apsfc annual report 2014 final 27-8-14 low res
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ANNUAL REPORTTRANSCRIPT
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158th Annual Report 2013 - 2014
K. Narasimha MurthyCost & Management Consultant
M. B. N. RaoFormer CMD,
Indian Bank & Canara Bank
K. Harish Chandra PrasadIndustrialist
V. SridharGeneral Manager, SIDBI, Mumbai
Satish Madhusudan KarambelkarGeneral Manager, SIDBI, Hyderabad
J.S.V. Prasad, IASManaging Director
T.S. Appa Rao, IAS (Retd.)Chairman
Corporate Governance
MD AzeezuddinSr. Divisional Manager, LIC of India
Koteswara Rao SSRChartered Accountant
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Andhra Pradesh State Financial Corporation
2 58th Annual Report 2013 - 2014
Ass
ista
nt
Gen
era
l M
an
ag
ers
T. Swarnalatha SK. Ghouse Basha R. Prabhakar Goud Ts. Sudhakar
T.S.N. Raja K. S. Rao Ch. Anil Kumar
D. Suresam K. Hari Babu R. Satrughna Sarma P Ramakrishna Reddy
P. S. Satyanarayana A. Nagaiah G. Venkateswara Rao M. Chandra Prakash
P. Seshadri Shekhar V.P. Arun Mohzi M. Ramalingam P.S.S. Sekharudu
K.M.K. Prasad Y.N. Rajendra Kumar I. Ramachandra Rao Rathod Ramsingh
K. Rambabu G. Kishore Babu N. Prasada Rao
Dr. PS Rajeswara Prasad E. Chengalrayulu
Dep
uty
Gen
era
l M
an
ag
ers
Gen
era
l M
an
ag
ers
Executive Director Chief General Manager
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358th Annual Report 2013 - 2014
Contents
Chairmans Statement ............................................................................. 5
From Managing Directors Desk .............................................................. 9
Notice to Shareholders ............................................................................ 11
Directors Report ..................................................................................... 13
Annual Accounts and Financial Statements
Auditors Report .............................................................................. 31
Balance Sheet ................................................................................. 33
Profit&LossAccount ....................................................................... 34
Schedules ....................................................................................... 36
Cash Flow Statement ....................................................................... 55
Business, Sources and Uses of Funds ................................................ 56
Details of Bonds Maturity ......................................................................... 59
Tables on Corporate Performance ............................................................ 63
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Andhra Pradesh State Financial Corporation
4 58th Annual Report 2013 - 2014
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558th Annual Report 2013 - 2014
Chairmans Statement
Dear Shareholders,
APSFCs performance during the Financial Year
2013-14 demonstrated its ability to respond to the
challenges posed by slowdown in the economy
and its impact on the industry. As Chairman of the
Corporation, I am privileged to report yet another
satisfactory performance of the Corporation in spite
of the Administrative uncertainties prevailing before
and after the decision to Re-organise the State. The
Corporation continued to maintain its lead position
in the Key Result Areas of Sanctions, Disbursements
and Recoveries among all SFCs in the Country for the
13th year in succession.
Economy
The economic slowdown bottomed out last year. A
spell of global financial turbulence caused capital
outflows and pressure on the exchange rate, but
strong policy measures stabilized the currency, rebuilt
reserves,andnarrowedtheexcessivecurrentaccount
deficit.
Weaknesses remain, however, and include persistent
inflation,fiscalimbalances,bottleneckstoinvestment
andinefficienciesthatrequirestructuralreforms.
The governments initial estimates peg the growth
in GDP at 4.9% in Fiscal Year 2013. The marginal
pickup in headline GDP growth masks underlying
weakness in the economy as it was due to stronger
agriculture. The economic downturn of recent years
appears to have calmed, and with new stable
Government at Centre and the policy initiatives
taken by the Government, GDP growth in FY2014 is
expectedtogoupwardby5.4%to5.9%onimproved
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Andhra Pradesh State Financial Corporation
6 58th Annual Report 2013 - 2014
performance in industry and services. However, there
is the threatofescalationofconflict in Iraqwith its
likely impact on fuel prices and inflation. Another
major concern is the monsoon. As we all know that
Economies operate in cycles, let us hope that the
Economy would surge ahead overcoming these and
other hurdles.
The year just concluded saw the State bifurcated into
two. Industrial and Business activity was affected due
to prolonged political uncertainty and unrest. The
performance of the banking sector was adversely
affectedandyourCorporationisnoexceptiontoit.
The re-organisation process is continuing during the
currentfinancialyearalsoandmayhaveimpacton
the performance of the Corporation.
Performance
During the Financial Year 2013-14, the Corporation
sanctioned Rs.1315.34 crore and disbursed
Rs.882.76 crore as against Rs.1430.12 crore and
Rs.951.41 crore respectively during the previous
financial year 2012-13. The lower performance is
due to uncertainties prevailed in the state on account
of Re-organisation and APSFC concentrated on
consolidation and was selective in lending to projects.
The Corporation achieved all time high recoveries
of Rs.1076.44 crore in FY 2013-14 compared to
Rs.988.99 crore achieved during the previous year.
During the Current Financial year 2013-14, the
CorporationearnedanoperatingprofitofRs.93.58
crore against Rs.98.10 crore earned in the previous
year. The Corporation has earned a net profit of
Rs.40.14 crore during current year, after making
necessaryprovisions towards taxation,provision for
NPAs etc.
TheCapitalAdequacyRatio[CAR]stoodat13.26%,
average cost of borrowings stood at 9.77% as at
31.03.2014. The net NPAs have gone upto Rs.135.14
crore as on 31.03.2014 from Rs.88.99 crore as on
31.03.2013. The Corporation is determined to
bring down the NPAs during 2014-15 by improving
recoveries.
The Corporation has initiated the process of Re-
organising the Corporation consequent upon
bifurcation of the state.
Management
The Board of Directors with diverse and rich
experience have laid down clear cut policies and
guidelines and guided the Management for proper
and effective implementation.
The Managing Director, Sri T.Satyanarayana Rao,
IAS., has steered the Corporation successfully during
the period of uncertainty.
I takethisopportunity toextendmygratitudetomy
colleagues on the Board for their excellent support
and look forward for their valuable support in the
years to come.
Employees
I am proud to commend the extraordinary efforts
of the Senior Officers and employees of the
Corporation for delivering the Organisational goals.
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758th Annual Report 2013 - 2014
Their commitment, professionalism and team work
in serving the customers has lent an identity to the
Corporation.
Outlook
In the backdrop of bifurcation of State into Two
States,theongoingandcomingyearsareexpectedto
open up lot of opportunities for both Telangana and
Andhra Pradesh States. The Central Governments
announcement of special package to the residuary
StateofAndhraPradeshisexpectedtospurindustrial
activity in that State. The Corporation has strong
presence in Telangana State and will continue to
retain the same.
We will continue to strive hard for achieving the
organisational goals by implementing customer
centric schemes, concentrating thrust areas in MSME
sector, identifying emerging sectors and meeting
customerrequirements.
Acknowledgement
I am grateful for the support of the Government of
Andhra Pradesh and Small Industries Development
Bank of India. I convey my gratitude to the Union
Government, Reserve Bank of India and Commercial
Banks for their continued support and guidance.
I express my gratitude to the Shareholders of the
Corporation for the trust reposed on the Corporation.
I am thankful to our esteemed customers for their
continued patronage and support.
I would like to propose a special thanks to the
previous Managing Director, Sri T.Satyanarayana
Rao, IAS., for his focused efforts for achieving the
organisational goals and the teamofOfficers and
staff of the Corporation.
T.S. APPA RAO CHAIRMAN
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Andhra Pradesh State Financial Corporation
8 58th Annual Report 2013 - 2014
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958th Annual Report 2013 - 2014
From Managing Directors Desk
During the FY 2014 despite the adverse market
conditions prevailing in the economy in general
and Andhra Pradesh in particular, the Corporation
recorded a decent performance in key result areas of
sanction, disbursement and recoveries.
The performance during the period under report are as under:
t The loan portfolio registered a year on year growth of 6.50%.
t The Corporation Sanctioned Rs.1315.34 crore against Rs.1430.12 crore in the previous year.
t The disbursements clocked at Rs.882.76 crore as against Rs.951.41 crore in in the previous
year.
t The principal collections stood at Rs.668.14 crore against the previous year collections of
Rs.619.31 crore.
t The interest income increased to Rs.408.30 crore from Rs.369.68 crore during the previous
year. The operating profit stood at Rs.93.58
crore against Rs.98.10 crore. The net profit
stood at Rs.40.14 crore against Rs.63.35
crore in the previous year.
The Corporation managed its funds position
successfully during the current financial year even
thoughSIDBIreduceditsrefinancesupportbylimiting
the refinance amount to Rs.184.30 crore during
the FY 2014, being 50% of the refinance amount
repaid by the Corporation. The Corporation raised
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Andhra Pradesh State Financial Corporation
10 58th Annual Report 2013 - 2014
Non-SLR Bonds amounting to Rs.208.00 crore at a
competitive coupon rates. In order to meet the gap,
the Corporation raised funds from commercial banks
toanextentofRs.418.00crore.
