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Motilal Oswal Financial Services Ltd.

BSE: 532892 Sector: Financials
NSE: MOTILALOFS ISIN Code: INE338I01027
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NSE 09:59 | 25 Oct 887.30 -24.25
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OPEN 902.15
PREVIOUS CLOSE 912.45
VOLUME 10164
52-Week high 1188.00
52-Week low 538.50
P/E 17.34
Mkt Cap.(Rs cr) 13,076
Buy Price 888.80
Buy Qty 4.00
Sell Price 890.50
Sell Qty 10.00
OPEN 902.15
CLOSE 912.45
VOLUME 10164
52-Week high 1188.00
52-Week low 538.50
P/E 17.34
Mkt Cap.(Rs cr) 13,076
Buy Price 888.80
Buy Qty 4.00
Sell Price 890.50
Sell Qty 10.00

Motilal Oswal Financial Services Ltd. (MOTILALOFS) - Director Report

Company director report

Dear Members

The Directors of your Company have the pleasure in presenting the SixteenthBoard’s Report together with the Audited Financial Statements for the financial yearended March 31 2021.

FINANCIAL RESULTS

The summary of the Company’s financial performance both on a consolidated andstandalone basis for the Financial Year ("FY") 2020-21 as compared to theprevious FY 2019-20 is given below: (R in Lakhs)

Consolidated Standalone
Particulars 2020-21 2019-20 2020-21 2019-20
Total Revenue 363104 236541 218431 130639
Profit before Interest Depreciation Taxation and exceptional items 202239 81937 108966 35318
Interest 43028 49447 12770 12924
Depreciation 4727 3971 3651 2984
ems it Profit beforeTaxationand exceptional 154484 28519 92545 19410
It Add/(Less):Exceptional (8810) (8810)
Profit before taxation 145674 28519 83735 19410
Add / (Less) : Provision for Taxation
Current Tax 16067 13371 8975 7056
Deferred Tax 10750 (6424) 3474 (7326)
Less : Tax for earlier year (s) (912) 32 46
Tax Expenses 25905 6979 12495 (270)
Oper ProfitafterTaxationfromContinuing 119769 21540 71240 19680
Share of Profit from Associates and Joint Ventures (net of taxes) 6177 (2582)
Profit for the Period 125946 18958 71240 19680
Add / Less: Other Comprehensive Income (OCI)
Acturial gain / (loss) 311 201 163 57
Fair value gain / (loss) of investment held through FVOCI 32706 (6914) 27411 (4489)
Tax on OCI 3825 727 (3177) 499
Total Comprehensive Income 155138 12972 95637 15747
Net profit attributable to:
Owners of parent 153734 18337
Non-controlling interests 1404 621
Add: Balance brought forward from previous year 214919 217715 188435 185181
Profit Available for appropriation 153734 12354 95637 15747
Less: Appropriations (10649) (15153)
Transfer to Statutory Reserve (659) (782)
Transfer to Capital redemption Reserve
Interim Dividend and Final Dividend (7141) (12984) (7327) (12491)
Tax on Buyback (2820)
Dividend Distribution Tax (2603) (2)
Expected Credit Loss Impairment reserve (62)
Transfer to General Reserve 133 (2820)
Transfer to Minority interest (22) 1148
Balance of Profit carried forward 358004 214919 351673 188435

FINANCIAL PERFORMANCE Standalone

The standalone revenues in FY2020-21 stood at R 2184 crores vs R 1306crores in FY 2019-20. Total expenses (before interest and depreciation) for the year camein at R 1095 crores which increased by 15% over previous year. People costincreased 24% to R 386 crores. Operating expenses increased by 57% toR 524crores. The profit before depreciation interest exceptionalitems and taxation (EBITDA)stood at R 1090 crores. Reported net profit for the year came in at R 712crores.

Consolidated

The consolidated revenues for the year were R 3631 crores for the yearFY2020-21 under review an increase of 54% as compared to the previous year. Broking andrelated income grew 40% YoY to R 1709 crores. The average daily traded volumes(ADTO) for the equity markets during FY2020-21 stood at R 27.41 lakh crores up 90%YoY from R 14.44 lakh crores in FY2019-20. The overall Cash market ADTO reportedgrowth of 66% YoY at R 64951 crores in FY2020-21. Delivery saw growth of 39% YoYto R 12718 crores. Within derivatives futures volume increased 24% YoY to R 1.09lakh crores while options rose 95% YoY to R 25.67 lakh crores. Amongst cash marketparticipants retail constitutes 56% of total cash volume institution constitutes 18% oftotal of DII in the cash market was 7.1%. In FY2020-21 a record of 1.44 crores new demataccounts were added as against 0.48 crores in FY 2019-20. The number of demat accountsstood at 5.51 crores in FY2020-21 a growth of 35% YoY.

The Company had 1971964 retail broking and distribution clients growing at a CAGR of23% from FY 2016-17 to Client acquisition stood at ~620000 during the year +150% YoY.

Our financial product distribution UM was R 12785 crores as of March 2021 up42% YoY. A

Investment banking fee saw a decline over the previous year to R 3 crores. InFY20-21 we associated with ICICI bank for its largest ever QIP of R 15000 crores.We also participated in the QIP of HDFC aggregating R 17700 crores. The teamtransactions continuestoengageon across capitalwidecross-section markets andadvisory. Sharp recovery in capital markets augur well for deal closures.

Asset management income declined by 4% YoY to R 532 crores as compared to lastyear. Total assets under management across mutual funds PMS and AIF was R 45692crores up 54% YoY. Within this the mutual fund AUM was up 76% YoY to R 28136crores PMS AUM was up 26% YoY to R 14700 crores and AIF AUM was R 2656crores up 40% YoY.

