1(a) Corporate Information

Srei Infrastructure Finance Limited (the ‘Company’) is a public limited company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company is also a Public Financial Institution (PFI) notified under section 4A of the Companies Act, 1956. The Company received a Certificate of Registration from the Reserve Bank of India (‘RBI’) on 1st August, 1998 to commence / carry on the business of Non-Banking Financial Institution (‘NBFI’) and was subsequently classified as Infrastructure Finance Company vide Certificate of Registration dated 11th May, 2010.

2.1 Reconciliation of the Number of Equity Shares outstanding

The reconciliation of the number of equity shares outstanding and the corresponding amount thereof, as at the Balance Sheet date is set out below:

2.2 Rights, preferences and restrictions in respect of each class of shares

The Company’s authorised capital consists of two classes of shares, referred to as Equity Shares and Preference Shares having par value of Rs. 10/- and Rs. 100/- each respectively. Each holder of equity shares is entitled to one vote per share. Preference Shareholder has a preferential right over equity share holders, in respect of repayment of capital and payment of dividend. However, no such preference shares have been issued by the Company during the year ended 31st March, 2018 and 31st March, 2017.

The Company declares and pays dividend in Indian rupees. The dividend, if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

2.3 Shares allotted as fully paid-up without payment being received in cash / by way of bonus shares (during 5 years preceding 31st March, 2018)

The Company has not issued any shares without payment being received in cash / by way of bonus shares since 2012-13.

The Board has recommended a dividend of Rs. 0.50 per share on Equity Shares of the Company, subject to approval of the Members at the forthcoming Annual General Meeting.

3.1 Bond / Debenture Redemption Reserve

As per terms of Issue, Company creates Bond / Debenture Redemption Reserve (“DRR”) towards redemption of Long-Term Infrastructure Bonds and Secured and Unsecured Non-Convertible Debentures issued through Public Issue, as statutorily required.

During FY 2017-18, Company has created DRR (net) to the extent of Rs. 4,769 Lacs (Previous year Rs. 1,097 Lacs) towards redemption of Long-Term Infrastructure Bonds and Secured and Unsecured Non-Convertible Debentures issued through Public Issue, as statutorily required.

4.1 Long-Term Infrastructure Bonds - Secured, Redeemable, Non-convertible Debentures

During the financial year 2011-12, the Company had raised fund through Public issue of Long-Term Infrastructure Bonds in the nature of Secured, Redeemable Non-Convertible Debentures, eligible for deduction under section 80 CCF of the Income-Tax Act, 1961. Fund raised has been utilised for the purposes of infrastructure lending as per terms in the year of the issue.

Bonds with interest rate of 8.90% have an overall tenure of 10 years and those with 9.15%, 15 years. Buyback option was available for all bonds at the end of 5 years i.e. on 22.03.2017 which had lapsed in the previous year. Bonds are secured by exclusive charge on specific receivables of the Company & pari-passu mortgage / charge on immovable property.

1 Secured against Receivables / Assets of the Company and mortgage of immovable property.

2 Secured against Mortgage of immovable property.

3 Secured against Receivables / Assets of the Company and mortgage of immovable property. NCD’s have an overall tenure of 7 years and having put / call option at the end of 5 years i.e. on 05-11-2017

4 Secured against Receivables / Assets of the Company and mortgage of immovable property. Due to cumulative Interest bonds wherein interest is payable on maturity, yield has been considered as rate of interest.

5 Secured against Receivables / Assets of the Company and mortgage of immovable property. Due to cumulative Interest bonds wherein interest is payable on maturity, yield has been considered as rate of interest. NCD’s have an overall tenure of 7 years and having put / call option at the end of 5 years i.e. on 05-11-2017.

6 Secured against Receivables / Assets of the Company and mortgage of immovable property. As interest rate during the tenor of bond is different i.e. Year 1:12.50% Year 2:12% Year 3:11.50% Year 4:11.25% Year 5:11.25%, interest rate for 1st year considered for disclosure.

