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Paisalo Digital Ltd.

BSE: 532900 Sector: Financials
NSE: PAISALO ISIN Code: INE420C01059
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OPEN 75.00
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VOLUME 2749
52-Week high 97.20
52-Week low 58.40
P/E 36.84
Mkt Cap.(Rs cr) 3,143
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 75.00
CLOSE 75.10
VOLUME 2749
52-Week high 97.20
52-Week low 58.40
P/E 36.84
Mkt Cap.(Rs cr) 3,143
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Paisalo Digital Ltd. (PAISALO) - Director Report

Company director report

To

The Members of Paisalo Digital Limited

Your Board of Directors have pleasure in presenting the 30th Annual Report togetherwith the Audited Standalone and Consolidated Financial Statements for the Financial Yearended March 31 2022. This report read with Corporate Governance Report and ManagementDiscussion & Analysis includes macro-economic scenario governance philosophyfinancial performance of the Company business overview opportunity and threats andvarious initiative taken by the Company.

Financial Highlights

The Standalone financial performance of the Company for the Financial Year 2021-22 issummarized below:

(INR in Million)
Particulars FY 2021-22 FY 2020-21
Revenue from Operations 3563.98 3115.48
Less: Expenditure 2500.06 2349.43
Exceptional Item 0.02 (6.44)
Profit Before Tax (PBT) 1063.91 772.49
Tax Expenses 276.76 196.11
Net Profit After Tax (PAT) 787.14 576.38
Total Comprehensive Income for the Period 787.14 576.38
Transfer to Statutory Reserves (RBI Reserve Fund) 157.43 121.84
Transfer to General Reserve 550.00 400.00
Provisions of Standard Assets (18.49) (8.20)
Earnings per Share (EPS) (INR) 18.59 13.63
Net Worth 10240.91 8618.83
Assets Under Management (AUM) 24719.40 21424.66

Results of Operations and State of Company's affairs

Revenue from operations for the year ended March 31 2022 has increased by 14.40 % atINR 3563.98 Million over the corresponding previous year. The Net Profit of your Companyfor the financial year ended March 31 2022 stood at INR 787.14 Million as against the NetProfit of INR 576.38 Million for the financial year ended March 31 2021. Accordingly theNet Profit for the financial year ended March 31 2022 reflects a growth of 36.57 % overthe corresponding Profit for the financial year ended March 31 2021.

Transfer to Reserves

As required under Section 45IC of the Reserve Bank of India Act 1934 20% of theprofits are required to be transferred to a Special Reserve Account. The Company hastransferred INR 157.43 Million (previous year INR 121.84 Million) to Statutory Reservecreated and INR 550.00 Million has been transferred to General Reserve for financial year2021-22.

Subsidiary Company

Nupur Finvest Private Limited a registered Non-Deposit Taking Non-Banking FinanceCompany is the only Subsidiary Company of which the Company owned hundred percentshares. Nupur Finvest Private Limited is engaged in finance activities. At the year endedMarch 31 2022 the net worth of the Company stood at INR 541.80 Million. During thereporting period the subsidiary reported income of INR 359.14 Million and Profit BeforeTax (PBT) and Profit After Tax (PAT) at INR 7.31 Million and INR 5.36 Millionrespectively.

Consolidated Financial Statements

In compliance with the applicable provisions of Companies Act 2013 includingapplicable Accounting Standard on Consolidated Financial Statements this Annual Reportalso includes Consolidated Financial Statements for the Financial Year 2021-22.

Consolidated financial performance of the Company financial year ended March 31 2022is summarized below:

(INR in Million)
Particulars FY 2021-22 FY 2020-21
Revenue from Operations 3922.23 3460.22
Less: Expenditure 2850.69 2686.78
Exceptional Item 0.33 (4.23)
Profit Before Tax (PBT) 1071.22 777.68
Tax Expenses 278.71 197.87
Net Profit After Tax (PAT) 792.51 579.80
Total Comprehensive Income for the Period 792.51 579.80
Total Comprehensive income attributable to the Owner of the Company 792.51 579.80
Earnings per Share (EPS) (INR) 18.71 13.71

Review of Operations

The Company is providing a number of financial products like Business Loans SME &MSME Loans Income Generation Loans for business/self-employment purpose. During the yearunder review Company has posted 36.57 % increase in the Net Profit after tax from thefinance business of the Company.

Key Ratio

The Key Ratio for Financial Year 2021-22:

Current Ratio 3.58
Debt- Equity Ratio 1.46
Debt Service Coverage Ratio 1.19
Return on Equity Ratio 7.78%
Inventory Turnover Ratio 0.76
Trade Receivable Turnover Ratio 0.02
Trade Payable Turnover Ratio 0.01
Net Capital Turnover Ratio 1.62
Net Profit Ratio 22.09 %
Return on Capital Employed 15.06 %
Return on Investments 0.56%

COVID-19

The financial year ended March 31 2022 was the second year since the outbreak ofCOVID-19. Economic and Social disruptions continued with localized restrictions andlockdown as India witnessed a second wave of infections in April 21 and another wave fromJanuary to March 22.