The private equity income stood at R 100 crores down 4% YoY. The income fromwealth management business stood at R 127 crores up 26% YoY. The wealth managementAUM continued to attract assets with closing AUM for FY2020-21 at R 25286 croresup 62% YoY.

Housing finance related gross income of R 257 crores up 10% YoY. HFC loan bookwas R 3512 crores as of March 2021. Disbursements stood at R 273 croresup 42% YoY.

In line with the long term strategy to grow RoE sustainably Motilal Oswal FinancialServices Limited allocation of capital to long term RoE enhancing opportunities likeMotilal Oswal Home Finance Limited to our mutual fund and private equity funds. As ofMarch 2021 our total quoted equity investments stood at R 2180 crores. Totalexpenses (before interestdepreciation exceptional items and taxation) for the yearat R1609 crores registered an increase of 4% over previous year. Profit beforedepreciation interest exceptional items and taxation(EBITDA)stoodat R 2022crores an increase of 147% from the previous year. Profit for the year (post minorityinterest and exceptional item) increased by 466% toR 1184 crores. The detailedresults of operations of the Company are given in the Management Discussion & Analysisforming part of this Report.

FUTURE OUTLOOK

Our strategy to diversify our business model towards more annuity sources of earningsis showing definite results. The annuity nature of earnings in the new businesses likeasset based businesses and housing finance business has brought in visibility of ourearnings. Our businesses have stood strong in the volatile year of FY2021 whilemaintaining operating parameters. Our brand is now being recognized across each of ourbusinesses. The opportunity size in all our business segments is still huge and ourbusinesses are well placed to benefit from the growth potential they offer.

CONSOLIDATED FINANCIAL STATEMENT

As per Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 ("Listing Regulations") and applicable provisions of theCompanies Act 2013 ("the Act") read with the Rules issued thereunder (asamended from time to time) the Consolidated Financial Statement of the Company for theFY2020-21 have been prepared in compliance with applicable Indian Accounting Standards andon the basis of Audited Financial Statement of the Company and its subsidiaries asapproved by the respective Board of Directors.

The Consolidated Financial Statement together with the Auditors’ Report is formingpart of this Annual Report.

MOFSL "HIGHEST EVER" OR "LARGEST EVER"

The diversified business model of the Group has led to the largest ever profitabilityin the FY2020-21. The key highlights for FY2020-21 are as follows:-

Highest ever Annual Revenue and Profit

Highest ever Net worth and Balance Sheet size crossing R 100 bn mark

Highest ever Gains on Fund based Investments

Highest ever AMC Distribution Wealth and DP AUM

Highest ever Broking ADTO & Revenue

Highest ever New Client Acquisition in Broking

Highest ever NIM led by lowest ever CoF for Home Finance

ENVIRONMENT SOCIAL AND GOVERNANCE (ESG) INITIATIVES

Since your Company strongly believes in raising corporate transparency strengtheningrisk management promoting stakeholder engagement improving communications withStakeholders your Company has undertaken various Environment Social and (Corporate)Governance Initiatives (ESG) initiatives during FY2020-21. The separate disclosure on ESGinitiatives and contribution by the Company in battling against COVID-19 is forming partof this Annual Report.

INFORMATION ON THE STATE OF AFFAIRS OF THE COMPANY

The Information on the affairs of the Company has been given in Management Discussion& Analysis Report forming part of this Annual Report.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments affecting the financial positionof the Company which have occurred between the end of the financial year of the Companyand the date of this Report.

CORPORATE RESTRUCTURING OF GROUP ENTITIES

In order to consolidate the fund management business of the Group demonstrating thePromoter Group’s direct commitment etc. the Board of Directors (the"Board") of your Company on December 24 2020 has inter-alia subject toapproval of the shareholders / members of the Company considered and approved the Schemeof Arrangement between Passionate Investment Management Private Limited ("PIMPL"or "the Transferor Company 1") and MOPE Investment Advisors Private Limited("MOPE" or "the Transferee Company 2" or "the Demerged Company1" or "the Transferor Company 3") and Motilal Oswal Real Estate InvestmentAdvisors Private Limited ("MORE" or "the Transferor Company 2") andMotilal Oswal Real Estate Investment Advisors II Private Limited ("MORE II" or"the Demerged Company 2" or "the Transferor Company 4") and MOAlternate Investment Advisors Private Limited (erstwhile Motilal Oswal Fincap PrivateLimited) ("MO Alternate" or "the Resulting Company") and Motilal OswalFinancial Services Limited ("MOFSL" or "the Transferee Company 1" or"the Holding Company of the Resulting Company" or "the Company") andtheir respective shareholders ("the Scheme") under Sections 230-232 of theCompanies Act 2013 involving the following:-

i. Amalgamation of Passionate Investment Management Private Limited with Motilal OswalFinancial Services Limited and wal Financial Services Limited; Os consequent issue ofequity shares by Motilal

ii. al Oswal Real Estate Investment Advisors Private Limited with MOPE InvestmentAdvisors Private Limited; Motil Amalgamation of

iii. Post the amalgamation as stated in clause (ii) above demerger of the FundManagement Undertaking(defined as Fund Management Undertaking 1 in the Scheme) of MOPEInvestment Advisors Private Limited into MO Alternate Investment Advisors Private Limitedand consequent issue of equity shares by Motilal Oswal Financial Services Limited to theshareholders of MOPE Investment Advisors Private Limited;

iv. Post the demerger as stated in clause (iii) above amalgamation of MOPE InvestmentAdvisors Private Limited with Motilal Oswal Financial Services Limited and consequentissue of equity shares by Motilal Oswal Financial Services Limited.

v. Post the amalgamation as stated in clause (iv) above demerger of the FundManagement Undertaking (defined as Fund Management Undertaking 2 in the Scheme) of MotilalOswal Real Estate Investment Advisors II Private Limited into MO Alternate InvestmentAdvisors Private Limited and consequent issue of equity shares by Motilal Oswal FinancialServices Limited to the shareholders of Motilal Oswal Real Estate Investment Advisors IIPrivate Limited;

vi. Post the demerger as stated in clause (v) above amalgamation of Motilal Oswal RealEstate Investment Advisors II Private Limited with Motilal Oswal Financial ServicesLimited and consequent issue of equity shares by MotilalOswal Financial Services Limited.vii. Various other matters consequential or otherwise integrally connected herewith.

