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L&T Finance Holdings Ltd.

BSE: 533519 Sector: Financials
NSE: L&TFH ISIN Code: INE498L01015
BSE 00:00 | 02 Dec 91.30 3.00
(3.40%)
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88.30

HIGH

92.25

LOW

88.15

NSE 00:00 | 02 Dec 91.35 2.95
(3.34%)
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88.40

HIGH

92.25

LOW

88.15

OPEN 88.30
PREVIOUS CLOSE 88.30
VOLUME 1868923
52-Week high 92.25
52-Week low 58.50
P/E 69.17
Mkt Cap.(Rs cr) 22,625
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 88.30
CLOSE 88.30
VOLUME 1868923
52-Week high 92.25
52-Week low 58.50
P/E 69.17
Mkt Cap.(Rs cr) 22,625
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 Fourteenth AnnualReport together with the audited financial statements for the financial year("FY") ended March 31 2022.

FINANCIAL RESULTS

The summary of the Company's financial performance both on a consolidated andstandalone basis for FY22 as compared to the previous FY i.e. FY21 is given below:

(Rs in Cr)

Particulars Consolidated Standalone
2021-22 2020-21 2021-22 2020-21
Continuing Operations
Total income 12323.55 13753.33 350.46 191.42
Less: Total expenses 11100.70 12717.60 96.03 227.31
Profit before exceptional items and tax 1222.85 1035.73 254.43 (35.89)
Exceptional items - 225.61 - 224.68
Profit before tax 1222.85 1261.34 254.43 188.79
Less: Tax expense 373.62 523.1 1 36.25 72.74
Profit after tax from continuing operations 849.23 738.23 218.18 116.05
Add: Share in profit of associate company - - - -
Net profit after tax from continuing operations and share in profit of associate company 849.23 738.23 218.18 116.05
Discontinued operations*
Profit before tax from discontinued operations 251.96 233.86 - -
Tax expense from discontinued operations 51.95 23.21 - -
Profit after tax from discontinued operations 200.01 210.65 - -
Profit for the year (owners of the Company) 1070.11 970.94 218.18 116.05
Actuarial gain on defined benefit plan (gratuity) net of income tax 0.67 2.76 0.11 0.11
Total comprehensive income for the year (owners of the Company) 1070.78 973.70 218.29 116.16
Add: Balance brought forward from previous year 4642.40 3720.68 124.04 31.68
Transition impact of Ind AS 116 - - - -
Balance Available 5713.18 4694.38 342.33 147.84
Appropriations Dividend paid (including dividend distribution tax)
Transfer to/(from) Reserve u/s 45-IC of Reserve Bank of India Act 1934 206.05 38.33 43.63 23.21
Transfer to impairment reserve - 12.54 - 0.59
Transfer to/(from) General Reserve - 1.11 - -
Transfer to Reserve u/s 36(1)(viii) of Income Tax Act 1961 50.93 - - -
Transfer to Capital Redemption Reserve 33.10 - - -
Surplus in the Statement of Profit and Loss 5423.10 4642.40 298.70 124.04

* As required by Ind AS 105 L&T Investment Management Limited the wholly-ownedsubsidiary of the Company has been presented in the financial statements as "Noncurrent assets held for sale and discontinued operations"

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 Rs 12323.55 Cr in FY22 as compared to Rs 13753.33 Cr in FY21.

• Profit before taxes was Rs 1222.85 Cr in FY22 as compared to Rs 1261.34 Cr inFY21.

• Profit for the year attributable to the owners of the Company was Rs 1070.11 Crin FY22 as compared to Rs 970.94 Cr in FY21.

During the year the net loan book declined from Rs 87030.25 Cr to Rs 82469.44 Cr.

The Average Assets Under Management in the Mutual Fund business stood at Rs 75592 Crfor the quarter ended March 31 2022 as against Rs 72728 Cr for the quarter ended March312021.

