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Shriram Transport Finance Company Ltd.

BSE: 511218 Sector: Financials
NSE: SRTRANSFIN ISIN Code: INE721A01013
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OPEN 1285.00
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VOLUME 62048
52-Week high 1531.45
52-Week low 1002.50
P/E 9.02
Mkt Cap.(Rs cr) 34,261
Buy Price 0.00
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Sell Price 0.00
Sell Qty 0.00
OPEN 1285.00
CLOSE 1280.35
VOLUME 62048
52-Week high 1531.45
52-Week low 1002.50
P/E 9.02
Mkt Cap.(Rs cr) 34,261
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- ird AnnualReport and the Audited Statements of Accounts for the financial year ended March 31 2022.

FINANCIALHIGHLIGHTS

(Rs. in crores)
Particulars 2021_22 2020_21
Profit Before Depreciation And Taxation 3684.62 3415.37
Less: Depreciation amortisation and impairment 135.37 137.36
Profit Before Tax 3549.25 3278.01
Less: Provision for taxation 841.32 790.75
Profit After Tax 2707.93 2487.26
Add: Balance brought forward from previous year 10384.13 9257.73
Balance available for appropriation 13092.06 11744.99
Appropriations
General reserve (270.80) (248.73)
Statutory reserve (541.59) (497.46)
Debenture redemption reserve 614.13 (311.00)
Dividend on equity shares of Rs.10/- each (699.88) (303.67)
Balance carried to Balance Sheet 12193.92 10384.13

CREDIT RATING

The credit rating of the securities/instruments/loans creditfacilities and other borrowings of the Company as on March 31 2022 was as follows:

Name of Rating Agency Securities / Instruments/ Loans Credit Facilities and other Borrowings Ratings
CRISIL Bank Loan Long Term CRISIL AA+/Stable
Bank Loan Short Term CRISIL A1+
Long Term Principal Protected Market Linked CRISIL PPMLD AA+r/Stable
Debentures
Non-Convertible Debentures CRISIL AA+/ Stable
Subordinated Debt CRISIL AA+/Stable
Commercial Paper CRISIL A1+
Fixed Deposit CRISIL FAAA/Stable
India Ratings & Research Private Limited Non-Convertible Debentures IND AA+/ Stable
Dual Recourse Bond IND AAA (CE)/Stable
Principal Protected Market Linked Debentures (Dual Recourse) IND PP-MLD AAA(CE)emr'/ Stable
Subordinated Debt IND AA+ /Stable
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 outlook
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/ Stable Outlook
Short-Term Issuer Default Rating B
Senior Secured Long Term Rating BB
Local Currency Long Term Issuer Default Rating BB/ Stable Outlook

DIVIDEND

The Board of Directors approved payment of two interim dividends forthe Financial Year 2021-22:- The first interim dividend of Rs. 8/- per equity share ofRs.10/- each on 268783613 equity shares of face value of Rs.10/- each fully paid-upaggregating to Rs. 2150268904/- (gross) subject to deduction of tax at source as perthe applicable rate(s) to the eligible shareholders for the Financial Year ended March 312022 was declared on October 29 2021 and the second interim dividend of Rs.12/- perequity share of face value of Rs.10/- each on 270519713 equity shares of face value ofRs.10/- each fully paid-up aggregating to Rs. 3246236556 (gross) subject to deductionof tax at source as per the applicable rate(s) to the eligible shareholders for theFinancial Year ended March 31 2022 was declared on March 5 2022. The first interimdividend and second interim dividend was paid to eligible Members on November 24 2021 andMarch 24 2022 respectively.

The Board of Directors have not recommended final dividend. us thetotal interim dividend aggregating to Rs. 20/-per share (i.e. 200 %) shall be thefinal dividend for the financial year 2021-22 as against the total dividend of Rs.18/- per equity share of Rs. 10/- each fully paid-up (i.e. 180%) for the Financial Year2020-21.

The Dividend Distribution Policy forms part of the Corporate GovernanceReport and is also available on the website of the Company at https://bit.ly/3PTulOP

TRANSFER TO RESERVES

The amounts proposed to be transferred to General Reserve StatutoryReserve and Debenture Redemption Reserve are mentioned in the Financial Highlights underthe heading ‘Appropriations'.

CAPITALADE QUACY RATIO

Your Company's total Capital Adequacy Ratio (CAR) as on March 312022 stood at 22.97% as compared to 22.50% as on March 31 2021 of the aggregate riskweighted assets on balance sheet and risk adjusted value of the off-balance sheet itemswhich is well above the regulatory minimum of 15%. the CAR has substantially improved asresult of further strengthening of capital through successive issue of fresh Equity sharesduring the financial year 2021-22 at premium through Qualified Institutional Placement ofshares to Qualified Institutional Buyers (QIP Issue) and Preferential Issue of shares topromoters. The details of the said issue of fresh capital are given under the title ShareCapital.

