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IIFL Wealth Management Ltd.

BSE: 542772 Sector: Financials
NSE: IIFLWAM ISIN Code: INE466L01020
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OPEN 1530.35
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VOLUME 4547
52-Week high 1818.00
52-Week low 960.55
P/E 29.69
Mkt Cap.(Rs cr) 12,791
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

IIFL Wealth Management Ltd. (IIFLWAM) - Director Report

Company director report

To the Members of

IIFL WEALTH MANAGEMENT LIMITED

Your Directors have pleasure in presenting the Fourteenth Annual Report of IIFLWealth Management Limited (“the Company”) together with the AuditedFinancial Statements for the year ended March 31 2021.

1 Financial Results - The Highlights Of The Financial Results For The Year UnderReview Are As UNDER:

Consolidated Financial Results

Particulars 2020-21 2019-20
Gross Total Income 16590.20 15274.76
Less: Expenditure 11740.96 12410.55
Profit / (Loss) Before Taxation 4849.24 2864.21
Less: Taxation – Current 1239.61 693.56
– Deferred (82.29) 159.01
Net Profit / (Loss) After Tax 3691.92 2011.64
Other Comprehensive Income 1.18 52.82
Total comprehensive income for the year (Comprising profit and other comprehensive income for the year) 3693.10 2064.46

Standalone Financial Results

Particulars 2020-21 2019-20*
Gross Total Income 7667.61 5684.07
Less: Expenditure 1011.43 3741.22
Profit / (Loss) Before Taxation 6656.18 1942.85
Less: Taxation - Current 211.46 51.04
- Deferred 41.02 (42.95)
Net Profit / (Loss) After Tax 6403.70 1934.76
Other Comprehensive Income 0.48 (5.68)
Total comprehensive income for the year (Comprising profit and other 6404.18 1929.08
comprehensive income for the year)

*The Results includes results from discontinued operations. For details Refer Note 32of the Standalone Financial Statements.

 

2 REVIEW OF BUSINESS AND OPERATIONS

Total Assets under management including custody assets are Rs.246083 Crs as on March‘21. The wealth management business has client assets of

Rs.208711 Crs including custody assets while the Asset Management business hasRs.37372 Crs of assets under management as on March ‘21 of which Rs.23700 Crs areAIF Assets Rs.11196 Crs are PMS Assets and Rs.2476 Crs are Mutual Fund assets.Continuing focus on increasing Recurring Revenues has resulted in an increase in ARRgenerating assets by 62.9% to Rs.101969 Crs and an increase in Recurring revenues by9.1% YoY to Rs.583 Crs. The mix between ARR

Assets and TBR Assets is now almost equal (50:50).

IIFL-One has been well received by clients with Assets Under Management increasing by57.7% YoY to Rs.27940 Crs and Revenues increasing 58.6% YoY to Rs.55 Crs.

Total Net flows during the year were Rs.24096 Crs despite lockdowns constraining newaccount opening for almost 6 months of the year. Net Flows in Wealth Management wereRs.15138 Crs (including Rs.9919 Crs on account of acquisition of L&T CapitalMarkets) and

Rs.8957 Crs in Asset Management.

Total Consolidated Revenue for the year was up 23.4% YoY at Rs.1053 Crs as comparedto Rs.851 Crs for FY 20 while Revenue from Operations remained largely flat down 0.5%YoY at Rs.915 Crs.

Total Retention on Assets basis Revenue from Operations stood at 0.50 bps. Retention onWealth Management Assets was 0.46 bps and Retention on Asset Management Assets was 0.70bps.

Overall Costs for the year remained flattish up 0.6% to

Rs.568 Crs.

Employee Costs were up 8.5% overall YoY at Rs.417 Crs of which Fixed Employee costsreduced by 12.8% YoY to Rs.261 Crs and Variable cost including ESOP cost increased 83.5%YoY to Rs.156 Crs.

On account of remote operations Admin and Other expenses reduced 16.3% YoY to Rs.150Crs.

Operating PBT (OPBT) was down 2.2% YoY to Rs.348 Crs. Profit before tax (PBT) for theyear was up 69.3% YoY to

Rs.485 Crs.

Profit After Tax (PAT) for FY21 was up 78.9% atRs.369 Crs from Rs.206 Crs in FY20.

Consolidated Net worth stood at Rs.2828 Crs as against

Rs.2992 Crs in FY20. This was largely on account of a Dividend payout of Rs.70 duringthe year (Rs.40 special dividend).

During the year the Company has obtained the

Merchant Banking License from SEBI and the Company intends to pursue Merchant Bankingbusiness on going forward basis.

Return on Equity (ROE) for the year was at 12.5% and RoE Ex-Goodwill & Intangibleswas 15% up 94% YoY.

 

3 MACROECONOMIC OVERVIEW

Year in review

2020 has been by far one of the most challenging years for the global economy with theonset and continued evolution of the COVID 19 pandemic resulting in a -3.3% degrowth inglobal real GDP as per IMF the first such decline in over 10 years.

