. Qualified & Independent Audit Committee 49 (IIIA) Compliant
  B. Meeting of Audit Committee 49 (IIIB) Compliant
  C. Powers of Audit Committee 49 (IIIC) Compliant
  D. Role of Audit Committee 49 III(D) Compliant
  E. Review of Information by Audit Committee 49 (IIIE) Compliant
IV NOMINATION AND REMUNERATION COMMITTEE 49 (IV) Compliant
V SUBSIDIARY COMPANIES 49 (V) Compliant
VI RISK MANAGEMENT 49 (VI) Compliant
VII RELATED PARTY TRANSACTIONS 49 (VII) Compliant
VIII DISCLOSURES 49 (VIII) Compliant
  A. Related party transactions 49 (VIIIA) Compliant
  B. Disclosure of Accounting Treatment 49 (VIIIB) Compliant
  C. Remuneration of Directors 49 (VIIIC) Compliant
  D. Management 49 (VIIID) Compliant
  E. Shareholders 49 (VIIIE) Compliant
  F. Proceeds from public, rights, preference issues etc. 49 (VIIIF) Compliant
IX CEO / CFO CERTIFICATION 49 (IX) Compliant
X REPORT ON CORPORATE GOVERNANCE 49 (X) Compliant
XI COMPLIANCE 49 (XI) Compliant

POSTAL BALLOT
During FY15, pursuant to Section 110 of the Companies Act, 2013 read with Companies (Management and Administration) Rules, 2014, approval of the Shareholders of the Company was sought vide Notice dated February 19, 2015 circulated through postal ballot in respect of the resolutions, details of which are given in Table 12.

The Company also offered e-voting facility to its Shareholders through Karvy Computershare Private Limited (“Karvy”) to enable the Members to cast their votes electronically.

The Company appointed Ms. Savita Jyoti, a practicing Company Secretary, as the Scrutinizer for the postal ballot process both for e-voting and physical ballot papers received. The above resolutions were passed by the requisite majority and the Scrutinizer submitted her report to the Chairman. The result was announced on Monday, March 30, 2015 and the same was displayed at the Corporate Office and the Registered Office of the Company. The said result was posted on the website of the Company, besides being communicated to the stock exchanges where the securities of IDFC are listed.

The Company may seek to pass Special Resolution(s) in FY16 through Postal Ballot, as and when required, subject to applicable Act and Rules.

12 Resolutions circulated through Postal Ballot

SR. NO DESCRIPTION of resolution(s) NO. OF VOTES IN FAVOUR NO. OF VOTES AGAINST
1 Appointment of Mr. Surinder Singh Kohli (DIN: 00169907) as Independent Director as an Ordinary Resolution 99.29 0.71
2 Appointment of Ms. Marianne Økland (DIN: 03581266) as Independent Director as an Ordinary Resolution 99.56 0.44
3 Appointment of Dr. Omkar Goswami (DIN: 00004258) as Independent Director as an Ordinary Resolution 87.31 12.69
4 Amendment to Articles of Association by inserting clause relating to restriction on transfer of shares in certain circumstances as a Special Resolution 99.86 0.14
5 Creation of Charge / Hypothecation of Charge on the assets of the Company in respect of borrowings, under Section 180(1)(a) of the Companies Act, 2013 as a Special Resolution 99.90 0.10

VIGIL MECHANISM / WHISTLE BLOWER POLICY
Pursuant to provisions of Section 177(9) of the Companies Act, 2013 and Clause 49 of Equity Listing Agreement (as amended by SEBI vide its Circular No. CIR / CFD / POLICY CELL / 2 / 2014 dated April 17, 2014, the Company has established the Vigil Mechanism, as part of the Whistle Blower Policy, for the Directors and Employees to report concerns about unethical behaviour, actual or suspected fraud or violation of the Company’s Code of Conduct or ethics policy. It also provides adequate safeguards against the victimisation of employees who avail of this mechanism and allows direct access to the Chairman of the Audit Committee in exceptional cases. The Audit Committee overseas the Vigil Mechanism. The Whistle Blower policy and establishment of Vigil Mechanism have been appropriately communicated within the Company and no personnel has been denied access to the Audit Committee. The details of the said mechanism has been disclosed on the website of the Company.

ADOPTION OF NON-MANDATORY REQUIREMENTS

A. Separate posts of Chairman and CEO
Dr. Rajiv B. Lall is acting as the Executive Chairman and Mr. Vikram Limaye is acting as Managing Director & CEO of the Company.

B. Audit Qualification
During the year under review, there were no audit qualifications in the Company's Standalone financial statements. IDFC continues to adopt best practices to ensure regime of unqualified financial statements.

C. Reporting of Internal Auditor
The Internal auditor reports directly to the Audit Committee.

 
 
 

Annual Report and Accounts 2013-14

View or download our
reporting documents,
including the IDFC
Annual Report

Annual Report