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Edelweiss Financial Services Ltd.

BSE: 532922 Sector: Financials
NSE: EDELWEISS ISIN Code: INE532F01054
BSE 12:47 | 25 Feb 92.80 0
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OPEN

93.15

HIGH

93.90

LOW

92.40

NSE 12:39 | 25 Feb 92.90 0.10
(0.11%)
OPEN

93.60

HIGH

93.75

LOW

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OPEN 93.15
PREVIOUS CLOSE 92.80
VOLUME 43322
52-Week high 210.30
52-Week low 67.10
P/E 81.40
Mkt Cap.(Rs cr) 8,670
Buy Price 92.65
Buy Qty 309.00
Sell Price 92.85
Sell Qty 434.00
OPEN 93.15
CLOSE 92.80
VOLUME 43322
52-Week high 210.30
52-Week low 67.10
P/E 81.40
Mkt Cap.(Rs cr) 8,670
Buy Price 92.65
Buy Qty 309.00
Sell Price 92.85
Sell Qty 434.00

Edelweiss Financial Services Ltd. (EDELWEISS) - Director Report

Company director report

To the Members of Edelweiss Financial Services Limited

Your Directors hereby present the 24th Annual Report on thebusiness operations and state of affairs of the Company together with the auditedfinancial statements for the year ended March 31 2019.

FINANCIAL HIGHLIGHTS

I. Consolidated Financial Performance: (Rs in million)

2018-19 2017-18
Total Revenue 108775.54 89208.42
Total Expenses 91380.43 75707.24
Profit before share in profit / (loss) of associates and tax 17395.11 13501.18
Share in profit / (loss) of associates 41.99 (12.07)
Profit before tax 17437.10 13489.11
Tax expense 6993.41 5118.57
Profit for the year 10443.69 8370.54
Other Comprehensive Income 573.35 (323.55)
Total Comprehensive Income 11017.04 8046.99
Profit for the year attributable to
Owners of the parent 9951.66 8631.83
Non-controlling interests 492.03 (261.29)
Other Comprehensive Income for the year attributable to
Owners of the parent 384.13 (156.50)
Non-controlling interests 189.22 (167.05)
Total Comprehensive Income for the year attributable to
Owners of the parent 10335.79 8475.33
Non-controlling interests 681.25 (428.34)
Earnings per share (Face value Rs 1 each)
Basic 11.28 10.46
Diluted 11.09 10.12
II. Standalone Financial Performance: (Rs in million)
2018-19 2017-18
Total Revenue 3203.75 4401.36
Total expenses 2144.48 2672.41
Profit before tax 1059.27 1728.95
Tax expenses 30.49 346.31
Profit for the year 1028.78 1382.64
Other Comprehensive Income 0.82 4.00
Total Comprehensive Income 1029.60 1386.64
Earnings Per Share Rs (Face Value of Rs 1/- each)
(1) Basic 1.17 1.68
(2) Diluted 1.15 1.62

DIVIDEND

During the year under review your Directors declared and paid aninterim dividend of Rs 1.10 per Equity Share on the face value of Rs 1 each.

The Board has also recommended a final dividend of Rs 0.30 per EquityShare on the face value of ' 1 each for the financial year ended March 31 2019.

The payment of the final dividend is subject to declaration by theMembers at the ensuing Annual General Meeting (AGM) scheduled to be held on Thursday July25 2019 and shall be paid to those Members whose names appear in the Register of Membersof the Company as on July 18 2019. The Register of Members and the share transfer bookswill remain closed from July 19 2019 to July 24 2019 (both days inclusive).

Pursuant to Regulation 43A of the SEBI (Listing Obligations &Disclosure Requirements) Regulations 2015 the Board of Directors of the Company hasadopted a Dividend Distribution Policy which is provided as Annexure I to this Report andis available onthe website of the Company at the link: https:// www.edelweissfin.com/documents/30595/209699/ EFSL%20Dividend%20Distribution%20Policy.pdf

SHARE CAPITAL

During the year under review 17170637 Equity Shares of face valueof Rs 1 each were allotted on exercise of the Options granted under various Employee StockIncentive Plans of the Company.

Consequently as at March 31 2019 the total paid-up share capital ofthe Company stood at Rs 932.67 million divided into 932669564 Equity Shares of Rs 1each.

The disclosures with regard to the Employee Stock Options as requiredunder the SEBI (Share Based Employee Benefits) Regulations 2014 is available on thewebsite of the Company at the link:https:// www.edelweissfin.com/web/edelweiss/annual-reports?param=annualReport .

The Company has also introduced Edelweiss Employees Stock AppreciationRights Plan 2019 which was approved by the Members of the Company on May 2 2019 issuedvide Notice (Postal Ballot) dated March 26 2019.