The loan portfolio registered growth in absolute
terms to Rs.2926.77 crore as on 31.03.2014 from
Rs.2748.19 crore as on 31.03.2013. The net NPAs
increased to 4.83% as on 31.03.2014 against 3.34%
in the previous year due to increased assets in sub-
standard category. Action plan is being drawn to
contain NPAs.
The Corporations net worth improved to Rs.445.11
crore as on 31.03.2014 from Rs.433.39 crore as on
31.03.2013 registering a growth of 2.70%. While
the increased provisioning requirements, have led
tomarginaldipinCapitalAdequacyRatio(CAR),the
CARnowstandsat13.26%asagainst requirement
of 9% CAR.
The performance in key result areas of sanctions,
disbursements and recoveries during Financial Year
2014 has enabled the Corporation to retain the
Number One position among all SFCs in the country
for the thirteenth year in a row.
The Corporation is examining the challenges and
opportunities in the wake of bifurcation of the State.
To bring comprehensive reforms and make the
Corporation vibrant to face the emerging challenges
and perform well we have hired the services of Indian
Institute of Management (Bengaluru) to assess the
current situation and suggest the way forward. The
Corporation is in the process of reorganisation for
creating a separate State Corporation for the State
of Telangana with approval of Government of India
in terms of the Andhra Pradesh State Reorganisation
Act, 2014. I am sure that the Corporations will work
hard towards achieving the set goals in the coming
years.
J.S.V. PRASAD MANAGING DIRECTOR
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1158th Annual Report 2013 - 2014
NOTICE TO SHARE HOLDERS
Itisherebynotifiedthatthe58thAnnualGeneralMeetingoftheShareholdersofANDHRAPRADESHSTATE
FINANCIAL CORPORATION will be held at 11.00 a.m., on Saturday the 26th July, 2014, at the Head
OfficeoftheCorporation,5-9-194,ChiragAliLane,Hyderabad-500001,AndhraPradesh,totransactthe
following business:
1) To receive, consider and adopt the Balance Sheet as at 31st March, 2014 and the
Profit and Loss Account for the year ended 31st March, 2014, together with the
Report of the Board of Directors and the Report of the Auditors.
2) To declare dividend on equity shares.
For and on behalf of the Board
Sd/-
MANAGING DIRECTOR
Place: Hyderabad
Date: 02.07.2014.
N.B.:
1. The Share Transfer Book and Register of members of the Corporation will be closed from Thursday, July 10,
2014toSaturday,July26,2014(bothdaysinclusive).ShareholdersarerequestedtointimatetheCorporation
the change of address, if any, immediately.
2.TheBoardofDirectorshaverecommendedadividendof2%(Rs.2perequityshare)onpaidupequityshare
capitalforthefinancialyear2013-14.
3.AmemberentitledtoattendandvoteattheMeetingisentitledtoappointaproxytoattendandvoteinstead
ofhimself/herself,butaproxysoappointedshallnothaveanyrighttospeakatthemeeting.Theproxyform,
dulystampedandexecuted,mustreachtheChiefGeneralManager(F&A),HeadOfficeoftheCorporationnot
lessthantwocleardaysbeforethedatefixedfortheMeeting.
4.ThelistofshareholdersisavailableattheHeadOfficeoftheCorporationforpurchaseatRs.50/-percopy.
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Andhra Pradesh State Financial Corporation
12 58th Annual Report 2013 - 2014
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1358th Annual Report 2013 - 2014
Dear Shareholders,
Your Directors have great pleasure in presenting
the 58th Annual Report of the Corporation
together with the Audited Accounts for the year
ended 31st March, 2014.
I. ECONOMIC SCENARIO
1. GLOBAL ECONOMY
Growth in advanced economies is projected
to strengthen moderately during 201415,
building up momentum from the gains in 2013.
World Bank in its latest report (April, 2014)
lowered its forecast for developing countries,
now eying growth at 4.8 percent this year, down
from its January estimate of 5.3 per cent. Signs
point to strengthening in 2015 and 2016 to 5.4
and 5.5 per cent, respectively.
Monetary conditions have remained broadly
supportive in advanced economies, but more
so in the United States than in the euro area
or Japan. Policy rates remain close to the zero
lower bound, but they are expected to raise
beginningin2015.Credittothenon-financial
private sector in the euro area has continued to
decline, reflecting tight lending standards and
weak demand.
2. INDIAN ECONOMY
The Indian Economy underwent a challenging
phase during the financial year 2013-14
entangled by subdued domestic growth and
inflationary pressures. Thus, the economic
landscape created certain uncertainties and risks
in the investment arena. While the Government
DIRECTORS REPORT
In emerging and developing
Asia,growthisexpectedtorise
to 5.7 percent in 2015, helped
by stronger external demand
and weaker currencies. Among
emerging market economies,
growth is projected to remain
robust in emerging and
developing Asia and to recover
somewhat in Latin America and
the Caribbean.TYCHE Die Castings, Ranga Reddy District
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Andhra Pradesh State Financial Corporation
14 58th Annual Report 2013 - 2014
of India and Reserve Bank of India, in the wake
of difficult macro economic situation, initiated
several corrective steps to propel the economic
growth, the desired results could not be achieved.
The industrial sector was impacted due to supply
constraints, weak demand scenario besides high
cost of credit. Even though, the manufacturing
sector was under-performing since financial
year 2011-12, it recorded an average negative
growth rate so far. During this year, the service
sector also recorded a lowest growth rate of the
last decade.
Consequent to the subdued industrial activity
and weak performance of Corporate Sector
credit growth was impacted. Further, prolonged
slowdownstronglyaffectedtheassetqualityof
the Financial Institutions/Banks which lead to
significantincreaseinrestructuringofassets.
and have become highly vulnerable to the
business cycles. SMEs being the most important
segment of economy accounting for 45% of
manufacturingoutput,40%ofexportsandaround
15% of GDP, their underperformance affected
the Credit Portfolio of the Financial Institutions/
Banks and your Corporation is no exception.
Theloandelinquencieshavebeenconsiderably
higher as compared to the previous year.
There are positive signs in the direction of
improvement in domestic business climate
and confidence after General Elections. The
conducive macros may lift the capital productivity
which in turn will take GDP growth to 6-6.5%
levels as per the estimates by CRISIL but for
the ELNINOphenomenon. It is expected that
credit quality pressures have bottomed out
and improvement will now be gradual due to
recovery of economy.
As per the CRISIL Ratings
round up report, downgrades
continued to outnumber the
upgrades during 2013-14
reflecting unrelenting pressure
on credit quality of Corporate
India. The present sluggish
business environment coupled
with power problem has lowered
therevenuesandprofitabilityof
SMEs. They have been affected
more than large companies
Mateez Laboratories, Visakhapatnam District
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1558th Annual Report 2013 - 2014
is also working out a demerger plan in tune with
the A.P. Re-organisation Act.
II. REVIEW OF OPERATIONS
1. Sanctions and Disbursements
During the current Financial Year, the
Corporation sanctioned Rs.1315.34 crore
against Rs.1430.12 crore in the previous year.
3. STATE ECONOMY
Natural resources, policy incentives and
infrastructure in the state are favourably suited
for investments in major sectors such as drugs
and pharmaceuticals, biotechnology, IT and ITes,
minesandminerals,textiles,leatherandtourism.
Andhra Pradesh is one of the foremost states to
havedevelopedsector-specificpolicies.Forming
industrial clusters and developing infrastructure,
such as biotech parks, textile parks, leather
parks, auto parks, fab city and hardware parks,
has been the states key strategy to attract
investments in various industries.
Coming to the business environment in the
State of undivided Andhra Pradesh, the growth
was affected due to power cuts, Seemandhra
agitation etc. Uncertainty was prevailing and
investors largely followed wait and see policy.
Therefore desired business volumes could not be
achieved. Further, due to the adverse business
climate,assetqualityalsogotaffectedleadingto
higher provisions and prudential write offs.
Now that the uncertainty chapter is closed
consequent on bifurcation of the State into
Andhra Pradesh and Telangana, there are good
prospects for growth of the business in the two
States in view of the focused approach by the
newly elected Governments. Your Corporation
Disbursements clocked at Rs.882.76 crore in
thecurrentfinancialyearasagainstRs.951.41
crore during previous year.
2. Recovery Performance
During 2013-14, the Corporation continued its
efforts in the recovery front. The total recoveries
grew to Rs.1076.44 crore from Rs.988.99
crore during the previous year. The Principal
collections during the year stood at Rs.668.14
crore as against Rs.619.31 crore in the previous
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Andhra Pradesh State Financial Corporation
16 58th Annual Report 2013 - 2014
year and interest income rose to Rs.408.30 crore
duringthecurrentfinancialyearfromRs.369.68
crore during the previous year.
Though the Corporations performance is
affected in the key operational areas of sanctions,
disbursements and recoveries during the FY
2013-14, considering the adverse conditions
prevailing in the economy, the results achieved
by the Corporation are satisfactory.
3. Lead Position
During the year under review,
the Corporation continued
its lead position among its
peers in the Country. With
the good performance in all
the key operational areas of
Sanctions, Disbursements and
Recoveries, the Corporation
is likely to retain its NUMBER
ONE position among all SFCs
in the country for the thirteenth
year in a row.
