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Shriram Transport Finance Company Ltd.

BSE: 511218 Sector: Financials
NSE: SRTRANSFIN ISIN Code: INE721A01013
BSE 00:00 | 17 Sep 1360.80 -45.70
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NSE 00:00 | 17 Sep 1360.80 -45.60
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OPEN 1417.10
PREVIOUS CLOSE 1406.50
VOLUME 97557
52-Week high 1534.90
52-Week low 555.90
P/E 15.65
Mkt Cap.(Rs cr) 36,576
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1417.10
CLOSE 1406.50
VOLUME 97557
52-Week high 1534.90
52-Week low 555.90
P/E 15.65
Mkt Cap.(Rs cr) 36,576
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Shriram Transport Finance Company Ltd. (SRTRANSFIN) - Director Report

Company director report

To the Members

Your Directors have pleasure in presenting their Forty-Second Annual Report and theAudited Statements of Accounts for the financial year ended March 31 2021.

FINANCIAL HIGHLIGHTS

Particulars 2020_21 2019_20
Profit Before Depreciation And Taxation 3415.37 3579.72
Less: Depreciation amortization and impairment 137.36 141.05
Profit Before Tax 3278.01 3438.67
Less: Provision for taxation 790.75 936.83
Profit A_er Tax 2487.26 2501.84
Add: Balance brought forward from previous year 9257.73 8070.47
Balance available for appropriation 11744.99 10572.31
Appropriations
General reserve 248.73 250.19
Statutory reserve 497.46 500.38
Debenture redemption reserve 311.00 235.79
Dividend on equity shares of Rs.10/- each 303.67 272.26
Tax on dividend - 55.96
Balance carried to 10384.13 9257.73

CREDITRAT ING

COVID -19 pandemic adversely affected almost all sectors of Indian economy. is led torevision of the Company's Ratings to negative outlook/Credit Watch by the Rating Agencieswhich felt that the weak macroeconomic environment and post imposition of lockdown by thegovernment the Company's asset quality would be under pressure.

However post the moratorium period and with the gradual reopening up of the economythe monthly collection efficiency jumped to almost 95% in September 2020. is improvementwas sustained with collection efficiency crossing 100% in December 2020. During the secondhalf of the Financial Year 2020-21 the Company regained its Ratings due to its sustainedearnings profile improvement in asset quality closer to pre-pandemic level improvementin month-on-month collection efficiencies continued strong market position in thepre-owned vehicle finance segment long track record in the vehicle financing businessunderstanding of the target customer segment and relationship based lending model.

restructuring in the loan portfolio was at much lower level than initial estimate of2.5%.

Gross Stage 3 metrics stood at 8.36% and 7.06% as of March 31 2020 and March 31 2021respectively.

Despite business volumes dropping till the first half of fiscal 2021 and provision ofRs.2591.48 crores towards Covid related provisioning from Q4FY20 till Q4FY21 theCompany's earnings profile remains resilient. This comes on the back of the high yields onthe portfolio given the focus of STFCL on pre-owned vehicle financing.

Company demonstrated its ability to raise funds from diversified resources includingRights Issue of Equity shares issuance of Senior Secured Notes in the internationalmarket under its USD 3 Billion GMTN Programme issue of Redeemable Non-ConvertibleDebentures (NCDs) on private placement basis despite the challenges of weak macroeconomicenvironment. is fund raising coupled with higher Collections enabled the Company tosustain good liquidity throughout the Financial Year 2020-21. The credit costs howeverhad slightly increased to 2.48% in the

Financial Year 2020-21 from 2.43% in the Financial Year 2019-20.

credit rating positions of the Company was as under:

Name of Rating Agency_ Instrument Ratings as on March 31 2021
CRISIL Bank Loan Long Term CRISIL AA+/Stable
Bank Loan Short Term_______ CRISIL A1+
Long Term Principal Protected Market CRISIL PP-MLD AA+r/Stable
Linked Debentures
Non-Convertible Debentures__ CRISIL AA+/ Stable
Subordinated Debt___ CRISIL AA+/Stable
Short Term Debt____ CRISIL A1+
Fixed Deposit__ CRISIL FAAA /Stable
India Ratings & Research Private Limited_ Non-Convertible Debentures____ ________ IND AA+/ Stable outlook
Structured Non-Convertible Debentures Provisional IND AAA (CE)/ Stable
Dual Recourse Bond IND AAA (CE)/ Stable
Principal Protected Market Linked IND PP-MLD AAA(CE)emr'/ Stable
Debentures (Dual Recourse)
Subordinated Debt____ IND AA+/Stable outlook
Commercial Paper_ IND A1+
CARE Non-Convertible Debentures______ ____ CARE AA+/Stable
Subordinated Debt____ CARE AA+/ Stable
Commercial Paper______ CARE A1+
ICRA Fixed Deposit MAA+ with Stable
Non-Convertible Debentures Provisional [ICRA] AAA (CE) (Stable)
Standard & Poor's Ratings Long-Term Issuer Credit Rating BB -/ Stable
Short-Term Issuer Credit Rating B
Senior Secured Notes BB-
Fitch Ratings Long-Term Issuer Default Rating__ BB /Negative
Short-Term Issuer Default Rating_ B
Senior secured Long Term Rating BB
Local Currency Long Term Issuer Default BB /Negative
Rating

DIVIDEND

Board of Directors approved payment of two interim dividends for the Financial Year2020-21:-The first interim dividend of Rs. 6/- per equity share of Rs.10/- each fullypaid-up (60%) was declared on October 29 2020 and the second interim dividend of Rs. 6/-per equity share of Rs.10/- each fully paid-up (60%) was declared on March 25 2021.

The first interim dividend and second interim was paid to eligible Members on November26 2020 and April 16 2021 respectively. total interim dividend involved a cash outflowof Rs.303.67 crores. interim dividend was paid to Members subject to deduction of tax atsource as per the applicable rate.

The Board of Directors has recommended a final dividend of

Rs. 6/- per equity share of nominal face value of Rs.10/- each fully paid up i.e. 60 %for the Financial Year 2020-21 subject to approval by Members in the ensuing 42nd AnnualGeneral Meeting (42nd AGM) of the Company. With this the total dividend for the FinancialYear 2020-21 will be Rs. 18/- per share (i.e. 180 %).

Dividend Distribution Policy forms part of the Corporate Governance Report and is alsoavailable on the website of the Company athttps://cdn.stfc.in/common/Dividend-Distribution-Policy.pdf .

TRANSFERTO RE SERVES

amounts proposed to be transferred to General Reserve Statutory Reserve and DebentureRedemption Reserve are mentioned in the Financial Highlights under the heading‘Appropriations'.

CAPITAL ADEQUACY RATIO

Your Company's total Capital Adequacy Ratio (CAR) as of March 31 2021 stood at22.50% of the aggregate risk weighted assets on and risk adjusted value of the off- itemswhich is above the regulatory minimum of 15%.

Capital Adequacy Ratio has improved due to further strengthening of capital throughRights Issue of Equity shares in the month of August 2020 called Tier 1 Capital.

Tier 1 ratio as on March 31 2021 improved to 19.94% as against 18.13% as on March 312020. company's overall gearing (Debt/Tangible Net-worth) as on March 31 2021 improved to5.20x as against 5.45x as on March 31 2020.

Tier 2 ratio as on March 31 2021 was 2.56% as against 3.86% as on March 31 2020.

OPERATIONS AND COMPANY'S PERFORMANCE

For the Financial Year ended March 31 2021 your Company earned Profit Before Tax ofRs. 3278.01 crores as against Rs.3438.67 crores in the previous Financial Year and theProfit After Tax of Rs. 2487.26 crores as against Rs. 2501.84 crores in the previousFinancial Year.

total income for the year under consideration was Rs. 17436.40 crores and totalexpenditure was Rs. 14158.39 crores.