The Tier 1 ratio as on March 31 2022 improved to 20.70% as against19.94% as on March 31 2021. The company's overall gearing (Debt/Tangible Net Worth)as on March 31 2022 improved to 4.75x as against 5.20x as on March 31 2021. The Tier 2ratio as on March 31 2022 was 2.27% as against 2.56% as on March 31 2021.

SCHEMEOF A RRANGEMENT

The Board of Directors of the Company in its meeting held on December13 2021 have approved a Composite Scheme of Arrangement and Amalgamation("Scheme") inter-alia involving amalgamation of Shriram Capital Limited (afterde-merger of a few undertakings from the said Shriram Capital Limited) and Shriram CityUnion Finance Limited (SCUF) with the Company under Sections 230 to 232 and otherapplicable provisions of the Companies Act 2013. the said Scheme will be effective uponreceipt of approval of shareholders creditors Hon'ble National Company Law

Tribunal Reserve Bank of India and other regulatory and statutoryapprovals as applicable with an appointed date of April 01 2022. Your Company hasinitiated process for seeking the approval to the Scheme from various regulatory statutoryauthorities. the Company has received Observation letters under Regulation 37 ofSecurities and Exchange Board of India (SEBI) (Listing Obligations and DisclosureRequirements) Regulations 2015 ("Listing Regulations") from stock exchanges.the Company has filed the application to National Company Law Tribunal Chennai seekingdirections for convening meeting of shareholders secured creditors and unsecuredcreditors. All updates in this regard shall be posted on website of the Company from timeto time for information of stakeholders.

OPERATIONS ANDCOMPAN Y'S PERFORMANCE

Your Company earned higher Profit Before Tax of Rs. 3549.25crores for the Financial Year ended March 31 2022 as against Rs. 3278.01 crores in theprevious Financial Year ended March 31 2021 on account of efficient mobilization offunds reducing cost of finance improvement of collection efficiency and reduction incosts and overheads. the Profit A_er Tax for the Financial Year ended March 31 2022 wasRs. 2707.93 crores as against Rs. 2487.26 crores in the previous Financial Year. thetotal income for the year under consideration was Rs. 19274.23 crores and totalexpenditure was Rs. 15724.98 crores. the detailed analysis of income and expenditure andfinancial ratios is made in the Management Discussions and Analysis Report forming part ofthis Report. Mobilization of funds during the year under review from followingsources/instruments was as under:

(Rs. in crores)
Sr. No. Particulars 2021-22 2020-21
1 Non-Convertible Debentures – Institutional 8800.00 5133.30
2 Term Loans from Banks – Secured 25210.41 17650.36
3 Term Loans from Financial Institutions/ Corporates – Secured 3200.00 3550.00
4 Commercial Papers 4325.00 200.00
5 Fixed Deposit 11273.18 6927.36
6 Inter Corporate Deposits 99.43 176.90
7 External Commercial Borrowings (Loan) 187.35 -
8 Social Bonds (U.S. Dollar Senior Secured Notes) 3512.86 5302.85
9 Cash Credit - 4197.50

the mobilization of funds of the Company through fixed deposits wassubstantially higher during the Financial Year ended March 31 2022 on account ofpopularity of the Company's Fixed Deposit Schemes due to its long track record ofoffering better return and safety of investment and giving good services to fixed depositholders. the total Assets Under Management had increased to Rs. 127040.86 crores from Rs.117242.82 crores due to continuous focus laid by the Company in financing of pre-ownedcommercial vehicles which are affordable as compared to new vehicles. During the FinancialYear 2021-22 the Company securitized its assets worth Rs. 12880.16 crores (accountingfor 10.14 % of the total assets under management as on March 31 2022) as against Rs.13082.18 crores during the Financial Year 2020-21. With securitisation the Companyensures better borrowing profile leading to lower interest liability owing to its lendingto priority sector. the outstanding direct assigned portfolio stood at Rs. 1341.83 croresas on March 31 2022.

Your Company's relationship based business model enabled it tocontinue maintaining the leadership position in the pre-owned commercial vehiclesfinancing segment. the Company had 1854 Branch and other offices across India as on March31 2022. the Company's prudent liquidity management techniques and strategy ofmaintaining adequate liquidity buffer throughout the Financial Year 2021-22 not onlyensured seamless lending for our business operations but also ensured meeting ourliabilities on time thereby further strengthening the trust and confidence reposed on usby our creditors fixed deposit holders and security holders. This is evident from thesuccess of our fund raising program implemented during the year under review from domesticas well as international market.

