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L&T Finance Holdings Ltd.

BSE: 533519 Sector: Financials
NSE: L&TFH ISIN Code: INE498L01015
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OPEN 83.20
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VOLUME 806488
52-Week high 113.40
52-Week low 51.71
P/E
Mkt Cap.(Rs cr) 20,748
Buy Price 0.00
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Sell Price 0.00
Sell Qty 0.00
OPEN 83.20
CLOSE 83.80
VOLUME 806488
52-Week high 113.40
52-Week low 51.71
P/E
Mkt Cap.(Rs cr) 20,748
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

L&T Finance Holdings Ltd. (L&TFH) - Director Report

Company director report

Dear Members

The Directors of your Company have the pleasure in presenting the Thirteenth AnnualReport together with the audited financial statements for the financial year("FY") ended March 31 2021.

FINANCIAL RESULTS

The summary of the Company's financial performance both on a consolidated andstandalone basis for FY 2020-21 as compared to the previous FY 2019-20 is givenbelow:

Particulars Consolidated Standalone
2020-21 2019-20 2020-21 2019-20
Total Income 14080.10 14476.75 191.42 522.38
Less: Total Expenses 12810.51 11796.67 227.31 238.64
Profit before exceptional items and tax 1269.59 2680 (35.89) 283.74
Exceptional items 225.61 - 224.68 -
Profit before Tax 1495.20 2680.08 188.79 283.74
Less: Tax Expense 546.32 979.82 72.74 16.93
Profit after Tax 948.88 1700.26 116.05 266.81
Add: Share in profit of associate company - - - -
Net profit after tax and share in profit of associate 948.88 1700.26 116.05 266.81
company
Profit for the year (owners of the Company) 970.94 1700.17 116.05 266.81
Actuarial gain on defined benefit plan (gratuity) net of income tax 2.76 (4.59) 0.11 (0.11)
Total comprehensive income for the year (owners of the Company) 973.70 1695.58 116.16 266.70
Add: Balance brought forward from previous year 3720.68 2771.41 31.68 203.20
Transition impact of Ind AS 116 - (2.35) - (0.03)
Balance Available 4694.38 4464.64 147.84 469.87
Appropriations
Dividend paid (including dividend distribution tax) - 422.33 - 380.48
Transfer to/(from) Reserve u/s 45-IC of Reserve 35.86 225.06 23.21 53.36
Bank of India Act 1934
Transfer to impairment reserve 12.54 15.82 0.59 4.35
Transfer to/(from) Debenture Redemption Reserve - - - -
Transfer to Reserve u/s 36(1)(viii) of Income Tax Act 1961 - 80.75 - -
Transfer to Reserve u/s 29-C of National Housing Bank - - - -
Surplus in the Statement of Profit and Loss 4645.98 3720.68 124.04 31.68

FINANCIAL PERFORMANCE

Being a Core Investment Company the Company's standalone revenue is substantiallydividend from its subsidiaries and hence it is meaningful to look at the consolidatedperformance.

Consolidated

Total income was Rs14080.10 Cr in FY 2020-21 as compared to Rs14476.75 Cr in FY2019-20.

Profit before taxes was Rs1495.20 Cr in FY 2020-21 as compared to Rs2680.08 Cr in FY2019-20.

Profit for the year attributable to owners of the

Company was Rs970.94 Cr in FY 2020-21 as compared to Rs1700.17 Cr in FY 2019-20.

During the year the net loan book declined from Rs91324.63 Cr to Rs87030.25 Cr.

The Average Assets Under Management ("AAUM") in the mutual fund businessstood at Rs72728 Cr for the quarter ended March 31 2021 as against Rs71056 Cr for thequarter ended March 31 2020.

Standalone

Total income was Rs 191.42 Cr in FY 2020-21 as compared to Rs 522.38 Crin FY 2019-20.

Profit before taxes was Rs 188.79 Cr in FY 2020-21 as compared to Rs 283.74Cr in FY 2019-20.

Profit for the year was Rs 116.05 Cr in FY 2020-21 as compared to Rs266.81 Cr in FY 2019-20.

Appropriations

The Company proposes to transfer Rs 23.21 Cr (previous year Rs 53.36 Cr)to Special Reserve created u/s 45–IC of the Reserve Bank of India Act 1934.

Cost Records

The Company is not required to maintain cost records as per the provisions of Section148(1) of the Companies Act 2013 ("the Act").

INFORMATION ON THE STATE OF AFFAIRS OF THE COMPANY

The information on the affairs of the Company has been given as part of the ManagementDiscussion & Analysis Report forming part of this Report.

MATERIAL CHANGES AND COMMITMENTS

In FY 2019-20 the Boards of Directors of L&T Finance Limited("LTF") L&T Infrastructure Finance Company Limited ("LTIF") andL&T Housing Finance Limited ("LTHF") the wholly owned subsidiaries of theCompany have approved the amalgamation of LTIF and LTHF with LTF by way of merger byabsorption under the provisions of Sections 230 - 232 of the Act (including the rulesthereunder) and other relevant provisions of the Act. Further post receipt of thesanction orders from National Company Law Tribunal Mumbai and National Company LawTribunal Kolkata and the approval of the Board of LTF LTIF and LTHF merged withLTF w.e.f. April 12 2021.

