You are here » Home » Companies » Company Overview » Cholamandalam Investment & Finance Company Ltd

Cholamandalam Investment & Finance Company Ltd.

BSE: 511243 Sector: Financials
NSE: CHOLAFIN ISIN Code: INE121A01024
BSE 00:00 | 17 Aug 789.75 1.10
(0.14%)
OPEN

791.00

HIGH

800.95

LOW

784.75

NSE 00:00 | 17 Aug 789.90 1.40
(0.18%)
OPEN

789.95

HIGH

801.00

LOW

784.35

OPEN 791.00
PREVIOUS CLOSE 788.65
VOLUME 77217
52-Week high 800.95
52-Week low 469.75
P/E 27.20
Mkt Cap.(Rs cr) 64,870
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 791.00
CLOSE 788.65
VOLUME 77217
52-Week high 800.95
52-Week low 469.75
P/E 27.20
Mkt Cap.(Rs cr) 64,870
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Cholamandalam Investment & Finance Company Ltd. (CHOLAFIN) - Director Report

Company director report

Your directors have pleasure in presenting the forty fourth annual report together withthe audited accounts of the company for the year ended 31 March 2022.

FINANCIAL RESULTS

Rs in crores

Particulars 2021-22 2020-21
Gross Income 10138.76 9575.56
Profit Before Tax (PBT) 2890.94 2038.44
Profit After Tax (PAT) 2146.71 1514.91
Total Comprehensive income 2267.95 1480.13
Appropriation:
Transfer to statutory and other reserves 1430.00 1060.00
Dividend - Equity (including Taxes) 164.14 106.56

SHARE CAPITAL

During the year there was an increase in paid up capital by Rs 0.20 crores consequentto allotment of shares upon exercise of stock options by employees under the company'semployee stock option schemes.

OPERATIONS

The FY 22 began with the second wave of COVID pandemic impacting the lives andlivelihood of people across the country. Second wave was more impactful with more loss oflives than the first wave. Localized lockdowns were imposed by many states startingmid-April 2021 which extended in most states till June-2021. Many of our borrowers andemployees were impacted due to the second wave whereby the priority shifted from businessto protecting the wellbeing of the affected stakeholders. This resulted in a setback inperformance in Q1 on the disbursements and collections front. In view of the uncertaintiescreated by the resurgence of COVID-19 pandemic in India RBI extended the resolutionframework 2.0 for restructuring of existing loans without a downgrade and your company hadoffered resolution plans under this framework to the eligible customers. Post July 2021onwards with the waning of second wave and the rise in vaccination coverage led to sharpand sustained reduction in COVID-19 infections which contributed to the return of customerconfidence and business optimism. Pent-up demand good monsoon led to economic revival insecond half of FY 22 leading to a sharp recovery in disbursements and collections.

Despite slowdown due to 2nd wave in the first quarter of the year your company endedthe FY 22 with an all-time high disbursement of Rs 35490 crores which is a growth of 36%YoY. Vehicle Finance grew disbursements by 26% YoY to Rs 25439 crores with growth comingfrom both new and used segments across commercial and passenger vehicles. Loan againstproperty business grew disbursements by 62% YoY to Rs 5862 crores and home loans businessgrew disbursements marginally by 2% YoY to Rs 1571 crores. New businesses consumer andsmall enterprise loans secured business and personal loans launched in FY 22 along withsmall and medium enterprises loans business made aggregate disbursements of Rs 2618crores which is a g rowth of 319% YoY.

The business AUM of the company as of 31 March 2022 grew to Rs 76907 crores from Rs69996 crores in previous year which is a growth of 10% YoY.

The profit before tax of the company for the year FY 22 is Rs 2891 crores as againstRs 2038 crores which is a growth of 42% YoY.

Your company continued to hold a strong liquidity position with Rs 5341 crores as cashbalance as at end of 31 March 2022 (including Rs 1500 crores invested in Gsec shown underinvestments) with a total liquidity position of Rs 13246 crores (including undrawnsanctioned lines). The Asset Liability Management (ALM) is comfortable with no negativecumulative mismatches across all time buckets.

OUTLOOK

The outlook for FY 23 looks positive with GDP of the country projected to grow over 8%in FY 23. Industry outlook across all our business segments is positive and your companywill look to scale disbursements by expanding into new geography/ customer segmentsdriving market share growth through original equipment manufacturer / dealer tie-upsco-lending partnerships improving internal efficiencies through lean and digitalinitiatives. Our strong collection infrastructure is driven by experienced field teamswith product level focus from early buckets. Your company is running host of initiativesto digitize the collection processes which will be analytics enabled and will helpstrengthen the asset quality position back to pre-COVID levels.

