INDIA INFOLINE FINANCE LIMITED - Securities and Exchange ...

India Infoline Finance Limited
OUR STRENGTHS
Our Parentage
We believe we benefit extensively from our Promoter, IIFL, which is a diversified financial services company
with a pan-India presence. IIFL is a well established brand among retail, institutional and corporate investors in
India. IIFL along with its subsidiaries offers a wide range of products and services including retail broking,
institutional equities, commodities and currency broking, wealth advisory, credit & finance, insurance broking,
asset management, financial products distribution & investment banking. IIFL offers advisory/ broking/
distribution services in certain overseas locations through its overseas subsidiaries. IIFL is currently listed on
BSE and NSE. The IIFL brand is associated with trust, knowledge leadership and high quality services. We
believe we have been able to leverage on our Promoter to grow our business, build relationships and also attract
talent. We extensively leverage upon IIFL’s distribution network and its understanding of the market and
customer needs.
We draw upon a range of resources and shared resources from IIFL such as human resources, operations,
information technology, accounts, legal & compliance, audit, administration, infrastructure, etc. We believe we
can further leverage upon the branch network of IIFL for expansion, new product launch & building scale. For
further information please refer to the chapter titled “Our Promoter” on page 93 of this Draft Prospectus.
Secured Loan Book and Strong Asset Quality
Since 2008, we have been providing only secured finance which ensures lower NPAs and lesser recovery related
problems. As of March 31, 2012, over 99% of our Loan Book on a consolidated basis is secured.
The Mortgage Loans are secured with a mortgage of residential property, land, commercial properties, which
are either under construction or fully developed. Additionally, the disbursements are collaterally secured by a
guarantee from the borrower or with a co-applicant. The Capital Market Finance loans are secured by specified
equity shares, vested ESOPs, mutual fund units, structured notes bonds, debentures and collaterals approved by
the Approval Committee (“Approved Securities”). As a policy, for Mortgage Loans we lend up to 65% of value
of property for Loan Against Property and upto 80% for Home Loans. For our Capital Market Finance we
finance upto 90% of value of the Approved Security depending on the type and liquidity of the Approved
Security with a daily monitoring of margins. As per our existing policy, Gold Loans are secured against used
gold ornaments upto 60% of the gold jewellery value. We believe this policy provides us a cushion against
possible defaults. We believe that our robust credit approval mechanisms, credit control processes, audit and
risk management processes and policies help us maintain the quality of our loan portfolio.
We maintain provisions on our Loan Book on a conservative basis. Our provision coverage ratio is 28.07% of
gross NPAs as on March 31, 2012. As on March 31, 2012 on a consolidated basis our net NPA constituted
0.40% of our Loan Book, as compared to 0.36% of our Loan Book as on March 31, 2011.
We are adequately capitalized to fund our growth
We are subject to capital adequacy ratio (“CAR”) requirements prescribed by RBI. We are currently required to
maintain a minimum of 15% as prescribed under the Prudential Norms of RBI based on our total capital to risk
weighted assets. As part of our governance policy, we ordinarily maintain capital adequacy higher than
statutorily prescribed CAR. As of March 31, 2012 our capital adequacy ratio computed on the basis of
applicable RBI requirement was 17.86% as compared to a minimum of capital adequacy requirement of 15%
stipulated by RBI for FY11.
Set forth below is our capital adequacy ratio for the last four fiscal years on a standalone basis.
Year FY 2012 FY 2011 FY 2010 FY 2009
Capital Adequacy Ratio 17.86% 29.95% 47.65% 97.77%
Access to cost effective funding sources
Our fund requirements are currently predominantly sourced through term loans from banks, issue of redeemable
non-convertible debentures on a private placement basis and cash credit from banks including working capital
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