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Ujjivan Financial Services Ltd.

BSE: 539874 Sector: Financials
NSE: UJJIVAN ISIN Code: INE334L01012
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VOLUME 156301
52-Week high 310.85
52-Week low 144.70
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Mkt Cap.(Rs cr) 2,608
Buy Price 0.00
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Ujjivan Financial Services Ltd. (UJJIVAN) - Director Report

Company director report

To the Members

The FY 2014-15 has been one of the best financial years in Ujjivan’s history andwe are delighted to present the report of our business and operations for the year endedMarch 31 2015

Particulars FY 2014-15 (Rs.) FY 2013-14 (Rs)
Operating Income 5993165034 3478892385
Other Income 125635557 97734887
Total Income 6118800591 3576627272
Less: Operational Expenses
Personnel Expenses 1327695558 814912916
Administrative Expenses 654271391 360369530
Finance Charges 2713806964 1448546685
Depreciation 67417317 31467170
Provision For Doubtful Debts 210476682 82922821
Total Operational Expenses 4973667912 2738219122
Profit/(Loss) Before Tax 1145132679 838408150
Less: Income tax 468047354 316163764
Less Deferred tax (80802636) (28130625)
Profit/(Loss)After Tax 757887961 550375011

Review of Operations

• The operational highlights for the financial year ended March 31 2015 include:

• 100%+ growth in business volumes 148% growth in new customer outreach

• PBT at Rs. 114.51 crore PAT at Rs. 75.79 crore Ujjivan OER at around 8.4%

• 423 Branches in 21 States and 3 Union Territories

• Customer base of 2316668

• No. of borrowers 2196261 and cumulative disbursement of Rs. 11129.25 crore

• Loan Outstanding up from Rs. 1617.27 crore to Rs 3218.69 crore(excluding securitised portfolio of Rs. 55.4 crore)

The FY 2014-15 has been a golden year for Ujjivan with excellent growth in businessefficiency and profitability. Ujjivan has achieved a pre-tax profit of Rs. 114.51 croreand transferred an amount of Rs. 15.16 crore to statutory reserve fund in accordance withthe provisions of Section 45- IC of The Reserve Bank of India Act 1934. After transfer ofstatutory reserves and dividend (including dividend distribution tax) Ujjivan’scumulative profit stands at Rs. 130.82 crore as at March 31 2015.

Dividend

• The Board has recommended a dividend of Rs. 0.50 per Equity share for this year

Credit Rating

• CRISIL has assigned the Company a grading of mfR1 (the highest grading for MFI)in September 2014. CARE has assigned a ‘CARE A’ rating (revised from ‘CAREA-’) to Ujjivan in March 2015 for its Long Term Bank Facilities of Rs. 3000 crore.ICRA assigned a rating of ‘ICRA A-’ for its NCDs of Rs. 165 crore.

Capital adequacy

The Capital Adequacy

Ratio of the company was 24.24% as of March 31 2015 as against the minimum capitaladequacy requirements of 15% by RBI.

Corporate Governance

Clause 49 of the Standard Listing Agreement and the Corporate Governance Report underthis clause are not applicable to the company. However a Corporate Governance Report isattached and forms part of the Directors Report.

Management Discussion and Analysis

A detailed separate report on our Management Discussion and Analysis Reporthighlighting the important aspects of the business forms part of this Annual Report.

(a) Extract of Annual Return

In accordance with Section 134(3)(a) of the Companies

Act 2013 an extract of the Annual Return in the prescribed format (MGT-9) is appendedas "Annexure 1" to the Board’s Report.

(b) No. of Meetings of the Board during the FY 2014-15

During the Financial Year 2014-15 our Board has met six times and the meetings of ourBoard of Directors were held on April 30 2014 May 16 2014 August 06 2014 November25 2014 January 27 2015 and March 25 2015.

(c) Directors’ Responsibility Statement

Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors of theCompany confirms and states that

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

 

(b) The Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state end of the financial of year and of the profit andloss of the company for that period;

 

(c) The Directors had 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;

 

(d) The Directors had prepared the annual accounts on a going concern basis;

 

(e) Had laid down internal financial controls to be followed by the company andthat such internal financial controls are adequate and were operating effectively; and

 

(f) The Directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.

(d) Declaration by Independent Directors

A statement on declaration given by Independent Directors under sub-section (6) ofsection 149

The Company has received necessary declarations of independence from each of itsIndependent Directors under Section 149(7) of the Companies Act 2013 that he/ she meetsthe criteria of independent director envisaged in section 149 (6) of the Companies Act2013.

The declaration of independence reads as under:

• I possess relevant expertise and experience to be an independent director in theCompany;

• I am/was not a promoter of the company or its holding subsidiary or associatecompany;

• I am not related to promoters / directors / persons occupying managementposition at the board level or level below the board in the company its holdingsubsidiary or associate company;

• None of my relatives has or had any pecuniary relationship or transaction withthe company its holding subsidiary or associate company or their promoters ordirectors amounting to 2% or more of its gross turnover or total income or Rs. 50 Lacs orsuch higher amount as may be prescribed whichever is lower during the two immediatelypreceding financial years or during the current financial year;

• Neither me nor any of my relatives:

• Holds or has held the position of a key managerial personnel or is or has beenemployee/executive of the company or its holding subsidiary or associate company in anyof the three financial years immediately preceding the financial year;

• Is or has been an employee or proprietor or a partner in any of the threefinancial years immediately preceding the financial year of; A firm of auditors or companysecretaries in practice or cost auditors of the company or its holding subsidiary orassociate company; or Any legal or a consulting firm that has or had any transaction withthe company its holding subsidiary or associate company amounting to 10% or more of thegross turnover of such firm; Holds together with my relatives 2% or more of the totalvoting power of the company; or Is a Chief Executive or director by whatever name calledof any nonprofit organization that receives 25% or more of its receipts from the companyany of its promoters directors or its holding subsidiary or associate company or thatholds 2% or more of the total voting power of the company; or I am not a materialsupplier service provider or customer or a lessor or lessee of the company; I am not lessthan 21 years of age.

