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Salem Erode Investments Ltd.

BSE: 540181 Sector: Financials
NSE: N.A. ISIN Code: INE894E01028
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OPEN 54.25
CLOSE 56.90
VOLUME 866
52-Week high 122.45
52-Week low 4.01
P/E 55.20
Mkt Cap.(Rs cr) 62
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Salem Erode Investments Ltd. (SALEMERODEINV) - Director Report

Company director report

To.

The Members

Salem Erode Investments Limited

Your Directors present before you the 90th Annual Report of the Companytogether with the Audited Financial Statements for the Financial Year ended March 312021.

I. Financial Summary and Highlights

a) Operations

The Company was acquired by ICL Fincorp Limited on 17thday of February2020. The Company has till date after acquisition opened four branches across the regionsof Kanyakumari district of Tamil Nadu and two more branches are set to open in thesouthern parts of the Country in a couple of days' time. The Company together with itsHolding Company aims to open more branches across the Country in the comings years.Currently the workforce of the Company is 24 dedicated employees.

The commercial operations during the year under report were progressive. The Companyhas earned an income of Rs.22290023/- (Rupees Two Crores Twenty Two Lakhs NinetyThousand Twenty Three Only) as compared to Rs. 12118025/- (Rupees One Crore Twenty OneLakhs Eighteen Thousand and Twenty Five Rupees Only) during the previous year. The totalexpenditure of the Company for the year was Rs. 3210677/- (Rupees Thirty Two Lakhs TenThousand Six Hundred and Seventy Seven Rupees Only)as compared to Rs. 12629901/-(Rupees One Crore Twenty Six Lakhs Twenty Nine Thousand Nine Hundred and One Rupees Only).The Company incurred profit of Rs.13719450/- (Rupees One Crore Thirty Seven LakhsNineteen Thousand Four Hundred and Fifty Only) as against net loss amounting to Rs.1200230/- (Rupees Twelve Lakhs Two Hundred and Thirty Only) during the previousFinancial Year. Your Directors are hopeful to further expand the operations of the Companyin the coming year.

Financial Summary

Particulars

For the year ended March 312021 (Rs.)

For the year ended March 312020 (Rs.)

Total Income 22290023 12118025
Total Expense 3210677 12629901
Profit/Loss before Tax 19079345 (511876)
Less Current Income Tax 4464296 233708
Less Deferred Tax 753495 454645
(Excess)/Short provision of Previous Years 142104 -
Net Profit/Loss after Tax 13719450 (1200230)
Earnings per share (Basic) 1.20 (0.10)
Earnings per Share(Diluted) 1.20 (0.10)

b) Reserves

During the year the Company had transferred an amount of Rs. 3900000/- (Rupees ThirtyNine Lakhs Only) and Rs. 545458 (Rupees Five Lakhs Forty Five Thousand Four Hundred andFifty Eight Only) to the Statutory Reserve and Impairment Reserve respectively. An amountof Rs. 9273992/- (Rupees Ninety Two Lakhs Seventy Three Thousand Nine Hundred and NinetyTwo Only) is proposed to be retained in the statement of Profit and Loss Account.

c) Dividend

With a view to conserve profit for proposed expansion activities of the Company andconsidering the challenging situation caused by outbreak of the COVID-19 pandemic theBoard of Directors has not recommended any dividend on Equity Shares of the Company forthe Financial Year ended March 312021.

d) Change in Accounting Standards

The Company is following the Indian Accounting Standards during the year under report.

II. State of Company's affairs

a) Key Business Developments

i. Branch Network

During the year under report four branches were opened in Kanyakumari region of SouthIndia. The Company together with ICL Fincorp Limited now aims to open many more branchesacross rural parts of the Country. Having a widespread branch network enable the Companyto service and support the existing as well as fresh customers from proximate locationswhich gives easy access to services and also enables the Company to reach new potentialcustomers.

 

ii. Fund Raising

The Company vide Postal Ballot through e-voting on 23rd day of February2021 has approved issue of Secured Non-Convertible Debentures on Private Placement basisnot exceeding Rs.3000000000/- (Rupees Three Hundred Crores Only).The discussions toraise funds by issuing Non-Convertible Debentures are on board. This shall be the majorfinancial resource of your Company in the future. Further discussions on public issue ofNon-Convertible Debentures and Equity Shares are in progressive mode.

b) Other material event having an impact on the affairs of the Company

• Impact of Coronavirus disease (COVID-19)

Your Board has taken sufficient measures to ensure adequate liquidity is available atall times during the pandemic period by proper Asset Liability Management. All thepreventive measures and guidelines implemented by both the Central Government and StateGovernment to contain the spread of pandemic including but not limited to withdrawal ofbiometric punching facility for taking attendance regular sanitization online meetingswork from home restrictions on entry of visitors home quarantines etc. are beingcarried out by the Company. The Management has also constituted a Quick Response Teamconsisting of a Director and top management officials at the initial stage of lock downdeclared by the Central Government to provide regular updates to the Board on significantdevelopments and directions and instructions from regulators/outsideinstitutions/agencies.

Disbursement & Recovery

Due to repetitive lock down measures initiated by the Government entire operations inregular mode were affected. Since the Company has opened its branches only by the end ofthe reporting year Gold Loans segment were not affected. Your Company managed therecovery effectively by offering customers the option to make remittances through onlinebanking/ phone transfers and other electronic modes. Since the Company is focusing on loanrecovery efforts stringent manner there will not be adverse impact on the revenue of theCompany in the coming Financial Years also.

Non-Performing Assets

The Company expects to improve the gold loan portfolio during the current year in viewof raising the Gold prices. However the Company will continue to maintain the Loan toValue ratio within the prescribed norms. The Company had commenced Gold loan business bythe end of the third quarter of the Financial Year. The counter action period is yet to bereached because of which NPA will not come into the purview. Your Company maintains thatit will focus more on Gold Loan category in the future as market value of gold is expectedto rise as usual as predicted by the experts.