Standalone

• Total income was Rs 350.46 Cr in FY22 as compared to Rs 191.42 Cr in FY21.

• Profit before taxes was Rs 254.43 Cr in FY22 as compared to Rs 188.79 Cr inFY21.

• Profit for the year was Rs 218.18 Cr in FY22 as compared to Rs 116.05 Cr inFY21.

Appropriations

The Company proposes to transfer Rs 43.63 Cr (previous year Rs 23.21 Cr) to SpecialReserve created u/s 45-IC of the Reserve Bank of India Act 1934 ("RBI Act").

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 and Analysis section.

MATERIAL CHANGES AND COMMITMENTS

There were no material changes and commitments affecting the financial position of theCompany 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 hasbeen uploaded on the website of the Company at https://www. ltfs.com/ investors.html(click-Dividend Distribution Policy) .

The Board of Directors had declared and paid an interim dividend @ 8.95% 8.00% 7.95%(four options) 7.60% and 7.50% per share on the eight series of cumulativenon-convertible compulsorily redeemable preference shares ("NCRPS") of facevalue of Rs 100 each of the Company during FY22 entailing an outflow of Rs 53.15 Cr.Dividend was paid on a pro-rata basis on NCRPS which were redeemed on an early basis postnecessary approvals.

The Board of Directors is pleased to recommend a final dividend of Rs 0.50 per EquityShare of Rs 10 each subject to approval of the Members at the ensuing Annual GeneralMeeting ("AGM").

In terms of Ind AS 10 events after the reporting period as notified by the Ministry ofCorporate Affairs the proposed dividend of Rs 123.70 Cr is not recognised as liability ason March 31 2022.

The dividend if approved at the ensuing AGM would be paid to those Members whosenames appear in the Register of Members / Beneficial Owners maintained by the depositoriesas stated in Notice of the ensuing AGM.

CREDIT RATING

During the year under review CRISIL Ratings Limited ("CRISIL") CARE RatingsLimited ("CARE") India Ratings and Research Private Limited ("IndiaRatings") and ICRA Limited ("ICRA") have reviewed and reaffirmed theratings on various debt instruments of the Company. ICRA revised the outlook on long-termratings from 'Negative' to 'StableRs in August 2021.

Instruments Rating agencies
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/ Stable (Triple A; Outlook: Stable by ICRA)
Instruments Rating agencies
CRISIL CARE India Ratings ICRA
Preference Shares 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

During the year under review no fund raising activity was undertaken.

Further during the year under review there has been no deviation in the utilisationof rights issue proceeds from the objects stated in the letter of offer dated January 192021.

CHANGES TO SHARE CAPITAL

During the year under review the Company has issued 317000 Equity Shares and4272784 Equity Shares to employees of the Company and its subsidiary companies pursuantto the exercise of stock options under the Employee Stock Option Scheme - 2010 andEmployee Stock Option Scheme - 2013 ("ESOP Schemes") respectively.

During the year under review 25000000 NCRPS amounting to Rs 250 Cr which were duefor redemption were duly redeemed by the Company.

During the year under review 77410000 NCRPS amounting to Rs 774 Cr were dulyredeemed by the Company pursuant to the resolutions passed by the respective NCRPS holdersby way of postal ballot for early redemption of the said NCRPS.

Pursuant to the allotment of Equity Shares under ESOP Schemes and subsequent redemptionof NCRPS the paid-up share capital of the Company was Rs 2574.03 Cr (includingpreference share capital of Rs 100 Cr) as at March 31 2022 as compared to Rs 3593.55 Cr(including preference share capital of Rs 1124.10 Cr) as at March 312021.

EMPLOYEE STOCK OPTION SCHEME

There has been no material change in the ESOP Schemes during the year under review. TheESOP Schemes are in compliance with the SEBI (Share Based Employee Benefits and SweatEquity) Regulations 2021 ("SBSE Regulations").

