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AAVAS Financiers Ltd.

BSE: 541988 Sector: Financials
NSE: AAVAS ISIN Code: INE216P01012
BSE 10:41 | 20 Aug 1547.80 -72.35






NSE 10:34 | 20 Aug 1543.00 -75.95






OPEN 1600.00
52-Week high 1622.00
52-Week low 611.50
P/E 63.25
Mkt Cap.(Rs cr) 12,090
Buy Price 1542.40
Buy Qty 3.00
Sell Price 1548.70
Sell Qty 10.00
OPEN 1600.00
CLOSE 1620.15
52-Week high 1622.00
52-Week low 611.50
P/E 63.25
Mkt Cap.(Rs cr) 12,090
Buy Price 1542.40
Buy Qty 3.00
Sell Price 1548.70
Sell Qty 10.00

AAVAS Financiers Ltd. (AAVAS) - Director Report

Company director report

To The Shareholders


(Formerly Known as "Au Housing Finance Limited")

Your Directors are pleased to present the Eighth Annual Report on the operations of theCompany together with the Audited Financial Statements (standalone and consolidated)forthe year ended March 312018.


The summarized financial performances for the year ended March 312018 are as under:

(H in Crores)

Particulars For the Year ended March 312018 For the Year ended March 312017
Total Income 457.24 305.49
Less: Total Expenditure before Depreciation & Amortization and provision 307.96 207.39
Less: Provisions & Write offs 1.90 6.68
Less: Depreciation & Amortization 5.63 2.77
Total Expenses 315.49 216.84
Profit Before Tax 141.75 88.65
Less: Provision for Taxations (Net of Deferred Tax) 48.82 30.80
Profit After Tax 92.93 57.85
Transfer to Statutory Reserve 20.17 12.86

Company posted Total Income (Total Interest Income and Other Income) of H457.24 Croresand Net Profit of H92.93 Crores for the year ended March 312018 as against H305.49Crores and H57.85 Crores respectively in the previous year.


Your Directors have considered reinvesting the profits into the business of the Companyto build a strong reserve base in the long-term interests and to support the growth of thebusiness of the Company. Accordingly no dividend has been recommended for year endedMarch 312018.


During the year under review pursuant to the approval of the Members of the Companythe Authorized Share Capital of the Company was increased from H650000000/-(Rupees SixtyFive Crores) to H850000000/-(Rupees Eighty Five Crores).

The Paid-up Share Capital of the Company as on 31st March 2018 stood at H691728346(Sixty Nine Crore Seventeen Lakhs Twenty Eight Thousand Three Hundred Forty Six)consisting of 69950891 (Six Crore Ninety Nine Lakh Fifty Thousand Eight Hundred NinetyOne) Equity Shares of H10/- each as compared to H581635818 (Fifty Eight Crore SixteenLakh Thirty Five Thousand Eight Hundred Eighteen) consisting of 58739657 (Five CroreEighty Seven Lakh

Thirty Nine Thousand Six Hundred Fifty Seven) Equity Shares of H10/- in previous year.

During the year under review the Paid up equity share Capital of the Company hasmainly increased due to the issuance and allotment of equity shares through thepreferential basis Right basis and upon exercise of Stock options to the existing as wellas new shareholders of the Company.

During the Reported period the Company has issued and allotted the fully and partlypaid up equity shares and Convertible Share Warrants the details of which are as below:-


Fully Paid up Equity Shares

• 264662 (Two Lakh Sixty Four Thousand Six Hundred Sixty Two) Equity Shares ofH10/- Per share aggregating to H86809136/- (Eight Crore Sixty Eight Lakh Nine Thousandone hundred Thirty Six) on Preferential issue Basis.

• 9291521 (Ninety Two Lakh Ninety One Thousand Five Hundred Twenty One) EquityShares of H10/- Per share aggregating to H3999999791/- (Three Hundred Ninety Nine CroreNinety Nine Lakh Ninety Nine Thousand Seven Hundred Ninety one) on Rights Basis.

• 1222551 (Twelve Lakh Twenty Two Thousand Five

Hundred Fifty One) Equity shares of H10/- per share aggregating to H263154103/-(Twenty Six Crore Thirty One Lakh Fifty Four Thousand One Hundred Three) pursuant to theExercise of Stock Options.

Partly Paid up Equity Shares

During the Year under Review Company has issued and allotted 432500 (Four Lakh Thirtytwo thousand five Hundred) Equity Shares of H10/- per share aggregating to H28372000/-(Two Crore Eighty Three Lakhs Seventy Two Thousand) on preferential issue basis. Furtherthe Company has received H2/- per share as application money.

Receipt of Call Money

During the Year under Review Company has received H2/- per share aggregating toH31000047/- (Three Crore Ten Lakh Forty Seven) as 1st call Money in respect to the720094 (Seven Lakh twenty Thousand Ninety Four) Partly Paid up equity shares of H10/-each.


During the Year under Review Company has issued and allotted 360000 (Three Lakh SixtyThousand) and 440000 (Four Lakh Forty Thousand) Share warrants convertible into equityshares of H328/-and H430.50/- per share respectively. Further the Company has receivedH3/- per Convertible share warrant as warrant subscription money.


AAVAS FINANCIERS LIMITED ("Company") is registered with National Housing Bank("NHB") to carry on housing finance activities in India.

Your Company endeavors towards adopting the benchmark underwriting practices backed upby robust monitoring and recovery mechanisms. The Company's committed in its effortstowards improving efficiency and service level in its operations.

The Company's main thrust continues to be focused on the affordable Housing Segmentcatering to the aspirations of low and mid income Indian Families who dreams to own ahome.

