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Ujjivan Financial Services Ltd.

BSE: 539874 Sector: Financials
NSE: UJJIVAN ISIN Code: INE334L01012
BSE 00:00 | 20 May 137.35 1.10
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OPEN 141.00
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VOLUME 94445
52-Week high 261.70
52-Week low 96.10
P/E 763.06
Mkt Cap.(Rs cr) 1,671
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 141.00
CLOSE 136.25
VOLUME 94445
52-Week high 261.70
52-Week low 96.10
P/E 763.06
Mkt Cap.(Rs cr) 1,671
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Ujjivan Financial Services Ltd. (UJJIVAN) - Director Report

Company director report

To the Members

Your Directors are pleased to present the 17th Annual Report of UjjivanFinancial Services Limited together with the audited financial statements For thefinancial year ended March 312021.

1. FINANCIAL RESULTS

The Directors' submit the Annual Report of Ujjivan Financial ServicesLimited (the "Company" or "Ujjivan") together with the auditedfinancial statements For the financial year (FY) ended March 31 2021.

(Rs. in Crores)

Particulars Standalone* Consolidated*
FY 2020-21 FY 2019-20 FY 2020-21 FY 2019-20
Operating Income - 11.00 3065.98 2859.76
Other Income 8.44 10.24 115.01 109.62
Total Income 8.44 21.24 3180.99 2969.38
Less: Operational Expenses Personnel Expenses 2.25 3.16 759.10 734.71
Administrative & CSR Expenses 2.30 7.88 285.18 363.39
Finance Charges - - 1120.95 1114.92
Depreciation 0.01 0.02 169.90 165.99
Impairment Losses on Financial Instruments - - 1 1165.19 174.46
Total Operational Expenses 4.56 11.06 3500.32 2553.47
Profit/(Loss) Before Tax 3.88 10.18 (319.33) 415.91
Less: Income tax 0.94 1.37 171.95 115.76
Less: Deferred tax 0.01 (0.01) (252.17) 1.49
Profit/(Loss) After Tax 2.93 8.82 (239.11) 298.66

* as per Indian Accounting Standards (Ind-AS)

2. DIVIDEND

The Directors have not recommended any dividend For the FY 2020-21.

The Company on a standalone basis has no operation of its own and itis pertinent to note that the investments of the Company are primarily in the shares ofits material listed subsidiary 'Ujjivan Small Finance Bank Limited' wherein it holds83.32% equity shares and preference shares of ? 200 crores and therefore dividend incomeconstitutes a significant part of the total income of the Company. The Company has notreceived any dividend From its subsidiary during the year which has impacted its incomeand profitability. In view of inadequate profits of the Company the Board has notrecommended any dividend For the FY 2020-21.

The Dividend Distribution policy of the Company is available on theCompany's website and can be accessed From the linkhttps://www.ujjivan.com/pdf/policy/Ujjivan_Dividend_ Distribution_Policy.pdf

3. TRANSFER TO RESERVES

The Company transferred Rs. 59 lacs to Statutory Reserves. Transfer of20% of the Profit after Tax to the statutory reserves is in accordance with the provisionsof section 45 - IC Reserve Bank of India Act 1934.

4. CREDIT RATING

The Company has zero debt; hence no rating has been obtained From anyrating agencies during the year.

5. CAPITAL REQUIREMENTS

Adjusted Net Worth of a CIC-ND-SI shall at no point of time be lessthan 30% of its aggregate risk weighted assets on balance sheet and risk adjusted value ofoff-balance sheet items as on the date of the last audited balance sheet as at the end ofthe financialyearas per RBI CIC Master Directions.

The Company as of March 31 2021 is in compliance with the belowcapital requirements and all other mandatory ratios as required under RBI CIC MasterDirections:

Ratios RBI Requirement Actuals (%)
Adjusted Networth (ANW) >30% of RWA 219.08%
Investment ratio >90% of Net Assets 97.67%
Equity Investment Ratio >60% of Net assets 107.22%
Leverage Ratio <2.5 Times 0.04%

6. CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSISREPORT

In accordance with SEBI LODR Regulations Management Discussion andAnalysis Report and Corporate Governance Report together with the Certificate thereon Fromthe

Independent Practicing Company Secretary is provided separately andForms part of this Directors' Report.

7. EXTRACT OF ANNUAL RETURN

In accordance with Section 134(3)(a) of the Companies Act 2013 anextract of the Annual Return in the prescribed Format (MGT-9) is appended as"Annexure 1" to the Board's Report. The complete annual report including theannual return is being placed on our website www.ujjivan.com.

8. NO. OF MEETINGS OF THE BOARD DURING THE FY 2020-21

During the Financial Year 2020-21 our Board has met 7 (seven) timesand the meetings ofour Board of Directors were held on May 272020 August 102020November 11 2020 November 25 2020 February 10 2021 March 12 2021 and March 222021. For Further details please reFer to the Corporate Governance Report which Formspart of this report.

