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IIFL Finance Ltd.

BSE: 532636 Sector: Financials
NSE: IIFL ISIN Code: INE530B01024
BSE 00:00 | 19 Oct 78.60 3.10
(4.11%)
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77.15

HIGH

83.15

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76.20

NSE 00:00 | 19 Oct 78.50 2.95
(3.90%)
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77.00

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83.80

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OPEN 77.15
PREVIOUS CLOSE 75.50
VOLUME 73538
52-Week high 212.80
52-Week low 58.15
P/E 70.18
Mkt Cap.(Rs cr) 2,974
Buy Price 78.60
Buy Qty 949.00
Sell Price 79.05
Sell Qty 1543.00
OPEN 77.15
CLOSE 75.50
VOLUME 73538
52-Week high 212.80
52-Week low 58.15
P/E 70.18
Mkt Cap.(Rs cr) 2,974
Buy Price 78.60
Buy Qty 949.00
Sell Price 79.05
Sell Qty 1543.00

IIFL Finance Ltd. (IIFL) - Director Report

Company director report

Dear Shareholders

Your Directors present the Twenty Fifth Annual Report of IIFL Finance Limited (Formerly known as IIFL Holdings Limited) (your Company/the Company) together with the Audited Financial Statements for the financial year ended March 312020. The Company's Financial Statements reflect the effecting of the Composite Scheme of Arrangement as approved by the Hon'ble National Company Law Tribunal vide its order dated March 072019 .The Company is now registered with the Reserve Bank of India (RBI) as a Systemically Important Non-Banking Financial Company (NBFC) not accepting public deposits (NBFCND-SI).

1. FINANCIAL RESULTS

A summary of the financial performance of your Company and its major subsidiaries for the financial year ended March 312020 is as under:

(Rs in Million)
Name of the CompanyRevenueProfit after Tax
IIFL Finance Limited (Formerly known as IIFL Holdings Limited)26298.801488.03
IIFL Home Finance Limited (Formerly known as India Infoline Housing Finance Limited)17150.372449.22
Samasta Microfinance Limited5821.081073.04

Consolidated Financial Results

A summary of the consolidated financial performance of your Company for the financial year ended March 312020 is as under:

(Rs in Million)
Particulars2019-202018-19
Gross total income48207.2950848.78
Profit before Finance Cost depreciation share of loss of Joint Venture exceptional items and taxation32276.4936422.03
Finance Cost23968.1625850.43
Depreciation1056.49318.49
Profit before share of loss of Joint Venture exceptional items and tax7251.8410253.11
Profit before exceptional items and tax7251.8410253.11
Exceptional items-1046.12
Profit before tax7251.841 1299.23
Taxation - Current tax1778.982891.55
- Deferred tax481.32447.61
- Short or excess provision for income tax(43.19)2.97
Net profit for the year5034.737957.10
Other Comprehensive Income(66.60)(100.27)
Total Comprehensive Income before Non-Controlling interest4968.137856.83
Attributable to:
Owners of the Company4951.777846.04
Non-controlling interests16.3610.79
Less: Appropriations
Dividend(817.05)(1725.75)
Dividend Distribution Tax(167.95)(191.66)
Transfer to/ from Other Reserves(1476.92)(1968.92)
Other Adjustments2.27-
On account of Merger(25.83)(10.34)
On account of demerger-1.59
Add: Balance brought forward from the previous year8405.734454.77
Balance to be carried forward10872.018405.73

?Previous periods figures have been regrouped/rearranged wherever necessary.

Standalone Financial Results:

A summary of the standalone financial performance of your Company for the financial year ended March 312020 is as under:

(Rs in Million)
Particulars2019-202018-19
Gross total income26298.8029625.92
Profit before Finance Cost depreciation share of loss of Joint Venture exceptional items and taxation15659.3318969.77
Finance Cost12444.9513651.84
Depreciation894.09241.05
Profit before share of loss of Joint Venture exceptional items and tax2320.305076.90
Profit before exceptional items and tax2320.305076.90
Exceptional items46.061153.30
Profit before tax2366.356230.19
Taxation
- Current tax419.331258.27
- Deferred tax479.68450.30
- Short or excess provision for income tax(20.69)11.37
Net profit for the year1488.034510.25
Other Comprehensive Income(24.86)11.43
Total Comprehensive Income1463.174521.68
Fess: Appropriations
Dividend(817.05)(1725.75)
Dividend Distribution Tax(79.34)(183.04)
Transfer to/ from Other Reserves(686.05)(769.00)
Other Adjustments--
On account of Merger25.82(10.34)
On account of demerger-1.59
Add: Balance brought forward from the previous year3338.831762.63
Balance to be carried forward3193.733338.83

Previous periods figures have been regrouped/rearranged wherever necessary.

Transfer to Reserve

The Company during the year under review has transferred below mentioned amount to General Reserve out of the Retained Earnings. During the year the Company has transferred below mentioned amount to Debenture Redemption Reserve (DRR) in accordance with the provisions of the Companies Act 2013 read with rules made thereunder. Further in accordance with Section 45 1C of the Reserve Bank of India Act 1934 the Company has also transferred below mentioned amount to Special Reserve.

(Rs in Million)
ParticularsConsolidatedStandalone
2019-202019-20
DRR during the year(385.71)31.04
Special Reserve during the year1325.22617.61
General Reserve during the year537.7437.74

2. COMPOSITE SCHEME OF ARRANGEMENT

As informed earlier the Board of Directors of the Company at its meeting held on January 31 2018 had approved the Composite Scheme of Arrangement amongst the Company India Infoline Finance Limited (India Infoline) India Infoline Media and Research Services Limited (IIFL M&R) IIFL Securities Limited (IIFL Securities) IIFL Wealth Management Limited (IIFL Wealth) IIFL Distribution Services Limited (IIFL Distribution) and their respective shareholders under Sections 230 - 232 and other applicable provisions of the Companies Act 2013 (Scheme). The Scheme was filed with the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) and the Company received an observation letter from NSE on September 112018 and September 272018; and from BSE on September 14 2018 and September 28 2018. The proposed Scheme was then filed with the Hon'ble National Company Law Tribunal Mumbai Bench (NCLT) on October 01 2018 pursuant to which the Hon'ble NCLT directed the Company to hold a meeting of its equity shareholders on December 12 2018. The equity shareholders of the Company at the NCLT convened meeting on December 12 2018 approved the Composite Scheme of Arrangement with requisite majority. The Hon'ble NCLT vide its order passed on March 07 2019 sanctioned the Composite Scheme of Arrangement and the Company received the order on March 15 2019.

Further the Board of Directors of the Company at its meeting held on May 13 2019 approved the implementation of the Scheme except for merger of India Infoline Finance Limited with the Company. Accordingly following parts of the Scheme were implemented:

1. Amalgamation of IIFL M&R with the Company;

2. Demerger of the Securities Business Undertaking of the Company into IIFL Securities;

3. Demerger of the Wealth Business Undertaking of the Company into IIFL Wealth;

4. Transfer of the Broking and Depository Participant Business Undertaking of IIFL Wealth to its wholly owned subsidiary i.e. IIFL Distribution on a going-concern basis.

The Securities Business Undertaking Wealth Business Undertaking and Broking and Depository Participant Business Undertaking are defined in the Scheme and the Scheme can be accessed on the website of the Company i.e. www.iifl.com.

The Appointed Date for the amalgamation of IIFL M&R with the Company was opening hours of April 012017 and for all the other steps the Appointed Date was opening hours of April 012018.

Pursuant to the Scheme the name of the Company was changed from IIFL Holdings Limited to IIFL Finance Limited upon receipt of fresh Certificate of Incorporation dated May 24 2019 issued by the Registrar of Companies Mumbai and the Main Object of the Company was amended to carry on the lending business activity as that of India Infoline.

