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Cholamandalam Financial Holdings Ltd.

BSE: 504973 Sector: Financials
BSE 00:00 | 22 Mar 560.50 1.10






NSE 00:00 | 22 Mar 556.80 -3.05






OPEN 560.85
52-Week high 697.35
52-Week low 537.80
P/E 180.81
Mkt Cap.(Rs cr) 10,526
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Sell Price 0.00
Sell Qty 0.00
OPEN 560.85
CLOSE 559.40
52-Week high 697.35
52-Week low 537.80
P/E 180.81
Mkt Cap.(Rs cr) 10,526
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Cholamandalam Financial Holdings Ltd. (CHOLAHLDNG) - Director Report

Company director report

Dear Shareholders

The Directors take pleasure in presenting the 73rd AnnualReport together with the audited financial statements of the Company for the financialyear (‘FY?) ended March 31 2022.


Cholamandalam Financial Holdings Limited (‘CFHL?) isregistered as a Non-Deposit taking Systemically Important Core Investment Company(‘CIC?) pursuant to the receipt of Certificate of Registration dated January 62020 issued by the Reserve Bank of India (‘RBI') under section 45-IA of the ReserveBank of India Act 1934. CFHL holds substantial investments in the following financialservices / risk management companies of the Murugappa Group (hereinafter collectivelyreferred as ‘group companies?) and serves large number of customers by providingloans for asset acquisition through financing asset and family protection through generalinsurance and risk management services.

• Cholamandalam Investment and Finance Company Limited(‘CIFCL?) engaged in non-banking finance company business;

• Cholamandalam MS General Insurance Company Limited(‘CMSGICL?) engaged in general insurance business;

• Cholamandalam MS Risk Services Limited (‘CMSRSL?)engaged in risk management and engineering solutions business.


(Rs in Crore)

Particulars 2021-22 2020-21
Total Income 83.51 58.14
Total Expenses 12.77 24.24
Profit Before Tax 70.74 33.90
Tax Expense 15.23 12.19
Profit for the year 55.51 21.71
Other Comprehensive Income 0.58 0.53
Total Comprehensive Income 56.09 22.24


The paid-up equity share capital of CFHL as on March 31 2022 wasRs18.77 Crore. During FY 22 19910 equity shares were allotted upon exercise of vestedstock options by eligible option grantees under the Company?s Employees Stock OptionSchemes 2007 and 2016.


The Board of Directors have recommended a dividend at the rate of 55%i.e. Rs0.55 per equity share of face value of Rs1/- each for the year ended March 312022.


The Company has transferred a sum of Rs11.11 Crore (previous year:Rs4.35 Crore) to Special Reserve under section 45-IC of the Reserve Bank of India Act1934.


The financial year 2022 began with the impact from the COVID secondwave creating havoc for India and the world ushering in newer challenges across sectors.However a rapid vaccination coverage positive business environment paired withgovernment support provided a strong momentum for a sustained economic recovery. The onsetof the third wave which was seen in the latter part of the year was quite brief and had amuted impact on the economy than the earlier two waves. The second half of the yeargradually picked up with progress in consumption investment capacity utilisation amongothers. Key macroeconomic parameters including GST collections digital transactionsFASTag revenues demand for electricity metals and coal production demonstrated apositive trajectory. The country continues to remain one among the fastest growingeconomies with its GDP expected to grow around 9.2% in FY 22. Turning to the sectoralaspects growth in agriculture and allied activities is estimated at 3.3% backed by anormal monsoon. After a contraction in the previous fiscal year the manufacturing sectoris expected to expand by 12% while the services sector is projected to grow by 8.2% in FY22 following a decline of 8.4% last year. Contact intensive segments such as tradehotels transport and communication though yet to fully recover is likely to expand 11.6%in FY 22. Private consumption improved to recover significantly from the second half ofthe year. The RBI?s Monetary Policy maintained an accommodative stance and continuesto support the economy?s expansion.

The Union Budget for FY 2022-23 laid emphasis to strengthen theinfrastructure with its focus on key priorities including Productivity EnhancementFinancing Investments and GatiShakti Plan. The GatiShakti National Masterplan for seamlessmulti-modal connectivity continues to be the focus area for augmenting transportation andlogistics infrastructure. Government?s initiatives on driving Public PrivatePartnership (PPP) projects and extension of Production Linked Incentive (PLI) schemes tonew sectors is expected to drive growth in domestic manufacturing and create more jobs.Globally as the economy was gradually recovering from the effects of the pandemic andseveral economies returning to their pre-covid levels another shock struck. The ongoingconflict between the Russia and Ukraine since late February 2022 triggered a humanitariancrisis. Headwinds consequent to the war include high commodity prices especially energymetals and some food and agricultural products tightened fiscal conditions trade andsupply chain disruptions and lower private sector confidence. These disruptions pose riskof elevated inflation for businesses and consumers across the world urging continuedtightening of monetary and fiscal policies. Furthermore frequent and wider-ranginglockdowns in China have impacted economic activity creating new bottlenecks in globalsupply chains. Overall risks to economic prospects have risen sharply and policytrade-offs have become ever more challenging. As per the IMF global growth prospects areexpected to slow down to 3.6% in 2022 after a projected expansion of 6.1% in 2021.

Consequent to the evolving geopolitical situation and India?sdependence on crude oil natural gas and other commodities a spike in inflation and inthe current account deficit are aspects to be kept under watch. Exports that wereproviding a cushion to the loss of domestic output are likely to be subdued as thedeveloped countries are also witnessing a slowdown. Foreign direct investment inflow couldmoderate amid contraction of global economic and financial conditions. Outlook for thedomestic economy remains positive for FY 23 backed by normal monsoon and high publicinvestment though uncertainty prevails from the ongoing global conditions potential newwave of COVID and sharp rise in commodity prices. Amidst volatile economic conditonsIndia's GDP is projected to grow over 8% in FY 23.