The Company is maintaining a LTV of 70% keeping in mind the asset quality. The Companycontinues to focus on maintaining the gold inventory and also serving the existingcustomer base of your Company with optimum efficiency.

Looking at the current scenario your Management is predicting that the impact of COVID19 would be more or less the same in future operations of your Company as the HoldingCompany ICL Fincorp Limited has vast experience exposure and expertise in handling thissituation which has also guided to outclass performance in a most satisfactory manner.

Your Company operates mostly in its premises for procuring its advances (gold loans).So travel restrictions and border closures are not expected to make material impact onability to operate. But marketing activities including cluster marketing road showsbrand value addition etc. which are carried out centrally at various locations will standaffected thereby impairing the sales edge.

HI. Material Changes and Commitments

There was no change in the nature of the business during the year under report.

IV. External environment and economic outlook

India's Non-Banking Financial Companies grew at a slower pace in second and thirdquarters of Financial Year 2020-2021 on annual basis due to COVID-19 led disruptions andmuted demand but continued to disburse credit. The V-shaped economic recovery is supportedby the initiation of a mega vaccination drive with hopes of a robust recovery in theservices sector and prospects for robust growth in consumption and investment. Thefundamentals of the economy remain strong as gradual scaling back of lockdowns along withthe astute support of the Government have placed the economy firmly on the path ofrevival. This path would entail a growth in real GDP by 2.4 percent over the absolutelevel of 2019-2020implying that the economy would take two years to reach and go past thepre-pandemic level. India's GDP growth rate in 2021 is projected at 12.55% India is in 5thpositionout of 193 economies. India is among six economies that will experience a double-digitgrowth rate in 2021 with a 7.965% contraction in 2020 India is at the 150thposition.

V. Capital Structure Share Capital of the Company

The Authorized Share Capital of the Company is Rs. 12000000/- (Rupees One Crore andTwenty Lakhs Only) consisting of 12000000 Equity Shares of Re.1/- (Rupee One Only)each. The Issued Subscribed and Paid up Share Capital of the Company is Rs. 11465520/-(Rupees One Crore Fourteen Lakhs Sixty Five Thousand Five Hundred and Twenty Only)consisting of 11465520Equity Shares of Re. 1/- (Rupee One Only) each. There was nochange in the capital structure of the Company during the year under report.

VI. Credit Rating

The Company has applied for Credit Rating with Brickwork Ratings and are yet to receivethe report from their end.

VII. Management

i. Directors and Key Managerial Personnel

The changes in the constitution of the Board of Directors of the Company during theyear under report are as follows:-.

The Members of the Company vide. Postal Ballot through e-voting on 07th dayof August 2020 has appointed following Directors:

• Mr. K.G.Anilkumar as a Director(DIN: 00766739) of the Company with effectivefrom 17.02.2020 and as the Managing Director for a period of 5 Years effective from18.02.2020.

• Ms. Umadevi Anilkumar as a Non-Executive Director (06434467) of the Company witheffective from 17.02.2020.

• Mr. T.G. Babu as an Independent Director (DIN: 08315374) of the Company witheffective from 17.02.2020.

• Mr. Saseendran Veliyath as an Independent Director (DIN: 08205871) of theCompany with effective from 17.02.2020.

Your Board has appointed Ms. Manisha N. Menon an Associate Member of Institute ofCompany Secretaries of India (Membership No: A33083) as the Whole Time Company Secretaryof the Company with effect from 11thday of June 2020 in place of Ms. BelaParakh former Whole Time Company Secretary of the Company who resigned from the saidposition with effect from 18thday of February 2020.

Mr. Subramanian R a Fellow Member of Institute of Chartered Accountants of India(Membership No. 026299) was appointed as the Chief Financial Officer of the Company witheffect from 11th day of June 2020 in place of Mr. Arindam Saha former ChiefFinancial Officer of the Company who resigned from the said position with effect from 18thdayof February 2020.

Mr. K.G. Anilkumar Managing Director (DIN: 00766739) of the Company who retire byrotation and being eligible offered himself for re-appointment. Being eligible forre-appointment and in the best interest of the Company your Board recommends there-appointment of Mr. K.G. Anilkumar as Director of the Company liable to retire byrotation.

 

Events occurred after Balance Sheet date

Mr. Natarajan R. a Member of the Institute of Chartered Accountants of India(Membership No: A035898) was appointed as the Chief Financial Officer of the Company witheffect from 30thday of June 2021 in place of Mr. Subramanian R. (MembershipNo: 026299) former Chief Financial Officer of the Company who resigned from the saidposition with effect from 21st day of June 2021.

ii. Declaration from Independent Directors on Annual Basis

The Company has received necessary declaration from all the Independent Directors ofthe Company as per section 149(7) of the Companies Act 2013 confirming that they meetwith the criteria of Independence as laid down under Section149 (6) of Companies Act 2013and regulation 16 (1) (b) of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015.Further the IndependentDirectors have complied with the Code for Independent Directors prescribed in Schedule IVto the Companies Act 2013 and Code of Conduct for Directors and senior managementpersonnel of the Company.

iii. Meetings of the Board of Directors of the Company

During the year the Board of Directors of the Company had convened 9 (nine) meetingsdetails of the same as mentioned below.