Upon the Scheme coming into effect 18718281 & 45000000 equity shares of face value Rs 10/- each

6 Rs 2/- each respectively held by the Company in IIFL Securities and IIFL Wealth respectively were extinguished and cancelled.

As consideration to the shareholders of the Company for the demerger of the Securities Business Undertaking and Wealth Business Undertaking IIFL Securities issued and allotted 1 (One) fully paid up new equity share of Rs 2 each of IIFL Securities for every 1 (One) equity share of Rs 2 each of the Company; and IIFL Wealth issued and allotted 1 (One) fully paid up new equity share of Rs 2 each of IIFL Wealth for every

7 (Seven) equity shares of Rs 2 each of the Company on June 06 2019 to the Shareholders of the Company holding equity shares on May 312019 fixed as Record Date for the said purpose. Accordingly 319234462 equity shares of Rs 2/- each of IIFL Securities and 45604924 equity shares of Rs 2/- each of IIFL Wealth were issued and allotted in aggregate to the Shareholders of the Company.

IIFL Securities and IIFL Wealth had filed their respective Listing Application with Stock Exchange(s) and the In principle approval for listing of equity shares of IIFL Securities and IIFL Wealth was received on August 13 2019 (NSE) and August 21 2019 (BSE) & August 19 2019 (NSE) and August 21 2019 (BSE) respectively. Accordingly the shares of IIFL Wealth and IIFL Securities were listed on Stock Exchange(s) on September 19 2019 and September 20 2019 respectively.

The remainder of the Scheme i.e. the amalgamation of India Infoline with the Company was pending its implementation for the receipt of requisite approval from the RBI for an NBFC license by the Company.

The Company received the said NBFC License dated March 06 2020 bearing Certificate of Registration No. N-13.02386 from the RBI to carry on the Non-Banking Financial Activity on March 11 2020. Thereafter the Company decided to give effect to the merger of India Infoline and the Company with effect from March 30 2020 with appointed date as April 012018.

Consequently the residual shareholders of India Infoline were allotted 58654556 shares of the Company on March 30 2020 in the ratio 135 fully paid up equity shares of '2 each in the Company for every 100 shares of Rs 10 each held in India Infoline. The said new shares got listed and admitted for trading w.e.f. April 27 2020 in terms of final listing and trading approval received from NSE and BSE.

3. REVIEW OF BUSINESS AND OPERATIONS AND STATE OF AFFAIRS OF YOUR COMPANY

During the year under review your Company's total income on a consolidated basis amounted to Rs 48207 million. Profit before tax and exceptional items and Covid provision stood at Rs 10072 million. Profit after tax stood at' 4968 million and profit after tax excluding the impact of exceptional items of Covid provision and deferred tax asset reversals stood at Rs 7561 million.

Our Loan assets under management (AUM) grew 9% y-o-y and 5% q-o-q to Rs 379511 million. The core segments of our portfolio namely affordable Home loans Gold loans small Business loans and Microfinance loans grew faster at 12% y-o-y to Rs 327733 million. The primary drivers of the AUM growth were Gold loans which grew by 47% y-o-y and Microfinance loans which grew by 49% y-o-y. The synergistic products of Construction & Real-Estate finance and Capital Market loans continue to have a declining share in the portfolio.

The AUM of IIFL Home Finance Limited stood at Rs 184947 million as of March 31 2020 and that of Samasta Microfinance Limited stood at Rs 33998 million as on March 312020.

Our book continues to get more granular with about 88% of the book as at March 31 2020 being retail in nature. Moreover 43% of the loans are compliant with RBI's priority sector lending norms. The large share of retail and PSL compliant loans are of significant value in the prevailing environment as they can be easily Securitised/ Assigned with banks to raise long-term resources.

Our average cost of borrowings for the year rose by 43 bps y-o-y to 9.3% and Net Interest Margin (NIM) on Balance Sheet loans remained stable at 6.4% in FY20. Consolidated GNPAs and NNPAs recognised as per RBI's prudential norms and provisioned as per Expected Credit Loss (ECL) method prescribed in Ind AS stood at 2.31% and 0.97% of loans respectively as against 1.96% and 0.63% respectively in FY19. Provision coverage (incl. standard assets provision) under Ind AS norms on stage 3 assets for the year was 128% and the coverage excluding the additional provision of Rs 2820 million made for Covid impact stood at 88%.

Our Return on Assets and Return on Equity remained stable at 2.2% and 16.9% respectively excluding impact of one-off items.

Despite the challenging environment for the industry we have managed our liquidity well with adequate margin of safety. We raised long-term loans of Rs 94020 million in FY20. Our exposure to commercial paper continued to be nil. In February 2020 we raised USD 400 million in through our maiden issue overseas as part of our USD 1 billion Medium Term Notes (MTN) Programme listed on the Singapore Stock Exchange; Overseas Investors' positive response to our maiden issue is a great validation of the Company's credibility. We completed securitisation/assignment transactions of Rs 23077 million in Q4FY20 Rs 23815 million in Q3FY20 Rs 37208 million in Q2FY20 and Rs 45947 million in Q1FY20. We sold down both PSL and NPSL loans in five product categories including Home Loans Loans against property SME Gold and Micro-finance to government private and foreign banks during the year. Our funding mix remained well diversified with NCDs including sub-ordinate debt and MTN constituting 28% Bank term loans working capital finance and NHB re-finance constituting 40% and securitisation/ assignment constituting 32%. We had a positive ALM throughout the year whereby inflows covered or exceeded expected outflows across all buckets.

Outlook

The Covid-19 pandemic has disrupted global economy and created unprecedented challenges. Economic activity in India was down to a standstill owing to the nation-wide lockdown in India from March 25 2020. The NBFC industry was severely impacted with disruption in collections moratoriumto customers challenges in raising funds and Banks not granting moratorium adversely affecting our business performance in the last quarter of the financial year.

During the lockdown IIFL migrated to a 100% work from home scenario and all business operations continued to run smoothly. However both disbursements and physical collections were adversely impacted due to branches being closed during the lockdown period. Taking cognisance of the scenario the Company made an additional provision of Rs 2820 million for any potential Covid related impact on asset quality.

The Government and RBI have introduced several liquidity and stimulus measures to support the NBFC industry however those are yet to show tangible results as at the time of writing this report.

We expect as the lockdown starts to lift and as stimulus measures start reaching end-customers economic recovery will commence. The NBFC industry remains an important functionary in the economic ecosystem to fulfil credit requirement of credit starved and new to credit customers by bringing them into formal financial services ecosystem.

4. IMPACT OF COVID -19 PANDEMIC

The detailed disclosure on the material impact of Covid-19 pandemic on the Company is forming part of the Financial Statements of the Company. You may refer to Note no. 8 of the Standalone Financial Statements for the same.

5. MACROECONOMIC OVERVIEW

Indian economic growth was constrained in FY20 as compared to the previous fiscal mainly due to the pre-existing slowdown in the economy followed by the nationwide lockdown on account of Covid-19 pandemic. Even before the pandemic outbreak Indian economic growth was slow due to subdued consumption and investment activity. The main driving aspect for growth had been government spending. Despite these factors India continued to be one of the fastest growing major economies around the world. Indian economy grew by 4.2% in FY20 (Source: MoSPI).

The global economy was any ways weakening even before the pandemic spread across the world mainly due to deteriorating trade on account of the US-China trade war and the rising geo-political tensions in the Middle-East. Most advanced economies are now expected to report contraction of GDP over the next few quarters. The weakness in global growth rules out the possibility of pick up in Indian exports and the government will have to rely on internal consumption and investment to drive growth. That said weak global growth should keep commodity prices in check which in turn will keep domestic inflation and current account deficit under control in FY21. The shape of the postpandemic recovery curve in India depends upon the length of time for which economic activity is subdued and damage caused by it.