CFHL earns revenue primarily by way of dividend income from investmentsheld in group companies. An overview of the financial services sector in which the Companyoperates along with a business update of group companies during FY 22 is summarised in thefollowing paragraphs.

NBFC Industry & Business Update

India?s financial sector is a highly diversified one comprisingcommercial banks insurance companies non-banking financial companies co-operativespension funds mutual funds and other smaller financial entities. The sector dominated bybanking and non banking financial companies (‘NBFCs?) have witnessed exponentialgrowth in the last decade driven largely by regulatory reforms and their ability to caterto unbanked areas through innovative products and service delivery mechanisms. However inthe past few years the sector was dealing with the contagion effects associated with thecollapse of a few NBFCs and co-operative banks followed by the onset of COVID-19 pandemicin the early 2020. Various policy initiatives of the Government and the regulator havehelped NBFCs to navigate through the challenges in terms of liquidity provisioning andasset management. As economic activities gathered momentum post relaxation of pandemicrestrictions the sector rebounded from second quarter of the fiscal year 2022 posting asignificant growth. With an aim to strengthen supervision of NBFCs RBI introduced variousregulations and guidelines during the year such as: a) scale based regulations to provideenhanced regulatory standards based on the size and activities of NBFCs b) promptcorrective action framework for timely regulatory intervention which require NBFCs toinitiate and implement remedial measures so as to restore its financial health c) revisednorms for income recognition asset classification and provisioning to ensure uniformityamong lending institutions. Though these regulatory changes are expected improve overallgovernance standards of NBFCs in the long term the sector might face some headwinds inthe short term.

Cholamandalam Investment and Finance Company Limited(‘CIFCL?) an NBFC incorporated in 1978 is one of the leading comprehensivefinancial service provider offering vehicle finance home loans loan against propertyetc. to a wide range of customers.

Vehicle Finance (‘VF?)

CIFCL?s Vehicle Finance business comprising of diversifiedportfolio viz. commercial vehicles passenger vehicles and used vehicles continues to bethe major segment contributing 69% of its aggregate assets under management(‘AUM?) as at March 31 2022.

Commercial vehicles and passenger vehicles registered double digitgrowth in FY 22 after two years of continuous de-growth backed by improvement in economicactivity revival of construction / mining activities and improvement in semiconductorsupplies towards the end of the year. The domestic commercial vehicle industry grew by 26%in FY 22 supported by a low base and improvement in economic activity. The commercialvehicle industry is expected to deliver double digit growth in FY 23 driven by freightdemand replacement demand structural economic recovery and higher infra spends by thegovernment. However inflation in fuel prices and its impact on viability of fleetoperators will remain a key challenge in FY 23. The domestic car and utility vehicleindustry had witnessed a 14% growth in FY 22 aided by improvement in semiconductorsupplies towards the end of the year and improvement in sale of utility vehicles due toshift in customer preferences. A gradual recovery in two-wheeler demand is expected in FY23 with a decent growth year on year considering a low base. Tractor industry hadwitnessed a de-growth of 6% in FY 22 attributable to the huge volumes in FY 21 which wasthe ever all-time high for tractor sales in India. Tractor volumes might show minimalgrowth in FY 23 given the high base and moderation in demand. After strong volume upsurgein H1 of FY 22 the volumes in construction equipment moderated significantly during thesecond half and had a de-growth of around 8%. Major factors that contributed to thede-growth were increasing cost of equipment prices muted rentals and monsoon relatedimpediments which impacted the road and construction sector. With higher allocation toinfra sector in the union budget and restoration of normalcy in mining and constructionactivity the construction industry is expected to grow in FY 23.

The Vehicle Finance business disbursed Rs25439 Crore during FY 22 asagainst Rs20249 Crore in the previous year registering a growth of 26% and profits beforetax (‘PBT?) during the year was Rs2054 Crore as against Rs1287 Crore in theprevious year. The VF business continued its focus on maintaining asset quality through aco-ordinated collection strategy which helped in restricting gross stage 3 assets to 3.9%inspite of the second COVID wave in Q1 which had a severe impact on customer cash flows.The company has designed a multi-pronged long-term strategy to minimize the cost ofoperations and credit losses to maximize ROA and customer experience. Operating modelenhancements have been prioritized and implemented at product level. The business has arobust collection mechanism in place aided with a strong credit risk assessment frameworkwhich will help in steering through any strong currents in the market.

Loan against Property (‘LAP?)

In FY 22 growth rate in LAP segment was higher than non-LAP segment(secured non-LAP and unsecured) as non-banks preferred mortgage-based lending overcash-flow-based lending in the short-run given the potential risks in other segments. LAPsegment is expected to perform better in FY 23 with improvement in economy and lendersbeing positive towards mortgage-based lending.

The focus of CIFCL?s LAP in FY 22 was to stabilize collectionsscale up disbursements get systems and processes equipped to handle COVID inducedchallenges. The business continues to focus on a systematic approach to build a healthyportfolio mix with more than 80% of portfolio as self-occupied residential properties(SORP) and an average loan ticket size of less than Rs45 Lakh. The business had startedexceeding pre-COVID level of monthly disbursements with adequate branch expansionwhile strengthening credit policy in tune with market developments.

Assets Under Management (AUM) for the business grew by 16% to Rs17115Crore (previous year: Rs14777 Crore) and disbursements registered a growth of 62% toRs5862 Crore (previous year: Rs3627 Crore).

Home Loans ('HL')

The Indian Housing Finance market grew around 9~11% in FY 22. Q1 wassignificantly impacted by the second wave of COVID-19 and its impact was felt throughsubsequent quarters. In terms of ticket size the <25 lakhs segment contributes morethan 43% of the mortgage outstanding. Housing sector is expected to grow 10~12% in FY 23and affordable housing to grow 7~9% in the same period. Regulatory and fiscal environmentremains conducive for the demand in affordable housing segment.

