Capital First yearly profit after tax up 44%
Capital First Limited reported a profit after tax of Rs238.9 crore for FY17, an increase of 44% from Rs166.1 crore in FY 16. Capital First reported a profit after tax of Rs70.8 Crores for Q4 FY17, an increase of 49% from Rs47.5 crores in Q4 FY 16. This is the highest ever quarterly profit in the history of the company, according to a release from the company.
 
The net interest Income grew 59% to Rs1,300.8 crore in FY17 from Rs818.1 crore in FY16. Total income including fees grew 65% to Rs1,640.3 crore in FY17, from Rs991.8 crore in FY16.
 
The company’s AUM (assets under management) grew Rs19,824 crore as on 31 March 2017 with its retail loan portfolio contributing to 93% of its overall AUM as of 31 March 2017. The retail loan book grew by 33% to Rs18,353 crore as on 31 March 2017, up from Rs13,756 crore as on 31 March 2016.
 
The gross NPAs (non-performing assets) of the company have come down to 0.95% as of 31 March 2017 as compared to 1.08% as of 31 March 2016. The net NPAs of the company have come down to 0.30% as of 31 March 2017 as compared to 0.56% as of 31 March 2016. The Provision Coverage Ratio (PCR) has improved to 69% as of 31 March 2017 as compared to 48% as of 31 March 2016. The company has not opted for 90 days relaxation extended by RBI (Reserve Bank of India) for recognition of sub-standard assets.
 
The Capital Adequacy Ratio of the company stood at 20.35% as of 31 March 2017.
 
Capital First Limited is a non-banking finance company specializing in MSME (Micro, Small and Medium Enterprises) and consumer financing supported by proprietary credit evaluation methodologies and strong credit scoring platform. The company also offers loans to salaried consumers and small enterprises primarily for home loans, two wheeler loans, durable loans, working capital, short term business needs and for consumption.
 

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Infosys to 'fire' many techies for 'non-performance'
Infosys plans to soon "fire" an unspecified number of its techies for "non-performance", over a week after announcing on May 2 that it would hire 10,000 Americans in the US, said the global software major on Wednesday.
 
"A continued low feedback on performance could lead to certain performance actions, including separation of an individual," said the city-based company in a statement.
 
As a bi-annual exercise, the IT major's management would make performance assessments of its employees, keeping in view the business goals set for individuals.
 
"Performance assessments are done with reference to the goals individuals have on business objectives and other strategic priorities, asserted the company in the statement here.
 
Though the outsourcing firm declined to mention how many pink slips it would hand out, sources said they could be in hundreds at middle and senior levels, working in its development centres across the country and a few in its overseas offices or subsidiaries.
 
The proposed sacking by the troubled company follows similar layoff moves by rivals Wipro, TCS and Congnizant to right size their human resources and reduce cost of operations in a tough environment, with disruptive technologies and declining IT spend by enterprises worldwide due to sluggish economy.
 
The US-based Cognizant of Indian promoters last week announced a voluntary separation programme to some of its top-level executives, including directors, associate vice-presidents and senior vice-presidents with a "golden handshake".
 
Rival Wipro too sacked about 600-700 employees during the fiscal 2016-17, ostensibly for non-performance or not rising to its expectations.
 
Infosys' 'hire and fire' policy comes months after a whopping 37,915 engineers left the company and its hiring plunged 65 per cent in the last fiscal 2016-17, due to increasing automation and thrust on artificial intelligence in its operations and projects.
 
According to its employee metrics, though the company hired (gross addition) 44,235 techies in FY 2017, the exodus led to the net addition slump to 6,320 for the fiscal.
 
Net addition for the fourth quarter was 601, while it was negative or minus 66 in the third quarter and 661 in Q4 in 2016.
 
Hiring of laterals (seniors with 10 or more years of experience) also declined to 18,979 in the fiscal 2017) from 24,719 in FY 2016.
 
The company's total headcount for FY 2017 increased 6,320 to 200,364 from 194,044 in FY 2016.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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RBI relaxes JLF quantitative criteria for approving a restructuring plan
The Joint Lenders’ Forum (JLF) and Corrective Action Plan (CAP) work on the principle of identifying the stress in a borrower and cure it at its nascent stage. The intent is to preserve the economic value of the underlying assets against the loan extended by the creditor. 
 
The RBI has on 5 May 2017 rolled out an Amendment Notification on the “Framework for Revitalising Distressed Assets in the Economy – Guidelines on JLF and CAP”, originally put to effect from 1 April 2014.
 
