Note: This Disclosure Document is strictly for a private placement and is only an information brochure intended for private use. Nothing in this Disclosure Document shall constitute and/or deem to constitute an offer or an
invitation to offer to the public or any section thereof to subscribe for or otherwise acquire the Debentures in general under any law for the time being in force. This Disclosure Document should not be construed to be a
prospectus or a statement in lieu of prospectus under the Act. This Disclosure Document and the contents hereof are restricted for only the intended recipient(s) who have been addressed directly and specifically through a
communication by the Company and only such recipient(s) are eligible to apply for the Debentures. All investors are required to comply with the relevant regulations/guidelines applicable to them for investing in this Issue.
Further, since the Issue is being made on a private placement basis, the provisions of Section 31 of the Companies Act, 2013 shall not be applicable and accordingly, a copy of this Disclosure Document along with the
documents as specified under the head Material Contracts and Documents have not been filed with the Registrar of Companies or the Securities & Exchange Board of India or the Reserve Bank of India. Furthermore, a copy
of this Disclosure Document has not been filed or submitted with the SEBI or RBI for its review and/or approval.
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
DOCUMENT CONTAINING DISCLOSURE AS PER SCHEDULE I OF SEBI (ISSUE AND LISTING OF DEBT SECURITIES)
REGULATIONS, 2008 AS AMENDED FROM TIME TO TIME
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
The Company was incorporated as JM Financial Asset Reconstruction Company Private Limited, a private
company limited by shares under the Companies Act, 1956 on September 19, 2007 in the State of
Maharashtra with the registration number 11-174287. The Corporate Identity Number (CIN) of the Company
is U67190MH2007PTC174287.
Registered Office: 7th Floor, Cnergy, Appasaheb Marathe Marg, Prabhadevi, Mumbai 400 025
Tel: +91 22 6630 3030; Fax: +91 22 6630 3223
Contact Person and Company Secretary: Mr. Nikhil Bhandary
E-mail: [email protected] Website: www.jmfl.com
DISCLOSURE DOCUMENT FOR PRIVATE PLACEMENT OF UPTO 1000, SECURED, RATED, LISTED,
REDEEMABLE NON-CONVERTIBLE DEBENTURES (“DEBENTURES” OR “NCDs” OR “TRANCHE III
NCDs”) OF THE FACE VALUE OF ` 10,00,000/- (RUPEES TEN LAKH ONLY) EACH FOR CASH
AGGREGATING UP TO ` 100,00,00,000/- (RUPEES ONE HUNDRED CRORE ONLY) TO BE ISSUED IN
THREE OPTIONS VIZ., OPTION A, OPTION B AND OPTION C (“THE ISSUE” OR “THIS ISSUE”)
GENERAL RISKS
Investment in debt and debt related securities involve a degree of risk and investors should not invest any
funds in the debt instruments, unless they can afford to take the risks attached to such investments. Investors
are advised to read the risk factors carefully before taking an investment decision in relation to this Issue. For
taking an investment decision, the investors must rely on their own examination of the Company, this
Disclosure Document and the Issue including the risks involved. The Issue has not been recommended or
approved by the Securities and Exchange Board of India (“SEBI”) nor does SEBI guarantee the accuracy or
adequacy of this Disclosure Document. Prospective investors are advised to carefully read the risks
associated with the Issue of Debentures. Specific attention of investors is invited to statement of Risk
Factors contained under Section II of this Disclosure Document. These risks are not, and are not
intended to be, a complete list of all risks and considerations relevant to the Debentures or investor’s decision
to purchase the Debentures.
CREDIT RATING
ICRA Limited has assigned a “ICRA A+” (pronounced “ICRA A plus”) rating to the captioned Issue. As per
ICRA’s rating letter, instruments with this rating are considered to have adequate degree of safety regarding
timely servicing of financial obligations and such instruments carry low credit risk. Investors may please note
that the rating is not a recommendation to buy, sell or hold securities and investors should take their own
decisions. The rating agency has the right to suspend, withdraw or revise the rating/outlook assigned to the
Issue at any time, on the basis of new information or unavailability of information or other circumstances
which the rating agency believes may have an impact on the rating.
ISSUER’S ABSOLUTE RESPONSIBILITY
The Company, having made all reasonable inquiries, accepts responsibility for and confirms that this
Disclosure Document contains all information as required under Schedule I of SEBI (Issue and Listing of Debt
Securities) Regulations, 2008 as amended, and RBI Guidelines, that the information contained in this
Disclosure Document is true and fair in all material respects and is not misleading in any material respect,
that the opinions and intentions expressed herein are honestly held and that there are no other facts, the
omission of which makes this Disclosure Document as a whole or any of such information or the expression
of any such opinions or intentions misleading in any material respect.
LISTING
The Debentures are proposed to be listed on the wholesale debt market segment of BSE Ltd. (“BSE”).
BSE has given its ‘in-principle’ approval to list the Debentures vide its letter dated October 9, 2014.
This Disclosure Document shall be read in conjunction with the Debenture Trust Deed(s) and other
Transaction Document(s) and in case of any ambiguity or inconsistency or differences, the Debenture Trust
Deed(s) shall prevail.
This Disclosure Document is dated October 9, 2014
REGISTRAR TO THE ISSUE
Sharepro Services (India) Private Limited
13 AB, Samhita Warehousing Complex, Behind Sakinaka
Telephone Exchange, Kurla Andheri Road, Sakinaka, Mumbai – 400 072
Tel: +91 22 6772 0300; Fax: +91 22 2859 1568
E-mail: [email protected]
Website: www.shareproservices.com
Contact Person: Mr. Kumaresan
DEBENTURE TRUSTEE
IL&FS Trust Company Limited
IL&FS Financial Centre, Plot C-22, G Block,
Bandra Kurla Complex, Bandra (East),
Mumbai – 400 051
Tel: +91 22 2659 3884; Fax: +91 22 2653 3297
E-mail: [email protected]
Website: www.itclindia.com
Contact Person: Ms. Sitara Pillai
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
TABLE OF CONTENTS
TITLE
SECTION I
PAGE NO.
1-6
Notice to Investors and Disclaimers
Definitions and Abbreviations
SECTION II
7-12
Risk Factors
SECTION III
13-50
Disclosures as per Schedule I of SEBI (Issue and Listing of Debt
Securities) Regulations, 2008 as amended
A. Issuer Information
B. Issue details
Disclosure as per Section 42 of the Companies Act, 2013 and the
Companies (Prospectus and Allotment of Securities) Rules, 2014.
SECTION IV
Annexures
A. Credit rating letter and rating rationale.
B. Consent Letter of the Debenture trustee.
C. Annual report for financial years 2011-12, 2012-13 and 2013-14.
51-171
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
SECTION – I
NOTICE TO INVESTORS AND DISCLAIMERS
This Disclosure Document (the “Disclosure Document” or “DD”) is neither a prospectus nor a
statement in lieu of prospectus under the Companies Act, 2013. This Disclosure Document has not
been submitted to or approved by the Securities and Exchange Board of India (“SEBI”) and has been
prepared by the Company in conformity with the extant SEBI Regulations. This Issue of NCDs which is
to be listed on the WDM segment of the BSE Limited is being made strictly on a private placement
basis. This DD does not constitute and shall not be deemed to constitute an offer or an invitation to the
public to subscribe to the NCDs. Neither this DD nor any other information supplied in connection with
the NCDs is intended to provide the basis of any credit or other evaluation and a recipient of this DD
should not consider such receipt a recommendation to purchase any NCDs. Each potential investor
contemplating the purchase of any NCDs should make its own independent investigation of the
financial condition and affairs of the Company and its own appraisal of the creditworthiness of the
Company as well as the structure of the Issue. Potential investors should consult their own financial,
legal, tax and other professional advisors as to the risks and investment considerations arising from an
investment in the NCDs and should possess the appropriate resources to analyze such investment and
the suitability of an investment to the investor's particular circumstances. No person has been
authorized to give any information or to make any representation not contained in or incorporated by
reference in this DD or in any material made available by the Company to any potential investor
pursuant hereto and, if given or made, such information or representation must not be relied upon as
having been authorized by the Company.
This DD and the contents hereof are addressed only to the intended recipients who have been
addressed directly and specifically through a communication by the Company. All potential investors
are required to comply with the relevant regulations/guidelines applicable to them for investing in this
Issue. The contents of this DD are intended to be used only by those potential investors to whom it is
distributed. It is not intended for distribution to any other person and should not be reproduced by the
recipient or made public or its contents disclosed to a third person. No invitation is being made to any
person other than the investor to whom this DD has been sent. Any application by a person to whom
this DD has not been sent by the Company may be rejected without assigning any reason.
Invitations, offers and sales of NCDs shall only be made pursuant to this DD. You may not and are not
authorised to (1) deliver this DD to any other person; or (2) reproduce this DD in any manner
whatsoever. Any distribution or reproduction or copying of this DD in whole or in part or any public
announcement or any announcement to third parties regarding the contents of this DD is unauthorised.
Failure to comply with this instruction may result in a violation of applicable laws of India and/or other
jurisdictions. This DD has been prepared by the Company for providing information in connection with
the proposed Issue. The Company does not undertake to update this DD to reflect subsequent events
after the date of this DD and thus it should not be relied upon with respect to such subsequent events
without first confirming its accuracy with the Company.
Neither the delivery of this DD nor the issue of any NCDs made hereunder shall, under any
circumstances, constitute a representation or create any implication that there has been no change in
the affairs of the Company since the date thereof.
This Issue is a domestic issue restricted to India and no steps have been taken or will be taken to
facilitate the Issue in any jurisdictions other than India. Hence, this DD does not constitute, nor may it
be used for or in connection with, an offer or solicitation by anyone in any jurisdiction in which such
offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or
solicitation. No action is being taken to permit an offering of the NCDs or the distribution of this DD in
any jurisdiction where such action is required. This DD is not intended for distribution to, or use by, any
person or entity in any jurisdiction or country where distribution or use of such information would be
contrary to law or regulation. Persons into whose possession this DD comes are required to inform
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FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
themselves about and to observe any such restrictions. This DD is made available to potential investors
in the Issue on the strict understanding that it is confidential and may not be transmitted to others,
whether in electronic form or otherwise.
It is the responsibility of allottees of these NCDs to also ensure that they/it will transfer these
Debentures in strict accordance with this DD and other applicable laws.
DISCLAIMER CLAUSE OF SEBI
As per the provisions of SEBI (Issue and Listing of Debt Securities) Regulations, 2008 as amended, a
copy of this DD has not been approved by SEBI. It is distinctly understood that this DD should not in
any way be deemed or construed to be approved or vetted by SEBI. SEBI does not take any
responsibility either for the financial soundness of the Company or for the correctness of the statements
made or opinions expressed in this DD.
DISCLAIMER CLAUSE OF THE STOCK EXCHANGE
As required, a copy of this DD has been filed with BSE Limited in terms of SEBI (Issue and Listing of
Debt Securities) Regulations, 2008 as amended. It is to be distinctly understood that submission of this
DD to BSE should not in any way be deemed or construed to mean that this DD has been reviewed,
cleared or approved by BSE, nor does BSE in any manner warrant, certify or endorse the correctness
or completeness of any of the contents of this DD. BSE does not warrant that the NCDs will be listed or
will continue to be listed on BSE nor does BSE take any responsibility for the soundness of the financial
and other conditions of the Company, its sponsors, its management or any activities of the Company.
DISCLAIMER CLAUSE OF RBI
The Company has obtained a certificate of registration dated September 23, 2008 bearing no. 11
issued by the Reserve Bank of India (RBI) to carry on the business of securitisation and asset
reconstruction under the provisions of the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002. However, a copy of this DD has not been reviewed, cleared
or approved by the RBI. RBI does not accept any responsibility or guarantee about the present position
as to the financial soundness of the Issuer or for the correctness of any of the statements or
representations made or opinions expressed by the Issuer and for discharge of liability by the Issuer.
By issuing the aforesaid certificate of registration dated September 23, 2008 to the Issuer, RBI neither
accepts any responsibility nor guarantee for the payment of any amount due to any investor in respect
of the NCDs.
DISCLAIMER CLAUSE OF THE COMPANY
The Company has certified that the disclosures made in this DD are adequate and in conformity with
the SEBI guidelines and RBI Guidelines in force for the time being. This requirement is to facilitate
investors to take an informed decision for making an investment in the proposed Issue. The Company
accepts no responsibility for statements made otherwise than in the DD or any other material issued by
or at the instance of the Company and that anyone placing reliance on any other source of information
would be doing so at their own risk.
DISCLAIMER IN RESPECT OF JURISDICTION
Issue of these Debentures have been/will be made in India to investors as specified under clause “Who
Can Apply” in this DD, who have been/shall be specifically approached by the Company. This DD is
not to be construed or constituted as an offer to sell or an invitation to subscribe to Debentures offered
hereby to any person to whom it is not specifically addressed. The Debentures are governed by and
shall be construed in accordance with the existing Indian laws as applicable in the state of
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FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
Maharashtra. Any dispute arising in respect thereof will be subject to the exclusive jurisdiction of the
courts and tribunals of Mumbai.
FORCE MAJEURE
The Company reserves the right to withdraw the Issue at any time prior to the closing date thereof in
the event of any unforeseen development adversely affecting the economic and/or regulatory
environment or otherwise. In such an event, the Company will refund the application money, if any,
without assigning any reason.
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FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
DEFINITIONS AND ABBREVIATIONS
Unless the context otherwise indicates or requires, the following terms shall have the meanings given
below in this Disclosure Document.
General terms
Term
Description
JM Financial Asset
Reconstruction Company
Private Limited/ JMFARC
/ the Company / the
Issuer
JM Financial Asset Reconstruction Company Private Limited, a private
limited company incorporated under the Companies Act, 1956, having its
registered office at 7th Floor, Cnergy, Appasaheb Marathe Marg,
Prabhadevi, Mumbai – 400 025, Maharashtra, India and registered as
SC/RC with the Reserve Bank of India
Company related terms
Term
Description
Auditor
M/s. Khimji Kunverji & Co., the statutory auditors of the Company
Board of Directors/Board
The Board of Directors of the Company or any Committee thereof
Director(s)
Director(s) of the Company for the time being on the Board of the
Company, unless otherwise specified
Memorandum and
Articles
The Memorandum & Articles of Association of the Company, as amended
from time to time
NBFC
Non Banking Financial Company as per the Reserve Bank of India Act,
1934, as amended from time to time
Registered Office
The registered office of the Company located at 7th Floor, Cnergy,
Appasaheb Marathe Marg, Prabhadevi, Mumbai – 400 025, Maharashtra,
India
SC/RC
Securitisation Company/Reconstruction Company registered under Section
3 of SARFAESI
Issue related terms
Term
Description
Act
shall mean provisions of the Companies Act, 1956 and the Companies
Act, 2013, which are in effect from time to time
Allotment/Allot
The allotment of the NCDs or Debentures under this Issue
Application Form
The form in which an investor can apply for subscription to the NCDs
Beneficial Owner(s)
Holder(s) of the Debentures in dematerialized form as defined under
section 2 of the Depositories Act, 1996
BSE
BSE Limited
Business Day
Any day of the week excluding Saturdays, Sundays, any day which is a
public holiday for the purpose of the Negotiable Instruments Act, 1881 in
Mumbai and any other day on which banks are closed for customer
business in Mumbai, India
CDSL
Central Depository Services (India) Limited
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FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
Term
Description
Deemed Date of Allotment
The deemed date of allotment of NCDs being October 10, 2014
Debenture(s)
Secured, Rated, Listed, Redeemable, Non-convertible Debenture(s) of
the face value of ` 10,00,000/- (Rupees Ten Lakh only) each for cash
aggregating `100,00,00,000/- (Rupees One Hundred Crore only) to be
issued pursuant to this issue
Debenture Holder
The Debenture holder whose name appears in the register of debenture
holders or in the beneficial ownership record furnished by NSDL/CDSL for
this purpose
Debenture Trustee
Trustee for the Debenture Holders, in this case being IL&FS
Company Limited
Depository(ies)
A depository registered with SEBI under the Securities and Exchange
Board of India (Depositories and Participant) Regulations, 1996, as
amended from time to time, in this case being NSDL and CDSL
Depositories Act
The Depositories Act, 1996, as amended from time to time
Depository Participant/DP
A depository participant as defined under the Depositories Act, 1996
Disclosure Document/ DD
This Disclosure Document through which the Issue is being made and
which contains the disclosures as per Schedule I of SEBI (Issue and
Listing of Debt Securities) Regulations, 2008 as amended from time to
time
DP-ID
Depository Participant Identification Number
DRR
Debenture Redemption Reserve to be created, if any, in accordance with
the provisions of the Companies Act, 2013
ECS
Electronic clearing system
Equity Shares
Equity shares of the Company of the face value of `10 each
Interest/Coupon Rate
The rate of interest payable on the NCDs for the period specified in the
DD
Issue
Private Placement of the Debentures under this DD
Market Lot
The minimum lot size for trading of the Debentures on the Stock
Exchange, in this case being One Debenture
Moveable Property
Moveable Property shall mean the specific identified movable properties
of the Company provided as security in relation to this issue, including the
Security Receipts held by the Company and the Company’s receivables
Mutual Fund
A mutual fund registered with SEBI under the Securities and Exchange
Board of India (Mutual Funds) Regulations, 1996
NCDs
Debentures issued pursuant to this Issue
NEFT
National Electronic Fund Transfer Service
Option A NCDs
NCDs issued under DD and having a tenure of 976 days
Option B NCDs
NCDs issued under DD and having a tenure of 1112 days
Option C NCDs
NCDs issued under DD and having a tenure of 1158 days
NSDL
National Securities Depository Limited
PAN
Permanent Account Number
Rating Agency
ICRA Limited
RBI Act
The Reserve Bank of India Act, 1934, as amended from time to time
RBI Guidelines
RBI Guidelines means the guidelines issued by RBI for the purpose of
Trust
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FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
Term
Description
issue of NCDs
RoC
Registrar of Companies, Mumbai, Maharashtra
RTGS
Real Time Gross Settlement
Receivables
Receivables shall mean all amounts payable to the Company by the
obligors including principal, interest, additional interest, overdue charges,
premium on prepayment, prepayment proceeds, gross of service tax (if
any) arising out of any of loans and advances, investments, stock in trade
and other current assets of the Company
Redemption Date
With respect to any Option (viz. Option A or Option B or Option C) shall
mean the date on which repayment of principal amount and all other
amounts due in respect of the Debentures of that Option will be made
Registrar/Registrar to the
Issue
Registrar to the Issue, in this case being Sharepro Services (India)
Private Limited
RBI
The Reserve Bank of India
SARFAESI
The Securitisation and Reconstruction
Enforcement of Security Interest Act, 2002
SEBI
The Securities and Exchange Board of India constituted under the SEBI
Act, 1992
SEBI Act
The Securities and Exchange Board of India Act, 1992, as amended from
time to time
SEBI Regulations
Securities and Exchange Board of India (Issue and Listing of Debt
Securities) Regulations, 2008, as amended from time to time
Security
Means the security created or caused to be created by the Company to
secure its obligations in respect of the Debentures and includes movable
and/or immovable properties of the Company
Security Receipts
Security Receipts issued by SC/RC in accordance with the provisions of
SARFAESI
Stock Exchange
BSE Limited
Tranche III NCDs
Shall mean all NCDs issued under this DD
WDM
Wholesale Debt market Segment of the BSE
of
Financial
Assets
and
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FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
SECTION - II
RISK FACTORS
The following are the risks envisaged by the management of the Company relating to the Company, the
Debentures and the market in general. Investors should carefully consider all the risk factors in this DD
for evaluating the Company and its business and the Debentures before making any investment
decision relating to the Debentures. The Company believes that the factors described below represent
the principal risks inherent in investing in the Debentures, but does not represent that the statements
below regarding the risks of holding the Debentures are exhaustive. The order of the risk factors is
intended to facilitate ease of reading and reference and does not in any manner indicate the importance
of one risk factor over another. Investors should also read the detailed information set out elsewhere in
this DD and reach their own views prior to making any investment decision.
If any one of the following stated risks actually occurs, the Company’s business, financial conditions
and results of operations could suffer and, therefore, the value of the Company’s Debentures could
decline and/or the Company’s ability to meet its obligations in respect of the Debentures could be
affected. More than one risk factor may have simultaneous effect with regard to the Debentures such
that the effect of a particular risk factor may not be predictable. In addition, more than one risk factor
may have a compounding effect which may not be predictable. No prediction can be made as to the
effect that any combination of risk factors may have on the value of the Debentures and/or the
Company’s ability to meet its obligations in respect of the Debentures.
These risks and uncertainties are not the only issues that the Company faces. Additional risks and
uncertainties not presently known to the Company or that the Company currently believes to be
immaterial may also have a material adverse effect on its financial condition or business. Unless
specified or quantified in the relevant risk factors, the Company is not in a position to quantify the
financial or other implications of any risk mentioned herein below.
A.
INTERNAL RISK FACTORS
1. Credit Risk
Any lending and investment activity by the Company is exposed to credit risk arising from
interest/repayment default by borrowers and other counterparties. Being an SC/RC, the Company
has invested in Security Receipts having underlying assets being Non-performing assets (NPAs)
and has also lent money to borrowers having high credit risks. The Company is also exposed to the
risk of borrowers who owe money, securities or other dues and does not meet their obligations due
to various reasons.
The value of the security/collateral granted in favour of the Company, as the case may be, may
decline due to adverse market and economic conditions (both global and domestic), delays in
insolvency, winding up and foreclosure proceedings, defects in title, difficulty in locating moveable
assets, inadequate documentation in respect of assets secured and the necessity of obtaining
regulatory approvals for the enforcement of the security over the assets and the Company may not
be able to recover the estimated value of the assets, thus exposing it to potential losses.
Any delay in enforcing the collateral due to delays in enforcement proceedings before Indian courts
or otherwise could also expose the Company to potential losses. Although the Company regularly
reviews its credit exposures, defaults may arise from events or circumstances that are difficult to
detect or foresee.
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FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
2. Repayment of principal is subject to the credit risk of the Company
Investors should be aware that receipt of principal amount and any other amounts that may be due
in respect of the Debentures is subject to the credit risk of the Company. In the event that
bankruptcy proceedings or composition, scheme of arrangement or similar proceedings to avert
bankruptcy are instituted by or against the Company, the payment of sums due in respect of the
Debentures may be substantially reduced or delayed.
3. Access to Capital Markets and Commercial Borrowings
With the growth of its business, the Company will increasingly rely on funding from the debt capital
markets and commercial borrowings. The Company’s growth will depend on its continued ability to
access funds at competitive rates which in turn will depend on various factors including its ability to
maintain its credit ratings. If the Company is unable to access funds at an effective cost that is
comparable to or lower than its competitors, the Company may not be able to have adequate funds
to meet the requirements of the business. This may adversely impact its business results and its
future financial performance.
4. Commercial Papers and Short term borrowings
The Company, being SC/RC, does not have access to public deposits. A major portion of the
Company’s funding requirements is currently met through short term funding sources such as
commercial papers and short term loans from banks and other bodies corporate. Potential funding
mismatches can be created if short term funding sources are not available to the Company. This
could have a negative impact on the business and future financial performance of the Company.
5. Operational and System Risk
The Company is faced with operational and system risks, which may arise as a result of various
factors, viz., improper authorizations, failure of employees to adhere to approved procedures,
inappropriate documentation, failure in maintenance of proper policies, frauds, inadequate training
and employee errors. Further, there can also be a security risk in terms of handling information
technology related products such as system failures, information system disruptions,
communication systems failure which involves certain risks like data loss, breach of confidentiality
and adverse effect on business continuity and network security.
If any of the systems do not operate properly or are disabled or if other shortcomings or failures in
internal processes or systems are to arise, this could affect the Company’s operations and/or result
in financial loss, disruption of Company’s businesses, regulatory intervention and/or damage to its
reputation. In addition, the Company’s ability to conduct business may be adversely impacted by a
disruption (i) in the infrastructure that supports its businesses and (ii) in the localities in which it is
located.
6. Any inability of the Company to attract or retain talented professionals may impact its
business operations
The business in which the Company operates is very competitive and ability to attract and retain
quality talent impacts the successful implementation of growth plans. The Company may lose many
business opportunities and business would suffer if such required manpower is not available on
time. The inability of the Company to replace manpower in a satisfactory and timely manner may
adversely affect its business and future financial performance.
7. Employee Misconduct
Any kind of employee misconduct may impair the Company’s ability to service its clients. It is not
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FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
always possible to deter employee misconduct and the precautions the Company takes to detect
and prevent this activity may not be effective in all cases.
8. Downgrading in credit rating
ICRA Limited has assigned “ICRA A+” rating for this NCD issue of ` 100 Crore. The Company
cannot guarantee that this rating will not be downgraded. In the event of deterioration in the
financial health of the Company, there is a possibility that the Rating Agency may downgrade the
rating of the Debentures. In such cases, investors may have to take losses on re-valuation of their
investment or make provisions towards sub-standard/non-performing investment as per their usual
norms. Such a downgrade in the credit rating may lower the value of the Debentures and/or the
Company’s ability to meet its obligations in respect of the Debentures could be affected.
9. No guarantee
JM Financial Limited, the Principal Sponsor of the Company has not provided any guarantee in any
manner with respect to the Debentures and no Investor shall have any recourse against JM
Financial Limited or any of its promoters or group companies, except the Company, with respect to
the performance of the terms and conditions of the Issue.
10. Decisions may be made on behalf of all Debenture Holders that may be adverse to the
interest of individual Debenture Holders
The terms of the Debentures contain provisions for calling meetings of Debenture Holders to
consider matters affecting their interests generally. These provisions permit defined majorities to
bind all Debenture Holders including Debenture Holders who did not attend and vote at the relevant
meeting.
11. Security may be insufficient to redeem the Debentures
In the event that the Company is unable to meet its payment and other obligations towards
Investors under the terms of the Debentures, the Debenture Trustee may enforce the Security as
per the terms of the Debenture Trust Deed and other related documents. The Investors’ recovery in
relation to the Debentures will be subject to (i) the market value of the property offered as security,
and (ii) finding a willing buyer for such security at a price sufficient to repay the investors’ amounts
outstanding under the Debentures.
12. Tax and other Considerations
Special tax, accounting and legal considerations may apply to certain types of investors. Investors
are urged to consult with their own financial, legal, tax and other professional advisors to determine
any financial, legal, tax and other implications of an investment into the Debentures.
13. Company’s indebtedness and covenants imposed by its financing arrangements may
restrict its ability to conduct its business or operations
The Company’s financing arrangements require it to maintain certain security cover for some of its
borrowings. Should there be any breach of financial or other covenants of any financing
arrangements and such breach continues beyond the stipulated cure period, the Company may be
subjected to various consequences as a result of such default including forced repayment of such
borrowings. Further, under some of the financing arrangements, the Company is required to
inform/obtain prior approval of the lenders/debentures holders/ debenture trustee for various
actions. This may restrict/delay some of the actions/initiatives of the Company from time to time.
Page 9
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
14. The business of the Company is dependent on the successful acquisition of financial assets
from the banks/financial institutions and the resolution of such acquired assets within the
realisation time frame.
Any failure in realisation of the assets acquired by the Company due to recession, inflation,
economy, change in regulations, etc. could adversely affect our business.
15. There has been a substantial increase in our borrowings during the current financial year
2014-15 as against previous financial year 2013-14.
The Company’s short term borrowings have increased to ` 1258.17 Crore as on June 30, 2014 from
` 345.97 Crore as on March 31, 2014. This increase in the short term borrowings was mainly due to
financing for acquisition of new assets.
B. EXTERNAL RISK FACTORS
1. The Debentures may be illiquid
The Company intends to list the Debentures on the WDM segment of the BSE. The Company
cannot provide any guarantee that the Debentures will be frequently traded on the Stock Exchange
and that there would be any market for the Debentures. It is not possible to predict if and to what
extent a secondary market may develop for the Debentures or at what price the Debentures will
trade in the secondary market or whether such market will be liquid or illiquid. The fact that the
Debentures may be so listed or quoted or admitted to trading does not necessarily lead to greater
liquidity than if they were not so listed or quoted or admitted to trading.
The Company may, but is not obliged to, at any time purchase the Debentures at any price in the
market or by tender or private agreement. Any Debentures so purchased may be resold or
surrendered for cancellation. The more limited the secondary market is, the more difficult it may be
for holders of the Debentures to realise value for the Debentures prior to settlement of the
Debentures.
Further, the Company may not be able to issue any further Debentures, in case of any disruptions
in the securities market.
2. Future legal and regulatory impact
Future government policies and changes in laws and regulations in India (including their
interpretation and application to the operations of the Company) and comments, statements or
policy changes by any regulator, including but not limited to SEBI or RBI, may adversely affect the
Debentures, and restrict the Company’s ability to do business. The timing and content of any new
law or regulation is not within the Company’s control and such new law, regulation, comment,
statement or policy change could have an adverse effect on its business, financial results and/or
operations.
Further, SEBI, the relevant Stock Exchange(s) or other regulatory authorities may require
clarifications on this DD, which may cause a delay in the issuance of Debentures or may result in
the Debentures being materially affected or even rejected.
3. Material changes in regulations to which the Company is subject
SC/RCs in India are subject to detailed supervision and regulation by the RBI. In addition, the
Company is generally subject to changes in Indian law, as well as to changes in regulations and
policies and accounting principles. Any changes in the regulatory framework affecting SC/RCs
Page 10
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
could adversely affect the profitability of the Company or its future financial performance by
requiring a restructuring of its activities, increasing costs or otherwise.
4. A slowdown in economic growth in India
The Company’s performance and the recovery from the assets acquired are necessarily dependent
on the health of the overall Indian economy.
5. Political instability or changes in the government could delay further liberalization of the
Indian economy and adversely affect economic conditions in India generally
If there was to be any slowdown in the economic liberalization, or a reversal of steps already taken,
it could have an adverse effect on the Company’s business. Financial difficulties and other
problems in certain financial institutions in India could cause the Company’s business to suffer. The
Company is exposed to the risks of the Indian financial system, which in turn may be affected by
financial difficulties, trends and other problems faced by certain Indian financial institutions. The
problems faced by such Indian financial institutions and any instability in or difficulties faced by the
Indian financial system generally could create an adverse market perception about Indian financial
institutions, banks, NBFCs and SC/RCs. This in turn could adversely affect the Company’s
business, its future financial performance and its shareholders’ funds.
6. Acts of God, terrorist attacks, civil unrest and other acts of violence or war involving India
and other countries could adversely affect the financial markets and the Company’s
business
Acts of God, terrorist attacks and other acts of violence or war may negatively affect the Indian
markets and may also adversely affect the worldwide financial markets. These acts may also result
in a loss of business confidence. In addition, adverse social, economic and political events in India
could have a negative impact on the Company. Such incidents could also create a perception that
investment in Indian companies involves a higher degree of risk which could have an adverse
impact on the Company’s business.
7. The Company’s business may be adversely impacted by natural calamities or unfavourable
climatic changes.
India has experienced natural calamities such as earthquakes, floods, droughts and tsunami in
recent years. India has also experienced pandemics, including the outbreak of avian flu and swine
flu. The extent and severity of these natural disasters and pandemics determine their impact on the
economy and in turn their effect on the financial services sector of which the Company is a part
cannot be ascertained or predicted but could adversely affect the Company. Prolonged spells of
abnormal rainfall and other natural calamities could have an adverse impact on the economy which
in turn could adversely affect the financial results and/or operations of the Company.
C. ASSUMPTIONS IN RESPECT OF INVESTMENT IN NCDS BY INVESTORS
The initial subscriber by subscribing to and any subsequent purchaser by purchasing the NCDs shall be
deemed to have agreed that and accordingly the Company shall be entitled to assume that each of the
initial subscribers and any subsequent purchasers (Debenture Holder, as referred to hereinabove and
hereinafter):
1) has reviewed the terms and conditions applicable to the NCDs as contained in the DD and has
understood the same, and, on an independent assessment thereof, found the same acceptable for
the investment made and has also reviewed the risk disclosures contained herein and has
understood the risks, and determined that NCDs are a suitable investment and that the Debenture
Holder can bear the economic risk of that investment;
Page 11
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
2) has received all the information believed by it to be necessary and appropriate or material in
connection with, and for, investment in the NCDs;
3) has sufficient knowledge, experience and expertise as an investor, to make investment in the
NCDs;
4) has not relied on either the Company or any of its affiliate, associate or any person acting in its or
their behalf for any information, advice or recommendations of any sort except as regards the
accuracy of the specific factual information about the terms of the NCDs set out in this DD;
5) has understood that information contained in this DD is not to be construed as business or
investment advice;
6) has made an independent evaluation and judgement of all risks and merits before investing in the
NCDs;
7) has understood that the method and manner of computation of returns and calculations on the
NCDs shall be solely determined by the Company and the decision of the Company shall be final
and binding;
8) has understood that in the event of any discretions to be exercised, in relation to method and
manner of any of the above computations including due to any disruptions in any of the financial or
other related markets or if for any other reason the calculations cannot be made as the method and
manner originally stipulated or referred to or implied, such alternative methods or approach shall be
used as deemed fit by the Company and may include the use of estimates and approximations. All
such computations shall be valid and binding on the Debenture Holder(s) and no liability thereof will
attach to the Company;
9) has understood that in the event that the Debenture Holder(s) suffers adverse consequences or
loss, the Debenture Holder(s) shall be solely responsible for the same and the Company, its
members, directors or affiliates shall not be responsible, in any manner whatsoever, for any adverse
consequences or loss suffered by the Debenture Holder(s) including but not limited to on the basis
of any claim that no adequate disclosure regarding the risks involved were made or that the full
risks involved were not explained or understood;
10) has the legal ability to invest in the NCDs and the investment does not contravene any provision of
any law, regulation or contractual restriction or obligation or undertaking binding on or affecting the
Debenture Holder or its assets;
11) where the Debenture Holder is a company, that:
(a) the Debenture Holder is not precluded under any law, rules, regulations and / or circular(s)
issued by any statutory authority (ies) including under the Act from investing in the NCDs;
(b) all necessary corporate or other necessary action has been taken and that the Debenture
Holder has corporate ability and authority, to invest in the NCDs; and
(c) investment in the NCDs does not contravene any provisions of its Memorandum and Articles of
Association or any law, regulation or contractual restriction or obligation or undertaking binding
on or affecting the Debenture Holder or the Debenture Holder’s assets.
Page 12
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
SECTION - III
DISCLOSURES AS PER SCHEDULE I OF SECURITIES AND EXCHANGE BOARD OF INDIA
(ISSUE AND LISTING OF DEBT SECURITIES) REGULATIONS, 2008
A. ISSUER INFORMATION
a. Name and Address of the following:
Sr. No.
1.
Particulars
Name of the Issuer
Details
JM Financial Asset Reconstruction Company Private Limited
2.
Registered Office of
the Issuer
3.
Corporate Office of
the Issuer
7th Floor, Cnergy, Appasaheb Marathe Marg, Prabhadevi,
Mumbai - 400 025
Tel. No. +91 22 - 6630 3030 Fax: +91 22 - 6630 3223
Website: www.jmfl.com
7th Floor, Cnergy, Appasaheb Marathe Marg, Prabhadevi,
Mumbai - 400 025
Tel. No. +91 22 - 6630 3030 Fax: +91 22 - 6630 3223
4.
Company Secretary
and Compliance
Officer of the Issuer
Mr. Nikhil Bhandary
7th Floor, Cnergy, Appasaheb Marathe Marg, Prabhadevi,
Mumbai - 400 025
Tel. No. +91 22 - 6630 3445 Fax: +91 22 - 6630 3223
Email: [email protected]
5.
Trustee of the Issue
IL&FS Trust Company Limited
IL&FS Financial Centre, Plot C-22, G Block,
Bandra Kurla Complex, Bandra (East),
Mumbai – 400 051
Tel: +91 22 2659 3884; Fax: +91 22 2653 3297
E-mail: [email protected]
Website: www.itclindia.com
6.
Registrar of the
Issue
Sharepro Services (India) Private Limited
13 AB, Samhita Warehousing Complex, Behind Sakinaka Telephone
Exchange, Kurla Andheri Road, Sakinaka, Mumbai – 400 072
Tel: +91 22 6772 0300; Fax: +91 22 2859 1568
E-mail: [email protected]
website: www.shareproservices.com
7.
Credit Rating
agency of the Issue
ICRA Limited
1802, 18th Floor, Tower 3, Indiabulls Finance Centre, Senapati Bapat
Marg, Elphinstone, Mumbai - 400013;
Tel: +91 22 61796300; Fax: +91 22 24331390
website: www.icraindia.in
8.
Auditors of the
Issuer
M/s. Khimji Kunverji & Co
Sunshine Tower, Level 19,
Senapati Bapat Marg,
Elphinstone (W), Mumbai - 400 013
Tel: +91 22 2439 1111
website: www.khimjikunverji.com
Investors can contact the compliance officer in case of any pre-issue or post-issue related matters.
Page 13
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
b. Brief summary of the business / activities of the Issuer and its line of business:
i. Overview:
JM Financial Asset Reconstruction Company Private Limited is a Securitisation Company /
Reconstruction Company registered with the Reserve Bank of India under the provisions of the
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
The Company is engaged in the business of acquisition of financial assets from banks / financial
institutions and implementing resolution strategies for the acquired assets.
Part of the strong financial services JM Financial Group, the Company is a leading player in the asset
reconstruction business. As on March 31, 2014, the Company had acquired financial assets
(cumulative) valued at `12,026 Crore at an acquisition cost (cumulative) of `3,967 Crore. The total
assets under management of the Company as on March 31, 2014 were ` 3,647 Crore.
ii. Corporate Structure:
The shareholding pattern of the Company as on June 30, 2014 is as follows:
Name of the shareholder
Number of shares held
Percentage of
shareholding as on
Record date
(%)
Sponsor Shareholders
JM Financial Limited (Principal
Sponsor)
10,29,00,000
49.00
Mr. Narotam Sekhsaria
3,15,00,000
15.00
Radhakrishna Bimalkumar Private
Limited
1,05,00,000
5.00
Indian Overseas Bank
2,10,00,000
10.00
Non –Sponsor Shareholders
UCO Bank
1,00,00,000
4.76
Union Bank of India
1,00,00,000
4.76
75,00,000
3.57
Valiant Mauritius Partners FDI
Limited
1,66,00,000
7.91
Total
21,00,00,000
100.00
Central Bank of India
The Company has issued and allotted 3,12,50,000 equity shares on rights basis to its shareholder during the quarter ended September 30,
2014. The said allotment was subject to the approval of the Reserve Bank of India (RBI’s approval is awaited as on the date of this DD). The
shareholding pattern of the Company may accordingly change upon the receipt of approval from the RBI.