The disclosures required to be made under the SBSE Regulations are available on thewebsite of the Company at https://www. ltfs.com/investors.html (click- ESOPDisclosure) . The certificate from the Secretarial Auditors confirming compliance withthe aforesaid provisions has been appended as Annexure A to this Report.

INVESTMENT IN SUBSIDIARIES

During the year under review the Company has not made any investments in itssubsidiaries.

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 Section 45-IA ofthe RBI Act.

STATUTORY DISCLAIMER

The Company is having a valid Certificate of Registration dated September 11 2013issued by RBI under Section 45-IA of the RBI Act. However RBI does not accept anyresponsibility or guarantee about the present position as to the financial soundness ofthe Company or for the correctness of any of the statements or representations made oropinions expressed by the Company and for repayment of deposits / discharge of liabilitiesby 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.

Mr. Dinanath Dubhashi (DIN: 03545900) was re-appointed as the Managing Director &Chief Executive Officer of the Company for a term of upto 5 years with effect from April14 2021 to April 13 2026 by the Board based on recommendation of the Nomination andRemuneration Committee ("NRC") of the Company and the re-appointment wasapproved by the Members at the Thirteenth AGM held on July 28 2021.

During the year under review the Board based on the recommendation of the NRCapproved the appointment of Mr. S.N.Subrahmanyan (DIN: 02255382) as the Non-ExecutiveDirector and Chairperson of the Board with effect from February 28 2022. The appointmentof Mr. S.N.Subrahmanyan as the Non-Executive Director was approved by the Members by wayof a postal ballot in accordance with the provisions of Sections 152 and 161 of the Actand SEBI Listing Regulations. Mr. Shailesh Haribhakti ceased to be the Chairperson of theBoard with effect from February 28 2022.

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. Dinanath Dubhashi willretire by rotation at the ensuing AGM and being eligible has offered himself forre-appointment.

Further Mr. Prabhakar B. (DIN: 02101808) Director of the Company who also retires byrotation at the ensuing AGM has expressed his desire to not seek reappointment. It isproposed not to fill up the vacancy thereby caused. The Board records its deepappreciation for contribution by Mr. Prabhakar B. in guiding and supporting the managementduring his tenure as a Director of the Company.

The terms and conditions of appointment of Independent Directors are also available onthe 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 SEBI ListingRegulations stating that they meet the criteria of independence as provided in Section149(6) of the Act and Regulations 16(1)(b) of the SEBI Listing Regulations and they arenot aware of any circumstance or situation which exist or may be reasonably anticipatedthat could impair or impact his / her ability to discharge his / her duties with anobjective independent judgment 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 details relating to the familiarization programmeare available on the website of the Company at https://www.ltfs.com/investors.html (clickFamiliarization 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 2022 the Company had following KMPs:

1) Dinanath Dubhashi - Managing Director & Chief Executive Officer

2) Sachinn Joshi - Chief Financial Officer

3) Apurva Rathod - Company Secretary

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 SEBIListing Regulations requires the NRC to formulate a policy relating to the remunerationof the Directors Senior Management / KMPs and other employees of the Company andrecommend the same for approval of the Board.

Further Section 134 of the Act stipulates that the Board's Report is required toinclude a statement on company's policy on Directors' appointment and remunerationincluding criteria for determining qualifications positive attributes independence ofdirector and remuneration for KMPs and other employees ("the Policy").

The Board of Directors has based on the recommendation of the NRC of the Companyapproved the Policy which is available on the website of the Company at

https://www.ltfs.com/investors.html (click-Policyon Directors' Appointment) .

B. Brief framework of the Policy

The objective of this Policy is:

a) to determine inter-alia qualifications positive attributes and independence of aDirector;

b) to guide on matters relating to appointment and removal of Directors and SeniorManagement;

c) to lay down criteria / evaluate performance of the Directors;

d) to guide on determination of remuneration of the Directors Senior Management / KMPsand other employees; and

e) To ensure relationship of remuneration to performance is clear and meets appropriateperformance 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 before theappointment 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 a Director is subject to the provisions of the Act and SEBI ListingRegulations.