They were no other material changes and commitments affecting the financial position ofthe Company which occurred between the end of the financial year to which these financialstatements relate and the date of this Report.

DIVIDEND

The Dividend Distribution Policy of the Company approved by the Board is in line withthe Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 ("SEBI

Listing Regulations"). The Policy has been uploaded on thewebsiteoftheCompanyatwww.ltfs.com/investors.html. (click-Dividend Distribution Policy).

The Board of Directors had declared and paid an interim dividend @ 8.95% 8.15% 8.00%7.95% (four options) 7.60% and 7.50% (two options) per share on the nine series ofCumulative Compulsorily

Redeemable Non-Convertible Preference Shares ("CCRPS") of face value of Rs100 each of the Company during FY 2020-21 in accordance with the provisions of therespective Information Memoranda entailing an outflow of Rs 95.96 Cr (excludingDividend Distribution Tax). For the year ended on March 31 2021 your Company hasnot considered the proposal to pay dividend in view of the current challengingtimes arising on account of COVID-19 pandemic as the focus has been on strengthening thebalance sheet and making it more robust.

CREDIT RATING

During the year under review CRISIL Limited ("CRISIL") CARE Ratings Limited("CARE") India Ratings and

Research Private Limited ("India Ratings") and ICRA Limited("ICRA") have reviewed the ratings on various debt instruments of the Companyand reaffirmed the ratings as given below.

Rating agencies
Instruments CRISIL CARE India Ratings ICRA
Non- convertible Debentures CRISIL AAA/Stable (Triple A; Outlook: Stable by CRISIL) CARE AAA/ Stable (Triple A; Outlook: Stable by CARE) IND AAA/ Stable (Triple A; Outlook: Stable by India Ratings) ICRA AAA/ Negative (Triple A: Outlook: Negative by ICRA)
CCRPS CRISIL AAA/Stable (Triple A; Outlook: Stable by CRISIL) CARE AAA (RPS)/ Stable (Triple A [Redeemable Preference Shares]; Outlook: Stable by CARE) - -
Commercial Papers CRISIL A1+ (A One Plus by CRISIL) CARE A1+ (A One Plus by CARE) IND A1+ (A One Plus by India Ratings) ICRA A1+ (A One Plus by ICRA)

The instruments / bank facilities with long term ratings of AAA are considered to havehighest degree of safety regarding timely servicing of financial obligations. Suchinstruments carry lowest credit risk.

The instruments with short term ratings of A1+ are considered to have very strongdegree of safety regarding timely payment of financial obligations. Such instruments carrylowest credit risk.

FUND RAISING Rights Issue

During the year under review the Board of Directors of the Company issued 461325021Equity Shares of face value of Rs 10 each on rights basis to eligible equityshareholders of the Company who were on the Register of Members as on January 22 2021being the record date fixed for the purpose ("Eligible Equity Shareholders") atan issue price of Rs 65 per fully paid-up equity share (including a premium of Rs55 per equity share). The rights entitlement ratio was 17:74 (i.e. 17 Equity Shares wereoffered for every 74 shares fully paid-up Equity Shares held by the Eligible EquityShareholders of the Company).

There has been no deviation in the utilisation of rights issue proceeds from theobjects stated in the letter of offer dated January 19 2021.

Non-Convertible Debentures

During the year under review the Company issued 1950 Unsecured RedeemableNon-Convertible Debentures ("NCDs") of face value Rs 1000000 each aggregatingto R195 Cr on a private placement basis.

CHANGES TO SHARE CAPITAL

During the year under review the Company has allotted 461325021 Equity Shares offace value of Rs 10 each to the Eligible Equity Shareholders under rights issue atan issue price of Rs 65 per Equity Share (including premium of Rs 55 perEquity Share) thereby raising funds aggregating to Rs 2998.61 Cr.

Further the Company has issued 684500 Equity Shares and 2602573 Equity Shares toemployees of the Company and its subsidiary companies pursuant to the exercise of stockoptions under the Employee Stock Option Scheme – 2010 and Employee Stock Option

Scheme 2013 ("ESOP Scheme") respectively. Also 60000000 CCRPS amountingto Rs 600 Cr which were due for redemption were duly redeemed by the Company.

Pursuant to allotment of Equity Shares under Rights issue ESOP Scheme and subsequentredemption of CCRPS the paid-up share capital of the Company was

Rs 3593.55 Cr (including preference share capital of R1124.10 Cr) as atMarch 31 2021 as compared to Rs 3728.93 Cr (including preference share capital of R1724.10Cr) as at March 31 2020.