Page 14
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
iii. Key Operational and Financial Parameters for the last three Audited years:
The Key Operational and Financial Parameters for the last three Audited Financial years are as under:
Particulars
Net Worth
Total Debt
- Short Term Borrowing
- Current maturities of long term borrowing
Net Fixed Assets
Non Current Assets
Cash and cash equivalents
Current Investment
Current Assets
Current Liabilities
Asset Under Management
Off Balance Sheet Assets
Total Income
Total expenses (other than interest)
Interest Expenses
Provisioning & write-offs
PAT
Capital Adequacy Ratio (%)
As per
audited
financials
As at 31st
March 2014
33,037.09
As per
audited
financials
As at 31st
March 2013
28,212.89
(` in Lakh)
As per
audited
financials
As at 31st
March 2012
24,227.36
20,000.00
20,000.00
101.32
4,441.38
61.37
58,117.53
7,336.03
16,985.91
3,64,653.63
12,037.55
2,481.56
1,727.45
319.31
4,824.21
47%
16,877.61
16,875.00
2.61
131.33
220.65
8,867.22
33,605.09
3,668.70
1,359.68
1,08,262.70
8,897.28
1,966.17
124.11
742.63
3,985.53
75%
13.25
13.25
93.09
1,917.61
1,061.13
20,494.13
1,460.72
759.03
75,838.91
4,031.94
1,658.02
161.37
321.09
1,444.74
100%
Abridged Balance Sheet
Sr No
A
1
a
b
2
a
b
Particulars
EQUITY AND LIABILITIES
Shareholders' funds
Share Capital
Reserves and Surplus
Non-current liabilities
Long-term borrowings
Long-term provisions
As per
audited
financials
As at 31st
March 2014
As per
audited
financials
As at 31st
March 2013
(` in Lakh)
As per
audited
financials
As at 31st
March 2012
21,000.00
12,037.09
21,000.00
7,212.89
21,000.00
3,227.36
33,037.09
34.63
34.63
28,212.89
15.61
29.75
45.37
24,227.36
18.22
22.06
40.29
Page 15
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
3
a
b
c
d
Current liabilities
Short-term borrowings
Trade payables
Other current liabilities
Short-term provisions
Total
B
1
a
b
c
2
a
b
c
d
e
ASSETS
Non-current assets
Fixed assets
(i) Tangible assets
(ii) Intangible assets
(iii) Capital work-in-progress
Deferred tax assets (liabilities)
Long-term loans and advances
Current assets
Current investments
Trade receivables
Cash and bank balances
Short-term loans and advances
Other current assets
Total
20,000.00
11.26
16,942.31
32.34
36,985.91
70,057.64
16,875.00
15.14
1,316.44
28.16
18,234.74
46,492.99
20.01
716.16
22.87
759.04
25,026.68
44.93
56.39
116.23
4,325.15
59.15
72.18
154.25
66.40
52.14
4.98
35.97
36.08
1,881.53
4,542.70
351.98
2,010.70
58,117.53
4,678.09
61.37
2,657.94
65,514.93
70,057.64
33,605.09
1,009.85
8,867.22
2,606.06
52.79
46,141.01
46,492.99
20,494.13
1,318.89
1,061.13
136.79
5.05
23,015.99
25,026.68
For the year
ended
For the year
ended
31.03.2014
Rupees
31.03.2013
Rupees
Abridged Statement of Profit and Loss
Particulars
(` in Lakh)
For the year
ended
31.03.2012
Rupees
REVENUE FROM OPERATIONS
Management and advisory fees
Interest income on restructuring
Interest income on loans
Profit on redemption/sale of security receipts
Interest income on funded expenses
Earlier year provision w/back
Total
5,629.38
3,709.30
1,129.90
1,411.50
4.80
70.93
2,230.99
1,532.21
383.25
4,292.90
10.58
180.80
1,964.13
1,307.41
162.18
466.29
13.64
-
11,955.80
8,630.73
3,913.65
Page 16
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
OTHER INCOME
Interest income on fixed deposit
Other non-operating income
Total
71.21
10.53
81.74
255.29
11.26
266.54
77.31
40.98
118.29
12,037.54
8,897.27
4,031.94
Employee benefits expense
Finance costs
Provision/write off for receivables, loans & investments
Depreciation and amortization expense
Other expenses
1,508.10
1,727.45
319.31
42.33
931.12
1,214.69
124.11
742.64
35.82
715.66
890.84
161.37
321.09
24.64
421.46
Total expenses
4,528.32
2,832.91
1,819.39
Profit before Tax
Tax expense
7,509.22
6,064.36
2,212.54
Current tax
Deferred tax
Excess provision for tax in respect of earlier year (net)
2,647.00
38.02
-
2,197.00
(118.17)
-
846.00
(14.02)
(64.18)
2,685.02
2,078.83
767.81
4,824.21
3,985.53
1,444.74
Total Revenue
EXPENSES
Profit after tax
Page 17
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
Abridged Statement of Cash flow
(` in Lakh)
For the
year ended
March 31,
2012
For the
year ended
March 31,
2014
For the
year ended
March 31,
2013
7,509.22
6,064.36
2,212.54
42.33
0.08
319.31
(70.93)
5.16
3.90
1,727.45
9,536.53
35.82
0.43
13.85
380.29
(180.80)
348.49
8.85
4.12
124.11
6,799.52
24.64
321.09
6.44
4.17
161.37
2,730.25
Adjustment for:
(Increase)/decrease in trade receivables
(Increase)/decrease in short-term loans and advances
(Increase)/decrease in other current assets
Increase/(decrease) in trade payables
Increase/(decrease) in other current liabilities
Cash generated from/(used in) operations
(3,832.96)
(206.80)
52.79
(3.88)
15,626.28
21,171.96
36.95
(996.61)
(47.74)
(4.86)
805.85
6,593.11
(33.47)
67.20
47.76
12.25
211.87
3,035.86
Direct taxes paid
Net cash from/(used in) operating activities
(2,676.25)
18,495.71
(1,893.34)
4,699.77
(974.99)
2,060.87
(27,610.46)
3,168.95
(12.40)
319.00
(24,014.84)
10,555.39
(74.68)
0.20
(319.00)
(8,637.22)
6,025.67
(86.63)
(100.00)
(24,134.91)
(13,852.93)
(2,798.18)
-
-
7.34
(4,229.50)
-
2.61
-
18.22
(15.61)
(0.08)
3,125.00
-
(2.61)
(10.64)
16,875.00
-
13.25
(600.00)
Particulars
Cash flow from operating activities
Profit before tax
Adjustment for:
Depreciation
Loss on sale of fixed assets / written off
Write off /reversal of receivables and investments
Provision for receivables and advances & loans
Earlier year provision on receivables/ advances w/back
Provision for loss on impairment of investments
Provision for gratuity
Provision for/(reversal of) compensated absences
Interest expense
Operating profit before working capital changes
Cash flow from investing activities
Purchase of current investments - Others
Sale/ redemption of current investments - Others
Purchase of fixed assets
Sale of fixed assets
Bank balances not considered as Cash and cash
equivalents
Net cash from/(used in) investment activities
Cash flow from financing activities
Proceeds from long term loans and advances
Increase in long term loans and advances
Proceeds from long-term borrowings
Repayment of long-term borrowings
Repayment of short-term borrowings
Proceeds from short-term borrowings
Disbursement of secured loan
Page 18
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
Interest paid
Net cash from/(used in) financing activities
(1,727.45)
(2,847.65)
(124.11)
16,740.25
(161.37)
(722.55)
Net increase/(decrease) in cash and cash
equivalents
Cash & cash equivalents (opening)
Cash & cash equivalents (closing)
(8,486.85)
7,587.09
(1,459.87)
8,548.22
61.37
961.13
8,548.22
2,421.00
961.13
As on October 9, 2014, the Gross Debt equity ratio of the Company was 3.17 approximately
(prior to issue of NCDs including debt from JM Financial Ltd and its subsidiaries) which is not
expected to change materially post the issuance of NCDs since the proceeds would be utilised
for repayment of existing borrowings. However in case the proceeds are not utilised for
repayment of existing borrowings immediately, the Gross Debt equity ratio shall be higher for a
temporary period. For the purpose of this calculation, Gross Debt includes aggregate of financial
indebtedness of the Company (Secured Loan from bank, unsecured borrowings and secured working
capital facilities only) and Gross Equity includes the equity share capital of the Company and the
Reserves & Surplus. Further, unamortised interest on Commercial Papers have been considered as
debt.
iv. Project cost and means of financing, in case of funding new projects:
Not Applicable, the funds raised through issue of these NCDs will be utilised to meet the objects
stated under the term sheet of this DD.
c. Brief history of the Issuer since its incorporation giving details of its following activities:
Brief History of the Company
The Company was incorporated on September 19, 2007 as a private limited company under the
provisions of the Companies Act, 1956. The Company has obtained a certificate of registration dated
September 23, 2008 bearing no. 11 issued by the Reserve Bank of India to carry on the business of
securitisation and asset reconstruction under the provisions of SARFAESI.
i. Details of Share Capital as on June 30, 2014:
Share Capital
Particulars
Authorised Share Capital
`260 Crore comprising 26,00,00,000 Equity Shares of `10
each
Issued, Subscribed and
Paid up Share Capital
`210 Crore comprising 21,00,00,000 Equity Shares of `10
each
The Company has issued and allotted 3,12,50,000 equity shares on rights basis to its shareholder during the quarter ended September 30,
2014. The said allotment was subject to the approval of the Reserve Bank of India (RBI’s approval is awaited as on the date of this DD). The
Issued, Subscribed and Paid up Share Capital of the Company may accordingly change upon the receipt of approval from the RBI.
ii. Changes in its capital structure as on June 30, 2014:
The changes in Authorised Share Capital of the Company are as under:
Page 19
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
In `
Date of change (Annual
General Meeting (AGM) /
Extra Ordinary General
Meeting (EGM))
EGM held on April 28, 2014
EGM held on February 18,
2008
EGM held on November 28,
2007
Particulars
260 Crore
Increase in authorised share capital of the
Company from `210 Crore to `260 Crore
divided into 26 Crore equity shares of `10/each
210 Crore
Increase in authorised share capital of the
Company from `110 Crore divided into 10.50
Crore equity shares of `10/- each and 50
Lakh Preference shares of `10/- each to
`210 Crore divided into 21 Crore equity
shares of `10/- each
110 Crore
Increase in authorised share capital of the
Company from `2 Crore divided into 20 Lakh
equity shares of `10/- each to `110 Crore
divided into 10.50 Crore equity shares of
`10/- each and 50 Lakh Preference shares of
`10/- each
2 Crore
`2 Crore divided into 20 Lakh equity shares
of `10/- each
On incorporation
(September 19, 2007)
iii. Equity Share Capital History of the Company as on June 30, 2014:
The details of equity share capital raised by the Company up to June 30, 2014 are as under:
Date of
No. of
Face Issue Consideration Nature of
Cumulative
equity
Price
Allotment
Allotment
value
(Cash, other
No. of
Equity Share
shares
(`)
than cash,
(`)
equity
Capital (`)
etc.)
shares
On
incorporation
December
20, 2007
March 31,
2008
10,000
1,99,90,000
10,89,50,000
10
10
10
10
10
10
Equity
Share
premium
(`)
Cash
Allotment to
Subscribers
10,000
1,00,000
Nil
Cash
Preferential
Allotment to
JM Financial
Limited
2,00,00,000
20,00,00,000
Nil
Cash
Preferential
Allotment to
JM Financial
Limited, Mr.
Narotam
Sekhsaria
and RKBK
Fiscal
Services
Pvt. Ltd.
12,89,50,000
128,95,00,000
Nil
Page 20
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
May 5, 2008
March 4,
2010
4,85,00,000
3,25,50,000
10
10
10
10
Cash
Preferential
Allotment to
Indian
Overseas
Bank, UCO
Bank, Union
Bank of
India and
Central Bank
of India
17,74,50,000
177,45,00,000
Nil
Cash
Preferential
Allotment to
JM Financial
Limited and
Valiant
Mauritius
Partners FDI
Limited
21,00,00,000
210,00,00,000
Nil
The Company has issued and allotted 3,12,50,000 equity shares on rights basis to its shareholder during the quarter ended September 30,
2014. The said allotment was subject to the approval of the Reserve Bank of India (RBI’s approval is awaited as on the date of this DD). The
date of allotment of these shares was September 22, 2014.
iv. Details of any Amalgamation in the last one year:
None
v. Details of any Reorganisition or Reconstruction in the last one year:
None
d. Details of the shareholding of the Company as on June 30, 2014:
i. Shareholding pattern of the Company:
Name of the shareholder
Number of shares held
Percentage of
shareholding as on
Record date
(%)
Sponsor Shareholders
JM Financial Limited (Principal
Sponsor)
10,29,00,000
49.00
Mr. Narotam Sekhsaria
3,15,00,000
15.00
Radhakrishna Bimalkumar
Private Limited
1,05,00,000
5.00
Indian Overseas Bank
2,10,00,000
10.00
Non –Sponsor Shareholders
UCO Bank
1,00,00,000
4.76
Page 21
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
Union Bank of India
1,00,00,000
4.76
75,00,000
3.57
Valiant Mauritius Partners FDI
Limited
1,66,00,000
7.91
Total
21,00,00,000
100.00
Central Bank of India
All shares are held in demat mode except 2,00,00,000 equity shares held by JM Financial Limited are held in physical form. The Company has issued and allotted
3,12,50,000 equity shares on rights basis to its shareholder during the quarter ended September 30, 2014. The said allotment was subject to the approval of the Reserve
Bank of India (RBI’s approval is awaited as on the date of this DD). The shareholding pattern of the Company may accordingly change upon the receipt of approval from
the RBI.
ii. List of top 10 holders of equity shares of the Company as on June 30, 2014:
The list of top 10 holders of equity shares of the Company is as under:
Sr. No. Particulars
1.
2.
3.
4.
5.
6.
7.
8.
JM Financial Limited
Mr. Narotam S Sekhsaria
Radhakrishna Bimalkumar Private Limited
Indian Overseas Bank
UCO Bank
Union Bank of India
Central Bank of India
Valiant Mauritius Partners FDI Limited
e. Following details regarding the directors of the Company:
i. Details of the current directors of the Company:
Name, Designation
Sr.
in the Company,
DIN
Age Address
No.
Occupation
Ansal Heights, B-1802, 18th
1.
Mr. V P Shetty,
00021773 67
Floor, G.M.
Non - Executive
Bhosale Marg, Worli Naka,
Chairman
Worli, Mumbai – 400018
Occupation: Service
2.
Mr. Narotam
Sekhsaria, Non Executive Director
Director of the
Company
since
November 28,
2007
00276351
65
Rushilla 3, 17-C Carmichael
Road,
Mumbai – 400026
April 10, 2008
00074905
70
764-F, Sarosh Court, Tilak
Road, Dadar,
Mumbai - 400014
April 10, 2008
00064358
68
Flat No.1, Newry Shobhika,,
3,Chinnaiah
Street, T-Nagar,
Chennai -600017
April 10, 2008
Occupation: Business
3.
Mr. Hoshang N
Sinor, NonExecutive &
Independent
Director
Occupation / Line of
business: Finance
4.
Mr. G M
Ramamurthy, NonExecutive &
Independent
Director
Occupation: Professional
Page 22
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
Sr.
No.
5.
Name, Designation
in the Company,
Occupation
Mr. S H Khan, NonExecutive &
Independent
Director
Age
Address
00006170
76
181,Antariksha Apartments,
95/96
Kakasaheb Gadgil Marg,
Prabhadevi,
Mumbai – 400025
April 10, 2008
00007347
58
Flat No 228, 'B' Wing, Kalpataru
Habitat, 22nd Floor, Dr.S.S.
Rao
Road, Parel, Mumbai, 400012.
September 15,
2008
00005619
66
184/B, Kalpataru Horizon Chs
Ltd,, S K Ahire Marg, Worli,
Mumbai - 400018
September 11,
2013
01310959
49
1, Neelima, 12th Road, Near
Ram Krishna Mission,
Khar West, Mumbai – 400 052
September 19,
2007
Occupation/Line of
business: Finance
6.
Mr. Shailesh
Haribhakti, NonExecutive &
Independent
Director
Director of the
Company
since
DIN
Occupation: Professional
7.
Dr. Anil Khandelwal,
Non-Executive &
Independent
Director
Occupation/Line of
business: Banking &
Finance
8.
Mr. Anil Bhatia,
Managing Director
and CEO
Occupation: Service
We are awaiting the approval of the Reserve Bank of India for the appointment of Mr. Pulkit Sekhsaria as a Director on the Board of the Company.
To the best of the Company’s knowledge and belief, none of the current Directors are appearing in the
RBI’s defaulter list.
Details of other directorship of the directors of the Company:
Sr.
No.
Name of the Director
Details of other directorship
1.
Mr. V P Shetty
JM Financial Asset Management Ltd.
JM Financial Products Limited
FICS Consultancy Services Limited
Hotel Leelaventure Limited
2.
Mr. Narotam
Sekhsaria
ACC Limited
Ambuja Cements Limited
Radha Madhav Investments Limited
Ambuja Cement Foundation
Ambuja Educational Institute
Narotam Sekhsaria Foundation
3.
Mr. Hoshang N Sinor
3i Infotech Limited
3i Infotech Holdings Pvt. Ltd. (Mauritius)
ICICI Venture Funds Management Co. Ltd.
Tata Investment Corporation Limited
Tata Motors Finance Limited
Page 23
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
Sr.
No.
Name of the Director
Details of other directorship
CRISIL Limited
Themis Medicare Limited
Zoorastrian Co-operative Bank Limited
IFMR Rural Channels and Services Pvt. Ltd.
MF Utilities India Pvt. Ltd.
Institution of Mutual Funds Intermediaries
4.
Mr. G M Ramamurthy
JM Financial Asset Management Limited
ONGC Mangalore Petrochemicals Limited
5.
Mr. S H Khan
ITC Limited
IDFC Limited
Bajaj Auto Limited
Bajaj Holdings & Investment Limited
Bajaj Finserv Limited
Bajaj Allianz Life Insurance Company Limited
Bajaj Allianz General Insurance Company Limited
6.
Mr. Shailesh
Haribhakti
Torrent Pharmaceuticals Limited
L&T Finance Holdings Limited
Raymond Limited
Future Lifestyle Fashions Limited
Blue Star Limited
Mahindra Life space Developers Limited
NSDL e-Governance Infrastructure Limited
Ambuja Cements Limited
ACC Limited
J K Paper Limited
Milestone Capital Advisors Limited
Karam Chand Thapar & Bros. (Coal Sales) Limited
D H Consultants Private Limited
Quadrum Solutions Private Limited
AAA Infrastructure Consulting & Engineers Pvt. Ltd.
Reliance Enterprises & Ventures Pvt. Ltd.
ADA Enterprises & Ventures Pvt. Ltd.
AAA International Capital Pvt. Ltd.
AAA Industries Pvt. Ltd.
MentorCap Management Pvt. Ltd.
Haribhakti Moti India Pvt. Ltd.
Planet People & Profit Consulting Pvt. Ltd.
HB Advisory Services Pvt. Ltd.
7.
Dr. Anil Khandelwal
8.
Mr. Anil Bhatia
Dighi Ports Limited
Anugyan Consulting Private Limited
Access Development Services
Grassroot Trading Network for Women
Gail (India) Limited
Hotel Leelaventure Limited
Page 24
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
ii. Details of change in directors since last three years:
Date of
Appointment /
Resignation
Director of the
Company since
(in case of
resignation)
Sr.
No.
Name and
Designation
1.
Mr. Suresh Kumar
Neotia
00152016
May 15, 2014
(Date of
Cessation)
April 10, 2008
(Date of
appointment)
Resigned as a
Director
2.
Mr. Rabindra
Behera
05298483
September 11,
2013
(Date of
Cessation)
May 11, 2012
(Date of
appointment)
Change in
Nominee by
Indian Overseas
Bank
3.
Dr. Anil Khandelwal
00005619
September 11,
2013
(Date of
appointment)
-
Appointed as
Independent
Director
4.
Mr. Sunil B Mathur
00013239
March 31, 2013
(Date of
Cessation)
April 10, 2008
(Date of
appointment)
Resigned as a
Director
5.
Mr. A P Singh
02829137
May 11, 2012
(Date of
Cessation)
October 12, 2009
(Date of
appointment)
DIN
Remarks
Change in
Nominee by
Indian Overseas
Bank
We are awaiting the approval of the Reserve Bank of India for the appointment of Mr. Pulkit Sekhsaria as a Director on the Board of the Company.
f. Following details regarding the auditors of the Company:
i. Details of the auditor of the Company:
Name
M/s. Khimji Kunverji & Co.
Address
Sunshine Tower, Level 19,
Senapati Bapat Marg,
Elphinstone (W), Mumbai - 400 013
Auditor since
16/10/2007
ii. Details of change in auditor since last three years:
None
g. Details of Borrowings of the Company, as on June 30, 2014:
i. Details of Secured Loan Facilities as on June 30, 2014:
Page 25
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
Lender’s Name
Type of
Facility
IDBI Bank
Overdraft
Ratnakar Bank Ltd
Cash Credit
UCO Bank
Cash Credit
Indian Overseas
Bank
Cash Credit
Karur Vysya Bank
Short Term
Loan
Amount
Sanctioned
(` in Crore)
Principal
Amount
Outstanding
(` in Crore)
100.00
81.98
75.00
57.58
25.00
20.18
50.00
43.43
20.00
20.00
270.00
223.18
Total
Repayment
Date /
Schedule
Annually
renewable
Annually
renewable
Annually
renewable
Annually
renewable
May 30, 2015
Security
Pledge of Security
Receipts
Pledge of Security
Receipts
Pledge of Security
Receipts
Pledge of Security
Receipts
Pledge of Security
Receipts
Repayment schedule of secured loans from banks
Repayment
date
Lenders name
Karur Vysya Bank
Amount
(` in Crore)
May 30, 2015 20
ii. Details of Unsecured Loan Facilities (Inter Corporate Loans) as on June 30, 2014:
Lender’s Name
Type of Facility
Vinamra Universal
Vinamra Universal
HDFC Ltd
JM Financial Limited
JM Financial Products
Limited
JM Financial Services
Limited
Vinamra Universal
Vinamra Universal
Indostar Capital
Total
Inter Corporate
Loan
Inter Corporate
Loan
Inter Corporate
Loan
Inter Corporate
Loan
Inter Corporate
Loan
Inter Corporate
Loan
Inter Corporate
Loan
Inter Corporate
Loan
Short term loan
Principal Amount
Outstanding
(` in Crore)
Repayment Date /
Schedule
25.00
November 26, 2014
45.00
October 28, 2014
250.00
September 29, 2014
200.00
September 29, 2014
100.00
September 29, 2014
15.00
September 29, 2014
100.00
September 25, 2014
25.00
August 27, 2014
25.00
August 14, 2014
785.00
Page 26
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
iii. Details of Non-Convertible Debentures as on June 30, 2014:
None
iv. List of top 10 Debenture Holders as on June 30, 2014:
None
v. The amount of corporate guarantee issued by the Issuer along with name of the
counterparty (like name of the subsidiary, JV entity, group company, etc.) on behalf of whom it
has been issued:
None
vi. Details of Commercial Paper:
The total Face Value of Commercial Papers Outstanding as on June 30, 2014 and its breakup are as
follows:
Name of the Commercial Paper
holder
Maturity Date
Amount Outstanding
(Face Value)
(` in Crore)
Ms. Sushma Jain
June 30, 2015
25.00
Pramerica Mutual Fund
June 19, 2015
20.00
Alkem Laboratories
December 10, 2014
20.00
Indiabulls Liquid Funds
September 12, 2014
15.00
Indiabulls Ultra Short Term Fund
September 12, 2014
10.00
Tata Liquid Fund
August 29, 2014
50.00
UTI Treasury Advantage Fund
August 29, 2014
35.00
Religare Invesco Credit Opp Fund
August 11, 2014
25.00
Religare Invesco Credit Opp Fund
August 8, 2014
25.00
July 14, 2014
25.00
Pramerica Mutual Fund
Total
250.00
vii. Details of rest of the borrowing (if any including hybrid debt like FCCB, optionally
convertible debentures/preference shares) as on June 30, 2014:
None
viii. Details of all default/s and/or delay in payments of interest and principal of any kind of
term loans, debt securities and other financial indebtness including corporate guarantee
issued by the Company, in the past 5 years:
None
Page 27
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
ix. Details of any outstanding borrowings taken/ debt securities issued where taken/issued (i)
for consideration other than cash, whether in whole or in part, (ii) at a premium or discount, or
(iii) in pursuance of an option:
None
h. Details of Sponsor of the Company / management:
JM Financial Limited, Mr. Narotam Sekhsaria and Indian Overseas Bank are the Sponsors of the
Company. However, subsequent to the issue and allotment of 3,12,50,000 equity shares on rights basis
during the quarter ended September 30, 2014, Indian Overseas Bank ceases to be a Sponsor of the
Company.
Details of Sponsor’s holding in the Company:
Sr.
No.
1.
Name of the shareholders
JM Financial Limited
(Principal Sponsor)
Total no. of Equity
shares
10,29,00,000
% of total no. of equity shares
49.00
2.
Mr. Narotam Sekhsaria
3,15,00,000
15.00
3.
Radhakrishna Bimalkumar
Private Limited
1,05,00,000
5.00
All shares are held in demat mode except 2,00,00,000 equity shares held by JM Financial Limited are held in physical form. The above holdings of the Sponsors are subject to
change upon receipt of approval for allotment of 3,12,50,000 equity shares from RBI.
Key management of the Company
Mr. V P Shetty
Mr. Anil Bhatia
Mr. Vivek Grover
Mr. Satish Kumar Gupta
Mr. Sanil Panicker
Mr. Kunal Sarin
Mr. Rakesh Kashimpuria
Mr. Sabyasachi Ray
Mr. Nikhil Bhandary
-
Non-Executive Chairman
Managing Director and Chief Executive Officer
Executive Director
Executive Director
Senior Vice President
Senior Vice President
Senior Vice President
Finance Controller
Company Secretary
i. & j. Abridged version of audited financial information for the last three years:
As provided under A.b.iii above. There was no auditors’ qualification during the previous three years.
k. Any material event/ development or change having implications on the financials/credit
quality (e.g. any material regulatory proceedings against the Issuer/promoters, tax litigations
resulting in material liabilities, corporate restructuring event etc.) at the time of issue which may
affect the issue or the investor’s decision to invest / continue to invest in the debt securities:
Save as stated elsewhere in this DD, since the date of the last published audited financial accounts, to
the best of the Company’s knowledge and belief, no material developments have taken place that will
materially affect the performance or prospects of the Company.
Page 28
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
l. Name of the Debenture Trustee:
The Company has appointed IL&FS Trust Company Limited as the Debenture Trustee for the Issue.
The address and contact details of the Debenture Trustee are as under:
IL&FS Trust Company Limited
IL&FS Financial Centre, Plot C-22, G Block,
Bandra Kurla Complex, Bandra (East),
Mumbai – 400 051
Tel: +91 22 2659 3884; Fax: +91 22 2653 3297
E-mail: [email protected]
Website: www.itclindia.com
IL&FS Trust Company Limited has given its consent to the Company vide letter date October 9, 2014
under the provisions of Securities and Exchange Board of India (Issue and Listing of Debt Securities)
Regulations, 2008 and the Companies Act, 2013 to be appointed as the Debenture Trustee for this
Issue.
All the rights and remedies of the Debenture Holders shall vest in and shall be exercised by the
Debenture Trustee without referring to the Debenture Holders (other than to the extent as will be set out
in the relevant Debenture Trust Deed (s)). All Debenture Holders shall without any further act or deed
be deemed to have irrevocably given their authority and consent to IL&FS Trust Company Ltd. to act as
their Debenture Trustee and authorized the Debenture Trustee or any of its agents or authorised
officials to do, inter alia, acts, deeds and things necessary in respect of or relating to their duty in such
capacity including accepting the Security to be created by the Company in terms of this DD. No
Debenture Holder shall be entitled to proceed directly against the Company unless the Debenture
Trustee having become so bound to proceed, fails to do so.
Any payment by the Company to the Debenture Trustee on behalf of the Debenture Holders shall
discharge the Company pro tanto to the Debenture Holders. The Debenture Trustee shall carry out its
duties and shall perform its functions as per the SEBI Regulations, the Companies Act, 2013 and this
DD, with due care, diligence and loyalty. Resignation/retirement of the Debenture Trustee shall be as
per terms of the Debenture trust deed(s) entered into between the Company and the Debenture
Trustee and a notice in writing to the Debenture Holders shall be provided for the same.
The Debenture Trustee will protect the interest of the Debenture Holders on the occurrence of an event
of default by the Company in regard to timely payment of interest and repayment of principal and it will
take necessary action at the Company’s cost as provided in the Debenture Trust Deed.
m. The detailed rating rationale(s) adopted/ credit rating letter issued by the rating agencies
shall be disclosed:
ICRA Limited has assigned “ICRA A+” (pronounced “ICRA A plus rating” with stable outlook) rating to
the captioned Issue. As per ICRA’s rating letter, instruments with this rating are considered to have
adequate degree of safety regarding timely servicing of financial obligations and such instruments carry
low credit risk. Investors may please note that the rating is not a recommendation to buy, sell or hold
securities and investors should take their own decisions. The Rating Agency has the right to suspend,
withdraw or revise the rating / outlook assigned to the Issue at any time, on the basis of new
information or unavailability of information or other circumstances which the Rating Agency believes
may have an impact on the rating.
A copy of the ICRA rating letters are enclosed in Annexure A.
Page 29
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
n. Details/Copy of Guarantee or Letter of Comfort or any other Document / Letter with similar
intent, if any:
None
o. Copy of Consent Letter from the Trustee:
A copy of the consent letter of IL&FS Trust Company Limited dated October 9, 2014 is enclosed in
Annexure B.
p. Name of the recognised stock exchange where the debt securities are proposed to be listed
clearly indicating the designated stock exchange:
BSE will be the designated stock exchange for the Issue. NCDs will be listed on the wholesale debt
market segment of BSE.
The Company shall forward the listing application to BSE within 15 days from the date of allotment(s).
In case of delay in listing of the NCDs beyond 20 days from the date of allotment, the Company will pay
penal interest, of 1 % p.a. over the interest/coupon rate from the expiry of 30 days from the date of
allotment till the listing of such NCDs to the investor.
q. Other Details:
i. Debenture Redemption Reserve:
Debenture Redemption Reserve, if any, required under the applicable provisions of the Companies Act,
2013 will be created by the Company.
ii. Issue/instrument specific regulations:
The Debentures are governed by and will be construed in accordance with the Indian laws. The
Company, the Debentures and Company’s obligations under the Debentures shall, at all times, be
subject to the provisions of the Companies Act, 2013, regulations/guidelines/directions of RBI, SEBI
and Stock Exchanges and other applicable laws and regulations from time to time. The Debentureholders, by purchasing the Debentures, agree that the courts in Mumbai shall have exclusive
jurisdiction with respect to any matters relating to the Debentures.
Further, the said Debentures shall be subject to the terms and conditions as contained in the
application form, Disclosure Document, Disclosure document, Debenture Trust Deed, Debenture
Trustee Appointment Agreement and other Transaction / Security documents.
iii. Application Process:
How to Apply
Applications for the NCDs must be made in the prescribed Application Form as provided by the
Company and must be completed by the investors. Application Form must be accompanied by either a
demand draft or cheque drawn or made payable in favour of “JM Financial Asset Reconstruction
Company Private Limited” only and should be crossed “Account Payee only”. Demand Draft(s)/
cheque(s) may be drawn on any bank including a co-operative bank, which is a member or submember of the Banker’s clearing house located at Mumbai.
Page 30
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
In case the payment is made through any electronic mode of payment such as RTGS / NEFT, the funds
have to be credited to the Company’s current account, the details of which are provided in the
Application Form.
It may be noted that payment by any other means shall not be accepted. The Company assumes no
responsibility for any applications/cheques/demand drafts lost in mail or in transit or any failure of
electronic fund transfer.
Who can apply
Nothing in this DD shall constitute and/or deem to constitute an offer or an invitation to offer, to be
made to the public or any section thereof through this DD and this DD and its contents should not be
construed to be a prospectus under the Companies Act. This issue is a domestic issue and is being
made in India only. This DD and the contents hereof are restricted for only the intended recipient(s)
who have been addressed directly through a communication by the Company and only such recipients
are eligible to apply for the NCDs. The categories of investors eligible to subscribe to the NCDs in this
issue, when addressed directly, inter-alia include the following:
a. Banks;
b. Financial Institutions;
c. Non-Banking Financial Companies;
d. Companies;
e. Mutual Funds;
f. Insurance Companies;
g. Provident Funds, Gratuity, Superannuation and Pension Funds, subject to their investment
guidelines; and
h. Individuals
i. Hindu Undivided Family (HUF)
j. any other eligible investor authorized to invest in the Debentures.
All investors are required to check and comply with applicable laws including the relevant rules /
regulations / guidelines applicable to them for investing in this Issue of NCDs and the Company, is not
in any way, directly or indirectly, responsible for any statutory or regulatory breaches by any investor,
neither is the Company required to check or confirm the same.
Although above investors are eligible to apply however only those investors, who are individually
addressed through direct communication by the Company, are eligible to apply for the Debentures. No
other person may apply. Hosting of DD on the website of the BSE should not be construed as an offer
or an invitation to offer to subscribe to the NCDs and the same has been hosted only as it is stipulated
by the SEBI Regulations. Investors should check their eligibility before making any investment.
Submission of Documents
Investors should submit the following documents, wherever applicable:
a. Memorandum and Articles of Association/Documents governing constitution, in case of other than
individuals;
b. Government notification/certificate of incorporation;
c. SEBI registration certificate, if applicable;
d. Resolution authorizing investment along with operating instructions;
e. Power of Attorney (original & certified true copy);
f. Specimen signatures of authorised persons;
g. Certified true copy of PAN card;
h. Registered / communication address;
Page 31
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
The list of documents required to be provided by an investor as mentioned above is only indicative and
an investor will be required to provide all additional documents / authorizations / information, which may
be required by the Company. The Company may, but is not bound to revert to any investor for any
additional documents / information and can accept or reject an application as it deems fit, without
assigning any reasons.
Submission of completed Application Form
All applications duly completed accompanied by fund transfer instrument / fund transfer instructions
from the respective investor’s account to the account of the Company, shall be submitted at the
Registered Office of the Company.
Applications under Power of Attorney / Relevant Authority
In case of applications made under a Power of Attorney or by a Limited Company or a Body Corporate
or Registered Society or Mutual Fund, and scientific and/or industrial research organisations or Trusts
etc., the relevant Power of Attorney or the relevant resolution or authority to make the application, as
the case may be, together with the certified true copy thereof along with the certified copy of the
Memorandum and Articles of Association and/or Bye-Laws as the case may be must be attached to the
Application Form or lodged for scrutiny separately with the photocopy of the Application Form, quoting
the serial number of the Application Form at the Company’s office where the application has been
submitted failing which the applications are liable to be rejected.
Application by Mutual Funds
In case of applications by Mutual Funds registered with SEBI, a separate application must be made in
respect of each scheme of the Mutual Fund and such applications will not be treated as multiple
applications, provided that the application made by the Asset Management Company/ Trustee/
Custodian clearly indicate their intention as to the scheme for which the application has been made.
Right to Accept or Reject Applications
The Company is entitled at its sole and absolute discretion to accept or reject any application, in part or
in full, without assigning any reason thereof. Application Forms that are not complete in all respects
may be rejected at the sole and absolute discretion of the Company. Any application, which has been
rejected, would be intimated by the Company along with the refund warrant.
Debentures in Dematerialised mode
The Company will make allotment of NCDs to investors in due course after verification of the
application form, the accompanying documents and on realization of the application money. The
allotted NCDs will be credited in dematerialized form within 2 (two) Business Days from the Date of
Allotment. The Depository Participant’s name, DPID and beneficiary account number must be
mentioned at the appropriate place in the Application Form.
Notwithstanding the foregoing, investors have the option to seek rematerialisation of NCDs (i.e.
investors shall have the right to hold the NCDs in physical form) at any time in the future.
Page 32
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
B. ISSUE DETAILS
The Issue
The Company proposes to issue up to 1000 Secured, Rated, Listed, Redeemable, Non-Convertible
Debentures of the face value of `10,00,000 (Rupees Ten Lakh only) each for cash aggregating upto
` 100,00,00,000/- (Rupees One Hundred Crore only) on a private placement basis in three options viz.,
Option A, Option B and Option C.
Pursuant to a resolution passed by the Company’s shareholders at their meeting held on November 25,
2013 in accordance with provisions of the Companies Act, 2013, the Board has been authorised to
borrow, for the purpose of the Company, upon such terms and conditions as the Board may think fit for
amounts up to ` 1,500 Crore. The present issue of NCDs in terms of this Disclosure Document is within
the overall powers of the Board as per the above resolution.
This present rights issue of NCDs is being made pursuant to the resolution of the Board of Directors
passed at its meeting held on July 14, 2014, which has approved the issue of the Non-Convertible
Debentures of up to ` 600 Crore.
The following is a summary of the terms of the Issue.
SUMMARY TERM SHEET
Private placement of up to 1000 Secured, Rated, Listed, Redeemable, Non-Convertible
Debentures (“Debentures” or “NCDs” or “Tranche III NCDs”) of the face value of ` 10,00,000/(Rupees Ten Lakh only) each for cash aggregating up to ` 100,00,00,000/- (Rupees One hundred
crore only) to be issued in three options viz., Option A, Option B and Option C
Issuer
Arranger
Type of Instrument
Nature of Instrument
Seniority
Mode of Issue
Eligible Investors
Listing
JM Financial Asset Reconstruction Company Private Limited
None
Secured, Rated, Listed, Redeemable Non-Convertible Debentures
Secured
Senior
Private placement
In accordance with paragraph “Who can apply” of this Disclosure
Document.
The NCDs are proposed to be listed on WDM segment of BSE
Limited. BSE has given its in-principle approval to list the NCDs to be
issued and allotted in terms of this DD vide its letter dated October 9,
2014.
The Company shall forward the listing application to BSE Limited
alongwith the applicable disclosures within 15 days from the date of
allotment of NCDs.
Rating of the Instrument
In case of delay in listing of the NCDs beyond 20 days from the date
of allotment, the Company will pay penal interest, of 1 % p.a. over the
interest/coupon rate from the expiry of 30 days from the date of
allotment till the listing of such NCDs to the investor.
ICRA Limited has assigned a rating of “ICRA A+” to the NCD issue
programme of the Company. Instruments with this rating are
considered to have adequate degree of safety regarding timely
servicing of financial obligations. Such instruments carry low credit
risk.
Page 33
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
Issue Size
Option to retain
oversubscription (Amount)
Objects of the Issue
Aggregating upto ` 100 Crore in three options viz., Option A, Option B
and Option C
None
Coupon Reset Process
The object of the Issue is to augment the long term resources of the
Company and to increase the average maturity period of its
borrowings.
The proceeds of the Issue would be utilised to finance the acquisition
of financial assets to be acquired by the Company in its ordinary
course of business, to meet working capital requirements of the
Company including repayment / pre-payment, in full or in part, of
certain loans availed by the Company in its ordinary course of
business and for general corporate purposes.
None
Day Count Basis
Actual / Actual
Details of the utilization of
the Proceeds
Interest
on
application Not Applicable
money
Default Interest Rate
In case of default in payment of interest and/or principal redemption
on the due dates, additional interest @ 2% p.a. over the applicable
interest / coupon rate will be payable by the Company for the
defaulting period.
Issue Price
` 10,00,000/- (Rupees Ten Lakh only) per NCD
Discount at which security is None
issued and the effective yield
as a result of such discount
Face Value
` 10,00,000/- (Rupees Ten Lakh only) per NCD
Minimum Application and in
Minimum 3 Debenture and in multiples of 1 thereafter
multiples of Debt securities
thereafter
Issue Timing
-
Issue Opening date
Issue Closing Date
Pay in date
Deemed
date
of
allotment
Issuance mode of the
Instrument
Trading
mode
of
the
Instrument
Settlement mode of the
Instrument
Depository(ies)
Business Day Convention
October 10, 2014
October 10, 2014
October 10,2014
October 10, 2014
Demat only
Demat only
Cheque / Demand Draft / NEFT / RTGS / other permitted mechanisms
NSDL / CDSL
Any day of the week excluding Saturdays, Sundays, any day which is
a public holiday for the purpose of Section 25 of the Negotiable
Instruments Act, 1881 (26 of 1881) in Mumbai and any other day on
which banks are closed for customer business in Mumbai, India.
Record Date for payment / 15 days prior to each Coupon Payment / Redemption Date
call option /redemption
Security (where applicable)
The NCDs being issued under this Disclosure Document shall be
(Including description, type of secured by way of a Mortgage on first ranking pari passu basis on the
Page 34
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
security, type of charge,
likely date of creation of
security, minimum security
cover, revaluation,
replacement of security) and
Ranking of Security.
immovable property and Hypothecation on first exclusive basis on the
movable property including Security Receipts (SRs) and other
receivables of the Company.
The Company may provide or cause to be provided (without being
obliged to) such further security for securing its obligations in respect
of the Debentures as may be decided by the Company.
The Security Cover for NCDs under this Issue shall be 1.33 times.
Transaction Documents
Disclosure Document, Debenture Trust Deed, Debenture Trustee
Appointment
Agreement,
Deed
of
Hypothecation
(if
required/applicable) and any other document that may be designated
by the Debenture Trustee as a Transaction Document.
Debenture Trust Deed would
document(s) in case of conflict.
Conditions Precedent to
Disbursement
Condition Subsequent to
Disbursement
Event of Defaults and other
covenants and terms &
conditions
Provisions related to Cross
Default Clause
Role and Responsibilities of
Debenture Trustee
Governing Law and
Jurisdiction
prevail
over
other
transaction
None
None
As per the Note below.
None
As per SEBI (Debenture Trustee) Regulations, 1993, SEBI (Issue and
Listing of Debt Securities) Regulation, 2008, the Companies Act, 2013
and debt listing agreement(s) as amended from time to time.
The Debentures are governed by and will be construed in accordance
with the Indian Law. The Company, the Debentures and Company’s
obligations under the Debentures shall, at all times, be subject to the
provisions of the Companies Act, regulations/ guidelines/directions of
RBI, SEBI and Stock Exchanges and other applicable laws and
regulations from time to time. The Debenture-holders, by purchasing
the Debentures, agree that the courts in Mumbai shall have exclusive
jurisdiction with respect to any matters relating to the Debentures.
Specific terms of each instrument:
Security Name
Number of Debentures
Issue Size
Issue Price
Discount at which security
is issued and the effective
yield as a result of such
discount.
Interest/Coupon Rate
Implicit yield
Option A
12% JMFARC
12.06.2017
500
` 50 Crore
` 10,00,000/- per
NCD
None
Option B
12% JMFARC
26.10.2017
200
` 20 Crore
` 10,00,000/- per
NCD
None
Option C
12% JMFARC
11.12.2017
300
` 30 Crore
` 10,00,000/- per
NCD
None
12.00% per annum
None
12.00% per annum
None
12.00% per annum
None
Page 35
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
Step Up/Step Down
Coupon Rate
Coupon Payment
Frequency
Coupon payment dates
Coupon Type
Tenor
Redemption Date
Redemption Premium
Redemption Amount
Put Option Date
Put Option Price
Call Option Date
Call Option Price
Put Notification Time
Call Notification Time
None
None
None
Payable Annually
Payable Annually
Payable Annually
09.10.2015,
10.10.2016,
12.06.2017
Fixed
976 days
12.06.2017
None
` 10,00,000/- per
NCD
None
None
None
None
None
None
09.10.2015,
10.10.2016,
26.10.2017
Fixed
1112 days
26.10.2017
None
` 10,00,000/- per
NCD
None
None
None
None
None
None
09.10.2015,
10.10.2016,
11.12.2017
Fixed
1158 days
11.12.2017
None
` 10,00,000/- per
NCD
None
None
None
None
None
None
Notes:
Note 1 - Cash flows for the above NCDs shall be as follows:
Option A:
Cash flows
1st Coupon
2nd Coupon
3rd
Coupon
Redemption
Option B:
Cash flows
1st Coupon
2nd Coupon
3rd
Coupon
Redemption
Option C:
Cash flows
1st Coupon
2nd Coupon
3rd
Coupon
Redemption
Date
Friday, October 09, 2015
Monday, October 10, 2016
and Monday, June 12, 2017
Date
Friday, October 09, 2015
Monday, October 10, 2016
and Thursday, October 26, 2017
Date
Friday, October 09, 2015
Monday, October 10, 2016
and Monday, December 11, 2017
No. of days in
coupon period
364
367
245
Amount (in `)
(per NCD)
1,19,671.23
1,20,327.87
10,80,547.95
No. of days in
coupon period
364
367
381
Amount (in `)
(per NCD)
1,19,671.23
1,20,327.87
11,25,260.27
No. of days in
coupon period
364
367
427
Amount (in `)
(per NCD)
1,19,671.23
1,20,327.87
11,40,383.56
Note 2 - Effect on holidays: Should any of the date(s), as defined above or elsewhere in this DD, fall
on a non Business Day, the next Business Day shall be considered as the effective date for the
purpose of coupon/interest payment and the previous Business Day shall be considered as the
effective date for the purpose of payment of redemption proceeds.