(e) Nomination and Remuneration Policy

The Company pursuant to the provisions of Section 178 of the Companies Act 2013 hasformulated and adopted a nomination and remuneration policy which is being appended as "Annexure2" to the Board’s Report

(f) Explanations or comments by the Board on every qualification reservation oradverse remark or disclaimer made –(i) By the auditor in his report;

Nil; no qualification reservation or adverse remark made by the auditor

 

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

Nil; no qualification reservation or adverse remark made by the auditor Mr. K.Jayachandran Practicing Company Secretary was appointed as the Secretarial Auditor of theCompany to conduct secretarial audit of the Company for the FY 2014-15 as required undersection 204 of the Companies Act 2013 and the Rules made thereunder. The secretarialaudit report for FY 2014-15 is appended as "Annexure 3" to theBoard’s Report.

(g) Particulars of loans guarantees or investments under Section 186

The Company has neither given any loans or guarantee to any body corporate nor made anyinvestments covered under Section 186 of the Companies Act 2013

(h) Particulars of contracts or arrangements with related parties referred to inSection 188(1) in the prescribed form below;

1. Details of contracts or arrangements or transactions not at arm’s lengthbasis:

There were no contracts or arrangements or transactions entered in to during the yearended March 31 2015 which were not at arm’s length basis.

2. Details of contracts or arrangements or transactions at arm’s lengthbasis:

a) Name of the related party and nature of relationship Parinaam Foundation
Mr. Samit Ghosh the CEO & Managing Director of the Company holds 90% Equity Shares in Parinaam Foundation.
b) Nature of contracts / arrangements / transactions Reimbursement of expenses and others service
Parinaam Foundation (Section 8 Company under Companies Act 2013 ) is a charitable institution within the meaning of the Income Tax Act 1961 and conducts financial literacy and other programs for Ujjivan customers.
Ujjivan incurs expenditure and Parinaam Foundation reimburses the expenses.
c) Duration of the contracts / arrangements / transactions Continuous
Ujjivan has executed an MOU with Parinaam Foundation dated 26th November 2009 which is renewed from time to time.
d) Salient terms of the contracts or arrangements or transactions including the value if any Parinaam Foundation is to identify the needs of Ujjivan’s customers through specific surveys design specific programs for them and impart necessary trainings to Ujjivan customers.
Ujjivan will provide Parinaam the necessary database information infrastructure and administrative support and other material that will support Parinaam to facilitate the initiatives.
Parinaam has requested Ujjivan for a donation of Rs. 5 lakh to carry out its mission to serve the society at large. The Board in its meeting held on January 27 2015 took note of the vital role played by Parinaam Foundation in Ujjivan’s Financial Literacy Program for its customers and granted a donation of Rs. 5 Llakh to Parinaam Foundation.
e) Date(s) of approval by the Board June 12 2009 and renewed thereafter from time to time
f) Amount paid as advances if any Nil

Your Directors draw attention of the members to Note 26.3 to the Financial Statementswhich sets out other related party disclosures.

(i) The state of the Company’s affairs

Ujjivan is a RBI registered NBFC-MFI Company based in Bangalore and is one of thelargest microfinance institutions in the country with the most diversified geographicalreach offering a comprehensive suite of financial products and services to theeconomically active poor. Ujjivan operates primarily on a joint liability group lendingmodel as an adaptation of the famed Grameen model of microfinance. In addition it boastsof a cutting edge yet cost-effective technology infrastructure which continues to beahead of time in the microfinance industry.

The Company’s mission is to "Provide full range of financial services to theeconomically active poor to build better lives". Its primary goals are to:

• Provide the full range of financial services required by customers

• Build an institution which is best in class in all aspects: customer serviceinnovation efficiency workplace engagement leadership governance and reputation

• Operate a viable business to provide satisfactory returns for investors

• Provide professionally rewarding careers to employees and attract and retainquality talent

• Holistically approach poverty reduction in partnership with ParinaamFoundation through social welfare; healthcare education vocational training communitydevelopment shelter and disaster relief to enable customers lead a better life As onMarch 31 2015 the Company operates through 423 branches spread over 24 states in 4regions – South East North and West - with an employee strength of 7089. TheCompany’s present borrower base is 2196261 has disbursed Rs. 11129 crore sinceits inception and the portfolio outstanding as on March 31 2015 is Rs. 3218.7crore (excluding the securitised portfolio of Rs. 55.4 crore).

Ujjivan has positively impacted the lives of more than 20 lakh unbanked andunder-banked customers in urban semi-urban and rural areas by addressing the financialneeds for micro enterprise home improvement education and emergencies. Ujjivan’soperations are backed by its customer-centric focus on service and product innovationtechnology enabled back-end operations independent credit appraisal process and prudentbusiness risk management practices.

(j) The amounts if any which it proposes to carry to any reserves;

Rs. 15.16 crore to Statutory Reserves

(k) The amount if any which it recommends should be paid by way of dividend;

Rs. 5.18 crore (including dividend distribution tax)

(l) Material changes and commitments if any ecting the financial position of thecompany aff which have occurred between the end of the financial year of the company towhich the financial statements relate and the date of the report;

There has been no material change affecting the financial position of the Company fromthe end of the financial year till the date of the report.