EMPLOYEE STOCK OPTION SCHEME

The disclosures required to be made under the Securities and Exchange Board of India(Share Based Employee Benefits) Regulations 2014 is available on the website of theCompany at https://www.ltfs.com/investors.html

(click-ESOP Disclosure). The certificate from the Statutory Auditors confirmingcompliance with the aforesaid provisions has been appended as Annexure A to thisReport.

INVESTMENT IN SUBSIDIARIES

During the year under review the Company infused capital in its following subsidiariesby subscribing to the Equity/Ordinary Shares offered by them:

Name of subsidiary company Amount of capital subscribed (R in Cr)
L&T Capital Markets (Middle East) Limited 2.52

REGISTRATION AS A CORE INVESTMENT COMPANY

The Company is a registered Non-Banking Financial Institution - Core Investment Company("NBFC-CIC") pursuant to the receipt of Certificate of Registration from theReserve Bank of India ("RBI") dated September 11 2013 under Section45-IA of the Reserve Bank of India Act 1934.

STATUTORY DISCLAIMER

The Company is having a valid Certificate of Registration dated September 11 2013issued by RBI under Section 45-IA of the Reserve Bank of India Act 1934. HoweverRBI does not accept any responsibility or guarantee about the present position as to thefinancial soundness of the Company or for the correctness of any of the statements orrepresentations made or opinions expressed by the Company and for repayment of deposits /discharge of liabilities by the Company.

FIXED DEPOSITS

The Company being non-deposit taking NBFC-CIC has not accepted any deposits from thepublic during the year under review.

DIRECTORS

The composition of the Board is in accordance with the provisions of Section 149 of theAct and Regulation 17 of the SEBI Listing Regulations with an appropriate combination ofNon-Executive Directors and Independent Directors. The complete list of Directors of theCompany has been provided as part of the Corporate Governance Report.

During the year under review Mr. Thomas Mathew T. was re-appointed for a second termof 5 consecutive years with effect from July 1 2020 to June 30 2025 as an IndependentDirector in accordance with the provisions of Sections 149 and 152 of the Act and theappointment was approved by the Members at the Twelfth Annual General Meeting("AGM") held on July 28 2020. The tenure of Mr. Dinanath Dubhashi whowas appointed as a Whole-time Director designated as Deputy Managing Director ofthe Company with effect from April 14 2016 upto and including July 21 2016 and asManaging Director for the period July 22 2016 upto and including April 13 2021on the terms and conditions approved by the Members at their Eighth AGM held onAugust 23 2016 was expiring on April 13 2021.

In views of the aforesaid and pursuant to the

AnnuAl RepoRt 2020-21 43 provisions of Sections 196 197 203 read with ScheduleV of the Act and any other applicable provisions of the Act read with relevant rules madethereunder and based on the recommendation of the Nomination and RemunerationCommittee of the Company ("NRC") the Board at its Meeting held on March 192021 approved the re-appointment of Mr. Dinanath Dubhashi as the Managing Director andChief Executive Officer of the Company for another term of five consecutive yearsi.e. with effect from April 14 2021 to April 13 2026 subject to the approval of theMembers at the ensuing AGM.

Section 152 of the Act provides that unless the Articles of Association provide forretirement of all directors at every AGM not less than two-third of the total number ofdirectors of a public company (excluding the Independent Directors) shall be persons whoseperiod of office is liable to determination by retirement of directors by rotation ofwhich one-third are liable to retire by rotation. Accordingly Mr. R. Shankar RamanNon-Executive Director will retire by rotation at the ensuing AGM and being eligible hasoffered himself for re-appointment.

The terms and conditions of appointment of Independent Directors are availableon the website of the Company at https://www.ltfs.com/investors.html

(click-Appointment of ID).

The Board is of the opinion that the Independent Directors of the Company possessrequisite qualifications experience expertise and hold highest standards of integrity.

Declaration by Independent Directors

All Independent Directors have submitted the declaration of independence pursuant tothe provisions of Section 149(7) of the Act and Regulation 25(8) of the SEBIListing Regulations stating that they meet the criteria of independence as provided inSection 149(6) of the Act and Regulations 16(1)(b) of the SEBI Listing Regulations andthey are not aware of any circumstance or situation which exist or may be reasonablyanticipated that could impair or impact his/ her ability to discharge his/ her dutieswith an objective independent judgement and without any external influence.

Familiarization Programme

The Company has familiarized the Independent Directors with the Company their rolesresponsibilities in the Company nature of industry in which the Company operatesbusiness model of the Company etc. The Company had conducted familiarization programme onESG Framework for the Board of Directors of the Company. The details relating to thefamiliarization programme are available on the website of the Company atwww.ltfs.com/investors.html

(click-Familiarization Programme).

Fit and Proper Criteria & Code of Conduct

All the Directors meet the fit and proper criteria stipulated by RBI. All the Directorsand Senior Management of the Company have affirmed compliance with the Code of Conduct ofthe Company.

