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Central Depository Services (India) Ltd.

BSE: 538434 Sector: Others
NSE: CDSL ISIN Code: INE736A01011
BSE 05:30 | 01 Jan Central Depository Services (India) Ltd
NSE 00:00 | 07 Apr 214.10 4.20
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Central Depository Services (India) Ltd. (CDSL) - Director Report

Company director report

Your Directors have pleasure in presenting the Twenty-first AnnualReport along with Audited Statement of Accounts of your Company for the year ended 31stMarch 2019. The operational income of the Company has marginally increased from'15083.17 Lakhs to ' 15234.12 Lakhs resulting in an increase of total income from '17887.12 Lakhs to ' 18847.00 Lakhs.

Financial Highlights

Particulars Year ended 31st March 2019 (' in Lakhs) Year ended 31st March 2018 (' in Lakhs)
Income from Operations 15234.12 15083.17
Other Income 3612.88 2803.95
Total Income 18847.00 17887.12
Expenditure 6687.89 6194.17
Profit before Depreciation and Taxation 12159.11 11692.95
Depreciation 825.51 646.42
Profit before contribution to IPF & Tax 11333.60 11046.53
Contribution to IPF 367.65 408.39
Profit Before Tax 10965.95 10638.14
Provision for Taxation 2510.00 2962.40
Provision for Deferred Tax for the year 18.22 (92.96)
Profit after Tax 8437.73 7768.70
Other Comprehensive Income (Net of Tax) 0.57 (0.45)
Total Comprehensive Income 8438.30 7768.25
Balance brought forward 38679.60 34684.56
Profit available for appropriation 47117.90 42452.81
Dividend 3657.50 3135.00
Dividend Distribution Tax (including surcharge and education cess) 751.98 638.21
Surplus carried to Balance Sheet 42708.42 38679.60

The income from Operations comprising of Transaction charges AnnualIssuers Charges Account Maintenance Charges Settlement Charges Corporate ActionCharges etc. during the year 2018-19 increased from ' 15083.17 Lakhs to ' 15234.12Lakhs recording an increase of 1% over the year 2017-18.Pursuant to regulation 73 of theSEBI (Depositories & Participants) Regulations 2018 transfer of ' 367.65 Lakhs ismade to Investor Protection Fund (IPF). After contribution to Investor Protection FundProfit before Tax (PBT) for the year ended 31st March 2019 is ' 10965.95 Lakhs asagainst ' 10638.14 Lakhs of previous year. Similarly Profit after Tax (PAT) is at '8437.73 Lakhs as against ' 7768.70 Lakhs. Thus Profit before Tax & Profit after Taxfor the year ended 31st March 2019 has increased by 3% and 9% respectively over theprevious year.

Highlights of performance of subsidiariesassociates and joint venture companies and their contribution to the overall performanceof the Company during the financial year 2018-19

Financial performance of CDSL subsidiaries for the year ended March 312019

' in Lakhs

CDSL Ventures Limited CDSL Insurance Repository Limited CDSL Commodity Repository Limited
Total Income 4999.01 275.87 455.94
Total Expenses 1426.92 88.42 360.73
PBT 3572.09 187.45 95.21
PAT 2733.29 199.31 112.30
Contribution to Overall CDSL PAT % 24% 1% 1%

Dividend

Considering the performance of the Company for the year under reviewyour Directors have recommended a dividend of ' 4/- (Rupees Four only) per share (40%) forthe year ended 31st March 2019.

Share Capital and Shareholding

As on 31st March 2019 the Share Capital of the Company is as givenhereunder:

Authorised Share Capital: 1500000000 divided into 150000000equity shares of Rs 10 each.

Issued and Paid Up Share Capital: 1045000000 divided into104500000 equity shares of Rs 10 each.

Demat holding of Shareholders

As of 31st March 2019 out of 104500000 shares 104499590 sharesare in demat mode and 410 shares are in physical mode.

The Capital Market Environment

During FY 2018-19 BSE-30 Sensex opened at 33255 on 2nd April 2018and touched a high of 38896 in August 2018 and thereafter closed at 38672 on 29th March2019.

According to International Monetary Fund India's growth forecastfor FY 2019-20 is projected at 7.5% based on strengthening of investment and robustprivate consumption. India's economy is poised to pick up in 2019 benefiting fromlower oil prices and a slower pace of monetary tightening than previously expected asinflation pressures ease. India's GDP is expected to grow at 7.3 per cent in thefiscal year 2018-19 and 7.5 per cent in the following two years the World Bank hasforecast attributing it to an upswing in consumption and

investment. The bank said India will continue to be the fastest growingmajor economy in the world.