ISSUEOF SECURITIES

Share Capital

Qualified Institutional Placement (QIP Issue)

The Members in its 41st Annual General Meeting held onAugust 19 2020 accorded approval for the proposal of fund raising through issue ofsecurities up to Rs. 2500 crore to permitted investors through one or more permittedmethods to strengthen the Company's capital base and balance sheet and to augment thelong term resources for meeting funding requirements of its business activities financingthe future growth opportunities general corporate purposes and other purposes includingeffectively facing challenges of the uncertainties and disruptions caused by COVID-19pandemic and had constituted the Securities Issuance Committee for this purpose.

The Securities Issuance Committee in its meeting held on June 7 2021approved issuance of equity shares under Qualified Institutional Placement (QIP) up to Rs.2000 crore the QIP Issue was opened on June 7 2021 and closed on June 11 2021. The QIPIssue of Rs. 2000 crore was oversubscribed by more than 6.3 times.

On June 12 2021 the Company allotted 13986000 Equity Shares of facevalue Rs.10 each to eligible qualified institutional buyers at the issue price of Rs.1430/- per Equity Share (including a premium of Rs. 1420/- per Equity Share) at adiscount of Rs. 3.32 per Equity Share i.e. 0.23% of the floor price of Rs. 1433.32 perEquity Share aggregating to Rs. 19999980000/- under the QIP issue. the entire proceedshave been utilised as per the above mentioned objects of the QIP Issue.

Preferential issue of shares and warrants

As a part of their continued commitment and in order to minimise thedilution impact of the QIP on the Promoter's shareholding Shriram Capital LimitedPromoter of the Company had expressed its desire to subscribe the further equity sharesand warrants up to Rs. 500 crore through Preferential Issue. the Preferential Issueenabled the Company to further strengthen the Company's capital base and balancesheet and augmenting the long-term resources for meeting funding requirements of itsbusiness activities financing the future growth opportunities general corporatepurposes.

The Board of Directors of the Company in its meeting held on June 72021 considered the proposal of further fund raising and approved (i) issuance of1736100 equity shares of face value of Rs. 10/- each of the Company ("EquityShare") fully paid-up at a price of Rs.1440/- per Equity Share (including apremium of Rs.1430/- per Equity Share) aggregating up to Rs. 2499984000/- and(ii) 1736100 warrants each convertible into or exchangeable for 1 (one) fully paid-upEquity Share each at a price (including the warrant subscription price and the warrantexercise price) of Rs. 1440/- each ("Warrants") payable in cashaggregating up to Rs. 2499984000/- to Shriram Capital Limited Promoters of theCompany.

Pursuant to the special resolution the Members in its ExtraordinaryGeneral Meeting held on July 7 2021 approved the said proposal for Preferential Issue ofEquity Shares and Warrants.

On July 8 2021 the Company received from Shriram Capital LimitedPromoter the subscription money @ Rs. 1440/- per Equity Share of face value of Rs. 10each (including a premium of Rs. 1430/- per Equity Share) for allotment of 1736100Equity Shares fully paid-up and warrant subscription price @ Rs. 360/- per Warrant being25% of the Issue price of Rs. 1440/- per warrant for allotment of 1736100Warrants convertible in to fully paid-up Equity Shares. On July 8 2021 the Companyallotted to the Promoter on Preferential basis 1736100 Equity Shares fully paid-upaggregating to Rs. 2499984000 for consideration paid in cash and 1736100warrants. Each such warrant of Rs. 1440 (including the warrant subscription price and thewarrant exercise price) was convertible into or exchangeable for 1 fully paid-up EquityShare of the Company having face value of Rs. 10/- each.

On November 24 2021 Shriram Capital Limited paid the exercise pricebeing the balance amount of 75% of Issue Price of the said Warrants i.e. at Rs. 1080/-per Warrant aggregating to Rs. 1874988000/- and submitted the application forallotment of 1736100 fully paid-up shares of face value of Rs. 10/- each issued atpremium of Rs. 1430/- per share for conversion of the warrants into equity shares.Accordingly on November 25 2021 the Company allotted 1736100 fully paid-up Equityshares of face value of Rs. 10/- each to Shriram Capital Limited. the entire proceeds havebeen utilised as per the above mentioned objects of the Preferential Issue.

Consequent upon allotment of the Equity Shares pursuant to abovementioned QIP Issue and Preferential Issue of shares the paid-up share capital of theCompany stood increased to Rs. 2705197130.

Cancellation of 6141 equity shares of face value of Rs.10/- each nottaken or agreed to be taken by any person from the Issued Share Capital of the Company

Pursuant to the ordinary resolution passed by the shareholders on March6 2022 through Postal Ballot 6141 Equity shares of face value of Rs. 10 each nottaken/agreed to be taken by any person in the Rights Issue of the Company made in the year1995 were cancelled from the Issued Share Capital of the Company. Accordingly the IssuedSubscribed and Paid up Equity Share Capital of the Company stood at Rs. 2705197130/-consisting of 270519713 fully paid-up equity shares of face value of Rs.10/- each as onMarch 31 2022.