AsianMultiplex,WarangalDistrict
4. Credit Flow Analysis
MSME sector being the backbone to the
Industrialization of the country, has been a thrust
area of both State and Central Governments.
In line with the policy of the Government, the
Corporation has been focusing credit delivery
to this segment. During the year, the bulk
of sanctions and disbursements were shared
together by micro and small enterprises,
which accounted for 72.80% and 51.31% of
the total sanctions and disbursements of the
Corporation respectively. In terms of absolute
amounts, Rs.74.98 crore were sanctioned to
Micro enterprises, Rs.882.58 crore to units in
Small Enterprises, Rs.230.76 crore to Medium
Enterprises and Rs.127.01 crore to others. In
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1758th Annual Report 2013 - 2014
respect of disbursements, Micro enterprises
account for Rs.65.46 crore, Small Enterprises
account for Rs.632.95 crore, Medium Enterprises
account for Rs.127.51 crore, and others account
for Rs.56.84 crore, during the year under
review.
Thenetprofithascomedownduetoincreased
provision for Non-performing assets, employee
benefitsandwriteoffofamountsoverandabove
thestatutoryrequirement.
2. Income & Expenditure
The total income of the Corporation during
2013-14 grew by 10.22% to Rs.453.40 crore
from Rs.411.36 crore in 2012-13, while interest
income stood at Rs.408.30 crore as against
Rs.369.67 crore in 2012-13 recording a growth
of 10.45%, other income was Rs.45.10 crore
during 2013-14 as against Rs.41.69 crore
during the previous year. The growth in interest
III. FINANCIAL PERFORMANCE
1. Profitability
The Corporation has earned a net profit of
Rs.40.14 crore during current year, after making
necessaryprovisionstowardstaxation,NPAsetc.
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Andhra Pradesh State Financial Corporation
18 58th Annual Report 2013 - 2014
income was mainly due to increase in the loan
portfolio. Increase in other income is on account
of increased income from Treasury operation and
interestonFixedDeposits.During2013-14,the
total expenditure increased to Rs.359.82 crore
from Rs.313.27 crore in the previous year. The
increaseinthetotalexpenditurewasonaccount
of increased write off of bad debts during the
yearandinterestpayment.Theinterestexpenses
grew by 16.43% due to repayment of low cost
borrowings and increased cost of borrowings
on Term Loans form banks. The borrowing cost
increased from Rs.202.33 crore in 2012-13 to
Rs.235.59 crore in 2013-14. The operating
expenses were slightly increased to Rs.59.61
crore in the year 2013-14 from Rs.57.10 crore
during the year 2012-13.
3. Net worth
The net worth of the Corporation
improved to Rs.445.11 crore as
on 31.03.2014 from Rs.433.39
crore as on 31.03.2013,
registering a growth of 2.70%.
4. Capital Adequacy Ratio (CAR)
The Core Capital Adequacy
Ratio at the end of FY 2013-
14 stood at 13.26% as against
14.51% as on 31.03.2013
against 9% CAR stipulated by RBI for commercial
banks. The supplementary Capital Adequacy
Ratio stood at 17.43% as on 31.03.2014 as
against 15.10% as on 31.03.2013. The Slight
decrease in Capital Adequacy Ratio is due
to increase in the risk weighted assets, which
moved up by 12.42% to Rs.3356.89 crore as
on 31.03.2014 from Rs.2985.95 crore as on
31.03.2013 as a consequence of enhanced
loans and advances. The Reserves & Surpluses
rose from Rs.235.68 crore to Rs.508.71 crore in
thecurrentfinancialyearduetorevaluationof
fixedassetsandretainedearnings.
5. Expanded Loan Portfolio
The total loan portfolio has expended to
Rs.2926.77 crore as on 31.03.2014 from
Rs.2748.19croreason31.03.2013,reflecting
Shubham Function Hall, Nagole, Ranga Reddy District
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1958th Annual Report 2013 - 2014
market insurance products of LIC of India and
United India Insurance Company Ltd., during the
year. During 2013-14 the Corporation earned
commission from distribution of insurance
products at Rs.40.68 lakh against Rs.37.54
lakhs in the previous year.
IV. RESOURCE MANAGEMENT
1. Resource Mobilization
The aggregate resources raised by the
Corporation during the year stood at Rs.810.30
crore. The Corporation availed term loans from
Commercial Banks aggregating to Rs.418.00
crore. The Corporation issued Non-SLR Bonds
during the year aggregating to Rs.208.00 crore
andavailedRs.184.30crorebywayofRefinance
from SIDBI.
a year-on-year growth of 6.50%. The total loans
and advances, net of NPA provision, grew by
5.31% to Rs.2817.88 crore in the year 2013-14
as against Rs.2675.73 crore in the year 2012-13.
6. The per employee business performance
in the key parameters in 2013-14 vis--vis
2012-13 is as under
(` Lakhs)
Performance Indicator 2013-14 2012-13
Per employee sanctions 326.39 347.12
Per employee Disbursements
219.05 216.88
Per employee Recovery 267.11 225.44
Peremployeenetprofit 9.96 15.38
Per employee operating profit
23.22 23.81
7. Treasury Investments
During 2013-14, the Corporation continued to
invest short term surplus funds
inFixedDeposits withvarious
Banks and mutual funds
approved by the Board, duly
balancingtheliquidityposition.
During 2013-14, the income
from Treasury operations was
Rs.969.41 lakh as against
Rs.775.30 lakh in 2012-13.
8. Non-Fund Based Activities
The Corporation continued to EQIC Dies & Moulds, Ranga Reddy District
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Andhra Pradesh State Financial Corporation
20 58th Annual Report 2013 - 2014
SIDBI with a view to limit its exposure to
SFCs, has been substantially reducing the
Refinance assistance to the Corporation from
2012 onwards. In order to meet the gap,
the Corporation availed term loans from
Commercial Banks. The term loans availed are
Rs.150.00 crore from Canara Bank, Rs.90.00
crore from Bank of India, Rs.55.00 crore from
South Indian Bank, Rs.43.00 crore from Union
Bank of India, Rs.40.00 crore from Corporation
Bank, Rs.30.00 crore form Bank of Maharashtra,
and Rs.10.00 crore from Andhra Bank.
2. Resource Deployment
During the year, the Corporation has maintained
its on dot repayment track record by meeting
all the principal and interest commitments to
all its lenders. The Corporation has repaid
Rs.368.61croretoSIDBItowardsLOC/Refinance
installments, Rs.225.86 crore
was repaid towards Term Loans
of Commercial Banks.
3. Increase in Borrowing Costs
During 2013-14, the
Corporation has repaid
borrowings of Rs.150.00 crore
carrying lower interest rates
ranging between 6.00% and
7.50% to SIDBI. Further the
fresh borrowings from Commercial Bank were
raised at higher rate which led to increase the
weighted average cost of borrowings to 9.77%
in 2013-14 from 9.36% in the previous year.
V. QUALITY INITIATIVES
1. Asset Quality
Standard assets had gone up by 3.71% to
Rs.2682.74 crore in 2013-14 from Rs.2586.73
crore as on 31.03.2013, which worked out to
91.66% of the gross loans and advances. The
Sub-Standard assets and assets in Doubtful
category-1 have gone up to Rs.198.73 crore
from Rs.130.87 crore and Rs.45.30 crore from
Rs.30.58 crore respectively. The gross NPAs have
gone up to Rs.244.03 crore as on 31.03.2014
from Rs.161.46 crore as on 31.03.2013.
The increase in NPAs is mainly on account of
adverse market conditions prevailing in the
Rajaram Garments, Hyderabad
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2158th Annual Report 2013 - 2014
State. The Corporation has
made additional provisions of
Rs.14.72 crore towards 100%
of the net outstanding of the
Doubtful-I assets. Additional
provision of Rs.21.71 crore
was also made towards 20%
of the net outstanding in Sub-
standard asset.
2. NPA Management
The Corporation has conducted
3. Asset Liability Management
The Asset Liability Management Committee
(ALCO) chaired by the Managing Director met
four times during the year and reviewed structural
liquidity,interestratesensitivityanalysis,monthly
cashbudgets,fundingoptions,taximplications
etc. during the year. The cash flows were
managed satisfactorily.
4. Human Resources Initiatives
As on 31.03.2014, the Corporation had staff
strengthof405.TheOfficersarefromvarious
disciplines such as management, engineering,
chartered accountancy, cost accountancy,
company secretary, legal etc.
The Corporation has conducted 5 in-house
training programmes for new recruitees
at APCOB Training College, Hyderabad.
NPA Review meetings at periodical intervals during
2013-14 under the Chairmanship of the
Managing Director besides recovery reviews
at Weekly Departmental Review meetings.
The Corporation also conducted Special OTS
Campaigns for settlement of NPA accounts.
During the year, the Corporation has restructured
102 deserving loan accounts involving an
outstanding amount of Rs.283.40 crore.
XXX Soaps, Guntur District
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Andhra Pradesh State Financial Corporation
22 58th Annual Report 2013 - 2014
Conducted training programme on Upgraded IT
ApplicationstotheOfficersoftheCorporationat
Hyderabad, wherein 212 staff members of the
Corporation have attended. The Corporation
also gave induction training programme for
newly recruited employees. The Corporation
has also sponsored 30Officers for 9 external
training programmes conducted by reputed
institutes like ICAI, ICWAI, RBI College of
Agriculture Banking, IDRBT, Dr.MCR HRD
Institute etc., covering topics like Cost & Risk
Management, Accounting Standards, Service
Tax, etc. The Corporation also sponsored an
Officer for an Overseas Training Programme.
