Your Directors take pleasure in presenting the 10th Annual Report on theaffairs of your Company together with the audited financial statements for the financialyear ended March 31 2019.
The key highlights of the audited standalone financial statements of your Company forthe financial year ended March 31 2019 and comparison with the previous financial yearended March 31 2018 are summarised below:
| || ||(र in crore) |
|Particulars ||As at March 31 2019 ||As at March 31 2018 |
|Total income ||1177.17 ||786.94 |
|Total expenditure ||784.51 ||462.85 |
|Profit before taxation ||392.66 ||324.09 |
|Less: Provision for taxation || || |
|- Current tax ||91.92 ||125.45 |
|- Deferred tax asset ||45.61 ||(13.30) |
|Net profit after taxes ||255.13 ||211.94 |
|Other comprehensive income net of tax ||(0.13) ||0.02 |
|Total comprehensive income ||255.00 ||211.96 |
|Transfer to statutory reserve fund pursuant to Section 45-IC of the Reserve Bank of India Act 1934 ||51.03 ||47.12 |
|Appropriation towards dividend and dividend distribution tax ||11.12 ||- |
|Surplus in the statement of profit and loss ||192.85 ||164.85 |
|Balance brought forward from previous period ||707.08 ||542.24 |
|Balance carried to balance sheet ||899.94 ||707.08 |
|Earnings per share (Face Value र 10/- each) || || |
|Basic (र) ||28.21 ||26.95 |
|Diluted (र) ||27.62 ||24.31 |
Note: The Company adopted Indian Accounting Standards (Ind AS) notifiedunder Section 133 of the Companies Act 2013 read with the Companies (Indian AccountingStandards) Rules 2015 as amended from time to time from April 1 2018 with effectivetransition date of April 1 2017 and hence comparative figures for financial year 2017-18have been restated to make them comparable.
FINANCIAL PERFORMANCE AND COMPANY'S STATE OF AFFAIRS
During the year under review your Company recorded steady growth with a comfortableliquidity position despite the liquidity crisis in the financial services sector whichhad a significant impact during second half of the financial year. In order to support theexpansion of the retail lending business your Company has significantly expanded itsbranches during the year under review. Despite this increase in infrastructure andemployee expenses on account of expansion of branch network and increase in employeestrength the Profit Before Tax as on March 31 2019 increased by 21.16% to र392.66crore (previous year: र324.09 crore). The Profit After Tax as on March 31 2019increased by 20.38% to र255.13 crore (previous year: र211.94 crore) and the NetWorth of the Company as on March 31 2019 increased by 45.39% to र3029.89 crore(previous year: र2084.00 crore).
As a part of your Company's growth strategy to expand into retail lending for balancedgrowth it has been focusing on both organic as well as inorganic growth of itsbusinesses. In the last quarter of financial year 2018-19 your Company acquired theentire Vehicle Finance business of India Infoline Finance Limited (IIFL)including assets under management of र3515 crore 161 branches 1079 employees andmore than 50000 customers at a net purchase consideration of र2415 crore. After theacquisition of Vehicle Finance business from IIFL the retail loan asset portfolio of yourCompany as on March 31 2019 stood at 61% of total loan assets.
Such strategic acquisitions help your Company in significantly accelerating timelinesto achieve its goal of becoming a leading player in the retail lending space. Your Companyis now better placed to become a leading retail finance non-banking financial company(NBFC) having a diversified and profitable asset book with a product mixcomprising Vehicle Finance Corporate Lending SME Finance and Home Finance (through itssubsidiary IndoStar Home Finance Private Limited) each of which are businesses withstrong growth prospects.
Your Company has continued to maintain good asset quality with net non-performingassets (NPA) of 1.61% as on March 31 2019 (previous year: 1.02%) in spite ofa difficult macro-economic environment. Pursuant to the requirement of the Reserve Bank ofIndia (RBI) Master Direction - Non-Banking Financial Company - SystemicallyImportant Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions2016 and provisions of the Companies Act 2013 (Act) read with Rules madethereunder a provision of र163.95 crore (previous year: र45.74 crore) at therate of 1.61% of outstanding standard assets of the Company was made as at March 31 2019and pursuant to the requirement of Section 45-IC of the Reserve Bank of India Act 1934an amount of र51.03 crore (previous year: र 47.12 crore) was transferred tostatutory reserve fund. For details of Reserves and Surplus of the Company please referNote 21 of the audited standalone financial statements of the Company for the financialyear ended March 31 2019.
The operating and financial performance of your Company has been covered in theManagement Discussion and Analysis Report which forms part of the Annual Report.
During the year under review there has been no change in the nature of business ofyour Company.
No material changes and commitments affecting the financial position of your Companyhave occurred between the end of year under review and the date of this Board's Report.