6. DIVIDEND ON EQUITY SHARES

During the year 2019-20 the Board of Directors of the Company declared and paid an interim dividend of Rs 2.25/-per equity share (i.e. 1.13 times of face value of Rs 2/- per equity share). This led to an outgo of Rs 719.29 million owing to dividend (excluding dividend distribution tax). Your Directors recommend that the said interim dividend be considered as final. The dividend paid during the previous financial year 201819 was Rs 5/- per equity share.

The dividend payout for the year under review is in accordance with the Company's policy to pay sustainable dividend linked to long-term growth objectives of the Company to be met by internal cash accruals.

Pursuant to Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Board of Directors of the Company has adopted a Dividend Distribution Policy which is annexed as Annexure VI to this report and is available on the website of the Company i.e. www.iifl.com.

7. KEY INITIATIVES/DEVELOPMENTS

i. Public Issue of Debentures

During the year under review India Infoline Finance Limited (now merged with the Company) raised through Public Issue of Secured and Unsecured Redeemable Non-Convertible Debentures (NCDs) an amount aggregating to Rs 2442.17 million. These NCDs are listed and traded on the NSE and BSE.

Pursuant to the Composite Scheme of Arrangement approved by Hon'ble NCLT vide its order dated March 07 2019 India Infoline Finance Limited got merged with the Company w.e.f. March 30 2020. Accordingly all NCDs (Public) issued by India Infoline Finance Limited were transferred in the name of the Company.

ii. Issuance of Non-Convertible Debentures on Private Placement basis

During the year under review India Infoline Finance Limited (now merged with the Company) raised through Private Placement of Secured and Unsecured Redeemable Non-Convertible Debentures (NCDs) an amount aggregating to Rs 9910.20 million. These NCDs are listed on the NSE.

Pursuant to the Composite Scheme of Arrangement approved by Hon'ble NCLT vide its order dated March 07 2019 India Infoline Finance Limited got merged with the Company w.e.f. March 30 2020. Accordingly all NCDs (Private) issued by India Infoline Finance Limited were transferred in the name of the Company.

iii. Medium Term Notes Issuance

During the year under review India Infoline Finance Limited (now merged with the Company) raised through issue of Medium Term Notes of the face value of USD 1000 each aggregating to USD 400.00 million as part of our USD 1 billion Medium Term Notes (MTN) Programme on February 20 2020. These MTNs are listed and traded on Singapore Stock Exchange.

iv. Term Loan from Export Development Canada

During the year under review India Infoline Finance Limited (now merged with the Company) raised USD 100.00 million through term loan from Export Development Canada on July 30 2019.

v. NHB Refinance

During the year under review National Housing Bank (NHB) sanctioned Rs 9500.00 million refinance facility to IIFL Home Finance Limited a Wholly Owned Subsidiary of the Company. IIFL Home Finance Limited availed Rs 7000.00 million of refinance facility from NHB under its various refinance schemes during the year ended March 312020.

vi. Funds raised by way of other Borrowings

During the year under review India Infoline Finance Limited (now merged with the Company) raised Rs 8750.00 million through term loan from various banks.

vii. Sale of Mortgage Loan Business

During the year under review India Infoline Finance Limited (now merged with the Company) sold its mortgage loan business undertaking with its respective assets and liabilities as a going concern on a 'slump sale basis' to IIFL Home Finance Limited a Wholly Owned Subsidiary of India Infoline Finance Limited for a lump sum purchase consideration of Rs 6050.00 million.

viii. Sale of Micro Finance Portfolio

During the year under review India Infoline Finance Limited (now merged with the Company) sold its microfinance portfolio with its respective assets and liabilities as a going concern on a 'slump sale basis' to Samasta Microfinance Limited a Subsidiary of India Infoline Finance Limited for a lump sum purchase consideration of around Rs 1723.50 million.

ix. Corporate Social Responsibility (CSR) Initiative

The Corporate Social Responsibility (CSR) Committee of the Board has formulated and recommended to the Board a CSR Policy indicating the CSR activities which can be undertaken by the Company. The Board approved the CSR Policy which is available on the website of the Company i.e. www.iifl.com.

IIFL group has set-up India Infoline Foundation (generally referred to as IIFL Foundation) a Section 8 Company under the Companies Act 2013 which acts as the principal arm to undertake CSR initiatives on behalf of the Company & its subsidiaries.

The Company has identified focus areas for CSR initiatives which includes:-

 Girl Child Illiteracy Eradication Programme.

 Improving the quality of education in Government schools through technological interventions.

 Support to the differently abled.

 Financial Literacy and Financial Inclusion.

 Health Initiative and facilities.

 River rejuvenation and rural transformation in Maharashtra.

 Natural disaster reliefand rehabilitation.

 Fighting against Covid-19 by contributing to the PM-Cares Fund providing Personal Protective Equipment (PPEs) and actively connecting with livelihood and nutrition support programmes.

During the year under review your Company deployed 2% of its average net profits (computed as per the relevant provisions of the Companies Act 2013) of the preceding years on CSR projects fully utilising the required amount.

x. Awards and Recognitions

During the year under review following awards and accolades were conferred by reputable organisations details of the same is as follows:-

 IIFL Finance received Golden Peacock Award for Risk Management from the Institute of Directors at Singapore Global Convention on Board Leadership & Risk Management.

 IIFL Finance is recognised as one of The Economic Times most Promising Brands in the BFSI segment.

 The Economic Times recognised the Chairman as one of the 'Most Promising Business Leaders of Asia' for demonstrating exemplary leadership qualities.

 IIFL Finance received the 'Most Admired Service Provider in Financial Sector' at the ET Now World BFSI Awards.

 Insights Success magazine ranks IIFL Finance as India's most trusted NBFC in a select list of top 10 NBFCs to watch in 2019.

 IIFL Finance wins the Best Fintech NBFC of the Year Award at the India NBFC Excellence Awards 2019.

 IIFL Finance Limited featured in 'India's Best Workplaces in BFSI 2020' - Top 25.

 India Infoline Foundation won 'Best Innovative CSR Project Award' for Financial Literacy Centre project in East India promoting financial awareness and inclusion in rural areas.

 India Infoline Foundation received Best CSR Impact Award for Wadhona Nullah recharge which impacted lives of about 10000 people across 10 villages in Arvi block of Wardha district.

 India Infoline Foundation's flagship girl child education initiative 'Sakhiyon Ki Badi' received ET Now World CSR Award for 'Support and improvement in quality of education'.

 India Infoline Foundation also received the award for 'Best Corporate Social Responsibility Practices'.

 Ms. Madhu Jain Director India Infoline Foundation is recognised as one of the 'Women CSR leaders' at the prestigious World CSR Congress & Awards.

 IIFL Finance received Tata Institute of Social Sciences and LeapVault Award for 'Best on the Job Training Program' at Chief Learning Officers Summit in Mumbai.

 IIFL Finance received 'Best ATL Campaign' Award at mCube Awards for 'IIFL Bonds Campaign'.

 IIFL Finance received the Award for managing 'Best Communications Strategy of the Year' at Corporate Communication and PR Summit.

 IIFL Home Finance Limited received the Award for Best Company of the Year - Affordable Housing by DNA.

 IIFL Home Finance Limited received the Award for Best Green & Sustainable Initiative in Affordable Housing by ZEE Business.

 IIFL Home Finance Limited received the Award for Technology Initiative of the Year; Jhatpat Home Loans by ABP News.

 IIFL Home Finance Limited received the Award for Social Media Marketing by ET Now.