9. DIRECTORS RESIGNATION / APPOINTMENT/ REAPPOINTMENTS/RETIRINGDIRECTOR

(a) Appointment of Mr. Sunil Vinayak Patel as an Independent Director

On the recommendation of the Nomination and Remuneration Committee("NRC") the Board in its meeting held on February 102021 has appointed Mr.Sunil Vinayak Patel (DIN: 00050837) as an additional director (independent category) witheFFect From February 112021 Fora term of five years and his appointment was approved bythe shareholders through postal ballot on April 272021 (last date of e-voting).

(b) Appointment of Mr. Rajesh Kumar Jogi as an Independent Director

On the recommendation of the NRC the Board in its meeting held onFebruary 10 2021 has appointed Mr. Rajesh Kumar Jogi (DIN: 03341036) as an additionaldirector (independent category) with eFFect From February 112021 Fora term of Five yearsand his appointment was approved by the shareholders through postal ballot on April 272021 (last date of e-voting). However Mr. Rajesh Jogi has resigned From the Board of theCompany effective From August 22 2021 to be eligible to qualify as an IndependentDirector in Ujjivan Small Finance Bank (Bank) since as restricted by the RBI the commondirector between the Holding Company and the Bank cannot be termed as Independent Directorin the Bank. Further he has wished to dedicate more of his time and attention to the Bankwhich is the principal investment and sole subsidiary of the Company and hiscategorization as Independent Director will eligible him to actively participate in theBoard Committees of the Bank.

(c) Re-appointment of director retiring by rotation

As per the provisions of the Companies Act 2013 Mr. Narayan Anand(DIN: 02110727) retires by rotation at the ensuing 17th AGM and being eligible seeks hisre-appointment. The Board recommends his re-appointment. Please refer item no. 2 of the17th AGM Notice For Further details.

(d) Resignation of Mr. Jayanta Basu from the position of Non-ExecutiveDirector

Mr. Jayanta Basu (DIN: 01268046) resigned From the Board of the Companyeffective From January 202021 due to personal commitments.

(e) Resignation of Mr. Ittira Davis from the position of ManagingDirector and CEO

Mr. Ittira Davis (DIN: 06442816) resigned From his position of ManagingDirector and Chief Executive Officer effective From March 12 2021 (close of businesshours) so as to take up the Non-Executive Directorship role at Ujjivan Small Finance BankLimited (the subsidiary of the Company) where his name was proposed For the Part-TimeChairman of USFB. However in the interim RBI came out with its governance circular datedApril 26 2021 which mandated that the Chair of the Bank Board shall be an IndependentDirector. As Mr. Davis cannot chair the Board of the Bank being its Non-IndependentDirector he resigned From the Bank Board w.e.F. July 232021 (close of business hours).

(f) Appointment of Mr. Ittira Davis as the Non- Executive Directoreffective from November 012021

The Board on August 122021 based on the recommendation of the NRC hasconsidered and unanimously approved the Appointment of Mr. Ittira Davis as a Non-ExecutiveDirector (Non-Independent Category) w.e.F. November 012021 subject to prior approval ofthe RBI and the Shareholders. Mr. Davis was the MD& CEO of the Company From July012018 and until March 122021 when he resigned Forthe reason mentioned at point (d)above. The Board was of the view that on account of the impending reverse merger of theCompany with the Bank subject to requisite regulatory approvals and having regard to thepast association of Mr. Davis with the Company and the Bank his background andexperience his re-induction on the Board will be immensely beneficial to the Company andall its stakeholders. The Board recommends his appointment as the Non-Executive Director.Please refer item no. 4 of the 17th AGM Notice For Further details.

Other disclosure

The Board on the recommendation of the NRC at its meeting held on March122021 approved the appointment of Mr. Samit Ghosh (existing Non-Executive Chairman ofthe Company) as the MD & CEO of the Company with eFFect From May 012021 Fora periodof 3 years and approval of the shareholders byway of special resolution was sought whichneeded a minimum of 75% of the valid votes polled in Favour of the resolution or a minimumof 3 times of the votes polled against the resolution. However with 70% voting inFavour.it Fell short of the requisite 75% voting in Favour of the resolution and hence thespecial resolution was not passed. Mr. Samit Ghosh continues to be the Non-ExecutiveChairman of the Company.

Further the Board in its meeting held on March 22 2021 has approvedthe re-appointment of Mr. Abhijit Sen (DIN: 00002593) For a second term of five yearscommencing

From September 13 2021 and until September 12 2026 and approval ofthe shareholders by way of special resolution was sought which required a minimum of 75%of the valid votes polled in Favour of the resolution or a minimum of 3 times of the votespolled against the resolution. However with only 70% voting in Favour it Fell short ofthe requisite 75% voting in Favour of the resolution and hence the special resolution wasnot passed.

10. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act 2013 the Board ofDirectors of the Company confirms and state that:

(i) in the preparation of the annual accounts the applicableaccounting standards had been Followed along with proper explanation relating to materialdepartures;

(ii) they have 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 yearand of the profitand loss of the company For that period;

(iii) they have taken proper and sufficient care For the maintenance ofadequate accounting records in accordance with the provisions of this Act For safeguardingthe assets of the company and For preventing and detecting Fraud and other irregularities;

(iv) they have prepared the annual accounts on a going concern basis;

(v) they have laid down internal financial controls to be Followed bythe company and that such internal financial controls are adequate and were operatingeffectively; and

(vi) they have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

Based on the Framework of internal financial controls and compliancesystems established and maintained by the Company audit of internal financial controlsand the reviews performed by management and the audit committee of the board the board isof the opinion that the Company's internal financial controls were adequate and effectiveduring the FY 2020-21.