DIVIDEND AND DIVIDEND DISTRIBUTION POLICY
In terms of the Dividend Distribution Policy of the Company dividend shall be declared/ recommended keeping in view the Company's objective of meeting the long term capitalrequirement for the business from internal cash accruals and appropriately rewardingshareholders. Details of the Dividend Distribution Policy have been provided in theCorporate Governance Report which is annexed to and forms an integral part of this Board'sReport and is also available on the website of the Company https://www.indostarcapital.com/investors.html#codes-policies-wrap.
In line with the Dividend Distribution Policy of your Company your Directors arepleased to recommend Final Dividend of 10% i.e. र1/- per equity share of face valueof र10/- each for financial year 2018-19. Final Dividend if approved by theshareholders of the Company at the ensuing Annual General Meeting will be paid toshareholders of the Company as on August 23 2019.
During the year under review Interim Dividend of 10% i.e. र1/- per equity shareof face value of र10/- each for financial year 2018-19 was declared and paid to theshareholders of the Company.
Accordingly the total dividend pay-out for financial year 2018-19 shall be 20% i.e.र2/- per equity share of face value of र10/- each aggregating to र22.24crore (including tax).
The financial statements of the Company have been prepared in accordance the IndianAccounting Standards (Ind AS) notified under Section 133 of the Act read withthe Companies (Indian Accounting Standards) Rules 2015 as amended from time to time. TheCompany has adopted Ind AS from April 1 2018 with an effective transition date of April1 2017. The transition has been carried out from the erstwhile Accounting Standardsnotified under the Act read with relevant rules issued thereunder and guidelines issuedby RBI and generally accepted accounting principles in India.
In terms of Section 129 of the Act read with Rules framed thereunder auditedconsolidated financial statements of the Company and its subsidiaries shall be laid beforethe ensuing Annual General Meeting of the Company along with the audited standalonefinancial statements of the Company for the financial year ended March 31 2019.
The audited standalone and consolidated financial statements together with Auditor'sReport thereon along with the salient features of the financial statements of thesubsidiaries of the Company in the prescribed Form AOC-1 forms part of the Annual Reportand are also available on the website of the Company at http://www.indostarcapital.com/investors.html.
INITIAL PUBLIC OFFERING
During the year under review your Company completed the initial public offering of itsequity shares for 32237762 equity shares of face value of र10/- each comprisingfresh issue of 12237762 equity shares and offer for sale for 20000000 equity sharesfor cash at a price of र572/- per equity share determined through book buildingprocess (IPO). The equity shares of your Company got listed and commencedtrading on the BSE Limited and the National Stock Exchange of India Limited on May 212018.
In line with the 'Object of the Officer' of the IPO the proceeds of fresh issue wereused towards augmenting the capital base of the Company to meet future capitalrequirements.
SUBSIDIARY COMPANIES & THEIR FINANCIAL PERFORMANCE
Your Company has 2 (two) unlisted wholly-owned subsidiaries namely IndoStar AssetAdvisory Private Limited (IAAPL) and IndoStar Home Finance Private Limited(IHFPL). Your Company does not have any joint venture(s) / associatecompany(ies) within the meaning of Section 2(6) of the Act.
During the year under review there has been no change in the nature of business of thesubsidiary companies and there were no additions / deletions in the number of subsidiariesof your Company.
In terms of Regulation 16(1)(c) of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 (ListingRegulations) and Company's Policy for Determining Material Subsidiary IAAPL andIHFPL are not material subsidiaries of your Company.
The audited standalone financial statements of each of the subsidiaries are availableon the website of the Company at https://www.indostarcapital.com/investors.html#financial-statementssubsidiary-companies-wrap. Members interested inobtaining a copy of the audited standalone financial statements of the subsidiaries maywrite to the Company Secretary at the Registered & Corporate Office of the Company.
IndoStar Asset Advisory Private Limited
IAAPL is enabled under its objects to carry on the business of inter-alia advisingmanaging providing investment advisory services financial advisory services managementand facilitation services. Currently IAAPL acts as an investment manager to IndoStarCredit Fund and IndoStar Recurring Return Credit Fund both Category II AlternativeInvestment Funds registered with the Securities and Exchange Board of India(SEBI). Since IndoStar Recurring Return Credit Fund is not operational IAAPLhas applied to SEBI for surrendering the registration of IndoStar Recurring Return CreditFund and the application is under process.
During the year under review the Total Income of IAAPL was र5.68 crore (previousyear: र0.60 crore) and the Profit After Tax was र3.23 crore (previous year: LossAfter Tax was र1.08 crore).