DIVIDEND

Dividend distribution policy

The company has formulated a dividend distribution policy in compliance with regulation43A of SEBI (Listing Obligation and Disclosure Requirement) Regulations 2015 (ListingRegulations) a copy of which is available on the website of the company. (weblink:httDs://www.cholamandalam.com/comDanv-Dolicies.asDx)

Payment of dividend

Your company paid an interim dividend on the equity shares at the rate of 65% (Rs 1.30per equity share) as approved by the Board on 01 February 2022 for the year ended 31March 2022.

Your directors are pleased to recommend a final dividend of 35% (Rs 0.70 per equityshare) on the equity shares of the company. With this the total dividend will be 100% (Rs2.00 per equity share) for the year ended 31 March 2022.

TRANSFER TO RESERVES

Your company transferred a sum of Rs 430 crores to statutory reserve as required underthe Reserve Bank of India Act 1934 and Rs 1000 crores to general reserves.

FIXED DEPOSITS

The company is an NBFC - Investment and Credit Company (NBFC- ICC). The company doesnot hold or accept deposits as of the date of balance sheet.

CAPITAL ADEQUACY

The company's capital adequacy ratio was at 19.6% as on 31 March 2022 as against thestatutory minimum capital adequacy of 15% prescribed by RBI.

EMPLOYEE STOCK OPTION (ESOP) SCHEMES

ESOP 2016

Pursuant to the approval accorded by the shareholders on 3 January 2017 the nominationand remuneration committee had formulated an employee stock option scheme 2016 (ESOP2016).

During the year the company made grants aggregating to 2025520 options to 56employees. The total number of options issued as on 31 March 2022 under ESOP 2016 is4522020.

ESOP 2007

Pursuant to the approval accorded by the shareholders at the twenty ninth annualgeneral meeting (AGM) of the company held on 30 July 2007 the nomination and remunerationcommittee had formulated an employee stock option scheme 2007 (ESOP 2007). During theyear there have been no fresh grants under the scheme and no options are outstanding ason 31 March 2022.

The schemes are in compliance with Securities and Exchange Board of India (Share BasedEmployee Benefits) Regulations 2014 (SEBI (SBEB) Regulations) and the Companies Act 2013(the Act).

The certificate from M/s. Sridharan & Associates company secretaries confirmingthat ESOP 2007 and ESOP 2016 have been implemented in accordance with the SEBI (SBEB)Regulations and shareholders resolutions has been obtained and will be available for theshareholders at the ensuing AGM.

The details of the schemes as on 31 March 2022 are provided and disclosed on thewebsite of the company (weblink: https://www.cholamandalam.com/esop.aspx)

DIRECTORS

Re-appointment

Mr. Vellayan Subbiah director who retires by rotation at the ensuing AGM and beingeligible has offered himself for re-appointment and is recommended to the shareholdersfor approval.

During the year there were no appointment / resignation of directors of the company.

DECLARATION FROM INDEPENDENT DIRECTORS

All the independent directors (IDs) have submitted their declaration of independenceas required pursuant to section 149(7) of the Act confirming that they meet the criteriaof independence as provided in section 149(6) of the Act. In the opinion of the board theIDs fulfil the conditions specified in the Act and the rules made there under forappointment as IDs including the integrity expertise and experience and confirm that theyare independent of the management. All the IDs of the company have registered their nameswith the data bank of IDs and are in the process of completion of online proficiencyself-assessment test as per the timeline notified by the Ministry of Corporate Affairs(MCA).

KEY MANAGERIAL PERSONNEL

Pursuant to the provisions of section 203 of the Act read with the rules made thereunder the following employees are the whole time key managerial personnel of the companyduring FY 22:

1. Mr. Ravindra Kumar Kundu Executive Director

2. Mr. D. Arul Selvan Chief Financial Officer and

3. Ms. P. Sujatha Company Secretary

DIRECTORS' RESPONSIBILITY STATEMENT

The directors' responsibility statement as required under section 134(5) of the Actreporting the compliance with accounting standards is attached and forms part of theboard's report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

There are no significant and material orders passed by the regulators or courts ortribunals which would impact the going concern status of the company and its futureoperations.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There are no significant material changes and commitments affecting the financialposition of the company that occurred between the end of financial year and the date ofthis report.

MANAGEMENT DISCUSSION AND ANALYSIS

The management discussion and analysis report (MDA) highlighting the business-wisedetails is attached and forms part of this report. MDA also contains the details of therisk management framework of the company including the development and implementation ofrisk management policy and the key risks faced by the company.

CORPORATE GOVERNANCE REPORT

A report on corporate governance as per the Listing Regulations is attached and formspart of this report. The report also contains the details as required to be provided onthe composition and category of directors number of meetings of the board composition ofthe various committees annual board evaluation remuneration policy criteria for boardnomination and senior management appointment whistle blower policy/vigil mechanismdisclosure of relationships between directors inter-se state of company's affairs etc.