Disbursements

During the Financial Year 2021-22 total disbursements reached to INR 16343.40Million.

Number of Customers

During the year under review the Customer outreach increased by 3.12 % and totalCustomers outreach stood at 1241816.

Fully Convertible Warrants

In terms of SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018 andSpecial Resolution passed by the Shareholders of the Company at Extraordinary GeneralMeeting held on March 82021 on receipt of initial warrant subscription amount of INR460.01 Million equivalent to 25% of the warrant issue price as prescribed by the SEBI(Issue of Capital and Disclosure Requirements) Regulations 2018 for allotment of FullyConvertible Warrants (‘Warrants') on March 20 2021 the Company considered andallotted 2610000 Warrants to Promoter Group entities on preferential basis. As per theterms of the issue of Warrants conversion option can be exercised by Warrant holders atany time during the period of 18 (Eighteen) months from the date of allotment of warrantsin one or more tranches.

During the year 1620000 warrants have been converted into equity and balance 990000warrants are available for conversion till September 19 2022.

Share Capital

During the financial year ended March 31 2022 Warrant Holders opted to exercise theirright to convert the 1620000 warrants into equity shares and paid 75% of issue price toconvert 2610000 warrants into equivalent number of equity shares. Accordingly 810000equity shares of INR 10/- each at premium of INR 695/- each on March 14 2022 and 810000equity shares of INR 10/- each at premium of INR 695/- each on March 25 2022 allotted tothe warrant holders on conversion of warrants.

The Authorized Share Capital of the Company stood at INR 1250000000.00 andconsequent to allotment of equity shares on conversion of warrants the Issued ShareCapital of the Company as on March 31 2022 was stood at INR 439246990.00 consistingof 43924699 Equity Shares of face value of INR 10/- each and the Subscribed ShareCapital of the Company as on March 31 2022 was stood at INR 439184490.00 consistingof 43912199 Equity Shares of face value of INR 10/- each and 12500 forfeited equityshares of face value of INR 10/- each (amount originally paid-up @ INR 5 each) and thePaid-up Share Capital of the Company as on March 31 2022 was stood at INR439121990.00 consisting of 43912199 Equity Shares of face value of INR 10/- eachfully paid-up and Rs.62500 for 12500 forfeited equity shares of face value of INR 10/-each (amount originally paid-up @ INR 5 each).

Dematerialization of Equity Shares

Equity Shares of the Company are compulsorily tradable in demat form. As on March 312022 99.99% of the Equity Shares are held in demat form and only 4006 Equity Shares outof total Equity Shares were held in physical form.

Net Worth and Capital to Risk Adjusted Ratio (CRAR)

The Net Worth of the Company (Standalone) increased to INR 10240.91 Million as on March31 2022 from INR 8618.83 Million as on March 31 2021. The Capital to Risk AdjustedRatio (CRAR) stood at 42.92 % as on March 31 2022 as against 44.47 % as on March 312021 which is much above the requirement as stipulated by Reserve Bank of India.

Disclosure of Utilization of Funds pursuant to Regulation 32(7A) of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015

During the year under review the fund raised (75% of issue price) through allotment ofequity shares on conversion of warrants had been utilized for general working capitalrepay of borrowings and other corporate purpose as mentioned in the explanatory statementannexed to the Notice of Extra-Ordinary General Meeting held on March 8 2021 in whichSpecial Resolution was passed by the Shareholders for preferential issue of FullyConvertible Warrants.

Dividend

Your Board is pleased to recommend a final dividend of 10% on each fully paid equityshare for Financial Year 2021-22. The dividend if declared by the Members at theforthcoming Annual General Meeting (AGM) shall be paid to the eligible Members of theCompany. Final dividend is subject to deduction of income tax at source.

The dividend recommended is in accordance with the Company's Dividend DistributionPolicy

Dividend Distribution Policy

In terms of Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Board of Directors of the Company at their meeting held on June 42021 has approved and adopted Dividend Distribution Policy of the Company. The policy isavailable on the website of the Company at https://www.paisalo.in/corporate'govemance.php

Unclaimed Dividend and Unclaimed Shares

Pursuant to Rule 5(8) of the Investor Education and Protection Fund Authority(Accounting Audit Transfer and Refund) Rules 2016 your company furnished a statement /information through Form IEPF 2 to the Ministry of Corporate Affairs of the unclaimeddividends amounting to INR 153696.00 as on the date of financial year ended on March 312021. During the year under review there was an amount of INR 40522.00 of unpaid andunclaimed dividend for a period of 7 years from the date it was lying in the unpaiddividend accordingly pursuant to provisions of Section 124(5) of the Companies Act2013

INR 40522.00 have been transferred in the Investor Education and Protection Fund(IEPF) of the Central Government in November 2021.