Mobilization of funds from following sources/instruments was as under:

(Rs. in crores)
Sr. No. Particulars 2020-21 2019-20
1 Non-Convertible Debentures – Institutional 5133.30 2960.30
2 Term Loans from Banks – Secured 17650.36 19121.64
3 Term Loans from Financial Institutions/ corporates – Secured 3550.00 -
4 Commercial Papers 200.00 4130.00
5 Fixed Deposit 6927.36 4226.21
6 Inter Corporate Deposits 176.90 207.40
7 Non-Convertible Debentures Public Issue- Secured - 533.61
8 External Commercial Borrowings (Loan) - 1636.10
9 U.S. Dollar Senior Secured Notes 5302.85 8744.63
10 Cash Credit 4197.50 784.00

total Assets Under Management had increased to Rs. 117242.82 crores from Rs.109749.24 crores. During the

Financial Year 2020-21 the Company securitized its assets worth Rs. 13622.00 crores(accounting for 11.62% of the total assets under management as on March 31 2021) asagainst Rs. 16581.13 crores during the Financial Year 2019-20.

With securitisation the Company ensures better borrowing profile leading to lowerinterest liability owing to its lending to priority sector as per RBI.

outstanding direct assigned portfolio stood at Rs. 1051.23 crores as on March 312021.

The commercial vehicles. relationship based business model enabled us to maintain theleadership position in the pre-owned commercial vehicles financing segment. For furthermarket penetration the Company opened 59 new Branches and other offices. With this thetotal number of Branch and other offices across India has now increased to 1817.

Company's judicious liquidity management framework enabled maintaining adequateliquidity throughout the Financial Year 2020-21 to meet its liabilities despitechallenging pandemic conditions and offering moratoriums to its customers.

ISSUEO F SECURITIES Share Capital

In order to augment capital base the Company offered Company continued its focus onfinancing of pre-owned through Rights Issue 26178777 Equity Shares of face value of Rs.10 each to the Eligible Equity Shareholders on Record Date at Issue price of Rs. 570/- pershare (including premium of Rs. 560/- per Equity share) aggregating to Rs.1492.19 crores(including share issue expenses of Rs. 19.55 crores) in the ratio of 3 fully paid-upRights Equity for every 26 Equity Shares held by the Eligible Equity Shareholders onRecord Date.

Company's Rights Issue received good response from Foreign Portfolio InvestorsInstitutional and retail shareholders/investors and was oversubscribed by 1.65 times ofthe issue size.

Company received 24081 applications for 43187941 shares aggregating to Rs. 2461.71crores against 26178777 shares offered in the Rights Issue.

Rights Issue which was opened on July 16 2020 was closed on the notified date i.e.approval from stock exchanges for listing on August 7 2020 and trading of the RightsEquity shares on August 10 2020.

Subscribed and Paid up Equity Share Capital of the Company stood at Rs.253.06 croresconsisting of 253061513 fully paid-up equity shares of face value of Rs.10/- each as onMarch 31 2021.here was no convertible instrument outstanding as on March 31 2021. Noneof the Directors of the Company holds instruments convertible into Equity Shares of theCompany.

Issue of U.S. Dollar Senior Secured Notes (Social Bonds)

Company updated USD 3 Billion Global Medium Term Note (GMTN) Programme on December 242020. On January 13 2021 the Company issued USD 500000000 4.40 percent Senior SecuredNotes due 2024 (Social Bonds) under the USD 3 Billion GMTN

Programme to the Qualified Institutional Buyers (QIBs) under the Rule 144A of the U.S.Securities Act 1933 and to the eligible investors outside United States under Regulation Sof the U.S. Securities Act 1933.

Social Bondsgotgoodresponsefrominvestorswithoversubscription of >2x.

Further on March 31 2021 the Company issued USD 225000000 Senior Secured Notes (tobe consolidated and form a single series with the USD 500000000 4.40 per cent SeniorSecured Notes due 2024 issued on January 13 2021) under the USD 3 Billion GMTN Programme.

proceeds of Senior Secured Notes issued have been (in case of issuance of Social Bondson January 13 2021) / are being (in case of issuance of Social Bonds on March 312021)utilized by the Company to finance investments in Eligible

Social Projects in accordance with International Capital Market Association Social BondPrinciples 2018 as permitted by the ECB Guidelines.

said Social Bonds are listed on the Singapore Exchange Securities Trading Limited. AllSenior Secured Notes/Social Bonds issued under the USD 3 Billion GMTN Programme are fullyhedged and would not involve any foreign exchange risk to the Company.

