| 1. Corporate Information
IKF Finance Limited (the company) is a public company domiciled in
India and is incorporated under the provisions of the Companies Act,
1956. Its shares are listed on BSE Ltd. (BSE) and Ahamadabad Stock
Exchange Ltd. (ASE). However, the Company has applied for delisting of
its Equity Shares from the Stock Exchanges and got the In Principle
Approvals for delisting from the respective Stock Exchanges. The
company is Classified as Asset Financing - Deposit Accepting - Non
Banking Finance Company (NBFC-AFC-D) registered with Reserve Bank of
India (RBI). However, the Company has surrendered the Deposit Accepting
status in March 13, 2014 and as such Reserve Bank of India has
reclassified the Company as Asset Financing - Non Deposit Accepting -
Non Banking Finance Company (NBFC - AFC) vide its CoR dated May 12,
2014.
2. Basis of Preparation
The financial statements are prepared and presented under the
historical cost convention on the accrual basis of accounting and
comply with the relevant provisitons of the Companies Act, 1956. The
Company follows the directions prescribed by the Reserve Bank of India
(RBI) for Non Banking Financial Companies.
The preparation of the financial statements, in confirmity with
generally accepted accounting principles, requires the use of estimates
and assumptions that affect the reported amount of assets and
liabilities as at the balance sheet date, reported amounts of revenues
and expenses during the year and disclosure of contingent liabilities
as at that date. The estimates and assumptions used in these financial
statements are based upon the management's evaluation of the relevant
facts and circumstances as of the date of the financial statements.
3.a Terms / Rights attached to Equity Shares
The company has only one class of equity shares having a par value of
Rs. 10/- per share. Each holder of the equity shares is entitled to one
vote per share.
b. Preferential Allotment of Equity Shares
The company has issued / alloted 30,00,000 equity shares at a
subscription price of Rs.13.00 per equity share (which includes a
premium of Rs 3.00 per equity share) on 30th September 2013, consequent
to conversion of 30,00,000 Warrants issued on March 31, 2012, being the
price higher than the price determined under chapter VII of the
Securities Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009 to Promoters for cash. The Company has
forfieted 10,00,000 Warrants on failure of the allottee/s in
excercising the optionin and as such Rs.32.50 lacs received towards
subscreiption to the Warrants was credited to the Securities Premium
Account.
4. Nature of Security
The redemption of principal amount of secured redeemable
non-convertiable debentures together with interest there on are secured
by way of floating charge on the company's movable Current assets with
a Security Cover of 100% in favour of the Debenture Trustee M/s. IDBI
Trusteeship Services Limited.
These secured redeemable non-convertiable debentures are redeemable at
par in the case of Regular Income Debentures, and with interest in case
of Cumulative Debentures in terms of respective Information Memorandum.
Secured redeemable non-convertiable debentures may be bought back
(Repurchase) and the Company has the Right to cancel or reissue the
same from time to time subject to applicable statutory and /or
regulatory requirements, upon the terms and conditions as may be
decided by the company and, upon such reissue, the person entitled to
the Debentures shall have and shall be deemed always to have had, the
same rights and priorities as if the Debentures had never been
redeemed.
Credit Rating Agency - Credit Analysis and Research Limited (CARE) has
reaffirned the rating of "BBB " assigned to these Non Convertiable
Debentures on 27th March 2014
5. Nature of Security
Term Loan from the bank is secured by an exclusive charge by way of
hypothecation of Loan Receivables created out of the loan proceeds and
Cash Collateral by way of Fixed Deposits besides property/ies
collateral of the Directors and the personal guarantee of Promoter
Directors.
Nature of security
Term Loans from Financial Institutions / NBFCs are secured by an
exclusive charge by way of hypothecation of specific Loan Receivables
and personal guarantee of Directors.
6. Unsecured loan - Long Term Borrowings
A. Security Deposits
Security Deposits consist of deposits received from various individual
borrowers to secure the repayment of loans arranged by the company
through its business associates besides deposits received from
Company's franchisees / Marketing Associates.
The primary objective behind the collection of security deposits is to
cover up losses, if any, which may accrue in respect of the loan
transaction and aimed to minimize the Company's liability to the extent
possible.
Security Deposits collected from the borrowers are free of interest and
the same will be either adjusted towards the installments of the loan
availed or refunded to the borrower in case all the loan installments
are paid by the borrower
B. Chit Liabilities
The company has subscribed to Chit Funds as an Investment option, which
derives higher spread, and also as a source for mobilization of funds,
in case of need, and has drawn / availed the bid amount which is to be
payable over the term of Chit.
Nature of security
Cash Credit Limits
Cash credit limits from banks are secured by way of hypothecation of
loan receivables, book debts and other current assets, mortgage of
company's office premises, personal properties of directors, their
relatives and associate company/ies besides their personal guarantee in
favour of the Lead Bank - Central Bank of India.
7. Contingent libilities
(Rs. in Lacs)
Particulars 31-03-2014 31-03-2013
a. Channel Business 250.95 341.20
b. Securitization / Direct Assignement - 168.71
Total 250.95 509.91
The Company has extended its Corporate Guarantee to HDFC Bank Limited,
Bajaj Finance Limited and in connection with the Channel Business
(Joint Lending Arrangement) and Securitization. The oustanding
Liability under the above is net of Security Deposits accepted from the
beneficiaries.
8. Utilization of money raised through preferential issue of equity
shares
The money raised through the Preferential allotment of 30,00,000 Equity
Shares, consequent to conversion of Warrants, was utilised to meet the
working capital requirements of the Company.
The credit enhancement and liquidity support were provided in the form
of bank deposits for Rs.1052.30 lakhs and the rest by way of
Overcollateral and the Company continues to collect and service the
receivables in respect of the securitized assets.
9. There are no amounts due to Small Scale Industries in terms of "The
Micro, Small and Medium Enterprises Development Act, 2006.
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