However aided by massive fiscal packages ultra-supportive monetary policies and thecreation and deployment of vaccines by major economies we have witnessed a V-shapedrecovery in global equities with global markets amazingly closing the year in the green asituation that 12 months ago seemed almost impossible. Many global equity indices not onlyregained their previous highs some have gone on to scale new peaks as well. A fresh surgein Covid 19 related infections rising US treasury yields and increased mobility curbs torein in infections by a few major economies has since reigned in investor and marketexuberance however with the continued roll out of vaccines the global economic turnaroundappears to be a factor of “when” rather than “if”.

Recently under the new leadership of Joe Biden the United States approved a $1.9TNfiscal stimulus bill this being in addition to the fiscal stimulus package announced in2020 of $3 TN. These financial stimulus packages are expected to aid the US economy and inturn also assist the global economies including Asian economies in supporting globalrecoveries and consequent economic growth.

The Indian Economy also faced severe disruptions on account of the pandemic withfiscal strains along with sector wide lower demand and operational stresses. The countrysaw its worst ever GDP contraction of

23.9% YoY in the first quarter of FY 2021 primarily on account of the stringentlockdowns imposed on account of the widespread pandemic. These restrictions were slowlyeased second quarter onwards and the economy commenced its journey towards recovery.

According to estimates of the provisional Annual National Income in 20-21 by theNational Statistical

Office (NSO) Indian GDP was estimated to contract by

7.3% in FY21 compared to the growth it had seen in the preceding year of 4%. Howeverthe Economic survey 2020-21 also a primary source for the NSO estimated a sharp V-shapedrecovery of the Indian economy with the real GDP estimated to record a 11% growth in FY2021-22 – the highest ever since independence.

 

Source: National Statistics 31 2021

* Economic Survey - 2020-21 P: Projected

The sharp recovery in Indian equity markets in FY 21 was supported byall-timehighforeigninflows.Factors like favorable monetary policy stance from RBIdeclining COVID cases over the second half of the financial year vaccine inoculations andprocurement attractive valuations and the prospect of a sharp increase in earnings growthover the next few years and upbeat cues from global markets upheld investor sentiments.

The World Bank (WB) elevated its forecast of India's

GDP growth for FY22 to 10.1% noticeably higher than the 5.4% it had projected inJanuary.

While the new wave of COVID-19 and the resultant lockdown in certain parts of countrieswill act as an overhang on the headline numbers most state governments pushing for highervaccination inoculations are expected to normalize the curve of patients with seriouscomplications thereby reducing the burden on existing medical infrastructure. We believethe volatility could increase in the near term owing to inflationary pressures at globaland domestic levels however pick up in earnings growth may auger well for Indianequities albeit the pace could be slower than anticipated. The market polarization islikely to reverse as the recovery becomes more broad-based and hence provide ample roomfor wealth creation.

There are obvious risks to this recovery in the near term that need to be monitored:

(1) Return to normalcy could take longer than anticipated given the unprecedented risein the COVID-19 cases across the country

(2) Lockdown / strict restrictions in certain states may remain for longer thananticipated.

Going forward implementation of various measures efficiencyannouncedduringtheUnionbudgetandthe and pace of vaccination along with global cues andcapital flows would be amongst the key events to monitor.

FUTURE BUSINESS OUTLOOK

Our conscious focus on driving cost and productivity enhancements at a firm level havenow begun to reap benefits. These measures have been taken using a combination of costreduction initiatives deployment of technology to improve productivity as well as takingjudicious calls on outsourcing of select activities to derive scale benefits. The benefitsare beginning to reflect in our Cost to Income ratios which have been

 

FY21 Provisional Estimates dated May

steadily declining. We expect going forward that these efforts will generate positiveoperating leverage thereby enhancing firmwide productivity metrics. Investments willcontinue in strengthening key organizational areas of Digital Compliance and Risk.

We intend to further grow and consolidate our overall market position and to enhanceour platform and proposition via differentiated product offerings as well as continuouslyevaluating inorganic opportunities to expand growth trajectory.

We will continue to find the right intersections between wealth creation and wealthpreservation between our expertise and client's level of involvement between old agevalues and new-age technology between client's needs for today and our client's family'sneeds for tomorrow. We continue to invest in building a high-quality team and imbibe aculture which encourages innovation and strong orientation towards knowledge-basedservice.

India has seen a strong economic bounce and investment sentiment remains buoyant on theback of excess liquidity and savings. There are strong tail winds across the WealthManagement and Asset Management businesses as evidenced by sustained growth in HNI/

UHNI clients driven by large number of monetization events and continued growth in nexttier locations along with strong traction on institutional mandates in the AssetManagement business and strong momentum across our Unlisted Differentiated strategies.

EQUITY MARKETS

Growing optimism around the global economic recovery persistent drop in new cases andthe progress of vaccination drives supported the global equity markets in the latter halfof FY 21. Vaccination roll-outs across the globe continued economic recoverystrengthened expectations of a fiscal stimulus in the US and dollar weakness kept investorsentiments strong for

EM equities. This was further aided by strong portfolio inflows amid supportive surplusliquidity across the globe. The Hang Seng Index (Hong Kong) and Nikkei 225 Index (Japan)shot up by 20.2% and 54.3% last year.