As on March 31 2022 the HL business had 43056 live accounts (25%growth Y-o-Y) with an AUM of Rs5269 Crore (21% growth Y-o-Y). 89% of this portfolio is inTier II III IV cities and towns. The disbursements grew by 2% Y-o-Y from Rs1542 Crorein FY 21 to Rs1571 Crore in FY 22. Lower Middle-Income-Group customers continue to be thetarget group for HL business. CIFCL?s HL business has built on inherent strength inlending to the lower middle income (LMI) segment with a customized eligibility program forbusiness owners and salaried customers. Lending for self construction remains a strongfocus with significant proportion of the portfolio and fresh disbursements sourced fromthis segment.

New Business

CIFCL launched new businesses during the year viz.Consumer & SmallEnterprise Loan (‘CSEL?) and Secured Business & Personal Loan(‘SBPL?) alongwith Small and Medium Enterprise Loans business. CSEL offerspersonal loans professional loans and business loans to salaried self-employedprofessionals and micro & small businesses spread across 50 locations and haveacquired over 1.3 Lakh customers in Q4 of FY 22. The business growth is both throughtraditional and partnerships with Fin-techs. SBPL offers secured business loan withself-occupied residential property or commercial cum-residential property as collaterallaunched in 50 locations with initial focus on South and West Markets. In SME businessthe product suite includes supply chain financing term loans for capex loan againstshares funding on hypothecation of machinery for specific industries. Business AUMsourced through new businesses aggregates to Rs1642 Crore and disbursements was Rs2618Crore for FY 22.

New Acquisitions

During the year CIFCL invested Rs450 Crore and acquired 73.8% stake inPayswiff Technologies Private Limited ('Payswiff') and invested Rs9.75 Crore and acquired16.29% stake in Paytail Commerce Private Limited ('Paytail'). Payswiff is engaged in thebusiness of enabling online payment gateway services for e-commerce businesses andprovides e-commerce solutions. Payswiff is an omni channel payment transaction solutionthat lets business owners accept payments from their customers in-store at homedeliveries online and on-the-go using mPOS and POS solutions. Paytail is a new agefintech company focusing on offline ‘Buy Now Pay Later? through brandpartnerships.

Other functions

Automation continues to be a key initiative and technology tools aredeployed for automation of repetitive activities across functions wherever opportunityexists. During the year CIFCL upgraded its system with a host of integrations to reducephysical touch-point with stakeholders. Online payment modes for collections have beenintroduced to provide customers with multiple payment options. For vendors online portalshave been introduced to liaise and share documents with the business.


Industry outlook across all business segments is positive and CIFCLwill look to scale up disbursements by expanding into new geography/customer segmentsdriving market share growth through OEM/dealer tie-ups co-lending partnerships improvinginternal efficiencies through digital initiatives. Strong collection infrastructure isdriven by experienced field teams with product level focus from early buckets. The companyis running host of initiatives to digitize the collection processes which will helpstrengthen the asset quality position back to pre-covid levels.

General Insurance Industry & Business Update

Financial year 2021-22 was a mixed one for the non-life insuranceindustry. Following the impact from COVID second wave the industry evidenced a phase ofrecovery only to be beset with challenges of heightened competitive intensity chipshortages in the four-wheeler segment and weak customer demand in the two-wheeler segment.The general insurance industry grew around 8.8% in FY 22 and achieved a grosswritten premium ('GWP') of Rs1848 billion. The market share of public sector companieswas 40.7% with the private sector companies growing their share to 59.3%. Amongst theother lines of insurance businesses motor insurance registered a muted growth of 4% whilethe fire insurance business grew by 7%. Growth in the health insurance segment was higherin the backdrop of group and Government health business.

Cholamandalam MS General Insurance Company Limited ('CMSGICL') theinsurance subsidiary of CFHL is registered with the Insurance Regulatory and DevelopmentAuthority of India (‘IRDA?) to carry on general insurance business. CMSGICLoffers a wide range of insurance including motor travel health accident home and othertypes of insurance for corporate customers.

In a highly competitive business environment CMSGICL ranks 8thposition among private insurers with a market share of 2.6% (among general insurers).

CMSGICL recorded a GWP of Rs5194 Crore (previous year: Rs4705 Crore)for the year ended March 31 2022. The GWP growth was largely driven by its thrust inadding new channel partners entry into large motor OEM programs and growth in commerciallines. Digital business grew well to contribute 2% of the top line. The company grew itsbusiness operations by welcoming over 10 million customers across its product categories.CMSGICL continues to lead the industry in motor OD loss ratios and to secure higher levelsof compromise settlements in motor third party claims. In FY 22 the company serviced over4.7 Lakh claims across various lines of business which is 52% more than the previousfiscal year.

Motor Insurance

Motor insurance business registered a higher than industry growth at9.7% during the year. The company stepped up its renewal ratio in the cars portfolio evenas the pandemic impacted the renewal ratio in commercial vehicles. The premium pricing inmotor own-damage (‘OD?) witnessed severe pressure with discounts across vehiclecategories rising to new highs. This has caused an adverse change in the motor OD claimsratios of all players in the industry. In motor third party the absence of hike in thirdparty premium was extended for the second year due to the pandemic. The company continuesto exercise utmost care in its choice of sub-segments geographies has been rated high byits channel partners and customers for its claims servicing processes.

Property and Casualty Insurance

Growth in premium from commercial lines of business was mainly drivenby the 11% growth in fire insurance portfolio. Marine and engineering lines of businessesalso witnessed improved performance with increase in the levels of economic activity.Miscellaneous lines grew well during the year. CMSGICL continues to follow disciplinedunderwriting and prudent risk selection in the highly demanding environment.