None of the Directors of the Company holds instruments convertible intoEquity Shares of the Company.

Issue of Senior Secured Notes (Social Bonds)

Commitment towards socio-economic advancement is at the core of theCompany's business. Your Company is primarily engaged in providing financialassistance to small road transport operators operating pre-owned/second hand commercialand passenger vehicles viz. goods carrying trucks passenger taxis etc. belonging tolower income group and vulnerable strata of the society who do not qualify for bank loansdue to the lack of stable income. Considering the additional financing avenue of Socialbonds the Company had developed the Social Finance Framework in January 2020 for issuanceof Social Bonds in the international market to finance or refinance a portfolio of newand/or existing Eligible Social Projects to promote sustainability. the Company wassanctioned loans by many international agencies including International FinancialCorporation Proparco OeEB for the purpose of financing CNG and environment friendlyvehicles. the Company's Social Finance Framework meets the criteria and guidelinesfor the allocation of proceeds of the Social Bonds as per International Capital MarketAssociation ("ICMA") Social Bond Principles 2018 ("SBP"). More detailsin this regard are available in the ESG Report forming part of this Annual Report. theSocial Finance Framework is available on the Company's website at: https://bit.ly/3M0rbFK

On January 4 2022 the Company has upsized the existing Global MediumTerm Note Programme from USD 3000000000 to USD 3500000000 Global Medium Term NoteProgramme (‘Upsized GMTN Programme') through upsized and updated OfferingCircular dated January 4 2022 for issuance of bonds/notes in international markets by wayof public/private issue subject to market conditions. On January 18 2022 the Companyissued USD 475000000 4.15 percent Senior Secured Notes due 2025 (Social Bonds)equivalent to Rs. 35139375000/- under the USD 3500000000 Global Medium Term NoteProgramme to the Qualified Institutional Buyers (QIBs) under the Rule 144A of the U.S.Securities Act 1933 and to the eligible investors outsideUnited States under Regulation Sof theU.S. Securities Act 1933. the Social Bonds issue received good response frominvestors with oversubscription by more than 2.5 times.

the proceeds of Senior Secured Notes issued have been utilized by theCompany to finance investments in Eligible Social Projects in accordance withInternational Capital Market Association Social Bond Principles 2018 as permitted by theECB Guidelines.

the said Social Bonds are listed on the Singapore Exchange SecuritiesTrading Limited India International Exchange (IFSC) Limited (‘India INX') andNSE IFSC Limited. All Senior Secured Notes/Social Bonds issued under the USD 3500000000GMTN Programme are fully hedged to mitigate risk of exchange rate volatility.

FIXED DEPOSITS

During the Financial Year ended March 31 2022 the Company mobilisedsubstantially higher funds through fixed deposits of Rs. 11273.18 crores as against Rs.6927.36 crores in the Financial Year ended March 31 2021. As on March 31 2022 therewere 8060 fixed deposits aggregating to Rs. 111.07 crores that have matured butremained unclaimed. the unclaimed deposits have since reduced to 4534 deposits amountingto Rs. 52.06 crores. Appropriate steps are being taken continuously to obtain thedepositors' instructions so as to ensure renewal/ repayment of the matured depositsin time. There were no deposits which were claimed but not paid by the Company.

DIRECTORS

Appointment of Directors

On the recommendation of the Nomination and Remuneration Committee theBoard of Directors in its meeting held on December 13 2021 appointed subject to approvalof Members the following person as directors:

1. Mr. Y. S. Chakravarti (DIN 00052308) as an Additional Director of the Company and

2. Mr. Parag Sharma (DIN 02916744) as an Additional Director and also as Whole-TimeDirector designated as Joint Managing Director and Chief Financial Officer of the Companywith effect from December 13 2021. His tenure of Whole-Time Directorship will be for aperiod of five years up to December 12 2026.

Mr. Y. S. Chakravarti and Mr. Parag Sharma will hold office ofAdditional Director upto the date of the ensuing 43rd Annual General Meeting (AGM)pursuant to Section 152 of the Companies Act 2013. the Company has received the noticepursuant to Section 160 of the Act signifying their intention to propose candidatures ofMr. Y. S. Chakravarti and Mr. Parag Sharma for their appointment as directors of theCompany in the AGM.