Japan's Nikkei 225 crossed the 30000 mark for the first time in more than threedecades. This surge can mainly be attributed to Japan's economy growing by 12.7% inOctober-December quarter FY 2020-21 on a YoY basis. European equities suffered from arelatively slow roll-out of COVID-19 vaccines political uncertainty in Italy and slowereconomic recovery amid lockdown restrictions. Brexit uncertainty along with second wave ofvirus infections have battered the UK with the FTSE

100 Index being the slowest performing regional equity market.

Meanwhile Indian equity markets outperformed the broader EM indices with the Nifty 50increasing by 70.9% and Nifty 500 by 76.0% in 12 months ending March

2021. Persistent traction in foreign flows and brighter domestic economic outlook asreflected through steady improvement in several high frequency indicators and better thanexpected Q4 FY 2020-21 corporate earnings also kept investor sentiments buoyant. This wasfurther supported by stimulus measures announced by the

Government and liquidity measures adopted by RBI.

Despite COVID-induced turbulence Indian equity markets showed their best performancein a decade in FY 2020-21. Surge in trading by retail investors and Foreign InstitutionalInvestors (FIIs) fuelled a rally in equity markets post the sharp correction of March2020. FII's net investment recorded an all-time high in

FY 2020-21 at USD 37.1 billion which is approximately 14 times higher than that of USD2.6 billion in FY 2019-20 owing to continuous rally in equity prices. Unlike FIIs

Domestic Institutional Investors (DIIs) remained strong sellers of Indian equities withnet outflows of USD 19.0 billion in FY 2020-21. Net investment by DIIs remained negativedue to redemption pressures and profit-booking as equity valuations touched lifetimehighs.

An exponential rise in COVID infections in the second half of March 2021 compelledre-imposition of restrictive measures and raised concerns on the ongoing economicrecovery however markets seem unperturbed by the rising number of infections in theongoing second wave of COVID-19. The likely reason is that markets see the same as atemporary bump in the course of recovery and expect activities to normalise over time.Further the impact on the earnings of majority of the NIFTY50 sectors is likely to betemporary and limited.

Debt Market Outlook

FY 20-21 was an action-packed year for Indian fixed income markets. 10-year G-secyields which spiked in early April 2020 on the back of massive FPI selling and the fearof a significant rise in fiscal deficit reversed its course soon and started trendinglower. The yield fell below 6% driven by aggressive monetary easing but inched up againand hovered around 6% throughout the year. The 10-year yield ended only 3 bps higher thanlast year despite the central government's fiscal deficit rising sharply from the budgeted3.8% to 9.2% of GDP. This was mainly due to the RBI's intervention through open marketoperations (OMOs). Term spread however jumped in March 2020 from ~1% to over 2% andremained at elevated levels as the shorter end of the yield curve was firmly anchored dueto ample liquidity. Domestic liquidity remained in ample surplus supported by liquidityinfusion by the RBI and the further rise in government spending and the muted creditgrowth also added to the surplus.

FPI flows into Indian debt markets in FY 20-21 were weak albeit better than theprevious year. The net FPI outflow amounted to ~$2.2 bn in FY 20-21 (FY 19-20: $5.4 bn).

Going forward the outlook on yields remains uncertain as rise in international crudeprices increase in 10-year US treasury yields elevated fiscal deficit and CPIespecially core CPI pose an upside risk to yields. The high statutory liquidity ratio(SLR) investment holdings of banks and signs of a broad-based improvement in economicactivity can also push yields higher. However the RBI has been consistently interveningto stem any significant rise in yields and may continue to do so in the foreseeablefuture. Also muted credit growth low global rates and ample liquidity bode well foryields in

India.

During the year credit markets faced heightened volatility resulting in the wideningof spreads. This followed from Yes Bank AT1 bonds being written off (in February 2020)imposition of the lockdown announcement of the winding up of six debt schemes by FranklinTempleton etc. The spreads normalised from

Q2FY 21 onwards supported by the RBI's monetary and regulatory easing measuresrecovery in economic activity lower than expected impact of the pandemic on financialefficiency of banks and NBFCs and other such factors.

 

4 DIVIDEND

During the period under review your Company has declared interim dividends of Rs.40/-and Rs.30/- per share on August 19 2020 and February 2 2021 respectively for shareshaving face value Rs.2/- each involving a total outlay of Rs.612.72 Crs.

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

In terms of Regulation 43A of the SEBI (Listing Obligations and DisclosureRequirements) Regulations

2015 (“Listing Regulations”) the Company has adopted a Dividend DistributionPolicy which is annexed as

Annexure IV and is available on the Company's website at https://www.iiflwealth. .

 

5 SHARE CAPITAL

The total paid-up share capital of the Company as on March 31 2021 was increased toRs.175765540 divided into 87882770 equity shares increased from

Rs.174362084 divided into 87181042 equity shares as on March 31 2020 of Rs.2/-each. The increase in share capital was due to issue of equity shares pursuant to exerciseof stock options during the year.

 

6 TRANSFER TO RESERVES

During FY21 the Company has transferred Rs.0.16 million to general reserve.

 

7 DEPOSITS

During the period under review your Company has not accepted/ renewed any depositwithin the meaning of Section 73 of the Companies Act 2013 read with applicable rulesthereto.