As per Prime Database 42 public issues have raised ' 36405 crores inFY 2018-19 as compared to 81 public issues mobilizing ' 98984 crores in FY 2017-18. Incontrast to the sluggish sentiment in the equity markets public bonds saw renewedmomentum with 26 issues raising Rs 36715 crore — marking a five year high. Theamount mobilised in FY 2018-19 was seven times higher than the Rs 5167 crore raised FY2017-18.

Operational Highlights

The markets witnessed diverse magnitude of volatility and growth levelsbased on global and domestic scenario and investor participation. Despite severalchallenges including the liquidity crisis in the domestic non-banking financial companies(NBFCs) global trade tensions and high international crude oil prices the Indian marketshave performed reasonably well during the financial year 2018-19. The digitization ofvarious processes has helped to have easier access to stock markets and depositoryservices. This has resulted in record increase in opening of demat accounts. In order tosustain the growth in its depository business your Company continues to focus onenhancement of operational efficiency upgradation of technology service quality andenhanced emphasis on investor education through seminars / workshops.

Securities admitted

Securities like equity shares preference shares mutual fund unitsdebt instruments government securities certificates of deposit commercial papers and ahost of other instruments are available for dematerialization by the investors.

Details of the securities admitted with CDSL are given below:

Securities Year Year (%)change
ended 31st ended 31st over the
March 2019 March 2018 previous year
Equity Shares 12049 9938 21.24
Debt Instruments 8207 8503 -3.48
Other

Securities

23880 22257 7.29
Total 44136 40698 8.45

Position of Securities held in the System

The value and volume of securities held with CDSL in the year underreview as compared to the previous year are indicated below:

Holding of Securities Year ended Year ended Increase over
31st March 31st March the previous
2019 2018 year(%)
Value (in million ') 20796934 19839810 4.82
Volume (in million) 362030 283920 27.51

Depository Participants and Service Centers

As on 31st March 2019 597 depository participants held validregistration certificates of Securities and Exchange Board of India (SEBI) as compared to594 valid SEBI registrations as on 31st March

2018. During the year new registrations were received for 28 DPs andregistrations of 25 DPs were withdrawn/ cancelled. With a large DP network investorsspread across 28 States and 7 Union Territories can avail of CDSL's depositoryservices. Further investors have access to 19359 DP service centers spread across India.

Beneficial Owner Accounts

During the year under review 29.30 Lakh Beneficial Owner (BO) accountswere added taking the total number of such accounts to 223.35 Lakhs with the net BOaccounts at 173.86 Lakhs as on 31st March

2019. The comparative figures of gross and net BO accounts as on 31stMarch 2018 and 31st March 2019 are given in the following table:

Year ended 31st March 2019

Year ended 31st March 2018

Increase over the previous year's cumulative figure

Number Percentage (%)
(Gross) 22335222 (Gross) 19404479 2930743 15.10
(Net) 17386276 (Net) 14840058 2546218 17.15

Investor Awareness / Education Seminars

CDSL regularly conducts Investor Awareness Programs in association withvarious market intermediaries MIIs and SEBI. Capital Market Awareness for retailinvestors through such programs has been a major focus area. We believe investor educationcan become a significant key to achieving financial inclusion in the Capital market. Tothis end CDSL Investor Protection Fund (IPF) has conducted more than 450 InvestorAwareness Programs (IAPs) in this year. Out of these more than 330 programs were conductedin tier 2 & tier 3 cities and towns. This initiative allowed investors acrossgeographies professions and age groups including students corporate employeesgovernment servants to come together and learn

the basics of Capital Markets advantages of holding securities indemat form importance of Financial Planning Investment avenues available etc. CDSL IPFhas also conducted IAPs in association with financial institutions ICSI AMCs andregional Seminars & IAPs with SEBI in various cities. We have also conducted webinarto reach investors digitally. Although these IAPs reach out to investors in major metroswe have focussed to reach the investors in tier-2 and tier-3 cities to inculcate the habitof investment in securities. CDSL IPF has tied up with various regional newspapers toattract large number of investors to attend these IAPs. During the IAPs informativebooklets in English Hindi and other regional languages were distributed for the benefitof investors.