Your Company would work on the philosophy of Housing Financial Institution enablingcredit access to the low and middle income segment for purchasing the affordable housingunits.

The operating and financial performance of your Company has been covered in theManagement Discussion and Analysis report which forms part of this Annual Report.

During the year your company has delivered yet another year of resilient performancethrough achieving the below business figures:-


During the year under review the Company sanctioned housing loans for H2216.98 Cr ascompared to H1494.00 Cr in the previous year with a growth of 48.39% over the previousyear. The cumulative loan sanctions since inception of the Company stood at H5901.38 Cr asat March 31 2018. The Company has granted no loan against the Collateral of GoldJewellery.


During the year under review Company disbursed housing loans for H2051.16 Cr ascompared to H1391.60 Cr in the previous year and recorded a growth of 47.40% indisbursements.

The cumulative loan disbursement from inception stood at March 312018 was H5495.17 Cr.

Affordable Housing

We have built an exclusive team for the product and trained the ground staff to focuson Low Income Households Customers of EWS and LIG segment. This segment has one primeaspiration of owning their own house and thereby creating an affordable environment fortheir family members to live in. We thrive to create an environment and provide properfinancing schemes to these families of EWS/LIG segment residing across Semi Urban andUrban areas across most of the cities of India.

Your Company has signed the MOU with the Government of India for the Credit LinkedSubsidy Scheme (CLSS) under the Pradhan Mantri Awas Yojana for EWS LIG and MIG segments.Company has been an active contributor to the scheme and has disbursed H4.41 Cr during theyear in respect of 256 loans and credited the subsidy to the respective customers' loanaccounts.

Since inception of the scheme company has disbursed loans wherein customers areeligible for CLSS subsidy in respect of loan amount of H25.32 Cr of which company hasreceived claim of H6.36 Cr in respect of 441 loans.

The majority of the claims submitted are in respect of the EWS and LIG customers.

Assets under Management (AUM)

During the year under review the AUM stood at H4073.02 Cr (including assignment ofH900.65 Cr) as against H2693.52 Cr in the previous year with the growth of 51.22%.

As of 31st March 2018 the average sanctioned amount of our AUM was H8.62 Lakhs andAverage tenure was 168.94 Months (on origination basis).

Income & Profits

Total Income grew by 49.67% to H457.24 Cr for the year ended 31st March 2018 ascompared to H305.49 Cr for the previous year. Profit before Tax (PBT) was 59.90% higher atH141.75 Cr as compared to H88.65 Cr for the previous year.

The net profit after tax for the year has increased by 60.64% from H57.85 Cr in theprevious year to H92.93 Cr in the current year.

The operating and financial performance of your Company has been covered in theManagement Discussion and Analysis Report which forms part of this Annual Report.

Non-Performing Assets and Provisions for Contingency

Your Company adhered to the Prudential guidelines for NonPerforming Assets (NPAs)issuedby National Housing Bank under the NHB Directions 2010 as amended from time to time. TheCompany did not recognize income on such NPAs and further created provisions forcontingencies on standard as well as non- performing housing loans in accordance with theNational Housing Bank Directions. The Company has also made additional provisions to meetunforeseen contingencies.

During the year NHB vide notification No. NHB.HFC. DIR.18/MD&CEO/ 2017 datedAugust 2 2017 reduced the provisioning requirement on Standard Individual Housing Loansfrom 0.40% to 0.25%.

Using a pro-active collection and recovery management system supported by analyticaldecision making your company was able to contain its gross Non-Performing Assets atH10.69 Cr (0.34% of the portfolio) as at 31st March 2018. The Company reviews thedelinquency and loan portfolio on regular basis.

The Company coupled a defined policy with procedures to address delinquencies andcollections. As a result of which Gross NPA and net NPA as at 31st March 2018 were 0.34%and 0.26% respectively (against 0.79% and 0.60% respectively in the previous year).

Further information on the Business overview and outlook and State of the affairs ofthe Company is discussed in detail in the Management Discussion & Analysis


As required under Housing Finance Companies (NHB) Directions 2010 [NHB Directions2010] your Company is presently required to maintain a minimum capital adequacy of 12% ona stand-alone basis.

Company's Capital Adequacy Ratio as at 31st March 2018 was 61.55% (previous year46.72%) which is well above the minimum required level of 12% as prescribed.


During the period under review your Company has neither invited nor accepted norrenewed any fixed deposits from public within the meaning of Section 73 of the CompaniesAct 2013 read with the Companies (Acceptance of Deposits) Rules 2014.


Your Company's borrowing policy is under the control of the Board. The Company has videspecial resolution passed on July 26 2017 under Section 180 (1) (c) of the CompaniesAct 2013 authorized the Board of Directors to borrow money upon such terms andconditions as the Board may think fit in excess of the aggregate of paid up share capitaland free reserves of the Company up to an amount of H4500 Cr and the total amount soborrowed shall remain within the limits as prescribed by National Housing Bank.

Your Company manages its borrowing structure through prudent Asset-Liability Managementand takes the various measures which includes the diversification of funding sourcestenure optimization structured interest rates and prudent borrowing timing to maintainits borrowing cost at optimum level.

During the year under review company continued to diversify its funding sources byexploring the Debt Capital Market through private placement of Secured and UnsecuredNonConvertible Debentures; Securitization/Direct assignment fully hedged FCNR Loans andbanking products like Priority Sector/Non-Priority Sector Term loans Cash CreditFacilities and Working Capital Demand loans. The company has also further diversified byadding 8 (Eight) new lender/Financial Partners.