Appointment of Managing Director and Wholetime Director is subject to the provisions ofSections 196 197 198 and 203 of the Act read with Schedule V and Rules thereunder. Aperson cannot occupy the position as a Managing Director / Whole- time Director beyond theage of seventy years unless the appointment is approved by a special resolution passed bythe Company in general meeting. No re-appointment is made earlier than one year before theexpiry 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 31 on the basis of the foll owi ng criteria:

a) Membership & Attendance - Board and Committee Meetings;

b) Contribution during such meetings;

c) Active participation in strategic decision making;

d) Inputs to executive management on matters of strategic importance;

e) Performance of the directors;

f) Fulfillment of the independence criteria and their independence from the management;and

g) Such other matters as the NRC / Board may determine from time to time.

Executive Directors

The NRC carries out evaluation of performance of Executive Directors ("EDs")every year ending March 31. 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 initiates the process of evaluation of the aforementioned personsevery year ending March 31 with the Department Head(s) / Management concerned. KPIs areidentified well in advance at the commencement of the financial year. Performancebenchmarks are set and evaluation of employees is done by the respective reportingManager(s) / Management / Department Head(s) / NRC / as prescribed by law or regulator todetermine whether the performance benchmarks are achieved. The payment of remuneration /annual increment to the aforementioned persons is determined after the satisfactorycompletion of evaluation process.

The HR Department of the Company is authorised to design the framework for evaluatingthe EDs / Senior Management / KMPs / employees. The objective of carrying out theevaluation by the Company is to identify and reward those with exceptional performancesduring the financial year. Training and Development Orientation programmes on a need basisare provided to employees whose performance during any financial year does not meet thebenchmark 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 ensure that:

a. the level and composition of remuneration is reasonable and sufficient to attractretain and motivate Directors of the quality required to run the Company successfully;

b. relationship of remuneration to performance is clear and meets appropriateperformance benchmarks; and

c. remuneration to Directors Senior Management / KMPs involves a balance between fixedand incentive pay reflecting short and long-term performance objectives appropriate to theworking of the Company and its goals.

During the year under review the Policy was amended to carry out the changes asrequired due to changes in the regulatory provision(s).

PERFORMANCE EVALUATION

Pursuant to the provisions of the Act and the SEBI Listing Regulations the Board hascarried out an annual evaluation of its own performance performance of the Directorsindividually 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 bemade.

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

The process of the annual performance evaluation broadly comprises:

a) Board and Committee Evaluation:

• Evaluation of the Board as a whole and the Committees is done by the individualDirectors / members followed by submission of collation to NRC for discussion andfeedback to the Board.

b) Independent / Non-Executive Directors Evaluation:

• Evaluation done by Board members excluding the Director being evaluated isreceived and individual feedback is provided to each Director as per the policy forperformance evaluation of the Board / its Committees / Directors / as per the processapproved by the NRC / Board.

c) Chairperson / Managing Director & Chief Executive Officer Evaluation:

• Evaluation as done by the individual directors is submitted to the Chairpersonof the NRC and Chairperson of the NRC presents the feedback at the NRC Meeting andsubsequently at the Board Meeting.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

The 1st Integrated Report of the Company titled 'Driving SustainableGrowth-People Business Community' will be made available on the website of the Companyat https://www.ltfs.com/csr.html . This report has been prepared in accordance with theprinciples of International Integrated Reporting Council's (IIRC's) Framework. Thedisclosures have been made in accordance with the Global Reporting Initiative (GRI)Standards. Additionally on a voluntary basis the Company has provided cross referencingto Business Responsibility and Sustainability Report ("BRSR") disclosuresspecified by SEBI in its circular SEBI/HO/ CFD/CMD-2/P/CIR/2021/562 dated May 10 2021 inits Integrated Report.