FIXED DEPOSITS

As on March 31 2021 there were 8897 fixed deposits aggregating to Rs. 106.74 croresthat have matured but remained unclaimed. There were no deposits which were 30 2020. TheCompany has received claimed but not paid by the Company.

unclaimed deposits have since reduced to 5912 deposits amounting to Rs. 60.30 crores.Appropriate steps are being taken continuously to obtain the depositors' instructions soas to ensure renewal/ repayment of the matured deposits in time.

DIRECTORS

Mr. Puneet Bhatia (DIN 00143973) non-executive non–independent director ceased tobe Director of the Company on expiry of his tenure on August 19 2020 as the ordinaryresolution for his re-appointment as director retiring by rotation was not passed byrequisite majority in the last 41st Annual General Meeting held on 19th August 2020.

Board of Directors have placed on record its appreciation of the invaluable servicesrendered by Mr. Puneet Bhatia.

Retirement of director by rotation

Mr. D. V. Ravi (DIN 00171603) non-executive non– independent director of theCompany will retire by rotation at the ensuing 42nd Annual General Meeting (AGM) and beingeligible offers himself for re-appointment. Mr. D. V. Ravi is Managing Director ofShriram Capital Limited promoter of the Company. Mr. D. V. Ravi has wide experience incorporate strategy and services corporate finance information technology and processactivities of the Shriram Group. His profile is given in the Notice of the 42nd AnnualGeneral Meeting forming part of this Annual Report.

Nomination and Remuneration Committee and the Board of directors recommend to Memberspassing of the ordinary resolution for re-appointment of Mr. D. V. Ravi as directorretiring by rotation.

Declaration by Independent Directors

Pursuant to the provisions of Section 149 of the Companies Act 2013 ("theAct") the independent directors have submitted declarations that each of them meetthe criteria of independence as provided in Section 149(6) of the Act along with Rulesframed thereunder and Regulation 16(1)(b) of the SEBI Listing Regulations. There has beenno change in the circumstances affecting their status as independent directors of theCompany.

Policies on appointment of Directors and Remuneration

The management of the Company is immensely benefitted from the guidance support andmature advice from members of the Board of Directors who are also members of variouscommittees. Board consists of directors possessing diverse skill rich experience toenhance quality of its performance. Company has adopted a Policy on Board Diversityformulated by the Nomination and Remuneration Committee. Company's Remuneration Policy haslaid down a framework for remuneration of Directors (Executive and Non-Executive) KeyManagerial Personnel and Senior Management Personnel. These Policies are available on theCompany's website at the weblink: https://bit.ly/2QQvCg4 and https://bit.ly/3hREkWC.Company has formulated policy on Succession Planning for Directors and Key ManagerialPersonnel for continuity and smooth functioning of the Company.

Number of Meetings of the Board

9 (Nine) Board Meetings were held during the Financial Year.

details of the Board and various Committee meetings are given in the CorporateGovernance Report.

Performance evaluation at Board and Independent Directors' Meetings

Board has carried out an annual performance evaluation of its own performance thedirectors individually as well as the evaluation of the working of its various Committeesfor the Financial Year 2020-21. The evaluation was conducted on the basis of a structuredquestionnaire which comprises performance criteria such as performance of duties andobligations independence of judgement level of engagement and participation attendanceof directors their contribution in enhancing the Board's overall effectiveness etc.Board has expressed their satisfaction with the evaluation process. observations madeduring the evaluation process were noted and based on the outcome of the evaluation andfeedback of the Directors the Board and the management agreed on various action points tobe implemented in subsequent meetings.

evaluation process endorsed cohesiveness amongst directors smooth communicationbetween the Board and the management and the openness of the management in sharing theinformation with the Board and placing various proposals for the Board's consideration andapproval. Independent Directors met on January 29 2021 without the presence of otherdirectors or members of Management. All the Independent Directors were present at themeeting. In the meeting the independent directors reviewed performance ofNon–Independent Directors the Board as a whole and Chairman. They assessed thequality quantity and timeliness of flow of information between the Company Management andthe Board. minutes of the Independent Directors' meeting were placed before the BoardMeeting held on March 25 2021 and the same were noted by the Board.