The weighted average borrowing cost as at March 312018 was 8.65% as against 9.48% inthe previous year. As at March 312018 your Company's sources of funding were primarilyfrom banks and financial institutions (49.87%) followed by securitization/directassignment (25.63%)Non-convertible debentures (11.17%) Refinancing from NHB (10.46%)and subordinated debts (2.87%).

Term Loans from Banks and Financial Institutions

During the Year Company received fresh sanctions from banks amounting to H910 Cr ofwhich Company has availed loans aggregating to H753 Cr. The outstanding bank term loans asat March 31 2018 were H1708 Cr. Average Tenure of Bank term loan raised during the periodunder review is 9.29 Years

Refinance from National Housing Bank (NHB)

NHB continued its support to your company through refinance and during the year underreview your Company received refinance sanction of H300 Cr (previous year H200 Cr) underthe NHB refinance scheme to Housing Finance Companies. The company availed funds from NHBunder the Refinance Scheme for "Special urban Low income Housing" "UrbanHousing Fund" and "Regular Refinance Scheme" and outstanding at the end ofthe current year stood at H365.10 Cr (previous year H173.04 Cr).

Your company is one of the major participant to run the Pilot under "Special UrbanHousing Refinance Scheme for Low Income Households" launched by NHB with assistancefrom International Development Association (IDA) an Arm of World Bank aimed for extensionof credit for housing to lower income segments having informal sources of income securedeither by mortgageable title over the land / property or by alternative security.

Non-Convertible Debentures ("NCDs")

During the year under review your Company has raised H130 Cr through the issue ofSecured Redeemable NCDs and H100 Cr through the issue of Unsecured Sub-ordinated TierII Redeemable NCDs on private placement basis and policy of private placement of NCDs ofthe Company formulated as per the guidelines issued by National Housing Bank.

As on 31st March 2018 the Company's outstanding balance of Debentures stood at H490Cr as compared to H335 Cr as on 31st March 2017. The Company's Debentures are listed onWholesale Debt Market segment of BSE Limited.

In an environment where Market is experiencing an upward trend into cost of fund webelieve that we have been able to access cost-effective debt financing due to our stablecredit history strong financial performance and conservative risk management policiesresulted A+ rating with Stable outlook by ICRA A+ rating with Positive outlook by CAREand A+ rating with Stable outlook by India Rating & Research.

During the financial year under review the interest on NonConvertible Debenturesissued on private placement basis were paid by the Company on their respective due datesand there were no instances of any interest amount which were not claimed by the investorsor not paid by the Company after the date on which the same became due for payment.

Your Company being Housing Finance Company (HFC) is exempted from the requirement ofcreating Debenture Redemption Reserve (DRR) on privately placed debentures. Therefore DRRhas not been created by your company.

Disclosure under Housing Finance Companies issuance of Non-Convertible Debentures onprivate placement basis (NHB) directions 2014:

(i) The total number of non-convertible debentures which have not been claimed by theinvestors or not paid by the Company after the date on which the non-convertibledebentures became due for redemption - Nil

(ii) The total amount in respect of such debentures remaining unclaimed or unpaidbeyond the date of such debentures become due for redemption : Nil

Debenture Trustee

Debenture Trust Agreement(s) were executed in favour of IDBI Trusteeship ServicesLimited for NCDs issued on private placement basis. Following are details of IDBITRUSTEESHIP SERVICES LIMITED.


Regd. Office: Asian Building Ground Floor

17 R. Kamani Marg Ballard Estate Mumbai - 400 001. Tel: +91 22 4080 7015 / Fax: +9122 6631 1776 Website: Securitization/Assignment of Loan Portfolio

Your company has actively tapped Securitization/Direct Assignment market which enablesit to create liquidity reduce the cost of funds and minimizing asset liabilitymismatches.

During the year under review your Company securitized its loan portfolio of H593.51 Crthrough pool buyout transactions

The Securitization transaction was carried out in line with RBI guidelines onSecuritization of Standard Assets and securitized assets have been de-recognized in thebooks of the Company.

Commercial Paper (CP)

During the year your company has issued Commercial Paper amounting to H50 Cr.Company's Commercial papers are rated "ICRA A1+" and "CARE A1+"indicating that instrument have very strong degree of safety regarding timely payment offinancial obligations. As on 31st March 2018 Commercial Papers o/s is Nil.


During the year under review your Company has altered its Object Clause of Memorandumof Association (MOA) as per the suggestions given by the National Housing Bank during itsonsite Annual inspection.

Further the altered MOA is available at the registered office of the Company in theBusiness hours.


Your Company has been continuously successful in establishing its branch network with aview to support its Disbursement growth enhancing customer base and Services. During theyear under review the Company has expanded its branch network to 165 branches as of 31st

March 2018 and plans to scale up its operation to newer geographies in 2018-19.

The company has nearly doubled the branch network within the short span of time andstrengthened its business in the states of Rajasthan Maharashtra Gujarat MadhyaPradesh Haryana Delhi Chhattisgarh and Uttar Pradesh.

The Company has its registered office in Rajasthan and its branch network comparisonwith the previous year is detailed hereunder:

State No. of Branches (As on 31st March 2017) No. of Branches (As on 31st March 2018)
Rajasthan 41 72
Maharashtra 18 33
Gujarat 16 27
Madhya Pradesh 16 24
Haryana 01 03
Chhattisgarh - 03
Delhi 01 02
Uttar Pradesh 01 01
Total number of branches 94 165


The Board of Directors of the Company comprises of Nine Directorsconsisting of threeIndependent Directors five Nominee Directors and One Whole Time Director as on 31stMarch 2018 who bring in a wide range of skills and experience to the board.