Awards and recognition

During the year 2018-2019 your Company has won the following awards:

Award Category Organizer
Innovative CIO Award CIO BitStreamMediaworks Pvt. Ltd. (BSM)
Express Security Strategist Award Information Security Indian Express
Infosec Maestros Award Information Security BitStreamMediaworksPvt Ltd.
Big CIO 100 award IT Leadership Trescon
Big 50 BFSI Innovator award Technology innovation Trescon
IDC Insight Award Excellence in operations IDC
BFSI Digital Innovation Award Enterprise Application Indian Express

New Initiatives

Consolidated Account Statement (CAS)

Your Company provides to a demat account holder holding mutual fundunits in Statement of Account (SOA) form the CAS with information about transactions andsecurities held across multiple demat accounts with various Depository Participants-acrossdepositories along with mutual fund units held in SOA form. The CAS also providesadditional information with respect to mutual fund investments like total purchase value /cost of investment in each scheme of mutual fund in monthly transaction CAS andinformation like the amount of actual commission paid by AMCs/Mutual Funds (MFs) todistributors (in absolute terms) during the half-year period against the concernedinvestor's total investments in each MF scheme the scheme's average TotalExpense Ratio (in percentage terms) for the halfyear period etc. CDSL also provides afacility to its demat account holders to access its website and download CAS afterproviding certain security information. The demat account holders can also update/ modifythe email ID and opt for receipt of electronic CAS using CDSL's website.

System Enhancements

During the year your Company released a number of system enhancementsfor increasing the efficacy of processes

a. Transfer in favor of demat account of the Investor Education andProtection fund Authority of securities in respect of which dividend has not been paid orclaimed for a period of seven consecutive years or more. CDSL maintains the details ofshareholders whose securities have been transferred and the subsequent corporate actionsthereon. CDSL also released online facility to IEPF Authority to process requests receivedfor Refund of shares to the Holder of the shares whose shares were earlier transferred toIEPF Authority Account. Various MIS reports are being provided to the IEPF Authority andthe RTAs.

b. A system for monitoring of foreign investment limits in listedcompanies.

c. To bring more flexibility in the existing process CDSL incoordination with NSCCL developed and released a functionality wherein NSE CMs can nowcreate a pledge in favor of NSCCL for Collateral and / or Margin purpose from theirdesignated ‘Collateral Account(s)' maintained with any DP of CDSL to thedesignated account of NSCCL as a pledgee maintained with NSCCL. This facility is inaddition to the existing mechanism to pledge the securities through demat accountmaintained with the approved custodians.

d. Development of CDSL Online Application System for admission ofunlisted companies wherein Issuers and also Registrar and Transfer Agents (RTAs) can login and facilitate the admission process of unlisted companies in CDSL. The OnlineApplication System provides a convenient dependable and secure mode of admission ofunlisted companies in CDSL. Through this system unlisted companies and RTAs who wish toadmit securities for dematerialization in CDSL can electronically provide all the requiredinformation to CDSL and also upload digitally signed documents in the system. Onsubmission of digitally signed documents the Issuer / RTA need not submit physicaldocuments to CDSL

Transaction Cum Holding Statements

As of 31st March 2019 210 Depository Participants (DPs) have availedof the service of dispatch of transaction cum holding statements (DOTS and e-DOTS). In2018-19 CDSL has processed 19.77 Lakh statements.

Corporate Bond database

The Corporate Bond database maintained by your Company as mandated bySEBI vide its Circular No. CIR/IMD/DF/17/2013 dated October 22 2013 contains informationof over 23888 bonds issued in demat form by over 2806 Issuers. The database providescomprehensive information on the corporate debt instruments including details of IssuersInstruments issued along with the listing status Redemption details Names of DebentureTrustees and Credit Ratings along with the names of the Rating Agencies.

The credit rating agencies CRISIL CARE ICRA and India Rating areaccessing your Company's corporate bond database through the secure login and areverifying the credit rating displayed and also updating subsequent rating migrations. Thecomprehensive and updated information disseminated by your Company at a single placeprovides valuable information to the investors and assists them in taking a more informedinvestment decision.

Trade Repository of Corporate Bonds

Your Company has data of about 9172 ISINs for primary market issuancesand about 9379 ISINs pertaining to secondary market being traded in the stock exchanges.

Technology Initiatives:

As a part of continual upgradation process

CDSL has migrated its interface provided to BO/ CM(easi/Easiest) tolatest .net technology and now is in the process of migration DP /RTA interface to .netplatform. CDSL has also upgraded it database version to latest one. Further consideringgrowth over next 5 years CDSL has procured and deployed new reporting servers at Main andDR site. CDSL always benchmarks its practices against ISO standards and accordingly hasundergone periodic audit for ISO 27001 conducted by DNV and is recommended for continuityof certificate. Further CDSL has also undergone recertification audit for ISO 22301:2012(Business Continuity Management System) and has been recommended for Certification withvalidity of 3 years. CDSL's e-Voting services has also undergone recertificationaudit for ISO 9001:2015 certification and has been recertified for period of 3 years.

Continuing Professional Education (CPE) Programs - DepositoryOperations Certification Examination (DOCE)

National Institute of Securities Markets (NISM) has been offeringContinuing Professional Education (CPE) Programs for Associated Persons in the SecuritiesMarket Intermediaries.