 

8 MERGER AND ACQUISITIONS

During the year under review IIFL Wealth Prime Limited (formerly known as IIFL WealthFinance Limited) a wholly-owned subsidiary Company had acquired IIFL Wealth CapitalMarkets Limited (formerly known as L&T

Capital Markets Limited) on April 24 2020.

 

9 DETAILS OF SUBSIDIARIES institutions improvement incollection

In accordance with Section 129(3) of the Companies

Act 2013 the consolidated financial statements of the Company and all itssubsidiaries which form part of the Annual Report have been prepared and are alsoavailable on the website of the Company. You may refer to the annexure to the consolidatedfinancial statements of the Company which contains the statement containing the salientfeatures of the financial statement of the subsidiaries in the prescribed format AOC-1.

As per the provisions of Section 129 134 and 136 of the Companies Act 2013 read withapplicable Rules

Regulation 33 of SEBI Listing Regulations 2015 and applicable Indian AccountingStandards(“Ind AS”) the

Board of Directors at its meeting held on May 18 2021 approved the ConsolidatedFinancial Statements of the

Company and its subsidiaries. Copies of the Balance Sheet Profit and Loss AccountReport of the Board of Directors and Report of the Auditors of each of the subsidiarycompanies are not attached to the accounts of the Company for the financial year 2020-21.The Company will make these documents/ details available upon request by any Member of theCompany. These documents/details will also be available for inspection by any Member ofthe Company at its registered office and at the registered offices of the concernedsubsidiaries during business hours on working days and through electronic means. Memberscan request the same by sending an email to secretarial@iiflw. till the Annual GeneralMeeting. The audited financials of all the subsidiaries are available on the website ofthe Company at https://www.iiflwealth.com . The Company's financial statements includingthe accounts of its subsidiaries which form part of this Annual Report are prepared inaccordance with the Companies Act 2013 and Ind AS 110.

As at date of report your Company has following subsidiaries:

Domestic Subsidiaries:

i. IIFL Wealth Prime Limited (formerly known as IIFL

Wealth Finance Limited) ii. IIFL Wealth Distribution Services Limited (formerly knownas IIFL Distribution Services Limited)

iii. IIFL Asset Management Limited

iv. IIFL Investment Adviser and Trustee Services Limited

v. IIFL Wealth Portfolio Managers Limited (formerly known as IIFL Portfolio ManagersLimited)

vi. IIFL Trustee Limited

vii. IIFL Wealth Securities IFSC Limited

viii. IIFL Wealth Altiore Limited (formerly known as Altiore Advisors Private Limited)

ix. IIFL Wealth Capital Markets Limited (formerly known as L&T Capital MarketsLimited)

x. IIFLW CSR Foundation

International Subsidiaries: i. IIFL Asset Management (Mauritius) Limited ii. IIFLPrivate Wealth Management (Dubai) Limited iii. IIFL (Asia) Pte. Limited iv. IIFL Inc. v.IIFL Capital (Canada) Limited vi. IIFL Capital Pte. Limited vii. IIFL Securities Pte.Limited

IIFL Wealth Prime Limited (formerly knowns as IIFL Wealth Finance Limited) and IIFLAsset Management Limited are the material subsidiaries of the Company during the periodunder review.

During the year under review the Company has invested USD 10 Million into thestep-down subsidiary IIFL Capital Pte. Ltd. Singapore.

The Company does not have any associate/joint venture company.

The Annual Report which consists of the financial statements of your Company onstandalone basis as well as consolidated financial statements of the group for the yearended March 31 2021 is being sent to all the members of your Company.

The policy on determining the material subsidiary is available on the website of theCompany.

 

10 CORPORATE GOVERNANCE

Pursuant to SEBI Listing Regulations 2015 a separate section ‘Report on CorporateGovernance' has been included in this Annual Report. The Report of Corporate

Governance also contains certain disclosures required under the Companies Act 2013.

 

11 ANNUAL RETURN

Pursuant to Section 92(3) and Section 134(3)(a) of the Companies Act 2013 read withRule 12(1) of the Companies (Management and Administration) Rules 2014 the Annual Returnof the Company as on March

31 2021 is available on the Company's website: www. iiflwealth.com.

 12 DIRECTORS AND KEY MANAGERIAL PERSONNEL a. Directors

The Board of your Company consists of Mr. Karan Bhagat Managing Director Mr. NileshVikamsey (Chairman of the Board) Ms. Geeta Mathur Dr. S.

Narayan and Mr. Pankaj Vaish who are Independent Directors Mr. Nirmal Jain Mr. R.Venkataraman Mr. Gopalakrishnan Soundarajan and Mr. Yatin Shah who are Non-ExecutiveDirectors and Mr. Sandeep Naik and Mr. Shantanu Rastogi who are Nominee Directors(nominated by General Atlantic Singapore Fund Pte Ltd) of the Company.

Mr. Nilesh Vikamsey Dr. S. Narayan Mr. Pankaj Vaish and Ms. Geeta Mathur havesubmitted their declaration of independence under Section 149(6) of the Companies Act2013.

Directors retiring by rotation

Mr. Nirmal Jain and Mr. Venkataraman Rajamani shall retire by rotation at theFourteenth Annual General Meeting (AGM) of the Company and are eligible for re-appointment.