Sl. No. Date of the Meeting Present throughout the meeting Percentage of attendance
Mr. K. G. Anilkumar
01. 11.06.2020 Ms. Umadevi Anilkumar Mr. T.G. Babu 100%
Mr. Saseendran Veliyath
Mr. K. G. Anilkumar
02. 30.07.2020 Ms. Umadevi Anilkumar Mr. T.G. Babu 100%
Mr. Saseendran Veliyath
03. 18.08.2020 Mr. K. G. Anilkumar Ms. Umadevi Anilkumar Mr. T.G. Babu Mr. Saseendran Veliyath 100%
04. 29.08.2020 Mr. K. G. Anilkumar Ms. Umadevi Anilkumar Mr. T.G. Babu Mr. Saseendran Veliyath 100%
05. 15.09.2020 Mr. K. G. Anilkumar Ms. Umadevi Anilkumar Mr. T.G. Babu Mr. Saseendran Veliyath 100%
06. 29.10.2020 Mr. K. G. Anilkumar Ms. Umadevi Anilkumar Mr. T.G. Babu Mr. Saseendran Veliyath 100%
07. 28.11.2020 Mr. K. G. Anilkumar Ms. Umadevi Anilkumar Mr. T.G. Babu Mr. Saseendran Veliyath 100%
08. 13.01.2021 Mr. K. G. Anilkumar Ms. Umadevi Anilkumar Mr. T.G. Babu Mr. Saseendran Veliyath 100%
09. 13.02.2021 Mr. K. G. Anilkumar Ms. Umadevi Anilkumar Mr. T.G. Babu Mr. Saseendran Veliyath 100%

iv. General Meetings held during the Financial Year

During the Financial Year one General Meeting and two Postal Ballots through e-votingsof the shareholders were held details of the same are disclosed below:

Nature of Meeting Date of Meeting Number of Members attended Percentage of attendance
89thAnnual General Meeting 29.09.2020 12 2.28%
01st /2020-2021 Postal Ballot 07.08.2020 - -
02nd/ 2020-2021 Postal Ballot 23.02.2021 - -

v. Composition of the Board of Directors

The Board of the Company is headed by Mr. T.G. Babu Independent Director an eminentperson of high credentials and of considerable professional experience who activelycontributed in the deliberation of the Board. As on close of business hours of March 312021 Board comprised of four Directors as mentioned below:

Sl. No. Name DIN Designation & Category
01. Mr. K.G. Anilkumar 00766739 Managing Director (Executive)
02. Ms. Umadevi Anilkumar 06434467 Director (Non -Executive)
03. Mr. T.G. Babu 08315374 Director (Independent - Non-Executive)
04. Mr. Saseendran Veliyath 08205871 Director (Independent - Non-Executive)

vi. Committees of the Board

The Company has various Committees which have been constituted as a part of goodcorporate governance practices and the same are in compliance with the requirements of therelevant provisions of applicable laws and statutes.

a) Audit Committee

i) Description & Terms of reference

The Company has constituted and maintained Independent Competent and Qualified AuditCommittee by complying the provisions of Section 177 of the Companies Act 2013 Rule 6 ofthe Companies (Meetings of Board and its Powers) Rules 2014 and Regulation 18 of theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015and amendments made there under. The functions of the Audit Committeeinclude the following:

• Review of Financial Statements and Auditors' Report.

• Recommendation for appointment retention termination remuneration and termsof appointment of Statutory Auditors of the Company and allied matters.

• Recommendation for appointment retention termination remuneration and termsof appointment of Internal Auditors of the Company review of Internal Auditors' reportand allied matters.

• Recommendation for appointment retention termination remuneration and termsof appointment of Chief Financial Officer of the Company review of Internal Auditors'report and allied matters.

• Statement of uses / application of funds.

• Overview the financial performance of Subsidiary Company.

• Approval of Related Party Transactions and such other subsequent relatedmodifications.

• Such other matters envisaged in the aforesaid provisions of the Companies Act2013 and rules made thereunder.

ii) Composition

The Audit Committee of the Company comprised of following members:

Name & Designation Nature of Directorship Position in Committee
Mr. T.G.Babu Independent Director Chairman
Mr. Saseendran Veliyath Independent Director Member
Ms. Umadevi Anilkumar Non-Executive Director Member

iii) Meetings & Attendance

During the year the Audit Committee of the Company had convened 7 (seven) meetingsdetails of the same as mentioned below.

Sl. No. Date of the Meeting Present throughout the meeting Percentage of attendance
01. 08.06.2020 Mr. T.G. Babu 100%
Ms. Umadevi Anilkumar
Mr. SaseendranVeliyath
02. 30.07.2020 Mr. T.G. Babu 100%
Ms. Umadevi Anilkumar
Mr. SaseendranVeliyath
03. 19.08.2020 Mr. T.G. Babu 100%
Ms. Umadevi Anilkumar
Mr. Saseendran Veliyath
04. 15.09.2020 Mr. T.G. Babu 100%
Ms. Umadevi Anilkumar
Mr. Saseendran Veliyath
05. 29.10.2020 Mr. T.G. Babu 100%
Ms. Umadevi Anilkumar
Mr. SaseendranVeliyath
06. 25.11.2020 Mr. T.G. Babu 100%
Ms. Umadevi Anilkumar
Mr. Saseendran Veliyath
07. 13.02.2021 Mr. T.G. Babu 100%
Ms. Umadevi Anilkumar
Mr. Saseendran Veliyath

b) Nomination & Remuneration Committee

i) Description & Terms of reference

The Company has constituted and maintained Competent and Qualified Nomination andRemuneration Committee by complying the provisions of Section 178 of the Companies Act2013 Rule 6 of the Companies (Meetings of Board and its Powers) Rules 2014 andRegulation 19 of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 and amendments made thereunder. The functionsof the Nomination and Remuneration Committee include the following:

• Review and approval of appointment removal resignation and retirement ofDirectors Key Managerial Personnel and Senior Management Staff of the Company.

• Review and approval of remuneration to Directors Key Managerial Personnel andSenior Management Staff of the Company.

• Evaluation of performance of Directors Key Managerial Personnel SeniorManagement Staff and Committees of Board.

• Review performance of Directors Key Managerial Personnel and Senior ManagementStaff of subsidiary Companies.