CDSL as a NISM Accredited CPE Provider for conducting CPE Programshas successfully carried out 47 programs for 778 participants during the year.

CVL's National Academic Depository(C-NAD)

National Academic Depository (NAD) is a Digital Depository of AcademicAwards (X & XII Certificates Diplomas Degrees Marksheets Transcripts etc.). TheGovernment of India Ministry of Human Resources Department (MHRD) has designatedUniversity Grants Commission (UGC) as the authorised body for implementation of NAD.

As on 31st March 2019 NAD has over 521 Academic Institutions(Universities/Boards etc.) 10488960 Academic Awards 270000 plus Students and 114Verifying entities as compared to 277 Academic Institutions 2908721 Academic Awards23000 plus Students and 100 Verifying entities in last financial year.

e-Voting

As on 31st March 2019 5441 companies have signed agreements withCDSL to conduct e-Voting. So far the e-Voting system recorded 21380 instances of votingcarried out by 4757 Companies.

e-Notices

In the light of Green Initiative in the Corporate Governance byMinistry of Corporate Affairs CDSL has started offering the services to companies forsending documents to its shareholders electronically. As on 31st March 2019 a total of349 companies have signed for availing this services.

Corporate Social Responsibility (CSR)

The Board has framed a CSR Policy in compliance with the requirementsof Section 135 of the Companies Act 2013 read with the Companies (Corporate SocialResponsibility Policy) Rules 2014. In accordance with its CSR philosophy and thespecified activities under the Act the CSR activities of the Company has thrust areasincluding eradicating extreme hunger and poverty; promotion of education; promoting genderequality and empowering women; reducing child mortality and improving maternal health;combating human immuno deficiency virus acquired immune deficiency syndrome malaria andother diseases; ensuring environmental sustainability; employment enhancing vocationalskills; social business projects; contribution to the Prime Minister's NationalRelief Fund or any other fund set up by the Central Government or the State Governmentsfor socio-economic development and relief and funds for the welfare of the ScheduledCastes the Scheduled Tribes other backward classes minorities and women. Your Companyhas constituted a robust and transparent governance structure to oversee theimplementation of its CSR Policy.

The Corporate Social Responsibility Policy can be accessed on websiteof the Company www. cdslindia.com.

The Company has been actively associated with various NGOs in providingvarious facilities involving Capital expenditure for a sustainable impact of CSRactivities.During the FY 2018-19 your Company has sponsored various projects and thereport on CSR activities pursuant to section 135 and Schedule VII of the Companies Act2013 read with Companies (Corporate Social Responsibility Policy) Rules 2014 is given in(\ (Annexure A)

Risk Management Policy

The risk management policy identifying the various elements of risk isexplained in detail in the Management Discussion and Analysis Report attached as (AnnexureG). The Risk Management

Policy of your Company can be accessed on the website of the Companywww.cdslindia.com.

Change in the Nature of Business

The Company has not undergone any changes in the nature of the businessduring the Financial Year 2018-19.

Material changes affecting the financial position which have occurredbetween the end of the financial year and the date of the report.

No material changes affecting the financial position have occurredbetween the end of the financial year and the date of the report.

Prevention of Money Laundering Act

The Prevention of Money Laundering Act 2002 (PMLA) has been broughtinto force with effect from 1st July 2005. Subsequent amendments were made to the PMLAAct 2002 and Prevention of Money-laundering (Maintenance of Records) Rules 2005 vide SEBIcircular CIR/MIRSD/1/2014 dated 12th March 2014. CDSL and its depository participantsfall under the category of ‘intermediaries' under section 12 of the SEBI Act andhence PMLA and the policy guidelines issued by the regulators to combat money launderingare applicable to depository operations.

As required under the guidelines CDSL has designated PrincipalOfficer Alternate Officer and Designated Director to ensure compliance with theseguidelines. CDSL has prepared policy guidelines for implementation of PMLA and the same isreviewed periodically.

CDSL conducted training programs across the country and updateddepository participants and their internal auditors on compliance with PMLA provisions andfiling of Suspicious Transaction Reports

Details of Subsidiary Companies

Your Company has following subsidiary Companies as on 31st March 2019

1. CDSL Ventures Limited (CIN U93090MH2006PLC164885)

2. CDSL Insurance Repository Limited (CIN U74120MH2011PLC219665)

3. CDSL Commodity Repository Limited (CIN U74999MH2017PLC292113)

• CDSL Ventures Limited

Your Company's wholly owned subsidiary CDSL VenturesLimited's

main business continues to be KYC business for the Capital marketintermediaries. CVL continues to be the largest KYC Registration Agency (KRA) controllingabout 60% of the market share in the KYC of Capital market. In addition to its corebusiness of being a KRA for Capital market CVL has also initiated work on the followingbusiness lines which are in various stages of implementation / completion.