Health Accident and Travel Insurance

During the year health accident and travel insurance business grewmarginally with stronger growth registered in the last quarter. While the growth in retailindemnity policies was strong the bancassurance led bundled product sales in personalaccident and health benefit policies suffered a drop as a fall out of the pandemic andreduced lending by financiers.

The second wave of the pandemic impacted heavily with CMSGICL settlingover 58000 COVID health claims aggregating to Rs277 Crore during the year. The companycontinues to strengthen its underwriting framework with intelligent use of technology forits risk selection upsell and cross-sell initiatives.

Other functions

FY 22 witnessed claims management function stepping up speed ofdisposal while handling larger volumes with efficiency and productivity. Besidesdigitisation of its claims processes across lines of businesses CMSGICL continues tofocus on harnessing efficiencies for severity control across all lines automation forspeed and operational controls proactive approach to servicing for building transparencyand satisfaction levels of customers.

The company implemented several new tech platforms and IT initiativesincluding digital integration with channel partners such as OEMs bancassurance partnersdigital partners etc. for seamless issuance of policies a fully digitized platform foron-boarding of POSP agents introduction of robotics process automation in claims andfinance functions AI powered chat-bot enabled on corporate website to benefit customerself-service etc.


The general insurance industry which has displayed good resilienceduring the two years ravaged by the pandemic expects to grow strongly in FY 23. Headwindsfor the industry include the micro-chip shortage induced lower automobile sales higherinflation impacting consumer spends while the tailwinds are the enhanced level ofawareness towards health insurance newer products in the market the infrastructure spendthrust from the Government expected credit offtake from banks etc. The imminent rise ininterest rates in the economy will augment the investment income for all players in theindustry.

CMSGICL will continue its focus to add channel partners expandgeographically into new markets enhance its focus on renewals besides launching newproducts across lines of businesses. The company will tighten its expenses of managementand related processes by its thrust on productivity and efficiency improvements.

Risk Management Solutions - Business Update

Cholamandalam MS Risk Services Limited ('CMSRSL') is engaged inproviding risk management and engineering solutions in the field of safety health andenvironment in association with CMSGICL. Although the first quarter was impacted by thesecond wave of COVID the business divisions ramped up in the subsequent quarters and metthe targets set for FY 22. The business is backed by a strong technical team ofmultidisciplinary & certified professionals having exposure to domestic andinternational markets. During the year the company continued to extend digitalisation inits offering?s by adding Virtual DMC v.02 gamification in PSM Studies introducing"SHE Genie" for Construction safety application and automating checklist-basedaudit reports. The launch of scaffolding inspector training in collaboration with STITexas was another key milestone achieved during the year. CMSRSL expanded its presence toaround 54 locations across the country including resources deployed at various clientproject sites. More than 350 assignments in process safety 150 plus assignments inelectrical and more than 75 projects environment were carried out successfully during theyear. The company further strengthened its Order book with new orders aggregating to Rs57Crore. CMSRSL continues to offer services to CMSGICL and its clients through value-addedofferings like thermography safety audits and cargo loss minimization studies.

FY 23 began with a strong open order book of Rs41 Crore. Business islooking forward to increase the existing client base with a focused marketing and brandingstrategy in domestic market. Key Initiatives planned for FY 23 include addition of newservices focusing emerging sectors and strengthening execution excellence. Other keyinitiatives include participating in standards formulation / seminars and industrial tradeevents and meeting key clients besides rolling out of a structural and future focusedcompetency building program across all verticals.


CFHL earned an income of Rs83.51 Crore (previous year: Rs58.14 Crore) agrowth of 43% and profit before tax was Rs70.74 Crore (previous year: Rs33.90 Crore) forthe financial year ended March 31 2022 registering a growth of 109%. Aggregateinvestments stood at Rs1279.84 Crore (previous year: Rs1279.22 Crore) as on March 312022. During the year the Company repaid Rs50 Crore of Non-Convertible Debentures(‘NCDs?) and the outstanding NCDs as on March 31 2022 was Rs100 Crore.

Credit Rating

During the year India Ratings and Research Private Limited hasaffirmed a rating of IND AA+/Stable for the debt instruments of the Company.

Cholamandalam Investment and Finance Company Limited ('CIFCL')

The Company holds 45.41% in the paid-up equity share capital of CIFCLas on March 31 2022 and has de-facto control as per the principles of Ind AS 110 andaccordingly CIFCL has been considered as a subsidiary for consolidation purposes.Securities of CIFCL are listed and traded on the National Stock Exchange of India Limited(NSE) and the BSE Limited (BSE).

Business Assets under Management ('AUM') grew by 10% to Rs76907 Croreas at March 31 2022 (previous year: Rs69996 Crore). Loan disbursements aggregated toRs35490 Crore (previous year: Rs26043 Crore) registering a growth of 36% during theyear. Profit after tax grew by 42% to Rs2147 Crore (previous year: Rs1515 Crore).Investment portfolio of CIFCL as at end of FY 22 was Rs2076 Crore including investmentsin government securities of Rs1543 Crore. As per RBI mandate CIFCL adopted tighterprovisioning norms on its NPA and held a management overlay of Rs500 Crore as at March 312022. The company maintained a comfortable ALM position with no negative cumulativemismatches across all time buckets. As at end of FY 22 the capital adequacy ratio stoodat 19.6% as against the minimum regulatory requirement of 15%. During the year CIFCLraised CP of Rs5550 Crore of which Rs2750 Crore were repaid. Outstanding NCDs stood atRs10252 Crore and Tier II borrowings stood at Rs3734 Crore as on March 31 2022. CIFCLpaid an interim dividend of Rs1.30/- (65%) per equity share of face value of Rs2/- eachfor FY 22. The Board of CIFCL has recommended a final dividend of Rs0.70/- (35%) perequity share for FY 22 subject to their shareholders? approval.