INFORMATION ON THE STATE OF AFFAIRS OF THE COMPANY

Information on the operational and financial performance amongstothers is given in the Management Discussion and Analysis Report forming part of thisAnnual Report and is in accordance with the SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015.

ABRIDGED FINANCIAL STATEMENTS

In terms of the provisions of Section 136 of the Companies Act 2013the abridged Financial Statements as at March 31 2019 and the Auditors' Report on theFinancial Statements form part of the Annual Report. Full version of the Annual Report isavailable on the website of the Company at thelink: https://www.edelweissfin.com/web/ edelweiss/annual-reports?param=annualReportand will be made available to the Members of the Company on request.

SUBSIDIARIES & ASSOCIATES

During the year under review the following companies ceased to besubsidiaries of the Company with effect from February 18 2019 on account of their mergerwith Edelweiss Rural & Corporate Services Limited (formerly known as EdelweissCommodities Services Limited) a subsidiary of the Company:

• Edelweiss Business Services Limited

• Edelweiss Agri Value Chain Limited

• EFSL Comtrade Limited

• Edelweiss Fund Advisors Private Limited

• Edelweiss Capital Markets Limited

Edelweiss Multi Strategy Funds Management Private Limited ceased to bea subsidiary w.e.f. February 01 2019 on account of its merger with Edelweiss AssetManagement Company Limited a subsidiary of the Company.

Edelweiss India Capital Management Mauritius ceased to be subsidiaryw.e.f. October 12 2018.

Allium Finance Private Limited which was hitherto an AssociateCompany became a subsidiary of the Company w.e.f. December 5 2018 and Lichen MetalsPrivate Limited became a subsidiary of the Company w.e.f. December 31 2018.

The salient features of the financial statement of each of thesubsidiaries and the associates

as required under the Companies Act 2013 is provided in theconsolidated financial statement in Form AOC-1. The financial statements of the subsidiarycompanies are available on the websiteof the Company at the link:https:// www.edelweissfin.com/web/edelweiss/annual-reports?param=annualReport . Any member interested in obtaining a copy of financialstatement of the subsidiaries may write to the Company Secretary at the Registered Officeof the Company.

LOANS INVESTMENTS AND GUARANTEES

Particulars of loans given investments made guarantees given andsecurities provided if any are reported in the financial statements.

RELATED PARTY TRANSACTIONS

Particulars of contracts or arrangements with the related parties asreferred to in Sub-Section (1) of Section 188 of the Companies Act 2013 and forming partof this Report is provided in the financial statements in Form AOC-2. All the RelatedParty Transactions as required under Ind AS-24 are reported in the Notes to the financialstatement.

In accordance with the provisions of the SEBI (Listing Obligations& Disclosure Requirements) Regulations 2015 the Company has formulated the RelatedParty Transactions Policy which is available on the website of the Company atthe link: https://www.edelweissfin.com/ documents/30595/209699/Related%20Party%20Transactions%20Policy.pdf.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

(i) Independent Directors

Mr. Biswamohan Mahapatra (DIN: 06990345) was re-appointed as anIndependent Director of the Company at the Annual General Meeting (AGM) held on July 262018 to hold office for a period of five years.

Mr. Sanjiv Misra (DIN: 03511635) resigned as an Independent Directorw.e.f. January 24 2019 due to his other compelling commitments and time constraints. TheBoard placed on record its appreciation for the valuable contribution and the servicesrendered by him during his tenure as an Independent Director.

The Board of Directors on the recommendation of Nomination andRemuneration Committee (NRC) and in accordance with provisions of the Companies Act 2013and the SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015appointed Mr. Ashok Kini (DIN: 00812946) Dr. Ashima Goyal (DIN: 00233635) and Ms. AnitaM. George (DIN: 00441131) as Additional Directors on the Board w.e.f. April 1 2019. Theyshall hold office as Additional Directors upto the date of the ensuing AGM.

Further the Board has appointed

Mr. Ashok Kini (DIN: 00812946) and

Dr. Ashima Goyal (DIN:00233635) as Independent Directors w.e.f. April1 2019 for a period of 3 years subject to the approval by the Members at the ensuingAGM.

Ms. Anita M. George (DIN: 00441131) who was appointed as AdditionalDirector (Independent) w.e.f. April 1 2019 has been re-designated as a Non-ExecutiveNon-Independent Director w.e.f. May 14 2019.

The aforesaid appointments have been included in the Notice conveningthe ensuing AGM for approval of the Members.

