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Max Financial Services Ltd.

BSE: 500271 Sector: Financials
NSE: MFSL ISIN Code: INE180A01020
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OPEN 1122.05
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VOLUME 29329
52-Week high 1147.90
52-Week low 515.00
P/E 384.64
Mkt Cap.(Rs cr) 38,228
Buy Price 1098.00
Buy Qty 1.00
Sell Price 1110.00
Sell Qty 5.00
OPEN 1122.05
CLOSE 1122.30
VOLUME 29329
52-Week high 1147.90
52-Week low 515.00
P/E 384.64
Mkt Cap.(Rs cr) 38,228
Buy Price 1098.00
Buy Qty 1.00
Sell Price 1110.00
Sell Qty 5.00

Max Financial Services Ltd. (MFSL) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting the Thirty- second Board'sReport of Max Financial Services Limited ("MFSL" or "the Company")along with the audited Financial Statements for the financial year ended March 31 2020.

Standalone Results

The highlights of the standalone financial results of your Companyalong with previous year's figures (prepared as per IND-AS) are as under:

(Rs. in crores)

Year ended 31.03.2020 Year ended 31.03.2019
Revenue from operations 494.94 316.63
Other income 0.08 1.15
Total income 495.02 317.78
Expenses
Finance costs 0.20 27.25
Loss on fair value changes on derivative financial instruments 102.61
Employee benefits expenses 22.86 76.40
Depreciation and amortization expense 9.89 1.75
Legal and professional expenses 44.39 43.51
Other expenses 21.36 16.87
Total expenses 98.70 268.39
Profit before tax 396.32 49.39
Tax expense 123.78 -
Profit after tax for the year 272.54 49.39
Other comprehensive income for the year (0.12) (0.30)
Total comprehensive income (after tax) 272.42 49.09

The Company had filed application with the income tax authorities underthe 'The Direct Tax Vivad se Vishwas Act 2020' ('the Scheme') enacted vide the Gazetteof India on March 17 2020 regarding settlement of the ongoing tax litigation pertainingto

Telecom stake sale made by its erstwhile subsidiary Max TelecomVentures Limited (since merged with the Company w.e.f. December 1 2005). The saidlitigation was being contested both by the Company and the Income Tax Department formultiple years pending before various Appellate Authorities.

The settlement proposed by the Company under the Scheme has beenaccepted by the Tax Department for all the years under dispute viz. Assessment Year199899 Assessment Year 1999-2000 and Assessment Year 2006-07 and the Company has paid thecumulative tax amount of Rs. 123.78 crores determined under the provisions of the Schemetowards full and final settlement of the tax arrears.

Your Company is primarily engaged in business of making and holdinginvestments in its subsidiary Max Life Insurance Company Limited and providing managementconsultancy services to group companies and accordingly in terms of extant RBI guidelinesyour Company is a Core Investment Company ("QC") with its financial incomeexceeding 50% of its total income and financial assets (investment in securities etc.)exceeding 50% of the total assets. However it does not meet the criteria stipulated byRBI for Systemically Important CIC and hence registration under Section 45-IA of RBI Act1934 is not required.

Net worth of your Company on a standalone basis grew by around 14% toRs 2280 crore as at March 31 2020 as against Rs. 2000 Crores as at March 312019.

Consolidated Results

In accordance with the Companies Act 2013 ("the Act") andapplicable accounting standards the audited consolidated financial statements areenclosed as part of this Annual Report.

In FY 2019-20 MFSL reported consolidated revenues of Rs. 18242crores 7% lower compared to the previous year due to volatility in markets in March 2020caused by COVID-19 pandemic causing a mark-to-market loss on debt and equity portfolio.

The Net Premiums at Rs. 15927 crores grew at 11% compared to theprevious year. The Company reported consolidated Profit after Tax of Rs.273 crores 34%lower compared to the previous year largely due to shift in product mix towardsnonparticipating products investments in expansion of proprietary channel provision forimpairment on financial instruments and one-time tax expense on settlement of tax disputeunder Vivad se Vishwas Scheme.