The Scheme is subject to necessary statutory and regulatory approvals including theapproval of Hon’ble National Company Law Tribunal (NCLT) Mumbai Bench andaccordingly on receipt of No Objection Certificate from Stock Exchanges your Company hasfiled an application with NCLT to said effect. The aforesaid restructuring will not leadto any change in control and the brief presentation explaining the entire arrangement isuploaded on the website of the Company at www.motilaloswalgroup.com.

TRANSFER TO RESERVES

The Company has not transferred any amount to the Reserves for the year ended March 312021.

DIVIDEND

The Board of Directors of the Company has approved the Dividend DistributionPolicy("Policy") in line with the requirements of the Listing Regulations. The Policyis been uploaded on the Company’s websiteathttps://www.motilaloswalgroup.com/Downloads/IR/206776066708.-Dividend-Distribution-Policy.pdf The Board of Directors of the Company atits meeting held on January 28 2021 had declared and paid an Interim Dividend of R 5/-per Equity Share for the FY2020-21 out of the profits of the Company for the thirdquarter and nine months ended December 31 on 146537324 Equity Shares of face value of R1/- each aggregating toR 732686620/-. Further the Board has recommended FinalDividend of R 5/-per Equity Share for the FY2020-21 subject to approval ofShareholders at the ensuing Annual General Meeting ("AGM").

CREDIT RATING

During the year under review ICRA Limited reaffirmed the long term credit rating of[ICRA] AA" Rating with a Non-Convertible Debentures ("NCDs") Programme ofR300 crores of the Company. of "CRISIL A1+" and India Rating & ResearchPrivate Limited has also reaffirmed the CRISILLimited Credit Rating of "IND A1+"to the Commercial Programme of R 1500 crores of the Company. Accordingly therewas no revision in the credit ratings during the year under review. The ratings indicate avery strong degree of safety regarding timely servicing of financial obligations. FurtherCRISIL has provided rating of AA- with a stable outlook and ICRA Limited assigned [ICRA]A+ Rating with stable outlook for Long Term Borrowings Programme of Motilal Oswal HomeFinance Limited material subsidiary of the Company.

Further the Company did not have any fixed deposit programme or any scheme or proposalinvolving mobilization of funds in India or abroad during the year under review.

SHARE CAPITAL

During the year under review the Company has allotted 462800 Equity Shares undervarious Employee Stock Option Schemes of the Company. Pursuant to the allotment of theequity shares & post Buy-back of shares the paid up Equity Share Capital of theCompany as on March 31 2021 is R 146620374/- (Rupees Fourteen crores Sixty SixLakhs Twenty Thousand Three Hundred & Seventy Four only). The Authorised Share Capitalof the Company as on March 31 2021 is R 1490000000/- divided into 925000000Equity Shares of R 1/- each and 5650000 Preference Shares of R 100/- each.

BUY-BACK OF EQUITY SHARES

The Board of Directors at its Meeting held on March 21 2020 approved the proposal ofBuy-back of equity shares of the Company from the open market through the stock exchangesfor a total amount not exceeding R 1500000000/- at a price not exceeding R 650/-per equity share. The Buy-back was commenced from April 01 2020 and was closed fromclosure of trading hours of September 30 2020.

During the Buy-back period the Company has bought back 1909144 equity sharesrepresenting 1.29% of the Pre-Buyback paid up capital of the Company (As on March 202020) at an average price of R 630.31/- per Equity Shares. Accordingly the Companyhas deployed R 1203355358.94/- (Rupees One Hundred & Twenty Crores ThirtyThree Lakhs Fifty Five Thousand Three Fifty Eight & Ninety Four paisa Only) (excludingtransaction costs) representing 80.22% of the Maximum Buy-back Size during FY2020-21.

DEBENTURES

3000 NCDs of R 10 lakhs each aggregating to R 300 crores issued by theCompany during the year under review are outstanding as on March 31 2021.

The details of the Debenture Trustee of the Company is as under:

Beacon Trusteeship Limited

4C & D Siddhivinayak Chambers Gandhi Nagar

Opp. MIG Cricket Club Bandra (East) Mumbai 400 051

Tel: +91 (0)22 2655 8759 / Mob: +91 96992 94857

Website: www.beacontrustee.co.in

EMPLOYEE STOCK OPTION SCHEMES

The disclosures required to be made under the SEBI (Share Based Employee Benefits)Regulations 2014 ("ESOP Regulations") (as amended from time to time) areavailable on the website of the Company atwww.motilaloswalgroup.com. Further the Companyconfirmsthat all the Employee Stock Options Schemes of the Company are falling underdirect route and not Trust route and accordingly the provisions related to Trust route asspecified in the ESOP Regulationsare not applicable to the Company. Further all thepermanent employees (except the persons as mentioned in the regulations) of the Companyits holding company and its subsidiary companies are entitled to participate in saidschemes of the Company. Further the Company confirms that the Company has not grantedemployee stock options equal to or exceeding one percent of the issued capital of theCompany to any employees at the time of the Company / Holding Company / SubsidiaryCompany.