7 Secured against Receivables / Assets of the Company and mortgage of immovable property. In case investor fall under individual category and who are holder of NCD(s) / Bond(s) previously issued by the Company in past public issues and / or are equity shareholder(s) of Company on the date of allotment, shall be eligible for additional coupon rate of 0.25% p.a. provided the NCD(s) / Bond(s) are held by investors on the relevant record date of interest payment.

8 Secured against Receivables / Assets of the Company and mortgage of immovable property. In case investor fall under individual category and who are holder of NCD(s) / Bond(s) previously issued by the Company in past public issues and/or are equity shareholder(s) of Company and / or senior citizens on the date of allotment, shall be eligible for additional coupon rate of 0.25% p.a. provided the NCD(s) / Bond(s) are held by the investors on the relevant record date of interest payment.

9 Secured against Receivables / Assets of the Company and mortgage of immovable property. In case investor fall under individual category shall be eligible for additional coupon rate of 0.25% p.a. Further, investor who are individual and who are holder of NCD(s) / Bond(s) previously issued by the Company in past public issues and/or are equity shareholder(s) of Company and / or senior citizens and/or employees of Company on the date of allotment, shall be eligible for additional coupon rate of 0.25% p.a. provided the NCD(s) / Bond(s) are held by the investors on the relevant record date of interest payment.

10 Secured against Receivables / Assets of the Company and mortgage of immovable property. Investor who are individual and who are holder of NCD(s) / Bond(s) previously issued by the Company in past public issues and/or are equity shareholder(s) of

Company and/ or senior citizens and / or employees of Company on the date of allotment, shall be eligible for additional coupon rate of 0.25% p.a. provided the NCD(s) / Bond(s) are held by the investors on the relevant record date of interest payment.

11 Secured against Receivables / Assets of the Company and mortgage of immovable property. Investor who are individual and who are holder of NCD(s) / Bond(s) previously issued by the Company and Srei Equipment Finance Limited, in past public issues and/ or are equity shareholder(s) of the Company and / or are Senior Citizens and/or are Employees of Srei Group (the Company and all its subsidiaries, sub-subsidiaries, associates and group companies), on date of allotment, shall be eligible for additional coupon of 0.25% p.a. provided the proposed NCDs are held by the Investors on the relevant record date of interest payment.

Funds raised Rs. 30,976 Lacs through public issue of Secured, Redeemable Non-Convertible Debentures have been utilised for the purposes as per the terms of the issue.

All the above debentures are redeemable at par.

1 Secured against Receivables / Assets of the Company and mortgage of immovable property.

2 Secured against Mortgage of immovable property.

3 Secured against Receivables / Assets of the Company and mortgage of immovable property. NCD’s have an overall tenure of 7 years and having put / call option at the end of 5 years i.e. on 05-11-2017

4 Secured against Receivables / Assets of the Company and mortgage of immovable property. Due to cumulative Interest bonds wherein interest is payable on maturity, yield has been considered as rate of interest.

5 Secured against Receivables / Assets of the Company and mortgage of immovable property. Due to cumulative Interest bonds wherein interest is payable on maturity, yield has been considered as rate of interest. NCD’s have an overall tenure of 7 years and having put/ call option at the end of 5 years i.e. on 05-11-2017.

6 Secured against Mortgage of immovable property. NCD’s have an overall tenure of 5 years and having put / call option at the end of 3 years i.e. on 08-06-2015.

7 Secured against Receivables/Assets of the Company and mortgage of immovable property. As interest rate during the tenor of bond is different i.e. Year 1:12.50% Year 2:12% Year 3:11.50% Year 4:11.25% Year 5:11.25%, interest rate for 1st year considered for disclosure.

8 Secured against Receivables / Assets of the Company.

9 Secured against Receivables / Assets of the Company and mortgage of immovable property. In case investor fall under individual category and who are holder of NCD(s)/Bond(s) previously issued by the Company in past public issues and/or are equity shareholder(s) of Company on the date of allotment, shall be eligible for additional coupon rate of 0.25% p.a. provided the NCD(s)/Bond(s) are held by investors on the relevant record date of interest payment.