However one material change though not affecting the financial position of the Companywhich has occurred after the end of the FY 2014-15 is that the Board in its meeting heldon June 04 2015 has considered and approved the change of categorization of Mr. SamitGhosh from "Promoter" to "Founder" of the Company. The Board in theirmeeting held on June 04 2015 discussed that in view of various successive rounds offunding the shareholding profile of the Company has changed and the shareholding of Mr.Samit Ghosh Founder of the Company and present Managing Director and Chief ExecutiveOfficer has been reduced to [1%] of the total issued and paid up share capital of theCompany. Despite this Mr. Samit Ghosh continues to be identified as the Promoter of theCompany including in the existing Articles of Association of the Company. In thecircumstances the Board while recognising the importance of the role of Mr. Samit Ghoshin the Company discussed the possibility of more appropriately categorising hiscontinuing role in the growth of the Company as the founder of the Company instead of"promoter". In this context the Board also noted that Mr. Ghosh is acting as aDirector of the Company in his professional capacity is not in control of the Company andwould not be a promoter of the Company under applicable law including under the Securitiesand Exchange Board of India (Issue of Capital & Disclosure Requirements) Regulations2009.

The Board noted that this would necessitate making appropriate amendments to itscharter documents (Articles of Association) of the Company.

To consider and approve the change of categorisation of Mr. Samit Ghosh from Promoterto Founder and alteration of Articles of Association accordingly the Company is proposingto hold an Extraordinary General Meeting (EGM) of the Shareholders of the Company on July09 2015.

(m) The conservation of energy technology absorption foreign exchange earnings andoutgo 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 the particulars relating toconservation of energy and technology absorption are not applicable.

The Foreign Exchange earnings and outgo

Foreign Exchange Inflow for the Company during the year is Rs. 225.77 crore on accountof raising fresh equity from foreign institutions.

The Foreign Exchange outflow during the year is Nil

(n) Development and implementation of risk management policy

Ujjivan’s Risk Management Committee consists of well-experienced Directors fromdiverse background who bring the best risk management practices to the organisation. TheRisk Management Committee which meets every quarter comprises of three Directorsincluding an Independent Director. The Committee reviews the Risk Management Framework ofthe Company and verifies adherence to various risk parameters and compliances. TheCompany’s Risk Management strategy is based on clear understanding of various risksdisciplined risk assessment and continuous monitoring. The Risk Management Committeereviews various risks which the organisation is exposed to including Credit Risk InterestRate Risk Liquidity Risk

Operational Risk and Regulatory Compliance issues. The Risk Committee approves andmakes recommendations to the Board regarding all its risk-related responsibilitiesincluding the review of major risk management and regulatory compliances.

The Company has developed and implemented a risk management policy that includesidentification therein of elements of risk if any which in the opinion of the Board maythreaten the existence of the Company. The Policy also highlights the functionsimplementation and the role of the Committee and the Board.

(o) The details about the policy developed and implemented by the company on corporatesocial responsibility initiatives taken during the year;

Building a better life for its customers through Social Development Programs andCorporate Social Responsibility by Ujjivan started in the year 2010. From 2010 theUjjivan Corporate Social Responsibility Team has focused on identifying and addressing ourcustomers’ critical problems. The Company has a well-defined Corporate SocialResponsibility (CSR) Policy in place and the Company has a holistic approach to povertyalleviation partnering with Parinaam Foundation a not- for-profitorganisation (Section25 Company) for programs in healthcare financial literacy education and vocationaltraining for Ujjivan’s customers and their family members. Ujjivan also conductsself-sustained Corporate Social responsibility Programs along with staff customers andthe communities where we work. Ujjivan has carried out the following CSR activities duringthe year:

• Supporting educational institutions and Improved sanitation facilities in girlsschool / colleges in the working areas which immediately benefited thousands of girlsstudents.

• Supported Health Dept. and Improve infrastructure/ diagnostic facilities inMaternity Centers / Primary Health Centers.

• Ladies Toilet construction in schools as a part of Swach Bharat Abhiyan; thefocus for Quarter II

III and IV FY 14-15 was on building / renovating toilets across schools especially forgirl child.

CSR Key initiatives FY 2014-15

• Ujjivan Corporate Social

Responsibility (CSR) Programs has focused on Mr. Narendra Modi the Honorable PrimeMinister of India dream project "Swachh Bharat Abhiyan" As part of Swachh BharatCampaign Ujjivan CSR team helped the school students with proper toilets sanitation andwater facilities in 266 Government Schools across India and approximately 133224 studentbeneficiaries are using our facilities. 84% of CSR programs of Ujjivan in FY 2014-15 aretowards Swachh Bharat Abhiyaan.

Projects South North East West Total Volume
Toilet Construction/Renovation 78 52 99 37 266 84%
Healthcare 10 8 0 2 20 6%
Drinking water facility 2 4 1 4 11 3%
Bus Stand Construction/Renovation 5 2 1 0 8 3%
Public facilities (Road/bridge/park) 2 1 1 2 6 2%
Facilities for Schools 0 3 0 1 4 1%
Social Welfare of Orphans/disabled 0 1 0 0 1 0%
Environmental Projects 1 1 0 0 2 1%
Total 98 72 102 46 318 100%
Beneficiaries 63401 170700 57747 22760 314608

During the FY 2014-15 these projects were carried out in 318 branches benefittingover 300000 beneficiaries.

An amount of Rs. 1.47 crore was spent on CSR activities during the year 2014-15.

The board has constituted a Corporate Social Responsibility Committee with anIndependent Director and two other directors as members.

A brief outline of the company’s CSR policy including overview of projects orprograms proposed to be undertaken and a reference to the web-link to the CSR policy andprojects programs is available on the Company’s website.