IndoStar Home Finance Private Limited
IHFPL is registered with the National Housing Bank to carry on business as a housingfinance institution without accepting public deposits and primarily focuses on providinga_ordable home finance. IHFPL commenced business operations in September 2017 and as ondate operates in 10 states across India through various branches and has an employee baseof over 350 employees.
During the year under review the Total Income of IHFPL was र42.57 crore (previousyear: र1.43 crore). The operations of IHFPL during the year under review has resultedin Loss After Tax of र19.07 crore (previous year: Loss After Tax was र10.53crore).
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In terms of the Listing Regulations and the circulars directions notifications issuedby RBI (RBI Directions) the Management Discussion and Analysis Report for theyear under review is presented in a separate section forming part of the Annual Report.
During the year under review the Company issued and allotted 12237762 equity sharesby way of fresh issue in the IPO and 1340394 equity shares pursuant to the exercise ofstock options under various employee stock option plans of the Company. Subsequent to theyear under review the Company issued and allotted 10000 equity shares pursuant toexercise of stock options under IndoStar ESOP Plan 2012.
Subsequent to the above mentioned allotments the issued subscribed and paid-up sharecapital of the Company stands increased to र922674150/- divided into 92267415equity shares of face value of र10/- each.
Your Company has not issued any equity shares with differential rights as to votingdividend or otherwise.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review there was no change in composition of the Board ofDirectors of your Company.
Subsequent to the year under review the following changes took place in the Board ofDirectors of your Company:
Due to other professional commitments and time constraints Mr. Sameer Sain resignedfrom the office of Non-Executive Non-Independent Director of the Company with effect fromJune 26 2019.
The Board of Directors place on record their sincere appreciation for the valuablecontribution and guidance provided by Mr. Sain during his association with the Companytowards establishing and building the Company into a well-respected and highly profitablecredit institution.
Considering the growth of your Company's business in order to strengthen the Boardwith an additional executive director and considering the rich experience and expertise ofMr. Shailesh Shirali in the financial services industry and his contribution during hisassociation with your Company since 2012 on the recommendation of the Nomination &Remuneration Committee the Board of Directors of the Company at their meeting held onJune 26 2019 appointed Mr. Shirali as a Whole-Time Director of the Company liable toretire by rotation subject to approval by shareholders of the Company at the ensuingAnnual General Meeting. The Company has received the requisite notice from a member inwriting proposing Mr. Shirali's appointment as a Director. A brief profile of Mr. Shiralihas been included in the notice convening the ensuing Annual General Meeting.
At present the Board of Directors of your Company comprises 8 (eight) Directors ofwhich 4 (four) are Non-Executive Independent Directors 2 (two) are Non-ExecutiveNon-Independent Directors and 2 (two) are Executive Directors. The Chairman is aNon-Executive Non-Independent Director. The Board composition is in compliance with therequirements of the Act the Listing Regulations and the RBI Directions. Detailedcomposition of the Board of Directors of the Company has been provided in the CorporateGovernance Report which is annexed to and forms an integral part of this Board's Report.
Director(s) Retiring by Rotation
In terms of Section 152(6) of the Act read with the Articles of Association of theCompany Mr. R. Sridhar Director being longest in office shall retire by rotation andbeing eligible has offered himself for reappointment at the ensuing Annual General Meetingof the Company. A brief profile of Mr. R. Sridhar has been included in the noticeconvening the ensuing Annual General Meeting.
Retiring Independent Director
The term of Mr. Bobby Parikh Non-Executive Independent Director of the Company whowas appointed for five years with effect from March 05 2015 expires on March 04 2020.In terms of Section 149(10) of the Act the Board of Directors of the Company at theirmeeting held on May 20 2019 on recommendation of the Nomination & RemunerationCommittee approved re-appointment of Mr. Parikh as Non-Executive Independent Director ofthe Company not liable to retire by rotation for a further term of five years witheffect from March 05 2020 to hold office up to March 04 2025 subject to approval byshareholders of the Company by way of a special resolution at the ensuing Annual GeneralMeeting. The Company has received the requisite notice from a member in writing proposingMr. Parikh's appointment as Non-Executive Independent Director. A brief profile of Mr.Parikh has been included in the notice convening the ensuing Annual General Meeting.
Director(s) Declaration and Disclosures
Based on the declarations and confirmations received in terms of the provisions of theAct the Listing Regulations and the RBI Directions none of the Directors on the Board ofyour Company are disqualified from being appointed / continuing as Directors.
A certificate from H Choudhary & Associates Practicing Company Secretaryconfirming that none of the Directors on the Board of the Company as on March 31 2019have been debarred or disqualified from being appointed or continuing as Director on theBoard of the Company by the Securities and Exchange Board of India the Ministry ofCorporate Affairs or any such statutory authority forms part of the Corporate GovernanceReport which is annexed to and forms an integral part of this Board's Report.