KEY MANAGERIAL PERSONNEL ("KMPs")

There was no change in the KMPs of the Company during the year under review. As atMarch 31 2021 the Company had following KMPs:

1) Mr. Dinanath Dubhashi – Managing Director & Chief Executive Officer("MD & CEO")

2) Mr. Sachinn Joshi – Chief Financial Officer

3) Ms. Apurva Rathod – Company Secretary

DuringtheyearMr.DinanathDubhashiwasre-appointed as MD & CEO and designated as KMPfor another term of five years with effect from April 14 2021 up to April 13 2026subject to the approval of the Members at the ensuing AGM.

COMPANY'S POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION FOR DIRECTORS KEYMANAGERIAL PERSONNEL AND OTHER EMPLOYEES

A. Background and objectives

Section 178 of the Act and Regulation 19 read with

Part D of Schedule II of the SEBI Listing Regulations requires the NRC to formulate apolicy relating to the remuneration of the Directors Senior Management / KMPs and otheremployees of the Company and recommend the same for approval of the Board. FurtherSection 134 of the Act stipulates that the Board's Report is required to include astatement on the Company's Policy on Directors' appointment and remuneration includingcriteria for determining qualifications positive attributes independence of director andremuneration for KMPs and other employees. The Board of Directors has based on therecommendation of the NRC of the Company approved the policy on Directors' appointmentand remuneration for Directors KMP and other employees which is available on the websiteof the Company at www.ltfs.com/investors.html (click-Policy on Directors' Appointment).

B. Brief framework of the Policy

The objective of this Policy is: a) to determine inter-alia qualifications positiveattributes and independence of a Director; b) to guide on matters relating to appointmentand removal of Directors and Senior Management; c) to lay down criteria / evaluateperformance of the Directors; d) to guide on determination of remuneration of theDirectors Senior Management / KMPs and other employees; and e) to ensure relationship ofremuneration to performance is clear and meets appropriate performance benchmarks.

C. Appointment of Director(s) – Criteria Identification

The NRC identifies and ascertains the integrity professional qualification expertiseand experience of the person who is proposed to be appointed as a director andappropriate recommendation is made to the Board with respect to his / her appointment.Appointment of Independent Directors is subject to the provisions of Section 149 of theAct read with Schedule IV and rules thereunder and SEBI Listing Regulations. The NRCsatisfies itself that the proposed person satisfies the criteria of independence asstipulated under Section 149(6) of the Act and SEBI Listing Regulations beforeappointment as an Independent Director.

No person is eligible to be appointed as a Director if he / she is subject to anydisqualifications as stipulated under the Act or any other law(s) for the time being inforce.

Appointment of Managing Director and Whole-time Director is subject to theprovisions of Sections 196 197 198 and 203 of the Act read with Schedule V and rulesthereunder. A person shall not occupy the position as a Managing Director / Whole-timeDirector beyond the age of seventy years unless the appointment is approved by a specialresolution passed by the Company in general meeting. No re-appointment is made earlierthan one year before the expiry of term.

D. Evaluation criteria of Directors and Senior Management / KMPs / Employees

Independent Directors / Non-Executive Directors

The NRC carries out evaluation of performance of Independent Directors / Non-ExecutiveDirectors every year ending March 31st on the basis of the following criteria: a)Membership & Attendance - Board and Committee Meetings; b) Contribution during suchmeetings; c) Active participation in strategic decision making; d) Inputs to executivemanagement on matters of strategic importance;

e) Performance of the directors; f) Fulfillment of the independence criteria and theirindependence from the management; and g) Such other matters as the NRC / Board maydetermine from time to time.

Executive Directors

The NRC carries out evaluation of performance of Executive Directors ("EDs")every year ending March 31st. The evaluation is on the basis of Key Performance Indicators("KPIs") which are identified well in advance for EDs and weights assigned foreach measure of performance keeping in view the distinct roles of EDs. The identified KPIsfor EDs are approved by the Board pursuant to recommendation of the NRC if required.

Senior Management / KMPs / Employees

The HR Department carries out the evaluation of the aforementioned persons every yearending March 31st with the Department Head(s) /

Management concerned. KPIs are identified well in advance at the commencement of thefinancial year. Performance benchmarks are set and evaluation of employees is done by therespective reporting Manager(s) / Management/ Department Head(s) to determine whether theperformance benchmarks are achieved. The payment of remuneration / annual increment to theaforementioned persons is determined after the satisfactory completion of evaluationprocess.

The HR Department of the Company is authorised to design the framework for evaluatingthe EDs / Senior Management /

KMPs / employees. The objective of carrying out the evaluation by the Company is toidentify and reward those with exceptional performances during the financial year.Training and Development Orientation programmes on a need basis are provided to employeeswhose performance during any financial year does not meet the benchmark criteria.

E. Criteria for Remuneration

The NRC while determining and / or recommending the criteria for remuneration /remuneration for Directors Senior Management / KMPs and other employees ensures that: a.the level and composition of remuneration is reasonable and sufficient to attract retainand motivate Directors of the quality required to run the Company successfully; b.relationship of remuneration to performance is clear and meets appropriate performancebenchmarks; and c. remuneration to Directors Senior Management

/ KMPs involves a balance between fixed and incentive pay reflecting short andlong-term performance objectives appropriate to the working of the Company and its goals.

