Directors' Report For The Financial Year 2013 -14 To the Members, Your Directors are pleased to present the 28th Annual Report of the Company together with the Statement of Profit and Loss for the year ended 31st March, 2014 and the Balance Sheet as on that date. (Rupees in Crs.) Performance Highlights 2014 2013 Year ended March 31 Operating Results Gross Income : a) Fee based – Merchant Banking and Advisory fees 532.00 491.24 b) Income from Securities, Lease and Hire Purchase and other Income 62.62 58.53 Total 594.63 549.77 Profit before Provisions, Depreciation, Interest and Tax 442.69 428.51 Provisions 51.17 7.31 Depreciation 2.82 2.80 Interest - 0.01 Profit before Tax 388.70 418.39 Profit after Tax 265.28 296.00 Financial Position Equity Share Capital 58.03 58.03 Reserves and Surplus 922.55 833.79 Other Selected Data Earnings per Share (Rs.) 45.71 51.00 Return on Equity 27% 33% Dividend per Share (Rs.) 26.00 26.00 Book Value per Share (Rs.) 164.22 151.44 Some major Performance Highlights are : Out of the current year’s profits, the Directors propose that a sum of Rs. 26.53 Crs. be transferred to the General Reserve. During the year, the Board declared an Interim Dividend of Rs.26 per share on 27th March, 2014. The Directors propose that the Interim Dividend of Rs.26 per share be declared as the Final Dividend. Awards & Recognition Your Company continued to receive both domestic and international awards during the calendar year 2013, the most prominent being: • IFR Asia ‘India Loan House of the Year’ 2013 for the 5th consecutive year • Thomson Reuters PFI - Industry Deal of the Year Award for 2013 (Asia-Pacific) for Tata Steel’s 6 MTPA Green field integrated steel plant in Odisha. • Euromoney Project Finance Asia Pacific Mining & Metals Deal of the Year 2013 for Tata Kalinganagar (Tata Steel Odisha) • Business World-Grant Thornton's 'Top INR Bonds & Loan Deal-maker of the Year' award for maximum issues in 2013 • "Deal of the Year" Award for 2014 from M&A International Your Company received top rankings from many ranking agencies. Significant among them are: • Thomson Reuters-Project Finance International • No. 1 Global Project Finance Book Runner with a market share of 8.3% AL REPORT 2013-14 • No. 2 Global Mandated Lead Arranger with a market share of 4.9% ANNU 016 Directors' Report For The Financial Year 2013 -14 (contd.) • No. 1 Mandated Arrangers Asia-Pacific & Japan with market share of 16.1% • No.1 Book Runner Asia Pacific & Japan with market share of 26.4% • Dealogic • No. 1 Global Mandated Lead Arranger for Global Project Finance Loans for 5th consecutive year with a market share of 5.7% • No. 1 Global Arranger of Project Finance Loans for the 5th successive year with a market share of 5.7% • No. 1 Financial Advisor of Global Project Finance Loans, for the 4th successive year with a market share of 13% • No. 1 Asian Project Finance Loans for the 5th successive year with a market share of 23.6% • Bloomberg League Tables • No. 1 Mandated Lead Arranger Asia Ex-Japan Loans with a market share of 7.3% • No.1 Book Runner Asia Ex-Japan Loans with a market share of 11% • No. 1 India Loans Mandated Lead Arranger (both INR and foreign currencies) with a market share of 40.4% • No.1 India Loans Mandated Arranger (INR) with a market share of 58.4% • Prime Database • Ranked No. 1 IPP in terms of number of issues handled for FY 2014 in India • Ranked No. 2 in terms of total amount raised through Rights Issuances league tables for FY 2014 Management Discussion and Analysis Management Discussion and Analysis is annexed to and forms part of this report (Annexure ‘A’). Corporate Governance The Directors’ Report on Corporate Governance for the year 2013-14 is attached (Annexure ‘B’). SUBSIDIARIES The performance of the five subsidiaries during the year 2013-14 is as follows :- 1. SBICAP Securities Limited (SSL) A brief summary of the financial highlights in the FY 2013-14 is given hereunder: (Rupees in Crs.) Particulars 2013-14 2012-13 Total Income 79.03 69.60 Expenses 87.88 65.91 Profit/(Loss) Before Tax (8.85) 3.69 Profit/(Loss) After Tax (8.19) 2.43 • On the Institutional business side, SSL has ramped up its sales and research teams and set up an exclusive FII desk to cater to institutional investors. SSL’s research now covers all key sectors and most NIFTY stocks. • With ramp up of operations, the Institutional market volumes for the year increased by 25.16% and the share of DII cash market volumes increased by 35 basis points. • Despite a decline in the overall retail market volumes in the financial year, SSL was able to grow its Retail topline by about 9% over the previous year. AL REPORT 2013-14 AL MARKETS LIMITED ANNU SBI CAPIT 017 Directors' Report For The Financial Year 2013 -14 (contd.) • New client acquisition remained a key focus area for SSL. With an increase of 70% over the new clients acquired in the previous year, the total new client acquisition in the year was at a record high. • SSL has made significant investments in its various growth initiatives which has lowered PAT but enhanced wherewithal for future growth. 