Page 36
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
Note 3 - Event of Default:
In the event of:
a) the Company failing to promptly pay any amount now or hereafter owing to the Debenture
Holder(s) or the Debenture Trustee as and when the same shall become due and payable under
the Transaction Documents;
b) the value of the Mortgage Properties not being sufficient to maintain the Security Cover, and the
Company having failed to cure such default;
i.
if the Security Cover is 1 time or above , within a maximum period of 25 (Twenty
Five) Business Days from the date on which the Security Cover went below 1.33
times;
ii.
if the Security Cover is below 1 time, within a maximum period of 10 (Ten)
Business Days from the date on which the Security Cover went below 1 time;
c) There being an event of default under the terms and conditions of any of the Company’s or its
subsidiaries’ issuances / obligations (including any kind of hybrid borrowing like foreign currency
convertible bonds, optionally convertible preference shares or optionally convertible debentures)
as a borrower other than the Debentures for an amount exceeding ` Ten Crore and the same not
being cured as per terms therein or are not waived by those lenders / investors;
d) Any representation or warranty being found to be false, misleading or incorrect in any material
respect, as on the date on which the same was made or deemed to have been made;
e) Material non compliance with any covenant, condition or agreement on the part of the Company
under any Transaction Documents;
f)
Security becoming unenforceable, illegal or invalid or any restriction, claim, imposition or
attachment or any event leading to Security becoming unenforceable, illegal or invalid or any
restriction, imposition or attachment has occurred other than as permitted under the Transaction
Documents or loss of lien on the collateral and the company does not cure the defect within 15
days
g) It becoming unlawful for the Company to perform any of its obligations under the Transaction
Documents, or if the Transaction Documents or any part thereof ceases, for any reason
whatsoever, to be valid and binding or in full force and effect;
h) The Company repudiating any of the Transaction Documents to which it is a party or evidences
an intention to repudiate a Transaction Document to which it is a party;
i)
Non-execution of any of the Transaction Documents to the satisfaction of the Debenture Trustee
within 45 (Forty Five) Business Days from the earlier of Deemed Date of Allotment or date of
closure of issue of the Debentures;
j)
Failure to file necessary forms with the Registrar of Companies in form and substance required to
perfect the Security within 20 (Twenty) Business Days from the date of execution of this Deed;
k) The Company having voluntarily or involuntarily become the subject of proceedings under any
insolvency laws;
l)
The proceedings for the voluntary or involuntary dissolution of the Company having been
Page 37
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
commenced;
m) A petition for winding up of the Company having been admitted or if an order of a Court of
competent jurisdiction having been made for the winding up of a Company, otherwise than in
pursuance of a scheme of voluntary amalgamation or reconstruction or arrangement previously
approved in writing by the Debenture Trustees (acting on behalf of Majority Debenture Holders)
and duly carried into effect;
n) The Company having taken or suffered any action to be taken for its liquidation or dissolution;
o) A receiver or a liquidator being appointed or allowed to be appointed for all or any part of the
undertaking of the Company;
p) The Company having admitted in writing of its inability to pay its debts as they mature;
q) The Company being adjudged insolvent or having taken advantage of any law for the relief of
insolvent debtors;
r) An attachment being levied on the Mortgage Properties or any part thereof other than by colenders and/ or certificate proceedings being taken or commenced for recovery of any dues from
the Company and the Company does not cure the defect within 15 days.
s) The Company ceasing to carry on its business or giving notice of its intention to do so;
t)
The Company being declared a sick undertaking under the provisions of the Sick Industrial
Companies (Special Provisions) Act, 1985 or if a reference has been made to the Board for
Industrial and Financial Reconstruction (‘BIFR’) by a creditor under the said act and the Company
has not resolved the complaint or is nationalised or is under the management of Central
Government;
u) The Company, without the previous consent in writing of the Debenture Trustee, making any
alteration in any Article of the Articles of Association concerning the Debentures or Debenture
Holders which might in the opinion of the Debenture Trustee detrimentally affects the interest of
the Debenture Holders and upon demand by the Debenture Trustee refusing or neglecting or
being unable to rescind such alteration;
v) The Company having entered into any arrangement or composition with its creditors or
committing any act of insolvency or any other act, the consequence of which may lead to the
insolvency or winding up of the Company;
w) Company failing to obtain, comply and/or losing any of its operating license, approvals, consents
or any other authorization required to carry out its business which would prejudice its ability to
perform its obligations under the Transaction Documents and/or to discharge the Debentures;
x) BSE delists the Debentures at any point of time due to an act of the Company or failure by the
Company to take all necessary actions to ensure continued listing and trading of the Debentures
on BSE and the same is not relisted within 15 days.
y) The Company attempting to create any charge, in addition to the charge created / to be created in
favour of the Debenture Trustee under the Transaction Documents, over the Security created in
favour of the Debenture Trustee, except as permitted under the Transaction Documents;
z) The Company without obtaining the No Objection Certificate of the Debenture Trustee (acting on
Page 38
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
the instructions of the Majority Debenture Holders) attempting or purporting to create any
mortgage, charge, pledge, hypothecation, lien or encumbrance over the Security ranking in
priority to or pari passu with or subservient to, the charge created in favour of the Debenture
Trustee in terms of the Transaction Documents except as permitted under the Transaction
Documents;
aa) The passing of any order by a court of competent jurisdiction ordering, restraining or otherwise
preventing the Company from conducting all or any material part of its business;
bb) The withdrawal, failure of renewal, or failure to obtain any statutory or regulatory approval in any
relevant jurisdiction required, if any, for issuance of the Debentures or creation of the Security and
the Company does not cure the defect within 15 days.
cc) Any act of fraud, embezzlement, misstatement, misappropriation or siphoning off of the
Company’s funds or revenues or any other act having a similar effect being committed by the
management of the Company;
dd) Failure on the part of the Company to honor Acceleration;
ee) Failure to maintain “JM Financial” as part of the name of the Company at all times during the
tenure of debentures without obtaining prior approval in writing from Majority Debenture Holders
(75%).
the same shall constitute an event of default in relation to the Debentures (hereinafter referred to as an
“Event of Default”) except where Debenture Trustee at its absolute discretion (acting on the instruction
of Majority Debenture Holders) gives any cure period through notice thereof in writing to the Company
and the Company remedies the default within such cure period; or
Nothing contained herein gives any cure period to the Company in case of Event of Default under
clause (a) above.
Consequence of Event of Default
On and at any time after the occurrence of an Event of Default, the Debenture Trustee shall, if so
directed by the Majority Debenture Holder(s), be entitled to:
- Accelerate the redemption of the NCDs and the amounts due under this Deed shall become
immediately due and payable; and/or
- enforce its charge over the Mortgage Properties in terms of this Deed to recover the Amount
Due; and/or
- exercise any other right that the Debenture Trustee and / or Debenture Holder(s) may have
under the Transaction Documents or under Indian law.
If any Event of Default has happened, the Company shall, promptly give notice thereof to the
Debenture Trustee, in writing, specifying the nature of such Event of Default.
All expenses incurred by the Debenture Trustee after an Event of Default has occurred in connection
with:(a)
preservation of the Security (whether then or thereafter existing); and
(b)
collection of amounts due under this Agreement;
shall be payable by the Company.
Page 39
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
Note 4 - Interest on coupon bearing NCDs:
a. Interest rate
Any interest payable on the Debentures may be subject to deduction at source at the rates
prevailing from time to time under the provisions of the Income tax Act, 1961, or any other
statutory modification or re-enactment thereof, for which a certificate will be issued by the
Company. Please refer to the Note 14 on Tax Deduction at Source (TDS) for further details.
b. Computation of Interest
Interest for each of the interest periods shall be computed on an actual / 365 days a year basis
on the principal outstanding on the relevant Options of NCDs at the applicable Interest Rate.
However, where the interest period (start to end date) includes 29th February, interest shall be
computed on 366 days a year basis, on the principal outstanding on the relevant Options of
NCDs at the applicable Interest Rate.
c. Payment of Interest
Payment of interest on the NCDs will be made to those of the Debenture Holder(s) whose
name(s) appear in the register of Debenture Holder(s) (or to the first holder in case of joint
holders) as on the Record Date fixed by the Company for this purpose and/or as per the list
provided by the Depository to the Company of the beneficiaries who hold NCDs in
dematerialized form on such Record Date, and are eligible to receive interest.
Note 5 - Redemption:
Unless previously redeemed or purchased and cancelled as specified below, the NCDs of each
Option shall be redeemed at the face value, at the expiry of the tenor.
Note 6 - Payment on Redemption:
The Company’s liability to the Debenture Holders of any Option in respect of all their rights
including for payment or otherwise shall cease and stand extinguished after maturity of that
Option, in all events save and except for the Debenture Holder’s right of redemption. Upon
dispatching the payment instrument towards payment of the redemption amount in respect of
the NCDs of any Option, the liability of the Company in respect of such Option shall stand
extinguished.
Note 7 - Redemption Payment Procedure:
a. NCDs held in physical form:
The Debenture certificate(s), duly discharged by the sole / all the joint holders (signed on the
reverse of the Debenture certificate(s)) will have to be surrendered for redemption on maturity
and should be sent by the Debenture Holder(s) by registered post with acknowledgment due or
by hand delivery to the Company or to such persons at such addresses as may be notified by
the Company from time to time, seven days prior to the Redemption Date. In case of any delay
in surrendering the Debenture certificate(s) for redemption, the Company will not be liable to
pay any interest, income or compensation of any kind for the late redemption due to such
delay.
The Company may, at its discretion, redeem the NCDs without the requirement of surrendering
of the certificates by the Debenture Holder(s). In case the Company decides to do so, the
redemption proceeds would be paid on the Redemption Date to those Debenture Holder(s)
Page 40
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
whose names stand in the register of Debenture Holders maintained by the Company on the
Record Date fixed for the purpose of redemption. Hence the transferee(s), if any, should ensure
lodgement of the transfer documents with the Company before the Record Date. In case the
transfer documents are not lodged before the Record Date and the Company dispatches the
redemption proceeds to the transferor, the Company shall be fully discharged and claims in
respect of the redemption proceeds should be settled amongst the parties inter se and no claim
or action shall lie against the Company.
b. NCDs held in dematerialised form:
Payment of the redemption amount of the NCDs will be made by the Company to the
beneficiaries as per the beneficiary list provided by the Depositories as on the Record Date. The
NCDs of any Option shall be taken as discharged on payment of the redemption amount by the
Company to the Debenture Holders of such Option as per the beneficiary list. Such payment will
be a legal discharge of the liability of the Company towards the Debenture Holders of such
Option. On such payment being made, the Company will inform the Depositories and
accordingly the account of the Debenture Holders of such Option with Depositories will be
adjusted.
Note 8 - Deemed Date of Allotment:
All benefits relating to the NCDs will be available to the investors from the Deemed Date of
Allotment. The actual allotment of NCDs may take place on a date other than the Deemed Date
of Allotment. The Company reserves the right to keep multiple allotment date(s)/ deemed
date(s) of allotment at its sole and absolute discretion without any notice. The Deemed Date of
Allotment may be changed (advanced/ postponed) by the Company at its sole and absolute
discretion.
Note 9 - Payment of outstanding amounts on the NCDs:
In terms of the Debt Listing Agreement, the Company shall ensure that services of Direct Credit,
RTGS (Real Time Gross Settlement) or NEFT (National Electronic Funds Transfer) are used for
payment of all outstanding amounts on the NCDs, including the principal and interest accrued
thereon.
Note 10 - Security:
The NCDs being issued under the DD shall be secured through a first ranking pari pasu charge
on the immovable properties and first ranking exclusive charge / hypothecation over portions of
the moveable properties or such other property as may be identified by the Company as set out
in the relevant debenture trust deed / security documents.
The Company will create Security for NCDs in accordance with applicable laws in India.
Subject to the provisions of the relevant Debenture Trust Deed, the Company shall be entitled to
replace / substitute any of the Moveable Property provided as Security in terms of the relevant
debenture trust deed / security documents with other Moveable Property. The Company shall
for such replacement issue a letter to the Debenture Trustee describing both the original
Moveable Property being replaced and the Moveable Property with which such original
Moveable Property is being replaced, which letter shall be duly acknowledged by the Debenture
Trustee. The Debenture Holders upon subscription to the Debentures shall be deemed to have
authorized the Debenture Trustee to execute such documents as may be required by the
Debenture Trustee to give effect to such replacement / substitution by acknowledging the
Replacement Security Letter, without providing notice to or obtaining consent from the
Page 41
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
Debenture Holders, so long as the Company has not defaulted in relation to any payment due
and the Auditor of the Company/ independent chartered accountant confirms to the Debenture
Trustee in writing that the Security Cover for the NCDs shall be maintained post such
replacement.
Further, in the event that the Moveable Property provided as Security by the Company is of a
value greater than the Security Cover, the Company shall be entitled to require the Debenture
Trustee to release the excess Moveable Property and the same shall cease to form part of the
Security on such release. The Company shall, for such release, issue a letter to the Debenture
Trustee describing the Moveable Property to be released and the Debenture Trustee shall
release the same by duly acknowledging the letter so addressed by the Company. The
Debenture Holders upon subscription to the Debentures shall be deemed to have authorized the
Debenture Trustee to give effect to such release without providing notice to or obtaining consent
from the Debenture Holders, so long as the Company has not defaulted in relation to any
payment due and the Auditor of the Company / independent chartered accountant confirms to
the Debenture Trustee in writing that the Security Cover for the NCDs shall be maintained post
such release.
Subject to the provisions of the Debenture Trust Deed, the Company may provide or cause to
be provided (without being obliged to) such additional security for securing its obligations in
respect of the Debentures as may be decided by the Company.
In case the actual Security Cover for Debentures falls below 1.33 times, the Company shall
restore the Security Cover to the stipulated level within the time allowed under the Debenture
Trust Deed.
The Company shall be entitled, from time to time, to make further issue of non-convertible
debentures or such other instruments to any other person(s) and/or raise further loans /
advances and/or avail of further financial and/or guarantee(s) facilities from Indian and/or
international financial institutions, banks and/or any other person(s) on the security of the
moveable property of the Company or any part thereof (other than that those comprising the
Security to NCDs issued under this Issue) and/or such other assets and properties as may be
decided by the Company from time to time without requiring to provide notice to or obtain
consent from the Debenture Trustee and/or the Debenture Holders.
Notwithstanding anything contained in this DD, so long as the stipulated Security Cover is
maintained, the Company shall have all rights to deal with the charged assets in normal course
of business without requiring to provide notice to or obtain consent from the Debenture Trustee
and/or the Debenture Holders.
Note 11 - Time Limit for creation of Security:
The Company shall endeavor to create the security in favour of the Debenture Trustee prior to
the issuance and allotment of the NCDs. In case of delay in execution of Debenture Trust Deed
and documents relating to creation of charge beyond the deemed date of allotment, the
Company shall hold the subscription monies received with respect to such NCDs in an escrow
account or such other account and shall utilize the same only on creation of the Security.
Additionally, in case of delay in execution of Debenture Trust Deed and documents relating to
creation of charge beyond one month from the date of closure, the Company will refund the
subscription money with agreed rate of interest/coupon/implicit yield or will pay penal interest of
2% p.a. over the Interest / coupon Rate till these conditions are complied with at the option of
the investor.
Page 42
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
Note 12 - Tax Deduction at Source (TDS):
Tax as applicable under the Income Tax Act, 1961, or any other statutory modification or
reenactment thereof will be deducted at source for which a certificate will be issued by the
Company. As per the provisions of the Income Tax Act, 1961, with effect from June 1, 2008, no
tax is deductible at source from the amount of interest payable on any listed dematerialised
security, held by a person resident in India. Since the NCDs shall be issued in dematerialised
mode and shall be listed on the WDM segment of BSE, no tax will be deductible at source on
the payment/credit of interest/implicit yield on NCDs held by any person resident in India. In the
event of rematerialisation of the NCDs, or NCDs held by persons resident outside India or a
change in applicable law governing the taxation of the NCDs, the following provisions shall
apply:
a) In the event the NCDs are rematerialized and the Company is required to make a tax
deduction, the Company shall make the payment required in connection with that tax
deduction within the time allowed and in the minimum amount required by applicable law;
b) The Company shall within 30 (thirty) days after the due date of payment of any tax or other
amount which it is required to pay, deliver to the Debenture Trustee evidence of such
deduction, withholding or payment and of the remittance thereof to the relevant taxing or
other authority.
Interest on Application Money shall be subject to TDS at the rates prevailing from time to time
under the provisions of the Income Tax Act, 1961 or any other statutory modification or
reenactment thereof for which a certificate will be issued by the Company.
For seeking TDS exemption / lower rate of TDS, relevant certificate / document must be lodged
by the Debenture Holder(s) at the Registered Office of the Company atleast 15 days before the
interest payment becoming due. Tax exemption certificate / declaration of non-deduction of tax
at source on interest on application money should be submitted along with the application form.
For detailed tax implications of the investment in NCDs, investors should get in touch with their
tax consultant.
Note 13 - Currency of Payment:
All obligations under the NCDs are payable in Indian Rupees only.
Note 14 - Right of the Company to Purchase, Re-sell and Re-issue NCDs:
a. Purchase and Resale of NCDs:
The Company may, subject to applicable law at any time and from time to time, at its sole and
absolute discretion purchase some or all of the NCDs held by the Debenture Holders at any
time prior to the specified date(s) of redemption. Such buy- back of NCDs may be at par or at
discount / premium to the face value at the sole discretion of the Company. The NCDs so
purchased may, at the option of the Company, be cancelled, held or resold.
b. Reissue of Debentures:
Where the Company has repurchased / redeemed any such NCDs, subject to the provisions of
the Companies Act, 2013 and other applicable legal provisions, the Company shall have and
shall be deemed always to have had the right to keep such NCDs alive for the purpose of
reissue and in exercising such right, the Company shall have and shall be deemed always to
have had the power to reissue such NCDs either by reissuing the same NCDs or by issuing
Page 43
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
other NCDs in their place in either case, at such a price and on such terms and conditions
(including any variations, dropping of or additions to any terms and conditions originally
stipulated) as the Company may deem fit.
Note 15 - Future Borrowings:
The Company shall be entitled, from time to time, to make further issue of debentures and or
such other instruments to the public, members of the Company and/or avail further financial
and/or guarantee facilities from financial institutions, banks and/or any other person(s) on the
security or otherwise of its assets / properties without the consent of the Debenture Trustee or
the Debenture Holders.
Note 16 - Rights of Debenture Holders:
The Debenture Holder(s) shall not be entitled to any right and privileges of shareholders other
than those available to them under the Act. The NCDs shall not confer upon its holders the right
to receive notice(s) or to attend and to vote at any general meeting(s) of the shareholders of the
Company.
Note 17 - Modification of Rights:
The Debenture Holders’ rights, privileges, terms and conditions attached to the NCDs may be
varied, modified or abrogated with the consent, in writing, of the Debenture Holders who hold
atleast three-fourth of the outstanding amount of the relevant Option of the NCDs or with the
sanction accorded pursuant to a resolution passed at a meeting of the Debenture Holders of
that Option, provided that nothing in such consent or resolution shall be operative against the
Company where such consent or resolution modifies or varies the terms and conditions of the
NCDs, if the same are not acceptable to the Company.
Note 18 - Notices:
The Company agrees to send notice of all meetings of the Debenture Holders. The notices,
communications and writings to the Debenture Holder(s) required to be given by the Company
shall be deemed to have been given if sent by registered post or by hand delivery or by
electronic transmission to the sole / first allottee or sole/first registered Debenture Holder as the
case may be at its address registered with the Company.
All notices, communications and writings to be given by the Debenture Holder(s) shall be sent
by registered post or by hand delivery to the Company at its Registered Office or to such
persons at such address as may be notified by the Company from time to time and shall be
deemed to have been received on actual receipt of the same.
Note 19 - Splitting and Consolidation:
Splitting and consolidation of the NCDs is not applicable in the dematerialised mode form since
the saleable lot is 1 (one) Debenture. In case the NCDs are in physical mode as a consequence
of rematerialisation of the NCDs by any Debenture Holder, the request from Debenture
Holder(s) for splitting/consolidation of Debenture certificates will be accepted by the Issuer only
if the original Debentures certificate(s) is/are enclosed along with an acceptable letter of
request. No requests for splits below the Market Lot will be entertained.
Note 20 - Transfers:
The NCDs may be transferred to any person duly qualified to acquire such NCDs under the
applicable laws.
Page 44
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
Note 21 - Succession:
In the event of demise of a Debenture Holder, the Company will recognize the executor or
administrator of the demised Debenture Holder or the holder of succession certificate or other
legal representative of the demised Debenture Holder as the registered holder of such NCDs, if
such a person obtains probate or letter of administration or is the holder of succession certificate
or other legal representation, as the case may be, from a court in India having jurisdiction over
the matter and delivers a copy of the same to the Company. The Company may, in its absolute
discretion, where it thinks fit, dispense with the production of the probate or letter of
administration or succession certificate or other legal representation, in order to recognise such
holder as being entitled to the NCDs standing in the name of the demised Debenture Holder on
production of sufficient documentary proof or indemnity. In case a person other than individual
holds the NCDs, the rights in the NCDs shall vest with the successor acquiring interest therein,
including liquidator or any such person appointed as per the applicable law.
Note 22 - The list of documents which has been executed or will be executed in connection with
the issue and subscription of debt securities shall be annexed:
The list of documents which has been executed or will be executed in connection with the Issue
and subscription of NCDs are as follows:
a. Debenture Trustee Appointment Agreement
b. Debenture Trust Deed
c. Deed of Hypothecation, if required/applicable
Note 23 - Additional information
a. The complaints received in respect of the Issue shall be attended to by the Company
expeditiously and satisfactorily;
b. It shall take all steps for completion of formalities for listing and commencement of trading at
the concerned stock exchange where securities are to be listed within specified time frame;
c. Necessary co-operation to the credit rating agencies shall be extended in providing true and
adequate information till the debt obligations in respect of the instrument are outstanding;
d. The Company shall use a common form of transfer for the NCDs;
e. The Company shall disclose the complete name and address of the Debenture Trustee in its
Annual Report;
f. The Company undertakes that the necessary documents for the creation of the charge,
including the Trust Deed would be executed within the time frame prescribed in the relevant
regulations/act/rules etc. and the same would be uploaded on the website of BSE, where the
debt securities have been listed, within five working days of execution of the same;
g. The Company undertakes that permission / consent from the prior creditor for a pari passu
charge being created, where applicable, in favor of the trustees to the proposed issue would
be obtained.
B.b. Additional covenants:
a. Security Creation: In case of delay in execution of Trust Deed and Charge documents beyond
one month from the date of closure of this DD, the Company will refund the subscription with
agreed rate of interest or will pay penal interest of atleast 2% p.a. over the interest/coupon rate
till these conditions are complied with at the option of the investor;
b. Default in Payment: In case of default in payment of Interest and/or principal redemption on the
due dates, additional interest of atleast @ 2% p.a. over the interest/coupon rate will be payable
by the Company for the defaulting period;
Page 45
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
c. Delay in Listing: In case of delay in listing of the debt securities beyond 20 days from the
deemed date of allotment, the Company will pay penal interest, of atleast 1 % p.a. over the
interest/coupon rate from the expiry of 30 days from the deemed date of allotment till the listing
of such debt securities to the investor.
The interest rates mentioned in above three cases are independent of each other.
Note 24 - A statement containing particulars of the dates of and parties to all material contracts,
agreements involving financial obligations of the issuer:
By the very nature of its business, the Company is involved in a large number of transaction involving
financial obligations and therefore it may not be possible to furnish details of all material contracts /
agreements / documents involving financial obligations of the Company. However, the contracts /
agreements / documents listed below which are or may be deemed to be material for this issue, have
been entered into / executed by the Company:
1. Memorandum and Articles of Association of the Company;
2. SC/RC registration certificate dated September 23, 2008 issued by the Reserve Bank of India;
3. Resolution of the Board of Directors passed at its meeting held on July 14, 2014 approving, interalia, the issue of Non-Convertible Debentures aggregating upto ` 600,00,00,000/- (Rupees Six
Hundred Crore)
4. Resolution passed by the shareholders at the Annual General Meeting of the Company held on
June 30, 2014 appointing M/s. Khimji Kunverji & Co. as Auditors of the Company
5. Resolution passed by the shareholders of the Company at the Extra-ordinary General Meeting
held on November 25, 2013 authorising the Board of Directors to borrow, for the purpose of the
Company, upon such terms and conditions as the Board may think fit for amounts up to
` 1500,00,00,000/- (Rupees One Thousand Five Hundred Crore only)
6. Annual Reports for the five years ended March 31, 2010, 2011, 2012, 2013 and 2014 of the
Company;
7. Letter from CRISIL assigning the credit rating to the NCDs;
8. Consent letter issued by IL&FS Trust Company Limited dated October 9, 2014 to act as the
Debenture Trustee to this Issue
9. Consent letter issued by Sharepro Services (India) Private Limited dated October 7, 2014 to act
as the Registrar to the Issue and inclusion of its name in the form and context in which it appears
in this Disclosure Document
10. Letter dated October 9, 2014 from BSE Limited giving its in-principle approval to the Issue.
Certified true copy of the above documents or such other relevant documents are available for
inspection at the Registered Office of the Company situated at 7th Floor, Cnergy, Appasaheb Marathe
Marg, Prabhadevi, Mumbai – 400 025 until the date of closure of the respective of the Issue.
DECLARATION BY THE DIRECTORS THAT –
a. the company has complied with the provisions of the Act and the rules made thereunder;
b. the compliance with the Act and the rules does not imply that payment of dividend or interest or
repayment of debentures, if applicable, is guaranteed by the Central Government;
c. the monies received under the offer shall be used only for the purposes and objects indicated in the
Offer letter;
I am authorised by the Board of Directors of the Company vide resolution dated July 14, 2014 to sign
this form and declare that all the requirements of the Companies Act, 2013 and the rules made
thereunder in respect of the subject matter of this form and matters incidental thereto have been
complied with. Whatever is stated in this form and in the attachments thereto is true, correct and
complete and no information material to the subject matter of this form has been surpressed or
Page 46
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
DISCLOSURE REQUIREMENTS UNDER FORM PAS-4 PRESCRIBED UNDER THE COMPANIES
ACT, 2013
(Pursuant to Section 42 and Rule 14(1) of the Companies (Prospectus and Allotment of Securities) Rules, 2014)
The table below sets out the disclosure requirements as provided in Form PAS-4 and the relevant
pages in this Disclosure Document where these disclosures, to the extent applicable, have been
provided.
Sr.
No.
1.
Disclosure Requirements
Page No.
GENERAL INFORMATION
a.
Name, address, website and other contact details of the company Page 13
indicating both registered office and corporate office.
b.
Date of incorporation of the company.
c.
September 19,
2007
Business carried on by the company and its subsidiaries with the Page 19
details of branches or units, if any.
d.
Brief particulars of the management of the company.
Page 28
e.
Names, addresses, DIN and occupations of the directors.
Page 22 - 23
f.
Management’s perception of risk factors.
Pages 7 - 11
g.
Details of default, if any, including therein the amount involved,
duration of default and present status, in repayment of:
None
(i)Statutory dues;
(ii)Debentures and interest thereon;
(iii)Deposits and interest thereon; and
(iv)Loan from any bank or financial institution and interest thereon.
h.
Names, designation, address and phone number, email ID of the Page 13
nodal/ compliance officer of the company, if any, for the private
placement offer process.
2.
a.
PARTICULARS OF THE OFFER
Date of passing of board resolution.
b.
Date of passing of resolution in the general meeting, authorising September 30,
the offer of securities.
2014
c.
Kinds of securities offered (i.e. whether share or debenture) and Debentures
class of security.
Price at which the security is being offered including the premium, Page 34
if any, along with justification of the price.
Name and address of the valuer who performed valuation of the Not Applicable
security offered.
d.
e.
f.
Amount which the company intends to raise by way of securities.
July 14, 2014
Page 34
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FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
g.
Terms of raising of securities:
(i)Duration, if applicable;
(ii)Rate of dividend;
(iii)Rate of interest;
(iv)Mode of payment; and
(v)Repayment.
Page 35-36
Not Applicable
Page 35-36
Not Applicable
Not Applicable
h.
Proposed time schedule for which the offer letter is valid.
Page 34
i.
Purposes and objects of the offer.
Page 34
j.
Contribution being made by the promoters or directors either as Not Applicable
part of the offer or separately in furtherance of such objects.
k.
Principle terms of assets charged as security, if applicable.
3.
a.
DISCLOSURES WITH REGARD TO INTEREST OF DIRECTORS, LITIGATION ETC.
Any financial or other material interest of the directors, promoters None
or key managerial personnel in the offer and the effect of such
interest in so far as it is different from the interests of other
persons.
b.
Details of any litigation or legal action pending or taken by any None
Ministry or Department of the Government or a statutory authority
against any promoter of the offeree company during the last three
years immediately preceding the year of the circulation of the offer
letter and any direction issued by such Ministry or Department or
statutory authority upon conclusion of such litigation or legal action
shall be disclosed.
c.
Remuneration of directors (during the current year and last three Refer Annual
financial years).
Reports attached
d.
Related party transactions entered during the last three financial Refer Annual
years immediately preceding the year of circulation of offer letter Reports attached
including with regard to loans made or, guarantees given or
securities provided.
e.
Summary of reservations or qualifications or adverse remarks of None
auditors in the last five financial years immediately preceding the
year of circulation of offer letter and of their impact on the financial
statements and financial position of the company and the
corrective steps taken and proposed to be taken by the company
for each of the said reservations or qualifications or adverse
remark.
f.
Details of any inquiry, inspections or investigations initiated or None
conducted under the Companies Act or any previous company law
in the last three years immediately preceding the year of circulation
of offer letter in the case of company and all of its subsidiaries.
Also if there were any prosecutions filed (whether pending or not)
fines imposed, compounding of offences in the last three years
immediately preceding the year of the offer letter and if so, sectionwise details thereof for the company and all of its subsidiaries.
Page 34-35
Page 49
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
g.
Details of acts of material frauds committed against the company None
in the last three years, if any, and if so, the action taken by the
company.
4.
a.
FINANCIAL POSITION OF THE COMPANY
The capital structure of the company in the following manner in a
tabular form:
The authorised, issued, subscribed and paid up capital (number of Page 19
securities, description and aggregate nominal value);
(i)(a)
(b)
(c)
(d)
(ii)
Size of the present offer; and
Paid up capital:
(A)After the offer; and
(B)After conversion of convertible instruments
(if applicable);
Share premium account (before and after the offer).
Page 34
Not Applicable
Not Applicable
Not Applicable
The details of the existing share capital of the issuer company in a Page 20-21
tabular form, indicating therein with regard to each allotment, the
date of allotment, the number of shares allotted, the face value of
the shares allotted, the price and the form of consideration.
Provided that the issuer company shall also disclose the number
and price at which each of the allotments were made in the last
one year preceding the date of the offer letter separately indicating
the allotments made for considerations other than cash and the
details of the consideration in each case.
b.
Date of Allotment:
September 22,
2014
Number of equity
shares:
3,12,50,000
Issue Price: ` 16.00
per share
Consideration :
Cash
Profits of the company, before and after making provision for tax, Page 17
for the three financial years immediately preceding the date of
circulation of offer letter.
c.
Dividends declared by the company in respect of the said three None
financial years; interest coverage ratio for last three years (Cash
profit after tax plus interest paid/interest paid).
d.
A summary of the financial position of the company as in the three Page 15
audited balance sheets immediately preceding the date of
circulation of offer letter.
e.
Audited Cash Flow Statement for the three years immediately Page 18-19
preceding the date of circulation of offer letter.
f.
Any change in accounting policies during the last three years and None
their effect on the profits and the reserves of the company.
Page 50
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
SECTION - IV
ANNEXURES
A – CRISIL CREDIT RATING LETTER AND RATING RATIONALE
Page 51
Page 52
Page 53
Page 54
JM Financial Asset Reconstruction Company
Private Limited
Instrument
Amount (in INR Crores)
Rating Action (August 2014)
Non Convertible Debentures
350
[ICRA]A+(stable) assigned
Long Term Bank Lines
700
[ICRA]A+(stable) assigned
Commercial Paper
500
[ICRA]A1+ assigned
The rating of [ICRA]A+ (stable) has been assigned to the Rs. 350 Crore Long Term Non Convertible
Debenture Programme and Rs. 700 crore Long Term Bank lines and the rating of [ICRA]A1+ has been
assigned to Rs. 500 crore Commercial Paper Programme of JM Financial Asset Reconstruction
Company Private Limited (JMFARC).
The rating draws comfort from the strong parentage of JM Financial Ltd which is the single largest
shareholder of the company. ICRA notes that JMFARC is strategically important to the JM Financial
group given that the group has allocated significant resources in the form of financial as well as
management support. The rating factors in the strong positioning of the company in the asset
reconstruction space, its sizeable assets under management and its experienced management team.
The rating is however constrained by the limited seasoning of the industry, higher leverage level in the
interim period to avail an opportunity, higher perceived risk of the target asset class of the company single large credit cases and the challenges faced by this industry in continuously acquiring assets at
reasonable price which could negatively impact the ability of companies to find suitable resolutions to
assets acquired as well as asset quality challenges inherent in the industry it operates. ICRA also
takes note of the newer RBI guidelines for Asset Reconstruction companies requiring higher initial
capital outlay as well as accounting of management fee on NAV and not on AUM, both of which could
impact the growth of the industry in the short term but is positive from a credit perspective in the long
run.
JMFARC is one of the larger players in the ARC business with AUM at Rs 8,290 crore as at June 30,
2014. The company largely operates in the large single borrower segment, perceived to be risky on
account of its complexity, higher ticket size, as well as levels of high degree of engagement with
promoters and bankers. As at March 31, 2014 the AUM of the company stood at Rs 3,647 crore and
leverage was at ~1.05 times. The AUM of the company increased significantly in the first quarter of
FY15 on account of a large ticket transaction to the tune of Rs 4100 crore. The deal was funded in part
by bank lines, commercial paper borrowings as well as ICDs from JM Financial Group and other
Corporates. Consequently, the AUM of the company increased to Rs 8,290 crore as at June 30, 2014
while leverage levels too increased substantially to 3.7 times as at the same date. However, the
management has laid out a roadmap to bring down the leverage levels around 2 times by March 2015.
Going forward, the group plans to launch a distressed asset fund – both overseas as well as domestic,
sponsored by the group which could also participate in the further assets bought by JMARC. The
company plans to reduce its overall dependence on the short term borrowing and mobilize longer term
financing by way of bank lines and debentures which is likely to augment the liquidity position of the
company over the next few quarters.
In ICRA’s view, JMARC faces asset-quality-related challenges given its exposure to stressed assets,
despite its adequate asset acquisition and resolution policy framework in place. As the company's
AUM has grown primarily in the past few years, the performance of the recently acquired portfolio
remains to be seen. Additionally, the pace of resolution has been slower with regard to a sizeable
proportion of portfolio acquired in 2009-10 and 2010-11. In the current economic scenario, marked by
significant pressure on cash flows of borrowers, JMARC's ability to recover money will remain a key
monitorable.
Page 55
The income profile of the company is dominated by Fee Income and interest income from loans given
for restructuring. The company reported PAT in FY 13-14 to the tune of Rs 48 crore on net worth of
Rs. 330 crore(RONW of 15.75%) as compared to Rs 40 crore on net worth of Rs. 282 crore(RONW of
15.20%) in FY 12-13. For Q1FY15, the company has reported PAT of Rs 10 crore and can get further
augmented on account of the strong fee income expectations in FY15 from a big ticket transaction.
Company Profile
JMFARC was incorporated in September 2007 by JM Financial Ltd which holds 49 per cent stake in
JMFARC, with the balance held by Mr. Narotam Sekhsaria and Mr. Suresh Neotia (20 per cent),
Valiant Mauritius Partners FDI Ltd (7.9 per cent), and four public sector banks (23.1 per cent).
JMFARC reported a PAT of Rs.48 crore on a total income of Rs. 120 crore for 2013-14, compared with
a PAT of Rs. 40 crore on a total income of Rs. 87 crore for 2012-13. JMFARC reported PAT of Rs. 10
crore on a total income of Rs. 37 crore for quarter ended June 30 , 2014.
August 2014
For further details please contact:
Analyst Contact:
Mr. Karthik Srinivasan (Tel. No. +91 22 6179 6365)
[email protected]
Relationship Contact:
Mr. L. Shivakumar (Tel. No. +91 22 6179 6393)
[email protected]
© Copyright, 2014, ICRA Limited. All Rights Reserved.
Contents may be used freely with due acknowledgement to ICRA
ICRA ratings should not be treated as recommendation to buy, sell or hold the rated debt instruments. The ICRA
ratings are subject to a process of surveillance which may lead to a revision in ratings. Please visit our website
(www.icra.in) or contact any ICRA office for the latest information on ICRA ratings outstanding. All information
contained herein has been obtained by ICRA from sources believed by it to be accurate and reliable. Although
reasonable care has been taken to ensure that the information herein is true, such information is provided ‘as is’
without any warranty of any kind, and ICRA in particular, makes no representation or warranty, express or
implied, as to the accuracy, timeliness or completeness of any such information. All information contained herein
must be construed solely as statements of opinion and ICRA shall not be liable for any losses incurred by users from
any use of this publication or its contents
Page 56
Registered Office
ICRA Limited
1105, Kailash Building, 11th Floor, 26, Kasturba Gandhi Marg, New Delhi 110001
Tel: +91-11-23357940-50, Fax: +91-11-23357014
Corporate Office
Mr. Vivek Mathur
Mobile: 9871221122
Email: [email protected]
Building No. 8, 2nd Floor, Tower A, DLF Cyber City, Phase II, Gurgaon 122002
Ph: +91-124-4545310 (D), 4545300 / 4545800 (B) Fax; +91- 124-4050424
Mumbai
Mr. L. Shivakumar
Mobile: 9821086490
Email: [email protected]
Kolkata
Mr. Jayanta Roy
Mobile: +91 9903394664
Email: [email protected]
1802, 18th Floor, Tower 3,
Indiabulls Finance Centre,
Senapati Bapat Marg,
Elphinstone, Mumbai 400013,
Board : +91-22-61796300; Fax: +91-22-24331390
Chennai
Mr. Jayanta Chatterjee
Mobile: 9845022459
Email: [email protected]
A-10 & 11, 3rd Floor, FMC Fortuna
234/3A, A.J.C. Bose Road
Kolkata—700020
Tel +91-33-22876617/8839 22800008/22831411,
Fax +91-33-22870728
5th Floor, Karumuttu Centre
634 Anna Salai, Nandanam
Chennai—600035
Tel: +91-44-45964300; Fax: +91-44 24343663
Ahmedabad
Mr. L. Shivakumar
Mobile: 989986490
Email: [email protected]
907 & 908 Sakar -II, Ellisbridge,
Ahmedabad- 380006
Tel: +91-79-26585049, 26585494, 26584924; Fax: +9179-25569231
Hyderabad
Mr. Jayanta Chatterjee
Mobile: 9845022459
Email: [email protected]
Bangalore
Bangalore
Mr. Jayanta Chatterjee
Mobile: 9845022459
Email: [email protected]
'The Millenia'
Tower B, Unit No. 1004,10th Floor, Level 2 12-14, 1 & 2,
Murphy Road, Bangalore 560 008
Tel: +91-80-43326400; Fax: +91-80-43326409
Pune
Mr. L. Shivakumar
Mobile: 989986490
Email: [email protected]
5A, 5th Floor, Symphony, S.No. 99, CTS 3909, Range Hills
Road, Shivajinagar,Pune-411 020
Tel: + 91-20-25561194-25560196; Fax: +91-20-25561231
4th Floor, Shobhan, 6-3-927/A&B. Somajiguda, Raj
Bhavan Road, Hyderabad—500083
Tel:- +91-40-40676500
Page 57
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
B - CONSENT LETTER OF THE DEBENTURE TRUSTEE
Page 58
Page 59
FOR PRIVATE CIRCULATION ONLY AND CONFIDENTIAL (For the Addressee only)
C – ANNUAL REPORT OF THE COMPANY FOR FY 2011-12, FY 2012-13 and FY 2013-14
Page 60
JM FINANCIAL ASSET RECONSTRUCTION
COMPANY PRIVATE LIMITED
Annual Accounts 2012
Page 61
BOARD OF DIRECTORS
Mr. V P Shetty - Chairman
Mr. Narotam S Sekhsaria
Mr. Suresh Kumar Neotia
Mr. Hoshang N Sinor
Mr. Sunil B Mathur
Mr. G M Ramamurthy
Mr. S H Khan
Mr. Shailesh Haribhakti
Mr. Anil Bhatia – Managing Director & CEO
th
Mr. A P Singh (upto May 11 , 2012)
th
Mr. Rabindra Behera (w.e.f. May 11 , 2012)
AUDIT COMMITTEE
Mr. Shailesh Haribhakti
Mr. V P Shetty
Mr. Sunil B Mathur
COMPANY SECRETARY
Mr. Mahesh Mimani
AUDITORS
M/s Khimji Kunverji & Co
Chartered Accountants
Sunshine Towers, 19th Floor,
Senapati Bapat Marg, Dadar (W),
Mumbai 400 028
BANKERS
HDFC Bank Limited
Manekji Wadia Building,
Nanek Motwani Marg, Fort,
Mumbai – 400 023
IDBI Bank Limited
Mittal Court, 224A Wing
2nd Floor, Nariman Point
Mumbai – 400 021
REGISTERED OFFICE
141, Maker Chambers III
Nariman Point
Mumbai – 400 021
Page 62
DIRECTORS’ REPORT
To the Members,
The Directors of your Company have pleasure in presenting their Fifth Annual Report together with the audited annual
accounts for the financial year ended March 31, 2012.