Max Life achieved a significant milestone this year with its Assetsunder Management (AUM) crossing the Rs. 70000 crores mark for the first time in February2020. The AUM as at March 31 2020 stood at Rs. 68471 crores growing 9% over theprevious year owing to COVID-19 led market volatility in March 2020. Another benchmarkset by Max Life was in the Claims Paid Ratio category. Already being an industry leaderwith the highest claims paid ratio of 98.74% in FY19 as per the Insurance Regulatory andDevelopment Authority of India (IRDAI) Annual Report Max Life further improved the ratioby 48 bps to 99.22% during Q4FY20. The Market Consistent Embedded value of Max Life as onMarch 31 2020 was Rs.9977 crores with an Operating Return on Embedded Value (RoEV) of20.3% and the value of new business at Rs. 897 crores has grown 5% with the margins at21.6% in line with the previous year

The highlights of the consolidated financial results of your Companyand its subsidiary are as under:

Year ended 31.03.2020 Year ended 31.03.2019
Revenue From operations 18239.98 19509.65
Other income 1.78 3.61
Total income 18241.76 19513.26
Expenses
Finance costs 0.28 27.30
Impairment on financial instruments 71.43 5.02
Employee benefits expenses 35.95 84.37
Depreciation amortization and impairment 11.37 1.75
Legal and professional expenses 44.39 43.51
Policyholders' Expenses of Life Insurance operations 17596.54 18838.60
Other expenses 39.32 31.87
Total expenses 17799.28 19032.42
Profit before tax 442.48 480.84
Tax expense 169.63 64.38
Profit after tax for the year 272.85 416.46
Other comprehensive income for the year 12.99 1.31
Total comprehensive income 285.84 417.77
Total comprehensive income attributable to
Owners of the company 154.38 263.41
Non-controlling interests 131.46 154.36

Material Changes affecting Financial Position

There are no material changes and commitments affecting the financialposition of the Company which has occurred between the end of the financial year of theCompany i.e. March 31 2020 and the date of the Directors' report i.e. May 26 2020 exceptthe Postal ballot notice issued to shareholders for MSI Swap transaction and execution ofthe definitive documents regulatory filings and Postal ballot notice issued to theShareholders for the Axis transaction as detailed below:

The Board of Directors of the Company in its meeting held on March 32020 had considered and approved the issuance and allotment of up to 75458088 equityshares of the Company of the face value of Rs. 2 each fully paid up on a preferentialbasis to Mitsui Sumitomo Insurance Company Limited (MSI) for consideration other thancash i.e. through swap of 394775831 equity shares of Rs. 10 each of Max Life InsuranceCompany Limited ("Max Life") ("MSI Swap") based on the valuationreport obtained by the Company in accordance with applicable laws. In addition theCompany through a call/put option has a right to acquire the remaining shareholding held

by MSI at Rs. 85/- for every Equity Share of Rs. 10/- each held by MSIin Max Life ("MSI Put/Call Option"). In this regard the Company has executeddefinitive agreements with the parties. The said transaction was subject to receipt ofrequisite shareholders approvals and regulatory approvals and hence no adjustments havebeen made in the financial statements.

The Company had issued Notice dated March 3 2020 for convening anextra ordinary general meeting (EGM) of the shareholders of the Company on April 2 2020.The meeting was postponed to April 16 2020 in view of the pandemic situation of COVID-19.On account of extension of nationwide lockdown till May 3 2020 the adjourned EGM of theCompany was cancelled for want of requisite quorum. On April 24 2020 Postal BallotNotice was issued for seeking the approval for MSI Share Swap and MSI Put/Call Option fromshareholders of the Company by way of Special Resolution. The results of the Postal Ballotwill be announced on May 27 2020.

On February 20 2020 the Company and Axis Bank Limited ("AxisBank") executed Confidentiality and Exclusivity Agreement to explore a long-termstrategic partnership. The Board of Directors of the Company had approved in its meetingheld on April 27 2020 to enter into definitive agreements with Axis Bank for the sale of29% of the equity share capital of Max Life a material subsidiary of the Company to AxisBank which will have the effect of Max Life becoming a 70:30 joint venture between theCompany and Axis Bank after series of transactions. On May 15 2020 Postal Ballot Noticewas issued seeking the approval for the proposed transaction from shareholders of theCompany by way of Special Resolution. The proposed transaction is subject to receipt ofrequisite shareholders approvals regulatory approvals (including RBI IRDAI and CCI) andsatisfaction conditions precedent and hence these will be reflected in the subsequentquarter financial results once the transaction is consummated.

Further the Company will work towards delivering the following valuecreation options to Axis Bank as agreed under the definitive agreements. The Companyalong with Max Life and promoters of the Company will take all steps to merge the Company

into Max Life resulting into a listed insurance company in terms ofapplicable law ('Merger'). From the Closing Date Axis Bank will have the right tosubscribe to equity shares of the Company in lieu of all or part of the equity shares heldby Axis Bank in Max Life ('Swap Transaction') and the Company will undertake all actionsto effect the Swap Transaction. Any income tax payable pursuant to the Swap Transactionshall be split equally between the Company and Axis Bank.