• Such other matters envisaged in the aforesaid provisions of the Companies Act2013 and rules made thereunder.

ii) Composition

The members of the Nomination and Remuneration Committee are as follows:

Name & Designation Nature of Directorship Position in Committee
Mr. T.G. Babu Independent Director Chairman
Mr. Saseendran Veliyath Independent Director Member
Ms. Umadevi Anilkumar Non-Executive Director Member

iii) Meetings & Attendance

During the year the Nomination and Remuneration Committee of the Company had convened4 (four) meetings details of the same as mentioned below.

Sl. No. Date of the Meeting Present throughout the meeting Percentage of attendance
01. 30.05.2020 Mr. T.G. Babu
Ms. Umadevi Anilkumar 100%
Mr. Saseendran Veliyath
02. 08.06.2020 Mr. T.G. Babu 100%
Ms. Umadevi Anilkumar
Mr. Saseendran Veliyath
03. 19.08.2020 Mr. T.G. Babu 1 nn/
Ms. Umadevi Anilkumar I00%
Mr. Saseendran Veliyath
04. 25.11.2020 Mr. T.G. Babu 1 nno/
Ms. Umadevi Anilkumar 100%
Mr. Saseendran Veliyath

c) Shareholders Grievance Committee

i) Description & Terms of reference

The Company has reconstituted and maintained Competent and Qualified StakeholdersRelationship Committee by complying the provisions of Section 178 (5) of the CompaniesAct 2013 Regulation 20 of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 and amendments made thereunder.The functions of the Stakeholders Relationship Committee include the following:

• Ensure that the views / concerns of the shareholders are highlighted to theBoard at appropriate time and that the steps are taken to address such concerns.

• Resolve complaints related to transfer/transmission of shares non-receipt ofannual report and non-receipt of declared dividends General Meetings issue ofnew/duplicate certificates and new certificates on split/consolidation/renewal etc.transfer/transmission dematerialization and re-materialization of Equity Shares in atimely manner and oversee the performance of the Register and Transfer Agents.

• Review the process and mechanism of redressal of investor complaints andsuggesting measures of improving the existing system of redressal of investor grievances

• Such other matters envisaged in the aforesaid provisions of the Companies Act2013 and rules made thereunder.

ii) Composition

The members of the Shareholders Grievance Committee are as follows:

Name & Designation Nature of Directorship Position in Committee
Mr. T.G. Babu Independent Director Chairman
Mr. Saseendran Veliyath Independent Director Member
Ms. Umadevi Anilkumar Non-Executive Director Member

iii) Meetings & Attendance

During the year the Stakeholders Relationship Committee of the Company had convened2(two) meetings details of the same are as mentioned below.

Sl. No. Date of the Meeting Present throughout the meeting Percentage of attendance
01. 08.06.2020 Mr. T.G. Babu 100%
Ms. Umadevi Anilkumar
Mr. Saseendran Veliyath
02. 08.03.2021 Mr. T.G. Babu 100%
Ms. Umadevi Anilkumar
Mr. Saseendran Veliyath

d) Corporate Social Responsibility Committee

i) Description & Terms of reference

The Company has constituted and maintained Competent and Qualified Corporate SocialResponsibility Committee by complying the provisions of Section 135 of the Companies Act2013 and amendments made thereunder. The functions of the Corporate Social ResponsibilityCommittee include the following:

• Prepare a detailed CSR Action Plan delineating the CSR activities to be carriedout during the upcoming Financial Years including the budgets thereof manner ofexecution implementation schedules modalities of utilization of funds and monitoring& reporting mechanism for the CSR activities and submit before the Board for approvalon Annual Basis.

• Formulation and recommend to the Board a Corporate Social Responsibility Policywhich shall indicate the projects/activities to be undertaken by the Company in areas orsubject as specified in Schedule VII.

ii) Composition

Corporate Social Responsibility Committee consists of following members:

Name & Designation Nature of Directorship Position in Committee
Mr. T.G. Babu Independent Director Chairman
Mr. Saseendran Veliyath Independent Director Member
Ms. Umadevi Anilkumar Non-Executive Director Member

iii) Meetings & Attendance

During the year the Corporate Social Responsibility Committee of the Company hadconvened 1 (one) meeting details of the same as mentioned below.

Sl. No. Date of the Meeting Present throughout the meeting Percentage of attendance
01. 08.03.2021 Mr. T.G. Babu
Ms. UmadeviAnilkumar 100%
Mr. SaseendranVeliyath

e) Events occurred after Balance Sheet date i) Debenture & Bond Committee

The Board of Directors vide. meeting held on 28th day of April 2021 hasconstituted Debenture & Bond Committee with following members:

Name & Designation Nature of Directorship Position in Committee
Mr. T. G. Babu Independent Director Chairman
Mr. K. G. Anilkumar Managing Director Member
Ms. Umadevi Anilkumar Non-Executive Director Member

ii) Risk Management Committee

The Board of Directors vide. meeting held on 27th day of August 2021 hasconstituted Risk Management Committee with following members:

Name & Designation Nature of Directorship Position in Committee
Mr. T.G. Babu Independent Director Chairman
Mr. K.G. Anilkumar Managing Director Member
Mr. Saseendran Veliyath Independent Director Member

iii) Asset- Liability Management Committee

The Board of Directors vide. Meeting held on 27th day of August 2021 hasconstituted Asset Liability Management Committee with following members:

Name & Designation Nature of Directorship Position in Committee
Mr. K.G. Anilkumar Managing Director Chairman
Ms. UmadeviAnilkumar Non-Executive Director Member
Mr. T.G. Babu Independent Director Member

In addition to the above persons holding the positions of the Finance Manager andAccounts Manager of the Company from time to time shall be permanent member to theCommittee.

iv) Internal Complaints Committee

The Board of Directors vide. meeting held on 27th day of August 2021 hasconstituted Internal Complaints Committee with following members:

Name & Designation Nature of Directorship Position in Committee
Ms. Umadevi Anilkumar Non-Executive Director Chairman
Mr. Sam S. Maliakal Human Resource Manager Member
Ms. Simi Binil Human Resource Administration Manager of ICL Fincorp Limited Member
Adv. Sandhya Pran External Member Member

v) IT Strategy Committee

The Board of Directors vide. meeting held on 27th day of August 2021 hasconstituted IT Strategy Committee with following members:

Name & Designation Nature of Directorship Position in Committee
Mr. T.G. Babu Independent Director Chairman
Ms. UmadeviAnilkumar Non-Executive Director Member
Mr. SaseendranVeliyath Independent Director Member

In addition to the above persons holding the positions of the Finance ManagerAccounts Manager and Information Technology Manager from time to time shall be thepermanent members of the Committee.

vi) IT Steering Committee

The Board of Directors vide. Meeting held on 27th day of August 2021 hasconstituted IT Steering Committee with following members:

Name & Designation Nature of Directorship Position in Committee
Mr. K.G. Anilkumar Managing Director Chairman
Ms. Umadevi Anilkumar Non-Executive Director Member

In addition to the above persons holding the positions of the Finance ManagerAccounts Manager Information Technology Manager Human Resource Manager and OperationsManager from time to time shall be the permanent members of the Committee.

vii. Policy on appointment of Directors

Pursuant to the provisions of Section 134(3)(e) salient features of the Company'spolicy on Director's appointment and remuneration including criteria for determiningqualifications positive attributes independence of a Director and other matters providedunder Section 178(3) is annexed as 'Annexure 1'.

 

Events occurred after Balance Sheet date

Your Board has adopted a revised Nomination and Remuneration Committee Policy on 27thday of August 2021 which may be accessed on the Company's website athttps://www.salemerode.com/downloads/policies/Nomination%20and%20Remuneration%20Policy.pdf

viii. Corporate Social Responsibility initiatives

The Company has contributed an amount of Rs. 538660/- (Rupees Five Lakhs Thirty EightThousand Six Hundred and Sixty Only) for the Financial Year 2019-2020 and Rs. 511536/-(Rupees Five Lakhs Eleven Thousand Five Hundred and Thirty Six Only) for the FinancialYear 2020-2021 towards the liability on Corporate Social Responsibility into the PrimeMinister's Relief Fund. The Corporate Social Responsibility initiatives taken by theCompany during the Financial Year 2020-2021 is detailed in the Report on CSR activitywhich is enclosed herewith as 'Annexure 2'.

 

Events occurred after Balance Sheet date

Your Board has adopted a revised Corporate Social Responsibility policy on 27thday of August 2021 which may be accessed on the Company's website athttps://www.salemerode.com/downloads/policies/Corporate%20Social%20Responsibility%20Policy.pdf

ix. Board Evaluation

Your Board has in place a well-defined performance evaluation framework for evaluatingthe appointment or regularization of Directors inter-alia includes factors likeparticipation at Board/Committee Meetings managing relationship with fellow BoardMembers knowledge and skill personal attributes like ethics and integrity independentjudgment with regard to corporate strategy performance risk management corporategovernance implementation and knowledge about the Company and external environment inwhich it operates confidentiality level adherence to the applicable code of conduct forDirectors etc.

x. Directors' Responsibility Statement

Pursuant to the requirements under Section 134 (3) (c) of the Companies Act 2013 withrespect to Directors' Responsibility Statement it is hereby confirmed:

a. that in the preparation of the annual accounts the applicable accounting standardshad been followed along with the proper explanation relating to material departures;

b. that the Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of theFinancial Year and of profit of the Company for that period;

c. that the Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;

d. that the Directors had prepared the annual accounts for the year ended March 312021 on a going concern basis;

e. that the Directors have laid down internal financial controls for the Company andsuch internal financial controls are adequate and were operating effectively; and

f. that the Directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

xi. Internal Control

The Company has in place adequate internal controls with reference to financialstatements and operations which is commensurate with the size and nature of its business.The internal control system is supported by an internal audit department which conductsregular internal audits. Your Board had appointed M/s. Saji Mathew and AssociatesChartered Accountants (FRN: 018048S) Kochi as the Internal Auditors of the Company.

The scope of work includes review of processes for safeguarding the assets of theCompany review of operational efficiency effectiveness of systems and processes andassessing the internal control strengths in all areas. During the year under reviewinternal controls were evaluated and no significant weakness was identified either in thedesign or operation of the control.

xii. Frauds reported during the year

There were no frauds reported during the Financial Year.

VIII. Deposits

Your Company has not accepted any Deposits from public within the meaning section 73 ofthe Companies Act 2013 read with Companies (Acceptance of Deposit) Rules 2014 during theyear under review.

IX. Details of subsidiary/joint ventures/associate Companies

No Company became or ceased to be Subsidiary or Joint Venture or Associate of theCompany during the year under report. ICL Fincorp Limited holding 75% of the EquityShares continues to be the Holding Company.

X. Loans guarantees or investments of the Company.

During the Financial Year 2019-2020 the Company has extended unsecured loan of Rs.206500000/- (Rupees Twenty Crores and Sixty Five Lakhs Only) to its Holding CompanyICL Fincorp Limited as Inter Corporate loan. Out of the said unsecured loan the Companyhas received an interest repayment of Rs. 20872527/- (Rupees Two Crores Eight lakhsSeventy Two Thousand Five Hundred and Twenty Seven Only) by the end of March 31 2021 andthe remaining interest of Rs. 631760/- (Rupees Six Lakhs Thirty One Thousand SevenHundred and Sixty Only) for the Financial Year 2020-2021 on April 16 2021 thereby makinga total interest payment of Rs. 21504287/- (Rupees Two Crores Fifteen Lakhs FourThousand Two Hundred and Eighty Seven Only).