The Company has received declaration from all the Non-Executive IndependentDirector(s) afirming compliance with the criteria of independence as stipulated inSection 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations.
Key Managerial Personnel (KMP)
During the year under review there were no changes in the KMPs of the Company.
Subsequent to the year under review Mr. Shailesh Shirali was designated as KMP of theCompany pursuant to his appointment as a Whole-Time Director of the Company subject toapproval by shareholders of the Company at the ensuing Annual General Meeting.
Following are the KMPs of the Company as on date of this Board's Report:
|1. Mr. R. Sridhar ||- ||Executive Vice-Chairman & CEO; |
|2. Mr. Shailesh Shirali ||- ||Whole-Time Director; |
|3. Mr. Pankaj Thapar ||- ||Chief Financial Officer; |
|4. Mr. Jitendra Bhati ||- ||Company Secretary & |
| || ||Compliance Officer |
Your Company complies with the direction(s) circular(s) notification(s) andguideline(s) issued by the Reserve Bank of India as applicable to your Company as asystemically important non-deposit taking non-banking financial company.
Your Company has complied with the provisions of the Foreign Exchange Management(Transfer or Issue of Security by a Person Resident Outside India) Regulations 2017 withrespect to the downstream investments made by it during the year under review.
COMPLIANCE WITH SECRETARIAL STANDARDS
In terms of provisions of Section 118 of the Act your Company is in compliance withSecretarial Standards on Meetings of the Board of Directors and Secretarial Standards onGeneral Meeting issued by the Institute of Company Secretaries of India.
Your Company has not accepted any public deposits during the year under review andshall not accept any deposits from the public without obtaining prior approval of the RBI.Further your Company being an NBFC disclosure requirements under Chapter V of the Actread with Rule 8(5)(v) and 8(5)(vi) of the Companies (Accounts) Rules 2014 are notapplicable to your Company.
RESOURCES AND LIQUIDITY
Your Company has diversified funding sources including public sector banks privatesector banks mutual funds insurance companies and financial institutions. Funds wereraised in line with Company's Resource Planning Policy adopted by the Board of Directorsfor the financial year under review through various modes including bank borrowingsissuance of non-convertible debentures on private placement basis issuance of commercialpapers and sale / assignment / securitisation of loan assets of the Company.
During the year under review your Company has raised funds from inter-alia followingsources (i) र2571 crore as bank borrowings (outstanding as on March 31 2019:र3369.75 crore); (ii) र1400 crore by issuance of commercial paper (outstandingas on March 31 2019: र291.17 crore); (iii) र2348.80 crore through issuance ofnon-convertible debentures (outstanding as on March 31 2019: र3208.41 crore); (iv)र238.16 crore by sale / assignment of loan assets of the Company.
Applicable disclosures in terms of Regulation 34(3) and Regulation 53(f) of the ListingRegulations as on March 31 2019 have been provided at Annexure I to this Board'sReport.
Your Company's financial discipline and prudence is reflected in the strong creditratings ascribed by rating agencies summarised below:
|Particulars / Rating Agencies ||Rating ||Remarks |
|Long Term: || || |
| Debt Programme || ||The ratings indicate that the instruments have high degree of safety regarding timely servicing of financial obligations and carry very low credit risk. |
|CARE Ratings Limited ||CARE AA-; Positive || |
|India Ratings and Research ||IND AA-/Stable || |
|(Fitch Group) || || |
| Market Linked Debentures || || |
|CARE Ratings Limited ||CARE PP-MLD AA-; Positive || |
Short Term Debt Programme / Commercial Paper:
|CRISIL Limited ||CRISIL A1+ ||The ratings indicate that the instruments have very strong degree of safety regarding timely payment of financial obligations and carry lowest credit risk. |
|CARE Ratings Limited ||CARE A1+ || |
|ICRA Limited ||[ICRA] A1+ ||Short Term Debt Programme / Commercial Paper of your Company carry the highest rating by three major credit rating agencies. |
During the year under review the outlook of rating assigned by CARE Ratings Limited tothe Long Term Debt Programme of the Company including Market Linked Debentures wasupgraded from Stable to Positive.
DEBT EQUITY RATIO
Your Company's Debt Equity ratio as on March 31 2019 stood at 2.94:1.
CAPITAL ADEQUACY RATIO
Your Company is well capitalised to provide adequate capital for its continued growth.As on March 31 2019 the Capital to Risk Assets Ratio (CRAR) of your Companystood at 24.05% (Tier I Capital to Risk Assets Ratio was 21.73% and Tier II Capital toRisk Assets Ratio was 2.32%) well above the regulatory limit of 15% as prescribed by theRBI for NBFCs.
NET OWNED FUNDS
The Net Owned Funds of your Company as on March 31 2019 stood at र2420.15 crorea 20.64% increase over the previous year.