The Board of Directors of the Company are as follows:-

Name of the Director Designation DIN Category
Mr.Krishan Kant Rathi Independent Director 00040094 Independent Non-Executive
Mrs. Kalpana Iyer Independent Director 01874130 Independent Non-Executive
Mr. Sandeep Tandon Independent Director 00054553 Independent Non-Executive
Mr. K R Kamath Nominee Director 01715073 Non-Executive
Mr. Vivek Vig Nominee Director 01117418 Non-Executive
Mr. Nishant Sharma Nominee Director 03117012 Non-Executive
Mr. Manas Tandon Nominee Director 05254602 Non-Executive
Mr. Sushil Kumar Agarwal Whole Time Director & CEO 03154532 Executive
Mr. Kartikeya Dhruv Kaji Nominee Director 07641723 Non-Executive

The Independent Directors have confirmed that they satisfy the criteria prescribed foran Independent Director as stipulated in the provisions of the Section 149(6) of theCompanies Act 2013. None of the Directors have any pecuniary relationships ortransactions with the Company. None of the directors of the Company are related to eachother and confirmed that they are not disqualified from being appointed as directors interms of section 164 of the Companies Act 2013.

Appointment & Resignation of Directors

During the Year under Review two Directors have been appointed on the Board of theCompany. As required under section 160 of the Companies Act 2013 a Notice has beenreceived from a member proposing the name of the Directors and all directors are appointedby the members of the Company.

Directors Appointed during the Year under Review are as follows:-

Name of the Director Date of appointment DIN Category
Mr. Sandeep Tandon 27-07-2017 00054553 Independent Director
Mr.Kartikeya Dhruv Kaji* 27-07-2017 07641723 Nominee Director

*Mr.Kartikeya Dhruv Kaji-Nominee Director on Board representing Kedaara CapitalAlternative Investment Fund - Kedaara Capital AIF 1 and Lake District Holdings Limited.

During the year No Director of the Company has resigned from the Board of the Company.

Directors Retiring by Rotation

In terms of Section 152 of the Companies Act 2013 Mr. Manas Tandon Nominee Directorwas retired by rotation and was reappointed by the Members in the Previous Annual GeneralMeeting of the Company held on 26th July 2017.

Further Mr. Nishant Sharma Nominee Director being longest in the office shall retireat the ensuing Annual General Meeting and being eligible for re-appointment offershimself for re-appointment.

Appointments/Resignations of the Key Managerial Personnel

Mr. Sushil Kumar Agarwal-Whole-Time Director & CEO; Mr. Ghanshyam Rawat- ChiefFinancial Officer and Mr. Sharad Pathak-Company Secretary are the Key Managerial Personnelin terms of section 2(51) of the Company.

During the year No Key Managerial Personnel of the Company has been appointed andresigned from the Company.

Number of Board Meetings held during the Financial Year

During the financial year 2017-18 6 (Six) Board Meetings were convened and held. Theintervening gap between the Board Meetings was within the period prescribed under theCompanies Act 2013.The details related to Board Meeting are appended in CorporateGovernance Report forming part of this Annual Report.

Performance Evaluation of the Board

Your Company is following the most effective way to ensure Board members to understandtheir duties and to adopt effective good governance practices. In furtherance to this thedirectors of a company shall act in good faith to promote the objects of the Company forthe benefit of its employees the shareholders the community and for the protection ofenvironment.

Your Company has designed a mechanism as per the provisions of the Companies Act 2013Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 (‘SEBI LODR')and "Housing Finance Companies - CorporateGovernance (National Housing Bank) Directions 2016" for the Evaluations ofperformance of Board Committees of Board & Individual Directors.

Further your company is adhered towards the Fit and Proper Criteria which includesBoard approved Fit and proper policy

for ascertaining the Fit and Proper Criteria of the directors at the time ofappointment and on a continuing basis.

The Nomination & Remuneration Committee carried out the evaluation of everyDirector's performance and the Board additionally carried out a formal evaluation of itsown performance Statutory Board Committees namely Audit Committee Nomination &Remuneration Committee and Corporate Social Responsibility Committee and all theIndividual Directors without the presence of the Director being evaluated.

During the year Independent Directors of the Company also held separate meetings toreview the performance of the Non- Independent Directors and Board as a whole afterassessing the quality quantity and timeliness of flow of information between the Companymanagement and the Board which is necessary for the Board to effectively and reasonablyperform their duties.

Major aspects of board evaluation includes who is to be evaluated process ofevaluation including laying down of objectives and criteria to be adopted for evaluationof different persons feedback to the persons being evaluated and action plan based on theresults. The Corporate Governance Report is annexed to this report as "Annexure-1".

Company's Policy on Directors Appointment Remuneration & Evaluation

The Board on the recommendation of the Nomination & Remuneration Committee of theBoard adopted a "Nomination & Remuneration Policy" which inter-alia laysdown the criteria for identifying the persons who are qualified to be appointed asDirectors and/or Senior Management Personnel of the Company along with the criteria fordetermination of remuneration of Directors KMPs and other employees and their evaluationand includes other matters as prescribed under the provisions of Section 178 of CompaniesAct 2013.

The"Nomination & Remuneration Policy"of the Company is placed on thewebsite of the Company. The Remuneration paid to the Directors is in line with theremuneration policy of the Company.

The Nomination & Remuneration Policy can be accessed through the following link

Details of Remuneration paid to the all Directors during the financial year 2017-18 ismore particularly mentioned in extract of annual Return in form "MGT-9".