During the year under review the Policy was amended to include the retirement age ofExecutive Director / Managing Director of the Company. Also the changes required underregulatory provision were carried out to the Policy.

PERFORMANCE EVALUATION

Pursuant to the provisions of the Act and the SEBI

Listing Regulations the Board has carried out an annual evaluation of its ownperformance performance of the Directors individually and the Committees of the Board.

Manner of Evaluation

The NRC and the Board have laid down the manner in which formal annual evaluation ofthe performance of the Board its Committees and individual directors is required to becarried out.

It includes circulation of evaluation forms separately for evaluation of the Board andits Committees Independent Directors / Non-Executive Directors / Managing Director andChief Executive Officer and Chairperson of the Company.

The process of the annual performance evaluation broadly comprises: a) Board andCommittee Evaluation:

Evaluation of Board as a whole and the

Committees is done by the individual directors /members followed by submission ofcollation to NRC and feedback to the Board. b) Independent/ Non-Executive DirectorsEvaluation:

Evaluation done by Board members excluding the Director being evaluated is submitted tothe Chairperson of the Company and individual feedback provided to each Director. c)Chairperson / Managing Director & Chief Executive Officer Evaluation:

Evaluation as done by the individual directors is submitted to the Chairperson of theNRC and Chairperson of the NRC provides feedback to the NRC and subsequently to the Board.

SUSTAINABILITY REPORT AND BUSINESS RESPONSIBILITY REPORT

The detailed Sustainability Report will be available on the website of the Company athttps://www.ltfs.com/csr.html.

The information disclosed in the Sustainability Report is aligned to the GlobalReporting Initiative ("GRI") Standards for sustainability reporting. Theprinciples applied for defining contents of the report and quality are as prescribed bythe GRI Standards. Additionally on a voluntary basis the Company has providedcross referencing to Business Responsibility and Sustainability Report ("BRSR")disclosures specified by SEBI in its circular SEBI/HO/CFD/CMD-2/P/

CIR/2021/562 dated May 10 2021 in its Sustainability Report.

Further in terms of Regulation 34(2)(f) of the SEBI Listing Regulations theCompany is required to submit a Business Responsibility Report ("BRR") asa part of the Annual Report. The Company's BRR describing the initiatives taken bythe Company is hosted on the website of the Company atwww.ltfs.com/investors.html (click-Business Responsibility Report).

REPORT ON CORPORATE GOVERNANCE

The Report on Corporate Governance for the year underreviewisformingpartoftheAnnualReport.Thecertificate from the Statutory Auditors of theCompany confirming compliance with the conditions of Corporate Governance is appended tothe Corporate Governance Report.

STATUTORY AUDITORS

Pursuant to the provisions of Section 139(2) of the Act and the rules made thereunderthe Members at their Eighth AGM held on August 23 2016 had appointed M/s.Deloitte Haskins & Sells LLP

Chartered Accountants (ICAI Firm's Registration Number 117366W/W-100018) and M/s. B. K.Khare & Co. Chartered Accountants (ICAI Firm's Registration Number 105102W) as theJoint Statutory Auditors of the Company for a term of five years i.e. from the conclusionof Eighth AGM till the conclusion of the Thirteenth AGM.

In view of the aforesaid M/s. Deloitte Haskins & Sells

LLP Chartered Accountants and M/s. B. K. Khare & Co.

Chartered Accountants would cease to be the Joint Statutory Auditors of the Company atthe conclusion of the ensuing AGM. In view of the aforesaid the Board on therecommendation of the Audit Committee ("AC") recommended the appointment of M/sKhimji Kunverji and Co LLP Chartered Accountants (ICAI Firm's

Registration Number 105146W/W100621) as the Statutory Auditors of the Company for aterm of three years in accordance with the requirements stipulated by the RBI theCompany's regulator to hold office from the conclusion of the ensuing AGM i.e. ThirteenthAGM till the conclusion of the Sixteenth AGM subject to the approval of the Members atthe ensuing AGM of the Company.

M/s Khimji Kunverji and Co LLP Chartered Accountants have confirmed that theirappointment if made will comply with the eligibility criteria in terms of Section 141(3)of the Act and RBI regulations. Further the Auditors have confirmed that they havesubjected themselves to Peer Review process by the Institute of

Chartered Accountants of India ("ICAI") and hold valid certificate issued bythe Peer Review Board of ICAI.

AUDITORS' REPORT

The Auditors' Report to the Members for the year under review is unmodified/ clean. TheNotes to the Accounts referred to in the Auditors' Report are self-explanatory andtherefore do not call for any further clarifications under Section 134(3)(f) of the Act.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Act the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 and Regulation 24A of the SEBI ListingRegulations the

Company had appointed Ms. Naina R. Desai Practicing

Company Secretary (Membership No.: F1351; Certificate of Practice No.: 13365) toundertake the Secretarial

Audit of the Company for FY 2020-21.