11. DECLARATION BY INDEPENDENT DIRECTORS

The Company has received necessary declarations of independence Fromeach of its Independent Directors under section 149(7) of the Companies Act 2013 thathe/she meets the criteria of independent director envisaged in section 149 (6) of theCompanies Act 2013.

All Independent Directors have submitted the declaration ofIndependence as required pursuant to Section 149(7) of the Act and including the addedcriteria prescribed under SEBI LODR Regulations stating that they meet the criteria ofIndependence as provided in section 149(6) of the Companies Act 2013 and they are notdisqualified From continuing as Independent Directors of our Company.

12. NOMINATION AND REMUNERATION POLICY

The Company pursuant to the provisions of Section 178 of the CompaniesAct 2013 has Formulated and adopted a nomination and remuneration policy which isdisclosed on our website at the below link- https://www.ujjivan.com/ mandatory-policies

13. STATUTORY AUDITORS

MSKA & Associates (FRN: 105047W) (hereinafter referred to as MSKA)who were appointed as Statutory Auditors of the Company Fora tenure of five yearscommencing From the conclusion of the 15th ACM held on August 02 2019 till the conclusionof 20th ACM of the Company to be held in the year 2024 has vide their letter dated August122021 tendered their resignation From the position of Statutory Auditors From theconclusion of the ensuing 17th ACM of the Company scheduled to be held on WednesdaySeptember 292021.

MSKA & Associates has offered to resign From their position ofstatutory auditor of the Company due to the restrictions imposed by the RBI through itsCircular No.DoS.CO.ARC/ SEC.01/08.91.001/2021-22 dated April 27 2021 on the audit firmswhereby they can audit a maximum 8 (eight) NBFCs during a particular year. MSKA hasinformed the Company that they have reached the maximum limit For the number of audits tobe undertaken in the current year and hence they will not be able to continue as theStatutory Auditors of the Company From the Financial Year 2021-2022. Accordingly theywill cease to be the Statutory Auditors of the Company on the conclusion of the ensuing17th ACM of the Company.

Further on account of completion of three years tenure of MSKA as thestatutory auditors of our material listed subsidiary ‘Ujjivan Small Finance BankLimited' (Bank) beyond which they are not permitted to continue due to the RBIrestrictions they will cease to be its statutory auditors on the conclusion of theensuing ACM of the Bank.

RBI has Further restricted that the same set of auditors are notpermitted to be the statutory auditors of the Company and the Bank. Accordingly after dueevaluation the Board based on the recommendation of the Audit Committee in its meetingheld on August 12 2021 subject to the approval of the shareholders in the ensuing 17thACM has appointed Varma & Varma Chartered Accountants (FRN - 004532S) as theStatutory Auditors of the Company For a term of 3 years starting From the conclusion ofthe ensuing 17th ACM being scheduled on September 29 2021 and till the conclusion of 20thACM. Please refer to item no. 3 of the 17th ACM notice For Further details.

14. EXPLANATIONS OR COMMENTS BY THE BOARD ON EVERY QUALIFICATIONRESERVATION OR ADVERSE REMARK OR DISCLAIMER MADE-

(i) Statutory Auditor's Report

There are no disqualifications reservations adverse remarks ordisclaimers in the auditor's report For the FY 2020-21.

(ii) By the Company Secretary in practice in his secretarial auditreport;

Secretarial Auditor

Mr. K. Jayachandran Practicing Company Secretary (ACS No. 11309 andCertificate of Practice No. 4031) was appointed as the Secretarial Auditor of the Companyto conduct secretarial audit of the Company For the year ended March 31 2021 as requiredunder Section 204 of the Companies Act 2013 and the Rules made thereunder. Thesecretarial audit report For FY 2020-21 is appended as "Annexure 2" tothe Board's Report.

As required under regulation 24Aof theSEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a separate secretarial audit report For theyear ended March 312021 given by the Secretarial Auditor Mr. K. Jayachandran in theFormat as prescribed by SEBI in this regard is appended as "Annexure 3"

The Secretarial Audit Report does not contain any qualificationreservation or adverse remark made by the Secretarial Auditor.

Further Mr. K. Jayachandran Practicing Company Secretary (ACS No.11309 and Certificate of Practice No. 4031) has through his certificate dated May 28 2021has certified that none of the directors on the Board of the Company have been debarred ordisqualified From being appointed or continuing as director of companies by the Board /Ministry of Corporate Affairs or any such statutory authority. The said certificate isappended as "Annexure 4" to the Board's Report and should also Form apart of the Corporate Governance Report of the Board as required under the SEBI ListingRegulations.

15. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186

During the FY 2020-21 the Company has not given any loans andguarantees to any-body corporate and has not made any investment under Section 186.

16. TRANSACTION WITH RELATED PARTIES

Pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of theCompanies (Accounts) Rules 2014 there are no transactions to be reported under Section188(1) of the Act in Form AOC-2.