1. National Academic Depository (NAD)

2. C KYC Processing

3. eSign (electronic signature based on aadhaar number)

4. Claim registry for life insurance companies that offer PradhanMantri Jeevan JyotiBimaYojana (PMJJBY)

5. GST Suvidha Provider Services

6. RTA Activity

7. Certifying Authority

8. PACL Project

CDSL Insurance Repository Limited (CDSL IR)

Your Company had under the "Guidelines on Insurance repositoriesand electronic issuance of insurance policies" issued by IRDAI floated a separatesubsidiary viz:- CDSL Insurance Repository Ltd. (CDSL IR) in the year 2011 to providepolicyholders a facility to keep insurance policies in electronic form and to undertakechanges modifications and revisions in the insurance policy with speed and accuracy inorder to bring about efficiency transparency and cost reduction in the issuance andmaintenance of insurance policies. Leading public sector and private sector insurancecompanies have contributed to the equity Capital of CDSL IR. At the time of launch inAugust 2013 the insurance repository services was restricted only to Life insurancepolicies. However later on IRDAI has extended the scope of services to Health insurancepolicies and Motor insurance policies. As on 31st March 2019 the repository has openedupwards of 5-Lakh e-Insurance Accounts (e-IA) in which it holds about 2.28 lakhs lifeinsurance policies about 7798 Health insurance policies and 136

Motor insurance policies in electronic form. CDSL IR had tied up withtwenty- two life insurance companies four health insurance companies and eighteen generalinsurance companies for holding policies in electronic form.

• CDSL Commodity Repository Limited (CCRL):

Your Company has floated a subsidiary in the name and style of CDSLCommodity Repository Limited (CCRL) to establish and run a Commodity Repository on thelines of a Securities Depository. Warehousing Development and Regulatory Authority (WRDA)is the regulator for CCRL. CCRL received the certificate of commencement of business /registration from WDRA on September 26 2017 and commenced operations from September 302017. Multi Commodity Exchange of India Ltd. (MCX) and BSE Investments Ltd. have eachtaken up 24% of the stake in CCRL in May 2018 and August 2018 respectively.

During the year the Board of Directors of the Company reviewed theaffairs of its subsidiaries. In accordance with section 129 (3) of the Companies Act2013 your Company has prepared the consolidated financial statements of the Company andof all its subsidiaries companies in the same form and manner as that of its own and inaccordance with applicable accounting standards which forms part of this annual report.Further a separate statement containing the salient features of the financial statement ofour subsidiaries in the prescribed format AOC 1 is appended as (Annexure B) to theBoard's report. The statement also provides details of the performance and financialposition of each of the subsidiary.

In accordance with section 136 of the Companies Act 2013 the auditedfinancial statements including the consolidated financial statements and all other relateddocuments and information of the Company and separate audited accounts in respect of eachof the subsidiary are available on our website www.cdslindia.com. These documents will beavailable for inspection till the date of AGM during business hours at the registeredoffice of the Company.

Deposits

Your Company has not accepted any deposits within the meaning ofSection 73 & 76 of the Companies Act 2013 and the Rules made thereunder. There are nodeposits remaining unpaid or unclaimed as at the end of the year and there has been nodefault in repayment of deposits or payment of interest thereon during the year.

Details of Deposits not in Compliance with the Requirements of the Act

Since the Company has not accepted any deposits during the FinancialYear ended on March 31 2019 there has been no non-compliance with the requirements ofthe Companies Act 2013.

Directors and KMPs

The SEBI (Depositories and Participants) Regulations 2018 werenotified on 3rd October 2018. As per regulation 25 of SEBI (Depositories andParticipants) Regulations

2018 the appointment and re-appointment of all Shareholder Directorson the board of depository shall be with the prior approval of SEBI. The Public InterestDirectors on the board shall be nominated by SEBI. As per Regulation 24(9) of the SEBI(Depositories and Participants) Regulations

2018 no depository participant or their associates and agentsirrespective of the depository of which they are members shall be on the governing boardof the depository.

During the year under review Shri Venkat Nageswar ChalasaniShareholder Director nominated by State Bank of Indiahas vide his letter no.GM/ECM/2018-19 dated 10th January

2019 tendered his resignation as a Director from the Governing Board ofthe Company w.e.f. 10.01.2019.

Shri Kumarapuram Venkateswaran Subramanian a Shareholder Directornominated by Standard Chartered Bank has vide his letter dated 28th January 2019 tenderedhis resignation as a Director from the Board of the Company.

The term of Shri Taruvai Subbayya Krishna Murthy Chairman and PublicInterest Director of the Company has expired with effect from close of business hours onMarch 29 2019.