As on March 31 2022 following amount was lying in the unclaimed dividend account:

Financial Year Type of Dividend % Dividend per share (in INR) Dividend Declared in Date of Dividend Declaration Unclaimed divided amount (in INR)
2014-15 Final 10 1.00 23rd AGM 30-09-2015 26860.00
2015-16 Final 10 1.00 24th AGM 30-09-2016 20451.00
2016-17 Final 10 1.00 25th AGM 26-09-2017 17859.00
2017-18 Final 10 1.00 26th AGM 29-09-2018 12633.00
2018-19 Final 10 1.00 27th AGM 10-08-2019 13815.00
2019-20 Final 10 1.00 28th AGM 08-09-2020 21556.00
2020-21 Final 10 1.00 29 th AGM 25-09-2021 35707.00

For details please refer the list available on Company's website www.paisalo.in

Deposit

During the year and review the Company has not accepted any public deposits and assuch no amount on account of principal or interest on deposits from public in terms ofSection 73 of the Companies Act 2013 was outstanding as on the date of the balance sheet.

Bank finance

Your Company raised funds for its working capital and business requirements fromvarious banks and the total amount of bank loan outstanding as on March 31 2022 was INR10261.10 Million as against INR 7286.72 Million on March 31 2021.

During the year under review your Company maintained banking relationships with 14Banks.

Fund Raising Through Issue of Debentures

During the year under review Company has raised INR 1610.00 Million by issuingUnlisted Unsecured Unrated NonConvertible Debentures of INR 10.00 Million each on privateplacement basis. The fund raised from such issue were utilized for the same purpose forwhich it were raised.

Timely Repayment of Debt Liabilities

During the year under review the Company has duly serviced all its debts obligationsin time.

During the year the Company has also make payment of interest and principal amount onNon-Convertible Debentures as per the terms of issue.

Credit Rating

M/s Infomerics Valuation and Rating Pvt. Ltd. assigned following rating to Company'sinstruments

Sr No. Instrument/Facility Amount (INR in Million) Rating Assigned
1 Fund Based Facilities from Banks 11600.00 IVR AA-/Stable Outlook (IVR Double A Minus
2 Non Convertible Debentures 1150.00 with Stable Outlook)

Board of Directors Board Meetings and Key Managerial Personnel

The Company's Board is duly constituted and is in compliance with the requirements ofthe Companies Act 2013 SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 RBI's Corporate Governance provisions as applicable on the Company andprovisions of the Articles of Association of the Company. The Company's Board has beenconstituted with requisite diversity wisdom and experience commensurate to the businessof your Company.

Change in Directors or KMP

During the year under review Mr. Anoop Krishna (DIN: 08068261) who retired at the29th Annual General Meeting was re-appointed as an Executive Director of the Company.

W.e.f. November 10 2021 Mr. Atul Agrawal ceased to be Chief Financial Officer of theCompany and Mr. Harish Singh Executive Director has also been appointed as ChiefFinancial Officer.

During the year under review Mr. Sunil Srivastav (DIN: 00237561) resigned from theBoard as Independent Director w.e.fJuly 29 2021 due to potential conflict of interestMr. Srivastav has also clarified in his resignation letter there was no other reason forhis resignation from the Board of the Company. The Board places on record its deep senseof appreciation for the guidance and support provided by Mr. Sunil Srivastav during histenure as Independent Director of the Company.

Board of Directors of the Company appointed Mr. Vijuy Ronjan (DIN:09345384) as anAdditional Independent Director on the Board of the Company w.e.f. October 8 2021.

Appointment/Reappointment of Directors or KMP

Reappointment of Mr. Harish Singh (retire by rotation):

In terms of Section 152 of Companies Act 2013 Mr. Harish Singh Executive Director(DIN 00039501) is liable to retire by rotation at the forthcoming Annual General Meetingand being eligible for re-appointment offers himself for re-appointment as Director.

The Board of the Company recommends re-appointment of Mr. Harish Singh as a Director ofthe Company liable to retire by rotation. Brief particulars of Mr. Harish Singh asrequired under the Secretarial Standard on General Meetings issued by the Institute ofCompany Secretaries of India and Regulation 36 of the SEBI (Listing Obligations andDisclosure Requirements Regulations 2015 is provided in the Notice convening the 30thAnnual General Meeting of the Company.

Since the date of 29th Annual General Meeting of the Company on the recommendation ofNomination and Remuneration Committee the Board of Directors has appointed Mr. VijuyRonjan (DIN:09345384) on October 8 2021 as Additional Independent Director of the Companyto hold the office till the date of forthcoming Annual General Meeting. Keeping in theview the good experience knowledge and expertise of Additional Director in financeindustry the Board believes that their association with the Company will be in theinterest of the Company and will benefit the Company in its endeavours. Accordingly Boardof Directors and Nomination and Remuneration Committee of the Company recommend theappointment of Mr. Vijuy Ronjan as Non-Executive Independent Director.