FINANCIAL RESULTS:
(Rs. in Lakh)
Particulars
2011-12
2010-11
Gross Income
4,031.94
3,419.02
Expenses
1819.39
1,409.65
Profit before tax
2,212.54
2,009.37
846.00
659.50
Deferred tax
(14.02)
10.77
Excess provision for tax in respect of earlier years (net)
(64.18)
-
Profit after tax
1,444.74
1,339.10
Profit brought forward from previous year
1,782.62
443.52
Profit carried to Balance Sheet
3,227.36
1,782.62
Less: Provision for Tax Current Tax
DIVIDEND:
In order to conserve the reserves of your Company, the Directors do not recommend payment of any dividend during the
year under review.
FINANCIAL PERFORMANCE:
The gross income of your Company increased by 18% to Rs. 4,031.94 lakh from Rs. 3,419.02 Lakh reported by it in the
previous year. After accounting for expenditure of Rs. 1,819.39 lakh (previous year Rs. 1,409.65 lakh), your Company has
reported a gross profit of Rs. 2,212.54 lakh as against the gross profit of Rs. 2,009.37 lakh in the previous year representing
an increase of 10%. The net profit after tax is Rs. 1,444.74 lakh (previous year Rs. 1,339.10 lakh) a rise of 8% over the
previous year. The net owned funds of your Company as on March 31, 2012 stood at Rs. 24,227.36 lakh.
ECONOMIC, MARKET AND REGULATORY OVERVIEW:
Indian banks are facing key challenges on multiple fronts. Most Indian banks reported fresh NPAs and the sizeable
proportion of loans restructured slipped into NPAs. The Reserve Bank of India has also laid special thrust on the role played
by asset reconstruction companies in reduction of the rising NPA levels in the banking system. Setting up of credit
information bureaus and central registry for recording mortgages will also result in better resolution of NPAs in the banking
system. More amendments are required to be made in the SARFAESI Act for quicker and effective resolutions. Reforms are
also required for rationalization of the stamp duty across states, increase in cap on FII investment in SRs, creation of
secondary market for SRs, etc. The reforms when made will present promising prospects for the asset reconstruction
business in the coming years.
BUSINESS OPERATIONS:
The ARC industry during the year under review saw consummation of very few deals. This was primarily due to reduced
NPA sale by the banks. Further, most of the NPAs put up for sale were also very old, dated and litigious leading to
mismatch in the price expectation between the banks and ARCs. Your Company participated in various portfolio auctions
conducted by the banks and financial institutions, but very few transactions were closed by banks.
Page 63
ACQUISITIONS:
During the year, your Company concluded 3 transactions with dues of Rs. 2,236.83 crore acquired by issuing Security
Receipts worth Rs. 223.50 crore, thereby taking the total outstanding dues acquired to Rs. 5,091.44 crore at a gross
consideration of Rs. 852.44 crore. Your Company made the first unsecured loan acquisition of credit cards and personal
loans default portfolio.
RESOLUTION AND RECOVERY:
Resolution strategies were initiated for majority of the assets acquired. As of March 31, 2012, accounts worth Rs. 270 crore
were restructured. Security Receipts worth Rs.64 crore held by the Company and other investors were redeemed after
which the outstanding Security Receipts stood at Rs.758.39 crore comprising Corporate, SME and Retail portfolios. Your
Company also sold during the year, Security Receipts with face value of Rs. 4.80 crore to other eligible investors.
FIXED DEPOSITS:
Your Company has neither accepted nor renewed any deposits from the shareholders/public during the year under review.
DIRECTORS:
None of the Directors of your Company is liable to retire by rotation since your Company is a private company.
The Company has received a letter dated May 4, 2012 from Indian Overseas Bank (IOB), Central Office, Chennai, informing
that the board of directors of IOB has approved the nomination of Mr. Rabindra Behera as the bank’s nominee on the Board
of the Company in place of Mr. A P Singh who has since retired.
Accordingly, Mr. A P Singh ceased to be a director of your Company w.e.f. May 11, 2012. Mr. Rabindra Behera joined the
Board of the Company w.e.f. May 11, 2012.
The Board wishes to place on record its sincere appreciation for the valuable contribution made by Mr. Singh during his
tenure as a director of your Company.
DIRECTORS’ RESPONSIBILITY STATEMENT:
Pursuant to sub-section (2AA) of Section 217 of the Companies Act, 1956, the Directors of your Company confirm that:
ƒ
in preparation of the annual accounts, the applicable accounting standards have been followed;
ƒ
they have selected such accounting policies and applied them consistently and made judgments and estimates
that are reasonable and prudent 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;
ƒ
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;
ƒ
they have prepared the annual accounts on a going concern basis.
PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN
EXCHANGE EARNINGS AND OUTGO:
The particulars as required under the Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988
on conservation of energy and technology absorption is not applicable to your Company, since it is not a manufacturing
company. During the year under review, your Company has neither earned nor spent any foreign exchange.
PARTICULARS OF EMPLOYEES:
The information required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of
Employees) Rules, 1975, is given in the annexure hereto and forms part of this Report. Your Company had 24 employees
as on March 31, 2012. Out of the total number of employees, two employees employed throughout the year were in receipt
of remuneration of more than Rs.60.00 lakh per annum.
AUDITORS:
The retiring Auditors, namely, M/s Khimji Kunverji & Co., Chartered Accountants, hold office until the conclusion of the
forthcoming Annual General Meeting and are seeking their re-appointment. Members are requested to consider and
approve their appointment and authorise the Board to fix their remuneration for the year 2012-13.
Page 64
ACKNOWLEDGEMENTS:
Your Directors place on record their deep sense of appreciation for the co-operation extended by the Reserve Bank of India,
the Company’s Bankers, its Sponsors and the Shareholders. Further, your Directors recognise the hard work of the
employees at all levels and the services rendered by them in the progress made by your Company.
For and on behalf of the Board
Place: Mumbai
Date: May 11, 2012
V P Shetty
Chairman
Page 65
AUDITORS’ REPORT
To
The Members of
JM Financial Asset Reconstruction Company Private Limited
1.
We have audited the attached Balance Sheet of JM Financial Asset Reconstruction Company Private Limited (‘the
Company’) as at March 31, 2012 and also the Statement of Profit and Loss Account and the Cash Flow Statement for
the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial statements based on our audit.
2.
We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
3.
As required by the Companies (Auditor's Report) Order, 2003 (‘the Order’) issued in terms of sub-section (4A) of
Section 227 of the Companies Act, 1956 (’the Act’), we enclose in the Annexure a statement on the matters specified in
paragraphs 4 and 5 of the said Order.
4.
Further to our comments in the Annexure referred to above, we report that:
i)
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;
ii)
In our opinion, proper books of account as required by law have been kept by the Company so far as appears from
our examination of those books;
iii)
The Balance Sheet and Statement of Profit and Loss Account and Cash Flow Statement dealt with by this report
are in agreement with the books of account;
iv) In our opinion, the Balance Sheet and Statement of Profit and Loss Account and Cash Flow Statement dealt with
by this report comply with the applicable accounting standards referred to in sub-section (3C) of Section 211 of the
Act;
v)
On the basis of the written representations received from the directors as on March 31, 2012 and taken on record
by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2012 from being
appointed as a director in terms of Section 274 (1)(g) of the Act;
vi) In our opinion and to the best of our information and according to the explanation given to us, the said accounts
read together with significant accounting policies and notes thereon 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;
a)
in the case of the Balance Sheet, of the state of the affairs of the Company as at March 31, 2012;
b)
in the case of the Statement of Profit and Loss Account, of the ‘profit’ of the Company for the year ended on
that date; and
c)
in the case of Cash Flow Statement, of the cash flows of the Company for the year ended on that date.
For and on behalf of
Khimji Kunverji & Co.
Chartered Accountants
Firm Registration No: 105146W
Hasmukh B. Dedhia
Partner
Membership No. 33494
Place: Mumbai
Date: May 11, 2012
Page 66
Annexure referred to in paragraph 3 of our report of even date
Re: JM Financial Asset Reconstruction Company Private Limited
i.
(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of
fixed assets.
(b) The fixed assets have been physically verified by the management at reasonable interval. As informed, no material
discrepancies were noticed on such verification.
(c) The Company has not disposed off substantial part of its fixed assets during the year.
ii.
The Company does not hold any inventory during the year, hence clause (ii) of the Order is not applicable to the
Company.
iii.
The Company has neither taken nor granted loan to parties in register maintained under Section 301 of the Act,
hence clause (iii) of the Order is not applicable to the Company.
iv.
In our opinion and according to the information and explanation given, there is adequate internal control system
commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets and for
rendering services. Further, on the basis of examination of the books and records of the Company and according
to the information and explanations given, and as per the checking carried out in accordance with the auditing
standards generally accepted in India, neither we have observed nor have we been reported for any continuing
failure to correct major weaknesses in the internal control system relating to the aforesaid. During the year, the
Company has neither purchased any inventory nor sold any goods.
v.
Based on the audit procedures applied and according to the information and explanations provided, there are no
transactions which needs to be entered in the register maintained under Section 301 of the Act
vi.
The Company has not accepted any deposits from the public, hence clause (vi) of the Order is not applicable to the
Company.
vii.
In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.
viii.
To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost
records under clause (d) of sub-section (1) of Section 209 of the Act for the products of the Company.
ix. (a) According to the records of the Company, the Company is regular in depositing with appropriate authorities
undisputed statutory dues including Provident fund, Income tax, Service tax, Cess and other material statutory
dues applicable to it.
We have been informed that Investor education and protection fund, Employees’ state insurance, Sales tax,
Wealth tax, Custom duty and Excise Duty are currently not applicable to the Company.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident
fund, Income tax, Service tax, Cess and other undisputed statutory dues were outstanding, at the year end, for a
period of more than six months from the date they became payable.
We have been informed that Investor education and protection fund, Employees’ state insurance, Sales tax,
Wealth tax, Custom duty and Excise Duty are currently not applicable to the Company.
(c) According to the information and explanations given, there are no dues of Income tax, Service tax and Cess which
have not been deposited on account of any dispute.
We have been informed that Sales tax, Wealth tax, Custom duty and Excise Duty are currently not applicable to
the Company.
x.
The Company has been registered for a period of less than five years and hence we are not required to comment
on whether or not the accumulated losses at the end of the financial year is fifty per cent or more of its net worth
and whether it has incurred cash losses in such financial year and in the immediately preceding financial year.
xi.
The Company has not borrowed funds from financial institutions, banks or debenture holders; hence clause 4(xi) of
the Order is not applicable to the Company.
xii.
According to the information and explanations given to us and based on the documents and records produced to
us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares,
debentures and other securities.
Page 67
xiii.
In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society, hence clause 4(xiii) of the
Order is not applicable to the Company.
xiv.
According to the information and explanations given and in our opinion, the Company is not dealing or trading in
shares, securities, debentures, and other investments, hence clause 4(xiv) of the Order is not applicable to the
Company.
xv.
According to the information and explanations given, the Company has not given any guarantee for loans taken by
others from bank or financial institution.
xvi.
According to the information and explanations given, the Company has not raised any term loans, hence clause
4(xvi) of the Order is not applicable to the Company.
xvii.
According to the information and explanations given and on an overall examination of the Balance Sheet of the
Company, we report that no funds raised on short-term basis have been used for long-term investment.
xviii.
The Company has not made any preferential allotment of shares to parties or Companies covered in the register
maintained under Section 301 of the Act .
xix.
According to the information and explanations given, the Company has not issued any debentures, hence clause
4(xix) of the Order is not applicable to the Company.
xx.
The Company has not raised any money through a public issue during the year.
xxi.
During the course of our examination of the books and records of the Company, carried out in accordance with the
auditing standards generally accepted in India, we have neither come across any instances of fraud on or by the
Company, noticed or reported during the course of our audit nor have we been informed of such case by the
management.
For and on behalf of
Khimji Kunverji & Co.
Chartered Accountants
Firm Registration No: 105146W
Hasmukh B. Dedhia
Partner
Membership No. 33494
Place: Mumbai
Date: May 11, 2012
Page 68
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
BALANCE SHEET AS AT MARCH 31, 2012
Particulars
I.
1
2
3
Note
No.
2.01
2.02
2,100,000,000
322,735,601
2,422,735,601
2,100,000,000
178,261,807
2,278,261,807
Non-current liabilities
a Long-term borrowings
b Long-term provisions
2.03
2.04
1,822,433
2,206,228
4,028,661
1,666,410
1,666,410
Current liabilities
a Trade payables
b Other current liabilities
c Short-term provisions
2.05
2.06
2.07
2,000,782
71,615,898
2,287,252
75,903,932
775,585
49,104,024
1,766,070
51,645,679
2,502,668,194
2,331,573,896
5,214,330
497,732
3,596,947
3,015,392
93,800
-
ASSETS
Non-current assets
a Fixed assets
(i) Tangible assets
(ii) Intangible assets
(iii) Capital work-in-progress
2.08
Deferred tax assets / (liabilities)
Long-term loans and advances
2.09
2.10
3,608,149
188,152,532
201,069,690
2,206,527
109,569,294
114,885,012
Current assets
a Current investments
b Trade receivables
c Cash and bank balances
d Short-term loans and advances
e Other current assets
2.11
2.12
2.13
2.14
2.15
2,049,413,092
131,889,013
106,112,928
13,678,660
504,811
2,301,598,504
1,788,258,400
160,650,961
242,099,955
20,398,740
5,280,828
2,216,688,884
2,502,668,194
2,331,573,896
b
c
2
As at
31.03.2011
Rupees
EQUITY AND LIABILITIES
Shareholders' funds
a Share Capital
b Reserves and Surplus
Total
II.
1
As at
31.03.2012
Rupees
Total
Significant accounting policies and notes to the financial
statements
As per our attached report of even date
For Khimji Kunverji & Co
Chartered Accountants
Firm Registration No: 105146W
1&2
Hasmukh B Dedhia
Partner
Membership No. 33494
V P Shetty
Chairman
Mahesh Mimani
Company Secretary
Place : Mumbai
Date : May 11, 2012
For and on behalf of the Board
Anil Bhatia
Managing Director &
Chief Executive Officer
Place : Mumbai
Date : May 11, 2012
Page 69
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2012
Particulars
Note
No.
For the year ended
March 31, 2012
Rupees
For the year ended
March 31, 2011
Rupees
I.
REVENUE FROM OPERATIONS
2.16
391,364,553
279,206,554
II.
OTHER INCOME
2.17
11,829,090
62,695,873
III
Total Revenue (I + II)
403,193,643
341,902,427
IV
EXPENSES
Employee benefits expense
Finance costs
Depreciation and amortization expense
Other expenses
89,083,999
16,136,909
2,463,672
74,254,768
78,270,947
10,312
7,795,760
54,888,139
Total expenses
181,939,349
140,965,158
Profit before tax
Tax expense
Current tax
Deferred tax
Excess provision for tax in respect of earlier years (net)
221,254,294
200,937,269
84,600,000
(1,401,622)
(6,417,877)
76,780,501
144,473,794
65,950,000
1,076,976
67,026,976
133,910,293
0.69
0.64
V
VI
Profit after tax
VII
Earnings per share
Basic / Diluted
2.18
2.19
2.08
2.20
2.21
Significant accounting policies and notes to the
financial statements
As per our attached report of even date
For Khimji Kunverji & Co
Chartered Accountants
Firm Registration No: 105146W
1&2
For and on behalf of the Board
Hasmukh B Dedhia
Partner
Membership No. 33494
V P Shetty
Chairman
Mahesh Mimani
Company Secretary
Place : Mumbai
Date : May 11, 2012
Anil Bhatia
Managing Director &
Chief Executive Officer
Place : Mumbai
Date : May 11, 2012
Page 70
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
STATEMENT OF CASH FLOW FOR THE YEAR ENDED MARCH 31, 2012
In Rupees
Particulars
A
B
C
For the
year ended
March 31, 2012
For the
year ended
March 31, 2011
Cash flow from operating activities
Profit before tax
221,254,294
200,937,269
Adjustment for:
Depreciation
Provision for gratuity
Provision for/(reversal of) compensated absences
Interest expense
Operating profit before working capital changes
2,463,672
643,979
417,020
16,136,909
240,915,875
7,795,760
767,156
69,929
10,312
209,580,426
Adjustment for:
(Increase)/decrease in trade receivables
(Increase)/decrease in short-term loans and advances
(Increase)/decrease in other current assets
(Increase)/decrease in trade payables
Increase/(decrease) in other current liabilities
Cash generated from/(used in) operations
28,761,948
6,720,080
4,776,017
1,225,197
21,186,722
303,585,839
(134,274,904)
(9,182,261)
19,997,693
430,578
9,093,373
95,644,905
Direct taxes paid
Net cash from/(used in) operating activities
(97,499,240)
206,086,598
(57,551,467)
38,093,439
(863,722,000)
602,567,308
(8,663,489)
(10,000,000)
(279,818,181)
(1,127,657,000)
189,134,600
(339,151)
523,700,000
(415,161,551)
733,879
1,822,433
1,325,152
(60,000,000)
(16,136,909)
(72,255,445)
10,881,126
(79,866)
(100,000,000)
500,000
(10,312)
(88,709,053)
(145,987,027)
242,099,955
96,112,928
(465,777,166)
707,877,120
242,099,955
Cash flow from investing activities
Purchase of current investments - Others
Sale/ redemption of current investments - Others
Purchase of fixed assets
Bank balances not considered as Cash and cash equivalents
Net cash from/(used in) investment activities
Cash flow from financing activities
Proceeds from long term loans and advances
Proceeds from long-term borrowings
Proceeds from short-term borrowings
Repayment of short-term borrowings
Disbursement of secured loan
Repayment of secured loan
Interest paid
Net cash from/(used in) financing activities
Net increase/(decrease) in Cash and cash equivalents
Cash & cash equivalents (opening)
Cash & cash equivalents (closing)
Page 71
Notes
1
2
The cash flow statement has been prepared under the 'Indirect Method' set out in AS 3 - "Cash Flow Statement"
notified in Companies (Accounting standards) Rules, 2006 (as amended).
Previous year's figures have been regrouped and rearranged wherever necessary
As per our attached report of even date
For Khimji Kunverji & Co
Chartered Accountants
Firm Registration No: 105146W
For and on behalf of the Board
Hasmukh B Dedhia
Partner
Membership No. 33494
V P Shetty
Chairman
Mahesh Mimani
Company Secretary
Place : Mumbai
Date : May 11, 2012
Anil Bhatia
Managing Director &
Chief Executive Officer
Place : Mumbai
Date : May 11, 2012
Page 72
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
1.
SIGNIFICANT ACCOUNTING POLICIES
a.
Accounting convention
"The financial statements have been prepared in compliance with all material aspects of the applicable Accounting
Standards notified under Companies (Accounting Standards) Rules 2006 (as amended), the Guidelines issued by the
Reserve Bank of India ('RBI') from time to time and the provisions of the Companies Act, 1956 ( the “Act”).
The financial statements are based on historical cost convention and are prepared on accrual basis, except where
impairment is made and revaluation is carried out.
The accounting policies have been consistently applied by the Company and are consistent with those used in the
previous year. Accounting Policies not specifically referred to otherwise, are consistent with generally accepted
accounting principles.
b.
Use of estimates
The preparation of financial statements is in conformity with Indian Generally Accepted Accounting Principles which
requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent liabilities on the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those estimates and differences between actual
results and estimates are recognised in the periods in which the results are known / materialised.
c.
Fixed assets and depreciation
Owned tangible assets
Tangible Fixed Assets are stated at original cost of acquisition less accumulated depreciation and impairment
losses. Cost comprises of all costs incurred to bring the assets to their present location and working condition.
Depreciation on tangible fixed assets is provided pro-rata basis for the period of use, on the Straight Line Method
(SLM), based on management's estimate of useful lives of the fixed assets, or at the rates prescribed in Schedule
XIV to the Act whichever is higher, as per the following table:
Asset
Useful Life
Office equipments
5 years
Computers
5 years
Motor Vehicles
5 years
Furniture and Fixtures
10 years
Assets costing Rs. 5,000/- or less are fully depreciated in the year of acquisition.
Owned intangible assets
Intangible fixed assets are stated at cost of acquisition or internal generation, less accumulated amortisation and
impairment losses. An intangible asset is recognised, where it is probable that the future economic benefits
attributable to the assets will flow to the enterprise and where its cost can be reliably measured. The depreciable
amount of the intangible assets is allocated over the best estimate of its useful life on a straight line basis.
The Company capitalises software and related implementation costs where it is reasonably estimated that the
software has an enduring useful life. Software is depreciated over management estimate of its useful life not
exceeding 5 year
Leased assets
Assets acquired under finance lease are accounted for at the inception of lease at the fair value of the assets or
present value of minimum lease payments whichever is lower. At the end of lease term, asset will revert back to
the lessor, hence they are fully depreciated on a straight line basis over the lease term or its useful life whichever is
shorter.
At the balance sheet date, assets held for disposal are valued at Written Down Value (WDV) or Net Realisable Value
(NRV), whichever is lower.
Page 73
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
d.
Impairment of assets
The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based
on internal / external factors. An asset is treated as impaired when the carrying cost of the assets exceed its
recoverable value. An impairment loss, if any, is charged to the profit and loss account in the year, in which an asset is
identified as impaired. Reversal of impairment losses recognised in prior years is recorded when there is an indication
that the impairment losses recognised for the assets no longer exist or have decreased.
e.
Investments
Investments in Security Receipt (SR) held by the Company are treated as Current Investment. They are valued at lower
of cost or realisable value. Latest available declared NAV is considered to be realizable value. In case where NAV is
not declared within one year from acquisition of assets or finalization of resolution strategy, whichever is earlier, cost of
SR is considered as realizable value. Individual scrip wise appreciation or diminution is aggregated to arrive at net
diminution or net appreciation. Net diminution, if any is provided for and net appreciation, if any is ignored.
f.
Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the
revenue can be reliably measured.
i
Management fee:
•
•
ii
Any fee income other than (i) above (e.g. advisory fees, etc.) is recognised as per the terms of contract.
iii
Additional realization / return on assets over acquisition price on redemption of SR is accounted for as per the
terms of relevant trust deed / offer document.
iv
Income by way of yield on SR’s is accounted as and when they are realized.
v
Interest income:
•
•
•
•
g.
Management fee is accrued as per terms of the relevant trust deed / offer document / contract with the
borrower.
Outstanding management fee in respect of trusts where management fee is remaining unpaid for more than
three years are treated as 'doubtful of recovery' and provided for in the profit and loss account. In respect of
such trusts, no further management fee is recognised unless it is realized. However, based on the
management estimate such management fee may not be provided and further continue to accrue after three
years in accordance with the resolution plan already implemented or in the process of being implemented.
Interest on bank deposits placed with banks is accounted on accrual basis.
Interest on expenses incurred on behalf of trust(s) is accounted as per terms of the relevant trust deed and
offer document and is accrued where reasonable certainty exists with respect to its recovery. Outstanding
interest on expenses in respect of trusts where it is remaining unpaid for more than three years are treated as
'doubtful of recovery' and provided for in the profit and loss account. In respect of such trusts no further
interest is recognized unless it is realised.
Interest on restructuring is accrued as per contract, net of the proportionate share of expenses incurred and
management fees charged in the trust.
Interest on loan is accounted for as per the terms of the contract. In case interest / principal is overdue for
more than 180 days from the due date specified in the contract, the loan outstanding is classified as Non
Performing Asset and provision is made as per the guidelines issued by the Reserve Bank of India. Unrealized
interest on loan is derecognized and further recognition is made only on realisation.
Employee Benefits
Defined contribution plan
•
The Company makes defined contribution to the provident fund, which is recognized in the profit and loss
account on an accrual basis.
Page 74
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
Defined benefit plan
•
The Company's liabilities under the Payment of Gratuity Act are determined on the basis of actuarial valuation
made at the end of each financial year using the projected unit credit method. Actuarial gains and losses are
recognised in the statement of profit and loss account as income or expense respectively. Obligation is
measured at the present value of estimated future cash flows using a discounted rate that is determined by
reference to market yields on the date of balance sheet on government bonds where the currency and terms
of the government bonds are consistent with the currency and estimated terms of the defined benefit
obligation.
Short term employee benefits
•
h.
Expenses incurred for financial assets not acquired
•
i.
The expenses incurred on behalf of trusts are shown as 'Recoverable from Trusts' and grouped under
Advances recoverable in cash or in kind in the balance sheet. These expenses are reimbursed to the
Company in terms of the provisions of the relevant trust deed and offer document. Generally, the recoverable
amount if not realized within the period of three years, it is charged to profit and loss account and the same is
reversed on recovery. However, based on the management estimate any expense incurred on financial assets
acquired on behalf of the trust may not be charged to profit and loss account even after the maximum period of
three years in accordance with the resolution plan already implemented or in the process of being
implemented.
Foreign currency transactions
•
k.
Acquisition expenses pertaining to financial assets not acquired are shown as 'Recoverable from Sellers /
Trust(s)' and grouped under Advances recoverable in cash or in kind in the balance sheet for a maximum
period of six months from the date the expenses are incurred to take care of the eventuality of such asset
being subsequently acquired by the Company or the expenses agreed to be reimbursed by the Sellers as deal
breakage cost within the said period. Where the Sellers have not agreed to reimburse the same or no
acquisition takes place within said period from the date of incurrence of cost, the same are charged to profit
and loss account. However, based on the management estimate any expense incurred on financial assets not
acquired may not be charged to profit and loss account even after the maximum period of six months.
Expenses incurred by the Company on behalf of the trust
•
j.
Short term employee benefits are recognised as an expense at the undiscounted amount in the profit and loss
account of the year in which the related services are rendered.
Transactions in foreign currency are recorded at the rate of exchange prevailing on the date of transaction.
Foreign currency monetary items are reported using closing rate of exchange at the end of the year. The
resulting exchange gain / loss is reflected in the profit and loss account. Other non-monetary items, like fixed
assets, investments in equity shares, are carried in terms of historical cost using the exchange rate at the date
of transaction. Premium / Discount, in respect of forward foreign exchange contract is recognised over the life
of the contract. Profit / Loss on cancellation / renewal of forward exchange contract is recognised as income /
expense for the year.
Taxation
•
•
•
•
•
Tax expense comprises current tax and deferred tax.
Provision for current tax is made on the basis of estimated taxable income for the current accounting year in
accordance with the provisions of Income Tax Act, 1961.
Deferred tax for timing differences between the book and tax profits for the year is accounted for, using the tax
rates and laws that apply substantively as on the date of balance sheet. Deferred tax assets arising from
timing differences are recognised to the extent there is reasonable certainty that these would be realised in
future.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the
taxes on income levied by same governing taxation laws.
At each balance sheet date the Company re-assesses unrecognised deferred tax assets. It recognises
unrecognised deferred tax assets to the extent that it has become reasonably certain, as the case may be that
sufficient future taxable income will be available against which such deferred tax assets can be realized. Any
such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available.
Page 75
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
l.
Operating leases
Operating lease payments are recognised as expenditure in the profit and loss account on a straight line basis,
which is representative of the time pattern user’s benefit.
m. Provisions, contingent liabilities and contingent assets
Contingent Liabilities are possible but not probable obligations as on the balance sheet date, based on the
available evidence. Department appeals, in respect of cases won by the Company, are also considered as
Contingent Liabilities. Provisions are recognised when there is a present obligation as a result of past event; and it
is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable
estimate can be made. Provisions are determined based on best estimate required to settle the obligation at the
balance sheet date. Contingent assets are not recognized in the financial statements.
Page 76
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
2. NOTES TO THE FINANCIAL STATEMENTS
SHARE CAPITAL
2.01
As at
As at
31.03.2012
31.03.2011
Rupees
Rupees
SHARE CAPITAL
Authorised
210,000,000 (Previous Year 210,000,000) Equity Shares of Rs 10/- each
2,100,000,000
2,100,000,000
2,100,000,000
2,100,000,000
210,000,000 (Previous Year 210,000,000) Equity Shares of Rs 10/- each
fully paid up
2,100,000,000
2,100,000,000
Total
2,100,000,000
2,100,000,000
Issued, Subscribed and Paid-up
Note a.
The Company has only one class of shares referred to as equity shares having a Face Value of Rs. 10/-. Each holder of
equity shares is entitled to one vote per share.
Note b.
Equity Shares
Particulars
As at 31.03.2012
Number
Shares outstanding at the beginning of the year
Shares Issued during the year
Shares bought back during the year
Shares outstanding at the end of the year
210,000,000
As at 31.03.2011
Rupees
2,100,000,000
-
-
210,000,000
2,100,000,000
Number
210,000,000
Rupees
2,100,000,000
-
-
210,000,000
2,100,000,000
Note c.
Out of Equity shares issued by the Company, shares held by each shareholder, holding more than 5 percent shares
specifying the number of shares held are as below:
As at 31.03.2012
Particulars
No. of
Shares held
As at 31.03.2011
% of
Holding
No. of
Shares held
% of
Holding
Equity Shares:
JM Financial Limited
102,900,000
49.00%
102,900,000
49.00%
Mr. Narotam S Sekhsaria
31,500,000
15.00%
31,500,000
15.00%
Indian Overseas Bank
21,000,000
10.00%
21,000,000
10.00%
Valiant Mauritius Partners FDI Ltd
16,600,000
7.90%
16,600,000
7.90%
Page 77
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.02
As at
As at
31.03.2012
31.03.2011
Rupees
Rupees
RESERVES AND SURPLUS
Surplus / (Deficit) in profit and loss account:
Opening balance
2.03
178,261,807
44,351,514
(+) Profit for the year
144,473,794
133,910,293
Closing balance
322,735,601
178,261,807
Total
322,735,601
178,261,807
As at
As at
31.03.2012
31.03.2011
Rupees
Rupees
LONG-TERM BORROWINGS
Secured:
Long term maturities of finance lease obligations
1,822,433
-
1,822,433
-
(Secured by way of hypothecation of vehicles. The lease is
repayable on a monthly basis over a period of 36 months)
Total
2.04
2.05
As at
As at
31.03.2012
31.03.2011
Rupees
Rupees
LONG-TERM PROVISIONS
For employee benefits - gratuity
2,206,228
1,666,410
Total
2,206,228
1,666,410
As at
As at
31.03.2012
31.03.2011
Rupees
Rupees
TRADE PAYABLES
Total outstanding dues to micro, small and medium enterprises
-
-
Total outstanding dues to creditors other than micro, small and
medium enterprises
2,000,782
775,585
Total
2,000,782
775,585
Page 78
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.06
2.07
As at
As at
31.03.2012
31.03.2011
Rupees
Rupees
OTHER CURRENT LIABILITIES
Short term maturities of finance lease obligations
(Secured by way of hypothecation of vehicles)
1,325,152
-
Statutory dues
5,809,406
12,675,584
Other Liabilities
64,481,340
36,428,440
Total
71,615,898
49,104,024
As at
As at
31.03.2012
31.03.2011
Rupees
Rupees
SHORT-TERM PROVISIONS
For employee benefits - gratuity
113,542
9,380
For employee benefits - compensated absences
2,173,710
1,756,690
Total
2,287,252
1,766,070
Page 79
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.08. FIXED ASSETS
Amount in Rupees
GROSS BLOCK
Description
As at
01.04.2011
Additions
DEPRECIATION/AMORTISATION
For the
Deductions
year
Up to
31.03.2011
As at
31.03.2012
Disposals
NET BLOCK
As at
As at
31.03.2012
31.03.2011
Upto
31.03.2012
i) TANGIBLE
ASSETS:
Owned Assets:
Furniture and Fixtures
654,166
-
-
654,166
168,091
67,035
-
235,127
419,039
486,075
Office Equipments
3,032,726
162,008
-
3,194,734
1,619,829
621,152
-
2,240,981
953,753
1,412,897
Computers
2,249,347
349,175
-
2,598,522
1,132,927
568,320
-
1,701,247
897,275
1,116,420
963,857
4,115,299
963,857
4,115,299
963,857
1,171,037
963,857
1,171,037
2,944,262
-
6,900,096
4,626,482
963,857
10,562,721
3,884,705
2,427,544
963,857
5,348,392
5,214,330
3,015,392
148,341
440,060
-
588,401
54,541
36,128
-
90,669
497,732
93,800
148,341
440,060
-
588,401
54,541
36,128
-
90,669
497,732
93,800
-
-
-
-
-
-
-
-
3,596,947
-
7,048,437
15,923,588
5,066,542
339,151
963,857
9,214,302
11,151,122
7,048,437
3,939,245
5,357,788
2,463,672
7,795,760
963,857
9,214,302
5,439,061
3,939,245
9,309,008
3,109,192
3,109,192
Leased Assets:
Vehicles
(refer note below)
Total
ii) INTANGIBLE
ASSETS:
Software
Total
iii) CAPITAL WORKIN-PROGRESS
Total
Previous Year
Note:
Vendor has lien over the assets taken on lease.
Page 80
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.09
As at
As at
31.03.2012
31.03.2011
Rupees
Rupees
DEFERRED TAX ASSETS/ (LIABILITIES)
Differences in the tax and books - written down value of fixed assets
1,982,102
Due under finance lease
65,968
-
Provision for gratuity
752,649
543,710
Preliminary expenses
102,169
1,165,361
Compensated absences
705,260
569,958
3,608,149
2,206,527
Total
2.10
(72,502)
As at
As at
31.03.2012
31.03.2011
Rupees
Rupees
LONG TERM LOANS AND ADVANCES
Other loans and advances
Secured, considered good:
Loan funds
159,500,000
99,500,000
Unsecured, considered good:
Staff loans
Advance Tax (Net of provisions)
Other deposits
Total
356,024
497,837
27,687,574
8,370,457
608,934
1,201,000
188,152,532
109,569,294
Page 81
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.11 CURRENT INVESTMENT
As at
As at
31.03.2012
31.03.2011
Nos. of
Rupees
SR
Nos. of
Rupees
SR
Other current investments
(Unquoted- valued at cost)
Investment in Security Receipts of the trusts
(Face Value Rs. 1,000/- each except otherwise stated)
JMFARC - BOB 2008 - Trust
111,600
111,600
111,600
37,832,400
5,518
5,518,000
5,518
5,518,000
696
696,000
696
696,000
JMFARC-BOI 2009 - Trust
48,600
48,600,000
48,600
48,600,000
JMFARC-BOI 2009 I - Trust
36,000
36,000,000
36,000
36,000,000
JMFARC - DB - ICICI - Trust
115,000
115,000,000
115,000
115,000,000
(Face value Rs.1/- each, Previous year Rs.339/- each)
JMFARC-SHREE RAMA - Trust
JMFARC-SHREE RAMA - BBK - Trust
JMFARC - DB - DCB - Trust
7,500
7,500,000
7,500
7,500,000
JMFARC - DB - SBI - Trust
61,000
61,000,000
61,000
61,000,000
JMFARC -Jord - SUUTI Trust
JMFARC - Pasupati - SASF - Trust
8,000
8,000,000
8,000
8,000,000
250,000
150,000,000
250,000
200,000,000
102,000
61,407,668
102,000
84,950,000
50,000
50,000,000
50,000
50,000,000
6,000
6,000,000
6,000
6,000,000
129,450
74,450,000
129,450
129,450,000
(Face value Rs. 600/- each, Previous year Rs.800/- each)
JMFARC - March 2010 Rare Metal Trust
(Face value Rs.602/- each, Previous year Rs.833/- each)
JMFARC -Central bank - Tube - Trust
JMFARC -UTI - Tube - Trust
JMFARC - Rice - June 2010 - Trust
(Face value Rs. 575/- each, Previous year Rs. 1000/- each)
JMFARC - Shree Rama - June 2010 - Trust
33,870
33,870,000
33,870
33,870,000
100,000
100,000,000
100,000
100,000,000
JMFARC - Resin September 2010 Trust
71,500
71,500,000
71,500
71,500,000
JMFARC - Poultry 2010 Trust
29,400
29,400,000
60,000
60,000,000
JMFARC - SASF Tube - Trust
62,000
62,000,000
62,000
62,000,000
JMFARC - Poultry II 2010 Trust
16,709
16,709,000
34,100
34,100,000
JMFARC - UCO Bank 2010 - Trust
31,500
31,500,000
31,500
31,500,000
JMFARC - SME Retail 2011 - Trust
13,365
13,365
13,365
12,865,000
376,500
340,994,199
376,500
376,500,000
JMFARC - Yarn 2010 - Trust
(Face value Rs.1/- each, Previous year Rs.963/-each)
JMFARC-IOB March 2011-Trust
(Face value - Class A SRs Rs. 873/- each, Class B SRs Rs.
1000/- each, Previous year Rs. 1000/- for both Class)
JMFARC-UCO Bank March 2011-Trust
JMFARC-IOB II March 2011-Trust
JMFARC-Central Bank Retail 2011-Trust
16,500
16,500,000
16,500
16,500,000
110,000
110,000,000
110,000
110,000,000
88,872
84,446,627
88,872
88,872,000
469,884
207,244,981
-
-
7,039
7,039
-
-
196,799
196,799,000
-
-
(Face value Rs.950/- each, Previous year Rs.1000/-each)
JMFARC-Retail June 2011-Trust
(Face value - Series I SRs Rs. 441/- each, Series II SRs Rs.
441/- each, Series III SRs Rs. 591/- each, Previous year Rs.
NIL each)
JMFARC-Retail Aug 2011-Trust
(Face value Rs.1/- each, Previous year Rs. Nil each)
JMFARC-Swarna 2011-Trust
Page 82
As at
As at
31.03.2012
31.03.2011
Nos. of
Rupees
Nos. of
SR
JMFARC-Petrochemicals 2012-Trust
Rupees
SR
190,000
124,145,613
-
-
-
-
5,000
5,000
(Face value Rs.653/- each, Previous year Rs. Nil each)
JMFARC-SNOWCEM Trust
(Face value Rs. Nil each, Previous year Rs.1/- each)
Total
Notes:
2,049,413,092
1,788,258,400
As at
31.03.2012
As at
31.03.2011
Cost
Cost
1. Aggregate value of
Rupees
Rupees
Unquoted Investments
2,049,413,092
1,788,258,400
Page 83
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.12
As at
As at
31.03.2012
31.03.2011
Rupees
Rupees
TRADE RECEIVABLES
(Refer note no. 2.25)
Trade receivables outstanding for a period exceeding six months from
the date they are due for payment
Unsecured, considered good
Less: Provision for receivables (Refer note no. 2.26)
72,836,721
12,810,686
30,396,682
-
42,440,039
12,810,686
89,448,974
147,840,275
89,448,974
147,840,275
131,889,013
160,650,961
Trade receivables outstanding for a period less than six months from the
date they are due for payment
Unsecured, considered good
Total
2.13
As at
As at
31.03.2012
31.03.2011
Rupees
Rupees
CASH AND BANK BALANCES
Cash and cash equivalents
Cash in hand
25,063
8,615
In Current Accounts
30,087,865
8,591,340
In Deposit Accounts (with maturity below 3 months)
66,000,000
233,500,000
96,112,928
242,099,955
Balances with banks
Other bank balances
Total
a.
c.
d.
10,000,000
-
106,112,928
242,099,955
Balances with banks in deposit account (maturing after b. Earmarked balances with banks (for example, for unpaid
dividend)
Balances with banks to the extent held as margin money or security against the borrowings, guarantees, other
commitments.