Ujjivan’s CSR Policy is being attached as "Annexure 4" of thisBoard’s Report

(p) A statement indicating the manner in which formal annual evaluation has been madeby the Board of its own performance and that of its committees and individual directors;

Ujjivan’s Board at its meeting held on March 25 2015 carried out the evaluationof the Board as a whole its Committees and the Independent Directors. The Board took onrecord the evaluation formats approved by the Governance Nomination and RemunerationCommittee (Nomination

Committee) for evaluation of (i) Board/ Committees (ii) Managing Director (iii)Independent Directors and (iv) Chairperson.

The Board was updated that the Nomination Committee deliberated on the variousevaluation attributes indicated in the evaluation formats for all the directors and afterdue deliberations made an objective assessment and evaluated that all the directors in theBoard have adequate expertise drawn from diverse industries and business and bringspecific competencies relevant to the company’s business and operations. TheNomination Committee found the performance of all the Directors to be quite satisfactoryand the Board’s functioning as well as that of its Committees overall were quiteeffective.

Evaluation of the Board

The Board evaluated its performance as a whole and was satisfied with its performanceand composition of independent and non-independent directors. Further the Boardappreciated that they are comprised of various professionals from diverse backgrounds inthe field offinance law HR management etc. which brings to the table differentdimensions for effective functioning.

Evaluation of the Committees of the Board

The Board evaluated its various committees and was satisfied with each of theircomposition functioning frequency of meetings and the performance of all its Committees.

Evaluation of the Independent Directors by the Board

The Board (excluding the independent director being evaluated) discussed theperformance of all the Independent Directors of the Company on an individual basis andevaluated that the performance of each Independent Director’s namely Mr. K.R.Ramamoorthy Mr. Sunil Patel and Ms. Vandana Viswanathan met the expectations of theCompany and it is advisable to continue with the term of appointment of the IndependentDirectors.

Separate Meeting of Independent Directors:

The Independent Directors of the Company at their separate meeting held on March 242015 in full attendance made an objective assessment and evaluation of the performance of

(a) the Executive Managing Director

(b) the Non Executive Non Independent Directors and

(c) the Chairperson of the Company.

They also reviewed the performance of the Board as a whole and assessed the qualityquantity and timeliness of flow of information between the Company management and theBoard.

(q) Other Details as required under Rule 8 of the Companies (Accounts) Rules 2014

(i) The financial summary or highlights;

Particulars FY 2014-15 (Rs.)
Operating Income 5993165034
Other Income 125635557
Total Income 6118800591
Less: Operational Expenses
Personnel Expenses 1327695558
Administrative Expenses 654271391
Finance Charges 2713806964
Depreciation 67417317
Provision For Doubtful Debts 210476682
Total operational expenses 4973667912
Profit/(Loss) Before Tax 1145132679
Less: Income tax 468047354
Less Deferred tax (80802636)
Profit/(Loss) 757887961

Business Highlights

• 73 new branches in FY 2014-15 and a footprint in the new states of Tripura andChhatisgarh makes us the most diversified MFI with a presence in 24 states

• 148% growth in new customer outreach. 10 lakhs NCA – key trigger: Akarshanloans

• Borrower base crossed the important milestone of 2 million 67% growth overMarch 2014

• FY 2014-15 disbursements at Rs. 4328 crore 106% growth over PY

• Loyalty loans added a significant Rs. 300 crore to the portfolio

• OSP Closed at Rs. 3218.7 crore (excluding securitised portfolio of Rs. 55.4crore) 99% growth over PY

• 200% growth in IL business contributing to 10.5% of total OSP new productslaunched – Agri and Higher Education Loan. Launch of Secured Lending Business-Secured Business Loan and Secured Housing Loan

Profitability:Pre-tax profits - Rs. 114.5 crore and post- tax profits -Rs.75.8 crore for FY 14- 2015

Efficiency: Focus on improved TAT – increased customer retention(from 85% in Mar-14 to 87% in Mar-15. OER contained at 8.4% on account of prudent expensemanagement)

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

None

(iii) The details of directors or key managerial personnel who were appointed or haveresigned during the year;

Sr. No. Name of Director / KMP Designation DIN / CS Membership No. Appointment Date of Appointment Cessation Date of Cessation
1. Mr. Ritesh Bawri Director 00604464 Appointed August 06 2014 Resigned October 20 2014
2. Mr. Sanjiv Kapur Director 01356126 N.A. N.A. Resigned March 25 2015
3. Mr. Mohit Bhatnagar Director 00381741 N.A. N.A. Resigned March 25 2015
4. Ms. Mona Kachhwaha Director 01856801 N.A. N.A. Resigned March 25 2015
5. Ms. Christina Juhasz Director 06451902 N.A. N.A. Resigned March 25 2015
6. Mr. Jayanta Kumar Basu Director 01268046 Appointed March 25 2015 N.A. N.A.
7. Mr. Amit Gupta Director 02282600 Appointed March 25 2015 N.A. N.A.
8. Ms. Suhasini Ashok KMP – CS A20239 N.A. N.A. Resigned September 012014
9. Mr. Sanjeev Barnwal KMP – CS A19180 Appointed September 01 2014 N.A. N.A.

 

(iii) The names of companies which have become or ceased to be its subsidiariesjoint ventures or associate companies during the year;

None

 

(iv) The details relating to deposits covered under Chapter V of the Act

Sr. No. Particulars Comments
(a) Accepted during the year None
(b) Remained unpaid or unclaimed as at the end of the year N.A.
(c) Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so number of such cases and the total amount involved N.A.
• At the beginning of the year;
• Maximum during the year;
• At the end of the year;

 

(v) The details of deposits which are not in compliance with the requirements ofChapter V of the Act; Not applicable; the Company has not accepted any deposits during theyear

 

(vi) The details of significant and material orders passed by the regulators orcourts or tribunals impacting the going concern status and company’s operations infuture;

None

 

(vii) The details in respect of adequacy of Internal Financial Controls (IFC) withreference to the Financial Statements In respect of internal financial control the Boardhas adopted the policies and procedures for ensuring the orderly and efficient conduct ofits business including adherence to the Company’s policies the safeguarding of itsassets the timely prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation.