CIFCL?s subsidiary companies are Cholamandalam Securities Limited('CSEC') Cholamandalam Home Finance Limited ('CHFL') and Payswiff Technologies PrivateLimited ('Payswiff'). CSEC is engaged in stock broking and investment advisory services.CSEC focused on creating three distinct business lines for enhancing revenues andproductivity - broking wealth and insurance distribution. During the year the companyincreased its footprint from 22 branches to 34 branches. CSEC achieved a gross income ofRs40.01 Crore (previous year: Rs30.14 Crore) and profit before tax of Rs7.48 Crore(previous year: Rs6.84 Crore) for the year ended March 31 2022 and the mutual fund AUMwas Rs839 Crore as at March 31 2022.

CHFL recorded a gross income of 56.37 Crore (previous year: Rs37.15Crore) and made a profit before tax of Rs9.19 Crore (previous year: Rs2.62 Crore) for theyear ended March 31 2022. Currently the company continues its focus on growing insurancecorporate agency business. Payswiff recorded a gross income of Rs284.60 Crore and made aloss of Rs33.78 Crore for the year ended March 31 2022. Payswiff Solutions PrivateLimited and Payswiff Services Private Limited are subsidiaries of Payswiff. The associatecompanies of CIFCL are White Data Systems Private Limited Vishvakarma Payments PrivateLimited and Paytail Commerce Private Limited.

Cholamandalam MS General Insurance Company Limited ('CMSGICL')

The Company holds 60% in the paid-up equity share capital of CMSGICL ajoint venture with Mitsui Sumitomo Insurance Company Ltd. Japan and is a materialsubsidiary of the Company. The IRDAI has deferred the implementation of Ind-AS forinsurance companies. Therefore financials of CMSGICL have been restated as per Ind-AS forconsolidation purposes and figures of CMSGICL reported in this annual report are underInd-AS. CMSGICL achieved a gross written premium of Rs5194 Crore during FY 22 (previousyear: Rs4705 Crore) and the profit before tax was Rs140 Crore (previous year: Rs367Crore). During the year IRDAI withdrew its earlier permission on accounting treatment ofsourcing costs on long term policies and directed the Company to absorb all costs relatingto sourcing of business upfront. CMSGICL was further directed to absorb the carriedforward pre-payments fully. The financial impact of the direction aggregated to Rs327Crore. The investment portfolio of CMSGICL grew to Rs11356 Crore as at March 31 2022(previous year: Rs10262 Crore). In the context of the pandemic environment and withinterest rates rendered higher in first few months of the year the company churned anddeployed its investments largely in central and state government securities and pared downexposures to corporate bonds. Investments of CMSGICL in government securities stood at74.91% of the investment assets (previous year: 74.91%). Solvency ratio of CMSGICL as onMarch 31 2022 was 1.95 times as against the minimum regulatory requirment of 1.50times.

With a view to conserve its resources and augment solvency ratio theBoard of CMSGICL has not recommended dividend for FY 22.

Cholamandalam MS Risk Services Limited ('CMSRSL')

The Company holds 49.5% in the paid-up equity share capital of CMSRSLa joint venture with Mitsui Sumitomo Insurance Company Ltd. Japan and has a technicalcollaboration with Inter Risk a group company of Mitsui Sumitomo Insurance Group.

CMSRSL achieved an income of Rs59.69 Crore (previous year: Rs43.59Crore) and profit before tax of Rs7.15 Crore (previous year: Rs2.64 Crore) for the yearended March 31 2022. The Board of CMSRSL recommended a dividend at the rate of 25% i.e.Rs2.50/- per equity share of face value of Rs10/- each for FY 22.


(Rs in Crore)

Particulars 2021-22 2020-21
Total Income 14734.98 13960.84
Total Expenses 11691.42 11560.56
Profit Before Tax of Profits from Associate / Joint Venture and Tax 3043.56 2400.28
Share of Profit from Associates /Joint Venture (Net of Taxes) (2.87) 0.32
Profits Before Tax 3040.69 2400.60
Tax Expense (801.33) (636.38)
Profits for the year 2239.36 1764.22
Minority Interest (1216.29) (939.58)
Net Profit for the year attributable to owners of the Company 1023.07 824.64


Cholamandalam MS General Insurance Company Limited is the subsidiarycompany of CFHL. Under Ind-AS Cholamandalam Investment and Finance Company Limited isconsidered as a subsidiary and Cholamandalam MS Risk Services Limited is the joint venturecompany of CFHL. There has been no change in the nature of business of these companiesduring the year. Business performance of these companies has been furnished in earlierparagraphs of this report.

A report on the performance and financial position of each of theaforesaid companies as per section 129(3) of the Act read with the Companies (Accounts)Rules 2014 in the prescribed form AOC-1 is annexed to this Report as Annexure I.Consolidated financial statements of the Company prepared in accordance with the CompaniesAct 2013 ('the Act') and the relevant Accounting Standards forms part of the annualreport.

The annual report containing standalone and consolidated financialstatements will be posted on the Company?s website Annual accountsof the subsidiary companies will also be posted on the Company?s website and be madeavailable for inspection by shareholders through electronic mode until the date of theAnnual General Meeting ('AGM').


At the 72nd AGM held on August 4 2021 the appointment ofMr. Vellayan Subbiah as a Non-Executive Director of the Company was approved. Mr. AshokKumar Barat Independent Director resigned from the Board on December 21 2021. The Boardplaces on record its appreciation for the contribution rendered by Mr. Barat during histenure on the Board.

Based on the recommendation of the Nomination & RemunerationCommittee of the Board Mr. K Balasubramanian (DIN: 00137260) has been appointed asan additional director in the category of an independent director with effect from March17 2022. Pursuant to section 149 and regulation 17(1C) of the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 (‘the SEBI Listing Regulations?)the Company has sought shareholders? approval by way of special resolution throughpostal ballot for appointment of Mr. K Balasubramanian as an independent directorfor a term of three (3) consecutive years with effect from March 17 2022 till March 162025. The result of the postal ballot shall be announced on or before May 19 2022.