The term of Shri P. S. Reddy Managing Director & Chief ExecutiveOfficer of CDSL expired with effect from close of business hours on March 31

2019. Consequent to the completion of his term as Managing DirectorShri P. S. Reddy tendered his resignation as Director w.e.f. March 31 2019.

The Board has placed on record its appreciation for the valuableservices rendered by Shri Venkat Nageswar Chalasani Shri Kumarapuram VenkateswaranSubramanian Shri Taruvai Subbayya Krishna Murthy and Shri P.S. Reddy during their tenureas Directors of the Company.

The Independent Directors have given declaration under sub-section (7)of section 149 of the Companies Act 2013 confirming that they satisfy the criteria of"independence" under section 149(6) the Companies Act 2013.The independentdirector have submitted declarations that they meet the criteria of independence asprovided in clause (b) of sub-regulation (1) of regulation 16 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2018 and that they are not aware ofany circumstance or situation which exist or may be reasonably anticipated that couldimpair or impact his ability to discharge their duties with an objective independentjudgment and without any external influence. The board of directors have taken on recordthe declaration and confirmation submitted by the independent director after undertakingdue assessment of the veracity of the same.

As per the provisions of Section 152(6) (d) of the Companies Act 2013Shri Nayan Mehta the Shareholder Director liable to retire by rotation and being eligibleoffered himself to be reappointed was considered for being re-appointed as Directors atthe ensuing Annual General Meeting. A brief resume of Shri Nayan Mehta is enclosed as (AnnexureC)

During the year under report Shri Amol Purandare AVP-Legal and CompanySecretary and Compliance Officer resigned w.e.f. 26th June 2018 and Shri Lalit Sharma wasappointed as VP- Legal and Company Secretary and Compliance Officer w.e.f. 27th October2018.

Nomination & Remuneration Policy for Directors

The Nomination & Remuneration Policy was approved by SEBI onDecember 6 2018 and the same can be accessed on website of the Company www.cdslindia.com.

In compliance with the requirements set out under Section 178 of theCompanies Act 2013 and Regulation 19(4) read with Part D of Schedule II of the Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 and SEBI (Depositories and Participants) Regulations 2018 the Nomination andRemuneration Policy has been framed in

order to set our principles parameters and governance framework of theappointment and remuneration for Shareholder Directors Public Interest DirectorsManaging Director & CEO and Key Managerial Personnel of the Company. The Policyencompasses the various factors laid down under Section 178(4) of the Companies Act 2013including the level and composition of remuneration is reasonable and sufficient toattract retain and motivate Directors of the quality required to run the Companysuccessfully; relationship of remuneration to performance is clear and meets appropriateperformance benchmarks; and remuneration to Directors and Key Managerial Personnelinvolves a balance between fixed and incentive pay reflecting short and long-termperformance objectives appropriate to the working of the Company and its goals. The Policyalso includes the criteria for determining qualifications positive attributesindependence of a director and other matters provided under sub-section (3) of section178.

Statutory Auditors & Audit Report

M/s. S. R. Batliboi & Co. LLP (Firm Registration No.301003E/E300005) Chartered Accountants Mumbai were appointed as Statutory Auditors ofthe Company in the Twentieth Annual General Meeting held on August 20 2018 to hold officefrom the conclusion of the 20th Annual General Meeting till the conclusion of the 25thAnnual General Meeting. Accordingly M/s. S. R. Batliboi & Co. LLP are the StatutoryAuditors of the Company for the financial year 2018-19 and shall continue as StatutoryAuditors of the Company till the conclusion of the 25th Annual General Meeting.

There are no qualifications reservations or adverse remarks ordisclaimer made by M/s. S. R. Batliboi& Co. LLP Chartered Accountants MumbaiStatutory Auditors in their report. There are no frauds reported by auditors undersubsection (12) of section 143 of the Companies Act 2013.

Internal Auditors

In terms of the provisions of Section 138 of the

Companies Act 2013 read with Rule 13 of the Companies (Accounts)Rules 2014 the Company had appointed M/s. Ray & Ray (Firm Registration No.301072E) Chartered Accountants as Internal Auditors & Concurrent Auditors of theCompany for the FY 2018-19.

There are no qualifications reservations or adverse remarks ordisclaimer made by the Internal Auditors and Concurrent Auditors in their report.

Secretarial Auditors and Secretarial Audit Report

M/s. Ragini Choksi & Company (C.P.No. 1436/ Membership No. 2390)Practicing Company SecretariesMumbai we reappointed as Secretarial Auditor of the Companyfor the FY 2018-19.In accordance with Section 204(1) of the Companies Act 2013 read withRule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014and Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2018 a copy of the secretarial audit report issued in form MR-3 by M/s.Ragini Choksi & Company Secretarial Auditors is enclosed as an (Annexure D) tothis report. The secretarial audit report of CDSL Ventures Limited a material unlistedsubsidiary of the Company issued in form MR-3 by M/s. Ragini Choks i & CompanySecretarial Auditors also forms part of (Annexure D) to this report.