The certificate from the Statutory Auditors confirming compliance with the aforesaidprovisions would be presented to the members at the AGM of the Company.

Committee of the Employee Stock the Board of the Company in accordance with theapplicable ESOP Regulations.

SUBSIDIARY COMPANIES

The Company along with its subsidiaries offers a diversified range of financialproducts and services such as Loan against Securities Investment Activities PrivateWealth Management Broking and Distribution Asset Management Business Housing FinanceBanking. Institutional Further the Company has incorporated subsidiary namely TMInvestment Technologies Private Limited ("TMITPL") at Mumbai on July 24 2020 toprovide registered investment advisory services through IT enabled platform. As of March31 2021 the Company had 20 subsidiaries (including step down subsidiaries). There are noassociate companies or joint venture within the meaning of Section 2(6) of the Act as onMarch 31 2021 Further pursuant to the provisions of Section 136(1) of the Act thefinancial statement for the period ended March 31 2021 of each subsidiary of the Companyis available on the website of the Company at www.motilaloswalgroup.com.

MATERIAL SUBSIDIARIES

As required under Regulation 16(1)(c) and 46 of the Listing Regulations the Board ofDirectors has approved the Policy on Determination of Material Subsidiaries("Policy"). The said policy is available on the website of the Company athttps://www.motilaloswalgroup.com/Downloads/IR/212618793Policy-on-Determination-of-Material-Subsidiaries.pdfAccordingly Motilal Oswal Home Finance Limited ("MOHFL") Motilal OswalAsset Management Company Limited ("MOAMC") and Motilal Oswal Finvest Limited("MOFL") are material subsidiaries of the Company.

INVESTMENT IN SUBSIDIARIES

During the year under review the Company has acquired 9568614 equity shares of facevalue of R 10/- each of MOFL (Wholly Owned Subsidiary). Also the Company hasacquired 3000000 equity shares of face value of R 10/- each of Glide TechInvestment Advisory Private Limited (Wholly Owned Subsidiary).

PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARIES

As required under Rule 5 and Rule 8(1) of the Companies (Accounts) Rules 2014 areport on the highlights of performance of subsidiaries associates and joint venturecompanies and their contribution to the overall performance of the Company has beenappended as "Annexure 1" to the Board’s Report. Pursuant to theprovisions of Section 129(3) of the Act a statement containing salient features offinancial statement of subsidiaries in Form AOC-1 is annexed to the Consolidated FinancialStatement in the Annual Report. Your Company will also E-mail the copy of separate auditedfinancial statement in respect of each of the subsidiary company upon request by anyMember of the Company interested in obtaining the same. In accordance with provisions ofSection 136 of Act the separate audited financial statement in respect of each of thesubsidiary company is also available on the website of your Company atwww.motilaloswalgroup.com. These documents will be available for inspection in electronicmode. Members can inspect the same up to the date of AGM by sending an e-mail to theCompany at shareholders@motilaloswal.com.

PUBLIC DEPOSITS

During the year under review the Company has not accepted any deposits from thepublic.

ANNUAL RETURN

Pursuant to provisions of Section 134(3) and section 92(3) of the Act the AnnualReturn of the Company for the financial year ended March 31 2021 is uploaded on websiteof the Company at www.motilaloswalgroup.com.

BOARD OF DIRECTORS

The composition of the Board of Directors of the Company is in accordance with theprovisions of Section 149 of the Act and Regulation 17 of the Listing Regulations with anappropriate combination of Executive Non-Executive and Independent Directors. The Boardof the Company has 10 (Ten) Directors comprising of 1 (One) Non-Executive Chairman 1(One) Managing Director & Chief Executive Officer 2 (Two) Whole-time Directors 1(One) Non-Executive Director and 5 (Five) Independent Directors. The complete list ofDirectors of the Company has been provided in the Report on Corporate Governance formingpart of this Annual Report. During the year under review the 2nd term ofIndependent Directors namely Mr. Vivek Paranjpe Mr. Praveen Tripathi & Mrs. ShardaAgarwal expired at the Fifteenth AGM of the Company. Accordingly aforesaid Independentdirectors ceased to be the Independent Directors of the Company w.e.f. July 30 2020.During the year under review the Board of Directors of the Company appointed Mr.Chitradurga Narasimha Murthy (C. N. Murthy) Mr. Pankaj Bhansali & Mrs. Divya Momayaas an Independent Directors of the Company w.e.f. July 01 2020 for a term of 3 years i.e.July 01 2020 to June 30 2023. Further their appointment as an Independent Directors wasapproved by the Shareholders at the Fifteenth AGM of the Company held on July 30 2020.Further the Board had subject to approval of the Shareholders of the Company approved theappointment of Mr. Rajat Rajgarhia as Additional Director of the Company w.e.f. July 312020 and as Whole-time Director of the Company for the period of 5 years commencing fromJuly 31 2020 uptoJuly302025beingliabletoretirebyrotation.Additionally the Board onJuly 31 2020 also approved the proposal of change in designation of Mr. Navin Agarwalfrom Managing Director to Non-Executive Company due to his appointment as ManagingDirector & Chief Executive Office in Motilal Limited material subsidiary of theCompany. Further subject to approval of the shareholders of the Company in the ensuingAGM the Board has approved the appointment of Mr. Chandrashekhar Karnik as AdditionalIndependent Director of the Company w.e.f. September 16 2020 for the term of 3 years i.e.September 16 2020 up to September 15 2023 under the provisions of Section to the dateof the ensuing AGM of the Company. Further Mrs. Rekha Shah due to her increased workcommitments has resigned as an Independent Director of the Company w.e.f. October 012020. Further the Board at its meeting held on December 24 2020 subject to approval ofthe Shareholders of the Company at the ensuing AGM approved the appointment of Mrs.Swanubhuti Jain as Additional Independent Director of the Company w.e.f. December 24 2020for the term of 3 years i.e. December 24 2020 up to December 23 2023 under theprovisions of Section 161 of the Act and will hold the office up tothe date of the ensuingAGM of the Company. During the year under review the Board at its meeting held on October30 2020 has subject to approval of the Shareholders at the ensuing AGM approved there-appointment of Mr. Motilal Oswal as a Managing Director & Chief Executive Officerof the Company w.e.f. January 18 2021 for a term of 5 years i.e. January 18 2021 toJanuary 17 2026. Section 152 of the Act provides that unless the Articles ofAssociationprovide for the retirement of all directors at every AGM not less thantwo-third of the total number of directors of a public company (excluding the IndependentDirectors) shall be persons whose period of office is liable to determination byretirement of directors by rotation. Accordingly Mr. Ajay Menon Whole-time Director ofthe Company will retire by rotation at the ensuing AGM and being eligible has offeredhimself for re-appointment. The details of Mr. Menon is included in the notice of the AGMof the Company.