In accordance with the provisions of Section 149 of the Companies Act2013 the Independent Directors have given a declaration that they meet the criteria ofindependence as provided in the said Section and also in terms of the SEBI (ListingObligations & Disclosure Requirements) Regulations 2015.

(ii) Executive Director

Pursuant to the recommendation of the Nomination and RemunerationCommittee the Board of Directors at their Meetingheld on May 14 2019 had subject tothe approval of the Members re-appointed Mr. Himanshu Kaji (DIN: 00009438) as anExecutive Director for a term of five years w.e.f. November 1 2019. The necessaryresolution in this regard is being placed for the approval of the Members at the ensuingAGM.

(iii) Other Directors

Mr. Rashesh Shah (DIN: 00008322) and Mr.VenkatchalamRamaswamy(DIN:00008509) retire by rotation at the ensuing AGM and being eligible offer themselvesfor re-appointment.

(iv) Key Managerial Personnel

There was no change in the Key Managerial Personnel (KMPs) during theyear under review. Some of the KMPs of the Company are also the KMPs of the subsidiariesand draw remuneration from those subsidiaries.

NUMBER OF BOARD MEETINGS HELD

During the year ended March 31 2019 the Board met 6 times.

REMUNERATION POLICY

The Company has formulated a Remuneration Policy pursuant to Section178 of the Companies Act 2013 and the SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015. The Policy is provided as Annexure II to this Report.

EVALUATION OF THE PERFORMANCE OF THE BOARD

A Board Evaluation Policy (the Policy) for evaluating the performanceof the Board its Committees the Chairman the Managing Director the ExecutiveDirectors the Non-Executive Directors and the Independent Directors has been adopted bythe Company.

The Policy inter alia provides for the criteria for performanceevaluation such as Board effectiveness quality of discussion contribution at themeetings business acumen strategic thinking time commitment relationship with thestakeholders corporate governance practices review of the terms of reference of theCommittees and the contribution of the Committees to the Board in discharging itsfunctions etc.

A separate meeting of the Independent Directors was held during theyear under review wherein the Independent Directors evaluted the performance of theNon-Independent Directors performance of the Board as a whole and also that of theChairman in terms of the provisions of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.

INTERNAL FINANCIAL CONTROLS AND RISK MANAGEMENT

The Company has in place adequate internal financial controls withreference to the financial statements. The Company's internal control system is designedto ensure operational efficiency protection and conservation of resources accuracy andpromptness in financial reporting and compliance with laws and regulations. The internalcontrol system is supported by an internal audit process.

Risk management is an integral part of the Company's Business Strategythat seeks to minimize adverse impact on business objectives and capatalise onopportunities. The Risk Committee oversees the risk management framework of the Companythrough regular and proactive intervention by identifying risks and formulating mitigationplans. Also refer to the Management Discussion and Analysis Section.

AUDIT COMMITTEE

The Audit Committee presently comprises of:

Mr. P. N. Venkatachalam ' (Chairman) . Independent

Mr. Berjis Desai

Directors

Mr. Biswamohan Mahapatra Mr. Kunnasagaran Chinniah

WHISTLE BLOWER POLICY/ VIGIL MECHANISM

The Company has adopted a Whistle Blower Policy for the employees toreport genuine concerns / grievances. The Policy is available on the websiteof the Company at the link: https:// www.edelweissfin.com/documents/30595/0/ WhistleBlowerPolicy.pdf.

The Policy provides for adequate safeguards against the victimisationof the employees who use the vigil mechanism. The vigil mechanism is overseen by the AuditCommittee.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The Board of Directors has constituted a Corporate SocialResponsibility {CSR) Committee in accordance with the provisions of the Companies Act2013. The CSR Committee presently comprises of:

Mr. Venkatchalam

Ramaswamy (Chairman) Executive

Mr. Himanshu Kaji Directors

Mr. Rujan Panjwani -

Mr. P. N. Venkatachalam Independent

Director

The Company has made contributions under Corporate SocialResponsibility mainly through its philanthropic arm Edelgive Foundation. The CSR Projectsof the Company largely focus on the following broad areas viz. sustainable livelihoodquality education women empowerment etc.

CSR REPORT

The CSR Report on the activities undertaken during the year is annexedto the Board's Report as Annexure III. The CSR Policy is available on the website of theCompany at the link: https://www. edelweissfin.com/documents/30595/209699/CSR%20Policy.pdf.

AUDITORS

At the 23rd Annual General Meeting of the Company held onJuly 26 2018 the Members had appointed M/s. S. R. Batliboi & Co. LLP (FirmRegistration No. 301003E/E300005) as the Auditors of the Company for a term of 5 years tohold office until the conclusion of the 28th AGM to be held in the year 2023.