Your Company continues to comply with the guidelines issued by NHB regarding accountingguidelines prudential norms for asset classification income recognition provisioningcapital adequacy concentration of credit/ investments accounting standards creditrating Know Your Customer(KYC) guidelines Anti Money Laundering (AML) standards fairpractices code Most Important Terms & Conditions (MITC) grievance redressalmechanism recovery of dues real estate and capital market exposures norms

The recognition of income and provision for non-performing asset has been made in thebooks as per the Guidelines on Prudential Norms applicable as of 31st March 2018.

Company Capital Adequacy Ratio stood at 61.55% as against the minimum requirement of12%.

The National Housing Bank Act 1987 empowers NHB to levy a penalty on Housing FinanceCompanies for contravention of the Act or any of its provisions. Your company has compliedwith the said provisions;

National Housing Bank (NHB) has not raised any stricture or direction in theirinspection carried out during the year. NHB has not levied any penalty on Company duringthe year

Regulatory & Statutory Compliances

During the Year under review the NHB has issued various Notifications Circulars andGuidelines to Housing Finance Companies.

The Circulars and the Notifications issued by NHB are also placed before the Board ofDirectors at regular intervals to update the Board members on compliance of the same andyour Company has adhered to all the Circulars Notifications and Guidelines issued by NHBfrom time to time.

The Government of India has set up the Central Registry of Securitization AssetReconstruction and Security Interest

of India (CERSAI) under Section 21 of the SARFAESI Act 2002 to have a central databaseof all mortgages created by lending institutions. The object of this registry is tocompile and maintain data relating to all transactions secured by mortgages. AccordinglyCompany is registered with CERSAI and has been submitting data in respect of its loans.


Your Company has instituted Stock Option Plans to attract and retain the personnel forpositions of substantial responsibility and to provide additional incentive to theManagement team Directors and Employees of the Company.

During the year 2016-17 the Company has approved the three Stock option plans named asEquity Stock Option Plan for Employees 2016 ("ESOP 2016-I") Equity Stock OptionPlan for Management Team 2016 ("ESOP 2016-II") and Equity Stock Option Plan forDirectors 2016 ("ESOP 2016- III") (hereinafter collectively referred to as"ESOP-2016") Employee Stock Option Plans-2016 (ESOP-2016) at its Extra OrdinaryGeneral Meeting held 23rd Feb 2017empowering the Board and Nomination & RemunerationCommittee of the Board to execute the said ESOP- 2016.

The above referred ESOP-2016 was further amended by the members in their meeting heldon 22nd February 2018considering to align ESOP-2016 in accordance with the provisions ofthe Securities and Exchange Board of India (Share Based Employee Benefits) Regulations2014 "SEBI (SBEB) Regulations 2014" as amended from time to time in order tosupport the Company's effort to proactively adopt the best corporate governance practicesand transparency.

In addition during the current year the Company has granted 424687 options underESOP 2016-I. The options granted entitle the employees to purchase options at an exerciseprice of H328/- per option as determined by the Nomination and Remuneration Committee.

The Nomination & Remuneration Committee monitors the Plan in compliance with theCompanies Act 2013 and related laws.


1) During the year Shareholders of the Company at their meeting held on 22nd February2018 has accorded their consent to amend the Equity Stock Option Plan For Employees 2016("ESOP 2016-I") in such a manner that share pool stands reduced by 360000un-granted options.

2) 116904 options lapsed due to the resignation of the certain employees from theCompany.

Employee wise details of options granted to:- 1) Key Managerial Personnel:

i) Mr. Sushil Kumar Agarwal (Whole Time Director & CEO) :- 2097328
ii) Mr. Ghanshyam Rawat (Chief Financial Officer) :- 749046
iii) Mr. Sharad Pathak (Company Secretary) :- 15000

2) Any other employee who receives a grant of options in any one year of optionamounting to five percent or more of options granted during that year:

i) Mr. Sushil Kumar Agarwal (Whole Time Director & CEO) :- 2097328
ii) Mr. Ghanshyam Rawat (Chief Financial Officer) :- 749046
iii) Mr. Vivek Vig (Nominee Director) :- 599236

3) Identified employees who were granted option during any one year equal to orexceeding one percent of the issued capital (excluding outstanding warrants andconversions) of the Company at the time of grant;

i) Mr. Sushil Kumar Agarwal (Whole Time Director & CEO) :- 2097328
ii) Mr. Ghanshyam Rawat (Chief Financial Officer) :- 749046
iii) Mr. Vivek Vig (Nominee Director) :- 599236


Your company has transferred H48.21 Crores i.e. 20 % of net profits amounting toStatutory reserves as required under the provisions of section 29C of The National HousingBank Act 1987 read with section 36 (1) (viii) of Income Tax Act 1961.


During the year under review on account of strong leadership Experienced managementteam Robust Capitalization Better asset quality & Collections scaling up businessImproved margins Strong asset liability management and mobilization of funds at Optimumcost ratings of the Company has been increased.

CARE has upgraded the outlook of the Company from "ICRA A+" / Stable to"ICRA A+" / Positive

Further during the year under review ICRA has upgraded the long term rating of theCompany from "ICRA A" / Positive to "ICRA A+" / Stable

India's renowned rating Agencies have assigned ratings as per below:-

The ratings continue to reflect Company's healthy earning profile adequatecapitalization and steady improvement in its scale of operations. These rating strengthsare partially offset by the susceptibility of the Company's asset quality to risks relatedto the limited seasoning in its loan portfolio.

The assigned ratings are a positive reflection of Company talented management team theCompany's leadership position in affordable housing segment and strong brand equity in itsregional markets. The ratings also derive strength from Company comfortable financial riskprofile growth in scale of operations and efficient operational strengths.