There were no contracts or arrangements or transactions entered intoduring the year ended March 312021 which were not at arm's length basis.

Your Directors draw attention of the members to Note 25 to theFinancial Statements which sets out other related party disclosures.

All Related Party Transactions as required under Accounting StandardsAS-18 are reported in Note 25 - Notes to Accounts of the Standalone financial statementsof the Company.

17. THE STATE OF THE COMPANY'S AFFAIRS

The Company is registered with RBI as a Non Deposit taking SystemicallyImportant Core Investment Company (NBFC-ND- SI-CIC). The Company is in compliance with theconditions of the Master Direction - Core Investment Companies (Reserve Bank) Directions2016 as amended. Prior to its conversion to a Core Investment Company the Company was oneof the largest microfinance institutions in the country. The conversion was done based onthe stipulation of the Reserve Bank of India while approving the Company to set up thesmall finance bank business.

The Company is the promoter of 'Ujjivan Small Finance Bank Limited'(hereinafter referred to as "USFB") and being a CIC the Company has itsinvestments primarily in USFB. The Company as on March 31 2021 holds 83.32% equity inUSFB and holds preference shares of ? 200 crores.

18. MATERIAL CHANGES AND COMMITMENTS

IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVEOCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIALSTATEMENTS RELATE AND THE DATE OF THE REPORT;

None

19. THE CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGEEARNINGS AND OUTGO IN THE MANNER AS PRESCRIBED IN RULE 8(3) OF THE COMPANIES (ACCOUNTS)RULES 2014 Conservation of energy and technology absorption

Since the Company does not own any manufacturing Facility theparticulars relating to conservation of energy and technology absorption are notapplicable.

The Foreign Exchange earnings and outgo

There was no Foreign Exchange inflow and outflow during the year.

20. DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY

The Company isa non-operating holding Company and its main objects areto carry on the business of making investments in group company(ies) in the Form ofsecurities and providing guarantees etc. and to carry on financial activities whether inIndia or outside in the nature ofinvestment in bank deposits money market instruments(including money market mutual Funds and liquid mutual Funds) government securities andto carry on such other activities as may be permitted and prescribed by the relevantstatutory authorities For core investment companies From time to time.

Since USFB is a listed entity the Company can only have a distantoversight on the risk management practices adopted by USFB. The Company expects that therisk management committee of USFB adopts the best risk practices reviews its riskmanagement Framework and verifies adherence to various risk parameters and compliances inthe best possible way.

The Company has a duly constituted Risk Management Committee of theBoard and has in place its risk management policy which highlights the Functionsimplementation and the role of the committee and the board. Please refer the CorporateGovernance section For the composition and terms of reference of the Risk ManagementCommittee.

21. CORPORATE SOCIAL RESPONSIBILITY

The Corporate Social Responsibility (CSR) programs were started by theCompany in the year 2010 much before it was made mandatory underthe Companies Act 2013.

During the year the Company has continued its partnership withParinaam Foundation to undertake various community development programs. Please refer theseparate section on Corporate Social Responsibility in the annual report for a detailedwrite upon the CSR activities of the Company during the year.

A brief outline of the company's CSR policy is disclosed on our websiteat the below link https://www.ujjivan.com/ mandatory-policies

The initiatives undertaken by the Company on CSR activities are set outin "Annexure 5" of the Board's Report in the format prescribed in the Companies(Corporate Social Responsibility Policy) Rules 2014. For other details regarding the CSRCommittee please refer to the Corporate Governance Report which forms part of theBoard's Report.

22. BOARD EVALUATION

The board of directors has carried out an annual evaluation of its ownperformance board committees and individual directors pursuant to the provisions of theCompanies Act 2013 and the corporate governance requirements as prescribed by Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 ("SEBI Listing Regulations") and SEBI guidance note on Board Evaluation.

Performance evaluation criteria for Board Committees of the Board andDirectors were adopted by the Nomination

Committee of the Board at its meeting held on March 22 2021.Evaluation formats and criteria of evaluation duly incorporated the criteria and otherparameters as suggested by SEBI vide their guidance note on evaluation through theircircular dated January 052017.

The Board was evaluated comprehensively inter alia on the structure ofthe Board competency experience and qualifications of directors diversity in boardregularity of the board meetings effectiveness of board processes independence of Boardinformation sharing and overall functioning of the Board.

The performance of the board was evaluated by the board after seekinginputs from all the directors on each of the above parameters of evaluation and theperformance of the committees was evaluated by the board after seeking inputs from thecommittee members on the basis of the above parameters of evaluation.

The Board committees were evaluated inter alia on the basis of theirmandate composition attendance functioning and independence.

Independent Directors' Evaluation of Non- Independent Directors

In a separate meeting of independent directors held on March 22 2021performance of non-independent directors performance of the board as a whole andperformance of the chairman was evaluated taking into account the views of executivedirectors and non-executive directors. The Independent Directors also assessed thequality quantity and timeliness of flow of information between the Company management andthe Board.

Performance of independent directors was evaluated by the entire boardexcluding the independent director being evaluated and was satisfied that each of theindependent director fulfills the independence criteria as specified in SEBI regulationsand that they are independent of the management.