Statutory Auditors & their Report
In terms of provisions of the Act S. R. Batliboi & Co. LLP Chartered Accountantshaving ICAI Firm Registration No. 301003E / E300005 were appointed as the StatutoryAuditors of the Company at the 6th Annual General Meeting of the Company heldon September 30 2015 for a period of five years and they hold office till the conclusionof the 11th Annual General Meeting of the Company.
S. R. Batliboi & Co. LLP Statutory Auditors in their report(s) on the auditedstandalone and consolidated financial statements of your Company for the financial yearended March 31 2019 have not submitted any qualifications reservations adverse remarksor disclaimers.
During the year under review the Statutory Auditors have not reported any instances offraud in the Company committed by officers or employees of the Company to the AuditCommittee.
Secretarial Auditors & their Report
In terms of Section 204 of the Act and Regulation 24A of the Listing Regulationssecretarial audit report from M Siroya and Company Practicing Company Secretary in theprescribed format for the financial year ended March 31 2019 is enclosed herewith at AnnexureII to this Board's Report.
M Siroya and Company Practicing Company Secretary in their report on the secretarialaudit of your Company for the financial year ended March 31 2019 have not submitted anyqualifications reservations adverse remarks or disclaimers.
MAINTENANCE OF COST RECORDS
Your Company is not required to maintain cost records in terms of Section 148(1) of theAct.
The Corporate Governance Report for the year under review including disclosures asstipulated under Regulation 34 read with Schedule V of the Listing Regulations and the RBIDirections is annexed to and forms an integral part of this Board's Report.
A certificate from H Choudhary & Associates Practicing Company Secretaryconfirming compliance with the conditions of Corporate Governance as prescribed under theListing Regulations is annexed to the Corporate Governance Report.
The Board and its Committees meet at regular intervals inter-alia to discuss reviewand consider various matters including business performance business strategies policiesand regulatory updates and impact. During the year under review the Board met 7 (seven)times and several meetings of Committees including the Audit Committee were held. Detailswith respect to the meetings of the Board of Directors and Committees held during the yearunder review including attendance by Directors / Members at such meetings have beenprovided in the Corporate Governance Report which is annexed to and forms an integral partof this Board's Report.
The Board of Directors in compliance with the requirements of various laws applicableto the Company as part of the good corporate governance practices and for operationalconvenience has constituted several committees to deal with specific matters and hasdelegated powers for different functional areas to different committees.
The Board of Directors has amongst others constituted Audit Committee CreditCommittee Asset Liability Management Committee Risk Management Committee Nomination& Remuneration Committee Corporate Social Responsibility Committee StakeholdersRelationship Committee IT Strategy Committee Debenture Committee Internal ComplaintsCommittee(s) Banking Committee Investment Committee and Grievances Redressal Committee.
Details with respect to the composition terms of reference number of meeting(s) heldand attended by respective member(s) roles powers and responsibilities of theCommittee(s) have been provided in the Corporate Governance Report which is annexed to andforms an integral part of this Board's Report.
In terms of the provisions of the Act and the Listing Regulations the Board ofDirectors adopted a Board Performance Evaluation Policy' to set out a formalmechanism for evaluating performance of the Board that of its Committee(s) and individualDirectors including the Chairman. Additionally in order to outline detailed process andcriteria to be considered for performance evaluation the Nomination & RemunerationCommittee has put in place the Performance Evaluation Process
Board Committees and Directors' which forms an integral part of the BoardPerformance Evaluation Policy.
In terms of the requirement of Schedule IV of the Act and Regulation 25 of the ListingRegulations a separate meeting of the Independent Directors was held on March 25 2019 toreview the performance of the Non-Independent Directors including the Chairman and theBoard as a collective entity.
Subsequent to the year under review the Board of Directors evaluated the performanceof the Directors including Independent Directors Committee(s) of the Board and the Boardas a collective entity during the year under review.
A statement indicating the manner in which formal evaluation of the performance of theBoard Committee(s) of the Board individual Directors including the Chairman during theyear under review was carried out is provided in the Corporate Governance Report which isannexed to and forms an integral part of this Board's Report.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
The Independent Directors of your Company were familiarised inter-alia with theindustry in which your Company and its subsidiaries operate Company's business model andoperations in order to give them an insight into the Company's business and itsfunctioning. The Independent Directors were also familiarised with their roles rights andresponsibilities as Independent Directors of the Company.
Details of familiarisation programmes imparted to the Independent Directors during theyear under review including details of number of programmes and number of hours spent byeach Independent Director are hosted on the website of the Company at https://www.indostarcapital.com/investorshtml#codespolicies-wrap.