10 Secured against Receivables / Assets of the Company and mortgage of immovable property. In case investor fall under individual category and who are holder of NCD(s) / Bond(s) previously issued by the Company in past public issues and/or are equity shareholder(s) of Company and/ or senior citizens on the date of allotment, shall be eligible for additional coupon rate of 0.25% p.a. provided the NCD(s) / Bond(s) are held by the investors on the relevant record date of interest payment.

11 Secured against Receivables / Assets of the Company and mortgage of immovable property. In case investor fall under individual category shall be eligible for additional coupon rate of 0.25% p.a. Further, investor who are individual and who are holder of NCD(s) / Bond(s) previously issued by the Company in past public issues and / or are equity shareholder(s) of Company and/ or senior citizens and/or employees of Company on the date of allotment, shall be eligible for additional coupon rate of 0.25% p.a. provided the NCD(s) / Bond(s) are held by the investors on the relevant record date of interest payment.

12 Secured against Receivables / Assets of the Company and mortgage of immovable property. Investor who are individual and who are holder of NCD(s) / Bond(s) previously issued by the Company in past public issues and/or are equity shareholder(s) of Company and / or senior citizens and/or employees of Company on the date of allotment, shall be eligible for additional coupon rate of 0.25% p.a. provided the NCD(s) / Bond(s) are held by the investors on the relevant record date of interest payment.

13 Secured against Receivables / Assets of the Company and mortgage of immovable property. Investor who are individual and who are holder of NCD(s) / Bond(s) previously issued by the Company and Srei Equipment Finance Limited, in past public issues and/ or are equity shareholder(s) of the Company and/or are Senior Citizens and/or are Employees of Srei Group (the Company and all its subsidiaries, sub-subsidiaries, associates and group companies), on date of allotment, shall be eligible for additional coupon of 0.25% p.a. provided the proposed NCDs are held by the Investors on the relevant record date of interest payment.

Funds raised Rs. 62,854 Lacs through public issue of Secured, Redeemable Non-Convertible Debentures have been utilised for the purposes as per the terms of the issue.

All the above debentures are redeemable at par.

The above Term Loans are secured by charge on specific assets covered by loan / lease agreements with customers and / or receivables arising therefrom.

1 Includes loans of Rs. Nil (Previous year: Rs. 2,425 Lacs) guaranteed by Export Import Bank of the United States.

4.2 Unsecured Subordinated bonds / debentures (Tier II Capital)

During the year, the Company raised subordinated debt qualifying for Ter II capital amounting to Rs. 2,702 Lacs (Previous year: Rs. Nil) and the same have been utilised for the purposes as per the terms of the issue. The following table sets forth the details of the outstanding:

5. DEFERRED TAX LIABILITIES (Net)

In terms of Accounting Standard 22, the net Deferred Tax Liability (DTL) reversed during the year is Rs. 1,360 Lacs (Previous year: Rs. 241 Lacs). Consequently, the net DTL as at year-end stands at Rs. 8,742 Lacs (Previous Year Rs. 10,102 Lacs). The break-up of major components of net DTL is as follows:

6.1 Nature of certain provisions and their movement

Provision for Bad Debts and Advances is made in the financial statements according to the Prudential Norms prescribed by RBI for NBFCs. The Company also makes additional provision based on the management’s best estimate, to the extent considered necessary.

The Company creates a general provision at 0.40% of the standard assets outstanding on the balance sheet date, as per the RBI Prudential Norms.

The following table sets forth the movement of aforesaid Provisions:

7.1 Working capital facilities from banks, including working capital demand loans earmarked against such facilities, are secured by hypothecation of underlying assets (short-term as well as long-term loan assets) covered by hypothecation loan and operating lease agreements with customers and receivables arising therefrom, ranking pari passu (excluding assets specifically charged to others). As per the prevalent practice, these facilities are renewed on a year-to-year basis and therefore, are revolving in nature.

7.2 Face value of Commercial Paper outstanding as at 31st March, 2018 is Rs. 81,910 Lacs (Previous year Rs. 38,410 Lacs). Face value of maximum outstanding at any time during the year was Rs. 1,39,830 Lacs (Previous year Rs. 1,22,940 Lacs). Face value of Commercial Paper repayable within one year is Rs. 81,910 Lacs (Previous year Rs. 38,410 Lacs).