The Auditors' Report annexed to the financial statements for the yearunder review does not contain any qualification reservation adverse remark ordisclaimer.

SECRETARIAL AUDIT REPORT

M/s. BNP & Associates Company Secretaries were appointed as theSecretarial Auditors to conduct the Secretarial Audit for the financial year ended March31 2019. The Report of the Secretarial Auditor is provided as Annexure IV to this Report.The Secretarial Audit Report does not contain any qualification reservation adverseremark or disclaimer.

As required under the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Secretarial Audit Report of Edelweisss Tokio LifeInsurance Company Limited the Material Unlisted Subsidiary of the Company for the yearended March 31 2019 is provided as Annexure IV-A to this Report.

PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

The Company has a Policy on Prevention of Sexual Harassment of Women atWorkplace. No cases were reported during the year under review. There were no complaintspending as on March 31 2019. The Company has complied with the provisions relating to theconstitution of Internal Complaints Committee under the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS/OUTGO

A. Conservation of energy

i. The steps taken or impact on conservation of energy - The operationsof your Company are not energy intensive. However adequate measures have been initiatedfor conservation of energy wherever possible.

ii. The steps taken by the Company for utilising alternate sources ofenergy - though the operations of the Company are not energy intensive the Companyexplores alternative sources of energy as and when the necessity arises.

iii. The capital investment on energy conservation equipments - Nil

B. Technology absorption

i. The efforts made towards technology absorption - The minimumtechnology required for the business has been absorbed.

ii. The benefits derived like product improvement cost reductionproduct development or import substitution - Not Applicable.

iii. In case of imported technology (imported during the last threeyears reckoned from the beginning of the financial year) - Not Applicable.

(a) the details of technology imported;

(b) the year of import;

(c) whether the technology has been fully absorbed;

(d) if not fully absorbed areas where absorption has not taken placeand the reasons thereof; and

iv. The expenditure incurred on Research and Development - NotApplicable.

C. Foreign exchange earnings and outgo

Foreign exchange earnings and outgo (including dividend) during theyear under review were Rs 118.68 million (previous year Rs 189.74 million) and Rs 52.77million (previous year Rs 56.63 million) respectively.

OTHERS

No disclosure is required in respect of the details relating to thedeposits covered under Chapter V of the Companies Act 2013 as the Company has notaccepted any deposit. There was no significant or material order passed by any regulatoror court or tribunal which would impact the status of the Company as a going concern andthe operations in future. The Company has complied with the Secretarial Standards issuedby the Institute of Company Secretaries of India.

ANNUAL RETURN

In accordance with the provisions of the Companies Act 2013 and theRules framed thereunder the extract of the Annual Return in Form MGT- 9 annual returnfor the financial year 2017-18 and 2018-19 are available on the websiteof the Company at the link: https:// www.edelweissfin.com/web/edelweiss/annual-reports?param=annualReport .

DISCLOSURE UNDER SECTION 197 OF THE COMPANIES ACT 2013

The information as required under Section 197 of the Companies Act2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 as amended forms part of this Annual Report.

Disclosures as required under Rule 5(1) of the aforesaid Rules areprovided as Annexure V to this Report. In terms of the provisions of Section 136 of theAct any member interested in obtaining a copy of information under Rule 5(2) of theaforesaid Rules may write to the Company Secretary at the Registered Office of theCompany.

CORPORATE GOVERNANCE

Pursuant to the SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 the Report on Corporate Governance together with thecertificate issued by M/s. BNP & Associates Company Secretaries on compliance inthis regard forms part of this Annual Report.

A Business Responsibility Report pursuant to the SEBI (ListingObligations & Disclosure Requirements) Regulations 2015 is provided as Annexure VI tothis Report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134 of the Companies Act

2013 the Directors confirm that:

i) in the preparation of the annual accounts the applicable accountingstandards have been followed;

ii) such accounting policies have been selected and appliedconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at March 312019 andthe profits of the Company for the financial year ended on that date;

iii) proper and sufficient care had been taken for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;

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

v) internal financial controls have been laid down and the same areadequate and were operating effectively; and

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

ACKNOWLEDGEMENTS

The Board of Directors places on record their gratitude for thevaluable guidance and continued support extended by the Securities and Exchange Board ofIndia the Reserve Bank of India Stock Exchanges Insurance Regulatory and DevelopmentAuthority of India Ministry of Corporate Affairs other Government Authorities Banks andother Stakeholders. Your Directors would also like to take this opportunity to expresstheir appreciation for the dedicated efforts of the employees of the Company.

For and on behalf of the Board of Directors
Edelweiss Financial Services Limited
Rashesh Shah
Chairman Managing Director & CEO
DIN: 00008322
May 14 2019