Retirement of director by rotation

Mr. Ignatius Michael Viljoen (DIN 08452443) non-executivenon–independent director of the Company will retire by rotation at the ensuing AGMand being eligible offers himself for re-appointment. the Nomination and RemunerationCommittee in its meeting held on April 19 2022 has recommended to the Board of Directorsand Members reappointment of Mr. Ignatius Michael Viljoen as director of the companyretiring by rotation. Ignatius Michael Viljoen is a Head of Credit-Sanlam Pan AfricaPortfolio Management South Africa and is responsible for a range of credit risk andcredit portfolio management aspects across the various entities owned by the Sanlam Groupoutside of the Republic of South Africa. His profile is given in the Notice of the ensuingAGM forming part of this Annual Report.

All the above appointments/re-appointments by the Board of Directorsare based on the recommendation of the Nomination and Remuneration Committee. theresolutions for aforementioned appointment/re-appointments and for payment of remunerationto Mr. Parag Sharma Whole-Time Director designated as Joint Managing Director and ChiefFinancial Officer of the Company together with requisite disclosures are set out in theNotice of the AGM. the Board recommends the resolutions for appointment / re-appointmentof aforementioned directors contained in the Notice of AGM for approval of Members.

Declaration by Independent Directors

Pursuant to the provisions of Section 149 of the Companies Act 2013("the Act") the independent directors have submitted declarations that each ofthem meet the criteria of independence as provided in Section 149(6) of the Act along withRules framed thereunder and Regulation 16(1)(b) of the SEBI Listing Regulations. There hasbeen no 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 theguidance support and mature advice from members of the Board of Directors who are alsomembers of various committees. the Board consists of directors possessing diverse skillrich experience to enhance quality of its performance. the Company has adopted a Policy onBoard Diversity formulated by the Nomination and Remuneration Committee. theCompany's Remuneration Policy has laid down a framework for remuneration of Directors(Executive and Non-Executive) Key Managerial Personnel and Senior Management Personnel.These Policies are available on the Company's website at the weblink:https://bit.ly/3N1u1vI and https://bit.ly/3NMh3lB. the Company has formulated policy onSuccession Planning for Directors and Key Managerial Personnel for continuity and smoothfunctioning of the Company.

Number of Meetings of the Board

10 (Ten) Board Meetings were held during the financial year. thedetails of the Board and various Committee meetings are given in the Corporate GovernanceReport.

Performance evaluation at Board and Independent Directors'Meetings

the Board the Committees of the Board and independent directorscontinuously strive for efficient functioning of Board and its committees and bettercorporate governance practices. A formal performance evaluation was carried out at themeeting of the Board of Directors held on April 28 2022 where the Board made an annualevaluation of its own performance the performance of directors individually as well asthe evaluation of the working of its various Committees for the Financial Year 2021-22 onthe basis of a structured questionnaire on performance criteria. the Board expressed itssatisfaction with the evaluation process. the observations made during the evaluationprocess were noted and based on the outcome of the evaluation and feedback of theDirectors the Board and the management agreed on various action points to be implementedin subsequent meetings.

the evaluation process endorsed cohesiveness amongst directors theopenness of the management in sharing the information with the Board and placing variousproposals for the Board's consideration and approval.

the Independent Directors met on March 17 2022 without the presence ofother directors or members of Management. All the Independent Directors were present atthe meeting. 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. the minutes of the Independent Directors' meeting were placed before theBoard Meeting held on April 28 2022 and the same were noted by the Board. the IndependentDirectors expressed satisfaction over the performance and effectiveness of the Boardindividual Non Independent Directors and the Chairman.

They also expressed satisfaction with regard to the flow of informationbetween the company management and the Board. the Management took note of varioussuggestions made in the meeting of Independent Directors.

the Independent Directors played active role in Board as well ascommittee meetings in which they are members. In addition to quarterly meetings held forreview of unaudited financial results of the Company the Audit Committee held additionalmeetings requiring detailed discussions and deliberations including for review ofpolicies approval of annual budget and special matters such as recommending to the Boardthe Composite Scheme of Arrangement and Amalgamation. the members of the Audit Committeealso had separate meeting with the Joint Statutory Auditors which covered Audit issues ingeneral and the framework and the process of Internal Audit in specific.

KEY MANAGERIAL PERSONNEL

the Nomination and Remuneration Committee periodically reviews careergrowth plan of senior management personnel who possess ability to build teams and nurtureleaderships for future growth plans of the Company. As a part of the career planning ofthe core team of employees and for smooth succession planning the Board of Directors atits meeting held on October 29 2021 on recommendation of Nomination and RemunerationCommittee have promoted Mr. Parag Sharma Mr. S. Sunder Mr. P. Sridharan Mr.Sudarshan Holla and Mr. Nilesh Odedara as Joint Managing Directors and designated them asKey Managerial Personnel. Mr. U. Balasundara Rao Chief Information Officer and Mr.Hardeep Singh Tur Chief Risk Officer have also been designated as Key ManagerialPersonnel.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) and Section 134(5) ofthe Companies Act 2013 the Directors confirm that to the best of their knowledge andbelief:

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 2022 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) the annual accounts have been prepared on a going concern basis.

e) the Company had followed the internal financial controls laid down by the directorsand that such internal financial controls are adequate and were operating effectively.

f) the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating e_ectively.