If the Merger is not completed within 5 years from the Closing Dateand Axis Bank has exercised its right for the Swap Transaction but the Company fails toconsummate the Swap Transaction then Axis Bank shall have the right to require theCompany to purchase all the shares held by Axis Bank in Max Life at INR 294 per sharesubject to the terms of the definitive agreements.

Estimation of uncertainties relating to COVID-19 global health pandemic

The Company has considered the impact of COVID-19 on its operations aswell as its financial statements including carrying amounts of trade receivablesinvestments property plant and equipment and other assets as at March 31 2020. Inassessing the carrying value of these assets the Company has used internal and externalsources of information up to the date of approval of these financial statements and basedon current estimates expects the net carrying amount of these assets will be recovered.The Company will continue to closely monitor any material changes to the business andfinancial statements due to COVID-19 wherever required.

Further the Group has assessed the impact of COVID-19 on itsoperations as well as its financial statements including valuation of investmentsvaluation of policy liabilities and solvency for the year ended March 312020. To thebest of the information available the subsidiary of the Company has provided anadditional Rs. 1000.00 lakhs in policyholders reserve on account of COVID relatedcontingencies over and above the policy level liabilities calculated based on prescribedIRDAI Regulations. The Company will continue to closely monitor any material changes tothe business and financial statements due to COVID-19.

Subsidiaries Associates & Joint Venture companies

As on March 312020 your Company had only 1 (one) subsidiary i.e. MaxLife Insurance Company Limited ("Max Life"). There were no other associate orjoint venture companies. The basic details of subsidiary form part of Form MGT-9 attachedto this report as Annexure - 1.

During the year under review your Company acquired 14170817 equityshares of Rs. 10/- each in Max Life. Accordingly the equity stake of the Company in MaxLife increased to 72.52% as at March 31 2020.

A report on the performance and financial position of Max Lifeincluded in the consolidated financial statements presented in Form AOC-1 is attached tothis report as Annexure - 2 as per Rule 8(1) of the Companies (Accounts) Rules2014.

Further a detailed update on the business achievements of Max Lifebeing the key operating subsidiary is furnished as part of Management Discussion andAnalysis section which forms part of this Annual Report.

As provided in Section 136 of the Companies Act 2013 the financialstatements and other documents of the subsidiary company Max Life Insurance CompanyLimited are not being attached with the financial statements of the Company. The completeset of financial statements including financial statements of the subsidiary of theCompany is available on website of the Company at www.maxfinancialservices.com.These documents will also be available for inspection during business hours at theregistered office of the Company and shall also be made available to the shareholders ofthe Company in hard copy on demand.

Dividend

Your Directors have not recommended any dividend for the financial year2019-20.

The Board of Directors of your Company has approved a DividendDistribution Policy in line with Regulation 43A of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 ("ListingRegulations") and the said policy is attached to this report as Annexure-3.The said policy is also available on website of

the Company at www.maxfinancialservices.com/shareholder-information.

Transfer to Reserves

The Company has not transferred any amount to reserves during the yearunder review.

Share Capital

During the financial year the Authorized share capital of the Companywas increased from Rs.600000000/- (Rupees Sixty Crores only) comprising of 300000000equity shares of Rs. 2/- each to Rs. 700000000 (Rupees Seventy Crores) divided into350000000 (Thirty Five Crores) Equity Shares of Rs. 2/- each.

During the year under review 123708 equity shares of Rs.2/- eachwere allotted to the option-holders under the 'max employee stock plan 2003' ('2003plan').

The Paid up capital of the Company as on March 31 2020 was Rs.539018974/- (Rupees Fifty three crores ninety lakhs eighteen thousand nine hundredseventy four) comprising of 269509487 equity shares of Rs. 2/- each.

Further after end of the financial year on March 31 2020 and till thedate of this report i.e. May 26 2020 your Company had allotted 65017 equity shares ofRs.2/- each to the option-holders under the aforesaid 2003 Plan.

Employee Stock Option Plan

Your Company has an employee stock option plan viz. 'Max Employee StockPlan 2003' ('2003 Plan') in place. The 2003 Plan provides for grant of stock optionsaggregating not more than 5% of number of issued equity shares of the Company to eligibleemployees and Directors of the Company. The 2003 Plan is administered by the Nominationand Remuneration Committee constituted by the Board of Directors of the Company. Detailsof options granted up to March 31 2019 and other disclosures as required under SEBI(Share Based Employee Benefits) Regulations 2014 are enclosed to this report as Annexure- 4.