 IIFL Home Finance Limited received the Award for Best Affordable Housing Finance Company of the Year ET Now.

 IIFL Home Finance Limited received the Award for Best Housing Finance Company of the Year by ET NOW.

 IIFL Home Finance Limited received the Award for Developing Sustainable Strategies by ET Now.

8. SHARE CAPITAL

During the year under review the total paid up equity share capital of the Company increased from Rs 638406184/- to Rs 756681844/- pursuant to allotment of 483274 equity shares of Rs 2/- each under Employee Stock Option Scheme(s) of the Company to the eligible employees and allotment of 58654556 equity shares of Rs 2/- each to the residual shareholders of India Infoline Finance Limited pursuant to the merger as explained in para 2 of the Directors Report.

9. SECURITIZATION OF LOAN PORTFOLIO

During the year under review your Company as an originator has undertaken securitisation transactions of total book value of loan assets amounting to Rs 27218.83 million and Direct Assignment transactions of total book value of loan assets amounting to Rs 69085.06 million.

10. EMPLOYEES STOCK OPTION SCHEMES (ESOS)

The Company has in force the following Schemes which are prepared as per the provisions of SEBI (Share Based Employee Benefits) Regulations 2014 (SBEB Regulations):

1. IIFL Finance Employees Stock Option Plan 2007 (ESOS 2007)

2. IIFL Finance Employee Stock Option Plan 2008 (ESOS 2008)

3. IIFL Finance Employee Stock Option Plan 2020 - Merger Scheme (ESOS 2020 Merger Scheme)

Further no stock options were granted to the employees during the year under the ESOS 2007 and ESOS 2008. During the year under review 30245 stock options granted under ESOS 2008 got lapsed and the same have been added back to the pool which can be used for further grant.

Pursuant to the aforesaid merger of India Infoline Finance Limited with the Company the stock option holders of India Infoline Finance Limited were required to be granted 135 stock options by the Company for every 100 stock options held in India Infoline Finance Limited on terms and conditions similar to the ESOP Scheme of India Infoline Finance Limited. Accordingly the Board adopted new ESOP scheme named as IIFL Finance Employee Stock Option Plan 2020- Merger Scheme and 8281111 stock options were granted under the scheme to option holders of India Infoline Finance Limited. The Company has received In principal approval from Stock Exchanges i.e. NSE and BSE on June 012020 and June 03 2020 respectively. During the year under review 15433 stock options under ESOS 2020 Merger Scheme got lapsed.

Under Ind AS equity settled share based payment transactions with employees are required to be accounted for as per Ind AS 102 Share-based Payment whereby the fair value of options as on the grant date should be estimated and recognised as an expense over the vesting period. In accordance with above the Company has followed fair value method for equity options in its accounts.

There is no material change in Employees' Stock Option Scheme during the year under review and the Scheme is in line with SBEB Regulations. A certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the SBEB Regulations and the resolution passed by the Members would be placed at the ensuing Annual General Meeting (AGM) for inspection by Members through electronic means. The disclosures relating to ESOPs required to be made under the provisions of the Companies Act 2013 and the SBEB Regulations are provided on the website of the Company i.e. www.iifl.com and the same is available for inspection by the Members at the Registered Office of the Company on all working days except Saturdays Sundays and Public Holidays during business hours and through electronic means. Members can request the same by sending an email to shareholders@iifl. com till the AGM.

11. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

Particulars of investments made loans given guarantees given and securities provided along with the purpose for which the loan or guarantee or security was proposed to be utilised by the recipient are given at the respective places in the Standalone Financial Statement (please refer to Note 8 9 & 37 to the standalone financial statement).

12. SUBSIDIARY COMPANIES

The Company is having following 3 (Three) subsidiaries and does not have any Associate/Joint Venture:

Sr. No.Particulars
1IIFL Home Finance Limited (Formerly known as India Infoline Housing Finance Limited)
2Samasta Microfinance Limited
3Clara Developers Private Limited

During the year under review due to the merger of India Infoline Finance Limited with the Company w.e.f. March 30 2020 in accordance with the Composite Scheme of Arrangement as explained in para 2 above India Infoline Finance Limited ceased to be a subsidiary of the Company.

As per the provisions of Section 129 134 and 136 of the Companies Act 2013 read with applicable Rules Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and applicable Indian Accounting Standards(lnd AS) the Board of Directors had at their meeting held on May 28 2020 approved the Consolidated Financial Statements of the Company and its subsidiaries. Copies of the Balance Sheet Profit and Loss Account Report of the Board of Directors and Report of the Auditors of each of the subsidiary companies are not attached to the accounts of the Company for the financial year 2019-20. The Company will make these documents/ details available upon request by any Member of the Company. These documents/details will also be available for inspection by any Member of the Company at its registered office and at the registered offices of the concerned subsidiaries during business hours on working days and through electronic means. Members can request the same by sending an email to shareholders@iifl.com till the Annual General Meeting. The Annual Reports of all the subsidiaries are available on the website of the Company i.e. www.iifl.com. The Company's financial statements including the accounts of its subsidiaries which form part of this Annual Report are prepared in accordance with the Companies Act 2013 and IndASHO.

A report on the performance and financial position of each of the subsidiaries of the Company as per the Companies Act 2013 is provided in the prescribed Form AOC-1 as Annexure A of the Consolidated Financial Statements and hence not repeated here for the sake of brevity.

In Line with Regulation 16 and 24 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 India Infoline Finance Limited and IIFL Home Finance Limited were the Material Subsidiaries of the Company for the financial year 2019-20. Pursuant to the Merger of India Infoline Finance Limited with the Company India Infoline Finance Limited ceased to be the material subsidiary of the Company. Pursuant to aforesaid Regulations IIFL Home Finance Limited and Samasta Microfinance Limited shall be the Material Subsidiaries for the financial year 2020-21. The policy on determining the material subsidiary is available on the website of the Company i.e. www.iifl.com.

13. CAPITAL ADEQUACY

The capital adequacy ratio (Standalone) was at 17.55% as on March 312020 comprising Tier I capital ratio of 13.13% against the ratio of 15% (Tier I 10%) as prescribed by the RBI.

14. ANTI CORRUPTION MECHANISM

The Company with a high regard for honesty and institutional integrity formulated an Anti Corruption framework which consists of Anti Corruption Gift and Whistle Blower/Vigilance policy applicable to all our employees and to our subsidiaries. The Company has responsibility both to the members and to the communities to which we do business to be transparent in all our dealings.

The Company takes a zero tolerance approach to bribery and other forms of unlawful payment. The Company's Anti Corruption framework requires that we do not engage in bribery or corruption in any form and explicitly mentions that we will not pay or procure payment of a bribe or unlawful fee to encourage the performance of a task or one which is intended or likely to compromise the integrity of another. We will not accept any payment gift or inducement from a third party which is intended to compromise our own integrity.

The Vigilance Policy of the Company urges employees to report and escalate unfair transactions without any fear of retribution. The Code of Conduct also includes procedures dealing with Gifts and Entertainment conflicts of interest and other important matters. Risk Assessment framework identifying inherent corruption risks has been prepared and implemented for all business and support verticals. The same is audited by our internal auditors. E-learning training and declaration on anti corruption is mandatory for our employees to ensure understanding of anti corruption policy and ways to mitigate such risk.

15. BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report in terms of Regulation 34(2)(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 describing the initiatives taken by the Company from an environmental social and governance perspective is attached as part of the Annual Report.

16. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In accordance with Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and Non-Banking Financial Company- Systemically Important Non-Deposit taking Company and Deposit taking Company Directions 2016 as amended (RBI Master Direction) the Management Discussion and Analysis Report forms part of this report.