AUDITORS Statutory Auditors

M/s S. R. BATLIBOI & Associates LLP Chartered Accountants (Firm Registration No:101049W/E300004) the Statutory Auditors of the Company were Re-appointed by the members inthe seventh Annual General Meeting (AGM) of the Company held on 26th July 2017 to holdoffice from conclusion of the seventh AGM to the Conclusion of the 12th AGM of the Company(subject to ratification of the appointment by the Members at every subsequent AnnualGeneral Meeting) in accordance with the provisions of the Companies Act 2013.

As per the provisions of the NHB Notification No. NHB.HFC.CG-DIR.1/MD&CEO/2016partner of the audit firm needs to be rotated in every three year.

Further Based on the recommendation of the Audit Committee the Board of Directors attheir meeting held on April 27 2018 recommended the ratification of appointment of M/sS. R. BATLIBOI & Associates LLP Chartered Accountants (Firm Registration No:101049W/E300004) as the Statutory Auditors of the Company and that the necessaryresolution in this respect

is being included in the notice of the Eighth (08th) Annual General Meeting for theapproval of the Members of the Company. M/s S. R. BATLIBOI & Associates LLP furnishedwritten consent and a confirmation to the effect that they are not disqualified to beappointed as the Statutory Auditors of the Company in terms of the provisions of CompaniesAct 2013 and rules framed thereunder.

Auditors Report

The observation of the auditors in their reports are selfexplanatory and therefore inthe opinion of the Directors do not call for further comments.

Secretarial Auditors and Secretarial Audit Report

In accordance with Section 204 of the Companies Act 2013 and Rule 9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 M/s V M.&Associates Practicing Company Secretaries were appointed as Secretarial Auditors toconduct the Secretarial Audit of the Company for the 2017-18. Company has provided allassistance and facilities to the Secretarial Auditor for conducting their audit. TheReport of Secretarial Auditor for 2017-18 is annexed to this report as"Annexure-2".

The Report is self - explanatory there were no major observations or qualifications oradverse remarks in the Auditor's Report except that expenses on CSR activities were belowthe prescribed limit Thus in response to this Management has responded that shortfall inCSR funding is on accountthat company considers social responsibility as an integral partof its business activities and endeavors to utilize allocable CSR budget for the benefitof society.

Thus the Company is in the process of gradually building and developing the CSRappraisal mechanism for appraising CSR projects internally as it intends to contributetowards genuine projects and partner with only reputed implementation agencies with proventrack record.


Your Company has an Internal Audit Department supported by Internal Auditor whoconducts comprehensive audit of functional areas and operations of the Company to examinethe adequacy of and compliance with policies procedures statutory and regulatoryrequirements.

Significant audit observations and follow up actions thereon are reported to the AuditCommittee. The Audit Committee reviews and evaluates adequacy and effectiveness of theCompany's internal control environment and monitors the implementation of auditrecommendations.

The Internal Audit Department monitors and evaluates the efficacy and adequacy ofinternal control system in the Company its compliance with operating systems

accounting procedures and policies at all locations of the Company. Significant auditobservations and corrective actions thereon are presented to the Audit Committee of theBoard every quarter or at periodic intervals.

The Audit Committee and Board of Directors have approved a documented framework for theinternal financial control to be followed by the Company and such policies and proceduresadopted by the Company for ensuring the orderly and efficient conduct of its businessincluding adherence to Company's policies safeguarding of its assets prevention anddetection of frauds and errors accuracy and completeness of the accounting records andtimely preparation of reliable financial information and disclosures. The Audit Committeeperiodically reviews and evaluates the effectiveness of internal financial control system.


There were no material changes and commitments affecting the financial position of theCompany which had occurred between the end of the financial year i.e. 31st March 2018 andthe date of the Director's report i.e. 27th April 2018.

However Company has incorporated the Company named "AAVAS FINSERV LIMITED"as wholly owned Subsidiary.

Aavas Finserv Limited was incorporated on 30th November 2017 under the Companies Act2013 as a public limited company with the Registrar of Companies Jaipur Rajasthan havingCorporate Identification Number U65929RJ2017PLC059623.Registered office is located at203-205 2nd Floor Southend Square Mansarovar Industrial Area Jaipur 302 020 India.

The authorized share capital of Aavas Finserv Limited is H45000000 divided into4500000 equity shares of H10 each and its paid-up share capital is H45000000 dividedinto 4500000 equity shares of H10 each.

During the year company has obtained the Certificate of registration dated December 82017 issued to our company by the Insurance Regulatory Development Authority of India(IRDAI) to act as a corporate agent (Registration No.CA0537).

There has been no change in the nature of business of the Company.

No significant or material Orders have been passed by the regulators or Courts orTribunals impacting the going concern status of the Company and / or the Company'soperations in future.


Your Company has developed a fully equipped "core housing finance solutionsPlatform" which is a step towards aligning technology to the projected businessgrowth.

All our branches of the Company and the corporate office are linked through acentralized data based platform that enriches data management strengthens servicedelivery and serves the customer(s) in an efficient manner which is an integral part ofthe control mechanism.

New initiatives taken by your company in Information Technology are as follows:-

a) Document Digitization

b) Device Location Tracking

c) Procurement of Energy Saving Green IT Equipment

d) Refilling Outsourced with High-end Copier Machine in High Print volume Branches toreduce the Carbon Footprint.

Company carries out audit of its IT systems from external agency at regular intervals.The external agency's suggestions and recommendations are reported to Audit Committee andimplemented where found necessary.


The Company's success depends largely upon the quality and competence of its managementteam and key personnel. Attracting and retaining talented professionals is therefore a keyelement of the Company's strategy and a significant source of competitive advantage.

Across all its business operations Company had a workforce of 1862 people as on March312018.