On May 6 2022 Board of Directors inducted Mr. Santanu Agarwal (DIN: 07069797) on theBoard of the Company as Deputy Managing Director and also recommended to the Shareholdersfor his appointment as Director and to fix his terms and remuneration as Deputy ManagingDirector.

Declaration of Independence by Independent Directors:

All Independent Directors of the Company have declared to the Board of Directors thatthey meet the criteria of Independence as laid down in Sections 149(6) and 149(7) of theCompanies Act 2013; Regulation 16(1) (b) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 and RBI Corporate Governance Norms as applicable on theCompany. In the opinion of the Board the Independent Directors possess the requisiteexpertise and experience and are the person of integrity and repute. They fulfil theconditions specified in the Companies Act 2013 and the Rules made thereunder and areindependent of the management of the Company. The Board also places on records its deepappreciation for their continuous guidance support and contribution to the Management ofthe Company.

Evaluation of Board of Directors:

The Board has carried out an annual evaluation of its own performance the Boardcommittees and individual Directors pursuant to the Companies Act 213 and the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015. Through a structuredquestionnaire feedback from Directors was obtained as a part of performance evaluation.This questionnaire and criteria of performance was broadly based on the guidance note onthe Board evaluation issued by SEBI on January 5 2017.

Basis on the feedback received from the directors the Board and the Nomination andRemuneration Committee reviewed the performance of the individual directors the ManagingDirector including various committees established by the Board at their respectivemeetings.

The performance evaluation of the individual Directors including the Managing Directorinter alia was done based on the criteria such as professional conduct roles andfunctions discharge of duties their contribution to Board/Committees/senior managementpreparedness on the issues to be discussed contribution to the decision making etc. Theperformance evaluation of the Board as a whole and its committees was made after seekinginputs from the Directors/committee members on various criteria such as structure andcomposition effectiveness of the Board process information roles and responsibilitiesprofessional development functioning of the Board and its committees establishment anddetermination of responsibilities of committees and the quality of relationship betweenthe Board and the management.

The performance evaluation of the Non-Independent Directors viz. Managing Director andExecutive Directors and the Board as a whole was also carried out by the IndependentDirectors at their separate meeting held on February 7 2022 considering the views of theExecutive and the Non-Executive Directors.

The Company conducts a Board Evaluation process for the Board of Directors as a wholeBoard Committees and also for the Directors individually through self-assessment and peerassessment. Performance of the Board of Directors Its Committees and Individual DirectorsMounting stakeholders' expectations challenges faced by the Companies to operate underfluctuating economic conditions and increased regulatory requirements have brought thequality of performance of the Board of Directors under greater scrutiny. The Board ofDirectors has recognized that it would be important for them to continually assess howeffectively they are performing their roles against the objectives and the goals they haveset for themselves. This growing recognition has resulted in Board evolutions as acritical structural tool for assessing Board effectiveness and efficiency.

The Directors expressed satisfaction with the evaluation process. The performance ofthe Director individually and collectively and performance of the Committees are foundsatisfactory.

With the spirit of wealth creation for the Stakeholders of the Company your Directorsare committed to give their efforts towards the development of the Company.

Board & Committees of the Company Board of Directors

As on March 31 2022 there are nine members on the Board of the Company out of ninemembers six are Non-Executive Independent Directors. Board members of the Company havingvast experience in the field of finance banking taxation legal and compliance.

Meetings of Board

During the year under review a total of Six Meetings of the Board of Directors of theCompany were held i.e. on June 4 2021; August 14 2021; November 10 2021; February 72022; March 14 2022 and March 25 2022. Details of Board composition and Board Meetingsheld during the financial year 2021-22 have been provided in the Corporate GovernanceReport which forms part of this Report.

Audit Committee

The Audit Committee of the Board consists of Independent Directors namely Mr. PradeepAgarwal as Chairperson and Mr. Gauri Shankar and Executive Director Mr. Harish Singh asMembers. The composition terms of reference and details of meetings held during the yearare disclosed in the Report on Corporate Governance. All the recommendations made by theAudit Committee were accepted by the Board of Directors.

Stakeholders Relationship Committee

The Stakeholder Relationship Committee of the Board consists of Independent Directorsnamely Mr. Naresh Kumar Jain as Chairperson and Mr. Gauri Shankar and Mr. Raman Aggarwalas Members. The composition terms of reference and details of meetings held during theyear are disclosed in the Report on Corporate Governance.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee (‘NRC') recommends to the Board thesuitability of candidates for appointment as Director/Managing Director Key ManagerialPersonnel and the remuneration packages payable to them. The composition terms ofreference and details of meetings held during the year are disclosed in the Report onCorporate Governance.