Further the management regularly reviews the control for any possible changes andtakes appropriate actions.

(r) Other disclosures

(i) Details of equityshareswithdifferential rights

The Company has not issued anyequityshareswithdifferential rights during 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) for compensation to itsemployees being ESOP 2006 ESOP 2007 ESOP 2008 and ESOP 2010.

The guidance note issued by the Institute of Chartered Accountants of India requiresthe disclosure of pro forma net results and Earnings Per Share (EPS) both basic anddiluted had the company adopted the fair value method amortising the stock compensationexpense thereon over the vesting period the reported profit for the year ended March 312015 would have been lower by Rs. 14797191/-and the basic and diluted EPS would havebeen revised to Rs. 11.15 and Rs. 10.53 respectively.

Option activity under the plans is as given as below:

Number
Particulars For the year ended March 31 2015 For the year ended March 31 2014
Options granted beginning of year 4138088 4435025
Granted during the year - -
Exercised during the year - -
Forfeited/Expired during the year 189668 296937
Options granted as of March 31 2015 3948420 4138088
Option exercisable at the year end 2312633 1841097
Weighted average of remaining contractual life (years) at the year end 2.09 2

 

(iv) Appointment of Independent Directors

The Company in compliance with the provisions of Section 149 has re-appointed itsIndependent Directors Mr. K. R. Ramamoorthy Mr. Sunil Patel and Ms. VandanaViswanathan with the shareholders approval at the EGM held on September 22 2014 inaccordance with the Act.

Each of the Independent Directors has been appointed for a term of five years on theterms and conditions as mentioned in their appointment letters; the extracts of the termsand conditions of the appointment of the independent directors is available on the websiteof the Company.

 

(v) Vigil Mechanism

The Company in compliance with Section 177 of the Companies Act 2013 has established aWhistle Blower Policy / Vigil Mechanism for the directors and employees to report genuineconcerns or grievances about unethical behavior actual or suspected fraud or violation ofthe company’s Code of Conduct or Ethics Policy. The Company has a vigil mechanismprocess wherein the employees are free to report violations of laws rules regulations orunethical conduct to the whistle and ethics officer of the Company.

Name and Address of the Whistle and Ethics Officer

Mr. Sunil Kutty – Head HR

Ujjivan Financial Services Private Limited

Grape Garden No. 27 3rd A Cross 18th Main 6th Block Bangalore – 560095Karnataka

Email: sunil.kutty@ujjivan.com

Protected Disclosure against the Whistle and Ethics Officer should be addressed to theCEO and MD of the Company and the Protected Disclosure against the CEO and MD of theCompany should be addressed to the Chairman of the Audit Committee.

Name and Address of CEO and MD of the Company:

Mr. Samit Ghosh

Ujjivan Financial Services Private Limited

Grape Garden No. 27 3rd A Cross 18th Main 6th Block Bangalore - 560095 Karnataka

Email: samit.ghosh@ujjivan.com

Name and Address of Chairman (Audit Committee):

Mr. K. R. Ramamoorthy

D - 302 Mantri Gardens

Jayanagar 1st Block Bangalore - 560011 Karnataka

Email: ram@bankconsult.co.in

The confidentiality of those reporting violations is maintained and they are notsubjected to any discriminatory practice

The whistle blower policy of the Company is being attached as "Annexure 5"

(vi) Remuneration details of Directors KMPs employees

Sr. No. Particulars Remarks
1. The ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year 40.66
2. The percentage increase in remuneration of each director chief financial officer chief executive officer company secretary or KMP manager if any in the financial year % increase in remuneration
MD 50%
CFO 15%
CS 10%
3. The percentage increase in the median remuneration of employees in the financial year; 10%
4. The number of permanent employees on the rolls of company 7089
5. The explanation on the relationship between average increase in remuneration and company performance The Company made a growth of 38% in its Net Profit and increased the remuneration of its employees by an average of 10% based on the recommendation of the HR and Compensation Committee of the Board.
6. Comparison of the remuneration of the key managerial personnel against the performance of the company The Company’s revenue and Net Profit has grown by 72% and 38% respectively in FY 2014-15 in comparison to FY 2013-14.
The average increase in remuneration of KMP in the FY 2014-15 was 25%.
7. Variations in the market capitalization of the company price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer in case of listed companies and in case of unlisted companies the variations in the net worth of the company as at the close of the current financial year and previous financial year The Company’s equity shares are not listed.
The Company’s Net worth has increased from Rs. 372.53 crore as at 31st March 2014 to Rs. 736.45 crore as at 31st March 2015 – an increase by Rs. 363.92 crore.
8. 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 and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration The average increase in the salaries of employees was 10% and the average increase in the managerial remuneration was 25%.
9. Comparison of the each remuneration of the key managerial personnel against the performance of the company The Company’s revenue and Net Profit has grown by 72% and 38% respectively in FY 2014-15 in comparison to FY 2013- 14.
The average increase in remuneration of KMP in the FY 2014-15 was 25%.
10. The key parameters for any variable component of remuneration availed by the directors No variable component availed by our Directors
11. The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year No employee received remuneration in excess of the highest paid director
12. Affirmationthat the remuneration is as per the remuneration policy of the company Yes