The statutory auditors of your Company M/s Deloitte Haskins &Sells LLP Chartered Accountants have time- to-time certified that the Employee StockOption Scheme of the Company has been implemented in

accordance with the applicable SEBI Regulations and the resolutionspassed by the Members in this regard. A certificate to this effect shall also be placedbefore the members at the ensuing Annual General Meeting.

During the year under review the Nomination and Remuneration Committeeof Directors of the Company ("NRC") granted 115420 stock options to Mr. MohitTalwar Managing Director with effect from April 1 2019 and 32010 Stock Options to Mr.Jatin Khanna Chief Financial Officer of the Company with effect from July 2 2019 whichwill vest with them in a graded manner. Further the NRC granted 33855 Stock Options toMr. Jatin Khanna Chief Financial Officer of the Company with effect from April 3 2020which will vest with him in a graded manner.

DIRECTORS

As on date of this report the Board of Directors of your Companycomprised of 8 (eight) members with 1 (one) Executive Director and 7 (seven) Non-ExecutiveDirectors of which 5 (five) are independent. Mr. Analjit Singh (DIN: 00029641) Chairmanof the Company is a Non Executive Promoter Director.

Mr. Ashwani Windlass and Mr. Sanjay Omprakash Nayar non-executivedirectors of the Company resigned from the Board of the Company with effect from January16 2020 and February 6 2020 respectively. Your Directors place their deep appreciationfor the valuable contributions made by Mr. Ashwani Windlass and Mr. Sanjay Nayar duringtheir association with the Company.

Mrs. Naina Lal Kidwai was appointed as an Independent Director of theCompany for a period of five years with effect from January 15 2016. The five year tenureof Mrs. Naina Lal Kidwai as Independent Director of the Company shall be completed onJanuary 14 2021.

In accordance with the Section 149(10) of the Companies Act 2013 andthe SEBI Listing Regulations an Independent Director shall hold office for a term up to 5(five) consecutive years on the Board of the Company and shall be eligible forre-appointment for another term of up to five consecutive years on passing of a specialresolution by the Company.

Your directors recommend the re-appointment of Mrs. Naina Lal Kidwai asan Independent Director on the Board of the Company for another term of five years.

Further in terms of Section 152 of the Act and the Articles ofAssociation of the Company Mr. Sahil Vachani is liable to retire by rotation at theensuing Annual General Meeting. Mr. Sahil Vachani being eligible have offered himself forre-appointment at the ensuing Annual General Meeting.

Brief profiles of aforesaid directors are annexed to the Noticeconvening the Annual General Meeting.

The Board met six times during the financial year 2019-20:

S.No. Date Board Strength No. of Directors present
1 May 28 2019 10 5
2 August 62019 10 7
3 November 6 2019 10 7
4 February 5 2020 9 6
5 February 20 2020 8 7
6 March 3 2020 8 4

The details regarding number of meetings attended by each Directorduring the year under review have been furnished in the Corporate Governance Reportattached as part of this Annual Report.

Statement of Declaration by Independent Directors

In terms of Section 149(6) of the Act and Regulation 25 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the followingNonExecutive Directors are categorized as Independent Directors of the Company: Mrs. NainaLal Kidwai (DIN: 00017806) Mr. Aman Mehta (DIN: 00009364) Mr. Dinesh Kumar Mittal (DIN:00040000) Mr. Jai Arya (DIN: 0008270093) and Sir Charles Richard Vernon Stagg (DIN:07176980).

The Company has received declaration of independence from all the abovementioned

Independent Directors as per Section 149(7) of the Act confirming thatthey continue to meet the criteria of independence.

Committees of the Board of Directors

The Company has the following committees which have been established asa part of the best corporate governance practices and are in compliance with therequirements of the relevant provisions of applicable laws and statutes. A detailed noteon the same is provided under the Corporate Governance Report forming part of this AnnualReport.

1. Audit Committee:

The Audit Committee met four times during the financial year 2019-20viz. on May 28 2019 August 6 2019 November 6 2019 and February 5 2020. TheCommittee as on March 31 2020 comprised of Mr. D.K. Mittal (Chairman) Mr. Aman MehtaMrs. Naina Lal Kidwai and Mr. Mohit Talwar. All the recommendations by the Audit Committeewere accepted by the Board.

2. Nomination and Remuneration Committee:

The Nomination and Remuneration Committee met once during the financialyear 2019-20 viz. on May 28 2019. The Committee as on March 31 2020 comprised of Mrs.Naina Lal Kidwai (Chairman) Mr. Aman Mehta Mr. Analjit Singh and Mr. D.K. Mittal.