7.3 The above foreign currency buyer’s credit from banks are repayable by bullet payment and have tenure of upto 1 year. These loans are secured by import documents covering title to capital goods and extension of pari passu charge towards working capital facilities.

8.1 To be credited to Investor Education and Protection Fund as and when due.

8.2 In order to qualify for registration as an ‘Infrastructure Finance Company’, the Company decided not to accept or renew public deposits w.e.f. 20th April, 2010. The amount of public deposits outstanding as on 19th April, 2010 (including matured and unclaimed deposits) along with accrued and future interest thereof is kept in the form of a Fixed Deposit, under lien, with Axis Bank Limited, a scheduled commercial bank, for the purpose of making payment to the depositors. The outstanding balance of the Fixed Deposit as at 31st March, 2018 is Rs.1 Lac (Previous year: Rs. 25 Lacs).

Sahaj is a long-gestation rural distribution & e-governance initiative and due to the accumulated losses, it’s net worth has eroded as at 31st March, 2018. However, Sahaj has informed the Company that it has taken a number of steps as part of a revamped business plan viz. substantial cost rationalisation, business expansion in new geographies and introduction of newer services etc., and its performance is expected to improve significantly over the coming years and that it shall continue to be a going concern in the foreseeable future.

Considering the long-term strategic nature of the investment and also in view of the revamped business plan of Sahaj as enumerated above, no provision is considered necessary by the Company at present, for any diminution in the value of investment and against loans advanced to Sahaj.

1 Secured by underlying assets and in certain cases are additionally secured by immovable properties and / or pledge of equity shares of the borrowers by way of collateral security.

2 a Loans to Others includes assets aggregating Rs. 1,72,541 Lacs (Previous year Rs. 71,176 Lacs) acquired in satisfaction of debt and held for sale.

b In terms of an Order from DRT-I, Kolkata dated 24 December, 2014, Deccan Chronicle Holding Limited (DCHL), one of the borrowers of the Company, had in the financial year 2014-15 allotted to the Company 6,60,37,735 equity shares in DCHL pursuant to conversion of a portion of loan into equity shares by virtue of the Company’s rights under the financial documents. However, during the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016 of DCHL, the Company has come to know that the said allotment of 6,60,37,735 equity shares by DCHL was contrary to law and therefore, void and ineffective. Since DCHL failed to give effect to such conversion, the Company has irrevocably and unconditionally withdrawn its right of conversion of loan into equity shares of DCHL vide its letter dated 23 April, 2018 to Resolution Professional of DCHL.

3 Includes Non-Performing Assets of Rs. 55,582 Lacs (Previous year Rs. 55,880 Lacs).

9. EARNINGS IN FOREIGN CURRENCY

Earnings in foreign currency for the year ended 31st March, 2018 is Rs. Nil (Previous year Rs. Nil )

10. DIVIDEND REMITTED IN FOREIGN CURRENCIES

The company remits the equivalent of the dividend payable to equity shareholders and holders of GDRs. For GDR holders, the dividend is remitted in Indian rupees to the custodian bank.

11. The Company has entered into Options / Swaps / Forward contracts (being derivative instruments) which are not intended for trading or speculation, for the purpose of hedging currency and interest rate related risks. Options, Swaps and Forward contracts outstanding as at year end are as follows:

11.1 The Company with effect from 1st April 2016 (referred to as “Transition date”) has applied the Guidance Note on Accounting for Derivative Contracts issued by the Institute of Chartered Accountants of India (ICAI) (herein after referred to as “Guidance Note”) which is applicable for all derivative contracts other than those covered by an existing notified Accounting Standard (AS) like forward contracts (or other financial instruments which in substance are forward contracts covered) which is covered by AS 11. Further, the said Guidance Note applies to all derivative contracts covered by it and are outstanding as on the transition date with the cumulative impact (net of taxes) as on the transition date recognized in reserves as a transition adjustment and disclosed separately.