Policy on Directors Appointment and Remuneration

The Company strives to maintain an appropriate combination of Executive Non-Executiveand Independent Directors. The Nomination & Remuneration Committee of the Companyleads the process for Board appointments in accordance with the requirements of CompaniesAct 2013 SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 andother applicable rules or guidelines. All the Board appointments are based on meritocracy.Generally the Managing Director and Whole-time Directors (Executive Directors) areappointed for a period of five years. Independent Directors of the Company are appointedto hold their office for a term of up to five consecutive years on the Board of yourCompany. Based on their eligibility for reappointment the outcome of their performanceevaluation and the recommendation by the Nomination and Remuneration Committee theIndependent Directors may be re-appointed by the Board for another term of fiveconsecutive years subject to approval of the Shareholders of the Company. The DirectorsKey Managerial Personnel and Senior Management Personnel shall retire as per theapplicable provisions of the Companies Act 2013 and the policy of the Company. Thepotential candidates for appointment to the Board are inter-alia evaluated on the basis ofpersonal and professional ethics standing integrity values and character; appreciationof the Company's vision mission values; prominence in business institutions orprofessions; professional skill knowledge and expertise; financial literacy and suchother competencies and skills as may be considered necessary.

In addition to the above the candidature of an Independent Director is also evaluatedin terms of the criteria for determining independence as stipulated under Companies Act2013 SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 guidelinesissued by RBI and other applicable regulations or guidelines. In case of re-appointment ofDirector the Board shall take into consideration the results of the performanceevaluation of the Directors and their engagement level.

The Company has Remuneration Policy for Directors KMPs and other employees which isreviewed by the Board of Directors of the Company time to time the policy represents theoverarching approach of the Company for the remuneration of Director KMPs and otheremployees.

Compliance with the Code of Conduct of Board of Directors and Senior Management

The Board of Directors and Senior Management of the Company have complied with theCompany's Code of Conduct applicable to Board of Directors and Senior Management. In thisregard declaration signed by the Managing Director is annexed and forms part of thisReport.

Directors' Responsibility Statement

Pursuant to the requirement under Section 134(3)(c) read with Section 134(5) of theCompanies Act 2013 with respect to Directors' Responsibility Statement the Directors tothe best of their knowledge and belief hereby confirm that:

a) in the preparation of the annual accounts the applicable accounting standards havebeen followed and that no material departure has been made in following the same;

b) appropriate accounting policies have been selected and applied consistently andjudgements and estimates made are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofit of the Company for that period;

c) proper and sufficient care for maintenance of adequate accounting records inaccordance with the provisions of Companies Act 2013 have been taken for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;

d) the annual accounts have been prepared on a going concern basis;

e) internal financial controls to be followed by the Company had been laid down andsuch internal financial controls are adequate and operating effectively; and

f) proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.

Auditors & Audit Reports

Statutory Auditor and Statutory Audit Report:

In terms of Guidelines for Appointment of Statutory Central Auditors (SCAs)/StatutoryAuditors (SAs) of Commercial Banks (excluding RRBs) UCBs and NBFCs (including HFCs)issued by Reserve Bank of India vide its notification RBI/2021-22/25 Ref. No. DoS. CO.ARG/SEC.01/08.91.001/2021-22 dated April 27 2021 during the financial year 2021-22 theCompany had appointed M/s Manish Goyal & Co. Chartered Accountants having FirmRegistration no. 006066C as the Statutory Auditors of the Company in place of M/s. D.Tayal & Jain Chartered Accountants having Firm Registration No. 011181C to fill inthe casual vacancy caused due to the resignation of D. Tayal & Jain CharteredAccountants who was not falling in the category of eligible Statutory Auditor(s) asprescribed in the aforesaid guidelines. M/s Manish Goyal & Co. Chartered Accountantsholds the office as Statutory Auditors till the conclusion of the 30th Annual GeneralMeeting of the Company.

As the term of the office of M/s Manish Goyal & Co. Chartered Accountants willcomplete post conclusion of the 30th Annual General Meeting of the Company. Accordinglyin terms of aforesaid guidelines and Company's policy for Appointment of StatutoryAuditors which provides that subject to satisfying the eligibility norms each year anAuditor can be appointed as Statutory Auditor of the Company for 3 continuous years TheBoard of Directors of the Company on the recommendation of the Audit Committee hasrecommended the re-appointment of M/s Manish Goyal & Co. Chartered Accountants whois fulfilling the eligibility norms as per RBI Guidelines as Statutory Auditors of theCompany for remaining period of two years commencing from the conclusion of 30th AnnualGeneral Meeting till the 32nd Annual General Meeting of the Company.

The Report given by the Statutory Auditor M/s Manish Goyal & Co. CharteredAccountants on the financial statement of the Company for the financial year 2021-22 ispart of the Annual Report. The Notes on financial statements referred to in the AuditorsReport are self-explanatory and do not call for any further comments under Section 134 ofthe Companies Act 2013. The Auditors' Report does not contain any qualificationreservation or adverse remark.