POLICY ON APPOINTMENT OF DIRECTORS AND SENIOR MANAGEMENT PERSONNEL
In terms of Section 178 of the Act the Listing Regulations and the RBI Directions theBoard of Directors adopted a Policy on Selection Criteria/ Fit &Proper Person Criteria' inter-alia setting out parameters to be considered forappointment of Directors and Senior Management Personnel of the Company.
Details of the Policy on Selection Criteria/ Fit & Proper PersonCriteria have been provided in the Corporate Governance Report which is annexed to andforms an integral part of this Board's Report and is also available on the website of theCompany at https://www.indostarcapital.com/investors. html#codes-policies-wrap.
REMUNERATION POLICY DISCLOSURE OF REMUNERATION & PARTICULARS OF EMPLOYEES
In terms of Section 178 of the Act and the Listing Regulations the Board of Directorsadopted a Remuneration Policy' inter-alia setting out the criteria for determiningremuneration of Executive Directors Non-Executive Directors Senior Management and otheremployees of the Company.
Details of the Remuneration Policy have been provided in the Corporate GovernanceReport which is annexed to and forms an integral part of this Board's Report. TheRemuneration Policy is also available on the website of the Company athttps://www.indostarcapital.com/ investors.html#codes-policies-wrap.
In terms of Section 197 of the Act read with Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the disclosures with respect to theremuneration of Directors Key Managerial Personnel and employees of the Company have beenprovided at Annexure III to this Board's Report.
Statement containing details of employees as required in terms of Section 197 of theAct read with Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is available for inspection at the Registered &Corporate Office of the Company during working hours for a period of 21 days before thedate of the ensuing Annual General Meeting. A copy of the statement may be obtained byshareholders by writing to the Company Secretary at the Registered & Corporate Officeof the Company.
The Board of Directors confirm that the remuneration paid to the Directors was as perthe Remuneration Policy of the Company.
WHISTLE BLOWER POLICY / VIGIL MECHANISM
In terms of Section 177(9) and Section 177(10) of the Act and the Listing Regulationsthe Board of Directors adopted a Whistle Blower Policy/Vigil Mechanism' inter-aliato provide a mechanism for Directors and employees of the Company to approach the AuditCommittee of the Company and to report genuine concerns related to the Company and providefor adequate safeguards against victimisation of Director(s) or employee(s) who reportgenuine concerns under the mechanism.
Details of the Whistle Blower Policy/Vigil Mechanism have been provided in theCorporate Governance Report which is annexed to and forms an integral part of this Board'sReport.
CORPORATE SOCIAL RESPONSIBILITY
In terms of Section 135 of the Act read with the Companies (Corporate SocialResponsibility Policy) Rules 2014 the Board of Directors have constituted a CorporateSocial Responsibility (CSR) Committee and in light of your Company'sphilosophy of being a responsible corporate citizen the Board of Directors adopted aCSR Policy' which lays down the principles and mechanism for undertaking variousprojects / programs as part of Company's CSR activities. During the year under review theCSR Policy of the Company was amended to enhance the areas / fields in which the Companycan undertake its CSR activities. In terms of the CSR Policy Company's CSR activities arefocused in the fields of education women empowerment environment sanitation &water healthcare and humanitarian relief.
Details of the composition of the CSR Committee and the CSR Policy have been providedin the Corporate Governance Report which is annexed to and forms an integral part of thisBoard's Report.
Disclosures in terms of Section 134(3)(o) and Section 135 of the Act read with theCompanies (Corporate Social Responsibility Policy) Rules 2014 with respect to CSRactivities undertaken by the Company during the year under review have been provided at AnnexureIV to this Board's Report.
RISK MANAGEMENT FRAMEWORK
Your Company has in place a mechanism to identify assess monitor and mitigate variousrisks associated with the business of the Company. Major risks identified by the businessand functions if any are systematically addressed through mitigating actions on acontinuing basis. The Board of Directors have adopted a Risk Framework and Policy'which inter-alia integrates various elements of risk management into a unifiedenterprise-wide policy.
The Risk Management Committee of the Company has not identified any elements of riskwhich in their opinion may threaten the existence of your Company. Details of the risksand concerns relevant to the Company are discussed in detail in the Management Discussionand Analysis Report which forms part of the Annual Report.
Details of the Risk Framework and Policy have been provided in the Corporate GovernanceReport which is annexed to and forms an integral part of this Board's Report.
INTERNAL CONTROL / INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
Your Company's well-defined organisational structure documented policies definedauthority matrix and internal controls ensure efficiency of operations compliance withinternal systems / policies and applicable laws. The internal control systems / policiesof your Company are supplemented with internal audits regular reviews by the managementand checks by external auditors. The Audit Committee and the Board of Directors monitorthe internal control systems / policies of your Company. The Risk Management Committee andthe Audit Committee periodically review various risks associated with the business of theCompany along with risk mitigants and ensure that they have an integrated view of risksfaced by the Company. The Board of Directors are of the view that your Company's internalcontrol systems are commensurate with the nature of its business size and complexity ofits operations.