As per the provisions of section 152 of the Act Mr. SridharanRangarajan (DIN: 01814413) retires by rotation at the ensuing AGM and being eligibleoffered himself for re-appointment. The Board recommends the re-appointment of Mr.Rangarajan as a director liable to retire by rotation and the resolution in this regardforms part of the Notice of the 73rd AGM of the Company. Information asrequired to be disclosed under regulation 36(3) of the SEBI Listing Regulations forre-appointment of director is provided in the AGM Notice.


The Independent Directors (‘IDs?) Mr. B Ramaratnam Mrs.Vasudha Sundararaman and Mr. K Balasubramanian have submitted declarations stating thatthey meet the criteria of independence as required under the provisions of section 149(6)of the Act and regulation 16(1)(b) of the SEBI Listing Regulations. In the opinion of theBoard all the IDs possess integrity expertise and relevant experience in theirrespective fields including the proficiency required to effectively discharge their rolesand responsibilities in directing and guiding the affairs of the Company.

In terms of section 150 of the Act read with the Companies (Appointment& Qualification of Directors) Rules 2014 the IDs of the Company have registeredtheir names in the independent directors? data bank created and maintained by theIndian Institute of Corporate Affairs (‘IICA?). The IDs are also required topass an online proficiency self-assessment test conducted by the IICA within a period oftwo years from the date of inclusion of their names in the data bank subject to exemptionto individuals who fulfill the eligibility criteria prescribed under the said Rules. Allthe IDs are compliant with the requirement under the said Rules.


Pursuant to the provisions of section 203 of the Act Mr. NGanesh Manager & Chief Financial Officer and Mrs. E Krithika Company Secretary arethe key managerial personnel of the Company and there were no changes during the year.


Pursuant to the provisions of section 139(2) of the Act and the rulesmade thereunder and the guidelines for appointment of statutory auditors for Banks andNBFCs dated April 17 2021 issued by the RBI M/s. Sharp & Tannan Associates ('S&TAssociates') Chartered Accountants were appointed as the statutory auditors of theCompany at the 72nd AGM held on August 4 2021 for a period of three yearscommencing from the conclusion of the 72nd AGM until the conclusion of the 75thAGM. The Auditors? Report issued by S&T Associates for the year under review isunmodified and does not contain any qualification reservation or adverse remark. Thestatutory auditors have not reported any incident of fraud to the Audit Committee or theBoard of Directors under section 143(12) of the Act during the year.

FINANCE Deposits

The Company has not accepted any fixed deposits under Chapter V of theCompanies Act 2013 and as such no amount of principal and interest were outstanding as onMarch 31 2022.

Particulars of Loans Guarantees or Investments

The provisions of section 186 of the Act pertaining to investment andlending activities is not applicable to CFHL since the Company is an NBFC whose principalbusiness is acquisition of securities. Information regarding investments made during theyear is given in the financial statements. During the year the Company has not given anyloans or guarantees under the provisions of section 186 of the Act.

Internal Financial Control Systems with reference to the FinancialStatements

The Company has in place adequate internal financial controls to ensurereliability of financial and operational information and regulatory and statutorycompliances. The Company?s business processes are equipped with monitoring andreporting processes to ensure financial discipline and accountability. The internalfinancial control systems are monitored both by internal and statutory auditors of theCompany. The statutory auditors of the Company have also certified on the existence andoperating effectiveness of the internal financial controls as on March 31 2022.

Financial Ratios

The Company being an investment company does not carry on any businessother than holding investments in its group companies. Dividend is the primary source ofincome. Key ratios of the Company are given in the table below:

Ratio Description 31-Mar-2022 31-Mar-2021
Return on Net Worth 4.68% 1.90%
Return on Total Assets 4.30% 1.67%
Debt Equity Ratio (No. of times) 0.08 0.13
Leverage Ratio (No. of times) 0.01 0.02
Ratio of Adjusted Net Worth (ANW) to its aggregate risk weighted assets 942.78% 626.00%

Dividend income is higher by 53.7% in FY 22 compared to the previousyear. Consequently there is improvement in the return on networth and return on totalassets. The Company redeemed NCDs aggregating to Rs50 Crore during the year. Thereforethere is a decrease in debt equity ratio and leverage ratio. Increase in adjusted networthis on account of increase in unrealised gains on investment in subsidiaries. The leverageratio (maximum regulatory requirement: 2.5 times) and adjusted net worth ratio (minimumregulatory requirement: 30%) are computed in accordance with the Master Directions

- Core Investment Companies (Reserve Bank) Directions 2016 ('MasterDirections of RBI').


Managing risk is fundamental to any business in general and inparticular to financial services industry. CFHL has a risk management framework in placewhich provides an integrated approach for identifying monitoring and mitigating risksassociated with its business and that of its group companies. Risks arising out of NBFCinsurance and risk management businesses of the group companies are the dominant risks ofthe Company. Key risk exposures of CFHL include financial risks governance risks marketrisks reputation risks and compliance risks. The Risk Management Committee(‘RMC?) assists the Board in monitoring various risks review and analysis ofrisk exposures and mitigation plans related to the Company and its group companies. A RiskManagement Policy has been adopted by the Board of Directors which inter alia sets outrisk strategy approach and mitigation plans liquidity risk management and assetliability management.

The group companies have their own risk management framework in linewith its strategic business operations as appropriate to the industry in which theyoperate. The risk management framework of NBFC and insurance businesses are broadly basedon (a) clear understanding and identification of various risks (b) disciplined riskassessment by evaluating the probability and impact of each risk (c) measurement andmonitoring of risks by establishing key risk indicators with thresholds for all criticalrisks and (d) adequate review mechanism to monitor and control risks. Business operationsof each of the group companies the risks faced by them and the risk mitigation toolsfollowed by them are reviewed periodically by the Risk Management Committees and theBoards of the respective group companies.