A statement showing the name of every employee of the company who

(i) if employed throughout the financial year was in receipt of remuneration forthat year which in the aggregate was not less than sixty lakh rupees;

Mr. Samit Ghosh – Managing Director

Sr. No. Particulars Details
(i) Designation Managing Director
(ii) Remuneration received Rs. 72.55 lakhs
(iii) Nature of employment whether contractual or otherwise Permanent
(iv) Qualifications and experience of the employee MBA Bachelor of Arts Samit has been in international banking for over thirty years. At Citibank he co-pioneered consumer banking in India in 1985. He led the launch of retail banking for Standard Chartered in the Middle East and South Asia and for HDFC Bank in India. His last assignment was as Chief Executive (India) of Bank Muscat. He founded Ujjivan in 2005 as a pioneering microfinance firm for the urban poor. He serves as the President of Microfinance Institutions (MFIN) Chairman of Association of Karnataka Microfinance Institutions (AKMI) and Board Member of Women’s World Banking (WWB). He is an alumnus of Jadavpur University and Wharton School.
(v) Date of commencement of employment Since inception 28-12-2004
First Director of the Company
(vi) Age 65
(vii) The last employment held by such employee before joining the company Bank Muscat S.A.O.G. India. Chief Executive Officer
(viii) The percentage of equity shares held by the em- ployee in the company 1.01%

 

(ii) if employed for a part of the financial year was in receipt of remunerationaggregate was not less than five lakh rupees per month;

Mr. Ittira Davis

Sr. No. Particulars Details
(i) Designation Head of Transition
(ii) Remuneration received 2.30 lakhs
(iii) Nature of employment whether contractual or otherwise Permanent
(iv) Qualifications and experience of the employee MBA (IIM Ahmedabad) (1976)
Ittira is an international banker having worked extensively in the Middle East and Europe. He has over 36 years corporate and investment banking experience having arranged syndicated and structured facilities for several corporate institutional and sovereign borrowers. Developed the ‘Bridge to MENA’ strategy for Arab Bank Group.
He has worked with Citibank in India and the Arab Bank Group in the Middle East and Europe.
(v) Date of commencement of employment 17-March-2015
(vi) Age 60 Years
(vii) The last employment held by such employee before joining the company Europe Arab Bank Plc
(viii) The percentage of equity shares held by the employee in the company Nil

 

(iii) if employed throughout the financial year or part thereof was in receipt ofremuneration in that year which in the aggregate or as the case may be at a rate whichin the aggregate is in excess of that drawn by the managing director or whole-timedirector or manager and holds by himself or along with his spouse and dependent childrennot less than two percent of the equity shares of the company.

None

Compliance of Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013

The Company is in compliance with the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal)

Act 2013 and has a prevention of sexual harassment policy in place. The Directorsfurther state that during the year under review there was no case filed pursuant to theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.

Acknowledgment

Your Directors wishes to gratefully acknowledge the assistance and guidance receivedfrom the RBI ROC Investors Banks Auditors Lawyers Accountants Suppliers PartnerNGOs Institutions and Foundations Police & Government Authorities Advisors and allour well wishers. The Board also wishes to place on record their warm appreciation for thecreative and dedicated efforts of staff at all levels.

For and on behalf of the Board of Directors

Samit Ghosh Sunil Patel
Managing Director Independent Director
Date: June 04 2015
Place: Bangalore

"Annexure 1"

Extract Of Annual Return in Form MGT-9 as on the Financial Year ended on March 31 2015

[Pursuant to Section 92(3) of the Companies Act 2013 and Rule 12(1) of the Companies(Management and Administration) Rules 2014] I. Registration and other details:

i) CIN : U65999KA2004PTC035329
ii) Registration Date : December 28 2004
iii) Name of the Company : Ujjivan Financial Services Private Limited
iv) Category / Sub-Category of the Company : NBFC-MFI
v) Address of the Registered Office and Contact : Grape Garden No. 27 3rd A Cross 18th Main
Details 6th Block Koramangala Bangalore – 560095
Karnataka
vi) Whether Listed Company : Yes
Equity Shares are not listed; however NCDs of the Company are listed with Bombay Stock Exchange
vii) Name address and Contact Details Of Regis- trar And Transfer Agent if any: : Karvy Computershare Private Limited
Karvy Selenium Tower B Plot No 31 & 32
Gachibowli Financial District
Nanakramguda Serilingampally
Hyderabad – 500 008
P : +91 040 67161604
e-mail: ramachandra.v@karvy.com
Website: www.karvy.com

II. Principal Business Activities of the Company

Non Banking Finance Company engaged in the Micro Finance Lending Business

All The Business Activities Contributing 10 % Or More Of The Total Turnover Of TheCompany Shall Be Stated:-

Sl. No. Name and Description of main products / services NIC Code of the Product/ service % to total turnover of the company
1 Micro Finance Lending 64990 100%