The resolutionsfor the appointment / re-appointment of all the Directors proposed forShareholders approval along with their brief placed for your approval.profilesas The copyof the draft letter of appointment of Independent Directors setting out their terms andconditions of appointment of Independent Directors are also available on the website ofthe Company at www.motilaloswalgroup.com.

MEETINGS AND COMPOSITION OF BOARD OF DIRECTORS AND COMMITTEE(S)

The details of the Meetings of the Board and Committee(s) of the Company held duringFY2020-21 are disclosed in the Report on Corporate Governance forming part of this AnnualReport. The Composition of Board and Committee(s) as on March 31 2021 are disclosed inthe Report on Corporate Governance.

DECLARATION BY INDEPENDENT DIRECTORS

All Independent Directors have submitted the declaration of independence as requiredpursuant to provisions of the Section 149(7) of the Act stating that they meet thecriteria of independence as provided in Section 149(6) of the Act and Regulation 16(1)(b)of the Listing Regulations and are not disqualified from continuing as IndependentDirectors of the Company. Further all the Independent Directors have confirmed theirregistration on Independent Directors Databank. These declarations / confirmations havebeen placed before the Board.

DISCLOSURE ON MAINTENANCE OF COST RECORDS

The Company engaged in Stock Broking Activity during the year under review is notrequired to maintain cost records in accordance with the provisions of the Act.

FAMILIARIZATION PROGRAMMES

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 various businesses in the group etc. The details of thefamiliarization Programmes are available on the website of the Companyathttps://www.motilaloswalgroup.com/Downloads/IR/248230074Familiarization-Programmes-for-Independent-Director_2021.pdf

CODE OF CONDUCT

Pursuant to Regulation 26(3) of the Listing Regulations all the Directors & Seniorcompliance with the Code of Conduct of the Company.

KEY MANAGERIAL PERSONNEL

During the year under review Mr. Rajat Rajgarhia has been appointed as Whole-TimeDirector & Key Managerial Personnel of the Company w.e.f. July 31 2020. Furthersince Mr. Navin Agarwal ceased to be a Managing Director of the Company due to change inhis designation as Non-Executive Director of the Company w.e.f. July 31 2020 he alsoceased to be the Key Managerial Personnel of the Company w.e.f. July 31 2020.Accordingly as at March 31 2021 the Company has the following Key Managerial Personnel:

1) Mr. Motilal Executive Officer

2) Mr. Ajay Menon Whole-time Director

3) Mr. Rajat Rajgarhia Whole-time Director

4) Mr. Shalibhadra Shah Chief Financial Officer

5) Mr. Kailash Purohit Company Secretary & Compliance Officer

COMPANY’S POLICY ON DIRECTOR’S APPOINTMENT AND REMUNERATION

Section 178 of the Act and Regulations as amended from time to time19readwithPartDofScheduleIIoftheListing requires the Nomination and Remuneration Committee("NRC") to formulate a Policy relating to the remuneration for the DirectorsKey Managerial Personnel ("KMP") Senior Management and other employees of theCompany and recommend the same for approval of the Board.

Accordingly in compliance to provisions to the aforesaid provisions the Nominationand Remuneration Policy of the Company is available on the website of the Company athttps://www.motilaloswalgroup.com/Downloads/IR/724496156Nomination-and-Remuneration- Thesalient features of the Policy are given below:-

Appointment criteria and qualifications:

1. The Committee shall identify and ascertain the integrity qualification expertiseand experience of the person for appointment as Director KMP or Senior Management andrecommend to the Board his / her appointment.

2. A person should possess adequate qualification expertise and experience for theposition he / she is considered for appointment. The Committee has discretion to decidewhether are sufficient / satisfactory for the concerned position.

3. The Company shallnotappointorcontinue the employment of any person as ManagingDirector/Whole-time Director / Manager who has attained the age of seventy years.

Provided that the term of the person holding this position may be extended beyond theage of seventy years with the approval of shareholders by passing a special resolutionbased on the explanatory statement annexed to the notice for such motion beyond seventyyears. indicatingthe

Evaluation:

The performance evaluation shall be carried out as given below:-

Performance Evaluation by Of Whom
Nominationand Committee Remuneration Every Director’s performance
Board of Directors All Directors and Board and Committees as a whole
All Independent Directors excluding the Director being evaluated
Independent Directors Review the performance of Non Independent Directors and Chairman of the Company

ormance of every Director at regular interval (yearly). perf The Committee shall carryout evaluation of

Removal:

Due to reasons for any disqualification mentioned in the Act rules made there under orunder any other applicable Act rules and regulations the Committee may recommend writingremoval of a Director the Board with reasons recorded KMP or Senior Managementsubject to the provisions and compliance of the said Act rules and regulations.