23. DETAILS AS REQUIRED UNDER RULE 8 OF THE COMPANIES (ACCOUNTS) RULES2014

(i) The financial summary or highlights

(Rs. in Crores)

Particulars Standalone* Consolidated*
FY 2020-21 FY 2019-20 FY 2020-21 FY 2019-20
Operating Income - 11.00 3065.98 2859.76
Other Income 8.44 10.24 115.01 109.62
Total Income 8.44 21.24 3180.99 2969.38
Less: Operational Expenses Personnel Expenses 2.25 3.16 759.10 734.71
Administrative & CSR Expenses 2.30 7.88 285.18 363.39
Finance Charges - - 1120.95 1114.92
Depreciation 0.01 0.02 169.90 165.99
Impairment Losses on Financial Instruments - - 1 1165.19 174.46
Total Operational Expenses 4.56 11.06 3500.32 2553.47
Profit/(Loss) Before Tax 3.88 10.18 (319.33) 415.91
Less: Income tax 0.94 1.37 171.95 115.76
Less: Deferred tax 0.01 (0.01) (252.17)> 1.49
Profit/(Loss) After Tax 2.93 8.82 (239.11) 298.66

* as per Indian Accounting Standards (Ind-AS)

(ii) highlights of performance of subsidiaries associates and jointventure companies and their contribution to the overall performance of the company duringthe period

'Ujjivan Small Finance Bank Limited' ("USFB") is a materiallisted subsidiary of the Company and is a small finance bank licensed by the RBI in termsof Section 22 of the Banking Regulation Act 1949. USFB was incorporated on July 042016and commenced its operations as a small finance bank w.e.F. February 01 2017. The Companyas on March 31 2021 holds 83.32% equity in USFB.

Key business and financial performance highlights of the materiallisted subsidiary ‘Ujjivan Small Finance Bank Limited* (USFB) (in l-GAAP):

• Cross advances at Rs. 15140 crore as on March 31 2021 asagainst Rs. 14153 crore as on March 312020; growth of7%

• Disbursement during FY 2020-21 was Rs. 8397 crore as againstRs.13221 crore during FY2019-20; declined by 36%

• Total deposit of Rs. 13136 as on March 31 2021 as against Rs.10780 crore as on March 31 2020; growth of 22%; retail deposits grew 32% during the yearFrom Rs. 4724 crore in March 2020 to Rs. 6242 crore in March 2021

• CASA increased by 85% FromRs. 1459 crore in March 2020 to 2699crore in March 2021

• 59.2 lakh customers in March 2021 as against 52.5 lakh customersin March 2020

• 40.1 lakh borrowers in March 2021 as against 43.5 lakh in March2020; decline in borrower base is due to reduced disbursements and closure of existingloans

• CRAR of 26.4% in March 2021 as against 28.8% in March 2020

• Number of branches remained unchanged at 575 in March 2021 whencompared to previousyearand numberofATMs increased From 475 to 491 during FY 2020-21

• Total income increased to Rs. 3117 crore in March 2021 From Rs.3026 crore in March 2020; an increase of 3%

• Net interest income grew to Rs. 1729 crore in March 2021 FromRs. 1634 in March 2020; an increase of 6%

• Profit after Tax (PAT) declined to Rs. 8 crore in March 2021From Rs. 350 crore in March 2020 primarily due to significant increase in provisions andcontingencies;

• Return on Asset (ROA) For FY 2020-21 is 0.04% as against 2.2% inFY 2019-20

• Return on Equity (ROE) For FY 2020-21 is 0.3% as against 13.9%in FY 2019-20

• GNPA at 7.1% in March 2021 as against 1.0% in March 2020

• NNPA at 2.9% in March 2021 as against 0.2% in March 2020

• Cost to income ratio improved to 60% in FY 2020-21 From 67% inFY 2019-20

• Cost of Fund improved to 6.8% in March 2021 From 7.9% in March2020

• Awarded 'Business Today - KPMG Best Bank and Fintech Jury Award2020 in innovation workforce & talent and enterprise resilience (qualitative) For SFBcategory

• 16thAnnualBankingTechnologyAward2021 (SmallFinance BankCategory) - Winner in 'Best Digital Financial Inclusion Initiatives' First Runner up in'Best Technology Bank of the Year' and First Runner up in 'Best IT Risk & CyberSecurity Initiatives'

• Awarded Jury Recognition Award For Excellence in CognitiveAutomation at UiPath Automation Excellence Awards 2020

• Received Inclusive Finance India Award 2020-Small Finance BankForachieving financial inclusion among SFBs

• Ranked 3rd in India's Best Companies To Work For 2020 USFB -Key Ratios as on March 31 2021

Particulars FY 20-21
Average Yield - across segment 16.0%
Cost of Funds (Cof) 6.8%
Net Interest Margin (NIM) 9.5%
Return on Assets (ROA) 0.04%
Return on Equity (RoE) 0.3%
Cost to income 60.0%
Capital Adequacy (CRAR) 26.4%
NNPA 2.9%
LCR 116%

The Company doesn't have any operations of its own and USFB contributes99.7% of the consolidated total income of the Company.