To the best of our knowledge and belief and according to the information andexplanations obtained by us and based on the report(s) of Statutory Auditors andsubmission(s) by Internal Auditors of the Company for the financial year under review theDirectors are of the view that the internal financial controls with reference to thefinancial statements of the Company were adequate and operating efficiently and furtherconfirm that: (i) the Company has comprehensive internal financial control systems thatare commensurate with the size and nature of its business; (ii) the Company has laid downstandards processes and structures which enable implementation of internal financialcontrol systems across the organisation and ensure that the same are adequate andoperating effectively; (iii) the systems are designed in a manner to provide reasonableassurance about the integrity and reliability of the financial statements; (iv) theCompany adopts prudent lending policies and exercises due diligence to safeguard its loanasset portfolio; and (v) the loan approval process involves origination and sourcing ofbusiness leads credit appraisal and credit approval in accordance with approved processes/ matrices.
CEO & CFO CERTIFICATE
Compliance Certificate in terms of Regulation 17(8) of the Listing Regulations on theaudited financial statements and other matters prescribed therein submitted to the Boardof Directors by the Executive Vice-Chairman & CEO and the Chief Financial Officer ofthe Company for financial year ended March 31 2019 is enclosed herewith at Annexure Vto this Board's Report.
BUSINESS RESPONSIBILITY REPORT
In terms of Regulation 34(2)(f) of the Listing Regulations the Business ResponsibilityReport (BRR) of your Company detailing initiatives undertaken by the Company onenvironmental social and governance front during the year under review forms part ofthis Annual Report and has been provided at Annexure VI to this Board's Report andis also available on the website of the Company at http://www.indostarcapital.com/investors.html#agm-wrap.
CONTRACTS / ARRANGEMENTS WITH RELATED PARTIES AND RELATED PARTY TRANSACTION POLICY
In terms of the provisions of the Act the Listing Regulations and the RBI Directionsthe Board of Directors adopted a Related Party Transaction Policy' to ensureobtaining of proper approvals and reporting of transactions with related parties.
In terms of Section 177 of the Act and Regulation 23 of the Listing Regulations readwith the Related Party Transaction Policy of the Company transactions with relatedparties were placed before the Audit Committee for its approval and omnibus approval ofthe Audit Committee was obtained for related party transactions of repetitive naturewithin the limits prescribed by the Board of Directors. The Audit Committee isperiodically updated with respect to related party transactions executed under omnibusapproval.
During the year under review your Company had not entered into any related partytransactions covered within the purview of Section 188(1) of the Act and accordingly therequirement of disclosure of related party transactions in terms of Section 134(3)(h) ofthe Act in Form AOC 2 is not applicable to the Company. All other transactions withrelated parties during the year under review were in compliance with the Related PartyTransaction Policy. Further during the year under review the Company had not enteredinto transactions with related parties which could be considered to be material' inaccordance with the Related Party Transaction Policy of the Company.
Disclosure of the related party transactions as required under Ind AS - 24 is reportedin Note 32 of the audited standalone financial statements of the Company for the financialyear ended March 31 2019.
Details of the Related Party Transaction Policy have been provided in the CorporateGovernance Report which is annexed to and forms an integral part of this Board's Report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
In terms of Section 186(11) of the Act read with Companies (Meetings of Board and itsPowers) Rules 2014 the provisions of Section 186 in respect of loans made guaranteesgiven or securities provided by the Company are not applicable to the Company.
During the year under review your Company has made investment in the equity sharecapital of IHFPL and liquid securities including units of mutual funds in terms of theTreasury Policy of the Company. For details of the investments of the Company pleaserefer Note 6 of the audited standalone financial statements of the Company for thefinancial year ended March 31 2019.
Details of the Investment Policy and the Treasury Policy are provided in the CorporateGovernance Report which is annexed to and forms an integral part of this Board's Report.
EXTRACT OF ANNUAL RETURN
In terms of Section 134(3)(a) and Section 92(3) of the Act read with the Companies(Management and Administration) Rules 2014 the extract of Annual
Return as at financial year ended March 31 2019 in the prescribed Form MGT-9 has beenprovided at Annexure VII to this Board's Report and is also available on thewebsite of the Company at http://www.indostarcapital. com/investors.html#agm-wrap.