Secretarial Auditor and Secretarial Audit Report:

In accordance with the provisions of Section 204 of the Companies Act 2013 read withRule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 and as a measure of good Corporate Governance practice Board of Directors in theirMeeting held on February 7 2022 has appointed M/s. Satish Jadon & AssociatesPracticing Company Secretries as Secretarial Auditor of the company to conductSecretarial Audit of the Company for financial year ended March 31 2022 and to submitSecretarial Audit Report in Form No. MR-3.

A copy of the Secretarial Audit Report received from M/s. Satish Jadon & Associatesin the prescribed Form No. MR-3 is annexed to this Board's Report and marked as AnnexureA.

Pursuant to circular No. CIR/CFD/CMD1/27/2019 dated February 8 2019 issued by theSecurities and Exchanges Board of India and Regulation 24A(2) of SEBI (LODR) Regulations2015 the Company has obtained Secretarial Compliance Report for financial year endedMarch 31 2022 from Practicing Company Secretary on compliance of all applicable SEBIRegulations and circular/ guidelines issued thereunder and the copy of same has beensubmitted with the Stock Exchanges within the prescribed due date.

There are no qualifications reservations adverse remarks or disclaimer in the aboveSecretarial Audit Report.

Secretarial audit of material unlisted Indian subsidiary

Nupur Finvest Private Limited the material unlisted subsidiary of the Company has gotthe secretarial audit conducted for financial year 2021-22 pursuant to Section 204 of theAct a copy of the report of which is appended to this Report as Annexure A1.

Secretarial Standards

During the year under review the Company has complied with the applicable SecretarialStandards issued by the Institute of Company Secretaries of India.

Maintenance of cost records

The cost records as specified by the Central Government under Section 148(1) of the Actare not required to be maintained by the Company.

Fraud reported by auditors under Section 143(12) other than those which are reported tothe Central Government

Pursuant to provisions of Section 143(12) of the Companies Act 2013 the Auditors ofthe Company have not reported about any fraud which is being or has been committed in theCompany by its officers or employees.

Particulars of Loans Guarantees or Investments under Section 186 of Companies Act2013

Being RBI registered Non-Banking Financial Company pursuant to Section 186(11) of theCompanies Act 2013 the provisions of Section 186 except Sub-Section 1 of the saidSection shall not apply on the Company hence disclosure under Section 134 (3) (g) of theCompanies Act 2013 of particulars of the loans given investments made or guaranteesgiven or securities provided under Section 186 of the Companies Act 2013 is notapplicable to the Company. However the details of Investment made by the Company havebeen disclosed in the note no. 6 of the Standalone Financial Statement for the year endedMarch 31 2022. The Company has given its guarantee only for the credit facilities availedby its Wholly Owned Subsidiary M/s. Nupur Finvest Private Limited.

Particulars of contracts or arrangements with related parties

During the financial year ended March 31 2022 transactions with the Related Partiesas defined under the Companies Act 2013 read with Rules framed thereunder and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 were in the‘ordinary course of business' and ‘at arm's length' basis. During the year underreview your Company did not enter into any Related Party Transactions which require priorapproval of the Members. All Related Party Transactions of the Company had approval of theAudit Committee and the Board of Directors as required under Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015. Subsequently theAudit Committee and the Board have reviewed the Related Party Transactions on a quarterlybasis. The Company has an internal mechanism for the purpose of identification andmonitoring of Related Party Transactions. During the year under review there has been nomaterially significant Related Party Transactions having potential conflict with theinterest of the Company. Since all Related Party Transactions entered into by your Companywere in the ordinary course of business and also on an arm's length basis thereforedetails required to be provided under the provisions of Section 134(3)(h) of the CompaniesAct 2013 in the prescribed Form AOC-2 is not applicable to the Company. The Directorsdraw attention of the Members to note no. 38 of the Notes to the Financial Statements forthe year ended March 31 2022 which sets out details of related party transactions.

Policy on materiality of related party transactions and on dealing with related partytransactions is displayed on the website of the Company athttps://www.paisalo.in/corporate'governance.php.

Material Changes and Commitments if any Affecting the Financial Position of theCompany

There were no material changes and commitments affecting the financial position of theCompany which occurred between the end of the financial year and the date of this Report.

Significant and Material Litigations / Orders

During the financial year 2021-22 there were no significant and material orders passedby the Regulators / Courts which would impact the going concern status of the Company andits future operations. Further no penalties have been levied by the RBI or any otherregulator during the year under review.

Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo

As the Company is engaged in the financial services activities its operations are notenergy intensive nor does it require adoption of specific technology and hence informationin terms of Section 134(3)(m) of the Act read with the Companies (Accounts) Rules 2014to the extent applicable are as follows:

• being a Non-banking Finance Company the particulars regarding conservation ofenergy and technology absorption as required to be disclosed pursuant to the Rule 8(3) ofthe Companies (Accounts) Rules 2014 are not relevant to its activities.