Further in terms of Regulation 34(2)(f) of the SEBI Listing Regulations the Companyis required to submit a Business Responsibility Report ("BRR") as a part of theAnnual Report. The Company's BRR describing the initiatives taken by the Company is hostedon the website of the Company at https://www. ltfs.com/ investors.html (click-BusinessResponsibility Report) .

REPORT ON CORPORATE GOVERNANCE

The Report on Corporate Governance for the year under review is forming a part of theAnnual Report. The certificate from the Secretarial Auditors of the Company confirmingcompliance with the conditions of Corporate Governance is appended to the CorporateGovernance Report.

STATUTORY AUDITORS

Pursuant to the provisions of Section 139(2) of the Act and the rules made thereunderand RBI requirements the Members at their Thirteenth AGM held on July 28 2021 hadappointed M/s Khimji Kunverji and Co. LLP Chartered Accountants (ICAI Registration No.105146W/W100621) as the Statutory Auditors of the Company for a term of three years i.e.from the conclusion of Thirteenth AGM till the conclusion of the Sixteenth AGM.

AUDITORS' REPORT

The Auditors' Report to the Members for the year under review is unmodified. The Notesto the Accounts referred to in the Auditors' Report are self-explanatory and therefore donot 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 M/s Alwyn Jay and Co. Practicing Company Secretary(Membership No.: F3058 and Certificate of Practice No.: 6915) to undertake the SecretarialAudit of the Company for FY22.

Further in terms of the provisions of Regulation 24A of the SEBI Listing Regulationsand Circular No. CIR/ CFD/CMD1/27/2019 dated February 8 2019 issued by SEBI M/s AlwynJay and Co. has issued the Annual Secretarial Compliance Report confirming compliance bythe Company of the applicable SEBI regulations and circulars / guidelines issuedthereunder.

The Secretarial Audit Report is appended as Annexure B to this Report. There isno adverse remark qualification reservation or disclaimer in the Secretarial AuditReport.

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 informationis 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 DirectorsKMPs and other employees and is in accordance with the requirements of the Act and SEBIListing Regulations and none of the employees listed in the said Annexure are related toany Directors 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.

The details of conservation of energy and technology absorption at L&T FinancialServices ("LTFS") are as follows:

a. Conservation of Energy

(i) Steps taken or impact on conservation of energy:

• Installation of sensor-based lighting within the office premises whichautomatically turns the lights off when not in use.

• Set up of variable frequency drives for air handling units and pumps for optimumuse of electricity.

• Installation of LED-based energy efficient lighting fixtures in the officepremises.

• Optimisation of office space across branches leading to relocation of 24branches thereby achieving better energy efficiency.

• Installation of energy efficient ACs in offices.

• Installation of Automatic Tube Cleaning System (ATC system) for maintenance ofchiller.

(ii) Steps taken for utilizing alternate sources of energy:

• Corporate headquarters shifted to Renewable Energy.

b. Technology Absorption:

The details pertaining to technology absorption at LTFS (usage of digital and dataanalytics to build sustainable competitive advantage) are covered in the ManagementDiscussion and Analysis section.

c. Foreign Exchange Earnings and Outgo:

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 0.72 Cr(previous year Rs 0.69 Cr) towards professional fees.

DEPOSITORY SYSTEM

The Company's Equity Shares are compulsorily tradable in electronic form. As on March31 2022 out of the Company's total equity paid-up share capital comprising of2474035488 Equity Shares only 29551 Equity Shares were in physical form and theremaining capital was in dematerialised form.

As per SEBI notification No. SEBI/LAD-NRO/GN/2018/24 dated June 8 2018 and furtheramendment vide notification No. SEBI/LAD-NRO/GN/2018/49 dated November 30 2018 requestsfor effecting transfer of securities is not processed from April 12019 unless thesecurities are held in the dematerialised form with the depositories.

Further with effect from January 24 2022 transmission or transposition of securitiesheld in physical or dematerialised form is also effected only in dematerialised form.

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 the various businesssegments. As of March 31 2022 the Company had 8 subsidiaries (including step-downsubsidiaries).

