Equity Analysis

Financial Summary and State of Company's Affairs

Financial Performance

Sanctions, Disbursements and Recovery

Treasury, Investment and Forex Operations

Resource Mobilization and Borrowing Profile

Your Company is committed to maintaining a high standard of Investor services and devotes considerable effort to identify and follow best practices for timely resolution of investor complaints. Your Company has taken various investor friendly initiatives such as encouraging updation of KYC details with R&TA, dematerialization of securities, electronic payment of interest & redemption proceeds and implementation of an online service request portal for registering investor requests etc.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

Conservation of Energy - The Company's operations do not involve any manufacturing or processing activities. It provides financial assistance to the industries and thereby requires normal consumption of electricity.

Foreign Exchange Earnings

Internal Financial Controls

Vigilance

Your Company has a dedicated Vigilance Department at the Head Office headed by the Chief Vigilance Officer, to take care of vigilance matters of IFCI, its Regional Offices & Subsidiaries.

The comprehensive functioning of the Department is divided into Preventive Vigilance, Detective Vigilance and Punitive Vigilance. With amplified prominence given to Preventive Vigilance, the department conducts inspection of various offices from time to time. The findings observed are shared with Regional in-charge, Subsidiaries and the concerned departments for taking various steps, to initiate corrective measures or systemic improvements. It also advises the Management for systemic improvement, from time to time.

It ensures disposal of complaints and other referred cases as per extant guidelines. The suggestions provided by Vigilance Department have been implemented by the Management from time to time.

The Vigilance Awareness week is celebrated every year, to promote ethical practices. During the year, Vigilance Awareness week was celebrated from 30th October to 5th November 2023 with the theme “Ht'vmk dT fOjl/T dj; jTd d ifr ifr jtl” “Say no to corruption; commit to the Nation”.

Whistle Blower Policy

The Company has put in place a Vigil Mechanism in terms of the provisions of Section 177 (9) and (10) of the Companies Act, 2013 and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations). Under Whistle Blower Policy, Director(s) and employee(s) of IFCI, can report to the Management their concerns about unethical behavior, actual or suspected fraud or violation of the IFCI's code of conduct or ethics policy with adequate safeguards to them against any sort of victimization on raising an alarm. The Policy also provides for direct access to the Chairperson of the Audit Committee in appropriate and exceptional cases. The Whistle Blower Policy is available on the link https://www.ifciltd.com/2022/Whistle%20Blower%20Policy.pdf.

Disclosure as per the Sexual Harassment of Women At Workplace (Prevention, Prohibition And Redressal) Act, 2013

An Internal Complaint Committee has been formed and the Members of the said Committee, as on 31/03/2024, are as under:

1. Ms. Lata Lochav - External Member

2. Chief General Manager (HR) - Presiding Officer

3. General Manager (HR)

4. Ms. Shikha Gupta, DGM

5. Ms. Trina Tejaswini, DGM (Law)

In the absence of any of the aforesaid internal members, Ms. Priyanka Sharma, DGM is the alternate member.

The quorum of the Committee shall comprise of all members. A brief of the complaints received under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 is as under:-

Management Discussion and Analysis *

1. Industry Structure and Developments

Industry Outlook - As per the Economic Survey tabled in the Parliament on July 22, 2024, India's economy carried forward the momentum it built in FY23 into FY24 despite a gamut of global and external challenges. As a result, India's real GDP grew by 8.2% in FY24, posting growth of over 7% for a third consecutive year, driven by stable consumption demand and steadily improving investment demand. On the supply side, Gross Value Added (GVA) at 2011-12 prices grew by 7.2% in FY24, with growth remaining broad-based. Net taxes at constant (201112) prices grew by 19.1% in FY24, aided by reasonably strong tax growth, both at the centre and state levels and rationalization of subsidy expenditure. The shares of the agriculture, industry and services sector in overall GVA at current prices were 17.7%, 27.6% and 54.7% respectively in FY24. Within the industrial sector, manufacturing GVA grew by 9.9% in FY24. Construction activities registered a growth of 9.9% in FY24 due to the infrastructure build out and buoyant commercial and residential real estate demand.

Various high-frequency indicators reflect the growth in the services sector. Both Goods and Services Tax collections and the issuance of e-way bills, reflecting wholesale and retail trade, demonstrated double-digit growth in FY24. Financial and professional services have been a major driver of growth post the pandemic. Contact-intensive services?prominently trade, transport, real estate and their ancillary services that were impacted the most during the pandemic have emerged much stronger in the post-pandemic period.