17. DIRECTORS AND KEY MANAGERIAL PERSONNEL

a. Directors

The Board comprises Mr. Nirmal Jain and Mr. R. Venkataraman as Executive Directors of the Company in their capacity of Chairman and Managing Director respectively Mr. Nilesh Vikamsey Mr. Arun Kumar Purwar Mr. Vijay Kumar Chopra and Ms. Geeta Mathur are Independent Directors Mr. Chandran Ratnaswami as Non-executive Director and Mr. Nagarajan Srinivasan as Non-Executive Director (Investor Director representing CDC Group Pic) of the Company. The Board composition is in compliance with the requirements of the Companies Act 2013 (the Act) SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (Listing Regulations) and the RBI Master Directions.

The Board is of the opinion that the Independent Directors of the Company have the required integrity expertise and experience (including proficiency).

Appointment/Re-appointment of Directors

In accordance with Section 152 of the Act read with Article 157 of the Articles of Association of the Company Mr. Nirmal Jain is liable to retire by rotation at the ensuing Annual General Meeting (AGM) and being eligible has offered himself for re-appointment. The Board recommends the same for the approval of Shareholders.

The shareholders at the 24th AGM held on September 30 2019 approved re-appointment of Mr. Arun Kumar Purwar and Mr. Nilesh Vikamsey Independent Directors w.e.f. April 01 2019 Ms. Geeta Mathur Independent Director w.e.f. September 18 2019 and Mr. Nirmal Jain Whole Time Director and Mr. R Venkataraman Managing Director w.e.f. April 23 2020 for another term of five consecutive years.

Mr. Vijay Kumar Chopra and Mr. Nagarajan Srinivasan were appointed as Additional Directors on May 21 2019 and subsequently the Shareholders at the 24th AGM held on September 30 2019 approved their appointment as Independent Director & Non-Executive Director w.e.f. May 212019. Post aforesaid merger of India Infoline Finance Limited with the Company the designation and capacity of Mr. Nagarajan Srinivasan was changed to Non-Executive Director (Investor Director representing CDC Group Pic) w.e.f. May 05 2020.

Further Mr. R. Venkataraman was appointed as the Managing Director of IIFL Securities Limited w.e.f. May 15 2019 and accordingly his entire remuneration is paid by IIFL Securities Limited and no remuneration is being paid to him by the Company after such appointment.

Cessation

Mr. Kranti Sinha and Mr. S. Narayan Independent Directors of the Company resigned from the Board of Directors of the Company w.e.f. May 21 2019 since pursuant to the Composite Scheme of Arrangement and merger of India Infoline Finance Limited with the Company majority Directors of India Infoline Finance Limited were getting appointed on the Board of the Company. The Board placed on record its deep appreciation and gratitude for the valuable contribution made by them.

b. Key Managerial Personnel

Mr. Nirmal Jain - Chairman Mr. R. Venkataraman - Managing Director Mr. Sumit Bali - Chief Executive Officer Mr. Rajesh Rajak - Chief Financial Officer and Mr. Gajendra Thakur - Company Secretary are the Key Managerial Personnel as per the provisions of the Act and Rules madethereunder.

Appointment:

During the year Mr. Sumit Bali and Mr. Rajesh Rajak were appointed by the Board as the Chief Executive Officer and Chief Financial Officer respectively of the Company w.e.f. March 12 2020.

Cessation:

During the year Mr. Prabodh Agrawal resigned as the Chief Financial Officer of the Company w.e.f. February 01 2020. The Board placed on record its deep appreciation and gratitude for the valuable contribution made by him.

The Remuneration and other details of the Key Managerial Personnel for the year ended March 31 2020 are mentioned in the Extract to the Annual Return in Form MGT-9 which is attached as Annexure II and forms a part of this report of the Directors.

18. MEETING OF DIRECTORS & COMMITTEE/BOARD EFFECTIVENESS

> Meetings of the Board of Directors

The Board met (8) Eight times during the year to discuss and approve various matters including financials appointment of auditor declaration of dividend review of audit reports and other board businesses. For further details please refer to the report on Corporate Governance.

> Committees of the Board

In accordance with the applicable provisions of the Companies Act 2013 (the Act) and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (Listing Regulations) and RBI Master Directions the Board inter alia constituted the following Committees:

 Audit Committee

 Nomination and Remuneration Committee

 Corporate Social Responsibility Committee

 Stakeholders Relationship Committee

 Risk Management Committee

 Asset Liability Management Committee (ALCO)

 IT Strategy Committee

Audit Committee

The Audit Committee comprises Mr. Vijay Kumar Chopra Independent Director Mr. Nilesh Vikamsey Independent Director Ms. Geeta Mathur Independent Director and Mr. Nagarajan Srinivasan Non-Executive Director.

The role terms of reference and powers of the Audit Committee are in conformity with the requirements of the Act Listing Regulations and RBI Master Directions and the same has been provided in the Corporate Governance Report.

The Committee met during the year under review and discussed on various matters including financials internal audit reports and Audit Report. During the period under review the Board of Directors of the Company accepted all the recommendations of the Audit Committee.

The details of Committee meetings held during the year under review are provided in the Corporate Governance Report.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee comprises Mr. Vijay Kumar Chopra Independent Director Mr. Nilesh Vikamsey Independent Director Mr. Arun Kumar Purwar Independent Director and Mr. Nagarajan Srinivasan Non-Executive Director as members of the Committee.

The role terms of reference and powers of the Nomination and Remuneration Committee are in conformity with the requirements of the Act Listing Regulations and RBI Master Directions and the same has been provided in the Corporate Governance Report.

The Board has on the recommendation of the Nomination & Remuneration Committee framed a Nomination and Remuneration policy in compliance with the aforesaid provisions for selection and appointment of Directors KMR senior management personnel of the Company. The Nomination and Remuneration policy is available on the website of the Company i.e. www.iifl.com.

The said policy and the details of Committee meetings held during the year under review are provided in the Corporate Governance Report.

Corporate Social Responsibility (CSR) Committee

The CSR Committee comprises Mr. Nirmal Jain Whole Time Director Mr. Nilesh Vikamsey Independent Director and Mr. R. Venkataraman Managing Director.

The Committee has approved CSR Policy of the Company and the same is available on the website of the Company i.e. www.iifl.com. The CSR Report on activities in accordance with the Companies (Corporate Social Responsibility Policy) Rules 2014 is attached as Annexure I to this report.

The roles details of Committee meeting held during the year and the terms of reference of CSR Committee are provided in the Corporate Governance Report.

Stakeholders Relationship Committee

The Stakeholders Relationship Committee comprises Mr. Arun Kumar Purwar Independent Director Mr. Nirmal Jain Whole Time Director and Mr. R Venkataraman Managing Director.

The role terms of reference and power of the Stakeholders Relationship Committee are in conformity with the requirements of the Act and Listing Regulations and the same has been provided in the Corporate Governance Report.

The details of Committee meeting held during the year under review and status of complaints are provided in the Corporate Governance Report.

Risk Management Committee

The Risk Management Committee comprises Mr. Arun Kumar Purwar Independent Director Mr. Nilesh Vikamsey Independent Director Ms. Geeta Mathur Independent Director Mr. Nagarajan Srinivasan Non Executive Director Mr. Sumit Bali Chief Executive Officer and Mr. Anujeet Kudva Chief Risk Officer.

The role terms of reference and power of the Risk Management Committee are in conformity with the requirements of Regulation 21 of Listing Regulations and RBI Master Directions and the same has been provided in the Corporate Governance Report.

The details of Committee meetings held during the year under review are provided in the Corporate Governance Report.