TheCorporationcontinuedtoextendcounselling
services to the students of Professional colleges
and36studentswerebenefitedduring2013-14.
Vijayawada, Rajahmundry, Visakhapatnam and
Tirupati. The campaigns drew good response
fromtheexistingaswellasnewentrepreneurs.
The Corporation also conducted Mini-
Development campaigns at potential Mandals
of each district to widen the customer base.
2. Tie-up with APCOB
The Corporation has entered into a Memorandum
of Understanding with Andhra Pradesh State Co-
operative Bank [APCOB] Limited for extending
Cash Credit Limits to the assisted units of the
Corporation.
VII. DIVIDEND
The Board of the Directors of the Corporation
recommended a dividend of 2% on paid up
equity share capital (PY 7.50%) to the share
holders for the FY 2014.
VI. BUSINESS INITIATIVES
1. Business Development
Campaigns
During 2013-14, the
Corporation with a view to
provide faster services, build
relationship and encourage
new entrepreneurs in the very
beginning of the financial
year conducted Development
Campaigns at Hyderabad, Rank Silicon, Ranga Reddy District
-
2358th Annual Report 2013 - 2014
The out go on account of dividend including
dividendDistribution Tax works out to Rs.3.85
crores (PY Rs.14.45 crores).
VIII. OUTLOOK
The Corporation continued to hold on its
business volumes during 2013-14 despite the
adverse market conditions and disturbance in
the State prevailed during the most part of the
year under review.
The Corporation will focus on enhancing the
business substantially and thereby improve the
profitabilityinthecurrentyear.Inthisdirection,
the Corporation has set a business target of
Rs.1600 crore sanction for the financial year
2014-15. The business strategy will be on
identifying niche areas of business, enhance
client base with accretion of new customers
by encouraging entrepreneurship, and
for the past 13 successive years and aim for a
significantplaceinMSMElendingintheStateof
Andhra Pradesh.
IX. STATUTORY AND AGS AUDIT
The AGs audit team completed the audit of
Annual Accounts of the Corporation for the year
2012-13. As recommended by the Reserve
Bank of India under Sec. 37(1) of SFCs Act,
the Corportion appointed M/s.G.S. Madhava
Rao & Co., Hyderabad, as Statutory Auditors,
to conduct the audit of the books of account
of the Corporation for the F.Y.2013-14. The
auditors have completed the statutory audit for
thefinancialyear2013-14.
X. CORPORATE GOVERNANCE
PRACTICE
The Corporation has put in good Corporate
Governance Practices in place. The Corporation
Hotel Daspalla, Hyderabad
reach the existing customers
through business development
campaigns.
During 2014-15, the
Corporation will strive to improve
the operational and financial
parameters, reducing Net NPAs
to below 4% and retaining its
bench mark status of NUMBER
ONE position among all the
SFCs in the country, a position
the Corporation is enjoying
-
Andhra Pradesh State Financial Corporation
24 58th Annual Report 2013 - 2014
has adopted cardinal principles such as
credibility, accountability, transparency and
independency in decision making.
The Board of the Corporation meets regularly
and monitors the performance, issues guidelines
and reviews various aspects such as loan policy,
recoverypolicy,exposurelimits,businessplans,
performance in key result areas of operations,
overallassessmentoffinancialpositionactuals
vis--vis approved budgets, and other policy
matters besides according loan sanctions
beyond delegated powers of other sanctioning
authorities.
Audit Committee
The Corporation, in order to ensure good
corporate governance practices in its functioning,
has put in place an Audit Committee. The
members of the Committee are experienced
professionals in the fields of finance and
industry. Sri K.Narsimha Murthy, Director
of the Corporation is the Chairman, Sri. K.
Harishchandra Prasad and Sri S.S.R. Koteswara
Rao were members of the Audit Committee. The
Committee, which met four times during the year
2013-14, reviewed various aspects of internal
and external audit reports, performance of
branches, accounting policies, SIDBI Inspection
Report, annual financial statements including
profit&lossaccountandbalancesheetetc.
XI. BOARD OF DIRECTORS
1. Chairman
Sri T. S. Appa Rao, IAS (Retd.), was re-nominated
asaDirectorandnon-executiveChairmanofthe
Corporation by Small Industries Development
Bank of India (SIDBI) for a further period of 2
years ie. till 18.04.2016.
2. Managing Director
Sri T. Satyanarayana Rao, IAS, was appointed
as the Managing Director of the Corporation by
the Government of Andhra Pradesh with effect
from 07.01.2012 and continued as Managing
GS Alloy Castings Limited, Krishna District
-
2558th Annual Report 2013 - 2014
Director during the year 2013-14. The
Government of Andhra Pradesh appointed Sri
J.S.V. Prasad, IAS,asManagingDirector [FAC]
witheffectfrom01.04.2014,consequenttothe
retirement of Sri T. Satyanarayana Rao, IAS, on
attaining the superannuation.
The Board places on record its appreciation for
the services rendered by Sri T. Satyanarayana
Rao, IAS.
3. Changes in the constitution of the Board
(i) Sri Koteswara Rao, SSR, Chartered
Accountant, was unanimously elected
as Director by the Shareholders of the
Corporation with effect from 27.04.2013;
(ii) Sri K. Harish Chandra Prasad, Industrialist,
Director was unanimously elected as
Director by the Shareholders of the
Corporation with effect from 27.04.2013;
(iii) Sri MD Azeezuddin, Senior Divisional
Manager, LIC of India, Secunderabad
Division, was nominated by Life Insurance
Corporation of India Limited in place of
Sri Uday Kumar Navani, Senior Divisional
Manager, LIC of India, Secunderabad
Division, with effect from 12.06.2013.
(iv) Sri Satish Madhusudan Karambelkar,
General Manager, SIDBI, Hyderabad,
was nominated by Small Industries
Development Bank of India [SIDBI],
in place of Sri S. Mallikarjun, General
Manager, SIDBI, Hyderabad, with effect
from 28.06.2013;
(v) Sri V. Sridhar, General Manager, SIDBI,
Mumbai, was nominated by Small
MultiplexRestaurant,WarangalDistrict
-
Andhra Pradesh State Financial Corporation
26 58th Annual Report 2013 - 2014
Industries Development Bank of India,
in place of Sri R.P. Malik, Chief General
Manager, SIDBI, Mumbai, with effect from
05.08.2013;
(vi) Sri K. Jagadish Prasad, Industrialist,
Director elected by the Shareholders,
retired on 27.04.2013 on completion of
tenure;
(vii) Sri C. Rajendra Prasad, Industrialist,
Director elected by the Shareholders,
retired on 27.04.2013 on completion of
tenure;
(viii) Dr. Rajat Kumar, IAS, Commissioner of
Industries, nominated by the Government
of Andhra Pradesh, retired on 13.09.2013
on completion of tenure;
(ix) SriK.PattabhiSeetharamaRao,Chartered
Accountant and Industrialist, nominated
by the Government of Andhra Pradesh,
retired on 08.09.2013 on completion of
tenure;
The Board places on record its appreciation
for the services rendered by the outgoing
Directors.
XII. ACKNOWLEDGEMENTS
The Board is grateful to the Government of
Andhra Pradesh for the support and excellent
guidance extended at the need of the hour.
The Board is also grateful to the SIDBI for the
continuoussupportandguidanceextended.
TheBoardexpressesitsgratitudetoGovernment
of India and the Reserve Bank of India for their
S.V. Industry, Hyderabad
-
2758th Annual Report 2013 - 2014
valuable support and guidance. The Board
expressesthanksforAPIICLtd.,APCOB,Andhra
Bank, Bank of India, Bank of Maharashtra,
Canara Bank, Corporation Bank, State Bank
of Hyderabad, Syndicate Bank, Ing Vysya Bank
Ltd., IDBI Bank Ltd., ICICI Bank Ltd., HDFC Bank
Ltd., The Karur Vysya Bank, Axis Bank, South
India Bank, Union Bank of India, LIC of India
and United India Insurance Company Ltd., for
their continued cooperation and support.
The Board places on record the valuable support
and guidance, received from the Industries &
Commerce Department, the Public Enterprises
Department, Commissionerate of Industries and
other Development Corporations/Organisations
of Andhra Pradesh Government.
The Board expresses its profuse gratitude to
the shareholders of the Corporation for their
confirmed trustandunflinchingsupportall the
times.
The Board expresses its sincere thanks to the
valued customers, for their continued patronage
& support.
The Board acknowledges the high level
commitment and dedication of the Managing
Director,OfficersandStaffof theCorporation.
Their hard work, professionalism has enabled
the Corporation to achieve good results and
retain its Number One Position among all SFCs
in the Country for 13th year in a row.