Retirement:

The Director KMP and Senior Management shall retire as per the applicable provisionsof the Act and the prevailing internal policy of the Company. The Board will have thediscretion to retain the Director KMP Senior Management in the same attaining theretirement age for the benefit of the Company. position/

PROVISIONS RELATING TO REMUNERATION OF MANAGERIAL PERSON KMP AND SENIOR MANAGEMENT

General:

1. The remuneration / compensation / commission etc. to Managerial Person KMP andSenior by the Committee and recommended to the Board for approval. The remuneration /compensation / commission etc. shall be subject to the prior / post approval of theshareholders of the Company and such other approval wherever required.

2. The remuneration and commission to be paid to Managerial Person shall be as per thestatutory provisions of the Act and Listing Regulations and there under for thetime being in force. rules made

3. Increments to the existing remuneration / compensation structure may be recommendedby the Committee to the Board which should be within the slabs approved by theShareholders in the case of Managerial Person.

4. The remuneration structure will have a right mix of guaranteed (fixed) pay pay forperformance and long term variable pay based on business growth and other factors such asgrowth in shareholder value to ensure that it is competitive and reasonable

5. Where any insurance is taken by the Company on behalf of its Managerial Person KMPand for Senior Management for indemnifying them against any liability the premium paid onsuch insurance shall not be treated as part of the remuneration payable to any suchpersonnel.

Remuneration to Managerial Person KMP and Senior Management:

1. Fixed pay:

Managerial Person KMP and Senior Management shall be eligible for a monthlyremuneration as may be approved by the Board on the recommendation of the Committee inaccordance with the statutory provisions of the Act and the rules made there under for thetime being in force. The break-up of the pay scale and quantum of perquisites includingemployer’s contribution to Provident Fund(s) pension scheme(s) medical expensesclub fees etc. shall be decided and approved by the Board on the recommendation of theCommittee and approved by the shareholders and such other approval wherever required.

2. Variable Pay:

The Company may in its discretion structure any portion of remuneration to link rewardsto corporate and individual performance fulfilment of specified improvement targets orthe attainment of certain financial or other objectives set by the Board. The amountpayable shall be based on performance against pre-determined financial and non-financialmetrics.

3. Provision for excess remuneration:

If in any financial year the Company has no profits or its profits are inadequatethe Company shall pay remuneration to its Managerial Person in accordance with theprovisions of Schedule V of the Act. If any Managerial Person draws or receives directlyor indirectly by way of remuneration any such sums in excess of the limits prescribedunder the Act or without such approval wherever required he / she shall refund such sumsto the Company and until such sum is refunded hold it in trust for the Company.

Remuneration to Non-Executive / Independent Director:

1. Remuneration / Commission:

The remuneration / commission if any shall be in accordance with the statutoryprovisions of the Act and the rules made there under for the time being in force.

2. Sitting Fees:

The Non-Executive / Independent Director may receive remuneration by way of fees forattending meetings of Board or Committee thereof.

Provided that the amount of such fees shall not exceed the maximum amount as providedin the Act per meeting of the prescribed from time to time. Boardor

3. Limit of Remuneration / Commission:

Remuneration / Commission may be paid to Non-Executive Directors within the monetarylimit approved by shareholders subject to the limit not exceeding 1% of the net profitsof the Company computed as per the applicable provisions of the Act.

PERFORMANCE EVALUATION

Pursuant to the provisions of section 134(3)(p) and Schedule IV of the Act and inaccordance to Regulation 17(10) and 25(4) of the Listing Regulations the Board hascarried out the annual performance evaluation of the Board as a whole various the Boardand of the individual Directors. The performance evaluation of the Independent Directorswas carried out by the entire Board. The Directors expressed their satisfaction with theevaluation process. The Board and the Nomination and Remuneration Committee reviewed theperformance of the individual Directors on the basis of the criteria such as TransparencyPerformance etc.

Independent a separate meeting Directors performance of non-independent Directorsperformance of the Board as a whole and performance of the Chairman was evaluated takinginto account the views of the executive directors and non-executive directors. The samewas discussed in the Board meeting that followed the meeting of independent directors atwhich the performance of the Board its committee and individual Directors was alsodiscussed.

PARTICULARS OF EMPLOYEES

In accordance with the provisions of Section 197(12) of the Act the ratio of theremuneration of each Director to the medianremunerationofemployeesandotherdetailsintermsofsub-section12 of Section 197 of theCompanies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are forming part of this report and has been appendedas "Annexure 2" to the Board’s Report.

In terms of first proviso to Section 136 of the Act the Report and FinancialStatements are being sent to the Members and others entitled thereto excluding theinformation on employees’ particulars as required pursuant to provisions of Rule 5(2)and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014.

In accordance with the provisions of Section 197 of the Act read with Rule 5(2) and5(3) of the Companies (Appointment and 2014 the annexure pertaining to the names andother particulars of employees will Remuneration be available for inspection in electronicmode. Shareholders can inspect the same up to the date of AGM by sending an e-mail to theCompany at shareholders@motilaloswal.com. Any shareholder interested in obtaining a copyof the said Annexure may write to the Company Secretary & Compliance Officer in thisregard.

The Board of Directors affirms that the remuneration paid to Senior Management of theCompany is as per Remuneration Policy of the Company.

REPORT ON CORPORATE GOVERNANCE

The Report on Corporate Governance for the year under review is forming part of thisAnnual Report. The certificate from the Statutory Auditors of the Company confirmingcompliance with the conditions of Corporate Governance as stipulated in Regulation 34 andSchedule V to the Listing Regulations is annexed to the Report on Corporate Governance.