EMPLOYEE STOCK OPTION PLANS
Your Company believes that its success and ability to achieve its objectives is largelydetermined by the quality of its workforce and recognises that not only good employmentopportunities but also additional motivating mechanisms are needed to incentiviseemployees and for aligning their interest with the interests of the Company. Inrecognition of the said objective the Company adopted and implemented IndoStar ESOP Plan2012 (ESOP 2012) IndoStar ESOP Plan 2016 (ESOP 2016) IndoStarESOP Plan 2016-II (ESOP 2016-II) IndoStar ESOP Plan 2017 (ESOP2017) and IndoStar ESOP Plan 2018 (ESOP 2018) (collectively referred toas ESOP Plans) to attract retain motivate and incentivise employees of theCompany and its holding / subsidiary companies.
During the year under review after listing of equity shares of the Company on stockexchanges the ESOP Plans were amended in order to align them with regulatory requirementsand in terms of Regulation 12(1) of the Securities and Exchange Board of India (ShareBased Employee Benefits) Regulations 2014 (SEBI ESOP Regulations) the ESOPPlans being pre-IPO plans were ratified by the shareholders of the Company at the AnnualGeneral Meeting held on September 27 2018.
The ESOP Plans of the Company are implemented and administered by the Nomination &Remuneration Committee.
The Board of Directors confirms that the ESOP Plans are in compliance with theprovisions of the Act and the SEBI ESOP Regulations. In terms of Regulation 13 of SEBIESOP Regulations the Statutory Auditors have certified that the ESOP Plans have beenimplemented in accordance with the SEBI ESOP Regulations and the resolutions passed at therespective general meeting(s) in this regard. The said certificate from Statutory Auditorsshall be available for inspection at the ensuing Annual General Meeting of the Company.
Disclosure with respect to the ESOP Plans in terms of Section 62 of the Act read withRule 12(9) of the Companies (Share Capital and Debentures) Rules 2014 have been providedat Annexure VIII to this Board's Report.
Disclosures in terms of Regulation 14 of the SEBI ESOP Regulations read with SEBICircular No. CIR/ CFD/POLICY CELL/2/2015 dated June 16 2015 are available on the websiteof the Company at http://www.indostarcapital.com/investors.html#agm-wrap.
DISCLOSURES UNDER SEXUAL HARASSMENT
OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION & REDRESSAL) ACT 2013
Consistent with its core values your Company is committed to create an environment inwhich all individuals are treated with respect and dignity and to promote a gendersensitive and safe work environment. Accordingly the Board of Directors adopted aCare & Dignity Policy' and also constituted an Internal Complaints Committee incompliance with the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition & Redressal) Act 2013.
Considering geographic diversification throughout the country and increase in number ofemployees the Board of Directors also constituted Regional Internal Complaints Committeesfor North West and South regions.
During the year under review no complaints related to sexual harassment were receivedby the Internal Complaints Committee and the Regional Internal Complaints Committees.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Since your Company is engaged in financial services activities its operations are notenergy intensive nor does it require adoption of specific technology and hence informationin terms of Section 134(3)(m) of the Act read with the Companies (Accounts) Rules 2014 isnot provided in this Board's Report. Your Company is vigilant on the need for conservationof energy.
During the year under review your Company did not have any foreign exchange earningsand incurred foreign currency expenditure of र1.16 crore (previous year: र0.50crore).
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
During the year under review no orders have been passed against your Company by anyregulator(s) or court(s) or tribunal(s) which would impact the going concern status and /or the future operations of your Company.
DIRECTORS RESPONSIBILITY STATEMENT
To the best of our knowledge and belief and according to the information andexplanations obtained by us pursuant to the provisions of Section 134(3)(c) read withSection 134(5) of the Act the Directors hereby confirm that: a) in the preparation of theannual accounts for the financial year ended March 31 2019 the applicable accountingstandards have been followed and no material departures have been made from the same; b)they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitof the Company for that period; c) they have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities; d) they have prepared the annual accounts on a going concern basis;e) they have laid down internal financial controls to be followed by the Company and thatsuch internal financial controls are adequate and were operating effectively; and f) theyhave devised proper systems to ensure compliance with the provisions of all applicablelaws and that such systems were adequate and operating effectively.
APPRECIATION AND ACKNOWLEDGEMENT
The Directors take this opportunity to express their appreciation to all stakeholdersof the Company including the Reserve Bank of India the National Housing Bank theMinistry of Corporate Affairs the Securities and Exchange Board of India the Governmentof India and other Regulatory Authorities the BSE Limited the National Stock Exchange ofIndia Limited the Depositories Bankers Financial Institutions Members Customers andEmployees of the Company for their continued support and trust. Your Directors would liketo express deep appreciation for the commitment shown by the employees in supporting theCompany in achieving continued robust performance on all fronts.
By the Order of the Board of Directors
For IndoStar Capital Finance Limited
|Place: Mumbai ||Chairman |
|Date: June 26 2019 ||DIN: 02018124 |