For and on behalf of the Board
J.S.V. Prasad
MANAGING DIRECTOR
Place : Hyderabad
Date : 02.07.2014
-
Andhra Pradesh State Financial Corporation
28 58th Annual Report 2013 - 2014
-
2958th Annual Report 2013 - 2014
58th Annual Report2013 - 14
Annual Accountsand
Financial Statements
-
Andhra Pradesh State Financial Corporation
30 58th Annual Report 2013 - 2014
-
3158th Annual Report 2013 - 2014
Auditors Report
To,
The Members of
Andhra Pradesh State Financial Corporation
Report on the Financial Statements
We have audited the accompanied financial statements of Andhra Pradesh State Financial Corporation (the
Corporation), which comprise the Balance Sheet as at 31st March 2014, Profit and Loss Account and the
Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other
explanatory information.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation of these financial statements that give a true and fair view of
the financial position, financial performance of the Corporation in accordance with the form of Annexure C and
D of the regulation 87 of the Andhra Pradesh State Financial Corporation General Regulations 2004 framed
as per Section 48 of State Financial Corporations Act 1951 (the Act). This responsibility includes the design,
implementation and maintenance of internal control relevant to the preparation and presentation of the financial
statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our
audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India.
Those Standards require that we comply with the ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in
the financial statements. The procedures selected depend on the auditors judgment, including the assessment
of the risks of material misstatement of the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers the internal control relevant to the Corporations preparation
and fair presentation of the financial statements in order to design audit procedures that are appropriate
in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
-
Andhra Pradesh State Financial Corporation
32 58th Annual Report 2013 - 2014
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the financial
statements give the information required by the Act in the manner so required and give a true and fair view in
conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Corporation as at 31st March, 2014;
(b) in the case of the Profit and Loss Account, of the profit of the Corporation for the year ended on that date,
and
(c) in the case of the Cash Flow Statement, of the cash flows of the Corporation for the year ended on that
date.
Report on Other Legal and Regulatory Requirements
1. As required by the section 37 of the Act, 1951, we report that:
(a) we have obtained all the information and explanations which to the best of our knowledge and belief
were necessary for the purpose of our audit;
(b) in our opinion proper books of accounts as required by the Act have been kept by the Corporation so far
as appears from our examination of those books
(c) the Balance Sheet, Profit and Loss account dealt with by this report are in agreement with the books of
accounts
(d) in our opinion, the Balance Sheet, Profit and Loss account comply with the form of Annexure C and D of
the regulation 87 of the Andhra Pradesh State Financial Corporation General Regulations, 2004 framed
as per Section 48 of the Act;
(e) In our opinion Corporation has complied with provisions of section 7 and 8 of the State Financial
Corporation Act, 1951 as amended by SFC (Amendment) Act, 2000, regarding borrowings and deposits.
for G S Madhava Rao & Co
Chartered Accountants
FRN: 001907S
SVS Bhaskara Krishna
Place : Hyderabad Partner
Date : 2nd July, 2014 M.No: 209539
-
3358th Annual Report 2013 - 2014
Balance Sheet as at 31st March, 2014(` in lakhs)
Schedule 2014 2013
Capital and Liabilities :
Share Capital A 20600.99 20600.99
Loans Pending Conversion to Share Capital B 1334.00 1334.00
Reserve Fund and Other Reserves C 50870.81 23567.62
Borrowings D 275432.61 257466.70
Current Liabilities & Provisions E 19404.48 24722.91
T O T A L : 367642.89 327692.22
Property and Assets :
Cash & Bank Balances F 27623.75 24708.38
Investments G 4705.69 7759.63
Loans & Advances (Net of NPAs provision) H 281788.09 267572.52
Fixed Assets I 40935.81 15086.93
Other Assets J 12589.55 12564.76
T O T A L : 367642.89 327692.22
Accounting Policies O
Notes on Accounts P
Note : The Schedules referred to above form an integral part of the Balance Sheet
As per our Report of Even Date
for G.S. Madhava Rao & Co. T.S. Appa Rao J.S.V. PrasadChartered Accountants Chairman Managing Director
(Registration No. 001907S)
S.V.S. Bhaskara Krishna K. Narasimha MurthyPartner Director
M.No.209539
Place : Hyderabad
Date : 2nd July, 2014
-
Andhra Pradesh State Financial Corporation
34 58th Annual Report 2013 - 2014
Profit and Loss Account for the year ended 31st March, 2014
(` in lakhs)
ScheduleCurrent
Year
Previous
Year
Income :
Interest on Loans & Advances 40829.86 36967.63
Other Income K 4509.73 4168.59
T O T A L : 45339.59 41136.22
Expenditure :
Interest and other Financial Expenses L 23558.89 20232.73
Personnel Expenses M 5239.81 5060.61
Administrative Expenses N 721.35 649.00
Depreciation I 361.45 185.60
Bad Debts written off 6100.27 5198.76
T O T A L : 35981.77 31326.70
Operating Profit c/f 9357.82 9809.52
Contd. in next page
Note : The Schedules referred to above form an integral part of the Balance Sheet
As per our Report of Even Date
for G.S. Madhava Rao & Co. T.S. Appa Rao J.S.V. PrasadChartered Accountants Chairman Managing Director
(Registration No. 001907S)
S.V.S. Bhaskara Krishna K. Narasimha MurthyPartner Director
M.No.209539
Place : Hyderabad
Date : 2nd July, 2014
-
3558th Annual Report 2013 - 2014
Contd. from previous page : (` in lakhs)
ScheduleCurrent
Year
Previous
Year
Operating Profit b/f 9357.82 9809.52
Add :
Income tax provision for earlier years written back 22.88 0.00
Deferred Tax Asset (DTA) (198.59) (134.59)
Excess Provision for MGD written back 0.00 107.79
Profit before provisions 9182.11 9782.72
Less :
Provision for Non-Performing Assets 1385.80 0.00
Provision for erosion in the value of investments 44.66 0.00
Provision for Income tax 1987.78 2530.61
Provision for incentive to employees 176.33 181.52
Provision for retirement benefits of employees 1184.97 506.06
Provision against Standard Assets 388.46 229.34
5168.00 3447.53
Net Profit carried to P&L appropriation a/c C1 4014.11 6335.19
Note : The Schedules referred to above form an integral part of the Balance Sheet
As per our Report of Even Date
for G.S. Madhava Rao & Co. T.S. Appa Rao J.S.V. PrasadChartered Accountants Chairman Managing Director
(Registration No. 001907S)
S.V.S. Bhaskara Krishna K. Narasimha MurthyPartner Director
M.No.209539
Place : Hyderabad
Date : 2nd July, 2014
-
Andhra Pradesh State Financial Corporation
36 58th Annual Report 2013 - 2014
Schedule A
(` in lakhs)
31.03.2014 31.03.2013
Share Capital :
Authorised :
50000000 Ordinary Shares of Rs. 100/- each 50000.00 50000.00
Issued,subscribed and Paid up:
a. 16505074 Ordinary Shares (Previous year 16505.07 16505.07
16505074 shares) of Rs. 100/- each fully paid
Less: Surrendered Share Capital pending re-issue 32.83 32.83
16472.24 16472.24
b. 3016000 Ordinary Shares (Previous year 3016000)
of Rs. 100/- each fully paid up - Pending allotment 3016.00 3016.00
19488.24 19488.24
c. 1112750 Shares of Rs. 100/- each fully
paid (issued under Sec. 4A(1) of the
SFCs Act as Special Class of Shares) 1112.75 1112.75
T O T A L : 20600.99 20600.99
Schedule B
(` in lakhs)
Loans Pending conversion to Share Capital :
31.03.2014 31.03.2013
Loan Pending Conversion to Share Capital 946.00 946.00
Loan Pending Conversion to Special Share Capital 388.00 388.00
T O T A L : 1334.00 1334.00
-
3758th Annual Report 2013 - 2014
Schedule C
Reserve Fund and Other Reserves :
(` in lakhs)
31.03.2014 31.03.2013
a. Reserve Fund (under Sec.35 of SFCs Act,1951) 53.40 53.40
b. Special Reserve Fund (u/s.35A of SFCs Act,1951) 250.00 250.00
c. Reserve (U/s.36(1)(viii) of I.T.Act,1961) 7900.41 6597.21
d. Revaluation Reserve (on Land & Buildings) 27643.31 1711.35
e. Profit and Loss Account balance 15023.69 14955.66
T O T A L : 50870.81 23567.62
Schedule C1
(` in lakhs)
Current YearPrevious
YearProfit and Loss Appropriation Account :
Net Profit carried from Profit & Loss Account 4014.11 6335.19
Less: Transfer to Reserve U/s.36(1)(viii) of I.T.Act,1961 1303.20 1521.27
Balance 2710.91 4813.92
Less:
Proposed Dividend and dividend tax 385.43 1445.38
Minimum guaranteed dividend to SIDBI and other
shareholders0.00 987.02
Add: Profit brought forward from Previous Balance Sheet 14955.66 14049.77
17281.14 16431.29
Less:
Additional Provision on Sub-std and Doubtful-1 assets 2257.45 1475.63
Balance carried to Schedule C 15023.69 14955.66
-
Andhra Pradesh State Financial Corporation
38 58th Annual Report 2013 - 2014
Schedule D
(` in lakhs)
31.03.2014 31.03.2013
Borrowings :