As per the 2023-24 Annual Report of the Reserve Bank of India, Investment was the major driver of domestic demand, buoyed by Government spending on infrastructure. The domestic financial markets remained stable during 2023-24, with orderly movements in the bond and foreign exchange markets and exuberant equity markets. G-sec yields softened on favourable inflation prints, reports of inclusion of Indian bonds in major global bond indices and lower than expected market borrowings by the Union Government in the interim Union Budget 2024-25. Corporate bond yields moderated tracking the G-sec yields, and corporate bond issuances increased. The Indian Rupee displayed stability on the back of improving external sector and macroeconomic fundamentals, including a significant moderation in the Current Account Deficit and resurgent capital inflows that offset persistent headwinds from volatile global financial markets, the strong US dollar and persisting geopolitical tensions.

As per the June 2024 Financial Stability Report (FSR) of the Reserve Bank of India, Domestic Macro Financial Risks strong macroeconomic fundamentals and a sound and stable financial system have supported the sustained expansion of the Indian economy. Domestic financial conditions are buttressed by healthy balance sheets across financial institutions, marked by strong capital buffers, improving asset quality, adequate provisioning and robust earnings. Return on Assets (RoA) and Return on Equity (RoE) are close to decadal highs at 1.3% and 13.8%, respectively, while gross non-performing assets ratio and net non-performing assets ratios fell to multi-year lows of 2.8% and 0.6%, respectively. This has helped Schedule Commercial Banks (SCBs) to maintain strong capital buffers: their capital to risk-weighted assets ratio and the common equity tier 1 ratio at 16.8% and 13.9%, respectively, stood well above the regulatory minimum in March 2024.

*Source: Excerpts from the Economic Survey 2023-24 dated July 22, 2024, RBI Annual Report 2023-24 and RBI Financial Stability Report June 2024.

Non-Banking Financial Companies (NBFCs)

In terms of the Financial Stability Report brought out by the Reserve Bank of India in June 2024, NBFCs maintained robust credit growth in 2023-24 despite some moderation in the second half of the year. Personal loan growth decelerated whereas growth in loans to industry and services accelerated. Growth in industrial advances was largely contributed by the Government NBFCs. The GNPA ratio of NBFCs (including those under resolution) continued its downward trajectory in the post-pandemic period to reach 4.0% in March 2024. Asset quality improved for both Government and private NBFCs. The capital position of NBFCs remains healthy, their CRAR stood at 26.6% in March 2024, well above the regulatory minimum requirement. The RoA ratio has been rising, the cost-to-income ratio has maintained a declining trend in the post-pandemic period and the NIM stood strong during 2023-24. Liquidity stock measures for NBFCs have remained stable - the ratio of short-term liability to total assets remained below 25%; long term assets constitute about two-thirds of assets; and CPs had less than 2% asset share in total assets. Share capital, reserves and surplus of NBFCs declined during 2023-24 and constituted 28.3% of their total liabilities in March 2024. NBFCs were the largest net borrowers of funds from the financial system, with gross payables of ' 16.58 lakh crore and gross receivables of ' 1.61 lakh crore as at end-March 2024.

2. Opportunities & Threats

To make India self-sufficient, minimize import dependence, create global industrial champions within India and to ‘Make in India for the world', the Government of India has launched several Production Linked Incentive (PLI) schemes. There has also been focus on self-sufficiency in healthcare for which the Government of India launched Bulk Drugs and Medical Device Parks. At present, IFCI is the Project Management Advisor (PMA) for 10 out of the 14 PLI schemes.

Your Company's endeavor to become a preferred partner (in the capacity of Project Monitoring / Nodal Agency) for the PLI Schemes and other schemes of the Government of India has provided not only an additional revenue stream but also lot of visibility.

PLI Schemes are the cornerstone of the Government of India's push for achieving an AatmaNirbhar Bharat. The objective is to make domestic manufacturing globally competitive and to create global champions in manufacturing. The strategy behind the PLI schemes is to offer companies incentives on incremental sales from products manufactured in India, over the base year. They have been specifically designed to boost domestic manufacturing in sunrise and strategic sectors, curb cheaper imports and reduce import bills, improve cost competitiveness of domestically manufactured goods, enhance domestic capacity and exports. Following are the PLI and other Schemes of Government of India, where IFCI has been appointed as the Nodal Agency/ Project Management Agency (PMA):

3. Segment-Wise or Product-Wise Performance

4. Outlook*

As per the Economic Survey 2023-24 dated July 22, 2024, IMF projects the global economy to grow at 3.2% in 2024, with risks being broadly balanced. The average annual global growth was 3.7% during the decade ending FY20. Inflationary pressures have moderated in most economies with declining global commodity prices and easing of supply chain pressures. However, core inflation remains sticky and driven by high service inflation. Many central banks have hinted at the peaking of the interest rate hike cycle. The ECB has already cut the policy rate, while the Fed has hinted at reducing the rate in 2024.