3. Investment & Finance Committee:

The Committee met three times during the financial year 2019-20 viz.on May 28 2019 August 6 2019 and November 6 2019. As most of the matters mandated tothe Investment and Finance Committee were required to be statutorily considered by AuditCommittee and the Board the Board disbanded the Investment and Finance Committee witheffect from February 5 2020.

4. Corporate Social Responsibility Committee:

As on March 312020 this Committee comprised of Mr. Aman Mehta Mr.D.K. Mittal Mrs. Naina Lal Kidwai Mr. Jai Arya and Mr. Mohit Talwar.

Due to the lock down declared by the Central Government due to Covid-19Pandemic the meeting of the Committee which was scheduled to be held on March 24 2020could not be held for want of quorum. The said meeting of the Committee was held on May26 2020 through video conferencing.

5. Stakeholders' Relationship Committee:

The Committee met three times during the financial year 2019-20 viz.on May 28 2019 August 6 2019 and November 6 2019. The Committee as on March 31 2020comprised of Mr. Sahil Vachani (Chairman) Mr. D.K. Mittal and Mr. Mohit Talwar.

6. Risk & Compliance Review Committee:

As on March 312020 this Committee comprised of Mr. Aman Mehta Mr.D.K. Mittal Mrs. Naina Lal Kidwai Mr. Jai Arya and Mr. Mohit Talwar Due to the lock downdeclared by the Central Government due to Covid-19 Pandemic the meeting of the Committeewhich was scheduled to be held on March 24 2020 could not be held for want of quorum. Thesaid meeting of the Committee was held on May 26 2020 through video conferencing.

7. Independent Directors:

The Board of Directors included 5 Independent Directors as on March 312020 viz. Mr. Aman Mehta Mr. Dinesh Kumar Mittal Mrs. Naina Lal Kidwai Mr. Jai Arya andSir Charles Richard Vernon Stagg. The Independent Directors had a separate meeting throughvideo conferencing on May 26 2020. The meeting was conducted to:

(a) Review the performance of non-independent Directors and the Boardas a whole;

(b) Review the performance of the Chairperson of the Company takinginto account the views of executive Directors and nonexecutive Directors; and

(c) Assess the quality quantity and timeliness of flow of informationbetween the Company management and the Board that is necessary

For the Board to effectively and reasonably perform their duties.

Performance Evaluation of the Board

As per the requirements of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 formal Annual Evaluationprocess has been carried out for evaluating the performance of the Board the Committeesof the Board and the Individual Directors including Chairperson.

The performance evaluation was carried out by obtaining feedback fromall Directors through a confidential online survey mechanism through Diligent Boards asecured electronic medium through which the Company interfaces with its Directors. Theoutcome of this performance evaluation was placed before the meetings of the Nominationand Remuneration Committee and Independent Directors' and the Board meeting for theconsideration of the members.

The review concluded by affirming that the Board as a whole as well asits Chairman all of its members individually and the Committees of the Board continuedto display commitment to good governance by ensuring a constant improvement of processesand procedures and contributed their best in overall growth of the organization.

Key Managerial Personnel

As on the date of this Report Mr. Mohit Talwar Managing Director Mr.Jatin Khanna Chief Financial Officer and Mr. V. Krishnan Company Secretary are the KeyManagerial Personnel ("KMP") of the Company pursuant to the provisions of theCompanies Act 2013.

Human Resources

We are primarily engaged in growing and nurturing business investmentas a holding Company in the business of life insurance and providing management advisoryservices to group companies. The remuneration of our employees is competitive with themarket and rewards high performers across levels. The remuneration to Directors KeyManagerial Personnel and Senior Management are a balance between fixed incentive pay andlong-term equity program based

on the performance objectives appropriate to the working of the Companyand its goals and is reviewed periodically and approved by the Nomination and RemunerationCommittee of the Board.

Details pursuant to Section 197(12) of the Act read with the Rule 5(1)and Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 are attached to this report as Annexure - 5A and Annexure - 5B.

As on March 312020 there were 9 employees on the rolls of theCompany.

Nomination and Remuneration Policy

In adherence to the provisions of Sections 134(3)(e) and 178(1) &(3) of the Act the Board of Directors on the recommendation of the Nomination andRemuneration Committee had approved a policy on Directors' appointment and remuneration.The said policy includes terms of appointment criteria for determining qualificationsperformance evaluation and other matters. Copy of the same is available on the website ofthe Company at www.maxfinancialservices.com/shareholder-information.

Corporate Social Responsibility ("CSR")

The Board of Directors of your Company has constituted a CorporateSocial Responsibility Committee and adopted a CSR policy as approved by the CSRCommittee copy of which is available on the website of the Company at www.maxfinancialservices.com/shareholder-information.The CSR Policy comprises Vision and Mission Statement philosophy and objectives. Italso explains the governance structure along with clarity on roles and responsibilities.