Asset Liability Management Committee (ALCO)

The ALCO comprises Mr. Vijay Kumar Chopra Independent Director Mr. R Venkataraman Managing Director Mr. Sumit Bali Chief Executive Officer Mr. Rajesh Rajak Chief Financial Officer Mr. Bhawani Jhanwar Financial Controller Mr. Amarnath BS Treasurer and Mr. Anujeet Kudva Chief Risk Officer.

The role terms of reference and power of the ALCO are in conformity with the requirements of the provisions of RBI Master Direction and Asset Liability Management (ALM) System for NBFCs - Guidelines and the same has been provided in the Corporate Governance Report.

IT Strategy Committee

The IT Strategy Committee comprises Mr. Nilesh Vikamsey Chairman Mr. Sumit Bali Member Mr. Shiju Rawther Member Mr. Aditya Sisodia Member Mr. Anujeet Kudva Member Mr. Raghunathan Balaji Member and Mr. Sanjay Tiwari Member.

The role terms of reference and power of the IT Strategy Committee are in conformity with the requirements of the Master Direction - Information Technology Framework for the NBFC Sector issued by the RBI and the same has been provided in the Corporate Governance Report.

Besides the aforesaid Committees the Board of Directors of the Company has constituted Committees comprising of Senior Management Persons for day to day operations of the Company viz. Finance Committee Credit Committee Environment Social and Governance Committee etc.

> Board Effectiveness

> Familiarisation Program for the Independent Directors

In compliance with the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Company has put in place a Familiarisation Programme for Independent Directors to familiarise them with the working of the Company their roles rights and responsibilities vis-a-vis the Company the industry in which the Company operates and business model etc.

On a quarterly basis presentations are made at the meeting of Board and Committees on business operations and performance updates of the Company and the group important developments in the subsidiaries relevant statutory and regulatory changes applicable to the Company update on important legal matters pertaining to the Company and its subsidiaries.

Details of the Familiarisation Programme are provided in the Corporate Governance Report and are also available on the website of the Company i.e. www.iifl.com.

 Board Evaluation

Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and SEBI Circular no. SEBI/HO/CFD/CMD/ CIR/P/2017/004 dated January 05 2017 the Board of Directors has carried out an annual performance evaluation of its own performance the Directors individually including Independent Directors based out of the criteria and framework adopted by the Board. The Board approved the evaluation results as collated by the Nomination and Remuneration Committee (NRC). The evaluation process manner and performance criteria for Independent Directors in which the evaluation has been carried out is explained in the Corporate Governance Report.

The Board considered and discussed the inputs received from the Directors. Also the Independent Directors at their meeting held on March 30 2020 reviewed the following:

(a) Performance of Non-Independent Directors various Committee of Board and the Board as a whole.

(b) Performance of the Chairperson of the Company.

(c) Assessed the quality quantity and timeliness of flow of information between the Company's management and the Board which is necessary for the Board to effectively and reasonably perform their duties.

The Independent Directors expressed their satisfaction with overall functioning and implementations of their suggestions.

The evaluation process endorsed the Board Members' confidence in the ethical standards of the Company the cohesiveness that exists amongst the Board Members the two-way candid communication between the Board and the Management and the openness of the Management in sharing strategic information to enable Board Members to discharge their responsibilities.

 Declaration by Independent Directors

The Company has received necessary declaration from each Independent Director of the Company that they meet the criteria of independence laid down in Section 149(6) of the Companies Act 2013 (the Act) and Regulation 16(l)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (Listing Regulations).

The above declarations were placed before the Board and in the opinion of the Board all the Independent Director fulfils the conditions specified under the Act and the Listing Regulations and are Independent to the Management.

There has been no change in the circumstances or situation which exist or may be reasonably anticipated that could impair or impact the ability of Independent Directors to discharge their duties with an objective of independent judgment and without any external influence.

 Fit and Proper Criteria & Code of Conduct

Your Company has received undertaking and declaration from each director on fit and proper criteria in terms of the provisions of RBI Master Directions. The Board of Directors has confirmed that all existing Directors are fit and proper to continue to hold the appointment as Directors on the Board as reviewed and recommended by the Nomination and Remuneration Committee on fit and proper criteria under RBI Master Directions.

All the Directors of the Company have affirmed compliance with the Code of Conduct of the Company. The Declaration of the same is provided in the Corporate Governance Report.

 Board Diversity

The Company recognises and embraces the importance of a diverse Board in its success. The Company believes that a truly diverse Board will leverage difference in thought perspective knowledge skills regional and industry experience cultural and geographical backgrounds age ethnicity race gender that will help us retain our competitive advantage. The policy adopted by the Board sets out its approach to diversity. The policy is available on the website of the Company i.e. www.iifl.com.

19. RISK MANAGEMENT

The Company has in place a Risk Management Committee constituted in accordance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and RBI Master Directions to assist the Board in overseeing the Risk Management activities of the Company approving measurement methodologies and suggesting appropriate risk management procedures mitigating all the risks that the organisation faces such as strategic financial credit market liquidity security property IT legal regulatory reputational and other risks which have been identified and assessed. There is an adequate risk management infrastructure in place capable of addressing those risks.

In light of Covid-19 pandemic the organisation has put in place an exhaustive framework to manage any event specific risk. This framework included:

i. A quick response team comprising of senior management personnel to address any people risk be it on health front or psychological support;

ii. Customer support team to seamlessly address any customer grievances / complaints;

iii. Information technology steering committee to address technology related challenges and support;

iv. Senior management team who undertook an ongoing evaluation of asset quality and liquidity in lieu of the fast changing external environment. On an ongoing basis updates were sent to Board to apprise them on the ground situation and provide an outlook.

The Company's management monitors and reports principal risks and uncertainties that can affect its ability to achieve its strategic objectives. The Company's management systems organisational structures policy processes standards and code of conduct together form the risk management governance system of the Company.

The Company has in place a Risk Management Policy and introduced several measures to strengthen the internal controls systems and processes to drive a common integrated view of risks optimal and mitigation responses. This integration is enabled through a dedicated team and Risk Management Internal Control and Internal Audit systems and processes.

20. INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal controls with reference to financial statements and operations and the same are operating effectively. The Internal Auditors tested the design and effectiveness of the key controls and no material weaknesses were observed in their examination. Further Statutory Auditors verified the systems and processes and confirmed that the Internal Financial Controls system over financial reporting are adequate and such controls are operating effectively.

21. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

The Company has put in place a policy for Related Party Transactions (RPT Policy) which has been approved by the Board of Directors. The policy provides for identification of Related Party Transactions (RPTs) necessary approvals by the Audit Committee/Board/ Shareholders reporting and disclosure requirements in compliance with the Companies Act 2013 and provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

All contracts executed by the Company during the financial year with related parties were on arm's length basis and in the ordinary course of business. All such RPTs were placed before the Audit Committee/ Board for approval wherever applicable. The Audit Committee reviews all RPTs quarterly.

The Company has obtained the shareholders approval on Material Related Party Transaction in the previous Annual General Meeting.

During the year the Company has not entered into any contract/arrangement/ transaction with related parties which could be considered material in accordance with Regulation 23 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and the policy of the Company on materiality of RPTs . The policy for determining 'material' subsidiaries and the policy on materiality of RPTs and dealing with RPTs as approved by the Board may be accessed on the website of the Company i.e. www.iifl.com. You may refer to Note no. 40 of the Standalone Financial Statement which contains related party disclosures. Since all RPTs entered into by the Company were on an arm's length basis and in the ordinary course of business and the Company had not entered into any material related party contracts Form AOC-2 disclosure is not required to be provided.