During the year under review the Board of Directors of the Company at its meeting heldon December 23 2021 had approved the sale of 100% of the paid-up share capital of L&TInvestment Management Limited a wholly-owned subsidiary of the Company and the assetmanager of1 L&T Mutual Fund to HSBC Asset Management (India) PrivateLimited. The said sale is subject to receiptof necessary approvals.

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. Thedetails of the policy for determining Material Subsidiaries are available on the websiteof the Company at https://www.ltfs.com/investors.html (click-Policy on 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 the businesses of subsidiaries and the contribution thereofis given as a part of the Management Discussion and Analysis section.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Act the Board of Directors confirmthat to the best of its knowledge and belief:

1) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures if any;

2) the Directors have 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 as at March 312022 and of the profit ofthe Company for that period;

3) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

4) the Directors have prepared the annual accounts on a going concern basis;

5) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and operating effectively;and

6) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

SECRETARIAL STANDARDS

The Company has complied with Secretarial Standards issued by the Institute of CompanySecretaries of India on Board Meetings and General Meetings.

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 in line with the Board approved Risk Based Internal AuditPolicy.

The IA function of LTFS monitors and evaluates the efficacy and adequacy of theinternal control system in the Company to ensure that financial reports are reliableoperations are effective and efficient and activities comply with applicable laws andregulations. Based on the report of the IA function process owners undertake correctiveaction if any in their respective areas and thereby strengthen the controls. Significantaudit observations and corrective actions thereon are presented to the Audit Committee("AC") of the Company from time to time.

BOARD MEETINGS

The details of the Board meetings held during FY22 are disclosed in the CorporateGovernance 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 & ESG Committee areprovided in the Corporate Governance Report.

The Company has also formulated a CSR policy ("CSR Policy") in accordancewith the requirements of the Act containing details specified therein which is availableon the website of the Company at https://www.ltfs.com/csr.html(click-CSR Policy) .

The Company aims to promote inclusive social transformation of the rural communities bynurturing and creating opportunities for sustainable livelihoods. The CSR efforts of theCompany closely align with the Sustainable Development Goals (SDGs) 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). The CSRinterventions follow a project-based accountability approach emphasizing on theprinciples of 'Social impact' 'Scale' and 'Sustainability' to create shared value for allstakeholders. The key projects are undertaken in focused areas of interventions vizDigital Financial Inclusion Disaster Management and other initiatives.

During the year under review the CSR Policy has been updated as below:

• Revision in the thrust areas based on Company strategy

• Changes aligned with the amendment to the Act Considering that there is noaggregate net profit for the preceding three financial years calculated pursuant to theAct the Company did not have an obligation to spend any amount on CSR interventionsduring FY22. The total amount spent on CSR activities by the subsidiaries of the Companywas Rs 24.44 Cr.

An annual report on activities as required under Companies (Corporate SocialResponsibility 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 Mechanism Framework underwhich the Whistle Blower Investigation Committee has been set up. The objective of theframework is to establish a redressal forum which addresses all concerns raised onquestionable practices and through which the Directors employees and service providerscan raise actual or suspected violations.

Necessary details pertaining to the framework are disclosed in the Corporate GovernanceReport appended to this Report.

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

The particulars of loans guarantees and investments as per Section 186 of the Act bythe Company have been disclosed in the financial statements.

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 with therequirements of the Act RBI regulations and the SEBI Listing Regulations the Company hasformulated the RPT Policy which is also available on the website of the Company athttps://www.ltfs.com/investors.html (click-RPT Policy) . The RPT Policy intends to ensurethat proper reporting approval and disclosure processes are in place for all transactionsbetween the Company and the related parties.

Key features of the RPT Policy are as under:

• All transactions with related parties ("RPTs") irrespective of itsmateriality and any subsequent material modification to any existing RPTs are referred tothe AC of the Company for prior approval. The process of approval of RPTs by the AC Boardand Shareholders is as under:

a) Audit Committee:

All RPTs and subsequent material modification irrespective of whether they are in theordinary course of business or at an arm's length basis require prior approval of AC.