• Foreign Exchange earnings for the Company during the financial year under reviewwas nil and Company's Foreign Exchange outgo during the financial year under review wasINR 213680/-

Corporate Social Responsibility

In accordance with the provisions of Section 135 of the Companies Act 2013 read withrules made thereunder Company has constituted a Corporate Social ResponsibilityCommittee which framed a CSR Policy for the Company and same has been approved by theBoard of Directors of the Company which is available on the website of the Company. CSRPolicy of the Company is reviewed time to time

For the financial year 2021-22 the Board of Directors of the Company in their meetingheld onJune 4 2021 approved INR 15.91 Million as the budget for CSR activities. Duringthe year Company has spent CSR budget in various activities which are disclosed in theAnnual Report on CSR activities for financial year ended March 31 2022 annexed with thisreport as Annexure B.

Composition of CSR Committee is disclosed in Corporate Governance Section of thisAnnual Report as part of Board's Report.

Business Responsibility Report

Pursuant to Regulation 34(2)(f) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 read with SEBI Circular No. CIR/CFD/CMD/10/2015 datedNovember 4 2015 the Business Responsibility Report describing the initiatives taken bythe Company from an environmental social and governance perspective forms part of thisReport as Annexure C.

Internal Financial Control

The Company remains committed to improve the effectiveness of Internal FinancialControls and processes which would help in efficient conduct of its business operationsensure security to its assets prevention and detection of frauds and errors accuracy andcompleteness of accounting records and timely preparation of reliable financialinformation.

The Company has put in place adequate internal controls with reference to accuracy andcompleteness of the accounting records and timely preparation of reliable financialinformation commensurate with the size scale and complexity of operations and ensurescompliance with various policies and statutes in keeping with the organizations pace ofgrowth increasing complexity of operations prevention and detection of frauds anderrors. The Internal Financial Controls with reference to the financial statements areadequate in the opinion of the Board of Directors.

The internal control is supplemented by an extensive program of internal externalaudits and periodic review by the Management. This system is designed to adequately ensurethat financial and other records are reliable for preparing financial information andother data and for maintaining accountability of assets. Competent professionals have beenengaged by the Company for conducting internal audit to examine and evaluate the adequacyand effectiveness of internal financial control system of the Company. The Internal Auditteam is responsible to assist the Audit Committee and Risk Management Committee on anindependent basis with a complete review of the risk assessments and associated managementaction plans. The Internal Audit Reports and Risk related report are reviewed periodicallyby the Audit Committee and Risk Management Committee of the company. Efficacy of internalcontrol systems are tested periodically by Internal Auditors and Internal Control overfinancial reporting is tested and certified by Statutory Auditors.

Internal Financial Control System of the Company is modified continuously in accordancewith the dynamic changes in the business conditions and to comply with the applicablelaws regulations statutory and accounting requirements.

During the year no material or serious observations have been highlighted forinefficiency or inadequacy of such controls.

Risk Management

Risk management forms an integral part of the Company's business operations andmonitoring activities. The Company and its subsidiaries are exposed to a variety of risksincluding liquidity risk interest rate risk market risk credit risk technology riskoperational risk regulatory and compliance risk reputational risk business continuityrisk legal risk competition risk risks pertaining to Covid-19 pandemic among others.

NBFCs are required to ensure that a proper framework on Risk Management System isformulated and put in place. For this purpose the Company in addition to AuditCommittee has also constituted Assets Liability Management Committee and Risk ManagementCommittee the details of the functioning of these Committees and its frequency ofmeetings are provided in Report on Corporate Governance forming part of this Report. TheseCommittees are constituted to facilitate the Board to address the risk associated with thebusiness of the Company and developed and implemented a Risk Management Policy to ensuresustainable business growth with stability and promote a proactive approach in reportingevaluating and resolving risks associated with the Company's business. The Policy alsohighlights the functions responsibilities and role of the Committees and Board to addressthe risks associated with the Company and to mitigate/reduce the impact of the risk on theCompany. Further Risk Management Committee of the Company is also performed the functionas prescribed under Regulation 21 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. The Company follows a disciplined risk management processand takes business decisions with balanced risk reward paradigm.

Human Resources

Company's industrial relations continued to be harmonious during the period underreview. The Company strives to provide the best work environment with ample opportunitiesto grow and explore. Healthy cordial and harmonious industrial relations have beenmaintained by the Company at all levels.

Disclosures as per the Provision of Section 197 (12) of Companies Act 2013

The information required pursuant to the provisions of Section 197 of the Act read withRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 in respect of employees of the Company has been appended as Annexure D of thisReport. In terms of first proviso to Section 136 of the Act the Report and Accounts arebeing sent to the Members and others entitled thereto excluding the information onemployees particulars as required pursuant to provisions of Rule 5(2) and Rule 5(3) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014. The saidinformation is available for inspection by the Members at the Registered Office of theCompany during business hours on working days of the Company up to the date of the ensuingAGM. If any Member is interested in obtaining a copy thereof such Member may write to theCompany Secretary at cs@paisalo.in in this regard and same will be furnished on suchrequest.