Repatriation restrictions, if any, in respect of cash and bank balances
Page 84
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.14
As at
31.03.2012
31.03.2011
Rupees
Rupees
SHORT-TERM LOANS AND ADVANCES
Staff Loans (Unsecured)
Advances recoverable in cash or in kind or for value to be received
(Refer note no. 2.25)
Others
Total
Less: Provision for advances (Refer note no. 2.26)
Total
2.15
As at
308,740
258,510
13,835,576
1,828,042
1,246,472
18,312,188
15,390,788
20,398,740
1,712,128
-
13,678,660
20,398,740
As at
As at
31.03.2012
31.03.2011
Rupees
Rupees
OTHER CURRENT ASSETS
Interest accrued on fixed deposit
504,811
5,280,828
Total
504,811
5,280,828
Page 85
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.16
For the year ended
For the year ended
March 31, 2012
Rupees
March 31, 2011
Rupees
REVENUE FROM OPERATIONS
Operating revenue
Management and advisory fees
196,413,191
131,287,845
Interest income on restructuring
130,740,767
120,492,374
Interest income on loans
16,217,678
5,821,032
Profit on redemption/ sale of security receipts
46,629,116
21,605,303
1,363,801
-
391,364,553
279,206,554
For the year ended
For the year ended
March 31, 2012
Rupees
March 31, 2011
Rupees
Other operating revenue
Interest income on funded expenses
Total
2.17
OTHER INCOME
Interest income on fixed deposit
7,731,195
61,929,359
Other non-operating income
4,097,895
766,514
11,829,090
62,695,873
For the year ended
For the year ended
March 31, 2012
Rupees
March 31, 2011
Rupees
Total
2.18
EMPLOYEE BENEFITS EXPENSE
Salaries, Bonus and Allowances
Contribution to Provident Fund and Other Funds
Gratuity
Staff Welfare
Total
85,776,435
75,022,474
2,625,761
2,326,702
643,979
767,156
37,824
154,615
89,083,999
78,270,947
Page 86
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.19
For the year ended
March 31, 2012
Rupees
March 31, 2011
Rupees
FINANCE COSTS
Interest Expense
Other borrowing costs
Total
2.20
For the year ended
14,758,159
10,312
1,378,750
-
16,136,909
10,312
For the year ended
For the year ended
March 31, 2012
Rupees
March 31, 2011
Rupees
OTHER EXPENSES
Rent and other cost
12,257,121
12,284,747
Rates & taxes
219,378
310,559
Insurance premium
924,800
604,033
Communication expenses
451,687
478,691
Repairs and maintenance (Building)
241,945
365,283
Repairs and maintenance (Machinery)
410,086
271,369
2,000,888
2,419,758
212,360
200,000
Professional fees
Auditors Remuneration
-as auditor
-as tax auditor
21,030
20,000
-for management services (limited review)
79,429
75,000
19,210,011
30,269,148
Support service charges
Membership & Subscription
621,478
993,075
Travelling expenses
771,760
1,875,690
Electricity
484,254
518,038
Printing and stationery
365,063
218,026
Director’s sitting fees
450,000
400,000
Director’s commission
900,000
-
-
1,530,000
Reversal of fees
Provision for receivables & advances (Refer note no. 2.26)
Miscellaneous expenses
Total
32,108,810
-
2,524,668
2,054,722
74,254,768
54,888,139
Page 87
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.21
Earning per share
Earning per share is calculated by dividing the profit attributable to the equity shareholders by the weighted average
number of equity shares outstanding during the year, as under:
Particulars
For the year ended
31 March 2012
Profit attributable to the equity shareholders for the purpose of basic/
diluted earnings per share (Rupees)
144,473,794
133,910,293
Weighted average number of equity shares outstanding during the
year for basic/ diluted earnings per share
210,000,000
210,000,000
0.69
0.64
10
10
Basic/ diluted earnings per share – (Rupees)
Nominal value per share – (Rupees)
2.22
For the year ended
31 March 2011
Capital Commitments
Particulars
As at
31 March 2012
As at
31 March 2011
Estimated amount of contracts remaining to be executed on
capital account and not provided for (Rupees)
2.23
4,200,000
-
Contingent Liability
Particulars
As at
31 March 2012
As at
31 March 2011
Estimated liability of municipal property tax to the landlord of
premises taken on lease earlier (Rupees)
1,217,868
1,217,868
2.24
The Company have been sanctioned an overdraft limit of Rs. 50,00,00,000 by a scheduled bank which is secured
against pledge of investments in security receipts.
2.25
The normal operating cycle of the Company is five years in view of the estimated timeframe for resolution of the assets
post their acquisition. Accordingly, the trade receivables and advances recoverable have been classified under current
assets.
2.26
As a matter of prudence, the Company has made a provision of Rs. 3,03,96,682 for trade receivables and Rs.
17,12,128 for advances recoverable as the same were outstanding for more than one year.
2.27
Segment Reporting
The Company operates in only one business and geographical segment and hence there are no reportable segments.
2.28
a)
Leases
Finance Lease
The Company has acquired vehicles under the finance lease agreement. The tenure of the lease agreements are 36
months with an option to prepayment/foreclosure.
Page 88
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
The minimum lease rentals outstanding with respect to these assets are as under:
Total
minimum
lease
payment
outstanding
as at March
31, 2012
Particulars
Total
minimum
lease
payment
outstanding
as at March
31, 2011
Amount in Rupees
Present value
of the
Lease
minimum
finance
lease
charges
payment as
not due
at March 31,
2011
Not later than 1
year
1,777,320
452,169
1,325,151
-
-
-
Later than 1 year
but not later than
5 years
2,038,260
215,826
1,822,434
-
-
-
Later than 5 years
Total
b)
Lease finance
charges not
due
Present
value of the
minimum
lease
payment as
at March 31,
2012
-
-
-
-
-
-
3,815,580
667,995
3,147,585
-
-
-
Operating Lease
The Company has taken an office premises under operating lease upto July 15, 2013. The Company, after giving
advance notice period of 4 months can terminate the lease contract.
The minimum lease rentals outstanding with respect to these assets are as under:
Particulars
Amount in Rupees
Total lease payments
outstanding as at
Total lease payments
outstanding as at
March 31, 2012
Not later than 1 year
March 31, 2011
3,120,000
5,850,000
-
-
Later than 1 year but not later than 5 years
Later than 5 years
Expenditure debited to profit & loss account
2.29
A
-
-
9,842,040
11,919,400
Employee benefits
Defined benefit plans
a) Gratuity
Amount recognised in the balance sheet with
respect to gratuity
Present value of the defined benefit obligation at the
year end
2,319,770
1,675,791
-
-
2,319,770
1,675,791
Fair value of plan assets
Net liability
Amount recognised in salary, wages and
employee benefits in the profit and loss account
with respect to gratuity
Amount in Rupees
For the year ended
March 31, 2011
For the year ended
March 31, 2012
For the year ended
March 31, 2012
For the year ended
March 31, 2011
Current service cost
552,926
607,199
Interest on defined benefit obligations
179,034
117,477
-
-
(87,981)
(367,418)
-
409,898
643,979
767,156
Expected return on plan assets
Net actuarial gain (loss) recognised during the year
Past service cost
Net gratuity cost
Page 89
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
Reconciliation of present value of the
obligation and the fair value of the plan assets:
Amount in Rupees
For the year ended
March 31, 2011
For the year ended
March 31, 2012
Opening defined benefit obligation
1,675,791
908,635
Current service cost
552,926
607,199
Interest cost
179,034
117,477
Actuarial (gain)/loss
(87,981)
(367,418)
-
409,898
2,319,770
1,675,791
Past service cost
Closing defined benefit obligation
Change in fair value of plan assets
For the year ended
March 31, 2012
For the year ended
March 31, 2011
Opening fair value of the plan assets
-
-
Expected return on plan assets
-
-
Actuarial (gain)/loss
-
-
Contributions by the employer
-
-
Benefits paid
-
-
Closing fair value of the plan assets
-
-
For the year ended
March 31, 2012
For the year ended
March 31, 2011
-
-
For the year ended
March 31, 2012
For the year ended
March 31, 2011
Investment details of plan assets
Investment details of plan assets
Principal actuarial assumptions at the balance
sheet date
Discount rate
Estimated rate of return on plan assets
Retirement age
Salary escalation
8.65%
8.05%
-
-
60 years
60 years
7.00%
7.00%
Valuation assumptions
•
•
The estimates of future salary increases, takes into account inflation, seniority, promotion and other relevant
factors in the employment market.
The above information is certified by the actuary.
b)
Compensated absences
As per Company’s policy, provision of Rs.21,73,710/- (previous year Rs.17,56,690/- ) has been made towards
compensated absences, calculated on the basis of unutilised leave as on the last day of the financial year.
B
Defined contribution plans
Amount recognised as an expense and included in the ‘Contribution to provident fund & other funds’ Rs. 26,25,761/(previous year Rs. 23,26,702/- ).
2.30
The Revised Schedule VI has become effective from 1st April, 2011 for the preparation of financial statements. This
has impacted the disclosure and presentation made in the financial statements. Previous year's figures have been
regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.
Page 90
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
Additional disclosure:
The following additional disclosures have been made taking into account RBI guidelines in this regard:
a)
Name and address of the banks / financial institutions from whom financial assets were acquired and the values at
which such assets were acquired from each such bank/ financial institutions.
Name of the selling bank/ financial
institution
Address
Acquisition cost
Rupees
% to total
Sponsors
Indian Overseas Bank
763, Anna Salai, Chennai
Sponsors Total
3,304,500,000
38.77%
3,304,500,000
38.77%
65,000,000
0.76%
137,250,000
1.61%
13,909,236
0.16%
Non- Sponsors
Allahabad Bank
2, Netaji Subhash Road, Kolkata - 700001
th
Axis Bank
Maker Towers F, 13 Floor, Cuffe Parade,
Mumbai - 400005
Bank of Bahrain & Kuwait B.S.C
Jolly Maker Chamber, 2, Ground Floor, Nariman
point, Mumbai - 400021
Bank of Baroda
Kalpataru Heritage Building, 6th floor, Nanik
Motwani Lane, Fort, Mumbai - 400023
111,600,000
1.31%
Bank of India
Star House, C-5, G Block, Bandra Kurla
Complex, Bandra (East), Mumbai - 400051
535,080,000
6.28%
BNP Paribas
Unit No 203, Sakar II, Ellisbridge, Ahmedabad
380006
33,870,000
0.40%
Canara Bank
112 J. C. Road, Bangalore
Central Bank of India
Chandermukhi, Nariman Point, Mumbai 400021
Deutsche Bank
DB House, Hazarimal Somani Marg, Fort,
Mumbai 400001
Federal Bank
Aluva, Kerala State
HSBC
IDBI Bank
28,920,000
0.34%
2,631,534,000
30.87%
183,500,000
2.15%
4,100,000
0.05%
52/60, M. G. Road, Fort, Mumbai - 400001
490,288,000
5.75%
IDBl Tower, WTC Complex, Cuffe Parade,
Mumbai 400005
100,000,000
1.17%
Karnataka Bank
Mahavira Circle, Kankanadi, Mangalore - 575002
Punjab National Bank
7, Bhikhaji Cama Place, New Delhi
25,100,000
0.29%
113,354,000
1.33%
Rupee Co-operative Bank
2062, Sadashiv Peth, Astang Ayurved Building,
Pune- 411030
60,000,000
0.70%
Specified Undertaking of UTI
UTI Tower, G Block, Bandra Kurla Complex,
Bandra (East), Mumbai - 400051
73,000,000
0.86%
Standard Chartered Bank
23, Narain Manzil, Barakhamba Road, New
Delhi- 110001
24,930,000
0.29%
State Bank of Patiala
The Mall, Patiala- 147001, Punjab
124,526,000
1.46%
Stressed Asset Stabilisation Fund
IDBl Tower, 10 Floor, WTC Complex, Cuffe
Parade, Mumbai 400005
312,000,000
3.66%
The Nashik Road Deolali Vyapari
Sahakari Bank Ltd
Kalpavruksha, Aashanagar, Nashikroad, Nashik,
Maharashtra - 422101
15,000,000
0.18%
The Saraswat Co-op Bank Ltd
Mittal Court 'A' Wing 1st Floor, Nariman Point,
Mumbai - 400004
19,100,000
0.22%
UCO Bank
Biplabi Trailokya Maharaj Sarani, Kolkata –
700001
48,000,000
0.56%
UTI Mutual Fund
UTI Tower, Gn Block, Bandra Kurla Complex,
Bandra (East) 400051
6,000,000
0.07%
Vijaya Bank
41/2, M.G.Road, Bangalore 560001
th
63,862,102
0.75%
Non Sponsors Total
5,219,923,338
61.23%
Grand Total
8,524,423,338
100.00%
Page 91
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
b)
Dispersion of various assets industry wise.
Industry
Cables
Chemicals
Electronic
Engineering
Food Products
Gems & Jewellery
Hospitality
Leather
Paints
Pharmaceutical
Plastics & Packaging
Poultry
Real Estate
Retail
Steel
Textiles
Trading
Transportation
Others
Grand Total
Acquisition
Price in Rupees
1,000,000
863,600,000
15,000,000
309,500,000
159,951,000
13,900,000
507,774,000
31,500,000
69,100,000
978,000
380,429,236
94,100,000
1,781,735,102
2,254,344,000
12,500,000
1,217,000,000
208,385,000
357,400,000
246,227,000
8,524,423,338
% to total
0.01%
10.13%
0.18%
3.63%
1.88%
0.16%
5.96%
0.37%
0.81%
0.01%
4.46%
1.10%
20.90%
26.45%
0.15%
14.28%
2.44%
4.19%
2.89%
100.00%
c)
The above table (b) has been prepared by management and the same has been relied upon by the auditors.
d)
The acquisition price in the tables (a) and (b) above includes financial assets acquired till March 31, 2012 including
financial assets resolved till date.
e)
There are no financial assets required to be reclassified, accordingly no financial assets have been reclassified from
standard assets to non-performing assets as per the guidelines issued by the RBI.
f)
The accounting policies adopted by the Company in preparation and presentation of the financial statements are in
conformity with the applicable prudential norms prescribed by the RBI.
g)
The Company has put in place internal audit system, scope of which provides for periodical checks and review of the
assets acquisition procedures and asset reconstruction measures and the matters related thereto.
h)
The capital adequacy ratio is well above fifteen percent of its total risk weighted assets, accordingly the Company has
complied with the capital adequacy norms as prescribed the RBI.
i)
Additional disclosure as per RBI Notification No. DBNS.PD(SC/RC). 8/ CGM (ASR) dated April 21, 2010.
Particulars
Amount in Rupees
(face value)
Value of financial assets acquired during the financial year either in its own books or in the books
2,234,996,000
of the trust
Value of financial assets realized during the financial year
887,074,280
Value of financial assets outstanding for realization as at the end of the financial year
7,353,136,956
Value of Security Receipts redeemed partly during the financial year *
573,652,437
Value of Security Receipts redeemed fully during the financial year
65,000,000
Value of Security Receipts pending for redemption as at the end of the financial year
7,583,890,963
Value of Security Receipts which could not be redeemed as a result of non-realization of the
Nil
financial asset as per the policy formulated by the Securitization company or Reconstruction
company under Paragraph 7(6)(ii) or 7(6)(iii)
Value of land and/or building acquired in ordinary course of business of reconstruction of assets
Nil
Note: * Net of security receipts fully redeemed during the year, which were redeemed partly in last year retaining nominal
value per security receipt
Page 92
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.31
Disclosure in respect of related parties pursuant to Accounting Standard 18:
Enterprise which is able to exercise significant influence
JM Financial Limited
Key managerial personnel
Mr. Anil Bhatia- Managing Director and Chief Executive Officer
During the year the following transactions were carried out with the related parties in the ordinary course of business:
Sr. No.
1
Name of the Related Party
JM Financial Limited
Support Services Paid
2
Mr. Anil Bhatia
Remuneratioin
Nature of relationship
Enterprise which is able to
exercise significant influence
Amount in Rupees
2011-12
18,927,000
2010-11
30,000,000
Key Managerial Personnel
21,682,602
27,313,171
Page 93
JM FINANCIAL ASSET RECONSTRUCTION
COMPANY PRIVATE LIMITED
Annual Report 2012-13
Page 94
BOARD OF DIRECTORS
Mr. V P Shetty
Mr. Narotam S Sekhsaria
Mr. Suresh Kumar Neotia
Mr. Hoshang N Sinor
Mr. Sunil B Mathur
Mr. G M Ramamurthy
Mr. S H Khan
Mr. Shailesh Haribhakti
Mr. Rabindra Behera
Mr. Anil Bhatia
- Chairman
- (upto March 30, 2013)
- Nominee of Indian Overseas Bank
- Managing Director & CEO
AUDIT COMMITTEE
Mr. Shailesh Haribhakti
Mr. V P Shetty
Mr. Sunil B Mathur
Mr. G M Ramamurthy
- (upto March 30, 2013)
- (with effect from May 15, 2013)
COMPANY SECRETARY
Mr. Nikhil Bhandary
AUDITORS
M/s. Khimji Kunverji & Co
Chartered Accountants
Sunshine Towers, Level 19,
Senapati Bapat Marg, Elphinstone Road,
Mumbai 400 013
BANKERS
HDFC Bank Limited
Manekji Wadia Building,
Nanek Motwani Marg, Fort,
Mumbai – 400 023
IDBI Bank Limited
Mittal Court, 224A Wing
nd
2 Floor, Nariman Point
Mumbai – 400 021
UCO Bank
YWCA Building Complex Annex
18, Madam Cama Road
Mumbai- 400 001
The Ratnakar Bank Limited
One India Bulls Centre, Tower 2, 6th Floor
841, Senapati Bapat Marg, Lower Parel (W)
Mumbai- 400013
REGISTERED OFFICE
141, Maker Chambers III
Nariman Point
Mumbai – 400 021
Page 95
DIRECTORS’ REPORT
To the Members,
JM Financial Asset Reconstruction Company Private Limited
Your Directors have pleasure in presenting their Sixth Annual Report together with the audited statement of accounts for the
financial year ended March 31, 2013.
FINANCIAL RESULTS:
(Rs. in Lakh)
2011-12
Particulars
2012-13
Gross Income
8,897.27
4,031.93
Expenses
2,832.91
1,819.39
Profit before tax
6,064.36
2,212.54
Current Tax
2,197.00
846.00
Deferred tax
(118.17)
(14.02)
-
(64.18)
Profit after tax
3,985.53
1,444.74
Balance brought forward from previous year
3,227.36
1,782.62
Surplus carried to Balance Sheet
7,212.89
3,227.36
Provision for Tax
Excess provision for tax in respect of earlier years (net)
DIVIDEND:
In order to conserve the resources and build the reserves of your Company, the Directors do not recommend any dividend
on the equity shares for the financial year ended March 31, 2013.
FINANCIAL PERFORMANCE:
During the year under review, your Company reported an increase of around 221% in the gross income to Rs. 88.97 Crore
from Rs. 40.32 Crore in the previous year. After accounting for expenses of Rs. 28.33 Crore (previous year Rs. 18.19
Crore), the profit before tax increased to Rs. 60.64 Crore from Rs. 22.13 Crore in the previous year. The net profit after tax
works out to Rs. 39.86 Crore representing an increase of around 276% from the previous year’s net profit of Rs. 14.45
Crore.
ECONOMIC, MARKET AND REGULATORY OVERVIEW:
Indian banks continued to face multiple challenges on the Non-Performing Assets (NPA) front. Most Indian banks
experienced an increase in NPA levels along with an increase in restructured assets. Gross NPA ratio of all banks rose
sharply to 3.6 per cent by September 2012 from 2.9 per cent in March 2012. The total value of cases under Corporate Debt
Restructuring was estimated at Rs. 1.8 Lakh Crore as of September, 2012. The Reserve Bank of India (RBI) has also laid
special thrust on the role played by asset reconstruction companies (ARC) in reduction of the rising NPA levels in the
banking system. The Finance Ministry has also suggested selling of NPAs to ARCs in order to control the rising levels of
NPAs in the system.
On the regulatory front, the year saw many reforms which have a positive impact on the business of ARCs.
Major amendments made in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (SARFAESI) are as follows:
-
Conversion of debt into equity has been allowed.
Action under Section 13 (4) of SARFAESI can now be taken with consent of 60% of the secured lenders compared
to the consent of 75% as was required earlier.
“Multi – State co-operative bank” has been added in the definition of “bank”.
Secured Creditor is now allowed a time frame of 15 days to respond to any objection raised by a borrower /
mortgagor against a notice issued under Section 13 (2) of SARFAESI .
Page 96
-
-
Secured creditor is now allowed to purchase property in auctions under Section 13(4) of SARFAESI which has
been postponed for want of bids above the reserve price. The amount of purchase consideration can be adjusted
against the claim for which notice has been sent.
Affidavit of the Authorised Officer to be filed along with the application to the District Magistrate / Chief Metropolitan
Magistrate. Such affidavit has to contain specifically laid out details.
Secured Creditor may file caveats before DRT, DRAT or High Court as the case may be against any expected
securitisation application so that no ex – parte stay is granted to the borrower / mortgagor.
Central Government would have the powers to allow extension of time for registration of particulars with Central
Registry.
Foreign Investments in ARCs
-
The ceiling for FDI in ARCs has been increased from 49% to 74% subject to the condition that no sponsor may
hold more than 50% of the shareholding in an ARC either by way of FDI or by routing through an FII.
The foreign investment limit of 74% in ARCs would be a combined limit of FDI and FII.
The limit of FII investment in Security Receipts (SRs) has been enhanced from 49% to 74% and the individual limit
of 10% for investment of a single FII in each tranche of SRs issued by ARCs has been dispensed with.
The above reforms would help the asset reconstruction companies to enhance their business in the coming years.
BUSINESS OPERATIONS:
The ARC industry during the year under review saw consummation of relatively higher number of deals compared to last
year. This was primarily due to increased activity by banks, particularly in the last quarter, with respect to sale of NPAs.
Many banks and financial institutions declared sale of NPAs and also managed to close a few transactions. Your Company
participated in various portfolio auctions conducted by the banks and financial institutions and successfully closed few
transactions. Your Company also made acquisitions from few banks on bilateral basis.
Your company has implemented SAP ERP solution for accounting, workflow/approvals, reporting and analysis in order to
improve productivity and insight. It would also help in improving the monitoring of the portfolio of acquired assets.
Marketing efforts with Banks/FIs continued with increased vigor during the year. Many single credit and portfolio
transactions were originated through intensified marketing efforts and meetings with management personnel of Banks/FIs.
Your Company made acquisitions from 7 new banks and financial institutions during the year thereby establishing new
relationships.
During the year under review, your Company concluded multiple transactions with 11 banks for acquisition of assets with
outstanding dues aggregating Rs. 886.66 Crore. These were acquired for Rs. 477.03 Crore by issuance of Security
Receipts, taking the total outstanding dues acquired to Rs. 5,978.09 Crore at a gross consideration of Rs. 1,329.47 Crore.
Resolution strategies were initiated for majority of the assets acquired. As of March 31, 2013, accounts worth Rs. 345.00
Crore were restructured and Security Receipts worth Rs. 152.79 Crore held by your Company and other investors were
redeemed during the year after which the outstanding Security Receipts stood at Rs. 1,082.63 Crore as on March 31, 2013.
Your Company also sold Security Receipts with a face value of Rs. 4.14 Crore to other eligible investors.
ASSET UNDER MANAGEMENT:
As of March 31, 2013, the amount of outstanding Security Receipts (SRs) was Rs. 1082.63 Crore comprising Corporate,
SME and Retail portfolios. Category wise break-up of the outstanding SRs as on the above date is as given below:
Category
(Rs. in Crore)
Corporate / SME Accounts
496.16
Portfolio Accounts
Retail Portfolio
447.28
139.19
Total
1,082.63
FIXED DEPOSITS:
Your Company has neither accepted nor renewed any public deposits during the year under review.
DIRECTORS:
Mr. Sunil B Mathur, an Independent Director of your Company tendered his resignation from the Board of your Company
with effect from March 31, 2013. The Board places on record its sincere appreciation for the valuable services rendered by
Mr. Mathur during his tenure as a Director of your Company.
Page 97
Your Directors have re-appointed Mr. Anil Bhatia as Managing Director and Chief Executive Officer (MD & CEO) of your
Company for a period of 5 (five) years commencing from May 15, 2013. The Reserve Bank of India has, vide its letter dated
March 14, 2013, given its no objection to the continuation of Mr. Anil Bhatia as MD & CEO of the Company for a period of
one year from May 15, 2013 to May 14, 2014.
DIRECTORS’ RESPONSIBILITY STATEMENT:
Pursuant to sub-section (2AA) of Section 217 of the Companies Act, 1956, the Directors of your Company confirm that:
-
in preparation of the annual accounts, the applicable accounting standards have been followed;
-
they have selected such accounting policies and applied them consistently and made judgments and estimates
that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end
of the financial year and of the profit or loss of your Company for that period;
-
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 your Company and for preventing and
detecting fraud and other irregularities;
-
they have prepared the annual accounts on a going concern basis.
PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN
EXCHANGE EARNINGS AND OUTGO:
In view of the nature of activities which are being carried on by your Company, the particulars as prescribed under Section
217(1)(e) of the Companies Act, 1956 read with Companies (Disclosures of Particulars in the Report of Board of Directors)
Rules, 1988 regarding conservation of energy and technology absorption are not applicable to your Company. During the
year under review, your Company has not earned any foreign exchange. The foreign exchange spent by your Company
during the year is equivalent to Rs. 1,08,406/- (previous year Nil).
PARTICULARS OF EMPLOYEES:
The information required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of
Employees) Rules, 1975, is given in the annexure hereto and forms part of this Report. Your Company had 28 (twenty eight)
employees as on March 31, 2013. Out of the said employees, 2 (two) employees employed throughout the year were in
receipt of remuneration of more than Rs. 60.00 Lakh per annum and 2 (two) employees employed for part of the year were
in receipt of a remuneration of more than Rs. 5.00 Lakh per month.
STATUTORY AUDITORS:
The retiring Auditors, namely, M/s. Khimji Kunverji & Co., Chartered Accountants, hold office until the conclusion of the
ensuing Annual General Meeting and being eligible offer themselves for re-appointment. The Board of Directors recommend
the appointment of M/s. Khimji Kunverji & Co. as the Statutory Auditors of your Company for the year 2013-14.
ACKNOWLEDGEMENTS:
Your Directors would like to express their sincere appreciation for the continued support and co-operation extended by the
Reserve Bank of India, the Ministry of Finance, the Ministry of Corporate Affairs, Indian Banks’ Association, the Registrar of
Companies, Maharashtra, the Company’s Bankers, its Sponsors and the Shareholders. The Directors also place on record
their deep sense of gratitude for the commitment displayed by your Company’s staff at all levels.
For and on behalf of the Board
Place: Mumbai
Date: May 15, 2013
Sd/V P Shetty
Chairman
Page 98
INDEPENDENT AUDITOR’S REPORT
To
The Members of
JM Financial Asset Reconstruction Company Private Limited
Report on the Financial Statements
1
We have audited the accompanying financial statements of JM Financial Asset Reconstruction
Company Private Limited (“the Company”), which comprise the Balance Sheet as at March 31,
2013, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a
summary of significant accounting policies and other explanatory information
Management’s Responsibility for the Financial Statements
2
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 referred to in sub-section (3C) of section 211 of the Companies Act,
1956 (“the Act”). 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
Auditor’s Responsibility
3
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
4
An audit involves performing procedures to obtain audit evidence about the amounts and 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. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of the accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements
5
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion
Opinion
6
In our opinion and to the best of our information and according to the explanations given to us, the
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:
a)
b)
c)
In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;
In the case of the Profit and Loss Account, of the profit for the year ended on that date; and
In the case of the Cash Flow Statement, of the cash flows for the year ended on that date
Report on Other Legal and Regulatory Requirements
7
8
As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the Central
Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a
statement on the matters Specified in paragraphs 4 and 5 of the Order
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 purpose of our audit;
b.
in our opinion proper books of account as required by law have been kept by the Company so far
as appears from our examination of those books;
Page 99
c.
the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this
Report are in agreement with the books of account;
d.
in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement
comply with the applicable Accounting Standards referred to in subsection (3C) of section 211 of
the Act;
e.
on the basis of written representations received from the directors as on March 31, 2013, and
taken on record by the Board of Directors, we report that none of the directors is disqualified as
on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Act;
For Khimji Kunverji & Co
Chartered Accountants
Firm Registration No 105146W
Place: Mumbai
Date: May 15, 2013
Sd/Hasmukh B Dedhia
(Partner)
F-33494
Page 100
Annexure referred to in paragraph 7 of the Our Report of even date to the members of JM Financial
Asset Reconstruction Company Private Limited on the accounts of the company for the year ended
March 31, 2013
(i)
(a)
The Company has maintained proper records showing full particulars, including quantitative details and situation
of fixed assets
(b)
The fixed assets have been physically verified by the management at reasonable interval. As informed, no
material discrepancies were noticed on such verification
(c)
The Company has not disposed off substantial part of its fixed assets during the year.
(ii) The Company does not hold any inventory during the year, hence clause (ii) of the Order is not applicable to the
Company
(iii) The Company has neither taken nor granted loan to parties in register maintained under Section 301 of the Act, hence
clause (iii) of the Order is not applicable to the Company
(iv) In our opinion and according to the information and explanation given, there is adequate internal control system
commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets and for
rendering services. Further, on the basis of examination of the books and records of the Company and according to the
information and explanations given, and as per the checking carried out in accordance with the auditing standards
generally accepted in India, neither we have observed nor have we been reported for any continuing failure to correct
major weaknesses in the internal control system relating to the aforesaid. During the year, the Company has neither
purchased any inventory nor sold any goods
(v) (a)
Based on the audit procedures applied and according to the information and explanations given, the contracts or
arrangements referred to in Section 301 of the Act that need to be entered into the register maintained under that
Section have been so entered
(b)
According to the information and explanations given to us, where each of such contracts or arrangement is in
excess of Rs. 5 Lakh in respect of any party, the contracts or arrangement have been made at prices which are
prima facie, reasonable having regard to the prevailing market prices at the relevant time or the prices at which
transactions for similar services have been made with other parties or as per information available with the
Company
(vi)
The Company has not accepted any deposits from the public, hence clause (vi) of the Order is not applicable to the
Company
(vii)
In our opinion, the Company has an internal audit system commensurate with the size and nature of its business
(viii) To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost
records under clause (d) of sub-section (1) of Section 209 of the Act for the products of the Company
(ix) (a)
According to the records of the Company, the Company is regular in depositing with appropriate authorities
undisputed statutory dues including Provident fund, Income tax, Service tax, Cess and other material statutory
dues applicable to it.
We have been informed that Investor education and protection fund, Employees’ state insurance, Sales tax,
Wealth tax, Custom duty and Excise Duty are currently not applicable to the Company for the year under audit
(b)
According to the information and explanations given to us, no undisputed amounts payable in respect of
Provident fund, Income tax, Service tax, Cess and other undisputed statutory dues were outstanding, at the year
end, for a period of more than six months from the date they became payable
We have been informed that Investor education and protection fund, Employees’ state insurance, Sales tax,
Wealth tax, Custom duty and Excise Duty are currently not applicable to the Company for the year under audit
(c)
According to the information and explanations given, there are no dues of Income tax, Service tax and Cess
which have not been deposited on account of any dispute.
We have been informed that Sales tax, Wealth tax, Custom duty and Excise Duty are currently not applicable to
the Company for the year under audit
(x)
The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the
current and immediately preceding financial year
Page 101
(xi)
Based on our audit procedures and as per the information and explanations given, we are of the opinion that the
Company has not defaulted in repayment of dues to a financial institution or bank
(xii)
According to the information and explanations given to us and based on the documents and records produced to us,
the Company has not granted any loans and advances on the basis of security by way of pledge of shares,
debentures and other securities
(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society, hence clause 4(xiii) of the
Order is not applicable to the Company
(xiv) According to the information and explanations given and in our opinion, the Company is not dealing or trading in
shares, securities, debentures, and other investments, hence clause 4(xiv) of the Order is not applicable to the
Company
(xv)
According to the information and explanations given, the Company has not given any guarantee for loans taken by
others from bank or financial institution.
(xvi) According to the information and explanations given, the Company has not raised any term loans, hence clause 4(xvi)
of the Order is not applicable to the Company
(xvii) According to the information and explanations given and on an overall examination of the Balance Sheet of the
Company, we report that no funds raised on short-term basis have been used for long-term investment.
(xviii) The Company has not made any preferential allotment of shares to parties or Companies covered in the register
maintained under Section 301 of the Act
(xix) According to the information and explanations given, the Company has not issued any debentures, hence clause
4(xix) of the Order is not applicable to the Company
(xx)
The Company has not raised any money through a public issue during the year
(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the
auditing standards generally accepted in India, we have neither come across any instances of fraud on or by the
Company, noticed or reported during the course of our audit nor have we been informed of such case by the
management
For Khimji Kunverji & Co
Chartered Accountants
Firm Registration No 105146W
Place: Mumbai
Date: May 15, 2013
Sd/Hasmukh B Dedhia
(Partner)
F-33494
Page 102
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
BALANCE SHEET AS AT MARCH 31, 2013
Particulars
I.
1
2
3
Note
No.
2.01
2.02
2,100,000,000
72,12,88,641
282,12,88,641
2,100,000,000
322,735,601
2,422,735,601
Non-current liabilities
a Long-term borrowings
b Long-term provisions
2.03
2.04
1,561,494
2,975,357
4,536,851
1,822,433
2,206,228
4,028,661
Current liabilities
a Short-term borrowings
b Trade payables
c Other current liabilities
d Short-term provisions
2.05
2.06
2.07
2.08
1,687,500,000
1,514,393
131,643,829
2,815,506
1,823,473,728
2,000,782
52,117,344
2,287,252
56,405,378
4,649,299,220
2,483,169,640
5,915,327
7,217,535
-
5,214,330
497,732
3,596,947
ASSETS
Non-current assets
a Fixed assets
(i) Tangible assets
(ii) Intangible assets
(iii) Capital work-in-progress
2.09
Deferred tax assets / (liabilities)
Long-term loans and advances
2.10
2.11
15,425,066
6,639,940
35,197,868
3,608,149
188,152,532
201,069,690
Current assets
a Current investments
b Trade receivables
c Cash and bank balances
d Short-term loans and advances
e Other current assets
2.12
2.13
2.14
2.15
2.16
3,360,509,208
100,984,977
886,722,115
260,606,207
5,278,845
4,614,101,352
2,049,413,092
112,861,872
106,112,928
13,207,246
504,811
2,282,099,950
4,649,299,220
2,483,169,640
b
c
2
As at
31.03.2012
Rupees
EQUITY AND LIABILITIES
Shareholders' funds
a Share Capital
b Reserves and Surplus
Total
II.
1
As at
31.03.2013
Rupees
Total
Significant accounting policies and notes to the financial
statements
As per our attached report of even date
For Khimji Kunverji & Co
Chartered Accountants
Firm Registration No: 105146W
1&2
Sd/Hasmukh B Dedhia
Partner
Membership No. F- 33494
Sd/V P Shetty
Chairman
Sd/Nikhil Bhandary
Company Secretary
Place : Mumbai
Date : May 15, 2013
For and on behalf of the Board
Sd/Anil Bhatia
Managing Director &
Chief Executive Officer
Place : Mumbai
Date : May 15, 2013
Page 103
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
STATEMENT OF PROFIT & LOSS FOR THE YEAR ENDED MARCH 31, 2013
Particulars
Note
No.
For the year ended
March 31, 2013
Rupees
For the year ended
March 31, 2012
Rupees
I.
REVENUE FROM OPERATIONS
2.17
863,073,334
391,364,553
II.
OTHER INCOME
2.18
26,654,242
11,829,090
III
Total Revenue (I + II)
889,727,576
403,193,643
IV
EXPENSES
Employee benefits expense
Finance costs
Provision for receivables, advances & investments
Depreciation and amortization expense
Other expenses
121,469,234
12,411,001
72,878,029
3,581,512
72,951,678
89,083,999
16,136,909
32,108,810
2,463,672
42,145,958
Total expenses
283,291,454
181,939,349
Profit before tax
Tax expense
Current tax
Deferred tax
Excess provision for tax in respect of earlier years (net)
606,436,122
221,254,294
219,700,000
(11,816,918)
207,883,082
84,600,000
(1,401,622)
(6,417,877)
76,780,501
398,553,040
144,473,794
1.90
0.69
V
VI
Profit after tax
VII
Earnings per share
Basic / Diluted
2.23
Significant accounting policies and notes to the
financial statements
As per our attached report of even date
For Khimji Kunverji & Co
Chartered Accountants
Firm Registration No: 105146W
Sd/Hasmukh B Dedhia
Partner
Membership No. F- 33494
1&2
For and on behalf of the Board
Sd/V P Shetty
Chairman
Sd/Nikhil Bhandary
Company Secretary
Place : Mumbai
Date : May 15, 2013
2.19
2.20
2.21
2.09
2.22
Sd/Anil Bhatia
Managing Director &
Chief Executive Officer
Place : Mumbai
Date : May 15, 2013
Page 104
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
STATEMENT OF CASH FLOW FOR THE YEAR ENDED MARCH 31, 2013
Particulars
A
C
For the
year ended
March 31, 2012
Rupees
Cash flow from operating activities
Profit before tax
606,436,122
221,254,294
Adjustment for:
Depreciation
Provision for gratuity
Provision for/(reversal of) compensated absences
Provision for receivables & advances
Provision for loss on impairment of investments
Earlier year provision on receivables / advances w/back
Reversal of management fees
Investment written off
Loss on sale of fixed assets
Interest expense
Operating profit before working capital changes
3,581,513
885,217
412,166
38,029,314
34,848,715
(18,080,303)
770,272
615,116
43,060
12,411,001
679,952,193
2,463,672
643,979
417,020
32,108,810
16,136,909
273,024,684
Adjustment for:
(Increase)/decrease in trade receivables
(Increase)/decrease in short-term loans and advances
(Increase)/decrease in other current assets
(Increase)/decrease in trade payables
Increase/(decrease) in other current liabilities
Cash generated from/(used in) operations
(2,498,976)
(93,472,102)
(4,774,034)
(486,389)
80,590,697
659,311,389
(3,346,862)
6,720,080
4,776,017
1,225,197
21,186,722
303,585,839
(189,334,217)
469,977,172
(97,499,240)
206,086,598
(2,401,484,000)
1,055,539,170
(7,468,226)
19,800
(31,900,000)
(1,385,293,256)
(863,722,000)
602,567,308
(8,663,489)
(10,000,000)
(279,818,181)
261,423
(260,939)
1,687,500,000
(1,064,212)
(12,411,001)
1,674,025,271
733,879
1,822,433
1,325,152
(60,000,000)
(16,136,909)
(72,255,445)
758,709,187
96,112,928
854,822,115
(145,987,027)
242,099,955
96,112,928
Direct taxes paid
Net cash from/(used in) operating activities
B
For the
year ended
March 31, 2013
Rupees
Cash flow from investing activities
Purchase of current investments – Others
Sale/ redemption of current investments – Others
Purchase of fixed assets
Sale of fixed assets
Bank balances not considered as Cash and cash equivalents
Net cash from/(used in) investment activities
Cash flow from financing activities
Proceeds from long term loans and advances
Increase in long term loans & advances
Proceeds from long-term borrowings
Repayment of long-term borrowings
Proceeds from short-term borrowings
Repayment of short-term borrowings
Disbursement of secured loan
Interest paid
Net cash from/(used in) financing activities
Net increase/(decrease) in Cash and cash equivalents
Cash & cash equivalents (opening)
Cash & cash equivalents (closing)
Page 105
Notes
1
2
The cash flow statement has been prepared under the ‘Indirect Method’ set out in AS 3 – “Cash Flow Statement”
notified in Companies (Accounting standards) Rules, 2006 (as amended).
Previous year’s figures have been regrouped and rearranged wherever necessary
As per our attached report of even date
For Khimji Kunverji & Co
Chartered Accountants
Firm Registration No: 105146W
For and on behalf of the Board
Sd/Hasmukh B Dedhia
Partner
Membership No. 33494
Sd/V P Shetty
Chairman
Sd/Nikhil Bhandary
Company Secretary
Place : Mumbai
Date : May 15 2013
Sd/Anil Bhatia
Managing Director &
Chief Executive Officer
Place : Mumbai
Date : May 15 2013
Page 106
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
1.
SIGNIFICANT ACCOUNTING POLICIES
a.
Accounting convention
"The financial statements have been prepared in compliance with all material aspects of the applicable Accounting
Standards notified under Companies (Accounting Standards) Rules 2006 (as amended), the Guidelines issued by the
Reserve Bank of India ('RBI') from time to time and the provisions of the Companies Act, 1956 ( the “Act”).
The financial statements are based on historical cost convention and are prepared on accrual basis, except where
impairment is made and revaluation is carried out.
The accounting policies have been consistently applied by the Company and are consistent with those used in the
previous year. Accounting Policies not specifically referred to otherwise, are consistent with generally accepted
accounting principles.
b.
Use of estimates
The preparation of financial statements is in conformity with Indian Generally Accepted Accounting Principles which
requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent liabilities on the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those estimates and differences between actual
results and estimates are recognised in the periods in which the results are known / materialised.
c.
Fixed assets and depreciation
Owned tangible assets
Tangible Fixed Assets are stated at original cost of acquisition less accumulated depreciation and impairment
losses. Cost comprises of all costs incurred to bring the assets to their present location and working condition.
Depreciation on tangible fixed assets is provided pro-rata basis for the period of use, on the Straight Line Method
(SLM), based on management's estimate of useful lives of the fixed assets, or at the rates prescribed in Schedule
XIV to the Act whichever is higher, as per the following table:
Asset
Useful Life
Office equipments
5 years
Computers
5 years
Motor Vehicles
5 years
Furniture and Fixtures
10 years
Assets costing Rs. 5,000/- or less are fully depreciated in the year of acquisition.