The Company has not given any guarantee or provided a security in connection with aloan to any other body corporate or any person in respect of a loan availed by them as perthe provisions of the Companies Act2013.

XI. Particulars of contracts or arrangements with related parties

The Company has complied with the provisions of Section 188 (1) of the Companies Act2013 and rules made thereunder with respect to the contracts or arrangements with relatedparties details of the same is enclosed as 'Annexure 3'.

XII. Particulars regarding conservation of energy technology absorption and foreignexchange earnings & outflow

a) Conservation of Energy

Due to nature of our business energy conservation has limited applicability. Howeverthe Company follows a practice of purchase and use of energy efficient electrical andelectronic equipment and gadgets in its operations.

b) Technology Absorption

During the year under review there was no major technology absorption undertaken by theCompany. However the Company has been increasingly using information technology in itsoperations and promotes conservation of resources.

c) Foreign Exchange Earnings and Outgo

During the year under review the Company has not entered into any transactionsresulting in Foreign Exchange Earnings or Foreign Exchange Outflow.

XIII. Risk Management Policy

The Company has internal Risk Management Policy wherein all material risks faced by theCompany are managed by competent personnel and the same is reviewed by Risk ManagementCommittee on a periodic basis. The Company is generally exposed to the following types ofrisks.

i. Strategic Risks (External Risks)

Strategic Risks are potential business threats arises from events and trends that canadversely impact the Company's strategic growth trajectory and destroy shareholder value.Strategic risks includes the following:

a. Political/Government related Risks

b. Competition Risk

c. Reputational Risk

d. Force Majeure

e. Legal Risk

f. Regulatory & Compliance Risk

g. Credit Rates Risk

ii. Operating Risks (Internal Risks)

Operating risk is the level of uncertainty associated with the core operations of abusiness. Operating risks includes the following:

a. Liquidity Risk

b. Currency Risk

c. Interest Rate risk

d. Credit Risk

e. Employee Risk

f. Information Technology Risk

g. Fraud Risk

The Risk Management Committee will periodically review these various risks faced by theCompany and will advise the Board on risk mitigation plans on such risks. To cut it shortthe risks and the mitigation plans are explained briefly as follows:

 

Political/ Government related risks

This includes changes in the government policies or any socio-political contingencieswhich may adversely affect the business of the Company.

Mitigation Plan: Reviewing and monitoring the changes in rules and regulations inrelation to NBFCs by the Government will help the Company to oversee the consequences andact accordingly to a certain extend.

 

Competition Risks

Major competitions faced by the Company are from other Non-Banking Finance Companiesdifferent types of banking Companies including public sector/private sector banksCooperative banks foreign banks India Post local money lenders and other unauthorizedfinanciers.

Mitigation Plan: Your Company is having a good internal quality check mechanism to keepa close watch on competitor's strengths weaknesses competition dynamics etc. and focuson the awareness campaigns as per RBI directions among its employees stakeholders etc.The marketing department will concentrate on these areas and ensure that thesecompetitions do not affect the smooth functioning of the Company.

 

Reputational Risks

Damage to the trust and confidence of the stakeholders that may materially andadversely affect the business future financial performance and results of operations ofthe Company constitute reputational risks of the Company.

Mitigation Plan: Ensures accuracy in its documents published through WebsiteRegulatory Bodies and Social media and keeping prompt compliance with regulatorydirectives and other laws both in letter and spirit.

 

Pandemic and Covid 19

This includes Covid-19 outbreak in the society as well as within the Company's premisesthat adversely affect the financial position as well as the operating results of theCompany

Mitigation Plan: Your Company developed a disaster management plan with delegation ofresponsibility and set up Nodal Disaster Management Committee to prevent any such loss.

 

Legal. Regulatory and Compliance Risk

Being a Non-Banking Finance Company the Company has to follow various acts and anynoncompliance in relation to the above areas will lead to huge penalty and loss ofreputation for the Company.

Mitigation Plan: Your Company retained well-structured professionals includingChartered Accountants Company Secretaries Cost Accountants Advocates high profileretired hands etc. to ensure all the compliances are being done in a fair and timelymanner.

 

Credit Rates Risks

Any downgrade of credit ratings would increase borrowing costs and constrain access todebt and bank lending markets and thus would adversely affect business.

Mitigation Plan: Oversee the factors determining the credit ratings of the Company willprevent downgrading of credit ratings.

 

Liquidity Risks

This includes financial risk due to uncertain liquidity. Liquidity Risk management inNBFCs are defined as the risk of being unable either to meet their obligations todepositors or unable to invest to meet unacceptable costs or losses occurred.

Mitigation Plan: Your Company is having a reliable Management Information System toprovide timely and forward-looking information on the liquidity position of the Companyand report to the Asset Liability Committee both under normal and stress situations.

 

Interest Rate Risk

Interest rate risk is the risk where changes in market interest rates might adverselyaffect the Company's financial condition.

Mitigation Plan: Your Company estimates the behavioral pattern of various components ofassets and liabilities on the basis of past data / empirical studies to classify assetsand liabilities in the appropriate time buckets.

 

Credit Risk

Credit Risk is one of the major inevitable financial risks charged with everyNon-Banking Finance Company. It may be defined as the potential that a borrower or counterparty will fail to meet their obligations in accordance with agreed terms.

Mitigation Plan: Well structured customer verification recovery management etc. willsupport reduction of credit risks of the Company.

 

Employee Risk

The Company rely significantly on the performance of Board of Directors Key ManagerialPersonnel and Top Level Management. Loss of any member from the said category mayadversely affect business and results of operation. Identifying potential and calibercandidatures in right position of the Company and maintain them for future is anotheremployee related risk.