1. Non-SLR Bonds (Guaranteed by Govt. of A.P.)
8.50% Series - II 2008 10320.00 12900.00
9.00% Series - III 2008 10000.00 10000.00
8.35% Series - IV 2010 12100.00 12100.00
9.48% Series - V 2012 20000.00 20000.00
9.15% Series - VI 2013 32000.00 32000.00
9.75% Series - VII 2014 5800.00 0.00
9.85% Series - VIII 2014 15000.00 0.00
Sub-total 105220.00 87000.00
2. Small Industries Development Bank of India (SIDBI)
Refinance U/s 7(5) of the SFCs Act,1951 94031.59 112462.69
Sub-total 94031.59 112462.69
3. Term Loans from Banks 74554.89 55336.18
4. Fixed Deposits 1626.13 2667.83
T O T A L : 275432.61 257466.70
-
3958th Annual Report 2013 - 2014
Schedule E
(` in lakhs)
31.03.2014 31.03.2013
Current Liabilities & Provisions :
A. Current Liabilities :
1. Earnest Money Deposit (Sec.29) 67.77 64.18
2. Down payment (Inter-se Transfer/Sec.29) 370.00 290.97
3. Partys share of initial investment 40.00 3.17
4. Borrowings from bank (SOD) 5.41 2005.12
5. Seed capital assistance 53.61 53.84
6. Sundry Deposits 1684.37 1612.76
7. Dividend Subvention Fund 114.09 114.09
8. Deposit for service charges 206.30 185.84
9. Accrued interest on Borrowings 1663.40 1867.31
10. Outstanding expenses 226.98 651.83
11. Proposed dividend 329.44 1235.42
12. Other Liabilities 3983.28 4610.41
8744.65 12694.94
B. Provisions :
1. Provision for Income-tax 7379.18 8151.53
2. Contingent Provision against Standard Assets 1491.00 1102.54
3. Provision for retirement benefits of employees 1589.65 2573.90
4. Provision for incentive to employees 200.00 200.00
10659.83 12027.97
T O T A L : 19404.48 24722.91
-
Andhra Pradesh State Financial Corporation
40 58th Annual Report 2013 - 2014
Schedule F
Cash and Bank Balances : (` in lakhs)
31.03.2014 31.03.2013
a. Cash and Cheques on hand 4400.81 4280.42
b. Balances with Banks :
i) Reserve Bank of India 1.19 1.19
ii) SBI & Other Scheduled Banks 5548.30 6901.41
iii) Short Term Deposits with Banks 20873.61 16571.65
30823.91 27754.67
Less : Book overdraft 3200.16 3046.29
T O T A L : 27623.75 24708.38
Schedule G
Investments : (` in lakhs)
31.03.2014 31.03.2013
Investments held for Maturity :
i) Shares acquired pursuant to underwriting
agreements under sec.25(1)(c) of the
SFCs Act, 1951
a. Non-redeemable Preference Shares fully paid 2.25 2.25
b. Equity Shares fully paid 13.37 13.38
ii) Other equity shares fully paid 81.55 81.55
iii) Investment of Special Share Capital
under Sec.4A(1) of the SFCs Act, 1951
in Redeemable Preference Shares fully paidup. 4.53 4.53
Treasury Investments :
- Short term investments in liquid funds 4664.23 7673.50
4765.93 7775.21
Less :
Provision for diminution in value of shares 60.24 15.58
T O T A L : 4705.69 7759.63
-
4158th Annual Report 2013 - 2014
Schedule H
Loans and Advances : (` in lakhs)
31.03.2014 31.03.2013
Classification of Loans and Advances
on purpose-wise basis :
a. General Loans 173496.87 158130.31
b. Transport Loans 479.90 407.33
c. Loans under Good Entrepreneurs Scheme 21313.38 25735.43
d. Working Capital Term Loans 65736.39 62865.52
e. Loans under Marketing Assistance Scheme 27761.01 24349.51
288787.55 271488.10
Add i) Interest Accrued on Standard Assets 3785.98 3276.20
ii) Other Expenses - Loanee Accounts 103.92 54.32
292677.45 274818.62
Less: Provision against Non Performing Assets 10889.36 7246.10
T O T A L : 281788.09 267572.52
-
Andhra Pradesh State Financial Corporation
42 58th Annual Report 2013 - 2014
Sch
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-
4358th Annual Report 2013 - 2014
Schedule JOther Assets : (` in lakhs)
31.03.2014 31.03.2013
Loans & Advances to Staff 953.33 1077.63
Accrued interest 588.12 531.20
Other receivables 70.29 21.66
Deferred Tax Asset 608.30 806.89
Stock of Stationery 9.19 8.75
Disbursements under self employment
scheme receivable from Government 21.36 21.36
Margin Money to SC/ST reimbursable from Govt of A.P 87.76 107.44
Deferred Guarantee Commission 979.20 896.00
Income tax and Advance tax 8764.37 8685.93
Deposits 57.47 55.37
Other Current Assets 450.16 352.53
T O T A L : 12589.55 12564.76
Schedule KOther Income : (` in lakhs)
2013-14 2012-13
Bad Debts written-off recovered/written back 1835.75 1817.84
Service charges 625.81 654.84
Upfront Fee/ Commitment Charges 327.18 411.16
Sale of Application Forms 5.95 7.37
Dividend on Shares 2.43 1.82
Dividend on investments in liquid funds 317.33 443.37
Interest on Bank Deposits 652.08 331.93
Interest on Staff advances 188.77 52.45
Premium on pre-mature closure of Accounts 181.42 142.26
Profit on sale of investments 9.25 21.44
Profit on sale of assets 3.71 4.69
Commission on Insurance 40.68 37.54
Rent received & Other income 319.37 241.88
T O T A L : 4509.73 4168.59
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Andhra Pradesh State Financial Corporation
44 58th Annual Report 2013 - 2014
Schedule LInterest and other Financial Expenses : (` in lakhs)
2013-14 2012-13
Interest on Borrowings from SIDBI 8856.19 9905.51
Interest on SLR Bonds 0.00 206.27
Interest on Non-SLR Bonds 7886.98 5187.94
Interest on borrowings from Banks & others 6028.57 4363.86
Interest on Loan Pending Conversion to Share Capital 70.95 70.95
Interest on Fixed Deposits 177.47 291.71
Service charges to SIDBI on Seed Capital 1.08 1.05
Brokerage on Fixed Deposits 0.08 0.03
Guarantee Commission to Govt. of A.P. 124.80 104.00
Service tax paid 9.16 0.00
Other financial / Service charges 403.61 101.41
T O T A L : 23558.89 20232.73
Schedule MPersonnel Expenses : (` in lakhs)
Head of Account 2013-14 2012-13
Salaries and Allowances :
a. Managing Director 20.58 17.29
b. Others 4618.14 4393.11
Medical Expenses :
a. Managing Director 0.28 0.29
b. Others 89.23 135.95
Contribution to Provident Fund 357.75 364.12
Contribution to Leave Encashment - MD 4.86 0.00
Contribution to pension -MD 7.23 0.00
Gratuity (including contribution to Group Gratuity Scheme) 34.12 37.44
Leave Travel Concession 26.94 22.51
Staff Training Expenses 7.45 4.53
Staff recruitment expenses 0.00 13.62
Staff Welfare Expenses 73.23 71.75
T O T A L : 5239.81 5060.61
-
4558th Annual Report 2013 - 2014
Schedule N
Administrative Expenses : (` in lakhs)
Head of Account 2013-14 2012-13
Travelling Expenses :
i) Managing Director 1.37 0.91
ii) Directors 2.60 4.93
iii) Others 79.98 66.97
Sitting Fees to Directors 2.33 2.27
Rent,Taxes & Insurance 68.12 66.35
Postage,Telegrams & Telephones 54.03 58.33
Motor Car Expenses 115.82 100.94
Printing & Stationery 37.84 32.52
Publicity & Advertisement 1.32 3.49
Books, Periodicals & Newspapers 2.13 2.25
Repairs & Maintenance of office equipment & assets 67.91 50.70
Office Maintenance Expenses 161.32 129.65
Building Maintenance Expenses 7.67 10.68
Bank Charges & Commission 6.41 7.02
Remuneration to Auditors :
i) Audit fees 2.76 2.13
ii) Tax Audit Fee 0.59 0.43
iii) Expenses 1.56 2.35
Legal Charges 1.18 2.38
Professional & Consultancy charges 4.84 14.45
Power charges 61.75 50.21
Board Meetings/AGM Expenses 2.91 3.11
Membership fees/Subscriptions to institutions 1.02 0.97
Loss on sale of assets 0.18 0.00
Other Expenses 35.71 35.96
T O T A L : 721.35 649.00
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Andhra Pradesh State Financial Corporation
46 58th Annual Report 2013 - 2014
Schedule O
Significant Accounting Policies
General
1. The Financial Statements have been prepared under the historical cost convention, (other than
revalued land & buildings), by following the going concern concept. These Financial Statements are in
accordance with the accounting principles Generally Accepted in India and conform to the prevailing
statutory provisions of the State Financial Corporations Act, 1951, and other provisions, unless otherwise
stated.
2. Method of Accounting
The financial statements are prepared on Accrual basis.
3. Revenue Recognition.
Income and expenditure are accounted on accrual basis. In the case of Non-Performing Assets and
investments, the income is recognized to the extent of realization in accordance with norms prescribed by
SIDBI.