If the services inflation across economies moderates faster, that may allow central banks to bring forward the monetary policy easing cycle earlier than currently anticipated. A likely reduction in policy rates by central banks of AEs, especially the Fed, will open the space for central banks of Emerging Market Economies to follow the lead, bringing down the cost of capital. On the downside, any escalation of geopolitical conflicts in 2024 may lead to supply dislocations, higher commodity prices, reviving inflationary pressures and stalling monetary policy easing with potential repercussions for capital flows. The global trade outlook for 2024 remains positive, with merchandise trade expected to pick up after registering a contraction in volumes in 2023. Conversely, increased fragmentation along geopolitical lines and renewed thrust on protectionism may distort merchandise trade growth, impacting India's external sector. Global financial markets have scaled new heights, with investors betting on global economic expansion. However, any corrections in the elevated financial market valuations may have ramifications for household finances and corporate valuation, negatively impacting growth prospects. Improved balance sheets will help the private sector cater to strong investment demand. While merchandise exports are likely to increase with improving growth prospects in Advanced Economies, services exports are also likely to witness a further uptick. A normal rainfall forecast by the India Meteorological Department and the satisfactory spread of the southwest monsoon thus far are likely to improve agriculture sector performance and support the revival of rural demand. However, the monsoon season still has some ways to go. Structural reforms such as the GST and the IBC have also matured and are delivering envisaged results. Considering these factors, the Survey conservatively projects a real GDP growth of 6.5-7%, with risks evenly balanced, cognizant of the fact that the market expectations are on the higher side.

5. Risks and Concerns

In order to address risks, Your Company has put in place an Integrated Risk Management Policy (IRMP) which addresses Credit Risk, Market Risk, Operational Risk and Asset-Liability Management, as a part of Comprehensive Risk Management Framework which is integrated with its business model.

The General Lending Policy, IRMP, Liquidity Risk Management and other business policies of Your Company are reviewed periodically, keeping in view the changing economic and business environment. The Risk Management Vision Statement and Qualitative Risk Appetite Statements of IFCI have also been put in place. Parameters included in the Qualitative Risk Appetite statement are tested periodically.

Your Company assesses the Portfolio Level Risks by way of monitoring of actual exposures against prudential limits, stress testing under various scenarios, annual rating migration exercise, rating distribution, mapping of internal and external ratings.

As part of Ind AS implementation, Your Company estimates rating grade-wise Probability of Default (PD) numbers of its credit portfolio, based on past data while Loss Given Default (LGD) numbers are worked out based on past history of cashflows from NPAs. The risk components are utilized for calculation of Expected Credit Loss (ECL), as part of Ind AS implementation. The Risk and Asset Liability Management Committee of Executives (RALMCE), analyses the Dynamic Liquidity Position, Structural Liquidity Gaps and Interest Rate Sensitivity positions, on a periodic basis, based on extant regulatory prescriptions. The mid-office function of Integrated Treasury reports to the Risk Management function and acts as an independent risk monitoring functionary. To manage the Operational Risks, there are adequate internal controls and systems in place, aided and assisted by Internal Audit, Internal Financial Controls, remote back-up of data, Disaster Management Policy, IT security, physical security and suitable insurance of insurable assets of Your Company, as well as of the assets mortgaged to Your Company. Besides, mechanism for stress testing of loan portfolio and measurement of liquidity position is also in place, to assess likely impact on CRAR, profitability and liquidity.

Your Company would continue to work on various initiatives aimed at strengthening credit risk standards, post sanction monitoring of the portfolio to mitigate any adverse impact on the loan portfolio of Your Company. Your Company would also strive to develop a strong culture for risk management and awareness within the organization.