Independent Director's Data Base & Proficiency Test

Pursuant to a notification dated October 22 2019 issued by the Ministry of CorporateAffairs name of every Independent Director should be registered in the database ofIndependent Directors maintained by

Indian Institute of Corporate Affairs Manesar (“IICA”).

Accordingly the Independent Directors of the Company have registered themselves withthe IICA for the said purpose.

The opinion of the Board with regard to integrity expertise and experience (includingthe proficiency) of

Independent Directors is complied with.

i. Meetings of the Board of Directors

The Board of Directors have met seven (7) times during the period under review todiscuss and approve various matters including financials declaration of interim dividendreview of audit reports and other board businesses. For further details kindly refer theCorporate Governance Report.

ii. Committees of the Board

In accordance with the Companies Act 2013 the Board has constituted followingCommittees as per the applicable provision of the Companies Act 2013 and the

SEBI (Listing Obligation and Disclosure Requirements)

Regulations 2015.

(i) Audit Committee;

(ii) Nomination and Remuneration Committee; (iii) Corporate Social ResponsibilityCommittee; (iv) Stakeholders' Relationship Committee;

(v) Risk Management Committee.

(i) Audit Committee

The Audit Committee comprises of Mr. Nilesh Vikamsey Ms. Geeta Mathur Mr. PankajVaish and Mr. Shantanu Rastogi. Ms. Geeta Mathur is the Chairperson of the Committee. Therole terms of reference and powers of the Audit Committee are in conformity with therequirements of the Companies Act 2013 the SEBI

Listing Regulations 2015 and the internal policies. The Committee met seven (7) timesduring the year under review and discussed financials audit issues and appointment ofauditors. During the period under review all the recommendations of the Audit Committeewere accepted by the Board of Directors of the Company.

The details including the meetings role terms of reference etc. of the AuditCommittee are provided in the Corporate Governance Report.

(ii) Nomination and Remuneration Committee

The Nomination and Remuneration Committee (“NRC”) comprises Mr. NileshVikamsey Ms. Geeta Mathur Mr. Nirmal Jain and Mr. Sandeep Naik. Ms. Geeta Mathur is theChairperson of the Committee. As per the provisions of Section 178 of the Companies Act2013 the NRC had formulated a Nomination and Remuneration policy. The same is annexed asan Annexure I to this Report.

The details including the frequency of meetings role terms of reference etc. of theNomination and Remuneration Committee are provided in the Corporate Governance Report.

(iii) Corporate Social Responsibility Committee

The Corporate Social Responsibility Committee (“CSR Committee”) comprises ofMr. Nilesh Vikamsey

Mr. Nirmal Jain Mr. Karan Bhagat and Mr. Sandeep Naik. Mr. Karan Bhagat is theChairman of the Committee.

The Company has also incorporated IIFLW CSR foundation under Section 8 of theCompanies Act 2013 to execute IIFL Wealth group CSR activities.

The details including the meetings role terms of reference etc. of the CSR Committeeare provided in the Corporate Governance Report.

(iv) Stakeholders' Relationship Committee

Stakeholders' Relationship Committee comprises of

Mr. Venkataraman Rajamani Mr. Pankaj Vaish and Mr. Yatin Shah.

The details including the frequency of meetings role terms of reference etc. of theStakeholders' Relationship

Committee are provided in the Corporate Governance Report.

(v) Risk Management Committee

Risk Management Committee comprises of Mr. Venkataraman Rajamani Ms. GeetaMathur Mr.

Karan Bhagat Mr. Shantanu Rastogi and Mr. Nilesh

Vikamsey.

The objective of the Risk Management Committee is to oversee the risk managementgovernance structure define and review the framework for identification assessmentmonitoring mitigation and reporting of risks. The major risks identified by thebusinesses and functions are systematically addressed through mitigating actions on acontinuing basis.

The details including the role objectives/ terms of reference of the Risk ManagementCommittee are provided in the Corporate Governance Report.

iii. Separate meeting of Independent Directors

In compliance with provisions of the Companies Act 2013 a separate meeting ofIndependent Directors was held on March 23 2021 inter alia to discuss the following:

Review the performance of non-independent directors and the Board as a whole;

Review the performance of the Chairperson of the Company taking into account the viewsof Executive Directors and Non-Executive Directors;

Assess the quality quantity and timeliness of of information between the managementand the

Board that is necessary for the Board to effectively and reasonably perform theirduties.

Upon conclusion of the meeting the Independent Directors expressed their satisfactionover the performance of the other Directors and Board as a whole. They also expressedtheir satisfaction over the quality quantity and flow management and the Board /Committees of the Board from time to time.

iv. Annual Evaluation of the Board

Pursuant to the provisions of the Companies Act 2013 and SEBI Listing Regulations2015 and SEBI Circular no. SEBI/HO/CFD/CMD/ CIR/P/2017/004 dated January 05 2017 theBoard of Directors has carried out an annual performance evaluation of its ownperformance the Directors individually including Independent Directors based out of thecriteria and framework adopted by the Board. The Board approved the evaluation results ascollated by the Nomination and Remuneration Committee (“NRC”).