III. Particulars of Holding Subsidiary and Associate Companies -

The Company does not have any holding subsidiary or any associate company

IV. Shareholding pattern (Equity Share Capital breakup as Percentage of TotalEquity)

I) Category-Wise Share Holding

Category of Shareholders No. of shares held at the beginning of the year No. of shares held at the end of the year
Demat Physical Total % of total shares Demat Physical Total % of total shares % change during the year
(A) Promoters
1. Indian
a) Individual / HUF Nil 868340 868340 1.32% Nil 868340 868340 1.01% (0.31%)*
b) Central Govt. Nil Nil Nil Nil Nil Nil Nil Nil N.A.
c) State Govt. Nil Nil Nil Nil Nil Nil Nil Nil N.A.
d) Bodies Corp. Nil Nil Nil Nil Nil Nil Nil Nil N.A.
e) Banks / FI Nil Nil Nil Nil Nil Nil Nil Nil N.A.
f) Any other Nil Nil Nil Nil Nil Nil Nil Nil N.A.
Sub Total (A) (1):- Nil 868340 868340 1.32% Nil 868340 868340 1.01% (0.31%)*
(2) Foreign
a) NRIs Individuals Nil Nil Nil Nil Nil Nil Nil Nil N.A.
b) Other Individuals Nil Nil Nil Nil Nil Nil Nil Nil N.A.
c) Bodies Corp. Nil Nil Nil Nil Nil Nil Nil Nil N.A.
d) Banks / FI Nil Nil Nil Nil Nil Nil Nil Nil N.A.
e) Any Other Nil Nil Nil Nil Nil Nil Nil Nil N.A.
Sub Total (A) (2):- Nil Nil Nil Nil Nil Nil Nil Nil N.A.
Total Shareholding Of Promoter (A) = (A)(1) +(A)(2) Nil 868340 868340 1.32% Nil 868340 868340 1.01% (0.31%)*
B. Public Shareholding
1. Institutions
a) Mutual Funds Nil Nil Nil Nil Nil Nil Nil Nil N.A.
b) Banks / FI Nil Nil Nil Nil Nil Nil Nil Nil N.A.
c) Central Govt. Nil Nil Nil Nil Nil Nil Nil Nil N.A.
d) State Govt.(s) Nil Nil Nil Nil Nil Nil Nil Nil N.A.
e) Venture Capital Funds Nil Nil Nil Nil Nil Nil Nil Nil N.A.
f) Insurance Companies Nil Nil Nil Nil Nil Nil Nil Nil N.A.
g) FIIs 14302832 45420961 59723793 91.07% 49000487 27387965 76388452 88.69% (2.38%)
h) Foreign Venture Capi- tal Funds Nil Nil Nil Nil Nil Nil Nil Nil N.A.
i) Others (Specify) Nil Nil Nil Nil Nil Nil Nil Nil N.A.
Sub Total (B) (1) 14302832 45420961 59723793 91.07% 49000487 27387965 76388452 88.69% (2.38%)
2. Non Institutions
a) Bodies Corp.
i) Indian 1333340 350000 1683340 2.57% 5220287 525000 5745287 6.67% 4.10%
ii) Overseas Nil Nil Nil Nil Nil Nil Nil Nil N.A.
b) Individuals
i) Individual sharehold- ers holding nominal share capital upto Rs. 1 Lakh Nil 6250 6250 0.01% Nil 6250 6250 0.01% Nil
i) Individual sharehold- ers holding nominal share capital in excess of Rs. 1 Lakh 50000 3249640 3299640 5.03% 50000 3074640 3124640 3.63% (1.40%)
Sub Total (B) (2) 1383340 3605890 4989230 7.61% 5270287 3605890 8876177 10.31% 2.70%
Total Public Share- holding (B) = (B)(1)+ B)(2) 15686172 49026851 64713023 98.68% 54270774 30993855 85264629 98.99% 0.31%
C. Shares held by Custodian for GDRs & ADRs Nil Nil Nil Nil Nil Nil Nil Nil N.A.
Grand Total • (A)+(B)+(C) 15686172 49895191 65581363 100.00% 54270774 31862195 86132969 100.00%

* No change in Promoters shares held; however % shareholding changed because ofinfusion of fresh equity during the year

(ii)Shareholding of Promoters

Sr. No. Shareholder’s Name Shareholding at the beginning of the year Shareholding at the end of the year
No. of Shares % of total shares of the Company % of shares pledged / encumbered to total shares No. of Shares % of total shares of the Company % of shares pledged / encumbered to total shares % change in shareholding during the year
1. Mr. Samit Ghosh 868340 1.32% Nil 868340 1.01% Nil - 0.31%*

* No change in shares held; however % shareholding changed because of infusion of freshequity during the year

(iii) Change in Promoters’ Shareholding

Sr. No. Shareholding at the beginning of the year Cumulative Shareholding during the year
No. of Shares % of total shares of the Company No. of Shares % of total shares of the Company
1. At the beginning of the year 868340 1.32% 868340 1.01%*
No increase / decrease in shareholding during the year
At the end of the year 868340 1.32% 868340 1.01%*

* No change in shares held; however % shareholding changed because of infusion of freshequity during the year

(iv) Shareholding pattern of top ten Shareholders (other than Directors Promoters andHolders of GDRs and ADRs)

Sr. No. Name of the Shareholder

Shareholding at the beginning of the year

Cumulative Shareholding during the year

No. of Shares % of total shares of the Company No. of Shares % of total shares of the Company
(1) CDC Group Plc
At the beginning of the year Nil Nil Nil Nil
18-Mar-15 Preferential Allotment made on 18-Mar-2015 10932696 12.69%
At the end of the year 10932696 12.69%

 