Owned intangible assets
Intangible fixed assets are stated at cost of acquisition or internal generation, less accumulated amortisation and
impairment losses. An intangible asset is recognised, where it is probable that the future economic benefits
attributable to the assets will flow to the enterprise and where its cost can be reliably measured. The depreciable
amount of the intangible assets is allocated over the best estimate of its useful life on a straight line basis.
The Company capitalises software and related implementation costs where it is reasonably estimated that the
software has an enduring useful life. Software is depreciated over management estimate of its useful life not
exceeding 5 year
Leased assets
Assets acquired under finance lease are accounted for at the inception of lease at the fair value of the assets or
present value of minimum lease payments whichever is lower. At the end of lease term, asset will revert back to
the lessor; hence they are fully depreciated on a straight line basis over the lease term or its useful life whichever is
shorter.
At the balance sheet date, assets held for disposal are valued at Written Down Value (WDV) or Net Realisable
Value (NRV), whichever is lower.
Page 107
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
d.
Impairment of assets
The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based
on internal / external factors. An asset is treated as impaired when the carrying cost of the assets exceed its
recoverable value. An impairment loss, if any, is charged to the profit and loss account in the year, in which an asset is
identified as impaired. Reversal of impairment losses recognised in prior years is recorded when there is an indication
that the impairment losses recognised for the assets no longer exist or have decreased.
e.
Investments
Investments in Security Receipt (SR) held by the Company are treated as Current Investment. They are valued at lower
of cost or realisable value. Latest available declared NAV is considered to be realizable value. In case where NAV is
not declared within one year from acquisition of assets or finalization of resolution strategy, whichever is earlier, cost of
SR is considered as realizable value. Individual scrip wise appreciation or diminution is aggregated to arrive at net
diminution or net appreciation. Diminution, if any at the trust level is provided for and appreciation, if any is ignored.
f.
Revenue recognition
Accounting Standard 9 issued by ICAI specifies that the amount of revenue arising on a transaction is usually
determined by agreement between the parties involved in the transaction. When uncertainties exist regarding
determination of the amount, these uncertainties may influence the timing of revenue recognition.
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the
revenue can be reliably measured with no significant uncertainty as to the ultimate collection. In case of significant
uncertainty as to the ultimate collection, revenue recognition is postponed till such uncertainty is removed.
i
Management fee:
•
Management fee is accrued as per terms of the relevant trust deed / offer document.
•
Management fee from borrowers/parties is accrued as per the terms of the relevant contract. However in
respect of such fees, the ultimate realization is tested for impairment and in case there are events which
suggest significant uncertainty as to the ultimate collection, revenue recognition is postponed to the extent of
the uncertainty involved. Revenue is such case is recognized only when such uncertainty is removed.
•
Outstanding management fee in respect of trusts where management fee is remaining unpaid for more than
one year is provided for in the profit and loss account as a matter of prudence. In respect of such trusts, no
further management fee is recognised unless it is realized.
ii
Any fee income other than (i) above (e.g. advisory fees, etc.) is recognised as per the terms of contract. . However
in respect of such fees, the ultimate realization is tested for impairment and in case there are events which suggest
significant uncertainty as to the ultimate collection, revenue recognition is postponed to the extent of the
uncertainty involved. Revenue in such cases is recognized only when such uncertainty is removed.
iii
Outstanding management fee/ any other fee from borrowers/ parties remaining unpaid for more than one year is
provided for in the profit and loss account as a matter of prudence. In respect of such cases, no further fee is
recognized unless it is realized.
iv
Additional realization / return on assets over acquisition price on redemption of SR is accounted for as per the
terms of relevant trust deed / offer document.
v
Income by way of yield on SR’s is accounted on actual distribution from the trusts.
vi
Interest income:
•
•
•
Interest on bank deposits placed with banks is accounted on accrual basis.
Interest on expenses incurred on behalf of trust(s) is accounted as per terms of the relevant trust deed and
offer document and is accrued where reasonable certainty exists with respect to its recovery. Outstanding
interest on expenses in respect of trusts where it is remaining unpaid for more than one year is provided for in
the profit and loss account as a matter of prudence. In respect of such trusts no further interest is recognized
unless it is realised.
Interest on restructuring is accrued as per contract, net of the proportionate share of expenses incurred and
management fees charged in the trust.
Page 108
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
•
g.
Interest on loan is accounted for as per the terms of the contract. In case interest / principal is overdue for
more than 180 days from the due date specified in the contract, the loan outstanding is classified as Non
Performing Asset and provision is made as per the guidelines issued by the Reserve Bank of India. Unrealized
interest on loan is derecognized and further recognition is made only on realisation.
Employee Benefits
Defined contribution plan
•
The Company makes defined contribution to the provident fund, which is recognized in the profit and loss
account on an accrual basis.
Defined benefit plan
•
The Company's liabilities under the Payment of Gratuity Act are determined on the basis of actuarial valuation
made at the end of each financial year using the projected unit credit method. Actuarial gains and losses are
recognised in the statement of profit and loss account as income or expense respectively. Obligation is
measured at the present value of estimated future cash flows using a discounted rate that is determined by
reference to market yields on the date of balance sheet on government bonds where the currency and terms
of the government bonds are consistent with the currency and estimated terms of the defined benefit
obligation.
Short term employee benefits
•
h.
Expenses incurred for financial assets not acquired
•
i.
The expenses incurred on behalf of trusts are shown as 'Recoverable from Trusts' and grouped under
Advances recoverable in cash or in kind in the balance sheet. These expenses are reimbursed to the
Company in terms of the provisions of the relevant trust deed and offer document. The recoverable amount if
not realized within a period of one year, is provided for in the profit and loss account as a matter of prudence
and the same is reversed on recovery.
Foreign currency transactions
•
k.
Acquisition expenses pertaining to financial assets not acquired are shown as 'Recoverable from Sellers /
Trust(s)' and grouped under Advances recoverable in cash or in kind in the balance sheet for a maximum
period of six months from the date the expenses are incurred to take care of the eventuality of such asset
being subsequently acquired by the Company or the expenses agreed to be reimbursed by the Sellers as deal
breakage cost within the said period. Where the Sellers have not agreed to reimburse the same or no
acquisition takes place within said period from the date of incurrence of cost, the same are charged to profit
and loss account.
Expenses incurred by the Company on behalf of the trust
•
j.
Short term employee benefits are recognised as an expense at the undiscounted amount in the profit and loss
account of the year in which the related services are rendered.
Transactions in foreign currency are recorded at the rate of exchange prevailing on the date of transaction.
Foreign currency monetary items are reported using closing rate of exchange at the end of the year. The
resulting exchange gain / loss is reflected in the profit and loss account. Other non-monetary items, like fixed
assets, investments in equity shares, are carried in terms of historical cost using the exchange rate at the date
of transaction. Premium / Discount, in respect of forward foreign exchange contract is recognised over the life
of the contract. Profit / Loss on cancellation / renewal of forward exchange contract is recognised as income /
expense for the year.
Taxation
•
•
•
Tax expense comprises current tax and deferred tax.
Provision for current tax is made on the basis of estimated taxable income for the current accounting year in
accordance with the provisions of Income Tax Act, 1961.
Deferred tax for timing differences between the book and tax profits for the year is accounted for, using the tax
rates and laws that apply substantively as on the date of balance sheet. Deferred tax assets arising from
timing differences are recognised to the extent there is reasonable certainty that these would be realised in
future.
Page 109
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
•
•
l.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the
taxes on income levied by same governing taxation laws.
At each balance sheet date the Company re-assesses unrecognised deferred tax assets. It recognises
unrecognised deferred tax assets to the extent that it has become reasonably certain, as the case may be that
sufficient future taxable income will be available against which such deferred tax assets can be realized. Any
such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available.
Operating leases
Operating lease payments are recognised as expenditure in the profit and loss account on a straight line basis,
which is representative of the time pattern user’s benefit.
m. Provisions, contingent liabilities and contingent assets
Contingent Liabilities are possible but not probable obligations as on the balance sheet date, based on the
available evidence. Department appeals, in respect of cases won by the Company, are also considered as
Contingent Liabilities. Provisions are recognised when there is a present obligation as a result of past event; and it
is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable
estimate can be made. Provisions are determined based on best estimate required to settle the obligation at the
balance sheet date. Contingent assets are not recognized in the financial statements.
Page 110
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
2. NOTES TO THE FINANCIAL STATEMENTS
SHARE CAPITAL
2.01
As at
As at
31.03.2013
31.03.2012
Rupees
Rupees
SHARE CAPITAL
Authorised
210,000,000 (Previous Year 210,000,000) Equity Shares of Rs 10/- each
2,100,000,000
2,100,000,000
2,100,000,000
2,100,000,000
Issued, Subscribed and Paid-up
210,000,000 (Previous Year 210,000,000) Equity Shares of Rs 10/- each
fully paid up
2,100,000,000
2,100,000,000
Total
2,100,000,000
2,100,000,000
Note a.
The Company has only one class of shares referred to as equity shares having a Face Value of Rs. 10/-. Each holder of
equity shares is entitled to one vote per share.
Note b.
Equity Shares
Particulars
As at 31.03.2013
Number
Shares outstanding at the beginning of the year
Shares Issued during the year
Shares bought back during the year
Shares outstanding at the end of the year
210,000,000
As at 31.03.2012
Rupees
2,100,000,000
-
-
210,000,000
2,100,000,000
Number
210,000,000
Rupees
2,100,000,000
-
-
210,000,000
2,100,000,000
Note c.
Out of Equity shares issued by the Company, shares held by each shareholder, holding more than 5 percent shares
specifying the number of shares held are as below:
As at 31.03.2013
Particulars
No. of
Shares held
As at 31.03.2012
% of
Holding
No. of
Shares held
% of
Holding
Equity Shares:
JM Financial Limited
102,900,000
49.00%
102,900,000
49.00%
31,500,000
15.00%
31,500,000
15.00%
Indian Overseas Bank
21,000,000
10.00%
21,000,000
10.00%
Valiant Mauritius Partners FDI Ltd
16,600,000
7.90%
16,600,000
7.90%
Mr Narotam S Sekhsaria
Page 111
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.02
As at
As at
31.03.2013
31.03.2012
Rupees
Rupees
RESERVES AND SURPLUS
Surplus / (Deficit) in profit and loss account:
2.03
Opening balance
322,735,601
178,261,807
(+) Profit for the year
398,553,040
144,473,794
Closing balance
721,288,641
322,735,601
Total
721,288,641
322,735,601
As at
As at
31.03.2013
31.03.2012
Rupees
Rupees
LONG-TERM BORROWINGS
Secured:
Long term maturities of finance lease obligations
1,561,494
1,822,433
1,561,494
1,822,433
(Secured by way of hypothecation of vehicles. The lease is
repayable on a monthly basis over a period of 36 months)
Total
2.04
As at
As at
31.03.2013
31.03.2012
Rupees
Rupees
LONG-TERM PROVISIONS
For employee benefits - gratuity
2,975,357
2,206,228
Total
2,975,357
2,206,228
As at
As at
31.03.2013
31.03.2012
Rupees
Rupees
2.05 SHORT-TERM BORROWINGS
Other loans & advances
Unsecured loans
1,687,500,000
-
Total
1,687,500,000
-
Page 112
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.06
2.07
As at
31.03.2013
31.03.2012
Rupees
Rupees
TRADE PAYABLES
Total outstanding dues to micro, small and medium enterprises
-
-
Total outstanding dues to creditors other than micro, small and
medium enterprises
1,514,393
2,000,782
Total
1,514,393
2,000,782
As at
As at
31.03.2013
31.03.2012
Rupees
Rupees
OTHER CURRENT LIABILITIES
Short term maturities of finance lease obligations
(Secured by way of hypothecation of vehicles)
260,940
1,325,152
5,102,374
5,809,406
942,422
195,137
Other Liabilities
125,338,093
44,787,649
Total
131,643,829
52,117,344
Statutory dues
Secured working capital facilities from banks (refer note 2.27)
2.08
As at
As at
As at
31.03.2013
31.03.2012
Rupees
Rupees
SHORT-TERM PROVISIONS
For employee benefits - gratuity
229,630
113,542
For employee benefits - compensated absences
2,585,876
2,173,710
Total
2,815,506
2,287,252
Page 113
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.09 FIXED ASSETS
Amount in Rupees
GROSS BLOCK
Description
As at
01.04.2012
Additions
DEPRECIATION/AMORTISATION
As at
31.03.2013
Disposals
Up to
01.04.2012
Additions
NET BLOCK
As at
As at
31.03.2013
31.03.2012
Upto
31.03.2013
Deductions
i) TANGIBLE
ASSETS:
Owned Assets:
Furniture and Fixtures
654,166
-
-
654,166
235,127
67,035
-
302,162
352,004
419,039
Office Equipments
3,194,734
-
-
3,194,734
2,240,981
634,233
-
2,875,215
319,519
953,753
Computers
2,598,522
3,628,697
1,157,767
5,069,453
1,701,247
791,805
1,094,907
1,398,145
3,671,308
897,275
4,115,299
-
-
4,115,299
1,171,037
1,371,766
-
2,542,803
1,572,496
2,944,262
10,562,721
3,628,697
1,157,767
13,033,652
5,348,392
2,864,839
1,094,907
7,118,325
5,915,327
5,214,330
588,401
7,436,476
-
8,024,877
90,669
716,673
-
807,342
7,217,535
497,732
588,401
7,436,476
-
8,024,877
90,669
716,673
-
807,342
7,217,535
497,732
-
-
-
-
-
-
-
-
-
3,596,947
11,151,122
7,048,437
11,065,173
5,066,542
1,157,767
963,857
21,058,529
11,151,122
5,439,061
3,939,245
3,581,512
2,463,672
1,094,907
963,857
7,925,667
5,439,061
13,132,862
9,309,008
9,309,008
Leased Assets:
Vehicles
(refer note below)
Total
ii) INTANGIBLE
ASSETS:
Software
Total
iii) CAPITAL WORKIN-PROGRESS
Total
Previous Year
Note:
Vendor has lien over the assets taken on lease.
Page 114
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.10
As at
As at
31.03.2013
31.03.2012
Rupees
Rupees
DEFERRED TAX ASSETS/ (LIABILITIES)
442,559
Differences in the tax and books - written down value of fixed assets
Due under finance lease
Provision for gratuity
81,092
65,968
1,039,858
752,649
Preliminary expenses
93,655
102,169
838,987
705,260
11,306,665
-
1,622,250
-
15,425,066
3,608,149
Compensated absences
Impairment of investments
Provision for bonus
Total
2.11
1,982,102
As at
As at
31.03.2013
31.03.2012
Rupees
Rupees
LONG TERM LOANS AND ADVANCES
Other loans and advances
Secured, considered good:
Loan funds
-
159,500,000
Unsecured, considered good:
Staff loans
Advance Tax (Net of provisions)
Other deposits
Total
94,601
356,024
59,36,405
27,687,574
6,08,934
608,934
66,39,940
188,152,532
Page 115
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.12 CURRENT INVESTMENT
As at
As at
31.03.2013
Nos. of
31.03.2012
Rupees
SR
Nos. of
Rupees
SR
Other current investments
(Unquoted- valued at cost)
Investment in Security Receipts of the trusts
(Face Value Rs. 1,000/- each except otherwise stated)
JMFARC - BOB 2008 - Trust
111,600
111,600
111,600
111,600
5,518
250,000
5,518
5,518,000
JMFARC-BOI 2009 – Trust
48,600
48,600,000
48,600
48,600,000
JMFARC-BOI 2009 I - Trust
36,000
36,000,000
36,000
36,000,000
JMFARC - DB - ICICI - Trust
115,000
115,000,000
115,000
115,000,000
JMFARC - DB - DCB - Trust
7,500
7,500,000
7,500
7,500,000
JMFARC - DB - SBI – Trust
61,000
61,000,000
61,000
61,000,000
8,000
8,000,000
8,000
8,000,000
250,000
125,258,941
250,000
150,000,000
50,000
50,000,000
50,000
50,000,000
6,000
6,000,000
6,000
6,000,000
129,450
74,450,000
129,450
74,450,000
100,000
52,656,339
100,000
100,000,000
JMFARC - SASF Tube - Trust
62,000
62,000,000
62,000
62,000,000
JMFARC - UCO Bank 2010 - Trust
31,500
28,474,741
31,500
31,500,000
13,365
13,365
13,365
13,365
376,500
333,098,824
376,500
340,994,199
(Face value Rs.1/- each, Previous year Rs.1/- each)
JMFARC-SHREE RAMA - Trust
(Face value Rs. 45/- each, Previous year Rs. 1000/- each)
JMFARC -Jord - SUUTI Trust
JMFARC - Pasupati - SASF - Trust
(Face value Rs. 501- each, Previous year Rs.600/- each)
JMFARC -Central bank - Tube - Trust
JMFARC -UTI - Tube - Trust
JMFARC - Rice - June 2010 - Trust
(Face value Rs. 575/- each, Previous year Rs. 575/- each)
JMFARC - Yarn 2010 - Trust
(Face value Rs. 527/- each, Previous year Rs. 1000 /- each)
(Face value Rs. 904 /- each, Previous year Rs.1,000/-each)
JMFARC - SME Retail 2011 - Trust
(Face value Rs.1/- each, Previous year Rs.1/-each)
JMFARC-IOB March 2011-Trust
(Face value - Class A SRs Rs. 845/- each, Class B SRs Rs.
1000/- each, Previous year Rs. Class A SRs Rs. 873/- each,
Class B SRs Rs. 1000/- each)
Page 116
As at
As at
31.03.2013
31.03.2012
Nos. of
Rupees
Nos. of
Rupees
SR
16,500
16,500,000
SR
16,500
16,500,000
110,000
110,000,000
110,000
110,000,000
88,872
69,572,430
88,872
84,446,627
469,884
469,884
469,884
207,244,981
7,039
7,039
7,039
7,039
JMFARC-Swarna 2011-Trust
196,799
196,799,000
196,799
196,799,000
JMFARC-Petrochemicals 2012-Trust
190,000
121,645,797
190,000
124,145,613
14,962
14,962
-
-
78,700
7,87,00,000
-
-
564,587
5,00,00,000
-
-
JMFARC –Green December 2012 - Trust
23,945
2,39,45,000
-
-
JMFARC – Media 2013- Trust
12,500
1,25,00,000
-
-
JMFARC – Kruti II 2013- Trust
686,600
686,600,000
-
-
JMFARC – Media II 2013- Trust
34,030
34,030,000
-
-
JMFARC – Federal Bank March 2013- Trust
70,000
70,000,000
-
-
JMFARC – Textile 2013- Trust
91,000
91,000,000
-
-
289,360
289,360,000
-
-
JMFARC – Corp I 2013- Trust
93,000
93,000,000
-
-
JMFARC – Corp II 2013- Trust
58,800
58,800,000
-
-
JMFARC – Corp Textile 2013- Trust
150,000
150,000,000
-
-
JMFARC-Corp Apparel 2013-Trust
1,20,000
120,000,000
-
-
JMFARC – Corp Biotech 2013- Trust
114,000
114,000,000
-
-
JMFARC-UCO Bank March 2011-Trust
JMFARC-IOB II March 2011-Trust
JMFARC-Central Bank Retail 2011-Trust
(Face value Rs.783/- each, Previous year Rs.950/-each)
JMFARC-Retail June 2011-Trust
(Face value - Rs Rs. 1/- each for Series I, II and III
respectively, Previous year Face value - Series I SRs Rs.
441/- each, Series II SRs Rs. 441/- each, Series III SRs Rs.
591/- each)
JMFARC-Retail Aug 2011-Trust
(Face value Rs.1/- each, Previous year Rs.1/- each)
(Face value Rs.640/- each, Previous year Rs.653/- each)
JMFARC-Synthetic Rubber 2012-Trust
(Face value Rs.1/- each, Previous year Rs.Nil )
JMFARC-Swarna II 2012-Trust
JMFARC-Kruti 2012-Trust
(Face value Rs.89/- each, Previous year Rs.Nil )
JMFARC – Central India 2013- Trust
Page 117
As at
As at
31.03.2013
31.03.2012
Nos. of
Rupees
Nos. of
SR
JMFARC-Shree Rama-BBK-Trust
Rupees
SR
-
-
696
696,000
-
-
102,000
61,407,668
-
-
33,870
33,870,000
-
-
71,500
71,500,000
-
-
29,400
29,400,000
-
-
(Face value Rs.Nil, Previous year Rs.1,000/-each)
JMFARC-March 2010 Rare Metal Trust
(Face value Rs.Nil, Previous year Rs.602/-each)
JMFARC-Shree Rama June 2010 - Trust
(Face value Rs.Nil, Previous year Rs.1,000/-each)
JMFARC- Resin September 2010 - Trust
(Face value Rs.Nil, Previous year Rs.1,000/-each)
JMFARC-Poultry 2010 - Trust
(Face value Rs.Nil, Previous year Rs.1,000/-each)
JMFARC-Poultry II 2010 - Trust
16,709
16,709,000
(Face value Rs.Nil, Previous year Rs.1,000/-each)
3,395,357,922
Less: Provision for impairment of investments
Total
Notes:
2,049,413,092
34,848,715
-
3,360,509,208
2,049,413,092
As at
31.03.2013
As at
31.03.2012
Cost
Cost
1. Aggregate value of
Rupees
Rupees
Unquoted Investments
3,360,509,208
2,049,413,092
Page 118
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.13
As at
As at
31.03.2013
31.03.2012
Rupees
Rupees
TRADE RECEIVABLES
(Refer note no. 2.28)
Trade receivables outstanding for a period exceeding six months from
the date they are due for payment
Unsecured, considered good
Less: Provision for receivables
69,095,846
53,809,580
44,772,553
30,396,682
2,43,23,293
23,412,898
7,66,61,684
89,448,974
76,661,684
89,448,974
100,984,977
112,861,872
Trade receivables outstanding for a period less than six months from the
date they are due for payment
Unsecured, considered good
Total
2.14
As at
As at
31.03.2013
31.03.2012
Rupees
Rupees
CASH AND BANK BALANCES
Cash and cash equivalents
31,673
25,063
In Current Accounts
273,890,442
30,087,865
In Deposit Accounts (with maturity below 3 months)
580,900,000
66,000,000
Cash in hand
Balances with banks
Other bank balances
Total
a.
c.
d.
854,822,115
96,112,928
31,900,000
10,000,000
886,722,115
106,112,928
Balances with banks in deposit account (maturing after b. Earmarked balances with banks (for example, for unpaid
dividend)
Balances with banks to the extent held as margin money or security against the borrowings, guarantees, other
commitments.
Repatriation restrictions, if any, in respect of cash and bank balances
Page 119
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.15
As at
As at
31.03.2013
31.03.2012
Rupees
Rupees
SHORT-TERM LOANS AND ADVANCES
Secured considered good:
Loan Funds
178,005,882
-
Staff Loans
35,000,000
-
308,058
308,740
22,740,130
13,364,163
Unsecured considered good:
Staff Loans
Advances recoverable in cash or in kind or for value to be received
(Refer note no. 2.28)
Others
Total
Less: Provision for advances
Total
2.16
31,837,406
1,246,472
267,891,476
14,919,374
7,285,269
1,712,128
260,606,207
13,207,246
As at
As at
31.03.2013
31.03.2012
Rupees
Rupees
OTHER CURRENT ASSETS
Interest accrued on fixed deposit
5,278,845
504,811
Total
5,278,845
504,811
Page 120
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.17
For the year ended
For the year ended
March 31, 2013
Rupees
March 31, 2012
Rupees
REVENUE FROM OPERATIONS
Operating revenue
Management and advisory fees
223,099,283
196,413,191
Interest income on restructuring
153,220,594
130,740,767
Interest income on loans
Profit on redemption/ sale of security receipts
38,325,360
16,217,678
429,289,525
46,629,116
1,058,269
1,363,801
Other operating revenue
Interest income on funded expenses
Earlier year provision on receivables/ advances written back
Total
2.18
Other non-operating income
Total
For the year ended
For the year ended
March 31, 2013
Rupees
March 31, 2012
Rupees
25,528,585
7,731,195
1,125,657
4,097,895
26,654,242
11,829,090
For the year ended
For the year ended
March 31, 2013
Rupees
March 31, 2012
Rupees
EMPLOYEE BENEFITS EXPENSE
Salaries, Bonus and Allowances
Contribution to Provident Fund and Other Funds
Gratuity
Staff Welfare
Total
2.20
391,364,553
OTHER INCOME
Interest income on fixed deposit
2.19
18,080,303
863,073,334
117,441,818
85,776,435
3,076,188
2,625,761
885,217
643,979
66,011
37,824
121,469,234
89,083,999
For the year ended
For the year ended
March 31, 2013
Rupees
March 31, 2012
Rupees
FINANCE COSTS
Interest Expense
9,698,030
14,758,159
Other borrowing costs
2,712,971
1,378,750
12,411,001
16,136,909
Total
Page 121
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.21
2.22
For the year ended
For the year ended
March 31, 2013
Rupees
March 31, 2012
Rupees
PROVISIONS FOR RECEIVABLES, ADVANCES & INVESTMENTS
Provision for receivables & advances
38,029,314
32,108,810
Provision for impairment of investments
34,848,715
-
Total
72,878,029
32,108,810
For the year ended
For the year ended
March 31, 2013
Rupees
March 31, 2012
Rupees
OTHER EXPENSES
Rent and other cost
19,559,813
12,540,132
Rates & taxes
2,562,063
219,378
Insurance premium
1,037,940
924,800
Communication expenses
552,459
451,687
Repairs and maintenance (Building)
351,076
241,945
Repairs and maintenance (Machinery)
1,275,367
410,086
Professional fees
2,469,056
2,000,888
318,540
212,360
22,271
21,030
Auditors Remuneration
-as auditor
-as tax auditor
-for management services (limited review)
Support service charges
Membership & Subscription
Travelling expenses
Electricity
Printing and stationery
Director’s fees and commission
Investment written off
Reversal of fees
Miscellaneous expenses
Total
80,305
79,429
19,112,400
18,927,000
795,395
621,478
1,637,836
771,760
855,504
484,254
339,016
365,063
17,512,866
13,50,000
615,116
-
770,272
-
3,084,383
2,524,668
72,951,678
42,145,958
Page 122
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.23
Earning per share
Earning per share is calculated by dividing the profit attributable to the equity shareholders by the weighted average
number of equity shares outstanding during the year, as under:
Particulars
For the year ended
31 March 2013
Profit attributable to the equity shareholders for the purpose of basic/
diluted earnings per share (Rupees)
398,553,040
144,473,794
Weighted average number of equity shares outstanding during the
year for basic/ diluted earnings per share
210,000,000
210,000,000
1.90
0.69
10
10
Basic/ diluted earnings per share – (Rupees)
Nominal value per share – (Rupees)
2.24
For the year ended
31 March 2012
Capital Commitments
Particulars
As at
31 March 2013
Estimated amount of contracts remaining to be executed on
As at
31 March 2012
-
4,200,000
capital account and not provided for (Rupees)
2.25
Contingent Liability
Particulars
As at
31 March 2013
Estimated liability of municipal property tax to the landlord of
As at
31 March 2012
-
1,217,868
premises taken on lease earlier (Rupees)
2.26
Expenditure in Foreign Currency
Particulars
Conference & Seminars (Rupees)
As at
31 March 2013
As at
31 March 2012
108,406
-
2.27
The Company have been sanctioned overdraft/ cash credit limits of Rs. 1,25,00,00,000 by scheduled banks secured
against pledge of investments in security receipts.
2.28
The normal operating cycle of the Company is five years in view of the estimated timeframe for resolution of the assets
post their acquisition. Accordingly, the trade receivables and advances recoverable have been classified under current
assets.
2.29
Segment Reporting
The Company operates in only one business and geographical segment and hence there are no reportable segments.
2.30
a)
Leases
Finance Lease
The Company has acquired vehicles under the finance lease agreement. The tenure of the lease agreements are 36
months with an option to prepayment/foreclosure.
Page 123
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
The minimum lease rentals outstanding with respect to these assets are as under:
Total
minimum
lease
payment
outstanding
as at March
31, 2013
Particulars
Not later than 1
year
Later than 1 year
but not later than
5 years
b)
Total
minimum
lease
payment
outstanding
as at March
31, 2012
Amount in Rupees
Present value
of the
Lease
minimum
finance
lease
charges
payment as
not due
at March 31,
2012
1,777,320
208,031
1,569,289
1,777,320
452,169
1,325,151
260,940
7,795
253,145
2,038,260
215,826
1,822,434
Later than 5 years
Total
Lease finance
charges not
due
Present
value of the
minimum
lease
payment as
at March 31,
2013
-
-
-
-
-
-
2,038,260
215,826
1,822,434
3,815,580
667,995
3,147,585
Operating Lease
The current office premise of the Company is under operating lease upto July 15, 2013. The company has also taken
new office premises under operating lease upto March 31, 2014.
The minimum lease rentals outstanding with respect to these assets are as under:
Particulars
Amount in Rupees
Total lease payments
outstanding as at
Total lease payments
outstanding as at
March 31, 2013
Not later than 1 year
A
21,157,200
3,120,000
Later than 1 year but not later than 5 years
-
-
Later than 5 years
-
-
15,874,002
9,842,040
Expenditure debited to profit & loss account
2.31
March 31, 2012
Employee benefits
Defined benefit plans
a) Gratuity
Amount recognised in the balance sheet with
respect to gratuity
Present value of the defined benefit obligation at the
year end
3,204,987
2,319,770
-
-
3,204,987
2,319,770
Fair value of plan assets
Net liability
Amount recognised in salary, wages and
employee benefits in the profit and loss account
with respect to gratuity
Amount in Rupees
For the year ended
March 31, 2012
For the year ended
March 31, 2013
For the year ended
March 31, 2013
For the year ended
March 31, 2012
Current service cost
500,791
552,926
Interest on defined benefit obligations
239,068
179,034
-
-
145,358
(87,981)
Expected return on plan assets
Net actuarial (gain) loss recognised during the year
Past service cost
Net gratuity cost
-
-
885,217
643,979
Page 124
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
Reconciliation of present value of the
obligation and the fair value of the plan assets:
Opening defined benefit obligation
Amount in Rupees
For the year ended
March 31, 2012
For the year ended
March 31, 2013
2,319,770
1,675,791
Current service cost
500,791
552,926
Interest cost
239,068
179,034
Actuarial (gain)/loss
145,358
(87,981)
-
-
3,204,987
2,319,770
Past service cost
Closing defined benefit obligation
Change in fair value of plan assets
For the year ended
March 31, 2013
For the year ended
March 31, 2012
Opening fair value of the plan assets
-
-
Expected return on plan assets
-
-
Actuarial (gain)/loss
-
-
Contributions by the employer
-
-
Benefits paid
-
-
Closing fair value of the plan assets
-
-
Investment details of plan assets
For the year ended
March 31, 2013
Investment details of plan assets
Principal actuarial assumptions at the balance
sheet date
Discount rate
Estimated rate of return on plan assets
Retirement age
Salary escalation
For the year ended
March 31, 2012
-
For the year ended
March 31, 2013
For the year ended
March 31, 2012
8.10%
8.65%
-
-
60 years
60 years
7.00%
7.00%
Valuation assumptions
•
•
The estimates of future salary increases, takes into account inflation, seniority, promotion and other relevant
factors.
The above information is certified by the actuary.
b)
Compensated absences
As per Company’s policy, provision of Rs.25,85,876/- (previous year Rs.21,73,710/- ) has been made towards
compensated absences, calculated on the basis of unutilised leave as on the last day of the financial year.
B
Defined contribution plans
Amount recognised as an expense and included in the ‘Contribution to provident fund & other funds’ Rs. 30,76,188/(previous year Rs. 26,25,761/- ).
2.32
"Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's
classification / disclosure.”
Page 125
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
Additional disclosure:
The following additional disclosures have been made taking into account RBI guidelines in this regard:
a)
Name and address of the banks / financial institutions from whom financial assets were acquired and the values at
which such assets were acquired from each such bank/ financial institutions.
Name of the selling bank/ financial
institution
Address
Acquisition cost
Rupees
% to total
Sponsors
Indian Overseas Bank
763, Anna Salai, Chennai
Sponsors Total
3,619,100,000
27.22%
3,619,100,000
27.22%
65,000,000
0.49%
137,250,000
1.03%
13,909,236
0.10%
Non- Sponsors
Allahabad Bank
2, Netaji Subhash Road, Kolkata - 700001
th
Axis Bank
Maker Towers F, 13 Floor, Cuffe Parade,
Mumbai - 400005
Bank of Bahrain & Kuwait B.S.C
Jolly Maker Chamber, 2, Ground Floor, Nariman
point, Mumbai - 400021
Bank of Baroda
Kalpataru Heritage Building, 6th floor, Nanik
Motwani Lane, Fort, Mumbai - 400023
111,600,000
0.84%
Bank of India
Star House, C-5, G Block, Bandra Kurla
Complex, Bandra (East), Mumbai - 400051
535,080,000
4.02%
BNP Paribas
Unit No 203, Sakar II, Ellisbridge, Ahmedabad
380006
33,870,000
0.25%
Canara Bank
112 J. C. Road, Bangalore
715,520,000
5.38%
Central Bank of India
Chandermukhi, Nariman Point, Mumbai 400021
2,631,534,000
19.79%
Corporation Bank
Mangladevi Temple Road, Mangalore - 575 001
535,800,000
4.03%
Dena Bank
C -10, G Block, Bandra Kurla Complex, Mumbai 400051
75,916,048
0.57%
Deutsche Bank
DB House, Hazarimal Somani Marg, Fort,
Mumbai 400001
183,500,000
1.38%
Federal Bank
Aluva, Kerala State
1,483,000,000
11.15%
HSBC
52/60, M. G. Road, Fort, Mumbai - 400001
490,288,000
3.69%
HUDCO
HUDCO Bhawan, Core-7-A,India Habitat
Centre,Lodhi Road, New Delhi - 110 003
213,444,661
1.61%
IDBI Bank
IDBl Tower, WTC Complex, Cuffe Parade,
Mumbai 400005
100,000,000
0.75%
Karnataka Bank
Mahavira Circle, Kankanadi, Mangalore - 575002
25,100,000
0.19%
Life Insurance Corporation of India
Yogakshema, Jeevan Bima Marg,
Mumbai - 400 021
14,962,620
0.11%
Punjab National Bank
7, Bhikhaji Cama Place, New Delhi
677,941,000
5.10%
Ratnakar Bank
One India Bulls Center, Tower 2 , 6th Floor,841,
Senapati Bapat Marg,Lower Parel (W),Mumbai
400013
250,000,000
1.88%
Rupee Co-operative Bank
2062, Sadashiv Peth, Astang Ayurved Building,
Pune- 411030
60,000,000
0.45%
Specified Undertaking of UTI
UTI Tower, G Block, Bandra Kurla Complex,
Bandra (East), Mumbai - 400051
73,000,000
0.55%
Standard Chartered Bank
23, Narain Manzil, Barakhamba Road, New
Delhi- 110001
24,930,000
0.19%
State Bank of India
State Bank Bhavan, Corporate Centre, Madame
Came Marg, Mumbai, Maharashtra – 400 021
91,000,000
0.68%
State Bank of Patiala
The Mall, Patiala- 147001, Punjab
124,526,000
0.94%
312,000,000
2.35%
15,000,000
0.11%
th
Stressed Asset Stabilisation Fund
The Nashik Road Deolali Vyapari
Sahakari Bank Ltd
IDBl Tower, 10 Floor, WTC Complex, Cuffe
Parade, Mumbai 400005
Kalpavruksha, Aashanagar, Nashikroad, Nashik,
Maharashtra – 422101
Page 126
Name of the selling bank/ financial
institution
Address
Acquisition cost
Rupees
% to total
The Saraswat Co-op Bank Ltd
Mittal Court 'A' Wing 1st Floor, Nariman Point,
Mumbai - 400004
19,100,000
0.14%
UCO Bank
Biplabi Trailokya Maharaj Sarani, Kolkata –
700001
48,000,000
0.36%
UTI Mutual Fund
UTI Tower, Gn Block, Bandra Kurla Complex,
Bandra (East) 400051
6,000,000
0.05%
Vijaya Bank
41/2, M.G.Road, Bangalore 560001
63,862,102
0.48%
Yes Bank
9th floor Nehru Centre, Worli, Mumbai - 400018
544,500,000
4.10%
Non Sponsors Total
Grand Total
b)
9,675,633,667
72.78%
13,294,733,667
100.00%
Dispersion of various assets industry wise.
Industry
Chemicals
Electronic
Engineering
Food Products
Gems & Jewellery
Healthcare
Hospitality
Infrastructure
Leather
Media
Metals
Paints
Pharmaceutical
Plantation
Plastics & Packaging
Poultry
Real Estate
Retail
Steel
Textiles
Trading
Transportation
Others
Grand Total
Acquisition
Price in Rupees
888,562,620
113,745,805
368,300,000
170,985,783
36,900,000
334,300,000
547,574,000
478,900,000
31,500,000
799,003,106
96,000,000
69,100,000
5,178,000
476,254,195
380,429,236
94,100,000
3,652,048,028
2,254,344,000
44,700,000
1,600,800,000
235,385,000
357,400,000
259,223,894
13,294,733,667
% to total
6.68%
0.86%
2.77%
1.29%
0.28%
2.51%
4.12%
3.60%
0.24%
6.01%
0.72%
0.52%
0.04%
3.58%
2.86%
0.71%
27.47%
16.96%
0.34%
12.04%
1.77%
2.69%
1.95%
100.00%
c)
The above table (b) has been prepared by management and the same has been relied upon by the auditors.
d)
The acquisition price in the tables (a) and (b) above includes financial assets acquired till March 31, 2013 including
financial assets resolved till date.
e)
There are no financial assets required to be reclassified, accordingly no financial assets have been reclassified from
standard assets to non-performing assets as per the guidelines issued by the RBI.
f)
The accounting policies adopted by the Company in preparation and presentation of the financial statements are in
conformity with the applicable prudential norms prescribed by the RBI.
g)
The Company has put in place internal audit system, scope of which provides for periodical checks and review of the
assets acquisition procedures and asset reconstruction measures and the matters related thereto.
h)
The capital adequacy ratio is well above fifteen percent of its total risk weighted assets, accordingly the Company has
complied with the capital adequacy norms as prescribed the RBI.
Page 127
i)
Additional disclosure as per RBI Notification No. DBNS.PD(SC/RC). 8/ CGM (ASR) dated April 21, 2010.
Particulars
Value of financial assets acquired during the financial year either in its own books or in the books
of the trust
Value of financial assets realized during the financial year
Value of financial assets outstanding for realization as at the end of the financial year
Value of Security Receipts redeemed partly during the financial year *
Value of Security Receipts redeemed fully during the financial year #
Value of Security Receipts pending for redemption as at the end of the financial year
Value of Security Receipts which could not be redeemed as a result of non-realization of the
financial asset as per the policy formulated by the Securitization company or Reconstruction
company under Paragraph 7(6)(ii) or 7(6)(iii)
Value of land and/or building acquired in ordinary course of business of reconstruction of assets
Amount in Rupees
(face value)
4,770,310,329
1,623,435,058
10,500,012,227
1,184,052,083
343,879,000
10,826,269,589
Nil
Nil
Note: * Net of security receipts fully redeemed during the year, which were redeemed partly in last year retaining nominal
value per security receipt.
# Includes SRs written off.
Page 128
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.33
Disclosure in respect of related parties pursuant to Accounting Standard 18:
Enterprise which is able to exercise significant influence
JM Financial Limited
Key managerial personnel
Mr. Anil Bhatia- Managing Director and Chief Executive Officer
During the year the following transactions were carried out with the related parties in the ordinary course of business:
Sr. No.
1
Name of the Related Party
Nature of relationship
2012-13
2011-12
JM Financial Limited
Support Services Paid
Transfer of fixed assets
Enterprise which is able to
exercise significant influence
Employee related insurance
2
Amount in Rupees
Mr. Anil Bhatia
Remuneration
-
18,927,000
34,547
-
2,565
-
41,384,072
21,682,602
Key Managerial Personnel
Page 129
JM FINANCIAL ASSET RECONSTRUCTION COMPANY
PRIVATE LIMITED
Annual Report 2013 - 14
Page 130
BOARD OF DIRECTORS
Mr. V P Shetty
Mr. Narotam S Sekhsaria
Mr. Suresh Kumar Neotia
Mr. Hoshang N Sinor
Mr. G M Ramamurthy
Mr. S H Khan
Mr. Shailesh Haribhakti
Dr. Anil Kumar Khandelwal (with effect from September 11, 2013)
Mr. A M Venkatesa Prasad (with effect from September 11, 2013)
Mr. Rabindra Behera (upto September 11, 2013)
Mr. Anil Bhatia
Chairman
Nominee of Indian Overseas Bank
Nominee of Indian Overseas Bank
Managing Director and CEO
AUDIT COMMITTEE
ISSUE AND ALLOTMENT COMMITTEE
Mr. Shailesh Haribhakti
Mr. V P Shetty
Mr. G M Ramamurthy (with effect from May 15, 2013)
Mr. V P Shetty
Mr. Narotam S Sekhsaria
Mr. Shailesh Haribhakti
Mr. Anil Bhatia
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
Mr. V P Shetty
Dr. Anil Kumar Khandelwal
Mr. Anil Bhatia
COMPANY SECRETARY
Mr. Nikhil Bhandary
AUDITORS
INTERNAL AUDITORS
M/s. Khimji Kunverji & Co
Chartered Accountants
Sunshine Tower, Level 19,
Senapati Bapat Marg, Elphinstone Road,
Mumbai 400 013
M/s. Deloitte Haskins & Sells
Chartered Accountants
27th-32nd Floor, Indiabulls Finance Centre,
Tower 3, Elphinstone Mill Compound,
Senapati Bapat Marg, Elphinstone Road,
Mumbai 400 013
BANKERS
HDFC Bank Limited
IDBI Bank Limited
UCO Bank
The Ratnakar Bank Limited
Indian Overseas Bank
REGISTERED OFFICE
7th Floor, Cnergy,
Appasaheb Marathe Marg,
Prabhadevi,
Mumbai 400 025
CIN: U67190MH2007PTC174287
Tel: 91-22-6630 3030
Fax: 91-22-6630 3223
Website: www.jmfl.com
Page 131
DIRECTORS’ REPORT
To the Members
JM Financial Asset Reconstruction Company Private Limited
The Directors are pleased to present their Seventh Annual Report together with the Audited Statement of Accounts,
Auditors’ Report and the report on the business and operations of your Company for the financial year ended March
31, 2014.