(iii) The change in the nature of business if any;

There is no change in the nature of the business of the Company duringthe FY 2020-21. The Company continues to be a Non Deposit taking Systemically ImportantCore Investment Company (NBFC-ND-SI-CIC).

(iv) The details of directors or key managerial personnel who wereappointed or have resigned during the year;

Sr. No. Name Designation DIN Date of Appointment/ Change/ Cessation Reason
1 Mr. Samit Ghosh Non-Executive Chairman 00185369 April 01 2020 Appointment
2 Mr. Jayanta Basu Non-Executive Non-Independent 01268046 January 20 2021 Cessation
3. Mr. Sunil Vinayak Patel Independent Director 00050837 February 11 2021 Appointment
4. Mr. Rajesh Kumar Jogi* Independent Director 03341036 February 11 2021 Appointment
5. Mr. Ittira Davis MD & CEO 06442816 March 12 2021 Cessation

designed from the Board effective from August 22 2021

(v) the names of companies which have become or ceased to be itsSubsidiaries joint ventures or associate companies during the year;

None

(vi) Deposits from public

During the year the Company has not accepted any deposits From publicand as such no amount on account of principal or interest on deposits From public wasoutstanding as on the date of the balance sheet.

However the subsidiary of the Company 'Ujjivan Small Finance BankLimited' which is a Small Finance Bank has outstanding deposits of? 13136 croresas onMarch 31 2021.

(vii) The details of significant and material orders passed by theregulators or courts or tribunals impacting the going concern status and company'soperations in future;

None

(viii) The details in respect of adequacy of internal financialcontrols (IFC) with reference to the Financial Statements

In respect of internal financial control the Board has adopted thepolicies and procedures For ensuring the orderly and efficient conduct of its businessincluding adherence to the Company's policies the safeguarding of its assets the timelyprevention and detection of Frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information.

Further the management regularly reviews the control For any possiblechanges and takes appropriate actions.

24. ESOP RELATED & OTHER DISCLOSURES

(i) Details of equity shares with differential rights

The Company has not issued any equity shares with differential rightsduring the year

(ii) Details of sweat equity shares issued

The Company has not issued any sweat equity shares during the year

(iii) Details of employee stock option scheme

The Company has established Employee Stock Option Plan (ESOP) Forcompensation to its employees being ESOP 2006 ESOP 2007 ESOP 2008 ESOP 2010 MD-ESOP2010 and ESOP 2015.

As on March 312021 only ESOP 2015 scheme is active.

ESOP 2015

The ESOP 2015 pool comprises of 6579899 options which includes theoriginal pool of 4782129 options and 1797770 options added From the lapsed options ofESOP 2006 ESOP 2007 ESOP 2008 and ESOP 2010 with the approval of the shareholders attheir meetings held on November 03 2015 and June 272018.

As on March 31 2021 out of the 5515880 options granted 806074options has been exercised 2094864 options are lapsed 2043410 vested options areunexercised and 571532 options are yet to be vested. The Board (including its authorizedcommittee) has been authorized by the shareholders to include the lapsed / cancelledoptions under its ESOP 2010 and ESOP 2015 back to the pool of ESOP 2015 and that the Boardis hereby authorized to grant such added back options to its eligible employees (whichincludes the employees of its subsidiary).

The vesting period For the options granted under ESOP 2015 is Foraperiod of three years as under:

Tranche Yearof Grant Options Granted Year 1 Year 2 Year 2
ESOP 2015 (Tranche 1) 2015 1469800 34% 33% 33%
ESOP 2015 (Tranche 2)* 2016 1696850 33% 33% 34%
ESOP 2015 (Tranche 3) 2018 2337670 34% 33% 33%
ESOP 2015 (Tranche 4) 2018 11560 34% 33% 33%
Total 5515880

* Post IPO options were granted subsequent to the ratification of theshareholders No options were granted by the Company during the FY 2020-21.

The ESOP 2015 is in compliance with Securities and Exchange Board ofIndia (Share Based Employee Benefits) Regulations 2014 (SEBI ESOP Regulations) theCompanies Act 2013 and is implemented in accordance with guidance notes issued by ICAIand the relevant accounting standards.

Revisions in the ESOP Schemes during the Year

None;

ESOP Schemes Compliance Status

The ESOP 2015 is in compliance with Securities and Exchange Board ofIndia (Share Based Employee Benefits) Regulations 2014 (SEBI ESOP Regulations) and theCompanies Act 2013. The Company has received a certificate From the Statutory Auditors ofthe Company certifying that ESOP 2015 Scheme of the Company is being implemented inaccordance with the Securities and Exchange Board of India (Share Based Employee Benefits)Regulations 2014 and is in accordance with the resolutions passed by the Members of theCompany ata general meeting.

The ESOP Schemes are implemented in accordance with guidance notesissued by ICAI and the relevant accounting standards.

The weighted average Fair value of the share options granted during thefinancial year ended March 31 2021 and March 31 2020 is Nil. Options were priced usingBlack and Scholes Model. Vested ESOPs can be exercised within three years From theircorresponding dates of vesting. Vested ESOPs can be exercised between the dates of vestingand on or before option expiry dates. The term of the option is assumed to be the sum ofa) duration till vesting; and b) the midpoint of the remaining exercise period From dateof vesting in absence of historical exercise pattern. While the Company has been listedsince 2016 the period of listing up to the Grant Dates is not commensurate with theexpected term of the granted ESOPs. Accordingly volatility of comparable companies hasbeen considered For the purposes of valuation.