The guidelines are more as a set of instructions that the lenders under consortium or Multiple Banking Arrangements (MBA) and/or banks as individual lenders have to follow. Differently, resolution under Insolvency and Bankrutpcy Code, 2016 (IBC) is not instructions but a treatment or medication for both creditors and corporate debtors. While the RBI guidelines for CAP are aimed at revitalising stressed assets, IBC is a one-stop forum for all types of resolution.  
 
Decrease in the quantitative criteria for passing a resolution 
 
Vide the Amendment Notification, the majority of consensus required for approval of any resolution plan in the JLF has been decreased to 60% of creditors by value and 50% of creditors by number respectively, thereby relaxing the quantitative criteria required to approve a restructuring plan. 
 
Prior to the Amendment Notification, decisions under JLF mechanism required consent of 75% of creditors by value and 60% by number for restructuring of accounts of stressed assets under the guidelines. However, by virtue of the latest Amendment Notification, it seems that the resolution process will be facilitated and approvals may be given faster and plans implemented sooner.
 
As was the situation all this while, the same continues inasmuch as such resolution/ restructuring plan, once approved, will be binding on all lenders, irrespective of the vote cast by them. However, the Amendment Notification allows a bank to exit the decision approved by the JLF, by selling its loan to another JLF member (referred to as ‘exit by substitution’) within the time stipulated in the JLF framework. If the bank is unable to firm up its decision within the stipulated time, than the decision of the JLF shall be binding on the bank.
 
Board of Banks to provide adequate authority and mandate for implementation of JLF decisions
 
So as to curb the lethargic practice of the banks of not providing adequate authority to its representatives, which proves to be an impediment in the entire restructuring process, the Amendment Notification specifically provides that, henceforth, lenders shall ensure that their representatives in the JLF are equipped with appropriate mandates and the employees with adequate powers to implement the JLF decision without any further power from the lender’s board. 
 
Unlike earlier, the Amendment Notification clearly says that once they participate, the stand of the participating banks, while voting, cannot be ambiguous or conditional. The same has to be voted and accepted “as approved” without any conditionality, which means that whatever concerns a lender has, has to be taken into cognisance during the preparation of the restructuring plan. 
 
Additional mode of a restructuring plan 
 
The Amendment Notification provides that the restructuring plan under JLF can now include flexible structuring of loans, change of ownership under strategic debt restructuring (SDR), and even the latest RBI framework on Scheme for Sustainable Structuring of Stressed Assets (S4A). 
 
The conventional mode of restructuring was via corporate debt restructuring (CDR) route or in the case of outside CDR, then by carrying out the detailed Techno-Economic Viability (TEV) study. 
 
Penalty on delay in implementation 
 
In spite of specific timelines clearly provided in the RBI notifications, within which lenders have to decide and implement the CAP, delays have been observed in finalising and implementation of the CAP, leading to delays in resolution of stressed assets in the banking system. The track records of all the JLFs formed in the country is proof of how matters linger in the name of preparation and implementation of the restructuring plan in a stressed company. 
 
In an attempt to avoid delay by the banks, the Amendment Notification, sternly directs lenders to “scrupulously” adhere to the timelines of the framework, failing which, in addition to the disincentives, in the form of asset classification and accelerated provisioning, monetary penalties have to be paid by the lender as per the Banking Regulation Act. 
 
Difference between JLF and IBC
 
CAP seeks to offer three options for the purpose of resolution, namely, rectification, restructuring and recovery; notably recovery has been considered as the last resort here.
 
What distinguishes this action plan from the resolution process under IBC is that the IBC is in form of a Code, specifically framed and passed as an Act of Parliament, while CAP is enunciated as part of RBI guidelines. For very obvious reasons the Code will have a wider scope and far reaching implications on resolution proceedings. It is also interesting to note that the Code extends its span to include Operational Creditors.
 
Further to this, the Code has set specific timelines to dispose of applications and the resolution process, given its intent to resolve matters in a time-bound manner to defeat red-tape. On the other hand, even though CAP has specific timelines to be followed, delays have been noticed by the RBI in finalising and implementing CAP. 
 
Reasons for delay in case of CAP
 
1. Absence of authorisation from the board of the nationalised banks 
2. Banks with smaller exposure chose to settle outside the JLF
 
Decisions under IBC are taken by a committee of creditors by a vote of 75% of the voting power. In case of JLF, now the decisions shall be taken by 60% of creditors by value and 50% of creditors by number.
 
Patently, the JLF guidelines are applicable for lending under Consortium and MBA, except for instructions in paragraphs 2.1, 7.1, 8 and 9, which shall apply to all cases of lending. On the other hand, IBC is applicable to all types of creditors, both financial and operational.
 
(Nitu Poddar is a practicing Company Secretary while Vallari Dubey is an Executive at Vinod Kothari & Company)
 

 

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