The Board noted the key improvement areas emerging from the exercise in 2020-21 andaction plans to address these are in progress.

The Independent Directors expressed their satisfaction with overall functioning andimplementations of their suggestions given earlier.

v. Declaration by Independent Directors

The Company has received necessary declaration from each Independent Director underSection 149(7) of the Companies Act 2013 that they meet the criteria of Independent laiddown in Section 149(6) of the

Companies Act 2013 and Regulation 16(1)(b) of SEBI

Listing Regulations 2015.

There has been no change in the circumstances or situation which exist or may bereasonably anticipated that could impair or impact the ability of Independent Directorsto discharge their duties with an objective of independent judgment and without anyexternal influence.

b. Key Managerial Personnel

The following officials are the “Key Managerial

Personnel” of the Company pursuant to the provisions of Section 203 of theCompanies Act 2013:

Mr. Karan Bhagat Managing Director

Mr. Mihir Nanavati Chief Financial Officer and flow Mr. Amit Bhandari CompanySecretary and Compliance Officer (with effect from February 2

2021).

During the year Mr. Ashutosh Naik has resigned as

Company Secretary and Compliance Officer of the Company with effect from October 142020 and Mr. Amit Bhandari was appointed as Company Secretary and Compliance Officer witheffect from February 2 2021.of information between the

 

13 BOARD EFFECTIVENESS

Familiarisation Program for the Independent Directors

In compliance with the requirements of SEBI Listing

Regulations 2015 the Company has put in place a Familiarisation Programme forIndependent Directors to familiarise them with the working of the Company their rolesrights and responsibilities vis--vis the Company the industry in which the Companyoperates and business model etc.

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

Details of the Familiarisation Programme are provided in the Corporate GovernanceReport and are also available on the website of the Company.

 

14 CORPORATE SOCIAL RESPONSIBILITY (CSR)

We at IIFL Wealth Management Limited strongly believe in enabling inclusivedevelopment. The core focus of our CSR is aimed at reducing inequality by enabling accessto opportunities to underserved or marginalised communities. Through our CSR we wish toimplement sustainable programmes that move the needle on social impact by addressing someof the most critical developmental challenges. To consolidate our efforts towardscatalytic CSR we established the IIFLW CSR Foundation (“Foundation”) to designand deliver CSR activities on behalf of the IIFL Wealth Management Limited group entities.

Our vision for the Foundation is to bring about a positive change in the lives ofunderprivileged individuals and communities by enabling a strategic and collaborativepartnership to maximise social impact. We believe that meaningful impact can be achievedthrough effective collaboration. We wish to partner with our clients and leverage theirpassion for social impact to amplify the scale of our CSR programmes.

The first year of the Foundation's initiatives focused on critical and relevantthematic areas such as Education and Healthcare including COVID relief. Our focus goingforward will be to support interventions in Healthcare Education Livelihoods andFinancial Inclusion which will enable us to build resilience in various communities.

As experts in financial sector we would like to leverage our core competencies andexpertise beyond providing mere funds as part of our responsibility to society.

As we move forward in our social impact journey we wish to evolve towards a morestrategic and impactful model for our CSR where we envision our role in mobilising bothphilanthropic capital and other types of capital to create more collaborative meaningfulsustainable solutions that uplift lives of underserved and under-represented individualsand communities.

This will also enable a multiplier effect of our funds and make our programmessustainable in the longer run.

The Annual Report on CSR activities by the Company is annexed as Annexure II.

 15 PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act

2013 (“the Act”) read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are provided in “AnnexureIII” to this report.

Further a statement showing names and other particulars of employees drawingremuneration in excess of the limits as set out in the Rules 5(2) and 5(3) of theaforesaid 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 entitledthereto excluding the aforesaid information. The said information is available forinspection by the Members at the Registered Office of the Company during business hours onworking days and through electronic means up to the date of the ensuing Annual GeneralMeeting. If any Member is interested in obtaining a copy thereof such Member may write tothe Company Secretary at secretarial@ iiflw.com whereupon a copy would be sent.

 

16 EMPLOYEE STOCK OPTION SCHEME

The stock options granted to the employees of the Company and its subsidiariescurrently operate under the following Schemes which are prepared as per the provisions ofSEBI (Share Based Employee Benefits) Regulations 2014 (“SBEB Regulations”):

IIFL Wealth Employee Stock Option Scheme 2012

IIFL Wealth Employee Stock Option Scheme 2015

IIFL Wealth Employee Stock Option Scheme 2019

IIFL Wealth Employee Stock Option Scheme-

Demerger Scheme

IIFL Wealth Employee Stock Option Scheme 2021

During the year the Company has implemented IIFL Wealth Employee Stock Option Scheme-2021 for the employees of the Company and its subsidiaries.