11.2 Overall financial risk management objective and policies

Asset Liability Committee (ALCO) manages the Foreign Currency and Interest Rate Risks, besides other market risks / core functions. The company has put in place the policies for hedging / mitigating risks / strategies and processes for continuous monitoring of risks, which will enable the company to quantify risk, both on account of Foreign Currency and Interest Rate Risks. Apart from ALCO there is a Risk Committee of the Board which guides the company in these risks. Risk is measured on the basis of Fair Value as on reporting date. The Board has delegated authority to company officials in the FX Treasury department for entering into Generic derivative products besides Forward Contracts, on behalf of the company, to hedge the Foreign Currency and Interest Rate Risk exposures. The company has a Risk Management Policy which paves the way for risk reporting and risk monitoring systems. The marked-to-market values are obtained from the banks with whom the hedge deals are done. The Company, in order to hedge itself against the adverse impact of fluctuations in foreign currency rates / variable interest benchmark (LIBOR) on underlying liability, enters into the derivative contracts. The Company does not enter into derivative contracts for speculation purposes.

11.3 Methodology used to arrive at the fair value of the derivative contracts

In estimating the fair value of derivative, the Company obtains the marked-to-market values from the banks with whom the hedge deals are done. The fair value gains / losses recognized in the statement of profit and loss and in hedge reserve (equity) are disclosed as follows:

11.4 Hedge accounting relationship

The Company designates derivatives instruments in respect of foreign currency risk and interest rate risk as cash flow hedges. At the inception of the hedge relationship, the Company documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Company documents whether the hedging instrument is highly effective in offsetting changes in cash flows of the hedged item attributable to the hedged risk.

12. LEASES

a. In the capacity of Lessee

(i) The Company has certain cancellable operating lease arrangements for office premises and equipments, which range between 11 months to 15 years and are usually renewable by mutual consent, on mutually agreeable terms. Some of these lease agreements have rent escalation upto 5% p.a. or 10% p.a. on renewals. Lease payments charged to the Statement of Profit and Loss with respect to such leasing arrangements aggregate to Rs. 866 Lacs (Previous year Rs. 828 Lacs).

Contingent rent recognised for agreements which stipulate rent payment based on usage is Rs. Nil (Previous year Rs. 11 Lacs).

(ii) Further, the Company had certain non-cancellable operating lease arrangements for office premises, which was of 21 years and was renewable by mutual consent on mutually agreeable terms. Based on mutual understanding between parties, the agreement was terminated during the year. In respect of such arrangements, lease payments for the year aggregating to Rs.4 Lakhs (Previous year Rs.8 Lakhs) have been recognised in the Statement of Profit and Loss.

The future lease payments in respect of the above non-cancellable operating leases are as follows:

(iii) Sub lease payments received (or receivable) recognised in the Statement of Profit and Loss for the year is Rs. 1,333 Lacs (Previous year Rs. 2,981 Lacs). Future minimum sublease payments expected to be received under non-cancellable subleases is Rs. 875 Lacs (Previous year Rs. 587 Lacs).

b. In the capacity of Lessor

(i) The Company has given assets on Operating lease (refer Note No. 12) for periods ranging between 5 to 15 years. Some of these lease agreements stipulate rental computation on the basis of earnings of the Lessee. Such contingent rent recognised during the year is Rs. 3,173 Lacs (Previous year Rs. 501 Lacs).

(ii) The Company also has cancellable operating lease arrangements for office premises, which range between 1 to 3 years and are usually renewable by mutual consent on mutually agreeable terms. Further, the Company has non-cancellable arrangement which is of 3 years and is renewable by mutual consent on mutually agreeable terms. In respect of non-cancellable arrangements, lease earning for the year aggregating to Rs. 2 Lacs (Previous year Rs. 1 Lac) have been recognised in the Statement of Profit and Loss.

13. DISCLOSURE PURSUANT TO ACCOUNTING STANDARD (AS) 15 - EMPLOYEE BENEFITS

The trustees of the gratuity scheme for the employees of the Company have entrusted the administration of the scheme to the Life Insurance Corporation of India (LIC).