RBI GUIDELINES

the Company continues to comply with all the requirements prescribed bythe Reserve Bank of India (RBI) from time to time. the Company appointed InternalOmbudsman and Principal Nodal Officer as per the relevant notifications of RBI to carryout duties and discharge functions as laid down in the said notifications.

the Board of Directors have framed various policies as applicable tothe Company including Risk based internal audit policy. the Board periodically reviews thepolicies and approves amendments as and when necessary.

BUSINESS RESPONSIBILITY REPORT

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

CORPORATE SOCIAL RESPONSIBILITY (CSR)

the CSR Report for the Financial Year 2021-22 is annexed to this reportas Annexure-I. the composition of CSR Committee and the details of the ongoing CSRprojects/ programs/activities are included in the CSR report/section. the CSR Policy isuploaded 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 AnnualReturn of the Company is hosted on website of the Company athttps://www.stfc.in/investors/annual-reports/

DISCLOSURES AS PER THE SECTION 134 OF THE COMPANIES ACT 2013 READWITHRULE 8 OFTHE COMPANIES _ACCOUNTS_ RULES 2014 Conservation of Energy Technical Absorptionand Foreign Exchange Earnings and Outgo

the information pursuant to Section 134(3)(m) of the Companies Act2013 read with Companies (Accounts) Rules 2014 is as follows:

a. the Company continues its initiatives for conservation of energy the details ofwhich are given in ESG report. the Company's business operations do not involve anyactivity or technology absorption.

b. the Company did not earn any Foreign Exchange Earnings.

c. Outgo under Foreign Exchange – Rs. 36.63 crores.

Loans guarantee or investments in securities

the loan made guarantee given or security provided in the ordinarycourse of business by a NBFC registered with Reserve Bank of India are exempt from theapplicability of provisions of Section 186 of the Act. As such the particulars of loansand guarantee have not been disclosed in this Report. During the year under review theCompany has invested surplus funds in various securities in the ordinary course ofbusiness. For details of the investments of the Company refer to Note 13 of the financialstatements.

Contracts or Arrangements with Related Parties

All the related party transactions were entered in ordinary course ofbusiness on an arm's length basis. Hence no disclosure in Form AOC-2 are necessaryand the same does not form part of this report. For details of the transactions withrelated party entered in ordinary course of business on an arm's length basis referto the Note 50 to the financial statements.

As required under the Master Direction - Non-Banking Financial Company- Systemically Important Non-Deposit taking Company and Deposit taking Company (ReserveBank) Directions 2016 the policy on materiality of related party transactions anddealing with related party transactions as approved by the Board is uploaded on theCompany's website at the web link: https://bit.ly/3vfdL1c. There are no materiallysignificant related party transactions made by the Company with Promoters Directors Key

Managerial Personnel or other designated persons which may have apotential 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.

Whistle Blower Policy/ Vigil Mechanism

the Company's Whistle Blower policy provides a mechanism underwhich an employee/director of the Company may report unethical behaviour suspected oractual fraud violation of code of conduct and personnel policies of the Company. theVigil Mechanism ensures standards of professionalism honesty integrity and ethicalbehaviour. the Whistle Blower Policy/Vigil Mechanism is uploaded on the Company'swebsite: https://bit.ly/3uy3dZY

Financial summary/highlights

Income for the financial year 2021-22 increased by 10.54 % to Rs.19274.23 crores as compared to Rs. 17436.40 crores in 2020-21; Income from operationsfor the financial year 2021-22 was Rs.19255.17 crores as compared to Rs. 17420.45 croresin 2020-21 a growth of 10.53 %; Profit before tax for the financial year 2021-22 was Rs.3549.25 crores as compared to Rs. 3278.01 crores in 2020-21; Profit after tax for thefinancial year 2021-22 was Rs. 2707.93 crores as compared to Rs. 2487.26 crores in2020-21. the overall disbursement during financial year 2021-22 stood at Rs. 60073.44crores as compared to Rs. 35027.51 crores in the previous financial year 2020-21.

Our interest income increased by 8.86 % from Rs.17128.14 crores forthe year ended March 31 2021 to Rs.18646.26 crores for the year ended March 31 2022.Finance costs increased by 7.51% from Rs. 9054.26 crores for the year ended March 312021 to Rs. 9734.31 crores for the year ended March 31 2022. Other expenses increasedfrom Rs. 863.23 crores for the year ended March 31 2021 to Rs. 905.61 crores for the yearended March 31 2022. Our fees and commission for the financial year 2021-22 was Rs.100.08crores as compared to Rs. 115.86 crores in 2020-21.