Human resource development is considered vital for effective implementation of businessplans constant endeavor is being made to offer Professional Growth opportunities andrecognitions apart from imparting training to the Employees Company has also providedthe sales Training to the new recruits to have better understanding towards the Companyand make them compatible towards the working culture of the Company.

The Company hired professionals at Senior positions/ Functional Heads representing thevarious Departments of the Company having relevant industry experience and qualificationto strengthen and grow housing finance business. The Company recruited people fromprestigious institutes like the Institute of Chartered Accountants of India (‘ICAI')and the Institute of Company Secretaries of India (‘ICSI')besides recruiting fromother reputed Business Schools.

In pursuance of the Company's commitment to develop and retain the best availabletalent the Company had been sponsoring in house training programmes on regular basis forits employees on lending operations Underwriting & Due diligence KYC & AMLnorms Risk Management Information Technology recoveries CLSS PMAY and GrievanceRedressal.

During the period under review company has nominated their employees to attend theexternal training programmes conducted by NHB and other institutions on KYC-FPC CustomerService Legal Support for Recoveries NPA Management Grievance Registration &Information Database (GRIDS) Central Registry of Securitization Asset Reconstruction& Security Interest of India (CERSAI) PMAY Credit Linked Subsidy Scheme (CLSS)Loans-Credit Appraisal and Risk Management.


During the year under review the Company has received the Trade Mark Registrationcertificate for the registration of the Trademark from the Trade Marks RegistryGovernmentof India.


Company has tied up with Kotak Mahindra Old Mutual Life Insurance Limited HDFCStandard Life Insurance Company Limited & Bajaj Allianz Life Insurance Co. Ltd. forproviding group credit life insurance of the Insured.

Company also tied up with Shriram General Insurance Company Limited and IFFCO TokyoGeneral Insurance for providing property insurance of the mortgaged property."Standard Fire & Special Perils Policy" which provide coverage against FireFlood Earthquake and other perils mentioned in the policy on reinstatement basis.


The Company has in place a Board Constituted Credit and Risk Management Committee.Details of the Committee and its terms of reference are set out in the CorporateGovernance Report forming part of this report.

Company has Board Approved Credit and Risk Management Policies wherein all materialrisks faced by the Company are identified and assessed. Company has set up a policyframework for ensuring better management of its asset & liability profile. Company hasgiven due importance to prudent lending practices and put in place suitable measures forrisk mitigation which include verification of credit history from credit informationbureaus personal verification of customer's business and residence in house technicaland legal verification conservative loan to value and compulsory term cover forinsurance. The Risk management framework of the Company seeks to minimize adverse impactof risks on our key business objectives and enables the Company to leverage marketopportunities effectively.

During the year the committee reviewed the risks associated with the business of theCompany its root causes and the efficacy of the measures taken to mitigate the same.


Your Company believes to conduct its affairs in a fair and transparent manner byadopting highest standards of professionalism honesty integrity and ethical behaviour.The Company is committed to developing a culture where it is safe for all directors andemployees to raise concerns about any wrongful conduct.

The Board of Directors has approved the vigil mechanism/ whistle blower policy of theCompany which provides a framework to promote a responsible and secure whistle blowing. Itprotects employees wishing to raise a concern about serious irregularities within theCompany. It provides for a vigil mechanism to channelize reporting of such instances/complaints/ grievances to ensure proper governance. The Audit Committee oversees the vigilmechanism. No employee has been denied access to the Audit Committee. The policy is placedon the website of the Company and can be accessed


Your Company is the Direct Subsidiary of Lake District Holdings Limited and IndirectSubsidiary of the Holding Company of Lake District Holdings Limited i.e. Kedaara Capital ILimited.

The Shareholders having the Substantial interest in the Company is Partners Group ESCLLimited.

As on 31st March 2018 Your Company has incorporated the Company named "AAVASFINSERV LIMITED" as wholly owned Subsidiary the Company has not started anyoperations during the year.

Pursuant to the provisions of Section 129(3) of the Companies Act 2013 your Companyhas prepared Consolidated Financial Statements of the Company which forms part of thisAnnual Report. Further a Statement containing salient features of financial statements ofthe Subsidiary in the prescribed format AOC-1 pursuant to Section 129(3) of theCompanies Act 2013 read with the Companies (Accounts) Rules 2014 is annexed asAnnexure-3 to this Report.


The statement containing particulars of employees as required under Section 197(12) ofthe Companies Act 2013 read with Rule 5(2) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 forms part of this report. In terms of Section 136 ofthe Companies Act 2013 the same is open for inspection at the Registered Office of yourcompany.

The ratio of the remuneration of each director to the median employee's remunerationand other details in terms of sub-section 12 of Section 197 of the Companies Act 2013read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are forming part of this report as "Annexure-4".


In line with Section 135 of the Companies Act 2013 read with the Companies (CorporateSocial Responsibility Policy) Rules 2014; the Company has undertaken the projects in thearea of Health promoting gender equality empowering women Education promoting TrafficRules Regulation and Road Safety Providing Safe Drinking Water and Promoting Sportswhich are in accordance with the Schedule VII of the Companies Act 2013 and CSR Policy ofthe Company.

The Annual Report on CSR Activities which forms part of the Directors Report isannexed as "Annexure - 5" to this report.


In accordance with the provisions of the Sec 134 (3) (m) of the Companies Act 2013read with Rule 8 of the Companies (Accounts) Rules 2014 by your company are as under:-

A) Conservation of energy:

(i) The Steps taken / impact on conservation of energy:

The operations of the Company being financial services doesn't require intensiveconsumption of electricity. Howeverthe Company is taking every necessary step to reduceits consumption of energy.