4. Fixed assets, except land and buildings which are revalued, are stated at their original cost, less
depreciation, comprising of the purchase price and attributable cost of bringing the asset to working
condition for its intended use.
5. Depreciation is provided on the written down value method at the rates prescribed under the Income
Tax Rules, 1962.
6. Investments are stated at Purchase Price less provision, for erosion in the value of investment made, in
accordance with the guidelines prescribed by SIDBI.
7. Loans & Advances - Provision / Write off
(i) Provision against loans classified as Standard Assets and Non-Performing Assets, is made
in accordance with the guidelines on asset classification and provisioning prescribed for State
Financial Corporations by SIDBI.
(ii) Assets classified as Loss, Doubtful-3 and Doubtful-2 are fully written off.
iii) 50% of Assets in Doubtful-1 category are written off, unit-wise/ age-wise which remained in
Doubtful-1 Category for longer period.
-
4758th Annual Report 2013 - 2014
8. Provision for Income Tax
Provision for Income Tax is made in accordance with the provisions of the Income Tax Act, 1961 applicable
for the year.
9. Appropriation of recoveries
Amounts received from borrowers is first appropriated to recover Other Expenses incurred on their behalf,
thereafter to Interest and lastly to Principal, except in regard to units sold U/s.29 of the SFCs Act, 1951,
where, sale proceeds received are first appropriated to Other Expenses, thereafter to Principal and lastly
to Interest.
Receipts under One Time Settlement Scheme (OTS) are appropriated against the crystallized liability as
per the OTS approval, in the order of, Other Expenses, Interest and Principal.
10. Retirement Benefits
Liability for gratuity and leave encashment (defined benefits) is determined and provided for on the basis
of actuarial valuations at the year end.
As per our Report of Even Date
for G.S. Madhava Rao & Co. T.S. Appa Rao J.S.V. PrasadChartered Accountants Chairman Managing Director
(Registration No. 001907S)
S.V.S. Bhaskara Krishna K. Narasimha MurthyPartner Director
M.No.209539
Place : Hyderabad
Date : 2nd July, 2014
-
Andhra Pradesh State Financial Corporation
48 58th Annual Report 2013 - 2014
Schedule - P
Notes on Accounts
1. Share Capital
The Corporation has received an Equity Contribution of Rs.10879.00 lakhs from Government of Andhra
Pradesh by way of land of Ac 271-39 guntas at Gajularamaram, Qutubullapur Mandal, Rangareddy
district. (Ac.33-11 guntas of land by way of alienation and Ac.238-28 guntas of land by way of 99 years
lease, both at Rs.40.00 lakhs per acre during the year 2007-08). Out of the total Equity Contribution of
Rs.10879.00 lakhs, the Corporation has allotted and issued Shares to the extent of Rs.7863.00 lakhs in
respect of Ac.196-23 guntas of land demarcated and the balance amount of Rs.3016.00 lakhs was kept
as Share Capital Pending Allotment for want of completion of demarcation of balance of the land.
2. Asset Classification and Provisioning
The contingent provision for Standard Assets is 0.25% on Assets covered under Micro and Small Enterprises
(MSEs), 1.00% on Assets covered under Commercial Real Estate and 0.40% on others. The general
provisioning for Sub-Standard is 15%, for Doubtful-1 at 25%, Doubtful-2 at 40%, for Doubtful-3 and Loss
at 100%.
The asset classification and provisioning is made in accordance with the guidelines issued by SIDBI.
The provisioning requirement as per guidelines against Standard Assets and non-performing assets is
provided in the Profit & Loss Account. An additional provision to the tune of Rs.2257.45 lakhs has been
made from the appropriation account to cover 20% of the net Sub Standard Assets and at 100% on the
Net Doubtful-1 Assets over and above the mandatory requirement as buffer recycling provision. The
assets classified under Doubtful-2, Doubtful-3 and Loss categories are fully written off and the assets
classified under DBT-1 category are written off to the extent of 50% unit wise in the order of age wise
arrears.
-
4958th Annual Report 2013 - 2014
The asset category wise details of the outstanding loans as on 31.03.2014 and provision made are as follows:
(` in lakhs)
Asset
CategoryCurrent Year 2013-14 Previous Year 2012-13
Gross Provision Net Gross Provision Net
Standard 264488.50 1466.55 263021.95 255396.92 1086.52 254310.40
Int.in Std. 3785.98 24.45 3761.53 3276.20 16.02 3260.18
STD-Assets 268274.48 1491.00 266783.48 258673.12 1102.54 257570.58
Sub-Standard 19872.96 2980.94 16892.02 13087.35 1963.10 11124.25
Doubtful-1 4530.01 1132.50 3397.51 3058.15 764.54 2293.61
Doubtful-2 0.00 0.00 0.00 0.00 0.00 0.00
Doubtful-3 0.00 0.00 0.00 0.00 0.00 0.00
Loss 0.00 0.00 0.00 0.00 0.00 0.00
NPA-Assets 24402.97 4113.44 20289.53 16145.50 2727.64 13417.86
Total-Assets 292677.45 5604.44 287073.01 274818.62 3830.18 270988.44
Addl.Prov.
Sub-Standard 0.00 3378.40 3378.40 0.00 2224.85 2224.85
Doubtful-1 0.00 3397.51 3397.51 0.00 2293.61 2293.61
Grand Total 292677.45 12380.35 280297.10 274818.62 8348.64 266469.98
3. Loans and Advances
Letters seeking confirmation of outstanding balances in loan accounts were sent by the Corporation to
borrowers. Confirmations are yet to be received from the borrowers.
4. Contingent liabilities not provided for in respect of
a) Suits filed against the Corporation by the borrowers and others is estimated at Rs.435.89 lakhs
(Previous year - Rs.430.44 lakhs).
b) Contracts remaining to be executed on capital account, net of advances are estimated at Rs.12.00
lakhs (Previous year - Rs.22.00 lakhs).
c) Service Tax matters Rs.203.38 lakhs (Previous year Nil).
5. The total liability towards Gratuity on account of upward revision in ceiling during 2010-11 is estimated
at Rs.1479.46 lakhs, which is being provided in 5 years as per RBI guidelines, at Rs.295.89 lakhs each
year commencing from FY 2010-11. The balance liability yet to be provided in the books of accounts as
at 31st March, 2014 stood at Rs.295.89 lakhs (Previous year - Rs.591.79 lakhs).
-
Andhra Pradesh State Financial Corporation
50 58th Annual Report 2013 - 2014
6. A onetime guarantee commission is payable to the Government of Andhra Pradesh @ 1% of the Non-SLR
Bonds raised during the FY 2013-14. The same is proposed to be absorbed over the tenure of the Bonds.
7. The Corporation contributed to the Employees Social Security Trust an amount of Rs. 1764.00 lakhs till
the end of March, 2014, including Rs.761.84 lakhs for the current year, being one third of the balance
amount. An amount of Rs.200.00 lakhs is provided towards incentive as against previous year expenditure
of Rs.176.78 lakhs.
8. Status Of Income Tax Assessments
The Income tax assessments are completed up to the Assessment Year 2011-12.
9. Deferred Tax Asset (DTA)
During the year, the Deferred Tax Asset to the tune of Rs. 198.59 lakhs has been reversed due to funding
of employee benefits with LIC. The Deferred Tax Asset stood at Rs. 608.30 lakhs as at 31st March, 2014
(Previous Year - Rs. 806.89 lakhs).
10. Investment of surplus funds
The Corporation invested its surplus funds in liquid funds and fixed deposits as part of cash flow
management to maximize the returns and earned Rs.969.41 lakhs. (Previous Year - Rs.775.30 lakhs)
11. One Time Settlement
During the year, under One Time Settlement, the Corporation waived interest/penal interest of Rs.312.04
lakhs (Previous year - Rs.121.01 lakhs) for settling the bad and doubtful loans and for regularization of
the defaulted loan accounts including the accounts written off.
12. Segment reporting
The Corporation operates in a single business segment of term lending and in one geographical segment.
Hence, disclosure of Segment reporting as per AS-17 is not required.
13. Related Party Disclosures
Sri T. Satyanarayana Rao, IAS., Managing Director of the Corporation is the key managerial personnel
during the year.
Salary and other payments are shown under Personnel and Administrative expenses in Schedule M and
N respectively.
-
5158th Annual Report 2013 - 2014
14. Disclosures in compliance with SIDBIs guidelines:
A) Capital:
a. i) Core Capital Risk Weighted Adequacy Ratio (CRAR) 13.26% (PY 14.51%)
ii) Supplementary Capital Risk weighted Adequacy Ratio 17.43% (PY 15.10%)
b. Amount of subordinated debt raised and outstanding as Tier II capital NIL (PY Nil)
c. i. Net worth Rs.44511.22 lakhs (PY Rs.43338.82 lakhs)
ii. Risk weighted Assets Rs.335689.03 lakhs (PY Rs.298594.94 lakhs)
d. Shareholding Pattern:
(` in lakhs)
Sl. No. Shares held by
Equity Share Capital
Share Capital pending allotment
Special Share
CapitalTotal % of holding
1. State Govt. 14114.087 3016.00 556.375 17686.462 85.85
2. SIDBI 2330.987 0.00 556.375 2887.362 14.02
3. LIC of India 21.655 0.00 0.00 21.655 0.11
4.Individuals, Co-op. Banks, PF Trusts etc.