Mitigation Plan: Equal opportunity in terms of position & remuneration continuoustraining and development programs etc. will prevent the employee turnover of the Company.

 

Fraud Risk

Fraudulent risks arises from different types of frauds involving Directors Employeesof the Company Employees of Subsidiary or Group Companies Security holders otheragencies deployed for the Company's activities whether working from any of the Company'soffices or any other location contractors vendors suppliers or agencies

Mitigation Plan: Security arrangements both physical & electronic form andperiodically check of all areas of operations through gold audit internal audit etc. willhelp the Company to reduce the fraudulent risks.

In the opinion of the Board there are no risks which may threaten the existence of theCompany. Events occurred after Balance Sheet date

The Board of Directors of the Company has adopted a revised Risk Management Policy videmeeting held on 27thday of August 2021.

XIV. Vigil Mechanism and Whistle Blower Policy

The Company has established a vigil mechanism to promote ethical behavior in all itsbusiness activities and has in place a mechanism for employees to report any genuinegrievances illegal unethical behaviors suspected fraud violation of laws rules andregulation or conduct to the Whistle Blower Officer or Audit Committee or the Board ofDirectors of the Company. The policy also provides for adequate protection to the whistleblower against victimization or discriminatory practices. The details of the WhistleBlower Policy are available on the website of the Company athttps://www.salemerode.com/downloadspolicies/September%202014.pdf

XV. Significant and Material Orders passed by the Regulators

The Company has obtained an order from the Regional Director Eastern Region Ministryof Corporate Affairs Kolkata confirming alteration in clause II of the Memorandum ofAssociation of the Company for shifting of Registered Office from the State of West Bengalto the State of Tamil Nadu. Other than the same no other significant and material ordersare passed by the Regulators or Courts or Tribunals during the year impacting the goingconcern status of the Company and its future business and operations.

XVI. Auditors

M/s. S. Mandal & Co. Chartered Accountants (FRN-314188E) who was appointed by theshareholders at the 88th Annual General Meeting for a period of five yearsresigned from the office with effect from 13th day of November 2020. TheMembers of the Company vide postal ballot through e-voting on 23rd day ofFebruary 2020 had appointed M/s. Mohandas & Associates (Firm Registration No. 02116S)Chartered Accountants Sree Residency 3rdFloor Press Club Road ThrissurKerala - 680001 as the Statutory Auditors of the Company to fill the casual vacancy causedby the resignation of erstwhile Statutory Auditors until the conclusion of the 90thAnnualGeneral Meeting of the Company.

In accordance with Section 139(2) of the Companies Act 2013 and Rule 6 of theCompanies (Audit and Auditors) Rules 2014 M/s. Mohandas & Associates is eligible forre-appointment for a term of 5 (five) Financial Years. The Company has also receivedconsent and eligibility letter to act as the Statutory Auditors of the Company inaccordance with the provisions of Section 139 Section 141 of the Companies Act 2013 readwith the Companies (Audit and Auditors) Rules 2014 and other applicable provisions underthe Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015.

Your Board is of the view that the association with M/s. Mohandas & Associates andtheir rich experience in the audit field would definitely benefit the Company. FurtherM/s. Mohandas & Associates are also in possession of appropriate skills expertise andcompetencies in the context of the Company's present and proposed businesses.

M/s. Mohandas & Associates has fulfilled the conditions specified in the CompaniesAct 2013 the Companies (Audit and Auditors) Rules 2014 and other applicable provisionsunder the Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 for the proposed appointment as the Statutory Auditors ofthe Company and are independent of the management. Hence your Board recommendsre-appointment of M/s. Mohandas & Associates as the Statutory Auditors of the Companyfor 5 (five)Financial Years commencing from Financial Year 2021-2022 to Financial Year2025-2026 and to hold office from the conclusion of 90th Annual General Meetingto the conclusion of 95th Annual General Meeting for the Financial Year endingMarch 31 2026 on afixed remuneration of Rs.320000/- (Rupees Three Lakhs and TwentyThousand Only) for the Financial Year 2021 -2022 for statutory audit and interim review offour quarters with an annual increment of 10% per annum for the rest of tenure ofappointment payable in one or more installments exclusive of the other certificationsapplicable taxes thereon and reimbursement of out-of-pocket expenses incurred and the saidremuneration may be increased upto 20% for respective Financial Years depending upon thevolume of work involved and as may be mutually decided between the Auditors and Board ofDirectors of the Company.

XVII. Comments by the Board on qualification reservation or adverse remark ordisclaimer made by the Statutory Auditors

The Auditors' Report does not contain any qualification reservation or adverse remark.

XVIII. Secretarial Auditor

Your Board has appointed Mr. Yacob Pothumuriyil Ouseph Practising Company Secretaryhaving office at 02nd Floor Kalarikkal Building Karingachira TripunithuraKerala - 682301 as the Secretarial Auditor of the Company. The Secretarial Audit Report inForm MR 3 is enclosed as 'Annexure 4' forms part of this report.

XIX. Comments by the Board on qualification reservation or adverse remark ordisclaimer made by the Secretarial Auditor:

Qualified Opinion

The Company has not complied with the provisions laid down under Section 124 of the Actand the Investor Education and Protection Fund Authority (Accounting Audit Transfer andRefund) Rules 2016 with respect to the transfer of unpaid dividend and Equity Shares inrespect of which dividend has not been paid or claimed for seven consecutive years or moreto Investor Education and Protection Fund and related reportings.

 

Reply to the Qualified Opinion

Your Board has already taken necessary steps to comply with the provisions laid downunder Section 124 of the Act and the Investor Education and Protection Fund Authority(Accounting Audit Transfer and Refund) Rules 2016. Further to the same the Company hasalready paid unclaimed dividend lying in the Unclaimed Dividend Account 2013 to InvestorEducation and Protection Fund. With respect to the transferring of shares to InvestorEducation and Protection Fund the corporate action for transfer of shares for previousFinancial Years to Investor Education and Protection Fund has already been initiated bythe Company.