Further in terms of the provisions of the Circular No. CIR/CFD/CMD1/27/2019 datedFebruary 8 2019 issued by SEBI Ms. Desai has issued the Annual Secretarial ComplianceReport confirming compliance by the Company of the applicable SEBI Regulations andcirculars / guidelines issued thereunder. The Secretarial Audit Report is appended as AnnexureB to this Report. There is no adverse remark qualification reservation or disclaimerin the Secretarial Audit Report.

PARTICULARS OF EMPLOYEES

The information required pursuant to the provisions of Section 197 of the Act read withRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 in respect of employees of the Company has been appended as Annexure C to thisReport.

In terms of first proviso to Section 136 of the Act the Report and Accounts are beingsent to the Members and others entitled thereto excluding the information on employees'particulars as required pursuant to provisions of Rule 5(2) and 5(3) of the Companies(Appointment and Remuneration of Managerial

Personnel) Rules 2014. The said Annexure is available for inspection by the Members.

The Board of Directors affirms that the remuneration paid to the employees of theCompany is as per the

Policy on Directors' appointment and remuneration for Directors KMPs and otheremployees and is in accordance with the requirements of the Act and SEBI ListingRegulations and none of the employees listed in the said Annexure are related to anyDirectors of the Company.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Considering that the Company is a Core Investment Company carrying out its activitiesthrough its subsidiaries the particulars regarding conservation of energy and technologyabsorption as required to be disclosed pursuant to the Rule 8(3) of the Companies(Accounts) Rules 2014 are not relevant to its activities.

Some of the steps taken by L&T Financial Services ("LTFS") forconservation of energy includes:

- Installation of sensor-based lighting within the office premises which automaticallyturns the lights off when not in use.

- Set up of variable frequency drives for air handling units and pumps for optimum useof electricity.

- Installation of LED-based energy efficient lighting fixtures in the office premises.

- Installation of a sewage treatment plant for treatment of waste water to be reusedfor gardening and air conditioning.

There were no foreign exchange earnings during the year (previous year also Nil); whilethe expenditure in foreign currency by the Company during the year was Rs 0.69 Crtowards professional fees and nil travelling expenses (previous year Rs 0.79 Cr and Rs0.08 Cr respectively).

DEPOSITORY SYSTEM

The Company's Equity Shares are compulsorily tradable in electronic form. As on March31 2021 out of the Company's total equity paid-up share capital comprising of2469445704 Equity Shares only 4701 Equity Shares were in physical form and theremaining capital is in dematerialized form.

As per SEBI notification no. SEBI/LAD-NRO/GN/2018/24 dated June 8 2018 and furtheramendment vide notification no. SEBI/LADNRO/ GN/2018/49 dated November 30 2018 requestsfor effecting transfer of securities (except in case of transmission or transposition ofsecurities) cannot be processed from April 1 2019 unless the securities are held in thedematerialized form with the depositories.

Therefore Members holding securities in physical form are requested to take necessaryaction to dematerialize their holdings.

SUBSIDIARY COMPANIES

The Company conducts its business through its subsidiaries in various businesssegments. As of March 31 2021 the Company had 10 subsidiaries (including stepdown subsidiaries) and as on the date of this report the Company had 8 subsidiaries(including step down subsidiaries).

During the year under review pursuant to a Share Purchase Agreement the Companycompleted the sale of its investment in L&T Capital Markets Limited to IIFL WealthFinance Limited on April 24 2020 and accordingly L&T Capital Markets Limited ceasedto be a subsidiary of the Company.

During the year under review the Board of Directors of the Company at their meetingheld on July 16 2020 had approved the proposal to voluntarily winding-up L&T CapitalMarkets (Middle East) Limited the wholly owned subsidiary of the Company (carrying on theoffshore wealth management business) subject to applicable laws of United Arab Emirates.L&T Capital Markets (Middle East) Limited was voluntarily liquidated with effect fromDecember 17 2020 post completion of all regulatory requirements and accordingly ceasedto be a subsidiary of the Company. In FY 2019-20 the Boards of Directors of L&TFinance Limited ("LTF") L&T Infrastructure Finance Company Limited("LTIF") and L&T Housing Finance Limited ("LTHF") the whollyowned subsidiaries of the Company have approved the amalgamation of LTIF and LTHFwith LTF by way of merger by absorption under the provisions of Sections 230 - 232of the Act (including the rules thereunder and other relevant provisions of the Act.Further post receipt of the sanction orders from National Company Law TribunalMumbai and National Company Law Tribunal Kolkata and the approval of the Board of LTFLTIF and LTHF merged with LTF w.e.f. April 12 2021.