Compliance with provisions of Sexual Harassment of Women at Work Place (PreventionProhibition & Redressal) Act 2013

The Company is committed to providing and promoting a safe and healthy work environmentfor all its employees. The Company has a detailed policy in place in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention

Prohibition and Redressal) Act 2013 (the "POSH") Internal ComplaintsCommittees (the "ICC") has been set up to redress complaints if any receivedregarding sexual harassment and the Company has complied with provisions relating to theconstitution of ICC under the POSH. During the financial year 2021-22 no complaints wasreceived from any of the employees.

Compliance of Reserve Bank of India Guidelines

Your Company is categorized as a Non-Deposit taking Systemically Important Non-BankingFinance Company (NBFC- NDSI). Accordingly during the year the Company has not acceptedany deposits from the public and there were no deposits which become due for repayment orrenewal. The Company has complied with the ‘Master Direction-Non-Banking FinancialCompany- Systemically Important Non-Deposit taking Company and Deposit taking Company(Reserve Bank) Directions 2016 as amended from time to time and all other applicableDirections of RBI during FY 2021-22.

Annual Return

In accordance with the provisions of Section 92(3) read with Section 134(3) (a) of theAct and the applicable rules Annual Return of the Company as on March 31 2022 is hostedon website of the Company at https://www.paisalo.in/pdf/MGT- 7_PAISALO_2021-22.pdf

Management Discussion and Analysis

The Management Discussion and Analysis report for the year under review as requiredunder Regulation 34(2)(e) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is provided as a separate section forming part of the Annual Report.

Vigil Mechanism/Whistle Blower Policy

The vigil mechanism as envisaged in the Companies Act 2013 the rules prescribedthereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 is implemented through the Company's Whistle Blower Policy to enable the Directorsand Employees of the Company to report genuine concerns to provide for adequatesafeguards against victimisation and make provision for direct access to the Chairman ofthe Audit Committee. Details of vigil mechanism/whistle blower are included in theCorporate Governance Report forming part of this Report.

During the financial year 2021-22 no cases under this mechanism have been reported.

Corporate Governance

Your Company strives to ensure that best corporate governance practices are identifiedadopted and consistently followed. It is ensured that the practices being followed by theCompany are in alignment with its philosophy towards Corporate Governance. Your Companybelieves that good corporate governance is the basis for sustainable growth of thebusiness and effective management of relationship among constituents of the system andalways works towards strengthening this relationship through corporate fairnesstransparency and accountability. Your Company give prime importance to reliable financialinformation integrity transparency fairness empowerment and compliance with law inletter and spirit.

In compliance with the provisions of Regulation 34 of the SEBI (Listing Obligations andDisclosure Requirements) Regulation 2015 read with Schedule V to the said Regulationsthe Report on Corporate Governance forms an integral part of this report and is set out asseparate section of this Report. The certificate from the Secretarial Auditor of theCompany confirming compliance with the conditions of Corporate Governance is annexed tothe Report on Corporate Governance.

Certificate from the Managing Directors and Chief Financial Officer

The certificate received from Mr. Sunil Agarwal Managing Director and Mr. HarishSingh Executive Director and Chief Financial Officer with respect to the financialstatements and other matters as required under Part B of Schedule II to the the SEBI(Listing Obligations and Disclosure Requirements) Regulation 2015 forms part of thisReport.

Acknowledgments

Your Board acknowledges and appreciates the relentless efforts of the employees andstaff including the management team headed by the Executive Directors who always lead fromthe front in achieving a commendable business performance year on year despite achallenging business environment. Your Board is indebted for the unstinted support andtrust reposed by you the Members. Your Board wishes to place on record its deepappreciation of the Non-Executive Directors of the Company for their immense contributionby way of strategic guidance sharing of knowledge experience and wisdom which helpsyour Company to take right decisions in achieving its business goals. Your Boardacknowledges the support and co-operation

received from all regulatory authorities of the Central Government and all StateGovernments in India. Your Board takes this opportunity to thank all its Banks and otherstakeholders as it considers them essential partners in progress and your Board is alsolooking forward to continued support and co-operation in future.

The Board regrets the loss of life due to Covid-19 pandemic. The Board of Directors aredeeply grateful and have immense respect for medical fraternity other professional andfront-line workers who have worked throughout to save the lives.

Place : New Delhi For & on behalf of the Board of Directors of
Date : May 6 2022 Paisalo Digital Ltd.
Sd/- Sd/-
(Sunil Agarwal) (Harish Singh)
Managing Director & CEO Executive Director
DIN : 00006991 DIN : 00039501

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