CIFCL?s risk management division works as a value center byconstantly engaging with the business and providing key insights into the portfolio basedon data driven analysis. The key risks faced by CIFCL are credit risk liquidity riskinterest rate risk operational risk reputational and regulatory risk which are broadlyclassified as credit risk market risk and operational risk.

The in-house developed risk monitoring tool of CIFCL measures themovement of critical risks. This provides the level and direction of risks which arearrived at based on the two level risk thresholds for the identified key risk indicatorsand are aligned to the overall company?s risk appetite framework approved by theBoard.

The risk management framework of CMSGICL broadly comprise ofestablishment of risk management policy formulation of risk register review of key riskexposures and asset liability management. The Risk Management Committee of the Board ofCMSGICL reviews the risk management framework periodically. Key risk exposures of CMSGICLinclude financial risk credit risk market risk operational risk and compliance risk.CMSGICL?s Enterprise Risk Management (‘ERM?) function continually conductsrisk and control assessments for all functions across the Company. Risk managementactivities of CMSGICL are aligned to its corporate objectives organisational prioritiesand designed to protect and enhance its reputation.

During FY 22 the Risk Management Committee of CFHL?s Boardreviewed key risk exposures of the Company along with mitigation measures asset liabilitymanagement structural liquidity management key risk exposures and mitigation measures ofsubsidiary?s businesses viz. NBFC and general insurance businesses.


Internal control systems of an organisation is looked at as the key toits effective functioning. The Company has internal control systems in place commensuratewith the nature of business and size of its operations to ensure compliance with internalpolicies regulatory matters and to safeguard reliability of financial reporting and itsdisclosures. An audit of systems and processes is conducted by the internal auditor of theCompany and significant observations are reported to the Audit Committee every quarter.The Audit Committee evaluates adequacy and effectiveness of the internal controlsrecommends improvements and reviews the corrective action taken to address gaps if any.


The Company firmly believes in committing itself to maintaining highstandards of corporate governance. A report on corporate governance of the Companytogether with a certificate from practicing company secretaries in accordance with theSEBI Listing Regulations is annexed to this Report as Annexure II.

The Report further contains other details which are required to beprovided in the Board?s Report.


Five meetings of the Board were held during the year ended March 312022. Further details on the Board meetings are disclosed in the Report on CorporateGovernance.


The Board has constituted an Audit Committee in terms of the applicableprovisions of the Act the SEBI Listing Regulations and the Master Directions of RBI.Details of terms of reference composition and meetings of the committee are disclosed inthe Report on Corporate Governance.


Pursuant to the provisions of section 134 of the Act and regulation 17of the SEBI Listing Regulations the Board of Directors have carried out an annualperformance evaluation of the Board itself the individual directors various committeesof the Board and the Chairman for FY 21-22. The manner in which the evaluation has beencarried out is provided in the Report on Corporate Governance.


The Board has formulated a policy for selection and appointment ofdirectors senior management and their remuneration. Details of which are furnished in theReport on Corporate Governance.


The Company being a part of the Murugappa Group is known for itstradition of philanthropy and community service. The Company?s philosophy is to reachout to the community through service-oriented philanthropic institutions in the fields ofeducation and healthcare. With the enactment of CSR provisions in the Companies Act 2013the Company has framed a CSR policy and the policy is available on the Company?swebsite at Since the amount required to bespent by the Company towards CSR activities does not exceed the threshold limit prescribedunder section 135(2) of the Act constitution of the CSR Committee is not mandatory forthe Company. Accordingly the Board discharges the functions of CSR Committee envisagedunder the Act.

Pursuant to the provisions of section 135 of the Companies Act 2013atleast 2% of the average net profits of the Company shall be spent towards CSRactivities. Accordingly the Company has spent an amount of Rs6 Lakh on CSR projects/programmes approved by the Board during the year ended March 31 2022. The annual reporton CSR activities has been appended as Annexure III to this Report.


All transactions that were entered into by the Company with relatedparties during the financial year were in the ordinary course of business and on anarm?s length basis. There were no materially significant related party transactionsduring the year which had potential conflict with the interest of the Company at large.Pursuant to section 134(3)(h) read with rule 8(2) of the Companies (Accounts) Rules 2014there are no transactions to be reported under section 188(1) of the Act in Form AOC-2.Necessary disclosures in this regard have been made in the notes to the financialstatements. The Company has formulated a policy on related party transactions. None of theDirectors had any pecuniary relationships or transactions vis-a-vis the Company.


Human Resources ('HR') are the valuable assets for the Company. CFHLalong with its group companies has a work force of more than 9900 employees as at March31 2022. The group companies have robust HR management practices enablingachievement of organizational goals and key milestones through people. Safety and wellbeing of the employees continues to be focus area. The companies continue to emphasize onresourcing and talent planning strategies based on their functional and general managementrequirements in preparing the organisation for the future.

As on March 31 2022 there were two employees on the rolls of CFHL.The information required to be disclosed under the provisions of section 197 of the Actread with rule 5 of the Companies (Appointment & Remuneration of Managerial Personnel)Rules 2014 is appended as Annexure IV to this Report.


The Company?s ESOP Schemes viz. Employee Stock Option Plan2007(‘ESOP 2007?)and Employee Stock option Plan 2016 (‘ESOP 2016?)have been approved by the shareholders.

During the year there have been no fresh grants under both the schemes.Details in respect of ESOP 2007 and ESOP 2016 as required under the applicable SEBIregulations are displayed on the Company?s website at Both the schemes are in compliance with theSEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999and SEBI (Share Based Employee Benefits) Regulations 2014 respectively. There are 41680options vested and not exercised under ESOP 2016 as on March 31 2022 and no options wereoutstanding under ESOP 2007 as at end of the year. Vide the scheme of arrangement(demerger) employees of the Company were transferred to the resulting company TubeInvestments of India Ltd. The stock options granted by the Company prior to the effectivedate of demerger i.e. August 1 2017 continue to be held by the option grantees who areemployees of the resulting company. During the year upon exercise of vested stock optionsby the eligible option grantees 5000 and 14910 equity shares were allotted under ESOP2007 and ESOP 2016 schemes respectively.