Risk Management and Internal Financial Control System

the Company's Risk Management Policy deals with identificationmitigation and management of risks across the organization. is has been dealt with theManagement Discussion and Analysis annexed to the Annual Report. the Company'swell-defined organizational structure documented policy guidelines defined authoritymatrix and internal financial controls ensure operational effectiveness reliability offinancial data and compliance with applicable laws regulations and Company'spolicies.

the financial control framework includes internal controls delegationof authority procedures segregation of duties system access controls and documentfiling and storage procedures. the Internal Auditor ensures the continued effectiveness ofthe Company's internal control system. the Audit Committee reviews internal financialcontrol reports prepared by the internal auditor. the Company has framed risk basedinternal audit policy as part of its oversight function. the objective of risk basedinternal audit review is to identify the key activities and controls in the businessprocesses review effectiveness of business processes and controls assess the operatingeffectiveness of internal controls and provide recommendations for business process andinternal control improvement.

Composition of Audit Committee

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

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. the impact of pandemic has been dealt with in theManagement Discussion and Analysis annexed to the Annual Report.

There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and company's operations in future. Forother orders please refer to Note 49 of the financial statement containing details of thecontingent 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) ofthe Act to the Audit Committee.

Your company adopted ISO 27001 standards practices its processes and upgrades itsimplementation on regular basis to maintain the information security as per the markettrend. the Company is prepared to face emerging cyber threats such as Zero-day attacksremote access 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 are conducted by the externaland internal auditors. Board represented IT strategy committee governs the securitypolicies and its implementation as per the company corporate governance process.

The Company has a policy for prevention of Sexual Harassment for Women at Workplace. AnInternal Complaints Committee has been constituted in line with the Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013 (‘POSH').During the year under review there were no cases filed under the Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013. On March 30 2022the Company had arranged Online Orientation Programme for its Internal Committee Membersunder POSH Act at PAN India Level in order to make them profficient to discharge theirduties. the Training was attended by all the Internal Committee Members at PAN India. eCompany also added Module on "PREVENTION OF SEXUAL HARASSMENT IN WORKPLACE (POSH) in-MyCoach E-Learning Platform for sensitising the employees with the provisions under thePOSH.

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. the Company accepts deposits as per Master Direction - non-bankingfinancial companies 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.

The Company in the capacity of Financial Creditor has not filed any applications withNational Company Law Tribunal under the Insolvency and Bankruptcy Code 2016 during thefinancial year 2021-22 for recovery of outstanding loans against any customer beingCorporate 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

CONSOLIDATEDFINANCIAL STATEMENTS

There was no entity which became or ceased to be subsidiary jointventure or associate company of the Company during the financial year ended March 312022. 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 wheelersetc. repossessed by banks and financing companies. SAMIL has 97 Automalls located acrossthe Country. As per the audited financial statements of SAMIL for the year ended March 312022 its total income from operations and Net Profit was Rs. 191.18 crores and Rs. 29.56crores respectively on consolidated basis. the said financial statements of SAMIL will bemade available to Members on request. Pursuant to Section 129 of the Act read with Rule 5to the Companies (Accounts) Rules 2014 the statement containing salient features of thefinancial statement of associate company in Form AOC 1 forms part of this Annual Report.the consolidated financial statements forming part of this Annual Report are prepared incompliance with the applicable Indian Accounting Standards and Listing Regulations.Pursuant to the provisions of Section 136 of the Act this Annual Report is available onthe website of the Company https://www.stfc.in/investors/annual-reports/.

PARTICULARS OFEMPLO YEES

the Company has not employed any individual whose remuneration fallswithin the purview of the limits prescribed under the provisions of Section 197 of theAct read with Rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014.

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

AUDITORS

Reserve Bank of India ("RBI") issued guidelines onappointment of statutory auditor(s) by Non-Banking Financial Company ("NBFC")vide Circular RBI/2021-22 /25 Ref. No. DoS. CD.ARG/SEC.01/ 08.91.001/2021-22 dated April27 2021 ("RBI Guidelines"). Pursuant to RBI Guidelines the Audit Firmscompleting tenure of three financial years in the NBFC were not eligible to continue tohold office as Statutory Auditors of the NBFC. Since the RBI Guidelines were beingimplemented for the first time for NBFCs from Financial Year 2021-22 and in order toensure that there is no disruption the RBI had given flexibility to NBFCs to appoint newStatutory Auditors in the second half of the financial year ending March 31 2022.