(a) Expenses recognised in the Statement of Profit and Loss are as follows:

(b) Net Liability recognised in the Balance Sheet is as follows:

(c) Changes in the present value of the defined benefit obligations are as follows:

(d) The details of fair value of plan assets at the Balance Sheet date are as follows:

(e) The principal assumptions used in determining the gratuity and leave liability are as shown below:

(f) The amounts for the current and previous years are as follows:

(g) The estimate of future salary increase, considered in actuarial valuation, takes account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employee market.

(h) The amount provided for defined contribution plan is as follows:

14. Information as required by Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 is furnished vide Annexure - II attached herewith.

15. Figures pertaining to the previous year have been rearranged / regrouped, wherever necessary, to make them comparable with those of current year.

16. Disclosures on Risk Exposure in Derivatives (i) Qualitative Disclosure

The structure and organization for management of risk in derivatives trading, is not applicable since the Company is not engaged in derivative trading.

Besides other market risks / core functions, Asset Liability Committee (ALCO) manages the Foreign Currency and Interest Rate Risks also. The company has put in place the policies for hedging / mitigating risks / strategies and processes for continuous monitoring of risks, which will enable the company to quantify risk, both on account of Foreign Currency and Interest Rate Risks. Apart from ALCO there is a Risk Committee of the Board which guides the company in these risks.

The Board has delegated authority to company officials in the Forex Treasury department for entering into Generic derivative products besides Forward Contracts, on behalf of the company, to hedge the Foreign Currency and Interest Rate Risk exposures.

The company has a Market Risk Policy which paves the way for risk reporting and risk monitoring systems. The marked-to-market values are obtained from the banks with whom the hedge deals are done.

The Company, in order to hedge itself against the adverse impact of fluctuations in foreign currency rates / variable interest benchmark on underlying liability, enters into derivative contracts. Derivate contracts which are covered under AS 11, are accounted for as per the aforesaid policy for Foreign Currency Transactions and Translations.

The Company does not enter into derivative contracts for speculation or trading purposes. In accordance with the Guidance Note on Accounting for Derivatives (‘Guidance Note’) issued by the Institute of Chartered Accountants of India, the Company has classified derivative contracts (not covered under AS 11) as a hedging instrument and adopted cash flow hegde accounting model. The hedging instrument is measured at fair value, but any gain or loss that is determined to be an effective hedge is recognised in cash flow hedge reserve and recycled to the statement of profit & loss to offset the gains and losses of the hedged items.

The premium or discount arising at the inception of forward exchange contracts is amortised as expense or income over the life of the respective contracts. Exchange differences on such contracts are recognised in the Statement of Profit and Loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or expense in the year in which it is cancelled or renewed.

17. Details of Single Borrower Limit (SGL) / Group Borrower Limit (GBL) exceeded by the applicable NBFC

The Company has not exceeded the Prudential exposure limits during the current year and previous year in respect of exposure towards single borrower and group of borrowers.

18. Unsecured Advances

Unsecured advance as at 31st March, 2018 is Rs. 27,302 lacs (Previous year Rs. 59,314 lacs) and it includes advances amounting to Rs. Nil (Previous year Rs. Nil) for which intangible securities such as charge over rights, licences, authority, etc., has been taken as collateral.

19. Registration obtained from other financial sector regulators

The Company received a Certificate of Registration from the Reserve Bank of India (‘RBI’) on 1st August, 1998 to commence / carry on the business of Non-Banking Financial Institution (‘NBFI’) and was subsequently classified as Infrastructure Finance Company vide Certificate of Registration dated 11th May, 2010. The Company is also a Public Financial Institution (PFI) notified under section 4A of the Companies Act, 1956.

20. Disclosure of Penalties imposed by RBI and other regulators

No penalites has been imposed by RBI and other regulators during the financial year ended 31st March, 2018 and 31st March, 2017

21. Draw Down from Reserves

Details of draw down from Reserves is disclosed in Note No. 3 of Notes to Financial Statements.

22. Details of Financing of Parent Company Products

Financing of Parent Company Products during the financial year ended 31st March, 2018 is Nil (Previous year Nil).

23. The Company has not done any Securitisation during the financial year ended 31st March, 2018 and 31st March, 2017.