BUSINESS RESPONSIBILITY REPORT

In terms of Regulation 34(2)(f) of the Listing Regulations top 1000 listed entitiesbased on their market capitalization as on March 31 are required to prepare a BusinessResponsibility Report ("BRR") forming part of the Annual Report. Accordinglythe Company has prepared the BRR describing theinitiatives taken by the Board from anenvironmental Social and Governance perspective and Business Responsibility Committeeoverviews the Business Responsibility Report and frame and overview such polices as may berequired from time to time.

The said BRR is forming part of this Annual Report and is also uploaded on the websiteof the Company atwww.motilaloswalgroup.com

STATUTORY AUDITORS

Pursuant to the provisions of Section 139(2) of the Act and the rules made thereunderthe Members at their Twelfth AGM held on July 27 2017 had appointed M/s. Walker Chandiok& Co. LLP Chartered Accountants as the Statutory Auditors of the Company for a termof five years i.e. from the conclusion of Twelfth AGM till the conclusion of theSeventeenth AGM.

Mr. Murad Daruwalla Partner Walker Chandiok & Co. LLP Chartered AccountantsStatutory Auditors has signed the Audited Financial Statements of the Company.

STATUTORY AUDITORS’ REPORT

The Statutory Auditors’ Report issued by Walker Chandiok & Co. LLP for theyear under review does not contain any qualification reservations or adverse remarks. 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.Further pursuant to Section 143(12) of the Act the Statutory Auditors of the Companyhave not reported any instances of frauds committed in the Company by its officers oremployees.

SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 (as amended from time to time) theCompany had appointed M/s. U. Hegde and Associates Practicing Company Secretaries toundertake the Secretarial Audit of the Company for the FY2020-21. The Secretarial AuditReport has been appended as "Annexure 3" to the Board’s Report.

Further the Secretarial Compliance Report for the financial year ended March 31 2021was obtained from M/s. U. Hegde and Associates Practicing Company Secretaries inrelation to compliance of all applicable SEBI Regulations / circulars / guidelines issuedthereunder pursuant to requirement of Regulation 24A of Listing Regulations. There is noadverse remark qualifications Audit Report and or reservation in the SecretarialCompliance Report. the Secretarial Audit Report of material subsidiaries i.e. Furtherpursuant totheprovisionsofRegulation24A of Listing Regulations MOHFL MOAMC & MOFLis available at website of the Company at www. .

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO energyand technology absorption is provided in Business Responsibility The Report annexed tothis Report.

Details of the foreign exchange earnings and outgo are given in the Note No. 47 to theStandalone Financial Statement of the Company.

TRANSFER OF SHARES PERTAINING TO UNCLAIMED / UNPAID DIVIDEND TO INVESTOR EDUCATION ANDPROTECTION FUND

Pursuant to Investor Education and Protection Fund Authority (Accounting AuditTransfer and Refund) Rules 2016 the shares of the shareholders in respect of whom thedividend is unpaid / unclaimed for seven consecutive years are required to be transferredto Investor Education and Protection Fund ("IEPF") after giving an opportunityto shareholders to claim the said unpaid / unclaimed dividend. Accordingly the Companyissued the reminder letters to such shareholders to claim the dividend and also publishedthe notice to such effect in the leading newspaper in English and regional language havingwide circulation and accordingly informed them that in the event of failure to claim saiddivided the unpaid / unclaimed dividend along with shares pertaining to unpaid /unclaimed dividend would be transferred to IEPF. Subsequently the Company has transferred181 equity shares to IEPF on September 22 2020 and 493 equity shares on December 17 2020under review. The details of such shares are available on the website of the Company athttps://www.motilaloswalgroup.com/Investor-Relations/Disclosures/IEPF . The concernedshareholders are requested to claim the said shares by directly approaching IEPFAuthority.

Disclosure of Details of Unclaimed Equity Shares in the Suspense Account:

Pursuant to Regulation 34 and Schedule V of Listing Regulations the Company reportsthe following details in respect of unclaimed equity shares that are kept in SpecificDemat Accounts of Motilal Oswal Financial

Particulars Number of Shareholders Number of Equity shares
Aggregate Number of Shareholders and the outstanding shares in the suspense account lying as on April 1 2020 5 575
Number of Shareholders who approached the Company for transfer of shares from suspense account during the year
Number of Shareholders to whom shares were transferred from the suspense account during the year
Aggregate Number of Shareholders and the outstanding shares in the suspense account lying as on March 31 2021 5 575

DEPOSITORY SYSTEM

The Equity Shares of the Company are compulsorily tradable in electronic form. As onMarch 31 2021 out of the Company’s total paid-up Equity Share Capital comprising of146620374 Equity Shares only 27060 Equity Shares are in physical form and theremaining shares are in electronic form (demat form). In view of the numerous advantagesoffered by the Depository System the Members holding shares in physical form are advisedto avail the facility of dematerialization.

DIRECTORS’ RESPONSIBILITY STATEMENT

134(5)of confirm that to the Pursuant to the provisions of Section best of itsknowledge and belief: Act the Board of Directors

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 are reasonable and prudent so as to give a true and fair view ofthe state of affairs of the Company as at March 31 2021 and Compan period; oftheprofitofthe

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;

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.

INTERNAL FINANCIAL CONTROLS

The Internal Financial Controls with reference to financial statements as designed andimplemented by the Company are adequate. The Internal Financial Control procedure adoptedby the Company are adequate for safeguarding its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information. During the year under review the InternalFinancial Controls were operating effectively and no material or serious observation hasbeen received from the Auditors of the Company for inefficiency or inadequacy of suchcontrols.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

Pursuant to Rule 7 of the Companies (Meetings of Board and its Powers) Rules 2014 readwith Section 177(9) of the Act and as per Regulation 22 of the Listing Regulations (asamended from time to time) Blower Policy ("Policy") to enable directors andemployees to report genuine concerns or grievances significant deviations from keymanagement policies and reports any non-compliance and wrong practices e.g. unethicalbehavior fraud violation of law inappropriate behavior / conduct etc. The functioningof the Vigil Mechanism is reviewed by the Audit Committee from time to time. None of theDirectors or employees have been denied access to the Audit Committee of the Board.