There are no qualifications reservations or adverse remarks ordisclaimer made by M/s. Ragini Choksi & Company Practicing Company SecretariesMumbai in their report.

Related party transactions:

All related party transactions entered during the financial year2018-19 were in the ordinary course of business and on an arm's length basis.

Disclosure of related party transactions pursuant to section 134 (3)(h) read with Rule 8(2) of the Companies (Accounts) Rules 2014 in form AOC 2 are attachedas (Annexure E)

The Disclosures of Related Party Disclosures for annual resultspursuant to clause 2 of para A of Schedule 5 of the SEBI (LODR) Regulations 2015 arestated below:

Sr. Particulars

1. In the Accounts of Central Depository Services (India) Limited(CDSL) (Holding Company)

Loans and advances in the nature of loans to subsidiaries by name and amount.

Loans and advances in the nature of loans to associates by name and amount.

Loans and advances in the nature of loans to firms/ companies in which directors are interested by name and amount.

Subsidiary Name Amount (' Lakhs) Associate Name Amount (' Lakhs) Companies where directors are interested Amount (' Lakhs)
CDSL Ventures Limited NIL

Not applicable

NIL

Not applicable

NIL

CDSL Insurance Repository Limited NIL
CDSL Commodity Repository Limited NIL
2

In the Accounts of Central Depository Services (India) Limited (CDSL) (Subsidiary Company)

Loans and advances in the nature of loans to subsidiaries by name and amount.

Loans and advances in the nature of loans to associates by name and amount.

Loans and advances in the nature of loans to firms/ companies in which directors are interested by name and amount.

Subsidiary Name Amount (' Lakhs) Associate Name Amount (' Lakhs) Companies where directors are interested Amount (' Lakhs)
Not applicable NIL Not applicable NIL Not applicable NIL
3

In the Accounts of Central Depository Services (India) Limited (CDSL) (Holding Company)

Investments by the loanee in the shares of parent Company and subsidiary Company when the Company has made a loan or advance in the nature of loan.

NIL

The Disclosures of transactions of the Company with any person orentity belonging to the promoter/ promoter group which hold(s) 10% or more shareholding inthe listed entity in the format prescribed in the relevant accounting standards forannual results pursuant to clause 2A of para A of Schedule 5 of the SEBI (LODR)Regulations 2015 are stated below:

Particulars

As at 31.03.2019 (' Lakhs)

As at 31.03.2018 (' Lakhs)

BSE Limited
Rendering of services

107.12

384.69

Receiving of services

1.42

240.83

License agreements-Rent and Maintenance

67.47

173.63

Dividend Paid

877.80

1568.94

Loans and advances - opening deposit received

72.77

-

Particulars

As at

As at

31.03.2019

31.03.2018

(' Lakhs)

(' Lakhs)
Balances outstanding at the end of the year
Trade receivables

12.31

24.66
Loans and advances-Deposits given

-

72.77

Conservation of Energy Technology Absorption andForeign Exchange Earnings and Outgo

Considering the nature of operations of your Company the provisions ofSection 134(3) (m) of the Companies Act 2013 read with the Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules 1988 relating to information tobe furnished on conservation of energy and technology absorption are not applicable thoughthe Company uses all the possible ways in conserving energy. The Company has howeverused information technology extensively in its operations.

Foreign Exchange Earnings and Outgo

Details of foreign exchange earnings and outgo during the year underreview are as under:

Particulars As at As at
31.03.2019 31.03.2018
(Rs Lakhs) (Rs Lakhs)
Earnings Nil Nil
Travel expenses 63.40 19.25
Others 12.15 8.18
Total 75.55 27.43

Cost Records

The Company is not required to maintain cost records as specified bythe Central Government under sub-section (1) of section 148 of the Companies Act 2013 andaccordingly such accounts and records are neither made nor maintained.

Directors' Responsibility Statement

Pursuant to Section 134(3)(c) and 134(5) of the Companies Act 2013the Board of Directors reports that:

i) in preparation of the annual accounts the applicable accountingstandards have been followed and proper explanations relating to material departure ifany have been provided;

ii) accounting policies have been selected and applied themconsistently and the judgements and estimates made are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that period;

iii) proper and sufficient care has been taken

for the maintenance of adequate accounting records in accordance withthe provisions of the Companies Act 2013 for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities;

iv) the annual accounts have been prepared on a going-concern basis.

v) internal financial controls to be followed by the Company are laiddown and that such internal financial controls are adequate and were operatingeffectively.

vi) proper systems have been devised to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.