6. Internal Control Systems, their adequacy and Internal Audit Your Company has adequate Internal Control System commensurate with size, scale and complexity of its business and allied operations. The efficacy of these internal controls is being verified by the Internal Audit Department on a regular basis. From Financial Year 2018-19, the internal audits are being carried in-house by a team of experienced personnel. The periodicity of such audits varied from quarterly to yearly depending upon the criticality and materiality of transaction risks based on the scope approved by the Audit Committee of Directors. Besides this, exercise to ensure adequacy of Internal Financial Controls (IFCs) is also done by the Internal Audit Department. Based on the observations of Internal Audit Department, corrective actions are undertaken by the process owners in their respective areas thereby strengthening the control systems.

Your Company carries out audit, based on the guidelines of Risk Based Internal Audit (RBIA) in terms of RBI guidelines issued vide Circular dated February 03, 2021 for All non-deposit taking NBFCs.

7. Material Development in Human Resources, Industrial Relations Front, Including Number of People Employed

Your company is currently striving to become a prominent player in the Advisory Services sector. In recognition of this goal, IFCI has taken steps to reorient and develop its workforce to align with the shift in its business operations.

Effective Human Resources (HR) Management is a crucial element in advancing the Company's mission to create a positive and productive work environment. Our HR initiatives emphasize enhancing employee engagement, promoting professional growth and fostering a diverse and inclusive workplace. During the Financial Year 2023-24, Your Company has implemented various measures to boost employee productivity and equip them with the necessary skills, knowledge and abilities to fulfill the Company's vision.

In FY 2023-24, employee training was a key focus, with approximately 85% of employees receiving 2,917 man-hours of training in areas such as Financial Analysis of Business, Data

Analytics with Power BI, e-office, Cyber Security, ESG, POSH, communication skills, leadership and other behavioral skills. Your Company has been successful in deployment of required manpower resources in critical roles to support IFCI's strategic objectives.

Your Company has implemented different retention strategies by offering value proposition to deployed resources and continuous skilling and reskilling efforts.

Well-being programs were prioritized, including professional counseling for the emotional and mental well-being of employees. Delegation of Powers have been regularly reviewed and fine tuned to create platforms for consultative decision making and improve speed & quality in delivery of assignments. The value system of the organization is being clearly communicated to define expected behaviors and in this direction Staff Accountability related Policies have also been strengthened.

Your Company has also prioritized employee cohesiveness and the welfare of its employees through the arrangement of a diverse range of events and celebrations. These include activities such as observing International Day of Yoga, commemorating the 75^th IFCI Foundation Day, marking Independence Day, engaging in Swachhta Campaigns, celebrating Diwali, hosting a New Year Event, recognizing International Women's Day among others.

Sessions have also been organized for increasing financial awareness amongst female employees.

Your Company has successfully developed a new Human Resource Information System (HRIS) pertaining to Advisory Services, in its effort to continuously streamline HR operations and better information management.

Welfare of SCs/STs/OBCs/EWSs/PWDs

Your Company adheres to the guidelines of the Government of India w.r.t welfare of Scheduled Castes (SCs), Scheduled Tribes (STs), Other Backward Classes (OBCs), Parsons with Disabilities (PwDs) and Economically Weaker Sections (EWSs), both in letter & spirit. Your Company also works to actively promote the welfare of SCs, STs, OBCs, PwDs and EWSs. Your Company strictly follows to the guidelines set forth by the Government of India regarding reservations and relaxations for particular categories. Additionally, Your Company provides due representation for employees in reserved categories in its training programmes. The total number of regular employees in your Company during the financial year was 139 (excluding MD & CEO, DMD & CVO), of whom 20 (14%) were from Other Backward Classes, 12 (9%) were from Scheduled Castes and 01 (1%) was from Scheduled Tribes as on January 01, 2024.

ANNUAL STATEMENT SHOWING THE REPRESENTATION OF SCs, STs, OBCs & EWSs AS ON FIRST JANUARY OF THE YEAR 2024 AND NUMBER OF APPOINTMENTS MADE DURING THE PRECEDING CALENDAR YEAR

ANNUAL STATEMENT SHOWING THE REPRESENTATION OF SCs, STs, OBCs & EWSs IN VARIOUS GRADES AS ON FIRST JANUARY OF THE YEAR 2024

Group-wise Representation of Persons with Disabilities (PwD) up to 31.12.2023

NOTE:

(i) VH stands for Visually Handicapped (persons suffering from blindness or low vision)

(ii) HH stands for Hearing Handicapped (persons suffering from hearing impairment)

(iii) OH stands for Orthopedically Handicapped (persons suffering from locomotor disability or cerebral palsy)

(iv) ID stands for Intellectual Disability

8. Details of Significant Changes in Key Financial Ratios

The details of significant changes in Key Financial Ratios are as under:

* Explanation:- The change in the ratios were due to increase in operational income which was impacted due to increase in interest income on account of recognition of Stage 3 income & memo recovery. Further, as Debtor Turnover Ratio or Inventory Turnover Ratios are not applicable to the company (NBFC), the same has not been incorporated in the Table above.