5.511 0.00 0.00 5.511 0.02
Total 16472.24 3016.00 1112.750 20600.990 100.00
e. Loan Pending Conversion to Share Capital as on 31.03.2014.
(` in lakhs)
Loan Pending Conversion to Share Capital
IDBIState
GovernmentTotal
31.03.2014Total
31.03.2013
Ordinary Share Capital 946.00 0.00 946.00 946.00
Special Share Capital 194.00 194.00 388.00 388.00
Total 1140.00 194.00 1334.00 1334.00
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Andhra Pradesh State Financial Corporation
52 58th Annual Report 2013 - 2014
B) Asset Quality and Credit Concentration:
a. Percentage of net NPAs to net Loans & Advances: 4.83% (PY3.34%)
b. Value and percentage of net NPAs to Net Loans and Advances:
(` in lakhs)
Asset category
2013-14 2012-13
Net Loans Net NPAs% to total net
loans
% to total net
loans
Standard 266544.12 0.00 0.00 0.00
Sub-standard 13513.62 13513.62 4.83 3.34
Doubtful 0.00 0.00 0.00 0.00
Total 280057.74 13513.62 4.83 3.34
c. Provisions for the year:.
(` in lakhs)
Sl. No. Assets & Others Current Year Previous Year
1. Loans & Advances: Standard Assets 388.46 229.34
2. Income Tax 1987.78 2530.61
3. Employees Retirement Benefits 1184.97 506.06
4. Provision for incentives to employees 176.33 181.52
5. Provision for Non-Performing Assets 1385.80 0
6. Provision in the erosion of investments 44.66 0
Total 5168.00 3447.53
d. Movement in net NPAs:
i. Sub-standard Rs. 4614.22 lakhs Increase (51.84%)
ii. Doubtful - Nil -
e. Credit exposure as a percentage to capital funds and to total assets in respect of:
Sl. No. Borrower% to % to
Capital funds total assets
1 the largest single borrower other than group 3.69 0.63
2 the largest borrower group 9.43 1.60
3 10 largest single borrowers other than group 28.48 4.84
4 10 largest borrower groups 42.69 7.26
-
5358th Annual Report 2013 - 2014
C. Particulars of Accounts Restructured
(` in lakhs)
CDR
Mechanism
SME Debt
RestructuringOthers
C.Y. P.Y. C.Y. P.Y. C.Y. P.Y.
Standard
advances
restructured
No.of Borrowers -- -- -- -- 95 92
Amount outstanding -- -- -- -- 27970.54 16492.41
Sacrifice (diminution
in the fair value)-- -- -- -- - Nil - - Nil -
Sub-standard
advances
restructured
No. of Borrowers -- -- -- -- 7 17
Amount outstanding -- -- -- -- 369.80 1097.62
Sacrifice (diminution
in the fair value)-- -- -- -- - Nil - - Nil -
Doubtful
advances
restructured
No. of Borrowers -- -- -- -- - Nil - - Nil -
Amount outstanding -- -- -- -- - Nil - - Nil -
Sacrifice (diminution
in the fair value)-- -- -- -- - Nil - - Nil -
TOTAL
No. of Borrowers -- -- -- -- 102 109
Amount outstanding -- -- -- -- 28340.34 17590.03
Sacrifice (diminution
in the fair value)-- -- -- -- - Nil - - Nil -
D. Liquidity:
Maturity pattern of rupee current assets & liabilities:
(` in lakhs)
Items < = 1 yr>1 yr &
upto 3 yr
> 3 yr &
upto 5 yr
> 5 yr &
upto 7 yr
> 7 yr &
upto 10 yr> 10 yr Total
Rupee
assets93427.46 175913.05 43756.31 6026.95 218.66 40977.25 360319.68
Rupee
liabilities47333.57 96659.71 55589.64 33516.56 52923.40 59273.11 345295.99
Surplus/
(Deficit)46093.89 79253.34 (11833.33) (27489.61) (52704.74) (18295.86) 15023.69
Cum.
Surplus46093.89 125347.23 113513.90 86024.29 33319.55 15023.69
Surplus/
(Deficit) %97.38 81.99 (21.29) (82.02) (99.59) (30.87)
-
Andhra Pradesh State Financial Corporation
54 58th Annual Report 2013 - 2014
E. Operating Results
Item 2013-14 2012-13
1. Interest income as percentage to average working funds 12.06% 12.36%
2.Non-interest income as a percentage to average working
funds1.33% 1.39%
3 Non-interest income as a percentage of operating expenses 58.69% 63.33%
4. Operating profit as a percentage to average working funds 2.76% 3.28%
5. Return on average assets 1.19% 2.12%
6. Operating profit per employee (Rs. lakhs) 23.22 23.81
7. Net profit per employee (Rs. lakhs) 9.96 15.38
8. Weighted Average cost of borrowing as on 31st March. 9.77% 9.36%
15. The Board proposed and decided in its meeting held on 02-07-2014 to declare a dividend of Rs.2/- per
share amounting to Rs.385.44 lakhs including Dividend Distribution Tax of Rs.55.99 lakhs.
As per our Report of Even Date
for G.S. Madhava Rao & Co. T.S. Appa Rao J.S.V. PrasadChartered Accountants Chairman Managing Director
(Registration No. 001907S)
S.V.S. Bhaskara Krishna K. Narasimha MurthyPartner Director
M.No.209539
Place : Hyderabad
Date : 2nd July, 2014
-
5558th Annual Report 2013 - 2014
(` in lakhs)A. CASH FLOW FROM OPERATING ACTIVITIES 2013-14 2012-13
Profit before tax & provisions 9357.82 9809.52 Add: Depreciation 361.45 185.60 Bad Debts Written off 6100.27 5198.76 Less: Profit on sale of Fixed Assets (Net of loss on sale) 3.71 4.69 Profit on sale of investments 9.25 21.44 Dividend on shares 2.43 1.82 Cash from Operations 15804.15 15165.93 Adjustment for :Increase in advances (22893.36) (37979.57)Increase in borrowings 19007.61 36790.10 Decrease in deposits (1041.70) (979.36)Decrease in other assets (223.38) 327.79 Increase in other Liabilities (4279.73) 909.76 Direct Taxes paid (Net) (2878.68) (3421.15)Net cash from Operating Activities 3494.91 10813.50
B. CASH FLOW FROM INVESTMENT ACTIVITIES :Purchase of investments 0.00 (5534.07)Purchase of Fixed Assets (1252.14) (218.04)Sale of Fixed Assets 6.89 4.76 Sale of investments 3009.28 21.44 Dividend on shares 2.43 1.82 Net cash from investment activities 1766.46 (5724.09)
C. OTHER CASH FLOWS :Increase in Share Capital 0.00 0.00 Loan pending conversion to Share Capital 0.00 0.00 Other net cash flows (2346.00) (1931.73)Net cash flows (A+B+C) 2915.37 3157.68Net increase / (decrease) in cash and cash equivalents 2915.37 3157.68 Cash and Cash equivalents at the beginning of the year 24708.38 21550.70
Cash and Cash equivalents at the end of the year 27623.75 24708.38
As per our Report of Even Date
for G.S. Madhava Rao & Co. T.S. Appa Rao J.S.V. PrasadChartered Accountants Chairman Managing Director (Registration No. 001907S)
S.V.S. Bhaskara Krishna K. Narasimha MurthyPartner DirectorM.No.209539
Place : HyderabadDate : 2nd July, 2014
Cash Flow Statement
-
Andhra Pradesh State Financial Corporation
56 58th Annual Report 2013 - 2014
Business, Sources and Uses of Funds(` in lakhs)
2013-14 2012-13
I BUSINESS
NET EFFECTIVE SANCTION
a Term Loan
i Micro & Small Enterprises 45189.52 61279.96
ii Medium Enterprises 13033.75 3947.98
Sub-total 58223.27 65227.94
b Others
i Short Term Loan / WCTL 26514.09 27673.24
ii Soft Loan - NEF (Revival) 0.00 0.00
iii Soft Loan - Others (MUN) 0.00 0.00
iv Others - Commercial & Residential Complexes 10048.59 9355.00
Sub-total 36562.68 37028.24
Total I (a+b) 94785.95 102256.18
II USES OF FUNDS
1 DISBURSEMENTS
a Term Loan
i Micro & Small Enterprises 49146.12 54542.44
ii Medium Enterprises 6368.51 10464.33
Sub-total 55514.63 65006.77
b Others
i Short Term Loan (WCTL) 27077.12 26547.83
ii Soft Loan - NEF 0.00 0.00
iii Soft Loan - Others 0.00 0.00
iv Others - Commercial & Residential Complexes 5684.26 3586.79
Sub-total 32761.38 30134.62
Total 1 (a+b) 88276.01 95141.39
-
5758th Annual Report 2013 - 2014
Business, Sources and Uses of Funds
(` in lakhs)
2013-14 2012-13
2 REPAYMENTS
i Refinance / LOC / TL / Principal - SIDBI 36861.10 26879.54
ii SLR Bonds 0.00 4525.00
iii Non SLR Bonds 2