The certificate from the secretarial auditor M/s. Srinidhi Sridharan& Associates Practicing Company Secretaries confirming that ESOP 2007 and ESOP 2016schemes have been implemented in accordance with the applicable regulations andshareholders' resolutions passed in the general meeting of the Company will be availablefor the shareholders at the ensuing AGM.


The Company has no activity relating to consumption of energy ortechnology absorption etc. There was no foreign exchange earnings or outgo during theyear.


In compliance with the provisions of section 177(9) of the Act readwith the Companies (Meetings of Board and its Powers) Rules 2014 and regulation 22 of theSEBI Listing Regulations the Company has established a whistleblower / vigil mechanismwhich inter alia facilitates its employees to report genuine concerns. The mechanismprovides for adequate safeguards against victimisation of persons using the mechanism andmakes provision for direct access to the Chairman of the

Audit Committee in appropriate or exceptional cases. The policy isavailable on the Company?s website at


Pursuant to the Sexual Harassment of Women at Workplace (PreventionProhibition & Redressal) Act 2013 the Company has a policy for prevention of sexualharassment at workplace. An internal complaints committee (‘ICC?) is in place toredress complaints received regarding sexual harassment. The policy extends to allemployees (permanent contractual temporary and trainees). During the year no referralswere received under the policy and no complaints were pending at the beginning and end ofthe year.


Pursuant to the provisions of section 204 of the Companies Act2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 and regulation 24A of the SEBI Listing Regulations and the rules made thereunder theBoard appointed M/s. Srinidhi Sridharan & Associates Practicing Company Secretariesto conduct the secretarial audit for the year ended March 31 2022. The Report issued bythe secretarial auditor in the prescribed form MR-3 is annexed to this Report as AnnexureV.

The secretarial audit report does not contain any qualificationreservation or adverse remark by the secretarial auditor.

In terms of regulation 24A of the SEBI Listing Regulations thesecretarial audit report of the Company?s material subsidiary Cholamandalam MSGeneral Insurance Company Limited for the year ended March 31 2022 is annexed to thisReport as Annexure VI.


Maintenance of cost records and requirements of cost audit asprescribed under the provisions of section 148(1) of the Act is not applicable to theCompany.


Pursuant to the provisions of section 92(3) and section 134(3)(a) ofthe Companies Act 2013 the annual return for the year ended March 31 2022 is availableon the Company?s website at


The Company has complied with the Secretarial Standards on Meetings ofthe Board of Directors (SS-1) and Secretarial Standards on General Meetings (SS-2)issued by the Institute of Company Secretaries of India.


There are no material changes and commitments affecting the financialposition of the Company which have occurred between March 31 2022 and the date of thisReport.


The Company abides by a set of enduring values and beliefs called the‘five lights? viz. the lights of integrity passion quality respect andresponsibility in order to be a socially responsible business which would on a continuousbasis enhance the interests of all its stakeholders. By steadfastly upholding theprinciples of good and robust corporate governance ingrained with disciplineaccountability transparency and fairness the Company constantly endeavors to sustain andenhance itself as a responsible corporate citizen.

In terms of regulation 34(2) of the SEBI Listing Regulations a BusinessResponsibility Report in the prescribed form is annexed to this Report as Annexure VII.


The Board of Directors confirm that the Company has in place aframework of internal financial control and compliance system which is monitored andreviewed by the Audit Committee and the Board besides the statutory internal andsecretarial auditors. Further pursuant to section 134(5) of the Companies Act 2013 theBoard of Directors confirm that:

a) in the preparation of the annual financial statements for the yearended March 31 2022 the applicable accounting standards have been followed and thatthere were no material departures therefrom;

b) they have in the selection of the accounting policies consultedthe statutory auditors and have applied their recommendations consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as at March 31 2022 and of the profit of theCompany for the year ended on that date;

c) they have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

d) they have prepared the annual financial statements on a goingconcern basis;

e) they have laid down internal financial controls to be followed bythe Company and that such internal financial controls are adequate and were operatingeffectively during the year ended March 31 2022; and

f) proper system has been devised to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively during the year ended March 31 2022.


• There were no significant material orders passed by theregulators or courts or tribunals impacting the Company?s going concern status andits operations in future.

• The Company does not carry on any activities other than thosespecifically permitted by the RBI for CICs.

• RBI does not accept any responsibility or guarantee about thepresent position as to the financial soundness of the Company or the correctness of any ofthe statements or representations made or opinions expressed by the Company and fordischarge of any liability by the Company.

Neither there is any provision in law to keep nor does the Companykeep any part of the deposits with RBI and by issuing a Certificate of Registration to theCompany RBI neither accepts any responsibility nor guarantees the payment of deposits toany depositor or any person who has lent any sum to the Company.

• There are no applications made or any proceedings pending underthe Insolvency and Bankruptcy Code 2016 during the year.

• During the year the Company had not made any one-timesettlement with banks or financial institutions.


The Directors express their gratitude for the support and co-operationextended by the Ministry of Corporate Affairs Securities and Exchange Board of IndiaReserve Bank of India Stock Exchanges and other statutory authorities. The Directors alsowish to thank all investors vendors financial institutions banks and joint venturepartners for their continued support and faith reposed in the Company. The Board places onrecord its appreciation for the contribution made by the employees of the Company and itsgroup companies across all levels.

On behalf of the Board
M M Murugappan
Place : Chennai Chairman
Date : May 11 2022 DIN:00170478