The executive director and the chief financial officer have submitted a compliancecertificate to the board regarding the financial statements and other matters as requiredunder regulation 17(8) of the Listing Regulations.

BUSINESS RESPONSIBILITY REPORT

A business responsibility report is attached and forms part of this report.

CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statement is prepared in accordance with the Act and therelevant accounting standards and forms part of this annual report.

AUDITORS

The company has implemented the guidelines for appointment of statutory auditors forBanks and NBFCs issued by RBI on 27 April 2021. M/s. Price Waterhouse LLP and M/s.Sundaram & Srinivasan chartered accountants are the joint statutory auditors of thecompany. They were appointed as joint statutory auditors of the company at the 43rd AGMheld on 30 July 2021 for a period of three years commencing from the conclusion of 43rdAGM till the conclusion of 46th AGM. The statutory audit report is attached with financialstatement and forms part of this report and does not contain any qualificationreservation or adverse remarks.

SECRETARIAL AUDIT

Pursuant to the provisions of the Act and the rules framed there under M/s. R.Sridharan & Associates company secretaries had undertaken a secretarial audit of thecompany for FY 22. The secretarial audit report is attached and forms part of this reportand does not contain any qualification reservation or adverse remarks.

COST RECORD AND COST AUDIT

Maintenance of cost records and requirements of cost audit as prescribed under theprovisions of section 148(1) of the Act is not applicable for the business activitiescarried out by the company.

ANNUAL RETURN

In accordance with sections 134(3)(a) and 92(3) of the Act the annual return in formMGT-7 is placed on the website of the company and is available on the weblink:https://cholamandalam.com/files/MEDIA/ Annual-Return-2021-2022.pdf.

CORPORATE SOCIAL RESPONSIBILITY

The Murugappa group is known for its tradition of philanthropy and community service.The group's philosophy is to reach out to the community by establishing service-orientedphilanthropic institutions in the field of education and healthcare as the core focusareas. The company upholds the group's tradition by earmarking a part of its income forcarrying out its social responsibilities.

The company has been carrying out corporate social responsibility (CSR) activities formany years now even before it was mandated under the Act. The company has put in place aCSR policy. The policy along with composition of CSR committee and projects approved bythe board are available on the website of the company (weblink:httDs://www.cholamandalam.com/community-relations.asDx).

As per the provisions of the Act the company is required to spend at least 2% of theaverage net profits of the company made during the three immediately preceding financialyears.

This amount aggregated to Rs 36.32 crores and the company spent Rs 36.44 crores towardsCSR activities during FY 22 the details of which are annexed to and forms part of thisreport.

INTERNAL FINANCIAL CONTROLS

Internal control framework including clear delegation of authority and standardoperating procedures are established and laid out across all businesses and functions.These are reviewed periodically at all levels. The risk and control matrices are reviewedon a quarterly basis and control measures are tested and documented. These measures havehelped in ensuring the adequacy of internal financial controls commensurate with the scaleof operations of the company.

The internal financial controls with reference to the financial statements were testedand reported adequate.

RELATED PARTY TRANSACTIONS

The company has in place a policy on related party transactions as approved by theboard and the same is available on the website of the company (weblink:https://www.cholamandalam.com/company- Dolicies.aspx).

All transactions with related parties that were entered into during the financial yearwere in the ordinary course of business and were on an arm's length basis. There were nomaterially significant transactions made by the company with promoters directors keymanagerial personnel or other designated persons which may have a potential conflict withthe interest of the company at large. There were no contracts or arrangements entered intowith related parties during the year to be disclosed under sections 188(1) and 134(h) ofthe Act in form AOC-2. All transactions with related parties were placed before the auditcommittee for prior approval at the beginning of the financial year. The transactionsentered into pursuant to the approval so granted were placed before the audit committeefor its review on a quarterly basis. None of the directors has any pecuniary relationshipor transaction vis-a-vis the company.

INFORMATION AS PER SECTION 134(3)(m) OF THE ACT

During the year under review the company has no major impact on account ofconservation of energy or technology absorption. Foreign currency expenditure /remittances amounting to Rs 639.30 crores towards repayment of overseas borrowing andinterest purchase of computer equipment license fees and other professional charges wereincurred during the year under review. The company does not have any foreign exchangeearnings.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

Being an NBFC the disclosures regarding particulars of loans given guarantees givenand security provided is exempted under the provisions of section 186(11) of the Act.

As regards investments made by the company the details of the same are provided underNote 10 in standalone financial statementsn and Note 12 and Note 46 in consolidatedfinancial statements of the company for the year ended 31 March 2022.

DISCLOSURE OF REMUNERATION

The disclosure with respect to remuneration as required under section 197 of the Actread with rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 is attached and forms part of this report.

