Corporate Governance

Audit Committee

Members

Name	Status	Nature
Shri Vallabhbhai Maneklal Patel	Chairman	Independent Director
Smt. Sheela Pandit	Member	Independent Director
Shri Abhishek Kumar	Member	Nominee Director

Terms of Reference

A. The role of the audit committee shall include the following:
1. oversight of the Company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible;
2. taking on record the appointment of auditors of the Company by the Comptroller and Auditor General of India, recommendation for remuneration, terms of appointment of auditors of the Company based on the order of Comptroller and Auditor General of India and to review the follow-up action taken on the audit observations of the C&AG audit;
3. approval of payment to statutory auditors for any other services rendered by the statutory auditors;
4. reviewing, with the management, the annual financial statements and auditor’s report thereon before submission to the board for approval, with particular reference to: (a). matters required to be included in the director’s responsibility statement to be included in the board’s report in terms of clause (c) of sub-section (3)of Section 134 of the Companies Act, 2013; (b). changes, if any, in accounting policies and practices and reasons for the same; (c). major accounting entries involving estimates based on the exercise of judgment by management; (d). significant adjustments made in the financial statements arising out of audit findings; (e). compliance with listing and other legal requirements relating to financial statements; (f). disclosure of any related party transactions; (g). modified opinion(s) in the draft audit report;
5. reviewing, with the management, the quarterly financial statements before submission to the board for approval;
6. reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the board to take up steps in this matter;
7. reviewing and monitoring the auditor’s independence and performance, and effectiveness of audit process;
8. approval or any subsequent modification of transactions of the Company with related parties;
9. scrutiny of inter-corporate loans and investments;
10. valuation of undertakings or assets of the Company, wherever it is necessary;
11. evaluation of internal financial controls and risk management systems;
12. reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems;
13. reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit; Annual Report 2020-21 11 Corporate Overview Financial Statements Statutory Report
14. discussion with internal auditors of any significant findings and follow up there on;
15. reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board;
16. discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern;
17. to look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors;
18. to review the functioning of the whistle blower mechanism;
19. approval of appointment of chief financial officer after assessing the qualifications, experience and background, etc. of the candidate;
20. Carrying out any other function as specified by the Board from time to time;
21. reviewing the utilization of loans and/ or advances from/investment by the holding company in the subsidiary exceeding rupees 100 crore or 10% of the asset size of the subsidiary, whichever is lower including existing loans / advances / investments existing as on the date of coming into force of this provision;
22. consider and comment on rationale, cost benefits and impact of schemes involving merger, demerger, amalgamation etc., on the Company and its shareholders.

B. The audit committee shall mandatorily review the following information:

1. management discussion and analysis of financial condition and results of operations

2. statement of significant related party transactions (as defined by the audit committee), submitted by management

3. management letters / letters of internal control weaknesses issued by the statutory auditors;

4. internal audit reports relating to internal control weaknesses;

5. the appointment, removal and terms of remuneration of the chief internal auditor shall be subject to review by the audit committee;

6. statement of deviations:

(a) quarterly statement of deviation(s) including report of monitoring agency, if applicable, submitted to stock exchange(s) in terms of Regulation 32(1) of the SEBI Listing Regulations;
(b) annual statement of funds utilized for purposes other than those stated in the offer document/ prospectus/notice in terms of Regulation 32(7) of the SEBI Listing Regulations.

 

Nomination and Remuneration Committee

Members

Name	Status	Nature
Shri Vallabhbhai Maneklal Patel	Chairman	Independent Director
Smt. Sheela Pandit	Member	Independent Director
Shri Baldeo Purushartha	Member	Nominee Director

Terms of Reference

• 1. Decide on the annual bonus/ performance pay/ variable pay pool and policy for its distribution across the executives and non-unionized supervisors of our Company.
• 2. Formulation and modification of schemes for providing perks and allowances for officers and non-unionized supervisors.
• 3. Any new scheme of compensation like medical scheme, pension etc. to officers, non-unionized supervisors and the employees as the case may be.
• 4. Exercising such other roles assigned to it by the provisions of the SEBI Listing Regulations and any other laws and their amendments from time to time.
• 5. Taking on record the appointment and removal of directors, including independent directors, by the President of India, acting through respective ministries.
• 6. Taking on record the extension, if any, of the term of the independent directors of our Company, as may be directed by the President of India, acting through the respective ministries.
• 7. Taking on record the various policies, if any, promulgated by the Central Government including policy on diversity of board of the directors and criteria for evaluation of performance of the directors.