Corporate Governance Report

As per Regulation 31(1) the SEBI (Depositories and Participants)Regulations 2018 the disclosure requirements and corporate governance norms as specifiedfor the listed companies mutatis mutandis are applicable to the depository.

The Corporate Governance Report for the year ended 31st March 2019 isenclosed as (Annexure F)

Management Discussion and Analysis Report

The Management Discussion and Analysis Report for the year ended 31stMarch 2019is enclosed as (Annexure G)

Board Evaluation

The Board of Directors of the Company carried out annual evaluation ofits own performance committees of the Board and individual Directors pursuant to variousprovisions under the Act Regulation 17 19 and Schedule II of the Listing Regulations andbased on the SEBI circular dated January 5 2017 which provides further clarity on theprocess of board evaluation ("SEBI Guidance Note").

The Company has implemented a policy of evaluating performance of theBoard of Directors and of its Committees and individual Directors on the basis of astructured questionnaire which comprises evaluation criteria taking into considerationvarious performance related aspects.

Disclosures as prescribed under SEBI circular dated May 10 2018 aregiven below:

Observations of Board evaluation carried out for the year

No observations.

Previous year's observations and actions taken

Since no observations were received no actions were taken.

Proposed actions based on current year observations

Since no observations were received no actions were required.

The procedure followed for the performance evaluation of the BoardCommittees and individual Directors is explained in the Corporate Governance Reportenclosed as

(Annexure F)

Disclosures under SEBI (Depository and Participants) Regulations 2018

The relevant disclosures required to be made under the provisions ofthe SEBI (Depository and Participants) Regulations 2018 circulars notifications etc.applicable to a Depository have been made in the Corporate

Governance Report enclosed as (Annexure F)

Report by Internal Complaints Committee

Your Company has complied with provisions relating to the constitutionof Internal Complaints Committee under the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013. The ‘Internal ComplaintsCommittee' meets periodically to review the complaints if any received from femaleemployees.

During the year the Committee did not receive any complaints in thisregard.

Particulars of Employees

Information as required under Sec. 197(12) read with Rule 5 ofCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is enclosedto this report as (Annexure H)

Human Resource Development

The Company recognizes its Human assets as a critical resourceessential for the growth of the Company. It therefore accords high importance to humanresource development and consciously endeavors to enhance the quality and competence ofits employees across cadres. It conducts induction programme for new entrants. Nominatingemployees for training at reputed institutions and for attending seminars in India andabroad in Capital market related areas particularly relating to depositories has alwaysbeen a part of human resource development programme of the Company. Industrial relationsduring the year continued to be cordial.

Particulars of Loans Guarantees or investmentsunder section 186

Details of Loans Guarantees or investments under section 186 of theCompanies Act 2013 are given in the notes to the financial statements.

Details of significant and material orders passed by the regulators orcourts or tribunals impacting the going concern status and Company's operations infuture:

There are no significant and material orders passed by the regulatorsor courts or tribunals impacting the going concern status and Company's operations infuture.

Annual Return

In accordance with provisions of section 134(3)(a) of the CompaniesAct 2013 the Annual Return referred to in sub-section (3) of section 92 will be placedon the website of the Company www.cdslindia.com.

Extract of Annual Return

Pursuant to section 92 (3) of the Companies Act 2013 the extract ofthe annual return to be in Form MGT-9 is enclosed to this report as (Annexure I)

Corporate Policies

The details of the policies approved and adopted by the Board arementioned in the Corporate Governance Report enclosed as (Annexure F)

Adequacy of internal financial controls

The details in respect of adequacy of internal financial controls withreference to the Financial Statements forms part of the Management Discussion and AnalysisReport enclosed as (Annexure G)

Audit Committee Recommendations

During the year all recommendations of Audit Committee were approvedby the Board of Directors.

Secretarial Standards

The Company complies with the applicable Secretarial Standards issuedby the ‘Institute of Company Secretaries of India'.

Acknowledgement

Your Directors place on record their sincere gratitude for the supportguidance and cooperation the Company received from Ministry of Finance SEBI and otherregulatory agencies. The Directors also acknowledge with thanks the continued support ofthe BSE Ltd the Promoter all other shareholders Beneficial Owners DepositoryParticipants Stock Exchanges Clearing Houses Issuers and Registrar and TransferAgents. The Directors also express their appreciation for the unflinching dedication ofthe employees whose performance professionalism and commitment for rendering high qualityservices to the clientele of the Company has been commendable.

For and on behalf of the Board

Bontha Prasada Rao Rajender Mohan Malla
Director Director
(DIN:01705080) (DIN:00136657)
Place : Mumbai
Date :3rd May 2019