(` in lakh)
1. Financial Results
Particulars
2013-14
2012-13
Revenue
12,037.54
8,897.27
Expenses
4,528.32
2,832.91
Profit before tax
7,509.22
6,064.36
Current Tax
2,647.00
2,197.00
Deferred tax
38.02
(118.17)
Profit after tax
4,824.20
3,985.53
Balance brought forward from previous year
7,212.89
3,227.36
12,037.09
7,212.89
Provision for Tax
Surplus carried to Balance Sheet
2. Company’s Performance
During the financial year 2013-14, your Company has achieved a robust growth and stable profitability. Your Company
has crossed the top line of `100 crore for the financial year 2013-14 for the first time.
The revenue from operations for the financial year 2013-14 at `120.38 crore was higher by 35 percent over the
previous year (`88.97 crore in 2012-13). Profit before tax at `75.09 crore was higher by 24 percent over previous year
(`60.64 crore in 2012-13). Profit after tax for the year at `48.24 crore was higher by 21 percent over the previous year
(`39.86 crore in 2012-13).
3. Dividend
In order to conserve the reserves of your Company and to meet the long term capital requirements of your Company,
your directors do not recommend any dividend for the year ended March 31, 2014.
4. Management Discussion and Analysis
4.1 Industry and Macro economic Overview
The banking sector accounts for a major portion of financial intermediation in India and is considered to be the main
channel of monetary policy transmission, credit delivery and payment systems. The stability and sound health of the
banking system hence is a key pre-requisite for overall economic development and financial stability. The NonPerforming Assets (NPAs) are important prudential indicators to assess the financial health of the banking sector.
Besides asset quality, NPAs epitomize the credit risk management and efficacy in allocation of resources within the
banking system.
Asset quality continues to be a major concern for Scheduled Commercial Banks (SCBs) in India. The Gross NPA ratio
of SCBs increased to 4.20 percent as at end of September 2013 from 3.40 percent at the end of March 2013. The
restructured standard advances also increased to 6 percent of total advances as at the end of September 2013 from
5.80 percent at the end of March 2013. Overall the stressed advances rose significantly to 10.20 percent of total
advances as at end of September 2013 from 9.20 percent at the end of March 2013.
(Source: Financial Stability Report – December 2013 )
Page 132
The progress report of the cases with the Corporate Debt Restructuring (CDR) Cell as on March 31, 2014 is
summarised below. As on March 31, 2014, there were 280 live cases with the CDR Cell having an aggregate debt of
`2,42,259 crore.
(Aggregate debt in ` crore)
Overall Status
As on March 31, 2014
Number of cases
Aggregate debt
Total references received by CDR Cell
Cases rejected before admission or approval
Cases under consideration of CDR Empowered Group
Total Cases Approved
622
111
35
476
4,29,989
57,540
42,005
3,30,444
Cases withdrawn on account of package failure
121
29,980
Cases exited successfully
75
58,205
(Source: CDR Cell Progress Report)
In the year 2013, among the three channels for NPA recovery viz., the Securtisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act (SARFAESI Act), Debt Recovery Tribunals (DRT) and Lok Adalats,
the largest amount was recovered through the SARFAESI Act. NPAs recovered through this Act accounted for about
80 percent of the total amount of NPAs recovered.
Banks remained the most important subscribers of securitised assets of Asset Reconstruction Companies (ARCs).
However, their share has been on a continued decline in the recent years. The details of financial assets securitised
by ARCs are represented below.
Details of Financial Assets Securitised by ARCs
(in ` crore)
June 2012
June 2013
Book Value of assets acquired
80,500
88,500
Security Receipts issued by ARCs
16,700
18,900
Banks
ARCs
FIIs
Other Qualified Institutional Buyers
11,600
3,600
100
1,500
12,600
4,500
100
1,700
Amount of Security Receipts completely redeemed
8,200
10,100
Security Receipts subscribed to by
(Source: Report on Trend and Progress of Banking in India 2012-13)
4.2 Regulatory Overview
The Reserve Bank of India (RBI), with a focus to improve the financial system, implemented several developmental
measures during the year 2013-2014. One of the important developmental measures is to improve the system’s ability
to deal with corporate distress and financial institution distress by strengthening financial restructuring as well as debt
recovery. In order to ensure that the system recognises financial distress early, takes steps to resolve it, and fair
recovery for lenders and investors, RBI has outlined a ‘Framework for Revitalising Distressed Assets in the Economy’.
This framework, which is operational from April 1, 2014, will focus on putting distressed assets back to work in their
best use. The main proposals of the framework are:
•
Centralised reporting and dissemination of information on large credit;
•
Early formation of lenders’ committee with timelines to agree to a plan for resolution;
•
Incentives for lenders to agree collectively and quickly to a plan;
Page 133
•
Improvement in current restructuring process: Independent evaluation of large value restructurings mandated,
with a focus on viable plans and a fair sharing of losses (and future possible upside) between promoters and
creditors;
•
More expensive future borrowing for borrowers who do not co-operate with lenders in resolution;
•
More liberal regulatory treatment of asset sales:
– Lenders can spread loss on sale of loan assets over two years provided the loss is fully disclosed;
– Takeout financing/refinancing possible over a longer period and will not be construed as restructuring;
– Leveraged buyouts will be allowed for specialised entities for acquisition of ‘stressed companies’;
– Steps to enable better functioning of Asset Reconstruction Companies;
– Sector-specific Companies/Private Equity (PE) firms encouraged to play active role in stressed assets
market.
On the regulatory front, RBI has implemented several positive initiatives effecting the working of the Asset
Reconstruction Companies (ARCs) as highlighted below:
– ARCs are allowed to convert a portion of debt into the shares of the borrower company;
– ARCs have been permitted to enforce security interest with the consent of secured creditors holding up to 60
percent of the amount outstanding as against 75 percent earlier;
– ARCs are allowed to acquire debt from other ARCs (which was not permitted earlier) provided that such
acquisition is made for aggregation of debt;
– In order to ensure better chances of reconstruction of stressed assets at an early stage, a financial asset
may be sold to an ARC when the asset is reported as Special Mention Account-2 (SMA – 2 i.e. the accounts
where the principal or interest payment is overdue between 61-90 days);
– Banks using auction process for sale of NPAs to ARCs should be more transparent, including the disclosure
of reserve price, specifying clauses of non- acceptance of bids, etc. If a bid is received in cash, and also
fulfills the other conditions specified in the bid offer document, acceptance of the bid would be mandatory;
– Urban co-operative banks registered under the Multi State Co-Operative Societies Act, 2002 are permitted to
invest in the Security Receipts issued in respect of financial assets sold by them to ARCs;
– Uniform accounting standards for ARCs have been notified in April 2014 and the said accounting standards
shall be applicable to your Company from the financial year 2014-15 onwards;
– RBI has imposed restrictions on ARCs to acquire assets from their sponsor banks on a bilateral basis. ARCs
may however participate in auctions of NPAs by their sponsor banks provided that such auction is conducted
in a transparent manner, on an arms length basis, at price determined by market factors;
– Promoters of the defaulting companies / borrowers or guarantors are now allowed to buy back their assets
from the ARCs provided that such a settlement is considered helpful in minimising the cost of litigation,
arresting the negative impact of diminution in the value of secured assets, where the recovery would appear
to be rather uncertain and where such settlement will be beneficial for restructuring purposes;
On the Foreign Direct Investment (FDI) policy front, there has been a flurry of recent announcements by India’s Union
Government. The following significant changes have been announced to the FDI regime for ARCs :
– the overall limit for investment by Foreign Institutional Investors (FIIs) / Foreign Portfolio Investors (FPIs) or
through FDI route in the equity capital of ARCs has been increased from 74 percent to 100 percent;
Page 134
– the FDI entry route after the above change in policy shall be through Automatic route up to 49 percent and
through Government approval route beyond 49 percent;
– the total shareholding of any sponsor either by way of FDI or by routing it through an FII / FPI shall not
exceed 50 percent whereas the total shareholding of an individual FII / FPI shall not exceed 10 percent of
the total capital of an ARC;
– Both FIIs and FPIs can invest in the Security Receipts up to 74 percent of each tranche of scheme of
Security Receipts.
The Securities and Exchange Board of India (SEBI) has notified the SEBI (Foreign Portfolio Investors) Regulations,
2014. A FPI is an eligible qualified institutional buyer to invest in the Security Receipts issued by an ARC.
4.3 Business Performance Overview
4.3.1 Acquisition activities
During the year under review, your Company was successful in closing 18 transactions with outstanding dues of
around `6048 crore. A summary of the debts acquired during the year as compared to the previous financial year is
given below:
(in ` crore)
Details of Financial Assets acquired by the Company
FY 2013-14
FY 2012-13
6,048
887
276
240
2,362
2,638
44 percent
237
477
54 percent
Total outstanding dues acquired
(cumulative as on March 31)
12,026
5,978
Total gross acquisition cost
(Cumulative as on March 31)
3,967
1,329
Dues acquired
Acquisition cost
Investment by the Company
Issue of Security Receipts to other investors
Total acquisition cost
Acquisition cost as a percent of dues acquired
4.3.2 Bid participation
During the year, your Company has participated in portfolio auctions of 26 banks with outstanding dues of about
`14,400 crore.
4.3.3 Resolution and Recovery activities
Your Company had steady resolution of assets throughout the year. The summary of resolution of assets is given
below:
(in ` crore)
Details of Financial Assets resolved by the Company
FY 2013-14
FY 2012-13
Redemption of Security Receipts
74
153
Restructuring of assets (Cumulative as on March 31)
499
345
Page 135
4.3.4 Assets under management
The synopsis of the category of the assets under the management of the Company is as given below:
(in ` crore)
Comparison of assets under management
Single Assets
Corporate Portfolio
Retail Portfolio
Total
As on
March 31, 2014
615
As on
March 31, 2013
496
2,921
111
3,647
448
139
1,083
4.3.5 Security Receipts issued and outstanding
The summary of Security Receipts issued and outstanding as on March 31, 2014 as compared to March 31, 2013 is
given hereunder:
(in ` crore)
SRs issued, redeemed and outstanding
Security Receipts issued during the year
Security Receipts redeemed during the year
Security Receipts outstanding as at the end of the year
As on
March 31, 2014
2,638
As on
March 31, 2013
477
74
3,647
153
1,083
Out of the total Security Receipts issued by the Company of ` 3,967 crore as on March 31, 2014, Security Receipts
worth ` 555 crore have been subscribed by your Company as a sole investor to the Security Receipt schemes and
schemes involving Security Receipts worth ` 3,412 crore have been subscribed by other investors together with the
Company. Out of the above ` 3,412 crore, ` 249 crore has been contributed by your Company.
4.3.6 Credit ratings
CRISIL Limited has assigned ratings for the various facilities availed by the Company, details of which are given
below:
Facility
CRISIL Rating
Loans from Banks (`200 Crore)
CRISIL A+ (Stable)
Borrowing through issue of Commercial Papers (`100 Crore)
CRISIL A1+
4.3.7 Corporate Social Responsibility
During the year, as a Corporate Social Responsibility initiative, your Company has contributed an aggregate amount of
` 20 lakh to charitable trusts.
4.3.8 Future Outlook
The financial year 2014-15 is expected to have an increased level of activity. The Company anticipates higher NPA
sales in the financial system due to the incentives given by the Reserve Bank of India’s framework on distressed
assets and the regulatory push for early recognition and sale of NPAs. Your Company will continue to work diligently in
acquiring financial assets. It will also continue with its efforts on working closely with the distressed borrowers in
providing them support and guidance to bail them out from their stressed state of affairs.
5. Report on Corporate Governance
5.1 Company’s philosophy
Your Company’s corporate governance philosophy is based on an effective independent Board and the separation of
the Board’s supervisory role from the management. Your Company believes that its operations and actions must serve
the underlying goal of enhancing overall stakeholders’ value. Our vision is to be the most trusted partner for every
stakeholder, to demonstrate the highest level of accountability, maintaining highest standard of transparency, to
Page 136
ensure thorough compliance with the applicable acts, laws, rules and regulations and conducting business in the best
ethical manner.
5.2 Composition of the Board of Directors
Your Company has a proficient Board of Directors, constituted in conformity with the Securitisation and Reconstruction
of Financial Assets and Enforcement of Security Interest Act, 2002. As at March 31, 2014, the Board of your Company
consists of 10 (ten) directors out of which 5 directors are independent. There were 5 (five) meetings of the Board
during the financial year 2013-14 which were held on May 15, 2013, July 23, 2013, October 21, 2013, January 20,
2014 and March 18, 2014. The names of the directors and their attendance at the Board meetings during the year are
set out below:
Attendance of Directors at Board meetings
Name of the Director
Position held on the Board
No. of Board
meetings held
during the financial
year 2013-14
Mr. V P Shetty
Non-Executive Chairman
(Sponsor Director)
Mr. Anil Bhatia
Managing Director and Chief
Executive Officer (Sponsor Director)
Mr. Narotam Sekhsaria
Non-Executive Director
(Sponsor Director)
Mr. Suresh Kumar Neotia Non-Executive Director
(Sponsor Director)
Mr. A M Venkatesa Prasad* Nominee of Indian Overseas Bank
(Sponsor Director)
Mr. Hoshang N Sinor
Independent Director
Mr. G M Ramamurthy
Independent Director
Mr. S H Khan
Independent Director
Mr. Shailesh Haribhakti
Independent Director
Dr. Anil Khandelwal*
Independent Director
Mr. Rabindra Behera#
Nominee of Indian Overseas Bank
(Sponsor Director)
* Appointed with effect from September 11, 2013
5
No. of Board
meetings
attended during
the financial year
2013-14
5
5
5
5
4
5
-
5
3
5
5
5
5
5
5
2
5
4
4
1
1
# up to September 11, 2013
5.3 Committees of the Board and/or functionaries of the Company
The board committees and other committees of senior officials of the Company are guided by their respective terms of
reference. The Board of Directors of your Company has constituted the following committees.
A. Audit Committee
The Audit Committee comprises three directors and is chaired by Mr. Shailesh Haribhakti, an independent
director. 4 (four) meetings of the Committee were held during the year. The composition of the Committee and
attendance at its meetings are set out in the following table:
Name of the Director
Mr. Shailesh Haribhakti , Chairman
Mr. V P Shetty , Member
Mr. G M Ramamurthy, Member
No. of meetings held
4
4
4
No. of meetings attended
3
3
3
Mr. G M Ramamurthy was appointed as a member of the Audit Committee with effect from May 15, 2013.
Page 137
B. Issue and Allotment Committee
The Board of Directors of your Company, at its meeting held on March 18, 2014 has constituted the Issue and
Allotment Committee comprising Mr. V P Shetty, Mr. Narotam Sekhsaria, Mr. Shailesh Haribhakti and
Mr. Anil Bhatia to oversee and decide on the issue and allotment of equity shares and debentures, from time to
time.
C. Corporate Social Responsibility Committee
The Board of Directors of your Company has constituted the Corporate Social Responsibility Committee
comprising Mr. V P Shetty, Mr. Anil Bhatia and Dr. Anil Kumar Khandelwal to monitor the CSR expenditure of the
Company in accordance with the provisions of Section 135 of the Companies Act, 2013 and the Rules made
thereunder.
D. Asset Acquisition Committee
The Asset Acquisition Committee of the Company comprises of the Chairman, the Managing Director & CEO
and other functionaries of your Company. The Asset Acquisition Committee takes decisions on the acquisition
consideration and the acquisition of assets in accordance with the Reserve Bank of India guidelines and the
Asset Acquisition Policy of the Company.
E. Asset Resolution Committee
The Asset Resolution Committee of the Company comprises of the Chairman, the Managing Director and CEO
and other functionaries of the Company. The decisions on resolution and recovery are administered by this
Committee.
5.4 Policies and Procedures
Your Company conducts its business in a fair, transparent and ethical manner within the existing rules and regulations
prescribed for asset reconstruction companies. The Board of your Company has adopted the following policies in
accordance with the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002, RBI guidelines for Securitisation Companies/Reconstruction Companies and the Companies Act, 2013:
A. Asset Acquisition Policy
The Asset Acquisition Policy of your Company lays down the framework to acquire financial assets from
banks/financial institutions in compliance with the guidelines prescribed by RBI for acquisition of assets. This
policy is administered by the Asset Acquisition Committee.
B. Asset Resolution Policy
The Asset Resolution Policy of your Company lays down the broad parameters for rescheduling of debts due
from borrowers and is administered by the Asset Resolution Committee.
C. Investment Policy
The Investment Policy lays down a framework for deployment of funds of the Company with a view to maximise
returns on investments.
D. Policy for issue of Security Receipts
The objective of this policy is to enable trusts established by the Company to issue Security Receipts for
financing the purchase of financial assets and to lay down the broad guidelines for the issuance of Security
Receipts.
E. Credit information policy
The Company, being a member of a credit information company (CIBIL) is required to have in place a credit
information policy in accordance with the Credit Information Companies (Regulation) Act, 2005 and the
Rules/Regulations made thereunder.
F. Whistle Blower policy
The Company is required to establish a vigil mechanism for their directors and employees to report genuine
concerns or grievances pursuant to the provisions of Section 177 of the Companies Act, 2013 and the Rules
made thereunder. Accordingly a Whistle Blower policy governing the vigil mechanism of the Company has been
approved by the Board. The Audit Committee of the Company shall oversee the vigil mechanism of the Company
in accordance with this policy.
Page 138
5.5 General Shareholders’ information
Registered office address of the Company
7th Floor, Cnergy,
Appasaheb Marathe Marg,
Prabhadevi, Mumbai – 400 025
Corporate Identity Number
U67190MH2007PTC174287
ISIN Number
INE265J01012
Registrars and Share Transfer Agents
Sharepro Services (India) Private Limited
2nd Floor, Samhita Warehousing Complex,
Gala No-52 to 56, Bldg No.13 A-B, Near Sakinaka Telephone
Exchange,
Andheri-Kurla Road
Sakinaka, Andheri (East),
Mumbai – 400 072
Tel No: 022 6772 0300
Investor Relations
Mr. Nikhil Bhandary
Company Secretary
5th Floor, Cnergy,
Appasaheb Marathe Marg, Prabhadevi,
Mumbai – 400 025
Tel: 022 6630 3445
Fax: 022 6630 3223
Email: [email protected]
6. Registered office
During the year under review, the Registered office of your Company has been changed from 141, Maker Chambers
III, Nariman Point, Mumbai – 400 021 to 7th Floor, Cnergy, Appasaheb Marathe Marg, Prabhadevi, Mumbai – 400 025.
7. Share Capital
The Board of Directors of your Company has taken ‘in-principle’ decision to issue equity shares for an amount
aggregating up to ` 50 crore to the existing shareholders of the Company on a rights basis during the financial year
2014-15. Accordingly, the Authorised share capital of your Company is being increased from `210 crore to `260
crore.
8. Fixed Deposits
Your Company has not accepted any public deposits and as such, no amount on account of principal or interest on
public deposits was outstanding as on the date of the balance sheet.
9. Directors
Mr. Rabindra Behera, a nominee of one of the sponsor shareholders of your Company viz., Indian Overseas Bank
(IOB), retired from the services of IOB during the year under review and accordingly Mr. A M Venkatesa Prasad was
appointed as a nominee of IOB on the Board of your Company in place of Mr. Behera with effect from September 11,
2013. The Directors place on record their appreciation for the contribution made by Mr. Behera during his tenure as a
Director of your Company.
Pursuant to the provisions of Section 260 of the Companies Act, 1956, Dr. Anil Kumar Khandelwal was appointed as
an additional director of the Company with effect from September 11, 2013. He holds office as a Director up to the
date of the forthcoming annual general meeting. Your Company has received a notice in writing from a Member
proposing his candidature for the office of Director pursuant to Section 160 of the Companies Act, 2013.
Page 139
The above appointments have been approved by the Reserve Bank of India (RBI). RBI has also given its approval for
the continuation of Mr. Anil Bhatia as the Managing Director & Chief Executive Officer (MD & CEO) of your Company
for a period of three years from May 15, 2014 to May 14, 2017.
10. Statutory Auditors
M/s. Khimji Kunverji & Co, Mumbai, the Statutory Auditors of your Company retire at the ensuing annual general
meeting and offer themselves for re-appointment. In accordance with Section 139 of the Companies Act, 2013 read
with the Rules made thereunder, M/s. Khimji Kunverji & Co, Mumbai, can be appointed as the Statutory Auditors of the
Company for a period of maximum of three years. They have confirmed that their appointment, if made, shall be in
accordance with the provisions of Section 139(1) of the Act read with Companies (Audit and Auditors) Rules, 2014 and
that they satisfy the criteria given under Section 141 of the Act. Members are requested to consider their reappointment.
The Audit committee and Board of Directors have recommended the appointment of M/s. Khimji Kunverji & Co.,
Chartered Accountants as the Statutory Auditors of your Company.
11. Internal Audit/Control
Your Company has in place robust systems of internal control to ensure compliance with various policies and
procedures. M/s. Deloitte Haskins & Sells, Chartered Accountants, are the internal auditors of your Company. The
Audit Committee and the Board of Directors have re-appointed them as the internal auditors for the next financial year
2014-15.
12. Policy for Prevention, Prohibition and Redressal of Sexual Harassment of Women at workplace
Our policy against sexual harassment is made under the overall ambit of the Code of Conduct of JM Financial Group
and in accordance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act,
2013.
During the calendar year 2013, no cases were reported or filed for sexual harassment at workplace.
13. Directors’ Responsibility Statement
Pursuant to the requirements of sub-section (2AA) of Section 217 of the Companies Act, 1956, the Directors of your
Company hereby confirm that:
y In the preparation of the annual accounts for the financial year 2013-14, the applicable accounting standards have
been followed;
y they have selected such accounting policies and applied them consistently and made judgments and estimates
that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the
end of the financial year and of the profit of your Company for the financial year;
y they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of
adequate accounting records in accordance with the provisions of the Companies Act, 1956. They confirm that
there are adequate systems and controls for safeguarding the assets of your Company and for preventing and
detecting fraud and other irregularities;
y they have prepared the annual accounts on a going concern basis.
14. Conservation of energy, technology absorption, foreign exchange earnings and outgo
In view of the nature of activities which are being carried on by your Company, the particulars as prescribed under the
Companies Act, 1956 regarding conservation of energy and technology absorption are not applicable to your
Company and therefore not required to be furnished with this report. There was no inflow or outflow of foreign
exchange during the year under review.
Page 140
15. Particulars of employees
The information required under Section 217(2A) of the Companies Act, 1956 and the Rules made thereunder, in
respect of employees of the Company, is provided in the annexure forming part of this report. Your Company had 31
(thirty one) employees as on March 31, 2014. Out of these employees, 3 (three) employees who were employed
throughout the year were in receipt of remuneration of more than ` 60.00 lakh per annum.
16. Appreciations and acknowledgements
Your Directors thank the Company’s bankers, sponsors and members for their continued support and confidence in
the Company. The Directors also take this opportunity to express their sincere appreciation for the guidance and
assistance received from the Reserve Bank of India, the Ministry of Finance, the Ministry of Corporate Affairs, Indian
Banks’ Association and the Association of Asset Reconstruction Companies in India.
The Company continued to receive unstinted support from various banks and financial institutions which have
assigned their non performing assets to the Company and have invested in the Company’s asset securitisation
schemes from time to time. The Directors wish to place on record their deep sense of appreciation for the same and
the Company will continue in its effort to build and nurture strong relationships with the banks and financial institutions.
Your Directors also appreciate and value the contributions made by every employee resulting in the successful
performance of the Company during the year.
For and on behalf of the Board
Place: Mumbai
Date: April 28, 2014
Sd/V P Shetty
Chairman
(DIN – 00021773)
Page 141
INDEPENDENT AUDITOR’S REPORT
To
The Members of
JM Financial Asset Reconstruction Company Private Limited
Report on the Financial Statements
1
We have audited the accompanying financial statements of JM Financial Asset Reconstruction Company
Private Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2014, the Statement
of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant
accounting policies and other explanatory information
Management’s Responsibility for the Financial Statements
2
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 referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (“the Act”)
which continues to be applicable even under the provisions of Section 133 of the New Companies Act, 2013.
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
Auditor’s Responsibility
3
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
4
An audit involves performing procedures to obtain audit evidence about the amounts and 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. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of the accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements
5
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion
Opinion
6
In our opinion and to the best of our information and according to the explanations given to us, the 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:
a)
b)
c)
In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;
In the case of the Profit and Loss Account, of the profit for the year ended on that date; and
In the case of the Cash Flow Statement, of the cash flows for the year ended on that date
Page 142
Report on Other Legal and Regulatory Requirements
7
As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the Central
Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a
statement on the matters Specified in paragraphs 4 and 5 of the Order
8
As required by section 227(3) of the Act, we report that:
a.
b.
c.
d.
e.
we have obtained all the information and explanations which to the best of our knowledge and belief
were necessary for the purpose of our audit;
in our opinion proper books of account as required by law have been kept by the Company so far as
appears from our examination of those books;
the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this
Report are in agreement with the books of account;
in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with
the applicable Accounting Standards referred to in subsection (3C) of section 211 of the Act;
on the basis of written representations received from the directors as on March 31, 2014, and taken on
record by the Board of Directors, we report that none of the directors is disqualified as on March 31,
2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the
Act;
For Khimji Kunverji & Co
Chartered Accountants
Firm Registration No 105146W
Place: Mumbai
Date: April 28, 2014
Sd/Hasmukh B Dedhia
(Partner) F-33494
Page 143
Annexure referred to in paragraph 7 of our Report of even date to the members of JM Financial Asset
Reconstruction Company Private Limited on the accounts of the company for the year ended March 31,
2014
(i)
(a) The Company has maintained proper records showing full particulars, including quantitative details and
situation of fixed assets
(b) The fixed assets have been physically verified by the management at reasonable interval. As informed,
no material discrepancies were noticed on such verification
(c) The Company has not disposed off substantial part of its fixed assets during the year.
(ii) The Company does not hold any inventory during the year, hence clause (ii) of the Order is not applicable to
the Company
(iii) The Company has neither taken nor granted loan to parties in register maintained under Section 301 of the
Act, hence clause (iii) of the Order is not applicable to the Company
(iv) In our opinion and according to the information and explanation given, there is adequate internal control
system commensurate with the size of the Company and the nature of its business, for the purchase of fixed
assets and for rendering services. Further, on the basis of examination of the books and records of the
Company and according to the information and explanations given, and as per the checking carried out in
accordance with the auditing standards generally accepted in India, neither we have observed nor have we
been reported for any continuing failure to correct major weaknesses in the internal control system relating to
the aforesaid. During the year, the Company has neither purchased any inventory nor sold any goods
(v)
(a)Based on the audit procedures applied and according to the information and explanations given, the
contracts or arrangements referred to in Section 301 of the Act that need to be entered into the register
maintained under that Section have been so entered
(b)According to the information and explanations given to us, where each of such contracts or arrangement
is in excess of Rs. 5 Lakh in respect of any party, the contracts or arrangement have been made at
prices which are prima facie, reasonable having regard to the prevailing market prices at the relevant
time or the prices at which transactions for similar services have been made with other parties or as per
information available with the Company
(vi) The Company has not accepted any deposits from the public, hence clause (vi) of the Order is not applicable
to the Company
(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its
business
(viii) To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of
cost records under clause (d) of sub-section (1) of Section 209 of the Act for the products of the Company
(ix) (a) According to the records of the Company, the Company is regular in depositing with appropriate
authorities undisputed statutory dues including Provident fund, Income tax, Service tax, Cess and other
material statutory dues applicable to it.
We have been informed that Investor education and protection fund, Employees’ state insurance, Sales
tax, Wealth tax, Custom duty and Excise Duty are currently not applicable to the Company for the year
under audit
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of
Provident fund, Income tax, Service tax, Cess and other undisputed statutory dues were outstanding, at
the year end, for a period of more than six months from the date they became payable
Page 144
We have been informed that Investor education and protection fund, Employees’ state insurance, Sales
tax, Wealth tax, Custom duty and Excise Duty are currently not applicable to the Company for the year
under audit
(c) According to the information and explanations given, there are no dues of Income tax, Service tax and
Cess which have not been deposited on account of any dispute.
We have been informed that Sales tax, Wealth tax, Custom duty and Excise Duty are currently not
applicable to the Company for the year under audit
(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses
in the current and immediately preceding financial year
(xi) Based on our audit procedures and as per the information and explanations given, we are of the opinion that
the Company has not defaulted in repayment of dues to a financial institution or bank
(xii) According to the information and explanations given to us and based on the documents and records
produced to us, the Company has maintained adequate documents and records in case of loans and
advances granted on the basis of security by way of pledge of shares, or other securities
(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society, hence clause 4(xiii) of
the Order is not applicable to the Company
(xiv) According to the information and explanations given and in our opinion, the Company is not dealing or trading
in shares, securities, debentures, and other investments otherwise than in its ordinary course of business,
hence clause 4(xiv) of the Order is not applicable to the Company
(xv) According to the information and explanations given, the Company has not given any guarantee for loans
taken by others from bank or financial institution.
(xvi) According to the information and explanations given, the Company has not raised any term loans, hence
clause 4(xvi) of the Order is not applicable to the Company
(xvii) According to the information and explanations given and on an overall examination of the Balance Sheet of
the Company, we report that no funds raised on short-term basis have been used for long-term investment.
(xviii) The Company has not made any preferential allotment of shares to parties or Companies covered in the
register maintained under Section 301 of the Act
(xix) According to the information and explanations given, the Company has not issued any debentures, hence
clause 4(xix) of the Order is not applicable to the Company
(xx) The Company has not raised any money through a public issue during the year
(xxi) During the course of our examination of the books and records of the Company, carried out in accordance
with the auditing standards generally accepted in India, we have neither come across any instances of fraud
on or by the Company, noticed or reported during the course of our audit nor have we been informed of such
case by the management
For Khimji Kunverji & Co
Chartered Accountants
Firm Registration No 105146W
Place: Mumbai
Date: April 28, 2014
Sd/Hasmukh B Dedhia
(Partner) F-33494
Page 145
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
BALANCE SHEET AS AT MARCH 31, 2014
Particulars
I.
1
2
3
Note
No.
As at
31.03.2013
Rupees
EQUITY AND LIABILITIES
Shareholders' funds
a Share Capital
b Reserves and Surplus
2.01
2.02
2,100,000,000
1,203,709,237
3,303,709,237
2,100,000,000
721,288,641
2,821,288,641
Non-current liabilities
a Long-term borrowings
b Long-term provisions
2.03
2.04
3,463,130
3,463,130
1,561,494
2,975,357
4,536,851
Current liabilities
a Short-term borrowings
b Trade payables
c Other current liabilities
d Short-term provisions
2.05
2.06
2.07
2.08
2,000,000,000
1,126,396
1,694,230,984
3,233,956
3,698,591,336
1,687,500,000
1,514,393
131,638,576
2,815,506
1,823,468,475
7,005,763,703
4,649,293,967
4,492,618
5,639,360
5,915,327
7,217,535
Total
II.
1
As at
31.03.2014
Rupees
ASSETS
Non-current assets
a Fixed assets
(i) Tangible assets
(ii) Intangible assets
2.09
b
c
Deferred tax assets / (liabilities)
Long-term loans and advances
2.10
2.11
11,623,473
432,514,892
454,270,343
15,425,066
6,639,940
35,197,868
Current assets
a Current investments
b Trade receivables
c Cash and bank balances
d Short-term loans and advances
e Other current assets
2.12
2.13
2.14
2.15
2.16
5,811,753,178
467,808,930
6,137,077
265,794,175
6,551,493,361
3,360,509,208
94,791,131
886,722,115
266,794,800
5,278,845
4,614,096,099
7,005,763,703
Total
Significant accounting policies and notes to the financial
1&2
statements
As per our attached report of even date
For Khimji Kunverji & Co
For and on behalf of the Board of Directors
Chartered Accountants
Firm Registration No: 105146W
4,649,293,967
2
Sd/Hasmukh B Dedhia
Partner
Membership No. F-33494
Sd/VP Shetty
Chairman
(DIN-00021773)
Sd/Shailesh Haribhakti
Chairman-Audit Committee
(DIN-00007347)
Sd/Anil Bhatia
Managing Director &
Chief Executive Officer
(DIN-01310959)
Sd/Nikhil Bhandary
Company Secretary
Date : April 28, 2014
Place : Mumbai
Date : April 28, 2014
Place : Mumbai
Page 146
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
STATEMENT OF PROFIT & LOSS FOR THE YEAR ENDED MARCH 31, 2014
Particulars
Note
No.
For the year ended
March 31, 2014
Rupees
For the year ended
March 31, 2013
Rupees
I.
REVENUE FROM OPERATIONS
2.17
1,195,580,148
863,073,334
II.
OTHER INCOME
2.18
8,174,362
26,654,242
III
Total Revenue (I + II)
1,203,754,510
889,727,576
IV
EXPENSES
Employee benefits expense
Finance costs
Provision/write off for receivables, loans & investments
Depreciation and amortization expense
Other expenses
150,810,290
172,745,389
31,931,276
4, 233,185
93,112,179
121,469,234
12,411,001
74,263,417
3,581,512
71,556,290
Total expenses
452,832,319
283,291,454
Profit before tax
Tax expense
Current tax
Deferred tax
750,922,191
606,436,122
264,700,000
3,801,595
268,501,595
219,700,000
(11,816,918)
207,883,082
VI
Profit after tax
482,420,596
398,553,040
VII
Earnings per share
Basic / Diluted
2.30
1.90
V
2.19
2.20
2.21
2.09
2.22
2.23
Significant accounting policies and notes to the
1&2
financial statements
As per our attached report of even date
For Khimji Kunverji & Co
For and on behalf of the Board of Directors
Chartered Accountants
Firm Registration No: 105146W
Sd/Hasmukh B Dedhia
Partner
Membership No. 33494
Sd/VP Shetty
Chairman
(DIN-00021773)
Sd/Shailesh Haribhakti
Chairman-Audit Committee
(DIN-00007347)
Sd/Anil Bhatia
Managing Director &
Chief Executive Officer
(DIN-01310959)
Sd/Nikhil Bhandary
Company Secretary
Date : April 28, 2014
Place : Mumbai
Date : April 28, 2014
Place : Mumbai
Page 147
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
STATEMENT OF CASH FLOW FOR THE YEAR ENDED MARCH 31, 2014
In Rupees
Particulars
A
B
C
For the
year ended
March 31, 2014
For the
year ended
March 31, 2013
Cash flow from operating activities
Profit before tax
750,922,191
606,436,122
Adjustment for:
Depreciation
Provision for gratuity
Provision for/(reversal of) compensated absences
Provision for receivables, advances and loans
Provision for loss on impairment of investments
Earlier year provision on receivables / advances w/back
Reversal of receivable and investments
Loss on sale of fixed assets
Interest expense
Operating profit before working capital changes
4,233,185
516,041
390,182
31,931,276
(7,092,571)
7,591
172,745,389
953,653,283
3,581,513
885,217
412,166
38,029,314
34,848,715
(18,080,303)
1,385,388
43,060
12,411,001
679,952,192
Adjustment for:
(Increase)/decrease in trade receivables
(Increase)/decrease in short-term loans and advances
(Increase)/decrease in other current assets
(Increase)/decrease in trade payables
Increase/(decrease) in other current liabilities
Cash generated from/(used in) operations
(383,295,794)
(20,680,204)
5,278,845
(387,997)
1,562,627,757
2,117,195,889
3,694,870
(99,660,695)
(4,774,034)
(486,389)
80,585,445
659,311,390
Direct taxes paid
Net cash from/(used in) operating activities
(267,625,054)
1,849,570,835
(189,334,217)
469,977,173
(2,761,046,000)
316,894,601
(1,239,892)
31,900,000
(2,401,484,000)
1,055,539,170
(7,468,226)
19,800
(31,900,000)
(2,413,491,291)
(1,385,293,256)
Cash flow from financing activities
Increase in long term loans & advances
Repayment of long-term borrowings
Proceeds from short-term borrowings
Repayment of short-term borrowings
Interest paid
Net cash from/(used in) financing activities
(422,949,904)
(1,561,494)
312,500,000
(7,795)
(172,745,389)
(284,764,582)
261,423
(260,939)
1,687,500,000
(1,064,212)
(12,411,001)
1,674,025,272
Net increase/(decrease) in Cash and cash equivalents
Cash & cash equivalents (opening)
Cash & cash equivalents (closing)
(848,685,038)
854,822,115
6,137,077
758,709,188
96,112,928
854,822,115
Cash flow from investing activities
Purchase of current investments - Others
Sale/ redemption of current investments - Others
Purchase of fixed assets
Sale of fixed assets
Bank balances not considered as Cash and cash equivalents
(opening less closing)
Net cash from/(used in) investment activities
Page 148
Notes
1
2
The cash flow statement has been prepared under the 'Indirect Method' set out in AS 3 - "Cash Flow Statement"
notified in Companies (Accounting standards) Rules, 2006 (as amended).
Previous year's figures have been regrouped and rearranged wherever necessary
As per our attached report of even date
For Khimji Kunverji & Co
Chartered Accountants
Firm Registration No: 105146W
Sd/Hasmukh B Dedhia
Partner
Membership No. 33494
For and on behalf of the Board of Directors
Sd/VP Shetty
Chairman
(DIN-00021773)
Sd/Shailesh Haribhakti
Chairman-Audit Committee
(DIN-00007347)
Sd/Anil Bhatia
Managing Director &
Chief Executive Officer
(DIN-01310959)
Sd/Nikhil Bhandary
Company Secretary
Date : April 28, 2014
Place : Mumbai
Date : April 28, 2014
Place : Mumbai
Page 149
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
1.
SIGNIFICANT ACCOUNTING POLICIES
a.
Accounting convention
"The financial statements have been prepared in compliance with all material aspects of the applicable Accounting
Standards notified under Companies (Accounting Standards) Rules 2006 (as amended), the Guidelines issued by the
Reserve Bank of India ('RBI') from time to time and the provisions of the Companies Act, 1956 ( the “Act”).
The financial statements are based on historical cost convention and are prepared on accrual basis, except where
impairment is made and revaluation is carried out.
The accounting policies have been consistently applied by the Company and are consistent with those used in the
previous year. Accounting Policies not specifically referred to otherwise, are consistent with generally accepted
accounting principles.
b.
Use of estimates
The preparation of financial statements is in conformity with Indian Generally Accepted Accounting Principles which
requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent liabilities on the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those estimates and differences between actual
results and estimates are recognised in the periods in which the results are known / materialised.
c.
Fixed assets and depreciation
Owned tangible assets
Tangible Fixed Assets are stated at original cost of acquisition less accumulated depreciation and impairment
losses. Cost comprises of all costs incurred to bring the assets to their present location and working condition.
Depreciation on tangible fixed assets is provided pro-rata basis for the period of use, on the Straight Line Method
(SLM), based on management's estimate of useful lives of the fixed assets, or at the rates prescribed in Schedule
XIV to the Act whichever is higher, as per the following table:
Asset
Useful Life
Office equipments
5 years
Computers
5 years
Motor Vehicles
5 years
Furniture and Fixtures
10 years
Assets costing Rs. 5,000/- or less are fully depreciated in the year of acquisition.
Owned intangible assets
Intangible fixed assets are stated at cost of acquisition or internal generation, less accumulated amortisation and
impairment losses. An intangible asset is recognised, where it is probable that the future economic benefits
attributable to the assets will flow to the enterprise and where its cost can be reliably measured. The depreciable
amount of the intangible assets is allocated over the best estimate of its useful life on a straight line basis.
The Company capitalises software and related implementation costs where it is reasonably estimated that the
software has an enduring useful life. Software is depreciated over management estimate of its useful life not
exceeding 5 year
Leased assets
Assets acquired under finance lease are accounted for at the inception of lease at the fair value of the assets or
present value of minimum lease payments whichever is lower. At the end of lease term, asset will revert back to
the lessor; hence they are fully depreciated on a straight line basis over the lease term or its useful life whichever is
shorter.
At the balance sheet date, assets held for disposal are valued at Written Down Value (WDV) or Net Realisable
Value (NRV), whichever is lower.
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JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
d.
Impairment of assets
The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based
on internal / external factors. An asset is treated as impaired when the carrying cost of the assets exceed its
recoverable value. An impairment loss, if any, is charged to the profit and loss account in the year, in which an asset is
identified as impaired. Reversal of impairment losses recognised in prior years is recorded when there is an indication
that the impairment losses recognised for the assets no longer exist or have decreased.
e.