Risk Management Committee

Members

Name	Status	Nature
Shri Manoj Kumar Dubey	Chairperson	Chairman and Managing Director & CEO
Smt Shelly Verma	Member	Director (Finance)
Shri Vallabhbhai Maneklal Patel	Member	Independent Director
Smt. Sheela Pandit	Member	Independent Director

 

Effective risk management is central to ensuring a robust and healthy finance for the Company. While in risk management, credit risk is accorded high priority amongst various risk mitigation efforts of a business, this is virtually non-existent in the case of your Company, in as much as, an overwhelming segment of its assets is in the form of lease receivables from the Ministry of Railways, carrying low risk. Your company is lends to various projects of MoR, and due to quasi-sovereign nature of borrower, credit risk is low. The Company’s selective forays into other areas in the form of loans to Rail Vikas Nigam Limited and IRCON International Limited are suitably ringfenced, as the same has either the cash flows originating from the Ministry of Railways or there is a repayment assurance by Ministry of Railways.
Ordinarily, a company carrying out its business with predominantly single client, might be viewed as being faced with a business risk. However, in the case of your Company, the single client is the owner, who also happens to be the quasi-sovereign itself. By virtue of consistently funding about 25% to 45% of plan outlay of the Ministry of Railways, IRFC commands a position of strategic importance for the Ministry. Funding provided by IRFC has been at a competitive cost which is considered attractive by the Ministry. With strong indications of an even larger role being expected by the Ministry from IRFC in its efforts at augmenting rail infrastructure in the country, your Directors consider the Company is comfortably placed in the matter of Business Risk.
Given the carefully drafted provisions in the Lease Agreement signed by IRFC with MoR every year, there is a very good matching of the interest rate sensitivity profile of its assets and liabilities. In the circumstances, exposure of the Company to Interest Rate Risk is low. Further, for the Railway Projects financed through Institutional Finance, it is proposed to adopt the lease structure akin to the structure of borrowing which will minimize the liquidity and interest rate risk.
 
The cash flows of your Company are highly predictable, shielding it largely against liquidity related issues even in a volatile market. Besides, with the quality of credit, Company commanding a high level of reputation amongst investors, both domestic and international. The Risk Management Committee and ALCO actively monitors the Liquidity Risk. The Liquidity Risk in the case of IRFC is perceived at a low level.
Although the foreign exchange fluctuation risk is pass through to MoR, still your Company has consistently been adopting prudent, efficient and cost-effective risk management strategies to safeguard its operations against Exchange Rate Variation risk on its overseas borrowings. The Company strives to eliminate at opportune time the exchange rate variation risk in respect of principal repayments. Timing is important in such hedging transactions. The Company recognizes the fact that contracting a hedge at a time subsequent to the drawdown does not expose it to any undue risk because of longer maturities. The Risk Management Committee regularly monitors the Foreign Exchange Exposure. In accordance with the policy, the Company has hedged part of its foreign currency exposure thereby mitigating the exchange rate fluctuation risk to that extent.
Some of the outstanding foreign currency borrowings of the Company with tenor longer than five years are either having bullet repayment or amortised repayment in half-yearly instalments. As a result of amortized repayments, the risk gets significantly mitigated by virtue of repayments taking place progressively at different points of time. Keeping in view the volatility in the foreign exchange markets, the Company has been taking recourse to selective hedging of the ECBs outstanding both on principal and interest amount. With a view to effectively supplementing its in-house expertise on the matter, your Company usually resorts to external expert advice from reputed professional consultants, while taking hedging decisions. IRFC is working with external consultant to devise its Comprehensive Risk Management Policy.
Reserve Bank of India (RBI) has made it mandatory for all the Banks offering derivative products to ensure that all their clients who have business dealings must obtain certification regarding adoption of Risk Management Policy duly approved by their Board of Directors. In compliance with the RBI Guidelines, Board-approved Risk Management Policy is in place. The Company also has constituted Risk Management Committee which comprises Chairman & Managing Director, Director Finance and Independent Director. Further, as per the extant RBI circular number RBI/2018-19/184 DNBR (PD) CC. No. 099/03.10.001/2018-19 dated 16-05-2019 regarding appointment of a Chief Risk officer (CRO) by all the NBFC s has been complied with and a CRO has been appointed with effect from 1st July, 2021.
 