In terms of Section 135 of the Act read with Companies (CorporateSocial Responsibility Policy) Rules 2014 all Companies meeting the prescribed thresholdcriteria i.e. net worth of Rs. 500 crores or more or turnover of Rs. 1000 crores ormore or net profits of Rs. 5 crores or more in any financial year are required to spend atleast 2% of the average net profits of the Company for immediately preceding 3 financialyears.

As per rule 2(f) of the Companies (Corporate Social ResponsibilityPolicy) Rules 2014 any dividend

received From other companies in India which are already covered andcomplying with the provisions of the CSR shall not be included For the purposes oFcomputation of 'net profits' For a company.

As Max LiFe From whom the Company has been receiving dividend Fromtime to time discharged its CSR responsibilities For the financial year 2019-20 thedividend income received by the Company will be excluded For the purposes oF computationoF its 'net profits'. After excluding the dividend income received from Max Life theCompany does not have net profits computed as per the CSR rules. Therefore the Company isnot mandatorily required to spend on Corporate Social Responsibility For the financialyear 2019-20. However the Company has voluntarily made certain donations.

Business Responsibility Report

In terms of Clause 34(2)(f) of SEBI (Listing Obligations &Disclosure Requirements) Regulations 2015 a Business Responsibility Report on variousinitiatives taken by the Company is enclosed to this report as Annexure - 6.

Policy for Prevention of Sexual Harassment

Your Company has requisite policy for Prevention of Sexual Harassmentwhich is available on the website of the Company at www.maxfinancialservices.com/shareholder-information. The comprehensive policy ensures gender equality and theright to work with dignity. Your company has complied with provisions relating to theconstitution of Internal Complaints Committee under the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Rederessal) Act 2013. No case was reported to theCommittee during the year under review.

Loans Guarantees or Investments in Securities

The details of loans given and investments made by the company pursuantto the provisions of Section 186 of the Act are provided in Note nos 6 and 7 respectivelyto the standalone financial statements of the Company for the FY 2019-20.

Management Discussion & Analysis

In terms of Regulation 34 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a

review of the performance of the Company including those of yourCompany's subsidiary is provided in the Management Discussion & Analysis sectionwhich forms part of this Annual Report.

Report on Corporate Governance

The Company has complied with all the mandatory requirements ofCorporate Governance specified by the Securities and Exchange Board of India through PartC of Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. As required by the said Clause a separate Report on Corporate Governance forms partof the Annual Report of the Company.

A certificate from M/s Chandrasekaran Associates Practicing CompanySecretaries regarding compliance with the conditions of Corporate Governance pursuant toPart E of Schedule V of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is Annexed to this Report as Annexure - 7. Further a certificatefrom the Managing Director and Chief Financial Officer on compliance of Part B of ScheduleII of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 forms partof the Corporate Governance Report.

Copies of various policies adopted by the Company are available on thewebsite of the Company at www. maxFinancialservices.com/shareholder-inFormation.

Statutory Auditors and Auditors' Report

Pursuant to Sections 139 & 142 of the Act M/s Deloitte Haskins andSells LLP Chartered Accountants (Firm Registration Number: 117366W/W-100018) wereappointed as the Statutory Auditors of the Company at 27th Annual GeneralMeeting ("AGM") held on September 23 2015 for a period of five years i.e. tillthe conclusion of the 32nd AGM of the Company to be held in the year 2020.

Your directors recommend the appointment of M/s Deloitte Haskins andSells LLP Chartered Accountants (Firm Registration Number: 117366W/W-100018) for afurther term of five years from the conclusion of 32nd AGM till the conclusionof 37th AGM to be held in the year 2025 in terms of Section 139 and 142 of theCompanies Act 2013. The Company received a written consent from M/s. Deloitte Haskins& Sells LLP Chartered Accountants as required under Section

139 of the Act and a certificate to the effect that their appointmentif may would be in accordance with the limits prescribed under Section 141 of the Act.

There are no audit qualifications reservations disclaimers or adverseremarks or reporting of fraud in the Statutory Auditors Report given by M/s DeloitteHaskins and Sells LLP Statutory Auditors of the Company for the financial year 2019-20annexed in this Annual Report.

Secretarial Auditors and Secretarial Audit Report

Pursuant to Section 204 of the Act your Company had appointed M/sChandrasekaran Associates Practicing Company Secretaries New Delhi as its SecretarialAuditors to conduct the secretarial audit of the Company for the FY 2019-20. The Companyprovided all assistance and facilities to the Secretarial Auditor for conducting theiraudit. The Report of Secretarial Auditor for the FY 2019-20 is annexed to this report as Annexure- 8.

