Section 172(1) Statement

Section 172(1) Statement for the year ended 31 March 2020

Section 172 of the Companies Act 2006 requires a Director of a company to act in good faith to promote the success of the company for the benefit of its members as a whole. In doing this, section 172 requires a Director to have regard to the company’s reputation, a range of stakeholders and required resources in addition to shareholders, and to the long-term success of the company.

In the following section we detail the key stakeholders in the company and resources on which it relies for long-term success. We look at the interests of these parties, how we have engaged with them and, where significant decisions have been made during the year, how that engagement has influenced our decisions. In doing this the directors consider themselves to be fulfilling their duty under section 172 of the Companies Act 2006.


Having given careful consideration to these matters, the directors have concluded that the key factors and stakeholders to consider and the reasons we have considered them are as follows:

Financial stakeholders
Our financial shareholders provide our financial capital which allows us to engage in our principal activity of making long-term loans.

Our shareholder is India Infrastructure Finance Company Limited (IIFCL), which is, itself, owned by the Government of India.

Our other principal financial stakeholders, through holdings of bonds we have issued, are the Reserve Bank of India and the Government of India, which guarantees those bonds. To date we have raised USD 2.5bn under this arrangement and have an approval which allows for issuance of up to USD 5bn.

These stakeholders expect us to facilitate the development of infrastructure sector through financing as per SIFTI and other Government of India approved schemes.

We engage with our shareholder through providing regular business updates and the minutes of all our Board meetings are also placed in the Board meetings of our parent company (IIFCL). Also, through our AGM, which usually all board members attend. We also engage with our bondholder through periodic updates about funds deployed and other information including our audited financial statements and Annual Report.

Lending to our customers is the reason for our existence as a company. Communications with customers happen throughout the year both formally and informally including both direct communication and discussions through lending consortia. Since lending to infrastructure projects is typically for very long periods and during which the economic and regulatory environment may change, various amendments in the terms of loans may occasionally be required and the Board considers such requests for modifications on a case to case basis keeping in mind, inter alia, the interest of the company and the impact on development of the infrastructure sector in India.

The company has only three employees and therefore it is possible to have continuing two-way communication with employees without an extensive formal structure. Engagement with employees and their feedback is almost on ongoing basis.

Long-term success and high business standards
The company strives to maintain high business standards at all times as this is key to its relationships with its financial stakeholders and customers. Continuing high business standards are key to its ability to maintain its relationship with the shareholder and bondholder and managing risk and thus to the long-term success of the company.

Impact of views of stakeholders and consideration of resources on decisions made during the year
To illustrate the consideration of the directors in regard to the stakeholders above we note below some of the decisions made by the board during the year and their effect on the parties and matters above.

Equity increase: Having considered among other things, the effect of the provisions required by IFRS 9 on the company’s equity it was determined that the company should seek additional equity from its shareholder. The additional equity contributes positively to the perceived stability of the business for customers. Though the company continues to have a negative net equity position the directors believe that the positive cash flow being generated by the company, the support from the Government of India, the Reserve Bank of India and the parent company and the approval for extension of the bond issuance noted below also support the company’s stability and growth.

Subscription Agreement for Bond issuance to Reserve Bank of India: The company’s existing agreement for bond issuance with the Reserve Bank of India had been due to expire in March 2020. The Reserve Bank of India has agreed for an extension of this agreement till March 2023 which enables it to continue to raise funds under the agreement and contributes to its ability to augment its operations as noted above.

Decisions relating to employees: The directors of the company considered the effects of the COVID-19 pandemic on employees and, having considered government advice and keeping that safety of our staff is paramount, instituted appropriate safety measures to protect directors and employees while the pandemic continues. These include remote working / providing facilities to work from home etc. Keeping in view the increasing workload and to augment growth, the company also decided to recruit additional employees.

Deferrals of interest and principal due to COVID-19: The global pandemic COVID – 19 has affected most countries and many businesses across the globe. Due to the pandemic and the lockdown instituted because of it in many countries including India, the Reserve Bank of India also allowed banks/financial institutions the option of offering a moratorium in payments of interest and principal on lending. The company has provided a similar option where requested by borrowers. Only a few borrowers have availed such a deferral. During the deferral interest continues to accrue. This is not expected to have any material impact on the liquidity position of the company.
In addition the Government of India approved changes in schemes SIFTI, the New Refinance Scheme and Credit Enhancement Scheme which were adopted by the Board of the company. In terms of the New Refinance Scheme, the company has disbursed a term loan of USD 170 million to one of the eligible institutions since the year end, pursuant to its approval by the Company’s Board.

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Rakesh Kumar
Managing Director
Phone: +44-20-7776 8951

Eshant Aggarwal
Phone: +44-20-7776 8954/55