MATERIAL SUBSIDIARIES

As required under Regulations 16(1)(c) and 46 of the SEBI Listing Regulations theBoard of Directors has approved the Policy for determining Material Subsidiaries("Policy"). The details of the Policy are available on the website of theCompany at www.ltfs.com/investors.html (click-Policy for determining MaterialSubsidiaries)

PERFORMANCE AND FINANCIAL POSITION OF EACH SUBSIDIARY / ASSOCIATE AND JOINT VENTURECOMPANIES

As required under Rule 5 and Rule 8(1) of the Companies (Accounts) Rules 2014 areport on the performance and financial position of each of the subsidiaries andassociates of the Company has been appended as Annexure D to this Report. Thehighlights of performance of subsidiaries and the contribution by such subsidiaries isgiven as a part of the Management Discussion & Analysis Report forming part of thisReport.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Act the Board of Directorsconfirms that to the best of its knowledge and belief: 1) in the preparation of theannual accounts the applicable accounting standards have been followed along with properexplanation relating to material departures if any; 2) the Directors have selected suchaccounting policies and applied them consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company as at March 31 2021 and of the profit of the Company for that period; 3) theDirectors have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities; 4) the Directorshave prepared the annual accounts on a going concern basis; 5) the Directors have laiddown internal financial controls to be followed by the Company and that such internalfinancial controls are adequate and operating effectively; and 6) the Directors havedevised proper systems to ensure compliance with the provisions of all applicable lawsincluding applicable secretarial standards and that such systems were adequate andoperating effectively.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an internal control system commensurate with the size scale andcomplexity of its operations. Testing of such systems forms a part of review by theInternal Audit ("IA") function. The scope and authority of the IA function isdefined in the IA Charter. The IA function of LTFS monitors and evaluates theefficacy and adequacy of the internal control system in the Company to ensure thatfinancial reports are reliable operations are effective and efficient and activitiescomply with applicable laws and regulations. Based on the report of the IA functionprocess owners undertake corrective action if any in their respective areas and therebystrengthen the controls. Significant audit observations and corrective actions thereon arepresented to the AC of the Company from time to time.

BOARD MEETINGS

The details of the Board meetings held during FY 2020-21 are disclosed in theCorporate Governance Report appended to this Report.

COMPOSITION OF AUDIT COMMITTEE

The Company has constituted an AC in terms of the requirements of the Act Regulation18 of the SEBI Listing Regulations and RBI Regulations. The details of the same aredisclosed in the Corporate Governance Report.

CORPORATE SOCIAL RESPONSIBILITY

In accordance with the requirements of the provisions of Section 135 of the Act theCompany has constituted a Corporate Social Responsibility ("CSR") and ESGCommittee. The composition and terms of reference of the CSR and ESG Committee areprovided in the Corporate Governance Report.

The Company has also formulated a CSR Policy ("Policy") in accordance withthe requirements of the Act and containing details specified therein which is available onthe website of the Company at www.ltfs.com/csr.html (click-CSR Policy). The Policy of theCompany is a clear alignment with the United Nations' global development agenda ofSustainable Development Goals (SDG) particularly ‘No Poverty' (SDG 1)‘Gender equality' (SDG 5) ‘Sustainable cities and Communities' (SDG 11)‘Climate Action' (SDG 13) and ‘Partnership for the Goals' (SDG 17). Theinclusion of all stakeholders based on a priority matrix is clearly articulated in thePolicy and all the programmes are passed through this matrix before beingimplemented on the ground for creating maximum stakeholder value. Our keyinitiatives are woven around Sustainable Livelihoods of Rural communities facilitated byfocused areas of intervention – Digital Financial Inclusion Disaster Management andother programmes. During the year under review the Policy has been updated as below:

Revision in thrust areas based on strategy

Amendments as a result of the

(Corporate Social Responsibility Policy) Amendment Rules 2021

Further considering that there is no aggregate net profit for the preceding threefinancial years calculated pursuant to provisions of Section 135 of the Act the Companywas not required to contribute any amount on CSR activities during FY 2020-21. An annualreport on activities as required under Companies (Corporate Social Responsibility Policy)Rules 2014 has been appended as Annexure E to this Report.

VIGIL MECHANISM

Pursuant to Rule 7 of the Companies (Meetings of Board and its Powers) Rules 2014 readwith Section 177(9) of the Act the Company has adopted a Vigil MechanismFramework under which the Whistle Blower Investigation Committee ("theCommittee") has been set up. The objective of the framework is to establish aredressal forum which addresses all concerns raised on questionable practices andthrough which the Directors and employees can raise actual or suspected violations.

The Vigil Mechanism Framework empowers all levels of employees including top managementto raise voice against actual/ suspected violations. The implementation of theframework is monitored through the Committee which meets on a quarterly basis and allcases are discussed in detail before it's presented to the AC. It addresses all concernsraised on questionable practices. The framework ensures protection to the whistle-blowerto avoid any sort of unfair or prejudicial employment practices. The Chairperson of the AChas direct access to all complaints raised through the framework. At the AC brief updateis presented to the Members for their review. The Committee takes necessary actions tomaintain confidentiality within the organization on matters brought to its attention. Themechanism framed by the Company is in compliance with the requirements of the Act and SEBIListing Regulations and the same is available on the website of the Company atwww.ltfs.com/investors.html

(click-Vigil Mechanism Policy).

PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN OR SECURITY PROVIDED BYTHE COMPANY

Details of loans guarantees and investments are given in the Notes to the FinancialStatements as applicable.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

The Board of Directors has approved the policy on transactions with related parties("RPT Policy") pursuant to the recommendation of the AC. In line withthe requirements of the Act RBI Regulations and the SEBI Listing Regulations theCompany has formulated the RPT Policy which is also available on the website of theCompany at www.ltfs.com/investors. html (click-RPT Policy). The RPT Policy intends toensure that proper reporting approval and disclosure processes are in place for alltransactions between the Company and the related parties.

Key features of the RPT Policy are as under:

All transactions with related parties ("RPTs") are referred to the AC of theCompany for approval irrespective of its materiality. The AC also approves anysubsequent modification in the RPTs. The process of approval of RPTs by the AC Board andShareholders is as under:

a) Audit Committee:

RPTs irrespective of whether they are in All the ordinary course of business or at anarm's length basis require approval of AC.

b) Board:

Generally all RPTs are in the ordinary course of business and at arm's length price.

RPTs which are not at arm's length and which are not in the ordinary course of businessare approved by the Board.

c) Shareholders:

All material RPTs require prior approval of the All shareholders based onrecommendation of the Board through ordinary resolution passed at the general meeting.However approval of the shareholders is not required to be obtained by the Company if theproposed transaction is to be entered into with its wholly owned subsidiaries.

Where any contract or arrangement is entered into by a director or any other employeewithout obtaining the consent of the Board or approval by ordinary resolution in thegeneral meeting it is required to be ratified by the Board or the shareholders at ameeting as the case may be within three months from the date on which such contract orarrangement was entered into.

All RPTs that were entered into during FY 2020- 21 were on an arm's length basis andwere in the ordinary course of business and disclosed in the Financial Statements. Therewere no materially significant RPTs made by the Company with Promoters Directors KMPs orBody Corporate(s) which had a potential conflict with the interest of the Company atlarge. Accordingly the disclosure of RPTs as required under the provisions of Section134(3)(h) of the Act in Form AOC-2 is not applicable. The Directors draw attention of theMembers to Notes to the Financial Statements which sets out related party disclosures.

RISK MANAGEMENT FRAMEWORK

The Company has constituted a Risk Management Committee ("RMC") in terms ofthe requirements of Regulation 21 of the Listing Regulations and has also adopted a RiskManagement Policy. The details of the

RMC are disclosed in the Corporate Governance Report. The Company and its subsidiarieshave a risk management framework and Board members are informed about risk assessment andminimization procedures and periodical review to ensure management controls risk by meansof a properly designed framework. The AC is kept apprised of the proceedings of themeetings of the RMC and also apprised about the risk management framework at itssubsidiaries. The Company as it advances towards its business objectives and goals isoften subjected to various risks. Credit risk market risk liquidity risk and operationalrisk are some of the risks that your Company is exposed to and details of the same areprovided in the Management Discussion and Analysis Report.

PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE

The Company has in place a policy for prevention prohibition and redressal of sexualharassment at workplace. Further the Company has constituted an Internal Committee underthe Sexual Harassment of

Women at Workplace (Prevention Prohibition and Redressal) Act 2013 where employeescan register their complaints against sexual harassment. Appropriate reporting mechanismsare in place for ensuring protection against sexual harassment and the right to work withdignity.

During the year under review the Company has not received any complaints in thisregard.

ANNUAL RETURN AS PRESCRIBED UNDER THE ACT

The Annual Return in Form MGT-7 as required under Section 92(3) of the Act is availableon the website of the Company at www.ltfs.com/investors.html

(click-Annual Return).

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant and material orders passed by the Regulators / Courts whichwould impact the going concern status of the Company and its future operations. Furtherno penalties have been levied by RBI / any other Regulators during the year under review.

RBI REGULATIONS

The Company has complied with all the applicable regulations of RBI as on March 312021.

OTHER DISCLOSURES

During the year under review the Company has not obtained any registration/ license /authorisation by whatever name called from any other financial sector regulators.

ACKNOWLEDGEMENT

The Directors express their sincere gratitude to the RBI Securities and Exchange Boardof India BSE Limited National Stock Exchange of India Limited Ministry of FinanceMinistry of Corporate Affairs Registrar of Companies other government and regulatoryauthorities lenders financial institutions and the Company's bankers for the ongoingsupport extended by them. The Directors also place on record their sincere appreciationfor the continued support extended by the Company's stakeholders and trust reposed by themin the Company. The Directors sincerely appreciate the commitment displayed by theemployees of the Company and its subsidiaries across all levels for exhibitingoutstanding performance during such challenging times.

For and on behalf of the Board of Directors L&T Finance Holdings Limited

Shailesh Haribhakti Dinanath Dubhashi
Chairperson Managing Director &
DIN: 00007347 Chief Executive Officer
DIN: 03545900
Place: Mumbai
Date: June 24 2021

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