XX. Compliance with Secretarial Standards

The Company has complied with all the provisions stipulated under Secretarial Standardsissued by the Institute of Company Secretaries of India.

XXI. Annual Return

The Annual Return in Form MGT-7 as per Section 134(3)(a) of the Companies Act 2013read with Rule 12 of Companies (Management & Administration) Rules 2014 is availableon the website of the Company at https://www.salemerode.com/downloads/policies/MGT-7.pdf

XXII. Other Disclosures

1) The Consolidated Financial Statement will be presented by ICL Fincorp LimitedHolding Company.

2) The Company has taken sufficient measures to maintain good and well-structuredStakeholder relationship Customer relationship Environment Sustainability and Healthand Safety and various Committees were constituted and maintained to monitor the same.

3) The cost records required to be maintained by the Companies pursuant toan order ofthe Central Government is not applicable to the Company.

XXIII. Disclosure under Sexual Harassment of Women at the Work Place (PreventionProhibition and Redressal) Act 2013

The Company was not required to constitute Internal Complaints Committee under theSexual Harassment of Women at the Workplace (Prevention Prohibition and Redressal) Act2013 during the year under report. However your Company has in place anti-sexualharassment framework for monitoring the aforesaid provisions. The Company has not receivedany complaint of sexual harassment during the year under report.

 

Events occurred after Balance Sheet date

The Board of Directors of the Company has adopted a revised Anti-Sexual HarassmentPolicy vide meeting held on 27thday of August 2021.

XXIV. Capital Adequacy

As on March 31 2021 the Capital to Risk Assets Ratio (CRAR) of your Company was18.79% which is well above the minimum requirement of 15% CRAR prescribed by the ReserveBank of India. Tier I capital adequacy ratio stood at 18.79% as against the minimumrequirement of 12% and Tier II capital is Nil.

Compliance with NBFC Regulations

Your Company has complied and continues to comply with all the regulatory requirementsapplicable to Non- Banking Financial Institutions as per Reserve Bank of India'sguidelines pertaining to Non-Performing Assets Know Your Customer (KYC) Loan to ValueFair Practices Code CRAR Leverage Ratios etc.

XXV. Particulars of Employees

The Company does not have any employee whose remuneration exceeding the limitsprescribed under Section 197 (12) of the Companies Act 2013 and Rule 5 (2) of theCompany's (Appointment and Remuneration of Managerial Personnel Rules) 2014. Furtherdetails are given in 'Annexure 5' forming part of the Board Report.

XXVI. Other Matters

a. Sale of stake by Promoter

ICL Fincorp Limited being the Chief Promoter of the Company had acquired 76.03% ofshares of the Company on 17thday of February 2020. Further to the same theCompany has approved vide Postal Ballot through e-voting on 07th day of August2020 the re-classification of erstwhile Promoters of the Company Ms. Padma KanoriaJointly with Ms. Kusum Kanoria and Tara Investments Limited from 'Promoter and PromoterGroup' to 'Public Shareholding'.

To maintain minimum public shareholding under rule 19(2)(b) and 19A of the SecuritiesContracts (Regulations) Rules 1957 read with Regulation 38 of the Securities and ExchangeBoard of India (Listing Obligation and Disclosure Requirements) Regulations 2015 the saidPromoter had sold 118650 equity shares constituting 1.03% of the paid-up capital of theCompany to the public in accordance with comprehensive guidelines on Offer for Sale ofshares by promoters through Stock Exchange Mechanism issued by the Securities and ExchangeBoard of India and minimized its shareholding to 75%.

b. Adoption of new set of Articles of Association of the Company.

The Members of the Company vide. Postal Ballot through e-voting on 23of February 2021has adopted new set of Articles of Association.

c. Borrowing Security and Investment limits

To augment the working capital for the proposed expansion of the Company the Membersof the Company vide. Postal Ballot through e-voting on 23rd of February 2021has approved borrowing limits upto Rs.3000000000/- (Rupees Three Hundred Crores Only)charge creation limits upto Rs.3000000000/- (Rupees Three Hundred Crores Only) andinvestments limits upto Rs.500000000/- (Rupees Fifty Crores Only).

d. Corporate Governance

Pursuant to regulation 15 of chapter IV of the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 regulation 17 27& other regulations under this statute relating to corporate governance is notapplicable to your Company and a declaration in this effect is submitted with the StockExchange at regular intervals. However your Board ensure good corporate governance in theCompany.

e. Transfer of amounts to Investor Education and Protection Fund

Pursuant to the provisions of section 124 of the Act and the Investor Education andProtection Fund Authority (Accounting Audit Transfer and Refund) Rules 2016 theCompany has deposited an amount of Rs. 46335/- (Rupees Forty Six Thousand Three Hundredand Thirty Five Only) lying unpaid or unclaimed for a period of seven years with theInvestor Education and Protection Fund.

f. Human Resources

Your Company treats its "Human Resources" as one of its most importantassets. Your Company continuously invest in attraction retention and development oftalent on an ongoing basis. A number of programs that provide focused people attention arecurrently underway. Your Company thrust is on the promotion of talent internally throughjob rotation and job enlargement.

XXVII. Acknowledgement

The Board wishes to place on record its sincere appreciation to the Company'sCustomers Central and State Government Bodies Auditors Legal Advisors ConsultantsRegistrar and Bankers for their continued support to the Company during the year underreport. The Board also expresses its sincere gratitude to the Members and other Securityholders for their continued trust co-operation and support.

By order of Board

For Salem Erode Investments Limited

Sd/- Sd/-
K.G. Anilkumar Umadevi Anilkumar
Place: Irinjalakuda Managing Director Director
Date: 27.08.2021 (DIN:00766739) (DIN:06434467)

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