PARTICULARS OF EMPLOYEES

In accordance with section 136 of the Act the report and accounts are being sent tothe members and others entitled thereto. The statement prescribed under rule 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isavailable for inspection. If any member is interested in obtaining a copy such member maysend an e-mail to the company secretary in this regard.

COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETINGS

The company has complied with all the provisions of secretarial standards issued by theInstitute of Company Secretaries of India in respect of meetings of the board of directorsand general meetings held during the year.

INTERNAL COMPLAINTS COMMITTEE

The company has in place a policy for prevention of sexual harassment in line with therequirements of the Sexual Harassment of Women at the Workplace (Prevention Prohibitionand Redressal) Act 2013 (POSH Act). The company has complied with the provisions relatingto constitution of internal complaints committee (ICC) under the POSH Act. ICC has beenset up to redress complaints received regarding sexual harassment. All employees arecovered under this policy. During the year the company conducted workshops for employeescreating awareness about POSH Act. During the calendar year ended 31 December 2021 therewere no referrals received by ICC.

OTHER DISCLOSURES

There was no fraud reported by auditors of the company as given under Section 143(12)of the Companies Act 2013 (Read with Companies (Audit and Auditors) Rules 2014.

During the year ended 31 March 2022 the company had made an application amounting toRs 1.83 crores under the Insolvency and Bankruptcy Code 2016 ("the Code"). Asat 31 March 2022 total number of applications filed and pending under the Code are 10cases amounting to Rs 27.63 crores. No proceeding is pending against the company under theCode.

During the year the company had not made any one-time settlement with banks orfinancial institutions.

HIGHLIGHTS OF PERFORMANCE OF SUBSIDIARIES / ASSOCIATES AND JOINT VENTURES

CHOLAMANDALAM SECURITIES LIMITED (CSEC)

In FY 22 CSEC had commenced the implementation of its Reimagination strategy andtransformation to evolve as a (i) Digitally integrated financial services player (ii)Best-in-class company for customer journey and Tech enablement and (iii) High performanceFeet-on-street and franchise enablement through digital journeys. During the year CSECincreased its footprint from 22 branches to 34 branches. CSEC achieved a gross income ofRs 40.01 crores for the year ended 31 March 2022 and made a PBT of Rs 7.48 crores asagainst a PBT of Rs 6.84 crores in the previous year. The mutual fund AUM was at Rs 839crores. CSEC did not declare any dividend during the year. The PBT contribution of CSEC tothe overall performance of the company was Rs 7.48 crores during the year.

CHOLAMANDALAM HOME FINANCE LIMITED (CHFL)

CHFL recorded a gross income of Rs 56.37 crores for the year ended 31 March 2022 andmade a profit before tax of Rs 9.19 crores as against profit of Rs 2.62 crores in theprevious year. CHFL did not declare any dividend during the year. Currently the companycontinues its focus on growing insurance corporate agency business.

The PBT contribution of CHFL to the overall performance of the company was Rs 9.19crores during the year.

WHITE DATA SYSTEMS INDIA PRIVATE LIMITED (WDSI)

WDSI recorded a gross income of Rs 6.62 crores for the year ended 31 March 2022 andmade a loss of Rs 0.36 crores as against a loss of Rs 2.30 crores in the previous year.WDSI did not declare any dividend during the year.

VISHVAKARMA PAYMENTS PRIVATE LIMITED (VPPL)

The company forms part of the consortium for retail payments - Vishvakarma PaymentsPrivate Limited (VPPL) that has applied for a New Umbrella Entity (NUE) License for retailpayments with Reserve Bank of India. The company holds 21% of equity share capital ofVPPL.

PAYSWIFF TECHNOLOGIES PRIVATE LIMITED (PTPL)

During the year the company acquired 73.8% stake in equity share capital of PayswiffTehcnologies Private Limited (PTPL). Consequently the PTPL has become a subsidiary of thecompany. PTPL is engaged in the business of enabling online payment gateway services fore-commerce businesses and provides e-commerce solutions. PTPL is an omni channel paymenttransaction solution that lets business owners accept payments from their customersin-store at home deliveries online and on-the-go using mPOS and POS solutions. PTPLrecorded a gross income of Rs 284.60 crores and made a loss of Rs 33.78 crores for theyear ended 31 March 2022.

Payswiff Solutions Private Limited and Payswiff Services Private Limited subsidiariesof PTPL recorded gross income of Rs 284.90 crores and Rs 0.66 crores respectively for theyear ended 31 March 2022.

ACKNOWLEDGEMENT

The directors wish to thank the company's customers vehicle manufacturers vehicledealers channel partners banks mutual funds rating agencies and shareholders for theircontinued support. The directors also thank the employees of the company for theircontribution to the company's operations during the year under review.

On behalf of the board
Place : Chennai Vellayan Subbiah
Date : 5 May 2022 Chairman

.