Independent Directors expressed satisfaction over the performance and effectiveness ofthe Board individual Non-Independent Directors and the Chairman. Considering theunhealthy and stressful background of lockdown the performance of the Managing Directorand Chief Financial Officer was found to be outstanding and exemplary in cutting costsensuring collections and team building. Independent Directors also expressed improvementin the flow of information between the company management and the Board. Management tooknote of various suggestions made in the meeting of Independent Directors including IT andCyber security systems CSR projects benchmarking of interest rates on fixed depositsetc.

Independent Directors played active role in the committee meetings including AuditCommittee. Audit Committee which consists of four independent directors held separatemeetings in addition to quarterly meetings to discuss related party transactions reviewpolicies of the Company approval of Budget for Financial Year 2021-22. The members of the

Audit Committee also had separate meetings with joint statutory auditors and RatingAgencies in compliance with the applicable law and SEBI Circular.

KEY MANAGERIAL PERSONNEL

ere was no change (appointment/resignation) in the Key Managerial Personnel namelyManaging Director the Chief Financial Officer and the Company Secretary of the Companyduring the financial year. Based on the recommendation of the Nomination and RemunerationCommittee the Board of Directors have elevated and re-designated Mr. Umesh Revankar asVice Chairman and Managing Director with effect from April 01 2021. Board of Directorsalso elevated and re-designated Mr. Parag Sharma as Joint Managing Director and ChiefFinancial Officer not being part of Board of Directors with effect from April 01 2021.

ELEVATION OFS ENIOR MANAGERIAL PERSONNEL

Based on recommendation of the Nomination and Remuneration Committee and approval ofthe Board of Directors Mr. S. Sunder Mr. P. Sridharan Mr. Sudarshan Holla and Mr.Nilesh Odedara have been elevated as Joint Managing Directors not being part of Board ofDirectors with effect from April 01 2021.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) and Section 134(5) of the CompaniesAct 2013 the Directors confirm that to the best of their knowledge and belief:

a) In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;

b) at such accounting policies as mentioned in note 1 to 7 to the financial statementshave been selected and applied consistently and judgments and estimates have been madethat are reasonable and prudent so as to give a true and fair view of the state of affairsof the Company as at March 31 2021 and of the profit of the Company for the year ended onthat date;

c) at proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

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

e) The Company had followed the internal controls laid down by the directors and thatsuch internal financial controls are adequate and were operating effectively.

f) directors had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

RBI GUIDELINES

Company continues to comply with all the requirements prescribed by the Reserve Bank ofIndia from time to time.

BUSINESS RESPONSIBILITY REPORT

Pursuant to Regulation 34(2)(f) of the Listing Regulations the Business ResponsibilityReport is annexed and forms part of the Annual Report.

CORPORATE SOCIAL RESPONSIBILITY _CSR_

The to this report as Annexure-I. composition of CSR Committee and the detailsof the ongoing CSR projects/ programs/activities are included in the CSR report/section.CSR Policy is uploaded on the Company's website at the web link: https://bit.ly/3wnTqHg.

ANNUAL RETURN

In accordance with the provisions of Section 92(3) of the Act Annual Return of theCompany is hosted on website of the

Company at https://bit.ly/2RMEkMZ

DISCLOSURES AS PER THE SECTION 134 OF THE COMPANIES ACT 2013 READ WITH RULE 8 OF THECOMPANIES _ACCOUNTS_ RULES 2014 Conservation of Energy Technical Absorption and ForeignExchange Earnings and Outgo

information pursuant to Section 134(3)(m) of the Companies Act 2013 read withCompanies (Accounts) Rules 2014 is as follows: a. Company has no activity involvingconservation of energy or technology absorption. b. Com pany does not have any ForeignExchange Earnings. financial c. Outgo under Foreign Exchange – Rs. 23.29 crores.

Loans guarantee or investments in securities

loan made guarantee given or security provided in the ordinary course of business by aNBFC registered with Reserve Bank of India are exempt from the applicability of provisionsof Section 186 of the Act. As such the particulars of loans and guarantee have not beendisclosed in this Report.