The objective of this mechanism is to maintain a redressal system which can process allcomplaints concerning questionable accounting practices internal controls or fraudulentreporting of financial information.

The Policy framed by the Company is in compliance with the requirements of the Act andListing Regulations and is available on the website of the Company athttps://www.motilaloswalgroup.

CORPORATE SOCIAL RESPONSIBILITY

The Company recognizes the responsibilities towards society and strongly intends tocontribute towards development of knowledge based economy. In accordance with therequirements of the provisions of Section 135 of the Act the Company has constituted aCorporate Social Responsibility ("CSR") Committee. The composition and terms ofreference of the CSR Committee is provided in the Corporate Governance Report forming partof this Annual Report.

The Company has also formulated a CSR Policy which is available on the website of theCompany at https://www.motilaloswalgroup.com/Downloads/IR/200139696902.-CSR-Policy.pdf.FurtherthedetailedCSRinitiatives undertakenby the Company are available at https://www.motilaloswal.com/foundation/ In the wake ofCOVID-19pandemictheCompanyextendedandwillcontinueto extend full support and co-operationin adhering to the directives issued by from the Government and steps taken by theGovernment to overcome the crisis. The social contribution and contribution made by theCompany is covered in ESG section forming part of this Annual Report. We assure you thatyour Company will continue to work towards its social commitment and contribute in nationbuilding with the same zeal. The Company has made contribution through MotilalOswalFoundation a not-for-profit charitable company incorporated under Section 25 of theCompanies Act 1956 andto various other not-for-profit organisations.

An Annual Report on activities as required under Companies (Corporate SocialResponsibility Policy) Rules 2014 (as amended from time to time) has been appended as"Annexure4" to the Board’s Report. FurthertheAnnualActionPlan on CSR activities forFY2021-22 is also uploaded on the website of the Company athttps://www.motilaloswalgroup.com/Investor-Relations/Disclosures/Mandatory

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

The details of loans guarantees and investments are given in the Notes to theFinancial Statement forming part of this Annual Report.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

The Board of Directors has approved the policy on transactions with relatedparties("RPT Policy") pursuant to the recommendation of the Audit Committee. Inline with the requirements of the Act and Listing Regulations the Company has formulatedthe RPT Policy which is also available on the Company’s website athttps://www.motilaloswalgroup.com/Downloads/IR/1568199502MOFSL_Policy-on-Materiality-and-Dealing-with-Related-Party-Transactions.pdf-21 were on an arm’s length basis and in the ordinary course ofbusiness.Allrelatedparty

All Related Party Transactions were placed before the Audit Committee for priorapproval. Prior omnibus approval of the Audit Committee is obtained for the transactionswhich are of unforeseen or repetitive in nature. The details of all such related partytransactions entered into pursuant to the omnibus approval of the Committee were placedbefore the Audit Committee on a quarterly basis for its review. During the year underreview there were no material contracts or arrangements or transactions entered into bythe Company with related parties pursuant to Section 188 of Act and accordingly Form AOC-2is not applicable.

The Directors draw attentionof the Members to Note No. 51 to the Standalone FinancialStatement which sets out related party disclosures.

COMPLIANCE WITH SECRETARIAL STANDARD 1

The Company has complied with Secretarial Standard-1 (SS-1) on meeting of Board ofDirectors.

BUSINESS RISK MANAGEMENT

The Company realizes the importance of Enterprise Risk Management ("ERM")framework and had taken early initiatives towards itsimplementation.The policy.

A systematic approach has been adopted that originates with the identification of riskcategorization and risk evaluating effectiveness of existing controls and buildingadditional controls to mitigate risk and monitoring the residual risk through effectiveKey Risk Indicators ("KRI"). The implementation is being carried out in phasedmanner with the objective to encompass the entire line of businesses. Effective ERMinvolves a robust implementation of three lines of defense - first line of defense is thefront-line employees the second line of defense is the risk and compliance function andthe third line of defense is external and internal auditors. To build an effective riskculture significant effort has been made towards robustness of these lines of defense.

In the opinion of Board there are no elements of risks threatening the existence ofthe Company.

POLICY FOR 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. Appropriate reporting mechanisms are in place for ensuringprotection against Sexual Harassment and the right to work with dignity. During the yearunder review the Company has not received any complaint in this regard.

Further the Company has complied with the provisions relating to the constitution ofInternal Complaints

Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013 to redress complaints received regarding sexual harassment.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There were no significant and material orders passed by the Regulators or Courts orTribunals impacting the going concern status and Company’s operations in futureduring the year under review.

ACKNOWLEDGEMENT

The Directors express their sincere gratitude to the Reserve Bank of IndiaSecuritiesand Exchange Board of India BSE Limited National Stock Exchange of IndiaLimited Ministry of Finance Ministry of Corporate Affairs Registrar of Companies othergovernment and regulatory authorities lenders financial institutions and theCompany’s Bankers for the ongoing support extended by them. The Directors also placeon record their sincere appreciation for the continued support extended by theCompany’s stakeholders and trust reposed by them in your Company. The Directorssincerely appreciate the commitment displayed by the employees of the Company and itssubsidiaries across all levels resulting in successful performance during the year underreview.

For and on behalf of the Board of
Motilal Oswal Financial Services Limited
Raamdeo Agarawal
Place: Mumbai Chairman
Date: April 29 2021 (DIN: 00024533)

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