Investments
Investments in Security Receipt (SR) held by the Company are treated as Current Investment. They are valued at lower
of cost or realisable value. Latest available declared NAV is considered to be realizable value. In case where NAV is
not declared within one year from acquisition of assets or finalization of resolution strategy, whichever is earlier, cost of
SR is considered as realizable value. Individual scrip wise appreciation or diminution is arrived by comparing cost and
NAV. Diminution, if any at the trust level is provided for and appreciation, if any is ignored.
f.
Revenue recognition
Accounting Standard 9 issued by ICAI specifies that the amount of revenue arising on a transaction is usually
determined by agreement between the parties involved in the transaction. When uncertainties exist regarding
determination of the amount, these uncertainties may influence the timing of revenue recognition.
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the
revenue can be reliably measured with no significant uncertainty as to the ultimate collection. In case of significant
uncertainty as to the ultimate collection, revenue recognition is postponed till such uncertainty is removed.
i
Management fee:
•
Management fee from trusts is accrued as per terms of the relevant trust deed / offer document.
•
Management fee from borrowers/parties is accrued as per the terms of the relevant contract. However in
respect of such fees, the ultimate realization is tested for impairment and in case there are events which
suggest significant uncertainty as to the ultimate collection, revenue recognition is postponed to the extent of
the uncertainty involved. Revenue is such case is recognized only when such uncertainty is removed.
•
Outstanding management fee in respect of trusts where management fee is remaining unpaid for more than
one year is provided for in the profit and loss account as a matter of prudence. In respect of such trusts, no
further management fee is recognised unless it is realized.
ii
Any fee income other than (i) above (e.g. advisory fees, etc.) is recognised as per the terms of contract. . However
in respect of such fees, the ultimate realization is tested for impairment and in case there are events which suggest
significant uncertainty as to the ultimate collection, revenue recognition is postponed to the extent of the
uncertainty involved. Revenue in such cases is recognized only when such uncertainty is removed.
iii
Outstanding management fee/ any other fee from borrowers/ parties remaining unpaid for more than one year is
provided for in the profit and loss account as a matter of prudence. In respect of such cases, no further fee is
recognized unless it is realized.
iv
Additional realization / return on assets over acquisition price on redemption of SR is accounted for as per the
terms of relevant trust deed / offer document.
v
Income by way of yield on SR’s is accounted on actual distribution from the trusts.
vi
Interest income:
•
•
•
Interest on bank deposits placed with banks is accounted on accrual basis.
Interest on expenses incurred on behalf of trust(s) is accounted as per terms of the relevant trust deed and
offer document and is accrued where reasonable certainty exists with respect to its recovery. Outstanding
interest on expenses in respect of trusts where it is remaining unpaid for more than one year is provided for in
the profit and loss account as a matter of prudence. In respect of such trusts no further interest is recognized
unless it is realised.
Interest on restructuring is accrued as per contract, net of the proportionate share of expenses incurred and
management fees charged in the trust.
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JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
•
g.
Interest on loan is accounted for as per the terms of the contract. In case interest / principal is overdue for
more than 180 days from the due date specified in the contract, the loan outstanding is classified as Non
Performing Asset and provision is made as per the guidelines issued by the Reserve Bank of India. Unrealized
interest on loan is derecognized and further recognition is made only on realisation.
Employee Benefits
Defined contribution plan
•
The Company makes defined contribution to the provident fund, which is recognized in the profit and loss
account on an accrual basis.
Defined benefit plan
•
The Company's liabilities under the Payment of Gratuity Act are determined on the basis of actuarial valuation
made at the end of each financial year using the projected unit credit method. Actuarial gains and losses are
recognised in the statement of profit and loss account as income or expense respectively. Obligation is
measured at the present value of estimated future cash flows using a discounted rate that is determined by
reference to market yields on the date of balance sheet on government bonds where the currency and terms
of the government bonds are consistent with the currency and estimated terms of the defined benefit
obligation.
Short term employee benefits
•
h.
Expenses incurred for financial assets not acquired
•
i.
The expenses incurred on behalf of trusts are shown as 'Recoverable from Trusts' and grouped under Advances
recoverable in cash or in kind in the balance sheet. These expenses are reimbursed to the Company in terms of
the provisions of the relevant trust deed and offer document. The recoverable amount if not realized within a period
of one year, is provided for in the profit and loss account as a matter of prudence and the same is reversed on
recovery.
Foreign currency transactions
•
k.
Acquisition expenses pertaining to financial assets not acquired are shown as 'Recoverable from Sellers / Trust(s)'
and grouped under Advances recoverable in cash or in kind in the balance sheet for a maximum period of six
months from the date the expenses are incurred to take care of the eventuality of such asset being subsequently
acquired by the Company or the expenses agreed to be reimbursed by the Sellers as deal breakage cost within the
said period. Where the Sellers have not agreed to reimburse the same or no acquisition takes place within said
period from the date of incurrence of cost, the same are charged to profit and loss account.
Expenses incurred by the Company on behalf of the trust
•
j.
Short term employee benefits are recognised as an expense at the undiscounted amount in the profit and loss
account of the year in which the related services are rendered.
Transactions in foreign currency are recorded at the rate of exchange prevailing on the date of transaction. Foreign
currency monetary items are reported using closing rate of exchange at the end of the year. The resulting
exchange gain / loss is reflected in the profit and loss account. Other non-monetary items, like fixed assets,
investments in equity shares, are carried in terms of historical cost using the exchange rate at the date of
transaction. Premium / Discount, in respect of forward foreign exchange contract is recognised over the life of the
contract. Profit / Loss on cancellation / renewal of forward exchange contract is recognised as income / expense for
the year.
Taxation
•
•
•
Tax expense comprises current tax and deferred tax.
Provision for current tax is made on the basis of estimated taxable income for the current accounting year in
accordance with the provisions of Income Tax Act, 1961.
Deferred tax for timing differences between the book and tax profits for the year is accounted for, using the tax
rates and laws that apply substantively as on the date of balance sheet. Deferred tax assets arising from timing
differences are recognised to the extent there is reasonable certainty that these would be realised in future.
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JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
•
•
l.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on
income levied by same governing taxation laws.
At each balance sheet date the Company re-assesses unrecognised deferred tax assets. It recognises
unrecognised deferred tax assets to the extent that it has become reasonably certain, as the case may be that
sufficient future taxable income will be available against which such deferred tax assets can be realized. Any such
write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
Operating leases
Operating lease payments are recognised as expenditure in the profit and loss account on a straight line basis, which is
representative of the time pattern user’s benefit.
m. Provisions, contingent liabilities and contingent assets
Contingent Liabilities are possible but not probable obligations as on the balance sheet date, based on the available
evidence. Department appeals, in respect of cases won by the Company, are also considered as Contingent Liabilities.
Provisions are recognised when there is a present obligation as a result of past event; and it is probable that an outflow
of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are
determined based on best estimate required to settle the obligation at the balance sheet date. Contingent assets are
not recognized in the financial statements.
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JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
2. NOTES TO THE FINANCIAL STATEMENTS
SHARE CAPITAL
2.01
As at
As at
31.03.2014
31.03.2013
Rupees
Rupees
SHARE CAPITAL
Authorised
210,000,000 (Previous Year 210,000,000) Equity Shares of Rs 10/- each
2,100,000,000
2,100,000,000
2,100,000,000
2,100,000,000
210,000,000 (Previous Year 210,000,000) Equity Shares of Rs 10/- each
fully paid up
2,100,000,000
2,100,000,000
Total
2,100,000,000
2,100,000,000
Issued, Subscribed and Paid-up
Note a.
The Company has only one class of shares referred to as equity shares having a Face Value of Rs. 10/-. Each holder of
equity shares is entitled to one vote per share.
Note b.
Equity Shares
Particulars
As at 31.03.2014
Number
Shares outstanding at the beginning of the year
Shares Issued during the year
Shares bought back during the year
Shares outstanding at the end of the year
210,000,000
As at 31.03.2013
Rupees
2,100,000,000
-
-
210,000,000
2,100,000,000
Number
210,000,000
Rupees
2,100,000,000
-
-
210,000,000
2,100,000,000
Note c.
Out of Equity shares issued by the Company, shares held by each shareholder, holding more than 5 percent shares
specifying the number of shares held are as below:
As at 31.03.2014
Particulars
No. of
Shares held
As at 31.03.2013
% of
Holding
No. of
Shares held
% of
Holding
Equity Shares:
JM Financial Limited
102,900,000
49.00%
102,900,000
49.00%
Mr Narotam S Sekhsaria
31,500,000
15.00%
31,500,000
15.00%
Indian Overseas Bank
21,000,000
10.00%
21,000,000
10.00%
Valiant Mauritius Partners FDI Ltd
16,600,000
7.90%
16,600,000
7.90%
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JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.02
As at
As at
31.03.2014
31.03.2013
Rupees
Rupees
RESERVES AND SURPLUS
Surplus / (Deficit) in profit and loss account:
Opening balance
(+) Profit for the year
2.03
721,288,641
322,735,601
482,420,596
398,553,040
Closing balance
1,203,709,237
721,288,641
Total
1,203,709,237
721,288,641
As at
As at
31.03.2014
31.03.2013
Rupees
Rupees
LONG-TERM BORROWINGS
Secured:
Long term maturities of finance lease obligations
-
1,561,494
-
1,561,494
(Secured by way of hypothecation of vehicles. The lease is
repayable on a monthly basis over a period of 36 months)
Total
2.04
2.05
As at
As at
31.03.2014
31.03.2013
Rupees
Rupees
LONG-TERM PROVISIONS
For employee benefits - gratuity
3,463,130
2,975,357
Total
3,463,130
2,975,357
As at
As at
31.03.2014
31.03.2013
Rupees
Rupees
SHORT-TERM BORROWINGS
Other loans & advances
Commercial Paper
500,000,000
-
Other unsecured loans
1,500,000,000
1,687,500,000
Total
2,000,000,000
1,687,500,000
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JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.06
2.07
As at
As at
31.03.2014
31.03.2013
Rupees
Rupees
TRADE PAYABLES
Total outstanding dues to micro, small and medium enterprises
-
-
Total outstanding dues to creditors other than micro, small and
medium enterprises
1,126,396
1,514,393
Total
1,126,396
1,514,393
As at
As at
31.03.2014
31.03.2013
Rupees
Rupees
OTHER CURRENT LIABILITIES
Short term maturities of finance lease obligations
(Secured by way of hypothecation of vehicles)
Statutory dues
Secured working capital facilities from banks (refer note 2.25)
253,145
260,940
5,875,389
5,102,374
1,459,704,546
942,422
90,000,000
69,731,774
109,611,258
15,711,160
(Secured by way of pledge of security receipts)
Employees benefits payable
Amounts collected on behalf of trusts
Interest accrued but not due
Other Liabilities
Total
2.08
4,069,880
2,945,034
24,716,766
36,944,872
1,694,230,984
131,638,576
As at
As at
31.03.2014
31.03.2013
Rupees
Rupees
SHORT-TERM PROVISIONS
For employee benefits - gratuity
257,898
229,630
For employee benefits - compensated absences
2,976,058
2,585,876
Total
3,233,956
2,815,506
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JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.09 FIXED ASSETS
Amount in Rupees
GROSS BLOCK
Description
As at
01.04.2013
Additions
DEPRECIATION/AMORTISATION
As at
31.03.2014
Disposals
Up to
01.04.2013
Additions
Upto
31.03.2014
Deductions
NET BLOCK
As at
As at
31.03.2014
31.03.2013
i) TANGIBLE
ASSETS:
Owned Assets:
Furniture and
Fixtures
654,166
-
-
654,166
302,162
67,035
-
369,197
284,969
352,004
Office Equipments
3,194,734
306,484
134,407
3,366,811
2,875,215
270,507
134,407
3,011,315
355,496
319,519
Computers
5,069,453
906,607
379,762
5,596,297
1,398,145
918,901
372,172
1,944,874
3,651,423
3,671,308
Leased Assets:
Vehicles
(refer note below)
Total
4,115,299
-
-
4,115,299
2,542,803
1,371,766
-
3,914,569
200,730
1,572,496
13,033,652
1,213,091
514,169
13,732,573
7,118,325
2,628,209
506,579
9,239,955
4,492,618
5,915,327
ii) INTANGIBLE
ASSETS:
Software
8,024,877
26,801
-
8,051,678
807,342
1,604,975
-
2,412,317
5,639,360
7,217,535
Total
8,024,877
26,801
-
8,051,678
807,342
1,604,975
-
2,412,317
5,639,360
7,217,535
21,058,528
11,151,122
1,239,892
11,065,173
514,169
1,157,766
21,784,251
21,058,529
7,925,667
5,439,061
4,233,185
3,581,513
506,579
1,094,907
11,652,273
7,925,667
10,131,978
13,132,862
13,132,862
Total
Previous Year
Note:
Vendor has lien over the assets taken on lease.
Page 157
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.10
As at
As at
31.03.2014
31.03.2013
Rupees
Rupees
DEFERRED TAX ASSETS/ (LIABILITIES)
Differences in the tax and books - written down value of fixed assets
Due under finance lease
Provision for gratuity
(104,995)
81,092
1,264,777
1,039,858
Preliminary expenses
-
93,655
Compensated absences
1,011,562
838,987
Impairment of investments
9,434,313
11,306,665
-
1,622,250
11,623,473
15,425,066
Provision for bonus
Total
2.11
442,559
17,816
As at
As at
31.03.2014
31.03.2013
Rupees
Rupees
LONG TERM LOANS AND ADVANCES
Other loans and advances
Secured, considered good:
Loan funds
423,038,655
-
Unsecured, considered good:
Staff loans
Advance Tax (Net of provisions)
Other deposits
Total
5,850
94,601
8,861,453
5,936,405
608,934
6,08,934
432,514,892
6,639,940
Page 158
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.12 CURRENT INVESTMENT
As at
As at
31.03.2014
31.03.2013
Nos. of
Rupees
SR
Nos. of
Rupees
SR
Other current investments
(Unquoted- valued at cost)
Investment in Security Receipts of the trusts
(Face Value Rs. 1,000/- each except otherwise stated)
1.
JMFARC - BOB 2008 - Trust
111,600
111,600
111,600
111,600
5,518
250,000
5,518
250,000
48,600,000
(Face value Rs.1/- each, Previous year Rs.1/- each)
2.
JMFARC-SHREE RAMA - Trust
(Face value Rs. 45/- each, Previous year Rs. 45/- each)
3.
JMFARC-BOI 2009 – Trust*
48,600
48,600,000
48,600
4.
JMFARC-BOI 2009 I – Trust*
36,000
36,000,000
36,000
36,000,000
5.
JMFARC - DB - ICICI – Trust*
115,000
115,000,000
115,000
115,000,000
6.
JMFARC - DB - DCB – Trust*
7,500
7,500,000
7,500
7,500,000
7.
JMFARC - DB - SBI – Trust*
61,000
61,000,000
61,000
61,000,000
8.
JMFARC -Jord - SUUTI Trust*
8,000
8,000,000
8,000
8,000,000
9.
JMFARC - Pasupati - SASF – Trust*
250,000
40,000,000
250,000
125,258,941
50,000
50,000,000
50,000
50,000,000
6,000
6,000,000
6,000
6,000,000
129,450
59,450,000
129,450
74,450,000
100,000
32,715,898
100,000
52,656,339
14. JMFARC - SASF Tube – Trust*
62,000
62,000,000
62,000
62,000,000
15. JMFARC - UCO Bank 2010 - Trust*
31,500
28,474,741
31,500
28,474,741
13,365
13,365
13,365
13,365
376,500
318,671,283
376,500
333,098,824
(Face value Rs. 160/- each, Previous year Rs.501/- each)
10. JMFARC -Central bank - Tube – Trust*
11. JMFARC -UTI - Tube – Trust*
12. JMFARC - Rice - June 2010 – Trust*
(Face value Rs. 459/- each, Previous year Rs. 575/- each)
13. JMFARC - Yarn 2010 – Trust*
(Face value Rs. 327/- each, Previous year Rs. 527 /- each)
(Face value Rs. 904 /- each, Previous year Rs.904/- each)
16. JMFARC - SME Retail 2011 - Trust
(Face value Rs.1/- each, Previous year Rs.1/-each)
17. JMFARC-IOB March 2011-Trust*
(Face value - Class A SRs Rs. 793/- each, Class B SRs
Rs. 1000/- each, Previous year Rs. Class A SRs Rs. 845/each, Class B SRs Rs. 1000/- each)
18. JMFARC-UCO Bank March 2011-Trust
19. JMFARC-IOB II March 2011-Trust*
16,500
16,500,000
16,500
16,500,000
110,000
109,425,113
110,000
110,000,000
88,872
55,387,288
88,872
69,572,430
469,884
469,884
469,884
469,884
7,039
7,039
7,039
7,039
(Face value - Class A SRs Rs. 995/- each, Class B SRs
Rs. 1000/- each, Previous year Rs. Class A SRs Rs. 1000/each, Class B SRs Rs. 1000/- each)
20. JMFARC-Central Bank Retail 2011-Trust
(Face value Rs.623/- each, Previous year Rs.783/-each)
21. JMFARC-Retail June 2011-Trust
(Face value - Rs. 1/- each for Series I, II and III
respectively, Previous year Face value - Series I SRs Rs. 1/each, Series II SRs Rs. 1/- each, Series III SRs Rs. 1/- each)
22. JMFARC-Retail Aug 2011-Trust
(Face value Rs.1/- each, Previous year Rs.1/- each)
Page 159
As at
As at
31.03.2014
31.03.2013
Nos. of
Rupees
SR
23. JMFARC-Swarna 2011-Trust*
Nos. of
Rupees
SR
196,799
79,096,701
196,799
196,799,000
190,000
121,645,797
190,000
121,645,797
14,962
14,962
14,962
14,962
(Face value - Class A Rs. 55/-, Class B Rs. 1000/-,
Previous Year Class A and Class B Rs. 1000/- each)
24. JMFARC-Petrochemicals 2012-Trust*
(Face value Rs.640/- each, Previous year Rs.640/- each)
25. JMFARC-Synthetic Rubber 2012-Trust
(Face value Re.1/- each, Previous year Rs.Nil )
26. JMFARC-Swarna II 2012-Trust*
78,700
7,87,00,000
78,700
7,87,00,000
564,587
5,00,00,000
564,587
5,00,00,000
28. JMFARC –Green December 2012 - Trust
23,945
2,39,45,000
23,945
2,39,45,000
29. JMFARC – Media 2013- Trust
12,500
1,25,00,000
12,500
1,25,00,000
30. JMFARC – Kruti II 2013- Trust*
686,600
686,600,000
686,600
686,600,000
31. JMFARC – Media II 2013- Trust*
34,030
34,030,000
34,030
34,030,000
32. JMFARC – Federal Bank March 2013- Trust
70,000
58,358,650
70,000
70,000,000
27. JMFARC-Kruti 2012-Trust*
(Face value Rs.89/- each, Previous year Rs.89/- each )
(Face value Rs.834/- each, Previous year Rs 1,000/- each)
33. JMFARC – Textile 2013- Trust*
34. JMFARC – Central India 2013- Trust*
35. JMFARC – Corp I 2013- Trust
91,000
91,000,000
91,000
91,000,000
289,360
289,360,000
289,360
289,360,000
93,000
59,002,000
93,000
93,000,000
(Face value Rs.634/- each, Previous year Rs 1,000/- each)
36. JMFARC – Corp II 2013- Trust
58,800
58,800,000
58,800
58,800,000
37. JMFARC – Corp Textile 2013- Trust*
150,000
150,000,000
150,000
150,000,000
38. JMFARC-Corp Apparel 2013-Trust
120,000
116,833,000
1,20,000
120,000,000
39. JMFARC – Corp Biotech 2013- Trust
114,000
114,000,000
114,000
114,000,000
40. JMFARC-Kruti III 2013-Trust*
360,500
360,500,000
-
-
1,000
1,000
-
-
(Face value Rs.974/- each, Previous year Rs 1,000/- each)
41. JMFARC-Stancy Textile 2013-Trust
(Face value Re.1/- each, Previous year Rs.Nil )
42. JMFARC-Fed Textile 2013-Trust
8,820
8,820,000
-
-
43. JMFARC-Hospitality 2013-Trust*
107,294
107,294,000
-
-
44. JMFARC-BOI Textile 2013-Trust
41,000
41,000,000
-
-
45. JMFARC-OBC March 2014-Trust
34,500
34,500,000
-
-
46. JMFARC-Dena Bank March 2014-Trust
67,000
67,000,000
-
-
47. JMFARC-UCO March 2014-Trust
462,500
462,500,000
-
-
48. JMFARC-Gelatine March 2014-Trust
628,672
628,672,000
-
-
17,500
17,500,000
-
-
50. JMFARC-SBI March 2014 I-Trust
173,750
173,750,000
-
-
51. JMFARC-SBI March 2014 II-Trust
45,250
45,250,000
-
-
154,500
154,500,000
-
-
44,500
44,500,000
-
-
54. JMFARC-Petro BOB 2014-Trust
135,500
135,500,000
-
-
55. JMFARC-Petro UCO 2014-Trust
140,000
140,000,000
-
-
56. JMFARC-Petro CBOI 2014-Trust
51,500
51,500,000
-
-
49. JMFARC-Fed Gelatine March 2014-Trust
52. JMFARC-Cosmos March 2014-Trust
53. JMFARC-Indian Bank March 2014-Trust
57. JMFARC-OBC March 2014 II -Trust
4,760
4,760,000
-
-
58. JMFARC-BOI March 2014 II -Trust
215,750
215,750,000
-
-
59. JMFARC-UBOI March 2014-Trust
66,750
66,750,000
-
5,839,509,321
Less: Provision for impairment of investments
Total
3,395,357,922
27,756,143
34,848,715
5,811,753,178
3,360,509,208
Page 160
As at
As at
31.03.2014
31.03.2013
Nos. of
Rupees
SR
Notes:
Nos. of
Rupees
SR
As at
31.03.2014
As at
31.03.2013
Cost
Cost
1. Aggregate value of
Rupees
Rupees
Unquoted Investments
5,811,753,178
3,360,509,208
*Pledged with banks as security for bank overdraft / cash credit limit
Page 161
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.13
As at
As at
31.03.2014
31.03.2013
Rupees
Rupees
TRADE RECEIVABLES
(Refer note no. 2.26)
Trade receivables outstanding for a period exceeding six months from
the date they are due for payment
Unsecured, considered good
68,301,159
69,095,846
Less: Provision for receivables outstanding over 1 year
55,050,548
44,772,553
13,250,611
24,323,293
454,558,319
70,467,838
454,558,319
70,467,838
467,808,930
94,791,131
Trade receivables outstanding for a period less than six months from the
date they are due for payment
Unsecured, considered good
Total
2.14
As at
As at
31.03.2014
31.03.2013
Rupees
Rupees
CASH AND BANK BALANCES
Cash and cash equivalents
Cash in hand
-
31,673
6,137,077
273,890,442
-
580,900,000
6,137,077
854,822,115
Balances with banks
In Current Accounts
In Deposit Accounts (with maturity below 3 months)
Other bank balances
Total
a.
c.
d.
-
31,900,000
6,137,077
886,722,115
Balances with banks in deposit account (maturing after b. Earmarked balances with banks (for example, for unpaid
dividend)
Balances with banks to the extent held as margin money or security against the borrowings, guarantees, other
commitments.
Repatriation restrictions, if any, in respect of cash and bank balances
Page 162
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.15
As at
As at
31.03.2014
31.03.2013
Rupees
Rupees
SHORT-TERM LOANS AND ADVANCES
Secured considered good:
Loan Funds
209,967,227
178,005,882
Staff Loans
-
35,000,000
Unsecured considered good:
Staff Loans
Advances recoverable in cash or in kind or for value to be received
(Refer note no. 2.26)
Others
Total
Less: Provision for advances outstanding over 1 year
Less: Provision for loans
Total
2.16
102,472
308,058
39,614,596
28,928,722
45,075,984
31,837,406
294,760,280
274,080,068
19,016,104
7,285,268
9,950,000
-
265,794,175
266,794,800
As at
As at
31.03.2014
31.03.2013
Rupees
Rupees
OTHER CURRENT ASSETS
Interest accrued on fixed deposit
-
5,278,845
Total
-
5,278,845
Page 163
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.17
For the year ended
For the year ended
March 31, 2014
Rupees
March 31, 2013
Rupees
REVENUE FROM OPERATIONS
Operating revenue
Management and advisory fees
562,938,273
223,099,283
Interest income on restructuring
370,929,844
153,220,594
Interest income on loans
112,989,530
38,325,360
Profit on redemption/ sale of security receipts
141,150,358
429,289,525
479,572
1,058,269
Other operating revenue
Interest income on funded expenses
Earlier year provision on receivables/ advances written back
Total
2.18
2.19
18,080,303
863,073,334
For the year ended
For the year ended
March 31, 2014
Rupees
March 31, 2013
Rupees
OTHER INCOME
Interest income on fixed deposit
7,121,409
Other non-operating income
1,052,953
1,125,657
Total
8,174,362
26,654,242
For the year ended
For the year ended
March 31, 2014
Rupees
March 31, 2013
Rupees
25,528,585
EMPLOYEE BENEFITS EXPENSE
Salaries, Bonus and Allowances
Contribution to Provident Fund and Other Funds
Gratuity
Staff Welfare
Total
2.20
7,092,571
1,195,580,148
146,807,398
117,441,818
3,293,448
3,076,188
589,097
885,217
120,347
66,011
150,810,290
121,469,234
For the year ended
For the year ended
March 31, 2014
Rupees
March 31, 2013
Rupees
FINANCE COSTS
Interest Expense
Other borrowing costs
Total
167,575,014
9,698,030
5,170,375
2,712,971
172,745,389
12,411,001
Page 164
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.21
For the year ended
For the year ended
March 31, 2014
Rupees
March 31, 2013
Rupees
PROVISION / WRITE OFF FOR RECEIVABLES, LOANS AND
INVESTMENTS
Provision for receivables and advances over 1 year
21,981,276
38,029,314
99,50,000
-
Provision for impairment of investments
-
34,848,715
Write off/ reversal of receivables and investments
-
1,385,388
31,931,276
74,263,417
For the year ended
For the year ended
March 31, 2014
Rupees
March 31, 2013
Rupees
Provision for loans
Total
2.22
OTHER EXPENSES
Rent and other cost
27,021,425
19,559,813
Rates & taxes
3,256,047
2,562,063
Insurance premium
1,307,072
1,037,940
646,520
552,459
Communication expenses
Repairs and maintenance (Building)
110,632
351,076
Repairs and maintenance (Machinery)
2,466,970
1,275,367
Professional fees
3,613,031
2,469,056
403,484
318,540
74,326
22,271
Auditors Remuneration
-as auditor
-as tax auditor
-for management services (limited review)
Support service charges
Membership & Subscription
127,416
80,305
19,112,400
19,112,400
296,361
795,395
Travelling expenses
1,796,430
1,637,836
Electricity
1,409,215
855,504
Printing and stationery
Director’s fees and commission
Donation
Miscellaneous expenses
Total
511,115
339,016
24,040,000
17,490,000
2,027,000
-
4,892,734
3,107,249
93,112,179
71,566,290
Page 165
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
2.23
Earning per share
Earning per share is calculated by dividing the profit attributable to the equity shareholders by the weighted average
number of equity shares outstanding during the year, as under:
For the year ended
31 March 2014
Particulars
Profit attributable to the equity shareholders for the purpose of basic/
diluted earnings per share (Rupees)
482,420,596
398,553,040
Weighted average number of equity shares outstanding during the
year for basic/ diluted earnings per share
210,000,000
210,000,000
2.30
1.90
10
10
Basic/ diluted earnings per share – (Rupees)
Nominal value per share – (Rupees)
2.24
For the year ended
31 March 2013
Expenditure in Foreign Currency
As at
31 March 2014
Particulars
Conference & Seminars (Rupees)
As at
31 March 2013
-
108,406
2.25
The Company have been sanctioned overdraft/ cash credit limits of Rs. 2,50,00,00,000 by scheduled banks secured
against pledge of investments in security receipts.
2.26
The normal operating cycle of the Company is five years in view of the estimated timeframe for resolution of the assets
post their acquisition. Accordingly, the trade receivables and advances recoverable have been classified under current
assets.
2.27
Segment Reporting
The Company operates in only one business and geographical segment and hence there are no reportable segments.
2.28
a)
Leases
Finance Lease
The Company has acquired vehicles under the finance lease agreement. The tenure of the lease agreements are 36
and 60 months with an option to prepayment/foreclosure.
The minimum lease rentals outstanding with respect to these assets are as under:
Particulars
Total
minimum
lease
payment
outstanding
as at March
31, 2014
Lease finance
charges not
due
Total
minimum
lease
payment
outstanding
as at March
31, 2013
1,777,320
208,031
1,569,289
260,940
7,795
253,145
215,826
1,822,434
Not later than 1 year
260,940
Later than 1 year but
not later than 5
years
-
7,795
-
253,145
-
260,940
7,795
253,145
Total
Amount in Rupees
Present value
of the
Lease
minimum
finance
lease
charges
payment as
not due
at March 31,
2013
Present
value of the
minimum
lease
payment as
at March 31,
2014
2,038,260
Page 166
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
b)
Operating Lease
The current office premises of the Company is under operating lease upto March 31, 2015
The minimum lease rentals outstanding with respect to these assets are as under:
Particulars
Amount in Rupees
Total lease payments
outstanding as at
Total lease payments
outstanding as at
March 31, 2014
Not later than 1 year
March 31, 2013
19,490,400
21,157,200
-
-
Later than 1 year but not later than 5 years
Later than 5 years
Expenditure debited to profit & loss account
2.29
A
-
-
27,796,609
15,874,002
Employee benefits
Defined benefit plans
a) Gratuity
Amount recognised in the balance sheet with
respect to gratuity
Present value of the defined benefit obligation at the
year end
3,721,028
3,204,987
-
-
3,721,028
3,204,987
Fair value of plan assets
Net liability
Amount recognised in salary, wages and
employee benefits in the profit and loss account
with respect to gratuity
Amount in Rupees
For the year ended
March 31, 2013
For the year ended
March 31, 2014
For the year ended
March 31, 2014
For the year ended
March 31, 2013
Current service cost
637,739
500,791
Interest on defined benefit obligations
301,961
239,068
-
-
(350,603)
145,358
-
-
589,097
885,217
Expected return on plan assets
Net actuarial (gain) loss recognised during the year
Past service cost
Net gratuity cost
Page 167
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
Reconciliation of present value of the
obligation and the fair value of the plan assets:
Opening defined benefit obligation
Current service cost
Interest cost
Actuarial (gain)/loss
3,204,987
2,319,770
637,739
500,791
301,961
239,068
(350,603)
145,358
Past service cost
Benefits paid
Closing defined benefit obligation
Change in fair value of plan assets
Amount in Rupees
For the year ended
March 31, 2013
For the year ended
March 31, 2014
-
-
(73,056)
-
3,721,028
3,204,987
For the year ended
March 31, 2014
Opening fair value of the plan assets
For the year ended
March 31, 2013
-
-
Expected return on plan assets
-
-
Actuarial (gain)/loss
-
-
Contributions by the employer
Benefits paid
73,056
-
(73,056)
-
-
-
Closing fair value of the plan assets
Investment details of plan assets
For the year ended
March 31, 2014
Investment details of plan assets
Principal actuarial assumptions at the balance
sheet date
Discount rate
Estimated rate of return on plan assets
Retirement age
Salary escalation
For the year ended
March 31, 2013
-
For the year ended
March 31, 2014
For the year ended
March 31, 2013
9.10%
8.10%
-
-
60 years
60 years
7.00%
7.00%
Valuation assumptions
•
•
The estimates of future salary increases, takes into account inflation, seniority, promotion and other relevant
factors.
The above information is certified by the actuary.
b)
Compensated absences
As per Company’s policy, provision of Rs.29,76,058/- (previous year Rs. 25,85,876/- ) has been made towards
compensated absences, calculated on the basis of unutilised leave as on the last day of the financial year.
B
Defined contribution plans
Amount recognised as an expense and included in the ‘Contribution to provident fund & other funds’ Rs. 32,93,448/(previous year Rs. 30,76,188/- ).
2.30
"Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's
classification / disclosure.”
Page 168
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
Additional disclosure:
The following additional disclosures have been made taking into account RBI guidelines in this regard:
a)
Name and address of the banks / financial institutions from whom financial assets were acquired and the values at
which such assets were acquired from each such bank/ financial institutions.
Name of the selling bank/ financial
institution
Address
Acquisition cost
Rupees
% to total
Sponsors
Indian Overseas Bank
763, Anna Salai, Chennai
Sponsors Total
3,619,100,000
9.12%
3,619,100,000
9.12%
9,79,85,00,000
24.70%
5,67,00,80,000
14.29%
4,12,57,94,000
10.40%
3,09,00,00,000
7.79%
2,68,30,34,000
6.76%
1,95,90,00,000
4.94%
1,33,50,00,000
3.36%
89,00,00,000
2.24%
78,52,00,000
1.98%
Non- Sponsors
UCO Bank
Bank of India
State Bank of India
The Cosmos Co-operative Bank Ltd
Central Bank of India
The Federal Bank Ltd
Union Bank of India
Indian Bank
Oriental Bank of Commerce
Biplabi Trailokya Maharaj Sarani, Kolkata 700001
Star House, C-5, G Block, Bandra Kurla
Complex, Bandra (East), Mumbai - 400051
State Bank Bhavan, Corporate Centre, Madame
Came Marg, Mumbai, Maharashtra – 400 021
Cosmos Heights, 269/270 Shaniwar Peth, Pune 411030
Chandermukhi, Nariman Point, Mumbai 400021
Federal Towers, Aluva, Ernakulum, Kerala 683101
239, Vidhan Bhavan Marg, Nariman Point,
Mumbai - 400021
254-260, Avvai, Shanmugam Salai, Royapettah,
Chennai - 600014
Harsh Bhavan, E- Block, Connaught Place, New
Delhi - 110001
Canara Bank
112 J. C. Road, Bangalore
71,55,20,000
1.80%
Punjab National Bank
7, Bhikhaji Cama Place, New Delhi
67,79,41,000
1.71%
Sicom Ltd
Solitaire Corporate Park, Building No 4, Andheri
Kurla Road, Chakala, Andheri (East), Mumbai 400093
62,86,72,560
1.58%
Yes Bank
9th floor Nehru Centre, Worli, Mumbai - 400018
54,45,00,000
1.37%
Corporation Bank
Mangladevi Temple Road, Mangalore - 575 001
53,58,00,000
1.35%
HSBC
52/60, M. G. Road, Fort, Mumbai - 400001
49,02,88,000
1.24%
31,20,00,000
0.79%
25,00,00,000
0.63%
24,71,00,000
0.62%
21,34,44,661
0.54%
18,35,00,000
0.46%
14,29,16,048
0.36%
13,72,50,000
0.35%
Stressed Asset Stabilisation Fund
Ratnakar Bank
Bank of Baroda
HUDCO
Deutsche Bank
Dena Bank
Axis Bank
IDBl Tower, 10th Floor, WTC Complex, Cuffe
Parade, Mumbai 400005
One India Bulls Center, Tower 2 , 6th Floor,841,
Senapati Bapat Marg,Lower Parel (W),Mumbai
400013
Kalpataru Heritage Building, 6th floor, Nanik
Motwani Lane, Fort, Mumbai - 400023
HUDCO Bhawan, Core-7-A,India Habitat
Centre,Lodhi Road, New Delhi - 110 003
DB House, Hazarimal Somani Marg, Fort,
Mumbai 400001
C -10, G Block, Bandra Kurla Complex, Mumbai 400051
Maker Towers F, 13th Floor, Cuffe Parade,
Mumbai - 400005
State Bank of Patiala
The Mall, Patiala- 147001, Punjab
12,45,26,000
0.31%
IDBI Bank
IDBl Tower, WTC Complex, Cuffe Parade,
Mumbai 400005
10,00,00,000
0.25%
Page 169
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
Name of the selling bank/
financial institution
Address
Specified Undertaking of UTI
Acquisition cost Rupees
% to total
UTI Tower, G Block, Bandra Kurla Complex,
Bandra (East), Mumbai - 400051
7,30,00,000
0.18%
Allahabad Bank
2, Netaji Subhash Road, Kolkata - 700001
6,50,00,000
0.16%
Vijaya Bank
41/2, M.G.Road, Bangalore 560001
6,38,62,102
0.16%
6,00,00,000
0.15%
3,38,70,000
0.09%
2,59,30,000
0.07%
2,51,00,000
0.06%
1,91,00,000
0.05%
1,50,00,000
0.04%
1,49,62,620
0.04%
1,39,09,236
0.04%
60,00,000
0.02%
Non Sponsors Total
36,055,800,227
90.88%
Grand Total
39,674,900,227
100.00%
Rupee Co-operative Bank
BNP Paribas
Standard Chartered Bank
Karnataka Bank
The Saraswat Co-op Bank Ltd
The Nashik Road Deolali Vyapari
Sahakari Bank Ltd
Life Insurance Corporation of India
Bank of Bahrain & Kuwait B.S.C
UTI Mutual Fund
b)
2062, Sadashiv Peth, Astang Ayurved Building,
Pune- 411030
Unit No 203, Sakar II, Ellisbridge, Ahmedabad
380006
23, Narain Manzil, Barakhamba Road, New
Delhi- 110001
Mahavira Circle, Kankanadi, Mangalore - 575002
Mittal Court 'A' Wing 1st Floor, Nariman Point,
Mumbai - 400004
Kalpavruksha, Aashanagar, Nashikroad, Nashik,
Maharashtra - 422101
Yogakshema, Jeevan Bima Marg, Mumbai 400021
Jolly Maker Chamber, 2, Ground Floor, Nariman
point, Mumbai - 400021
UTI Tower, Gn Block, Bandra Kurla Complex,
Bandra (East) 400051
Dispersion of various assets industry wise.
Industry
Textiles
Acquisition Price in Rupees
% to total
7,31,31,78,747
18.43%
Real Estate
7,20,05,48,028
18.15%
Iron & Steel
2,52,58,00,000
6.37%
Retail
2,36,91,10,632
5.97%
Plywood/ laminates
1,68,00,00,000
4.23%
Airlines
1,66,00,00,000
4.18%
Hospitality
1,43,05,68,000
3.61%
Information Technology
1,26,46,26,000
3.19%
Media
1,14,71,03,106
2.89%
Trading
1,13,40,57,560
2.86%
Leather
1,07,15,00,000
2.70%
Chemicals
96,03,55,578
2.42%
Pharmaceuticals
86,25,61,786
2.17%
Healthcare
76,75,00,000
1.93%
Infrastructure
75,28,00,000
1.90%
Paper
71,79,00,000
1.81%
Food Products
68,42,47,208
1.72%
Engineering
61,53,00,000
1.55%
Plastics
58,28,00,000
1.47%
Packaging
55,88,53,456
1.41%
Poultry
50,97,68,803
1.28%
Page 170
JM FINANCIAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
Industry
Acquisition Price in Rupees
% to total
Plantation
47,62,54,195
1.20%
Transportation
38,74,00,000
0.98%
Metals
35,06,00,000
0.88%
Electronic
34,58,45,805
0.87%
Education
33,83,69,780
0.85%
Power
24,98,50,544
0.63%
Energy
22,70,00,000
0.57%
Ceramics
19,32,00,000
0.49%
Gems & Jewellery
17,77,00,000
0.45%
Agro Products
12,96,00,000
0.33%
Cement
7,30,00,000
0.18%
Paints
6,91,00,000
0.17%
Alcohol
5,18,00,000
0.13%
4,33,00,000
0.11%
75,33,01,000
1.90%
Coal
Others
Grand Total
39,674,900,227
100.00%
c)
The above table (b) has been prepared by management and the same has been relied upon by the auditors.
d)
The acquisition price in the tables (a) and (b) above includes financial assets acquired till March 31, 2014 including
financial assets resolved till date.
e)
Restructuring loan disbursed to one borrower amounting to Rs. 9.95 crore has been reclassified from standard asset to
non-performing asset (sub-standard) during the year as per the accounting policy of the Company and guidelines
issued by the RBI. A provision of 10% (Rs. 99.50 lac) has been made on the same as per RBI guidelines.
f)
The accounting policies adopted by the Company in preparation and presentation of the financial statements are in
conformity with the applicable prudential norms prescribed by the RBI.
g)
The Company has put in place internal audit system, scope of which provides for periodical checks and review of the
assets acquisition procedures and asset reconstruction measures and the matters related thereto.
h)
The capital adequacy ratio is well above fifteen percent of its total risk weighted assets, accordingly the Company has
complied with the capital adequacy norms as prescribed the RBI.
i)
Additional disclosure as per RBI Notification No. DBNS.PD(SC/RC). 8/ CGM (ASR) dated April 21, 2010.
Particulars
Value of financial assets acquired during the financial year either in its own books or in the books of
the trust
Value of financial assets realized during the financial year
Value of financial assets outstanding for realization as at the end of the financial year
Value of Security Receipts redeemed partly during the financial year
Amount in Rupees
(face value)
26,380,166,560
1,104,440,010
35,775,738,777
741,072,947
Value of Security Receipts redeemed fully during the financial year
Value of Security Receipts pending for redemption as at the end of the financial year
36,465,362,933
Value of Security Receipts which could not be redeemed as a result of non-realization of the
financial asset as per the policy formulated by the Securitization company or Reconstruction
company under Paragraph 7(6)(ii) or 7(6)(iii)
Nil
Value of land and/or building acquired in ordinary course of business of reconstruction of assets
Nil
Page 171