The proceedings of meetings of the Risk Management Committee were regularly placed in the meetings the Board of Directors.
The Company has constituted a sub-committee of Risk Management Committee namely Forex Risk Management Committee to assess and mitigate the foreign exchange fluctuation risk and interest rate risk in External Commercial Borrowings. Minutes of the meetings of the Sub-committee along with the action taken are placed before the Risk Management Committee.
For effective monitoring, control and mitigation of financial risk arising due to mismatch in the Asset Liability position, the Company has formed an Asset Liability Management Committee (ALCO) comprising Chairman & Managing Director, Director (Finance) and Senior Level Officers. The ALCO generates various reports as prescribed by RBI for monitoring the liquidity and interest rate risks and place the same before the Risk Management Committee from time to time.
 
The Company has constituted a sub-committee of Risk Management Committee namely IT and Operational Risk Management Committee to assess and mitigate to identify, monitor, and mitigate operational and IT risks for the corporation. Minutes of the meetings of the Sub-committee along with the action taken are placed before the Risk Management Committee.

Terms of Reference

The roles and responsibilities of RMC include the following: -

 

1) Periodical review of –

a) Internal and external risks

b) Assets Liability Management Position,

c) Forex Risk

d) Credit Risk

e) Risks related to IT and Operation.

f) Ensure that processes, and systems are in place to monitor and evaluate risks.

g) Monitor implementation of risk mitigation practices & processes for control of identified risks.

h) Monitor and oversee implementation of the risk management policy, including evaluating the adequacy of risk management systems.

2) Review and approve changes in risk management policy, at least once in two years, for incorporating necessary changes as per changing industry dynamics and evolving complexity or as recommended by CRO / Risk Management Dept.

3) Recommend appointment or removal of Chief Risk Officer.

4) Any other activity as decided by the Board.

 

Stakeholders Relationship Committee

Members

Name	Status	Nature
Smt. Sheela Pandit	Chairperson	Independent Director
Shri Vallabhbhai Maneklal Patel	Member	Independent Director
Smt Shelly Verma	Member	Director (Finance)

 

 

Terms of Reference

• 1. The Stakeholder Relationship Committee shall consider and resolve the grievances of the security holders of the listed entity including complaints related to transfer of securities, non-receipt of annual report, non-receipt of declared dividends etc.
• 2. Allotment or transfer of equity shares, approval of transfer or transmission of equity shares, debentures or any other securities, of the Company.
• 3. Issue of duplicate certificates and new certificates on split/consolidation/renewal, etc. and
• 4. Carrying out any other function contained in the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 as and when amended from time to time.

CSR Committee

Members

Name	Status	Nature
Shri Vallabhbhai Maneklal Patel	Chairman	Independent Director
Ms. Shelly Verma	Member	Director (Finance)
Smt. Sheela Pandit	Member	Independent Director

Terms of Reference

1. Recommend CSR and sustainability development policy to the Board;

2. Recommend plan of action and projects to be initiated in the short, medium and long term for CSR and sustainability development.

3. To recommend the annual CSR and sustainability development plan and budget.

4. Periodic review of CSR and sustainability development policy, plans and budgets.

IT Strategy Committee

Members

Name	Status	Nature
Smt Sheela Pandit	Chairperson	Independent Director
Smt Shelly Verma	Member	Director (Finance)
Shri Abhishek Kumar	Member	Nominee Director
Shri Sunil Kumar Goel	Permanent Invitee	Group General Manager (Finance), Chief Information Officer (CIO)
Shri Ajay Swami	Permanent Invitee	General Manger (Finance III),Chief Information Security Officer (CISO)
Shri Amarendra Sahoo	Permanent Invitee	Joint General Manger (IT),Convener, Chief Technology Officer (CTO)

Terms of Reference

1. Approving IT strategy and policy documents and ensuring that the management has put an effective strategic planning process in place;

2. Ascertaining that the management has implemented processes and practices that ensure that the IT delivers value to the business;

3. Ensuring IT investments represent a balance of risks and benefits and that budgets are acceptable;

4. Monitoring the method that management uses to determine the IT resources needed to achieve strategic goals and provide high-level direction for sourcing and use of IT resources.