During the year under review the Company has invested surplus funds in varioussecurities in the ordinary course of business. For details of the investments of theCompany refer to Note 13 of the financial statements.

Contracts or Arrangements with Related Parties

All the related party transactions were entered in ordinary course of business on anarm's length basis. Hence no disclosure in Form AOC-2 are necessary and the same does notform part of this report. For details of the transactions with related party entered inordinary course of business on an arm's length basis refer to the Note 50 to the financialstatements.

As required under the Master Direction - Non-Banking Financial Company - SystemicallyImportant Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions2016 the policy on materiality of related party transactions and dealing with relatedparty transactions as approved by the Board is uploaded on the Company's website at theweb link: https://bit.ly/3vfdL1c.

There are no materially significant related party transactions made by the Company withPromoters Directors Key Managerial Personnel or other designated persons which may havea potential conflict with the interest of the Company at large. None of the Directors hasany pecuniary relationships or transactions vis--vis the Company save and except thepayment of sitting fees and commission paid to Independent Directors.

Risk Management

Company's Risk Management Policy deals with identification mitigation and managementof risks across the organization. same has been dealt with the Management Discussion andAnalysis annexed to the Annual Report.

Whistle Blower Policy/ Vigil Mechanism

Company's Whistle Blower policy provides a mechanism under which an employee/directorof the Company may report unethical behaviour suspected or actual fraud violation ofcode of conduct and personnel policies of the Company. Vigil Mechanism ensures standardsof professionalism honesty integrity and ethical behaviour. Whistle Blower Policy/VigilMechanism is uploaded on the Company's website: https://bit.ly/3uy3dZY

Financial summary/highlights

Income for the Financial Year 2020-21 increased by 5.19% to Rs.17436.40 crores ascompared to Rs.16575.76 crores in the Financial Year 2019-20;

Income from operations for the Financial Year 2020-21 was Rs.17420.45 crores ascompared to Rs.16555.49 crores in the Financial Year 2019-20 a growth of 5.22 %; Profitbefore tax for the Financial Year 2020-21 was Rs.3278.01 crores as compared toRs.3438.67 crores in the Financial Year 2019-20;

Profit after tax for the Financial Year 2020-21 was Rs.2487.26 crores as compared toRs.2501.84 crores in 2019-20. Our interest income increased by 5.29% from Rs.16267.46crores in the year ended March 31 2020 to Rs.17128.14 crores in the year ended March 312021.

Finance costs increased by 9.48% from Rs.8270.26 crores in the year ended March 312020 to Rs.9054.26 crores in the year ended March 31 2021.

Other expenses increased from Rs.863.20 crores in the year ended March 31 2020 to Rs.863.23 Crores in the year ended March 31 2021.

Our fees and commission income decreased by 40.58 % from Rs. 194.97 crores in the yearended March 31 2020 to Rs. 115.86 crores in the year ended March 31 2021.

Internal Financial Control System

The Company's well-defined organizational structure documented policy guidelinesdefined authority matrix and internal financial controls ensure efficiency of operationsprotection of resources and compliance with the applicable laws and regulations. Moreoverthe Company continuously upgrades its systems and undertakes review of policies.

The internal financial control is supplemented by extensive internal audits regularreviews by management and standard policies and guidelines to ensure reliability offinancial and all other records to prepare financial statements and other data.

Audit Committee of the Board reviews internal audit reports given along with managementcomments. Audit Committee also monitors the implemented suggestions.

Composition of Audit Committee

Audit Committee comprised of following directors namely Mr. S. Sridhar –Chairman Mrs. Kishori Udeshi Mr. Pradeep Kumar Panja and Mr. S. Lakshminarayanan.

Others

There were no material changes and commitments affecting the financial position of theCompany which has occurred between the end of the financial year of the Company and thedate of the Directors' report. impact of pandemic has been dealt with in the ManagementDiscussion and Analysis annexed to the Annual Report.

There are no significant and the regulators or courts or tribunals impacting the goingconcern status and company's operations in future. For other orders please refer to Note49 of the financial statement containing details of the contingent liabilities.