2. SBICAP (UK) Limited (SUL) A brief summary of the major financial highlights is as under: (Rupees in Crs.) Particulars 2013-142013-14 2012-132012-13 Fee Income 3.04 16.89 Other Income 0.57 0.37 Gross Income 3.61 17.26 Expenses 4.22 3.48 Profit/(Loss) Before Tax (0.61) 13.78 Profit/(Loss) After Tax (0.56) 10.76 The Company earned Income of GBP 330,050 vis-a-vis the previous year level of GBP 1,903,461. The Company suffered a loss of GBP 32,971 as against a PAT of GBP 1,164,337 during the previous year. 3. SBICAP Trustee Company Limited (STCL) A brief summary of the financial highlights in the FY 2013-14 is given hereunder : (Rupees in Crs.) Particulars 2013-142013-14 2012-132012-13 Fee based – Trustee Remuneration Fees 18.89 13.61 Other Income 1.85 1.35 Total Income 20.74 14.96 Expenses 7.35 3.81 Profit/(Loss) Before Tax 13.39 11.15 Profit /(Loss) After Tax 8.81 7.52 During the year the Company registered encouraging growth in gross Income of 38.64% and has also registered growth in profit after tax of 17.15% as compared to previous year. Presently, the Company is undertaking various Corporate Trusteeship activities viz. Security Trusteeship, Security Agent and Safe Custody of Documents, Debenture/Bond Trusteeship, Escrow Agent, Escrow Trusteeship, Share Pledge Trusteeship, Alternate Investment Fund Trusteeship etc. It proposes to undertake various other activities like Role of Facility Agent, Will management and Will related Trusteeship etc. 4. SBICAP Ventures Limited (SVL) During the year, the Company made a net loss of Rs.34,75,948/- due to payment of stamp duty and registration charges for increase of the authorised share capital from Rs.25 crores to Rs.100 crores and employee cost. The authorised share capital of the Company was increased to Rs.100 crores as the Company is in the process of acting as Sponsor/Asset Management Company for the Alternative Investment Funds being set up with DFID and SBI Mutual Fund. AL REPORT 2013-14 ANNU 018 Directors' Report For The Financial Year 2013 -14 (contd.) 5. SBICAP (Singapore) Limited (SSGL) A brief summary of the major financial highlights is as under : (Rupees in Crs.) Particulars 2013-142013-14 2012-132012-13 Fee Income 1.34 - Other Income - - Gross Income 1.34 - Expenses 4.14 3.09 Profit / (Loss) Before Tax (2.81) (3.09) Profit / (Loss) After Tax (2.93) (3.10) For facilitating underwriting, additional Capital of SGD 3 million was infused in SSGL during the year. DIRECTORS During the year under review, the following changes took place among the Directors of the Company :- • Smt. Arundhati Bhattacharya resigned as Managing Director & CEO with effect from 2nd August, 2013. • Shri Pratip Chaudhuri resigned as Director and as Chairman with effect from 30th September, 2013. • Shri V.G. Kannan was appointed as Managing Director & CEO with effect from 8th October, 2013. • Smt. Arundhati Bhattacharya was appointed as Director and as Chairman with effect from 25th October, 2013. The Board extended a hearty welcome to Smt. Arundhati Bhattacharya as Director and as Chairman, and Shri V.G. Kannan as Managing Director & CEO of the Company, and placed on record its deep appreciation to Smt. Arundhati Bhattacharya and Shri Pratip Chaudhuri, for their valuable contributions during their tenure as Managing Director & CEO and Chairman, respectively of the Company. Shri D. Sundaram and Shri Ashok Kini, Directors retire by rotation at the 28th Annual General Meeting (AGM) of the Company. Shri D. Sundaram has advised that he does not propose to seek re-election as an Independent Director at the ensuing AGM, as he has been on the Board of the Company for over 12 years. The Board places on record its deep appreciation to Shri D. Sundaram, for his valuable contributions during his tenure as Director and also as the Chairman of the Audit Committee, Nomination and Remuneration Committee and HR Committee of the Company. Shri Ashok Kini, being eligible, has offered himself for re-appointment. The Company has received notices under Section 160 of the Companies Act, 2013 from State Bank of India (the member), together with necessary Deposit, proposing the candidatures of Shri Bansi S.