In compliance with the aforesaid RBI Guidelines the previous jointStatutory Auditors of the Company viz. M/s Haribhakti & Co. LLP CharteredAccountants Mumbai (ICAI Firm Registration No. 103523W/ W-100048) and M/s Pijush Gupta& Co. Chartered Accountants Gurugram (ICAI Firm Registration No. 309015E) vide theirrespective letters dated August 3 2021 had communicated to the Company their inability tocontinue to hold office as joint Statutory Auditors of the Company as they had alreadycompleted the tenure of four financial years as on the date of coming into effect the RBIGuidelines and had communicated their intention to resign as the joint Statutory Auditorsof the Company on conclusion of Extra-Ordinary General Meeting ("EGM") held bythe Company on September 15 2022 in compliance with the RBI Guidelines.

the Audit Committee and Board of Directors in their respective meetingsheld on August 3 2021 took note of the said letters dated August 3 2021 received fromthe previous joint Statutory Auditors and had passed resolutions to recommend to theMembers of the Company for the approval of the appointment of M/s. Sundaram &Srinivasan Chartered Accountants Chennai (ICAI Firm Registration No. 004207S)("M/s. Sundaram & Srinivasan") and M/s. Khimji Kunverji & Co LLPChartered Accountants Mumbai (ICAI Firm Registration No. 105146W/ W-100621) ("M/s.Khimji Kunverji & Co LLP") as new joint Statutory Auditors of the Company forthree consecutive financial years ending March 31 2022 March 31 2023 and March 31 2024in compliance with the RBI Guidelines: Accordingly and pursuant to Section 139(8)(i) ofthe Act the Members of the Company appointed M/s. Sundaram & Srinivasan and M/s.Khimji Kunverji & Co LLP as Joint Statutory Auditors of the Company at theExtra-Ordinary General Meeting held on September 15 2021 to hold office from theconclusion of the EGM till the conclusion of this 43rd Annual General Meeting of theCompany to conduct the audit of accounts of the Company for the Financial Year2021-22.

Vide their respective letters dated April 18 2022 and April 22 2022M/s. Sundaram & Srinivasan and M/s. Khimji Kunverji & Co LLP have confirmed thatthey continue to be eligible for appointment as joint Statutory Auditors for the FinancialYears 2022-23 and 2023-24. They have also confirmed that they hold a valid peer reviewcertificate as prescribed under Listing Regulations.

The Audit Committee and the Board of Directors recommends to theMembers appointment of M/s. Sundaram & Srinivasan and M/s. Khimji Kunverji & CoLLP to continue as joint Statutory Auditors of the Company for a further term of two yearsin compliance with RBI guidelines to hold office from conclusion of this 43rd AnnualGeneral Meeting till the conclusion of 44th Annual General Meeting of the Company toconduct the audit of accounts of the Company for the Financial Year 2022-23 (Second Term)and from conclusion of 44th Annual General Meeting of the Company till the conclusion of45th Annual General Meeting of the Company to conduct the audit of accounts of the Companyfor the Financial Year 2023-24 (" ird Term"). Approval of the Members is alsobeing sought for fixation of remuneration of joint Statutory Auditors by Board ofDirectors of the Company for the financial year 2022-23.

the Auditors' Report to the Members for the year under review doesnot contain any qualification reservation or adverse remark.

SECRETARIAL AUDIT

Secretarial Audit Report pursuant to the provisions of Section 204 ofthe Companies Act 2013 for the financial year 2021-22 issued by Mr. P. Sriram PracticingCompany Secretary (Certificate of Practice No.3310) (Membership No. FCS 4862) is annexedto this report as Annexure-III. the report does not contain any qualificationreservation or adverse remark.

CORPORATE GOVERNANCE

Pursuant to Schedule V of the Listing Regulations the followingReports/Certificates form part of the Annual Report:

the Report on Corporate Governance;

the Certificate duly signed by the Vice Chairman & Managing Director and the JointManaging Director & Chief Financial Officer on the Financial Statements of the Companyfor the year ended March 31 2022 as submitted to the Board of Directors at their meetingheld on April 28 2022;

the declaration by the Vice Chairman & Managing Director regarding compliance bythe Board members and senior management personnel with the Company's Code of Conduct;and

the Management Discussion & Analysis Report

the Auditors' Certificate on Corporate Governance is annexed tothis report as Annexure-IV.

ACKNOWLEDGEMENT

the Board of Directors would like to place on record their gratitudefor the guidance and co-operation extended by Reserve Bank of India and the otherregulatory authorities. the Board takes this opportunity to express their sincereappreciation for the excellent patronage received from the Banks and FinancialInstitutions and for the continued enthusiasm total commitment dedicated efforts of theexecutives and employees of the Company at all levels. We are also deeply grateful for thecontinued confidence and faith reposed on us by all the Stakeholders includingShareholders Depositors Debenture holders and Debt holders.

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