Sr. no. Heading Particulars
A Number of options granted during the year 117530
B Exercise Price (per share) 831 shares @ Rs.417
4300 shares @ ` 16
83725 shares @ ` 282
262936 shares @ Rs.339
198416 shares @ Rs.417
125026 shares @ Rs.861
25265 shares @ ` 82.02
372 shares @ Rs.82.73
857 shares @ Rs.218.71
C Options Vested during the year 1225953
D Options Exercised during the year 701728
E Total no. of shares arising as result of exercise of Options 701728
F Options lapsed (Re-allocable)* 125735
E Variation in terms of Options Nil
G Money realised by exercise of Options (In `) 305838384.33
Sr. no. Heading Particulars
H Total number of options in force 2967520
I Employee-wise details of options granted to:
- Key Managerial Personnel NIL
- any other employee who receives a grant in any one year of option amounting to 5% or more of option granted during that year Name (ESOP Scheme 2019)
Options
- Amit Kumar (Principal)
7500 @ Rs.900.00
- Anshuman Maheshwary (Chief Operating Officer)
10000 @ Rs.1147.00
- Kevin Chen Jong Woei (Senior Vice President)
10000 @ Rs.900.00
- Kunal Haria (Principal)
9000 @ Rs.900.00
- Manoj Shenoy (Executive Director)
24967 @ Rs.900.00
- Sugat Dhara (Senior Vice President)
10000 @ Rs.900.00
- Sugat Dhara (Senior Vice President)
10000 @ Rs.1147.00
- identified emplo yees who were granted option during any one year equal to or exceeding 1% of the issued capital (excluding warrants and conversions) of the company at the time of grant Nil

*Options Lapsed for 2012 Scheme 2015 Scheme and Demerger Scheme are not re-allocable.

A certificate from the Auditors of the Company that the

Schemes have been implemented in accordance with the SBEB Regulations would be placedat the ensuing

Annual General Meeting (“AGM”) for inspection by Members through electronicmeans.

The disclosure requirements under the Securities and Exchange Board of India(Share-Based Employee Benefits) Regulations 2014 for the aforesaid ESOP

Schemes in respect of the year ended March 31 2021 are disclosed on the Company'swebsite: www.iiflwealth. com.

 

17 RISK MANAGEMENT POLICY AND INTERNAL CONTROL ADEQUACY

The Company has in place a mechanism to identify assess monitor and mitigate variousrisks to key business objectives. Major risks identified by the businesses and functionsare systematically addressed through mitigating actions on a continuous basis. These arediscussed at the meetings of the Audit Committee

Risk Management Committee and Board of Directors of the Company. and material orders

The internal processes have been designed to ensure adequate checks and balances andregulatory compliances at every stage. Authority matrices have been defined going downfrom the Board of Directors to provide authority to approve various transactions.

The Company has in place adequate internal controls with reference to financialstatements and operations and the same are operating effectively. These are encapsulatedin the Risks & Controls Matrix (RCM). The Internal Auditors tested the design andeffectiveness of the key controls and no material weaknesses were observed in theirexamination. Further Statutory

Auditors verified the Design and Implementation (D&I) of controls and testing ofoperating effectiveness of controls for material class of transactions account balancesand disclosures and have confirmed that they do not have any significant or materialobservations in relation of deficiencies in design and controls.

 

18 SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS ORCOURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY AND THE COMPANY'SFUTURE OPERATIONS

passed There are no significant by the Regulators or Courts or Tribunals which wouldimpact the going concern status and the Company's future operations.

 

19 STATUTORY AUDITORS

At the 13th Annual General Meeting held on September

11 2020 M/s. Deloitte Haskins & Sells LLP Chartered Accountants (FirmRegistration No. 117366W/

W100018) were appointed as Statutory Auditors of the

Company to hold office till the conclusion of the 18th Annual GeneralMeeting to be held in the year 2025.

 

20 AUDITORS' REPORT

The Reports of the Statutory Auditors on Standalone and Consolidated FinancialStatements of the Company form part of this Annual Report.

There are no qualifications by the Statutory Auditors in their reports for thefinancial year ended March 31 2021.

The Notes to the financial statements referred in the

Auditors Reports are self-explanatory and therefore do not call for any comments underSection 134 of the Companies Act 2013.

The Statutory Auditors have not reported any incident of fraud committed in the Companyby its officers or employees to the Audit Committee under Section 143 (12) of theCompanies Act 2013 in the year under review.

 

21 SECRETARIAL AUDIT

During the year under review the Secretarial Audit was conducted by M/s. Mehta &Mehta Practicing

Company Secretaries. The report of the Secretarial Audit is annexed herewith as AnnexureV. There are no qualifications contained during the said Report.

As per Regulation 24A of the SEBI Listing Regulations a listed company is required toannex a secretarial audit report of its material unlisted subsidiary to its DirectorsReport. The secretarial audit reports of Material subsidiaries of the Company i.e. IIFLAsset Management Limited and IIFL Wealth Prime Limited for FY 2020-21 are annexedherewith.

 

22 FEMA COMPLIANCE

With reference to Circular No. D/o IPP F. No. 5(1)/2017-

FC-1 dated August 28 2017 (“FDI Policy”) relating to Foreign DirectInvestment Policy the Company complied with FDI Policy and various circulars issued by

Reserve Bank of India from time to time.

 

23 PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDERSECTION 186

The details of loans guarantees or investments made are provided in the standalonefinancial statement.