No equity shares were issued with differential rights as to dividend voting orotherwise.

No equity shares (including sweat equity shares) were issued to employees of yourcompany under any scheme.

The Company has not resorted to any buy back of its equity shares during the year underreview.

There was no change in the nature of business of the

Company.

There was no fraud reported by the Auditors of the

Company under the Section 143(12) of the Act to the Audit Committee.

Your company adopted ISO 27001 standards practices its processes and upgrade itsimplementation on regular basis to maintain the information security as per the markettrend. Company is prepared to face emerging cyber threats such as Zero-day attacks remoteaccess threats and targeted threats. Your company has established disaster recoverycentres and various security controls in place to mitigate risks also safeguard theCompany against security breaches and technological lapses located in different seismiczones periodic upgrading of servers and data storage adopting new technology for datamanagement. On regular basis different type of system audits is conducted by the externaland internal auditors. Board represented strategy committee governs the security policiesand its implementation as per the company corporate governance process. materialorderspassedby The Company has a policy for prevention of Sexual

Harassment for Women at Workplace. An Internal Complaints Committee has beenconstituted in line with the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 (‘POSH'). During the year under review therewas one case filed under the said Act and it was settled. The

Company also conducted an exhaustive video based learning module for all employees fromawareness and compliance perspective on POSH.

Disclosure regarding details relating to deposits covered under Chapter V of the Act isnot applicable since our company is a Non-Banking Financial Company regulated by ReserveBank of India. Company accepts deposits as per Master Direction - non-banking financialcompanies acceptance of public deposits

(Reserve Bank) Directions 2016.

The Company has obtained a certificate from the statutory auditor certifying that theCompany has complied with the requirements of the Regulation 9 of the Master Direction– Foreign Investment in India with regard to downstream investments.

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

Company in the capacity of Financial Creditor has not filed any applications withNational Company Law

Tribunal under the Insolvency and Bankruptcy Code

2016 during the financial year 2020-21 for recovery of outstanding loans against anycustomer being Corporate Debtor.

The details of difference between amount of the valuation done at the time of one timesettlement and the valuation done while taking loan from the Banks or FinancialInstitutions along with the reasons thereof. –Not Applicable

CONSOLIDATED FINANCIAL STATEMENTS

ere was no entity which became or ceased to be subsidiary joint venture or associatecompany of the Company during the financial year ended March 31 2021.

Shriram Automall India Limited (SAMIL) associate of the Company provides fee-basedfacilitation services for the sale of pre-owned commercial and passenger vehiclesagricultural and construction equipment dealer's stock of pre-owned two wheelers etc.repossessed by banks and financing companies.

SAMIL has 89 Automalls located across the Country. As per the unaudited financialstatements of SAMIL for the year ended March 31 2021 its total income from operationsand Net Profit was Rs. 158.96 crores and Rs. 25.96 crores respectively on consolidatedbasis. The said financial statements of SAMIL will be made available to Members onrequest. Pursuant to Section 129 of the Act read with Rule 5 to the Companies (Accounts)Rules 2014 the statement containing salient features of the financial statement ofassociate company in Form AOC 1 forms part of this Annual

Report. The consolidated financial statements forming part of this Annual Report areprepared in compliance with the applicable Indian Accounting Standards and ListingRegulations. Pursuant to the provisions of Section 136 of the Act this Annual Report isavailable on the website of the Company https://www.stfc.in/investors/annual-reports/.

PARTICULARS OF EMPLOYEES

Company has not employed any individual whose remuneration falls within the purview ofthe limits prescribed under the provisions of Section 197 of the Act read with Rule 5(2)of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.

Disclosure required as under Rule 5(1) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 is annexed to this report as Annexure-II.

AUDITORS

Pursuant to the provisions of Section 139 of the Act and the Companies (Audit andAuditors) Rules 2014 M/s Haribhakti & Co. LLP Chartered Accountants Mumbai (FirmRegistration No. 103523W/W100048) and M/s Pijush Gupta & Co. Chartered AccountantsGurugram (Firm Registration No. 309015E) had been appointed as Joint Statutory Auditors ofthe Company at the 38th AGM held on June 29 2017 to hold office from the conclusion ofthe 38th AGM until the conclusion of the 43rd AGM of the Company.