ESOP arrangement with subsidiary

With effect From February 12017 the business undertaking of theCompany was transferred to USFB and all the employees of the Company except Few identifiedpersonnel have been transferred to USFB as part of the transfer of the businessundertaking. This has resulted in the transfer of options From the employees of theCompany to the employees of USFB. As per Ind AS 102 Share-based Payment stock optionshave to be Fair valued on the grant date and expense has to be recognised over the vestingperiod. Pursuant to management decision Impact of Ind AS 102 on account of optionsgranted to the employees of subsidiary is treated as deemed investment in subsidiary inthe Company's books.

Administration of ESOP Schemes

The Governance Nomination and Remuneration Committee of the Boardadminister the Employee Stock Option Schemes Formulated by the Company From time to time.

Mandatory ESOP Disclosures

Disclosures as required under Section 62 of the Companies Act 2013 (tobe read with Rule 12 of the Companies (Share Capital and Debenture) Rules 2014 and SEBIESOP Regulations:

Sr. No. Particulars March 312021
1. Number of options granted and outstanding at the beginning of the year (A) 3405848
2. Number of options granted during the year (B) Nil
3. Number of options vested during the year 619021
4. Number of options exercised during the year 52760
5. Number of shares arising as a result of exercise of options (C) 52760
6. Money realized during the year by exercise of options (in ?) 7721426
7. Number of options Forfeited/Expired during the year (D) 738146
8. The exercise price of the outstanding options (in ?) 146.35 417.15 & 385.05
9. Number of options granted and in force at the end of year=(A)+(B)-(C)-(D) 2614942
10. Weighted average of remaining contractual life (years) at the year end 0.92
11. Variation of terms of the options None

* Please refer to note 24 of the standalone financials for furtherdetails on ESOP data

Options Granted to Key Managerial Personnel (KMP) during the year

No option was granted to any of the KMP or to any other employee of theCompany or its subsidiary (USFB) during the year.

Any other employee who receives a grant of options in any one year ofoptions amounting to five percent or more of options granted during that year: - None

Identified employees who were granted options during any one yearequal to or exceeding one percent of the issued capital (excluding outstanding warrantsand conversions) of the Company at the time of grant: - None

25. VIGIL MECHANISM

The Company in compliance with Section 177 of the Companies Act 2013has a duly constituted Audit Committee of the Board. The composition of the AuditCommittee is as under:

Sr. No. Directors Designation
1. Mr. Sunil Vinayak Patel Chairman (Independent Director)
2. Mr. K.R. Ramamoorthy Independent Director
3. Mr.AbhijitSen Independent Director
4. Ms. Mona Kachhwaha Independent Director
5. Mr. Samit Ghosh Non-Independent Non-Executive

Please refer to the Section on Corporate Governance For Further detailson the Board Committees.

Further in compliance to Section 177 of the Companies Act 2013 andRegulation 22 of SEBI Listing Regulations the Company has established a Whistle Blowerpolicy / Vigil Mechanism For the directors and employees to report genuine concerns orgrievances about unethical behavior actual or suspected Fraud or violation of thecompany's Code of Conduct or Ethics Policy. The Company has a vigil mechanism processwherein the employees are Free to report violations oflaws rules regulations orunethical conduct to the whistle and ethics officer of the Company. Further this policyalso specifically enables the employeesof the Companyand those of its subsidiary to reportinstances ofany leakof unpublished price sensitive information by the employees of theCompany and its subsidiary to any outsider which is not For legitimate business purposes.This is to ensure the compliance of SEBI (Prohibition of Insider Trading) Regulations2015 and Code of Conduct For Prevention of Insider Trading of the Company.

Name and Address of the Whistle and Ethics Officer

Mr. Sanjeev Barnwal- Company Secretary and Compliance Officer

Ujjivan Financial Services Limited

Crape Carden No. 27 3rd A Cross 18th Main 6th BlockBangalore-560095 Karnataka Email- sanjeev.barnwal@ujjivanfin.com

Protected Disclosure against the Whistle and Ethics OFficer in theabsence of the MD & CEO should be addressed to the Chairman of the Company and theProtected Disclosure against the Chairman of the Company should be addressed to theChairman of the Audit Committee.