Only those members of the AC who are independent directors approve RPTs.

RPTs to which the subsidiary of the Company is a party but the Company is not a partyrequire prior approval of the Company if the value of such transaction whether enteredinto individually or taken together with previous transactions during a financial yearexceeds ten per cent of the annual consolidated turnover as per the last auditedfinancial statements of the listed entity with effect from April 1 2022.

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 businessand / or which requires shareholders' approval are approved by the Board.

c) Shareholders:

All material RPTs and subsequent material modification thereof require approval of theshareholders based on recommendation of the Board through ordinary resolution passed atthe general meeting.

Where any contract or arrangement is entered into by a director or any other employeewithout obtaining the consent of the Board or approval by an 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.

Prior approval of the AC and the shareholders is not required for a transaction towhich the listed subsidiary is party but the Company is not a party if Regulation 23 andRegulation 15(2) of the SEBI Listing Regulations are applicable to such listed subsidiary.

The following transactions are exempted from the approval requirements as per SEBIListing Regulations and / or the Act:

• holding company and its wholly-owned subsidiary;

• two wholly-owned subsidiaries of the listed holding company whose accounts areconsolidated with such holding company.

TRANSACTIONS WITH RELATED PARTIES

All RPTs that were entered into during FY22 were on an arm's length basis and in theordinary course of business and disclosed in the Financial Statements. There were nomaterially significant RPTs made by the Company with Promoters Directors KMPs or BodyCorporate(s) which had a potential conflict with the interest of the Company at large.Accordingly the disclosure of RPTs as required under the provisions of Section 134(3) (h)of the Act in Form AOC-2 is not applicable. The Directors draw attention of the Members tonotes to the Financial Statements which sets out related party disclosures.

RISK MANAGEMENT FRAMEWORK

The Company has constituted a Group Risk Management Committee ("GRMC") interms of the requirements of Regulation 21 of the SEBI Listing Regulations and RBIregulations and has also adopted a Risk Management Policy. The details of the same aredisclosed in the Corporate Governance Report.

The Company and its subsidiaries have a risk management framework and Board members areinformed about risk assessment and minimization procedures and periodical review to ensuremanagement controls risk by means of a properly designed framework. The AC and the Boardis kept apprised of the proceedings of the meetings of the GRMC and also apprised aboutthe risk management framework at its subsidiaries. The Company as it advances towards itsbusiness objectives and goals is often subjected to various risks. Credit risk marketrisk liquidity risk ESG risk and operational risk are some of the risks that yourCompany is exposed to and details of the same are provided in the Management Discussionand Analysis section.

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) Act2013 where complaints in the nature of sexual harassment can be registered. Appropriatereporting mechanisms are in place for ensuring protection against sexual harassment andthe right to work with dignity.

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 https://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.

Further no penalties have been levied by RBI / any other regulators during the yearunder review.

RBI REGULATIONS

The Company has complied with the applicable regulations of RBI as on March 31 2022.

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 SEBI BSE Limited NationalStock Exchange of India Limited Ministry of Finance Ministry of Corporate AffairsRegistrar of Companies other government and regulatory authorities lenders financialinstitutions and the Company's bankers for the ongoing support extended by them. TheDirectors also place on record their sincere appreciation for the continued supportextended by the Company's stakeholders and trust reposed by them in the Company. TheDirectors sincerely appreciate the commitment displayed by the employees of the Companyand its subsidiaries across all levels for exhibiting outstanding performance during suchchallenging times.

For and on behalf of the Board of Directors
L&T Finance Holdings Limited
S.N.Subrahmanyan Dinanath Dubhashi
Non-Executive Director Managing Director
& Chairperson & Chief Executive Officer
DIN: 02255382 DIN:03545900
Place: Mumbai
Date: April 29 2022

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