9. Corporate Social Responsibility IFCI Social Foundation (ISF)

IFCI has always strived to conduct its business holistically and responsibly. At IFCI, along with economic performance, community and social stewardship have been key factors for its holistic business growth. IFCI has been an early adopter of Corporate Social Responsibility (CSR) initiatives and has been involved in socially relevant activities ever since its inception in 1948. Today, it continues to work towards social and community development and areas needing focus and attention, through the IFCI Social

Foundation (ISF), a registered Trust, established in 2014 (MCA Registration No. CSR00005110 ). ISF is functioning as an arm for CSR activities of IFCI and IFCI Group. ISF is guided by its values viz. Inclusiveness, Integrity, Commitment and Passion with the overall vision "To be one of India's premier CSR Institutions and strive to make sustainable social impact with inclusiveness”. Its major focus has been in areas of Education, Skill Development, Healthcare and Sanitation, Poverty Alleviation, Women Empowerment and Social Welfare of Women and Girl Child.

IFCI and ISF through its CSR projects have covered almost 23 states and Union Territories in India. The trust is registered for exemptions u/s 12A & 80G of the Income Tax Act. The trust is also registered with Ministry of Corporate Affairs in line with CSR Amendment Rules, 2021. ISF carries out CSR activities on behalf of IFCI and IFCI Group Companies.

CORPORATE SOCIAL RESPONSIBILITY

The investment in CSR activities is project based and for every project, time frame and periodic milestones are set at the outset. As the Average Net Profit of IFCI Ltd for the last preceding three years was negative, IFCI was not required to allocate any amount for CSR activities for FY 2023-24.

Pursuant to the amendment in the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Annual Report on CSR activities forms part of Board's Report at Annexure - I.

Cautionary Statement

Certain Statements in Management Discussion and Analysis describing the Company's objectives, estimates and expectations may be 'forward looking' within the meaning of applicable laws and regulations. Actual results might differ materially from those expressed or implied.

Details of Directors and Key Managerial Personnel (KMP) appointed or resigned during the year

Following were the changes in Directors and Key Managerial Personnel during the FY 2023-24 and till the date of signing of this Board's Report:

a) Shri Umesh Kumar Garg (DIN: 00599426) was appointed as Independent Director on the Board of Your Company w.e.f. May 10, 2023.

b) The Board at its Meeting held on August 11, 2023 appointed Shri Suneet Shukla, Chief General Manager as Chief Financial Officer (CFO) of the Company vice Shri Prasoon w.e.f. August 11, 2023.

Corporate Governance & Compliances

Auditors

Qualifications, Reservation or Adverse Remark or Disclaimer Made By the Statutory Auditors

The Secretarial Audit Report of the Company along with the Secretarial Audit Reports of the ‘Material Subsidiaries' i.e. IFCI Infrastructure Development Limited, Stock Holding Corporation of India Limited and MPCON Limited for the Financial Year ended March 31, 2024, are enclosed at Annexure - II.

Comments of Comptroller & Auditor General of India

The comments of Comptroller & Auditor General of India (C&AG) along with Consolidated IFCI's Comments on C&AG Supplementary Audit observations are at Addendum.

Director's Responsibility Statement

Pursuant to the requirement under Section 134 of the Companies Act 2013, with respect to Directors' Responsibility Statement, it is hereby confirmed that:

(i) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii) The Directors had 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 and loss of the Company for that period;

(iii) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) The Directors had prepared the annual accounts on a going concern basis;

(v) The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

(vi) The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Appreciation

Your Directors wish to express gratitude for the cooperation, guidance and support from the Ministry of Finance, various other Ministries and Departments of the Government of India, The Reserve Bank of India, The Securities and Exchange Board of India, the Stock Exchanges and other regulatory bodies, the Comptroller & Auditor General of India and the State Governments. Your Directors also acknowledge the valuable assistance and continued cooperation received from all banks, financial institutions, overseas correspondent banks, other members of the banking fraternity and investors. Your Directors would also like to express their appreciation for the efforts and dedicated service put in by the employees at all levels of Your Company.