(ii) The Steps taken by the Company for utilizing alternate sources of energy:

Company has procured the Energy Saving Green IT Equipment's and power saving lampsLEDs that have been installed in branches so far as a measure for conservation of energy.Your Company has installed High-end Copier Machine in High Print volume in Branches toreduce the Carbon Footprint.

As a part of Save Green efforts a lot of paper work at branches and the registeredoffice has been reduced by suitable leveraging of technology and Digitization.

(iii) The Capital investment on energy conservation equipment:

In view of the nature of the activities carried on by the Company there is no capitalinvestment on energy conservation equipment.

B) Technology absorption:

(i) the efforts made towards technology absorption: Nil

(ii) the benefits derived like product improvement cost reduction product developmentor import substitution: Nil

(iii) in case of imported technology (imported during the last three years reckonedfrom the beginning of the financial year)

a) the details of technology imported: N.A.

b) the year of import: N.A.

c) whether the technology been fully absorbed: N.A.

d) if not fully absorbed areas where absorption has not taken place and the reasonsthereof: N.A.

(iv) the expenditure incurred on Research and Development: N.A.

C) Foreign exchange earnings and Outgo:

Further Company does not have any Foreign Exchange Earnings and there was no outgoduring the Financial Year ended 31st March 2018.


Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of theCompanies Act 2013 read with Rule 12(1) of the Companies (Management and Administration)Rules 2014 the extracts of the Annual Return in form MGT-9 as at 31st March 2018 formspart of this report as "Annexure-6".


The Company has zero tolerance towards any action on the part of any of its officialswhich may fall under the ambit of ‘Sexual Harassment' at workplace. Company promotesand recognizes the right of women to protection from sexual harassment and the right towork with dignity as enshrined under the Constitution of India and the Convention on theElimination of all Forms of Discrimination against Women (CEDAW).

Pursuant to the requirements of Section 22 of Sexual Harassment of Women at Workplace(Prevention Prohibition

& Redressal) Act 2013 read with Rules there under the Internal Complaint committeeof the Company has not received any complaint of sexual harassment during the year underreview.

The following is a summary of sexual harassment complaints received and disposed ofduring the year 2017-18:

No of complaints received: Nil No of complaints disposed of: Nil


Since the Company is a Housing Finance Company the disclosure regarding particulars ofloans given guarantees given and security provided is exempted under the provisions ofSection 186 (11) of the Companies Act 2013.


In accordance with the provisions of section 188 of the Companies Act 2013 and rulesmade thereunder the transactions entered with related parties are in the ordinary courseof business and on an arm's length pricing basis the details of which are included in thenotes forming part of the financial statements.

During the year under Review your Company had not entered into any Related PartyTransactions covered within the purview of Section 188(1) of the Companies Act 2013accordingly requirement of disclosure of Related Party Transactions in terms of Section134(3)(h) of the Companies Act 2013 in Form AOC - 2 is not applicable to the Company.

Further as required by NHB notification no. NHB.HFC.CG- DIR.1/MD&CEO/2016 datedFebruary 9 2017a policy on Transactions with Related Parties is given as "Annexure-7" to this report and can accessed on the website of the Company


The Directors have devised proper systems to ensure compliance with the provisions ofall applicable Secretarial Standards and that such systems are adequate and operatingeffectively.


During the year under review your Company has formulated and adopted the InternalGuidelines on Corporate Governance in accordance with Housing Finance Companies -Corporate Governance (National Housing Bank) Directions 2016 which inter-alia definesthe legal contractual and social responsibilities of the Company towards its variousstakeholders and lays down the Corporate Governance practices of the Company.

The said policy is available on the website of the Company can be accessed on thewebsite of the Company at governance.


In accordance with the provisions of Section 134(3)(c) read with Section 134(5) of theCompanies Act 2013 and based on the information provided by the Management the Board ofDirectors report that:

(a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures.

(b) We have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent to give a true and fair view ofthe state of affairs of the Company at the end of the Financial Year and of the profit andloss of the Company for that period

(c) We have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.

(d) We have prepared the annual accounts on a going concern basis.

(e) We have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively; and

(f) We have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively.


A detailed business review is appended in the Management Discussion and AnalysisSection of Annual Report.


The Directors would like to place on record their gratitude for the valuable guidanceand support received from the National Housing Bank.

Your Directors would like to acknowledge the role of all its Stakeholders viz.Shareholder Debenture holders Bankers Lenders Borrowers Debenture Trustees and allothers for their continued support to the Company and the confidence and faith that theyhave always reposed in the Company.

Your Directors acknowledge and appreciate the guidance and support extended by all theRegulatory authorities including National Housing Bank (NHB) Securities Exchange Board ofIndia (SEBI) Ministry of Corporate Affairs (MCA) Registrar of Companies Rajasthan theBombay Stock Exchange NSDL and CDSL.

Your Directors thank the Rating Agencies (ICRA CARE CRISIL and India Ratings &Research Ltd. [Fitch group])local/statutory authorities and all others for theirwhole-hearted support during the year and look forward to their continued support in theyears ahead.

Your Directors also wish to place on record their appreciation for the commitmentdisplayed by all the members of the Audit Nomination & Remuneration and CorporateSocial Responsibility Committees of the Board executives officers staff and the SeniorManagement team in performance of the Company during the year.

For and on behalf of the Board of Directors of


(Formerly known as "Au Housing Finance Limited")


Sushil Kumar Agarwal

(Whole Time Director & CEO) (DIN:03154532)

Date: April 27 2018 Place: Jaipur


Manas Tandon

(Nominee Director) (DIN: 05254602)