Name and Address of the Chairman of the Company:

Mr. Samit Ghosh

Ujjivan Financial Services Limited

Crape Carden No. 27 3rd A Cross 18th Main 6th Block Bangalore -560095 Karnataka Email: samit.ghosh@ujjivanfin.com

Name and Address of the Chairman (Audit Committee):

Mr. Sunil Vinayak Patel

G-1 Avant Garde 193 6th Main Road Defence Colony IndiranagarBengaluru 560038 Karnataka Email: cpcon.blr@gmail.com

The confidentiality of those reporting violations is maintained andthey are not subjected to any discriminatory practice

The whistle blower policy of the Company is disclosed on our website atthe below link- https://www.ujjivan.com/ mandatory-policies

26. REMUNERATION DETAILS OF DIRECTORS KMPS EMPLOYEES

Sr. No. Directors Designation
1. The ratio of the remuneration of each Whole time director to the median remuneration of the employees of the company for the financial year MD & CEO: 3.27x
2. The percentage increase in remuneration of each director Chief Financial Officer Chief Executive Officer Company Secretary or Manager if any in the financial year KMP Mr. Ittira Davis - MD & CEO (until March 12 2021) Mr. Sanjeev Barnwal - CS Mr. Barun Agarwal - CFO * increase was done mid-year ef % increase in remuneration Nil 7%* 4%* Tective from Oct 01 2020
3. The percentage increase in the median remuneration of employees in the financial year; 7% increase in the median remunerr ition of employees in the FY 2020-21.
4. The number of permanent employees on the rolls of company as on March 31 2021 4
5. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration andjustification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration The average increase in the salaries personnel) was 11 % and the averags remuneration during the last financi Note: all increase was done mid-yeai of employees (other than managerial ? increase in the managerial al year was 3.67%. r effective from Oct 01 2020
6 Affirmation that the remuneration is as per the remuneration policy of the company Yes

A statement showing the name of every employee of the company otherthan disclosed above who-

a. if employed throughout the financial year was in receipt ofremuneration For that year which in the aggregate was not less than one crore and twolakh rupees;

- None

b. if employed For a part of the financial year was in receipt ofremuneration For any part of that year at a rate which in the aggregate was not lessthan eight lakh and fifty thousand rupees per month;

- None

c. if employed throughout the financial year or part thereof was inreceipt of remuneration in that year which in the aggregate or as the case may be at arate which in the aggregate is in excess of that drawn by the managing director orwhole-time director or manager and holds by himself or along with his spouse and dependentchildren not less than two percent of the equity shares of the company.

- None

Information as per Rule 5(2) of Chapter XIII the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014

The names of the top ten employees in terms of remuneration drawn:

The Company during the year ended March 312021 had only the Followingemployees:

Sr. No. Particulars Ittira Davis Sanjeev Barnwal Barun Agarwal Shashidhara S. Aakash Jaiswal
i. Designation MD & CEO (until March 12 2021) Company Secretary and Compliance Officer Chief Financial Officer Assistant Company Secretary Assistant Manager- Investor Relations
ii. Remuneration received 9821730 5256804 4695780 1310340 1174584
iii. nature of employment whether contractual or otherwise; Permanent (resigned w.e.f. Mar 12 2021) Permanent Permanent Permanent Permanent
vi. qualifications and MBA(IIMAhmedabad) CS LLB DBM Chartered Accountant CS LLB M.Com MBA (Finance)
experience of the employee 38+years' experience 17+ years' experience 13+years' experience 13+ years' experience 4 years' experience
V. date of commencement of employment July 01 2018 August 12 2014 June 01 2019 November 01 2017 May 20 2019
vi. the age of such employee 66 40 36 36 30
vii. the last employment held by such employee before joining the company Ujjivan Small Finance Bank Limited SMC Capitals Limited S. R. Batliboi & Associates LLP GMROse Hungund Hospet Highways Private Limited State Bank of India
viii. the percentage of equity shares held by the employee in the company 0.03%* Negligible Nil Nil Nil
ix. whether any such employee is a relative of any director or manager of the company No No No No No

*as a second holder with his wife Ms. Anna Ittira Davis

27. BUSINESS RESPONSIBILITY REPORTING

The Board of the Company in its meeting held on May 28 2021 hasapproved the Business Responsibility Report ("BRR") of the Company as stipulatedunder Regulation 34 (as amended) ofSEBI Listing Regulations which mandates that top 1000listed companies based on market capitalization as on March 31 should include its BRR inits Annual Report. The Company is ranked 529 in the list as on March 31 2021.

A copy of the BRR is appended as "Annexure 6" and has alsobeen hosted on the website of the Company at www.ujjivan.com and can be accessed From thelink below https://www.ujjivan.com/mandatory-policies

Compliance of Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013

The Company has only 4 employees as on March 312021 and the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 is notapplicable.

Disclosures in relation to the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013:

a. Number of complaints Filed during the year Nil
b. Number of complaint dismissed during the year Nil
c. Number of complaint pending as on end of the Financial year Nil

Green Initiatives

Electronic copies of the Annual Report For the FY 2020-21 and theNotice of the 17th ACM are being sent to all the members whose email addresses areregistered with the Company /Depository Participants. As per the relaxation given by SEBIon account ofCovid situation physical copies of the Annual Report are not being sent tomembers who have not registered their email address with their depositories.

ACKNOWLEDGEMENT

Your Directors wishes to grateFully acknowledge the assistance andguidance received From the RBI ROC Investors Banks Auditors Lawyers AccountantsVendors Partner NCOs Institutions and Foundations and Government Authorities and all ourwell-wishers. The Board also wishes to place on record their warm appreciation For thecreative and dedicated eFForts ofstaFF at all levels.

For and on behalF of the Board of Directors
Samit Ghosh Sunil Vinayak Patel
Chairperson Independent Director (Audit Committee Chairman)
DIN:00185369 DIN:00050837
Place: Bangalore
Date: May 28 2021

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