 

24 PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATEDPARTIES

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 identificationof Related Party Transactions (RPTs) necessary approvals by the Audit Committee/Board/Shareholders reporting and disclosure requirements in compliance with the Companies Act2013 and provisions of SEBI Listing Regulations 2015.

All related party transactions that were entered during the financial year were inordinary course of the business of the Company and the transactions were on arms'reservations or observations length basis.

No contract/ arrangement has been entered by the

Company with its promoters directors key managerial personnel or other persons whichmay have a potential conflict with the interest of the Company. The transactions withrelated party are disclosed by way of notes to accounts in the standalone financialresults of the Company for the financial year ended March 31

2021.

The Company's policy on dealing with the Related Party Transactions is available on theCompany's website: www.iiflwealth.com.

 

25 MANAGEMENT'S DISCUSSION AND ANALYSIS

In terms of the provisions of Regulation 34 of the SEBI Listing Regulations 2015 theManagement's discussion and analysis is set out in this Annual Report.

 

26 ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO

The information on energy conservation technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 is appended below:

Conservation of energy:

The Company is engaged in providing financial services and as such its operations donot account for substantial energy consumption.

However the Company is taking all possible measures to conserve energy. Severalenvironment friendly measures were adopted by the Company such as:

Installation of capacitors to save power

Ins talled Thin Film Transistor (TFT) monitors saves power

Light Emitting Diode (LED) lights

Automatic power shutdown of idle monitors

Restricted access to printers at central hub besides removal of earlier printers.

Environmental awareness communication:

Minimizing air-conditioning usage

Avoiding disposable cups and plates by encouraging employees to carry their own cupsand cutlery

Shutting off all the lights and air-conditioner when not in use and

Education and awareness programs for employees. The management frequently putscirculars on corporate intranet and digital boards in common area for the employeeseducating them on ways and means to conserve electricity and other natural resources andensures strict compliance of the same.

Technology absorption and innovation :

The management understands the importance of technology in the business segments. Itoperates and lays utmost emphasis on system development and use of best technologyavailable in the industry. The management keeps itself abreast of technologicaladvancements in the industry and ensures continued and sustained efforts towardsabsorption of technology adaptation as well as development of the same to meet thebusiness needs and objectives.

The management invested considerable resources in deploying the latest technologies inthe areas of wide area networking using MPLS video communications VoIP automateddialers and other customer relationship management (CRM) tools and software.

The Company also made significant strides in using cloud technology for customer-facingservers providing rapid and inexpensive ramp-up or down of capacity in line with businessrequirements.

The management is aware of increasing threats in the Information Security domain andhas taken several steps to ensure that the Company is safe guarded against hackingattacks data leakage and security breaches. IT and certain business processes have beenrecertified for ISO 27001 systems for practicing industry care standard securityimplementations and processes. The management has invested resources in implementingcontrols and continuously monitoring violations if any. That Research and Development(R & D):

The Company is engaged in distribution of various financial products and advisingclients on wealth management through mutual fund and alternative investment fund platformwhich entails internal research of investment products sectors and markets.

FOREIGN EXCHANGE EARNING AND OUTGO:

a) The foreign exchange earnings: Rs.10.87 Million;

b) The foreign exchange expenditure: Rs.62.45 Million.

 

27 DISCLOSURES UNDER SEXUAL HARASSMENT

OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION & REDRESSAL) ACT 2013

Your Company is committed to provide a work environment that ensures every womanemployee is treated with dignity and respect and afforded equitable treatment. YourCompany is also committed to promote a work environment that is conducive to theprofessional growth of its women employees and encourages equality of opportunity. YourCompany will not tolerate any form of sexual harassment and is committed to take allnecessary steps to ensure that its women employees are not subjected to any form ofharassment.

Your Directors further state that your Company has formulated and adopted a ‘Policyfor Prevention / Prohibition / Redressal of Sexual Harassment of

Women at the Workplace' and that there were no cases filed pursuant to the SexualHarassment of Women at

Workplace (Prevention Prohibition and Redressal) Act 2013.

 

28 DIRECTORS RESPONSIBILITY STATEMENT

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

a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

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

sufficient c) the Directors had taken proper and for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

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 theCompany and that such internal financial controls are adequate and are operatingeffectively; and

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

 

29 COMPLIANCE WITH THE SECRETARIAL STANDARDS

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

 

30 BUSINESS RESPONSIBILITY REPORT

A Business Responsibility Report as per Regulation 34 of the SEBI Listing Regulations2015 detailing the various initiatives taken by your Company on the environmental socialand governance front forms an integral part of this report.

 

31 RISK MANAGEMENT REPORT

IntermsoftheprovisionsofSection134oftheCompanies the Companies Act 2013 a RiskManagement Report is set out in the Management Discussion and Analysis Report.

ACKNOWLEDGEMENTS

Your Directors would like to place on record theirgratitudeforthevaluableguidanceandsupportreceived from regulatory agencies. Your Directorsacknowledge the support of the members and also wish to place on record their appreciationof employees for their commendable efforts teamwork and professionalism.

For and on behalf of the Board of Directors
-Sd- -Sd-
Karan Bhagat Yatin Shah
Managing Director Non-Executive Director
DIN: 03247753 DIN: 03231090
Date: May 18 2021
Place: Mumbai

.