In terms of Composite Scheme of Arrangement (Scheme) approved by the Hon'ble National Company Law Tribunal vide its Order dated March 07 2019 India Infoline Finance Limited a Non-Banking Finance Company registered with Reserve Bank of India (RBI) and a subsidiary Company got merged with the Company w.e.f. March 30 2020. Also during the year the Company received registration to act as a Non- Banking Financial Company from RBI vide registration number N-13.02386 dated March 062020. Accordingly the lending book of the Company now consists of diversified products customer segments geographies and varying tenors (Short Term and Long Term).

Considering the nature of business and operations the Company will be/continue entering into various Related Party Transactions in the ordinary course of business and accordingly the Company has sought approval from shareholders for Material Related Party Transactions and details of same can be sought from the Notice Convening the Annual General Meeting of the Company.

22. ANNUAL RETURN

The details forming part of the extract of the Annual Return of the Company in form MGT - 9 is annexed herewith as Annexure - II. Further the Annual Return is also available on the website of the Company i.e. www.iifl.com.

23. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments affecting the financial position of the Company which had occurred between the end of the financial year of the Company to which the financial statements relate and the date of this annual report.

24. ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The additional information on energy conservation technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 is appended as Annexure - IV and forms part of this Report.

25. WHISTLE BLOWER POLICY/ VIGIL MECHANISM

In Compliance of the Companies Act 2013 and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Company has adopted a Whistle Blower Policy/Vigil Mechanism and has established the necessary vigil mechanism for Directors Employees and Stakeholders of the Company to report genuine concerns about unethical behaviour actual or suspected fraud or violation of the Company's code of conduct or ethics policy. The Company has disclosed the policy on the website of the Company i.e. www.iifl.com.

26. CREDIT RATING

The Company's financial discipline and prudence is reflected in the strong credit ratings ascribed by rating agencies. The following Credit ratings were assigned to India Infoline Finance Limited which got merged with the IIFL Finance Limited (the Company) with effect from March 30 2020:

Credit Rating AgencyInstrument / ProgrammeRating as on March 312020Rating as on March 31 2019
NCDsCARE AA StableCARE AA Stable
CARELong Term Bank FacilitiesCARE AA StableCARE AA Stable
Preference SharesCARE AA(RPS) StableCARE AA(RPS) Stable
Subordinated DebtCARE AA StableCARE AA Stable
Non-convertible Debenture Programme[ICRA]AA (negative)[ICRA]AA (stable)
Subordinated Debt Programme[ICRA]AA (negative)[ICRA]AA (stable)
Long-term Bank Lines[ICRA]AA (negative)[ICRA]AA (stable)
Long-term Debt Programme[ICRA]AA (negative)[ICRA]AA (stable)
Secured NCD Programme[ICRA]AA (negative)[ICRA]AA (stable)
ICRAUnsecured NCD Programme[ICRA]AA (negative)[ICRA]AA (stable)
Long-term Principal Protected Equity Linked Debenture ProgrammePP-MLD[ICRA]AA (negative)PP-MLD[ICRA]AA (stable)
Long-term Principal Protected Market Linked Debenture ProgrammePP-MLD[ICRA]AA (negative)PP-MLD[ICRA]AA (stable)
Commercial Paper Programme[ICRA]A1 +[ICRA]A1 +
Commercial Paper Programme (IPO Financing)[ICRA]A1 +[ICRA]A1 +
Total Bank Loan Facilities RatedCRISIL AA/StableCRISIL AA/Stable
Long Term Principal Protected Market Linked DebenturesCRISIL PP-MLD AAr/ StableCRISIL PP-MLD AAr/ Stable
CRISILSubordinated DebtCRISIL AA/StableCRISIL AA/Stable
Non-Convertible DebenturesCRISIL AA/StableCRISIL AA/Stable
Commercial Paper Programme (IPO Financing)CRISILA1 +CRISILA1 +
Commercial PaperCRISILA1 +CRISILA1 +
NCDs (Public Issue)BWR AA+ 'Negative'BWR AA+ 'Stable'
BrickworkSecured NCDsBWR AA+ 'Negative'BWR AA+ 'Stable'
Unsecured Subordinated NCDsBWR AA+ 'Negative'BWR AA+ 'Stable'
Moody'sLong-term foreign- and local-currency senior secured ratings to USD! billion Medium Term Note (MTN) program.Ba3 / StableNA
Corporate Family Rating (CFR)Ba3 / StableNA
Fitch*Senior secured notes issued under USD! billion Medium Term Note (MTN) ProgrammeB+ / Negative WatchNA
Long-Term Issuer Default Rating (IDR)B+ / Negative WatchNA

*During the year Fitch Ratings had assigned rating of BB- with Stable outlook on January 28 2020 for the MTN programme and Issuance of MTN under the programme. Fitch Ratings had thereafter revised the rating to B+ with Negative Watch on March 27 2020.

The following Credit ratings were assigned to the Company post merger of India Infoline Finance Limited with the

Company:

Credit Rating AgencyInstrumentsRatings
CRISILLong Term Bank LinesCRISIL AA/Stable
Long Term Principal Protected Market Linked DebenturesCRISIL PP-MLD Aar/Stable
Subordinated DebtCRISIL AA/Stable
Non-Convertible DebenturesCRISIL AA/Stable
Commercial Paper Programme (IPO Financing)CRISILA1 +
'ICRALong-term Bank Lines[ICRA]AA (negative)
Secured NCD Programme[ICRA]AA (negative)
Subordinated Debt Programme[ICRA]AA (negative)
Unsecured NCD Programme[ICRA]AA (negative)
Long-term Principal Protected Equity Linked Debenture ProgrammePP-MLD[ICRA]AA (negative)
Long-term Principal Protected Market Linked Debenture ProgrammePP-MLD[ICRA]AA (negative)
Commercial Paper Programme[ICRA]A1 +
Commercial Paper Programme (IPO Financing)[ICRA]A1 +
BrickworkNCDs Public IssueBWR AA+ 'Negative'
Secured NCDsBWR AA+ 'Negative'
Unsecured Subordinated NCDsBWR AA+ 'Negative'
CARE*Long Term Bank LinesCARE AA Negative
Non-convertible DebentureCARE AA Negative
Subordinated DebtCARE AA Negative
FitchLong-Term Issuer Default Rating (IDR)B+ / Negative Watch
Senior secured notes issued under USD! billion Medium Term Note (MTN) ProgrammeB+ / Negative Watch
Moody's ACorporate family rating (CFR)B1 /Review for downgrade
Long-term foreign- and local-currency senior secured ratings to USD! billion Medium Term Note (MTN) program.B1 / Review for downgrade

* CARE Ratings has reaffirmed the rating i.e CARE AA however the outlook has been revised to Negative from Stable.

A Moody's rating had revised the rating to B! from Ba3; ratings remain under review for downgrade on May 29 2020.

Further CRISIL has assigned rating CRISIL A1+ to the Commercial paper of IIFL Finance Limited (Formerly known as IIFL Holdings Limited) and there has been no change in the said rating from the previous year.

27. PREVENTION OF SEXUAL HARASSMENT

Your Company recognises its responsibility and continues to provide a safe working environment for women free from sexual harassment and discrimination. In Compliance with the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 the Company has put in place a Policy on prevention of Sexual Harassment of Women at workplace and has duly constituted an Internal Complaints Committee under the same.

The details of complaints received pursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 are provided in the Corporate Governance Report.

28. PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act 2013 (the Act) read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are provided in Annexure - V to this report.

Further a statement showing the names and other particulars of employees drawing remuneration in excess of the limits as set out in the Rules 5(2) and 5(3) of the aforesaid Rules forms part of this report. However in terms of first proviso to Section 136(1) of the Act the Annual Report and Accounts are being sent to the Members and others entitled thereto excluding the aforesaid information. The said information is available for inspection by the Members at the Registered Office of the Company during business hours on working days and through electronic means up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof such Member may write to the Company Secretary at shareholders@iifl.com whereupon a copy would be sent.