There are no audit qualifications reservations disclaimers or adverseremarks in the said Secretarial Audit Report.

Your Company complies with the applicable Secretarial Standards issuedby the Institute of Company Secretaries of India and notified by Ministry of CorporateAffairs.

Internal Auditors

The Company follows a robust Internal Audit process and audits areconducted on a regular basis throughout the year as per agreed audit plan. During theyear under review M/s MGC and KNAV Global Risk Advisory LLP were re-appointed asInternal Auditors for conducting the Internal Audit of key functions and assessment ofInternal Financial Controls etc.

Internal Financial Controls

The Company has in place adequate internal financial controls withreference to financial statements. During the year such controls were tested and noreportable material weaknesses in the design or operation were observed. The Managementhas reviewed the existence of various risk-based controls in the Company and also testedthe key controls towards assurance for compliance for the present fiscal.

In the opinion of the Board the existing internal control framework isadequate and commensurate with the size and nature of the business of the Company.Further the testing of adequacy of internal financial controls over financial reportinghas been also been carried out independently by the Statutory Auditors as mandated underthe provisions of the Act.

During the year under review there were no instances of fraud reportedby the auditors to the Audit Committee or the Board of Directors.

Risk Management

Your Company considers that risk is an integral part of its businessand therefore it takes proper steps to manage all risks in a proactive and efficientmanner. The Board has formed a Risk and Compliance Review Committee to identify the risksimpacting the business formulate strategies/ policies aimed at risk mitigation as part ofrisk management. Further a core team comprising of senior management has also been formedto identify and assess key risks risk appetite tolerance levels and formulate strategiesfor mitigation of risks identified in consultation with process owners.

The Company has adopted a Risk Management policy whereby risks arebroadly categorized into Strategic Operational Compliance and Financial & ReportingRisks. The Policy outlines the parameters of identification assessment monitoring andmitigation of various risks which are key to the business performance.

There are no risks which in the opinion of the Board threaten thevery existence of your Company. However some of the challenges / risks faced by itssubsidiary have been dealt in detail in the Management Discussion and Analysis section ofsaid subsidiary forming part of this Annual Report.

Vigil Mechanism

The Company has a vigil mechanism pursuant to which a Whistle BlowerPolicy has been adopted and is in place. The Policy ensures that strict confidentiality ismaintained whilst dealing with concerns raised and also that no discrimination will bemeted out to any person for a genuinely raised concern in respect of any unethical andimproper practices fraud or violation of Company's Code of Conduct.

The said Policy covering all employees Directors and other personshaving association with the Company is hosted on the Company's website at www.maxfinancialservices.com/ shareholder-information. A brief note on Vigil Mechanism /Whistle Blower Policy is also provided in the Report on Corporate Governance which formspart of this Annual Report.

Cost Records

Your Company is not required to maintain cost records as specified bythe Central Government under Section 148(1) of the Act.

Public Deposits

During the year under review the Company has not accepted or renewedany deposits from the public.

Contracts or Arrangements with Related Parties

All transactions entered by the Company during the financial year withrelated parties were in the ordinary course of business and on an arm's length basisexcept an ongoing transaction with Max Life Insurance Company Limited for allowing usageof trademarks without any consideration and an approval has already been obtained fromshareholders of the Company in 2016 for the said transaction.

There is no material contract or arrangement in terms of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015. Form AOC-2 furnishingparticulars of contracts or arrangements entered into by the Company with related partiesreferred in Section 188(1) of the Companies Act 2013 is annexed to this report as Annexure- 9.

The details of all the Related Party Transactions form part of Note no.32 to the standalone financial statements attached to this Annual Report.

The Policy on materiality of related party transactions and dealingwith related party transactions as approved by the Board may be accessed on the Company'swebsite at www.maxfinancialservices. com/shareholder-information.

Particulars of Conservation Of Energy Technology Absorption andForeign Exchange Earnings & Outgo

The information on conservation of energy technology absorption andforeign exchange earnings & outgo as stipulated under Section 134(3) (m) of the Actread with Companies (Accounts) Rules 2014 is as follows:

a) Conservation of Energy

(i) the steps taken or impact on conservation of energy: Regularefforts are made to conserve the energy through various means such as use of low energyconsuming lightings etc.

(ii) the steps taken by the Company for using alternate sources ofenergy: Since your Company is not an energy intensive unit utilization of alternatesource of energy may not be feasible.