They have also confirmed that they hold a valid peer review certificate as prescribedunder Listing Regulations. The

Company seeks approval of Members every year at the Annual General Meeting for paymentof remuneration (exclusive of certification fee goods and services tax and reimbursementof out of pocket expenses) to the Joint Statutory Auditors for the financial year based onrecommendation of the Audit

Committee and approval of the Board of Directors pursuant to Section 142 and otherapplicable provisions of the Act. Reserve Bank of India (RBI) issued guidelines onappointment of statutory auditor (s) by Non-Banking Financial Company (NBFC) vide CircularRBI/2021-22/25 Ref. No. DoS. CD.ARG/SEC.01/08.91.001/2021-22 dated April 27 2021(‘Circular'/'Guidelines'). RBI has given flexibility to Non- Banking FinancialCompanies (NBFCs) to adopt these

Guidelines from H2 (second half) of the Financial Year 2021-

22 in order to ensure that there is no disruption. Accordingly the NBFCs shall appointStatutory Auditors for a continuous period of three years from Financial Year 2021-22.

current Joint Statutory Auditors of the Company have conducted audit of the accounts ofthe Company for four consecutive financial years ending March 31 2021. In order to givetime to NBFCs for smooth transition Finance Industry Development Council (FIDC) arepresentative body of asset and loan financing NBFCs has made request to RBI that the

Circular be made applicable to NBFCs from April 1 2022 i.e. from Financial Year2022-23.

In the event RBI accedes to the request of FIDC it is proposed that the current JointStatutory Auditors of the Company will continue to hold their office till such period asmay be permitted by the law. In that event it is proposed that they shall be paid theremuneration for conducting audit of Company's accounts for the full financial year endingMarch 31 2022. Otherwise it is proposed that the Joint Auditors shall be paidremuneration as may be fixed

Directors of the Company depending upon scope of their work on pro-rata basis forholding the office of Joint Statutory Auditors for part of the Financial year 2021- 22 asmentioned in the resolution at Item Nos.5 and 6 of the Notice of ensuing 42nd AnnualGeneral Meeting. Audit Committee and the Board of Directors have recommended passing ofthese resolutions by the Members.

Auditors' Report to the members for the year under review does not contain anyqualification reservation or adverse remark.

SECRETARIAL AUDIT

Secretarial Audit Report pursuant to the provisions of

Section 204 of the Companies Act 2013 for the financial year 2020-21 issued by Mr. P.Sriram Practicing Company

Secretary (Certificate of Practice No.3310) (Membership No.

FCS 4862) is annexed to this report as Annexure-III. report does not contain anyqualification reservation or adverse remark.

CORPORATE GOVERNANCE

Pursuant to Schedule V of the SEBI Regulations the following

Reports/Certificates form part of the Annual Report: the Report on CorporateGovernance; the

Managing Director and the Joint Managing Director & Chief Financial Officer on theFinancial Statements of the Company for the year ended March 31 2021 as submitted to theBoard of Directors at their meeting held on April 29 2021;

the declaration by the Vice Chairman & Managing

Director regarding compliance by the Board members and senior management personnel withthe Company's Code of Conduct; and

the Management Discussion & Analysis Report The Auditors' Certificate on CorporateGovernance is annexed to this report as Annexure-IV

ACKNOWLEDGEMENT

Board of Directors would like to place on record their gratitude for the guidance andcooperation extended by Reserve Bank of India and the other regulatory authorities. Boardtakes this opportunity to express their sincere appreciation for the excellent patronagereceived from the Banks and Financial Institutions and for the continued enthusiasm totalcommitment dedicated efforts of the executives and employees of the Company at alllevels. We are also deeply grateful for the continued confidence and faith reposed on usby all the Stakeholders including Shareholders Depositors Debenture holders and Debtholders. duly signed by the Vice Chairman &

For and on behalf of the Board of Directors
S. Lakshminarayanan
New Delhi Chairman
April 29 2021 (DIN: 02808698)

.