29. STATUTORY AUDITORS

M/s Deloitte Haskins & Sells LLR Chartered Accountants (Firm Registration Number 117366W/W- 100018) (Deloitte) were appointed as the Statutory Auditors of the Company by the Members at the 22nd Annual General Meeting (AGM) held on July 22 2017 for a term of five years i.e. from the conclusion of the 22nd AGM till the conclusion of the 27th AGM. However Deloitte vide its letter dated June 07 2020 resigned as the Statutory Auditors of the Company since the audit fees is not commensurate to the efforts that they would be incurring to conduct an audit for the Financial Year 2020-21 in accordance with the Standards on Auditing specified under Section 143(10) of the Companies Act 2013.

Based on the recommendations of the Audit Committee the Board of Directors of the Company at its meeting held on June 07 2020 noted and accepted the resignation of Deloitte. The Board also placed on record its appreciation to Deloitte for their contribution to the Company with their audit processes and standards of auditing.

In this regard after obtaining their consent and eligibility certificate under Section 139(1) of the Companies Act 2013 the Board of Directors of the Company at their meeting held on June 072020 appointed M/s VSankar Aiyar & Co Chartered Accountants (Firm Registration Number: 109208W) as the Statutory Auditors of the Company under Section 139(8)(i) of the Companies Act 2013 to fill the casual vacancy consequent to the resignation of Deloitte.

M/s V Sankar Aiyar & Co Chartered Accountants is a well-known firm of Chartered Accountants having 10 partners with offices in Mumbai New Delhi and Chennai. The firm also holds a Peer Review Certificate No. 11660 dated April 15 2019 issued by the Peer Review Board of the Institute of Chartered Accountants of India valid till April 14 2022.

As required by Section 139(8)(i) of the Companies Act 2013 the appointment is also to be ratified and approved at a general meeting of the Company. Accordingly the Board of Directors recommends the said appointment for the ratification and approval of shareholders at the ensuing AGM of the Company.

Further the Board on the recommendation of the Audit Committee and subject to the approval of the shareholders approved appointment of M/s V Sankar Aiyar & Co (Firm Registration Number: 109208W) as the Statutory Auditors of the Company for a period of 5 (five) years from the conclusion of the ensuing 25th AGM till the conclusion of the 30th AGM to be held in the year 2025 at such remuneration plus out of pocket expenses and applicable taxes as may be mutually agreed between the Board of Directors of the Company and the Auditors.

Appropriate resolution seeking Members' approval for the appointment of M/s V Sankar Aiyar & Co as the Statutory Auditors of the Company is appearing in the Notice convening the ensuing AGM of the Company.

The Audit for FY 2019-20 was conducted by Deloitte and there are no qualifications reservations adverse remarks or disclaimers made by the Statutory Auditor in their Audit Report. The Notes to the financial statements referred in the Auditors Report are self-explanatory and therefore do not call for any comments under Section 134 of the Companies Act 2013. The Auditors' Report is enclosed with the financial statements in the Annual Report.

30. SECRETARIAL AUDIT

The Board had appointed M/s Nilesh Shah & Associates Practicing Company Secretaries to conduct Secretarial Audit of the Company for the financial year 2019-20. The Auditor had conducted the audit and their report thereon was placed before the Board. The report of the Secretarial Auditor is annexed herewith as Annexure - III to this report. There are no qualifications or observations in the Report.

31. REPORTING OF FRAUDS BY AUDITORS

During the year under review the Statutory Auditor and the Secretarial Auditor have not reported any instances of frauds committed in the Company by its Officers or Employees to the Audit Committee under Section 143(12) of the Companies Act 2013 details of which needs to be mentioned in this Report.

32. RBI DIRECTIONS

Your Company complies with the direction(s) circular(s) notification(s) and guideline(s) issued by the RBI as applicable to your Company as a systemically important non-deposit taking NBFC.

The Company has in place the system of ensuring compliance with applicable provisions of Foreign Exchange Management Act 1999 and rules made thereunder and for certification from the Statutory Auditor of the Company on an annual basis.

33. CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI. The Company has also implemented several best Corporate Governance practices as prevalent globally. The report on Corporate Governance as stipulated under the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and the RBI Master Directions forms an integral part of this Report. The requisite certificate from the M/s Nilesh Shah & Associates Practicing Company Secretaries confirming compliance with the conditions of Corporate Governance is attached to the report on Corporate Governance.

Your Company has complied with all the norms prescribed by the RBI including the Fair Practices Code Anti Money Laundering and Know Your Customer (KYC) guidelines besides other guidelines.

34. COMPLIANCE WITH THE SECRETARIAL STANDARDS

The Board of Directors affirms that the Company has complied with the applicable mandatory Secretarial Standards issued by the Institute of Company Secretaries of India.

35. DEPOSITS

During the period under review your Company did not accept/ renew any deposits within the meaning of Section 73 of the Companies Act 2013 and the rules made there under and as such no amount of principal or interest was outstanding as on the balance sheet date. Further The Company did not hold any public deposits at the beginning of the year nor has it accepted any public deposits during the year under review.

36. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(5) of the Companies Act 2013 it is hereby confirmed that:

a) in the preparation of the annual accounts the applicable accounting standards had been followed and their are no material departures;

b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the directors had prepared the annual accounts on a going concern basis;

e) the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

37. GENERAL

Your Directors state that during the financial year 2019-20:

1. The Company has not issued equity shares with differential rights as to dividend voting or otherwise.

2. The Company has not issued any sweat equity shares during the year.

3. There are no significant and material orders passed against the Company by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations.

4. The Central Government has not prescribed the maintenance of cost records for any of the products of the Company under sub-section (!) of Section 148 of the Companies Act 2013 and the Rules framed there under.

5. Except as disclosed in Para 2 there is no change in nature of business of the Company.

6. The details of Debenture Trustees of the Company are as follows:

Catalyst Trusteeship LimitedIDBI Trusteeship Services LimitedMilestone Trusteeship Services Private Limited
Address- GDA House First Floor Plot No. 85 S. No. 94 & 95 Bhusari Colony (right) Kothrud Pune- 411038Address- Asian Building Ground Floor 17 R.Kamani Marg Ballard Estate Mumbai- 400001Address- Cowrks Worli PS56 3rd Floor Birla Centurion Century Mills Compound Pandurang Budhkar Marg Worli Mumbai - 400030
Phone- 022 49220555Phone- +91 22 40807001Phone- +91 22 628861 19
Fax No- 022 49220505FaxNo-+91 22 66311776Fax No- +91 22 67167077
Email-complianceCTL-Mumbai@ ctltrustee.comEmail-itsl@idbitrustee.comEmail-milindshah@milestonetrustee.in
Website-www.catalysttrustee.comWebsite- www.idbitrustee.comWebsite- www.milestonetrustee.in

38. APPRECIATION

Your Directors place on record their sincere appreciation for the assistance and guidance provided by the Reserve Bank of India the Ministry of Corporate Affairs the Securities and Exchange Board of India government and other regulatory Authorities stock exchanges other statutory bodies Company's bankers Members and employees of the Company for the assistance cooperation and encouragement and continued support extended to the Company.

Your Directors also gratefully acknowledge all stakeholders of the Company viz. customers members dealers vendors banks and other business partners for the excellent support received from them during the year. Our employees are instrumental in helping the Company scale new heights year after year. Their commitment and contribution is deeply acknowledged. Your involvement as shareholders is also greatly valued. Your Directors look forward to your continuing support.

For and on behalf of the Board
Nirmal Jain
Date: June 07 2020Chairman
Place: Mumbai(DIN: 00010535)

   

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