(iii) capital investment on energy conservation equipment : Nil

b) Technology Absorption

Your Company is not engaged in manufacturing activities thereforethere is no specific information to be furnished in this regard.

There was no expenditure incurred on Research and Development duringthe period under review.

c) Foreign Exchange Earnings and Outgo

The foreign exchange earnings and outgo are given below:

Total Foreign Exchange earned Nil
Total Foreign Exchange used Rs. 437.23 Lacs

Extracts of Annual Return

Pursuant to Section 134(3)(a) and Section 92(3) of the Act read withRule 12 of the Companies (Management and Administration) Rules 2014 the extracts of theAnnual Return as at March 312020 forms part of this report as Annexure - 1.

Directors' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act 2013 it is herebyconfirmed that:

(a) In the preparation of the annual accounts the applicableaccounting standards had been followed along with proper explanation relating to materialdepartures if any;

(b) The Directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that period;

(c) The Directors had 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) The Directors had prepared the annual accounts on a going concernbasis;

(e) The Directors had laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and wereoperating effectively; and

(f) The Directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.

Significant and material orders passed by the regulators or courts ortribunals

During the year under review there were no such significant andmaterial orders passed by the regulators or courts or tribunals which could impact thegoing concern status and company's operations in future.

Transfer of Unclaimed Dividend and Shares to the Investor Education andProtection Fund

The Company had paid interim dividend in FY2012-13 and the unpaiddividend was transferred to a separate account in same year within prescribed time. After

completion of 7 years the unpaid amounts still lying in the saidaccount were transferred to the Investor Education and Protection Fund along withrespective shares on which such dividend remains unpaid.

Unclaimed Shares

Regulation 39(4) of the SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 inter alia requires every listed company to comply withcertain procedure in respect of shares issued by it in physical form pursuant to a publicissue or any other issue and which remained unclaimed for any reason whatsoever.

The face value of the shares of the Company was split from Rs. 10/-each to Rs. 2/- each in the year 2007. Certain share certificates were returnedundelivered and were lying unclaimed. The Company had sent necessary reminders toconcerned shareholders and subsequently such shares were transferred to the UnclaimedSuspense Account.

The voting rights on the equity shares lying in the said UnclaimedSuspense Account shall remain frozen till the rightful owner claims such shares. Furtherall corporate benefits in terms of securities accruing on the said unclaimed shares viz.bonus shares split etc. if any shall also be credited to the said Unclaimed SuspenseAccount.

The concerned shareholder(s) are requested to write to the Registrarand Share Transfer Agent to claim the said equity shares. On receipt of such claimadditional documents may be called for and subject to its receipt and verification thesaid shares lying in the said Unclaimed Suspense Account shall be transferred to thedepository account provided by the concerned shareholder(s) or the physical sharecertificate shall be delivered to the registered address of the concerned shareholder(s).

The details of Equity Shares held in the Unclaimed Suspense Account areas follows:

S. No. Particulars No. of Shareholders No. of Equity Shares
1. Aggregate number of shareholders and the outstanding shares originally lying in the Unclaimed Suspense Account (as at beginning of the financial year i.e. April 1 2019) 2177 466895
2. Number of shareholders who approached listed entity for transfer of shares from the Unclaimed Suspense Account during the year *1681 *347385
3. Number of shareholders to whom shares were transferred from the Unclaimed Suspense Account during the year * 1681 *347385
4. Aggregate number of shareholders and the outstanding shares in the Suspense Account (as at end of the financial year i.e. March 31 2020) 496 119510

*This includes 1667 shareholders comprising of 343985 equity sharestransferred to Investor Education and Protection Fund.

Till date of this report the Company has approved overall 1707 suchclaims from shareholders comprising 355800 shares for transfer back of theirshareholding from the Unclaimed Suspense Account in demat / physical form.

Cautionary Statement

Statements in this Report particularly those which relate toManagement Discussion and Analysis describing the Company's objectives projectionsestimates and expectations may constitute "forward looking statements" withinthe meaning of applicable laws and regulations. Actual results might differ materiallyfrom those either expressed or implied in

the statement depending on the circumstances. Acknowledgements

Your Directors would like to place on record their appreciation of thecontribution made by its management and its employees who through their competence andcommitment have enabled the Company to achieve impressive growth. Your Directorsacknowledge with thanks the co-operation and assistance received from various agencies ofthe Central and State Governments Financial Institutions and Banks Shareholders JointVenture partners and all other business associates.

On behalf of the Board of Directors
Max Financial Services Limited
Franschhoek South Africa Analjit Singh
May 26 2020 Chairman DIN:00029641