(2) International Finance Corporation
At the beginning of the year 7894737 12.04% 7894737 12.04%
18-Feb-15 Preferential Allotment of 2307669 equity shares on 18-Feb-2015 10202406 13.57%
At the end of the year 10202406 11.84%
(3) Alena Private Limited
At the beginning of the year Nil Nil Nil Nil
04-Mar-15 Transfer of 9207251 Shares from various existing shareholders to Alena Private Limited 9207251 12.24%
At the end of the year 9207251 10.69%
(4) NewQuest Asia Investments II Limited
At the beginning of the year Nil Nil Nil Nil
11-Mar-15 Transfer of 819952 Shares from various existing shareholders to NewQuest Asia Invest- ments II Limited 819952 10.90%
At the end of the year 8199522 9.52%
(5) Elevar Equity Mauritius
At the beginning of the year 5535732 8.44% 5535732 8.44%
16-Feb-15 Preferential Allotment of 819952 equity shares on 16-Feb-2015 6355684 8.72%
At the end of the year 6355684 7.38%
(6) Lok Capital II LLC
At the beginning of the year 5870426 8.95% 5870426 8.95%
No increase / decrease in shareholding during the year At the end of the year 5870426 6.82%
(7) Women’s World Banking Capital Partners L.P.(Formerly known as WWB Isis Fund L.P.)
At the beginning of the year 4290610 6.54% 4290610 6.54%
19-Sep-14 Transfer of 1116010
Shares from Lok Capital 5406620 8.24%
LLC to WWB
16-Oct-14 Transfer of 8 Shares from Lok Capital LLC to WWB 5406628 8.24%
At the end of the year 5406628 6.28%
(8) Bajaj Holdings & Investment Limited
At the beginning of the year Nil Nil Nil Nil
30-Jan-15 Preferential Allotment of 5124702 equity shares on 30-Jan-2015 5124702 7.25%
At the end of the year 5124702 5.95%
(9) Sequoia Capital India Investments III
At the beginning of the year 9529376 14.53% 9529376 14.53%
04-Mar-15 Transfer of 2740112 Shares from Sequoia to Alena Private Limited 6789264 9.03%
11-Mar-15 Transfer of 2587988 Shares from Sequoia to NewQuest Asia Investments II Limited 4201276 5.59%
At the end of the year 4201276 4.88%
(10) India Financial Inclusion Fund (IFIF)
At the beginning of the year 5896182 8.99% 5896182 8.99%
04-Mar-15 Transfer of 1356596 Shares from IFIF to Alena Private Limited 4539586 6.04%
11-Mar-15 Transfer of 1030814 Shares from IFIF to NewQuest Asia Investments II Limited 3508772 4.67%
At the end of the year 3508772 4.07%

(V) Indebtedness

Indebtedness of the Company including interest outstanding / accrued but not due forpayment

Secured Loans excluding deposits Unsecured Loans Deposits Total Indebtedness
Indebtedness at the beginning of the financial year (01-04-2014)
i) Principal Amount 1646.50 3.50 - 1650.00
ii) Interest due but not paid - - - -
iii)Interest accrued but not due 9.89 0.00 - 9.89
Total (I + ii + iii) 1656.39 3.50 - 1659.89
Changes in Indebtedness during the financial year
Addition 2750.95 52.24 - 2803.19
Reduction 1331.39 - - 1331.39
Net Change 1419.57 52.24 - 1471.81
Indebtedness at the end of the financial year (31-03-2015)
i) Principal Amount 3066.07 55.74 - 3121.81
ii) Interest due but not paid - - - -
iii)Interest accrued but not due 21.18 0.47 21.65
Total (I + ii + iii) 3087.25 56.21 - 3143.46

(vi) Remuneration of Directors and Key Managerial Personnel

A. Remuneration to Managing Director Whole Time Directors and / or Manager:

Sl. No. Particulars of Remuneration Name of MD / WTD / Manager Total Amount
1. Gross Salary Mr. Samit Ghosh 7255064
(a) Salary as per provisions contained in section 17(1) of the Income-Tax Act 1961
(b) Value of perquisites u/s 17(2) of the Income- Tax Act 1961 Nil
(c) Profits in lieu of salary u/s 17(3) of the Income-Tax Act 1961 Nil
2. Stock Option Nil
3. Sweat Equity Nil
4. Commission
- As % of profit Nil
- Other specify
Total (A) 7255064
Ceiling as per the Act No ceiling

 

B. Remuneration to Other Directors:

(in Rs.)
Sl. No. Particulars of Remuneration Name of Directors Total Amount
1) Independent Directors Mr. K.R. Ramamoorthy Mr. Sunil Patel Ms. Vandana Viswanathan
• Fees for attending board and board committee meetings 371630 307922 350394 1029946
• Commission Nil Nil Nil Nil
• Other please specify Nil Nil Nil Nil
Total (1) 371630 307922 350394 1029946
2) Other Non Executive Directors Ms. Bhama Krishnamurthy
• Fees for attending board and board committee meetings 47781 47781
• Commission Nil Nil
• Other please specify Nil Nil
Total (B) = (1+2) 1077727
Total Managerial Remuneration 8332791
Overall ceiling as per the Act Sitting fees payable to a director for attending Board / Committee Meeting shall not exceed Rs. 100000/- per meeting and the Company is well in compliance of the same.

 

C. Remuneration to Key Managerial Personnel other than MD/Manager/WTD:

Sl. No. Particulars of Remuneration Key Managerial Personnel Total Amount
1. Gross Salary Mr. Samit Ghosh - CEO Ms. Sudha Suresh -CFO Mr. Sanjeev Barnwal - CS (w.e.f. 01.09.2014) Ms. Suhasini Ashok CS (till 31.08.2014)
(a) Salary as per provisions contained in section 17(1) of the Income-Tax Act 1961 7255064 4355182 1178236 542816 13331298
(b) Value of perquisites u/s 17(2) of the Income-Tax Act 1961 Nil Nil Nil Nil Nil
(c) Profits in lieu of salary u/s 17(3) of the Income- Tax Act 1961 Nil Nil Nil Nil Nil
2. Stock Option Nil Nil Nil Nil Nil
3. Sweat Equity Nil Nil Nil Nil Nil
Commission
4. - As % of profit Nil Nil Nil Nil Nil
- Other specify
Total (A) 7255064 4355182 1178236 542816 13331298
Ceiling as per the Act No Ceiling

VII. Penalties / Punishment / Compounding of Offences:

Type Section of the Companies Act Brief Description Details of Penalty / Punishment / Compounding fees imposed Authority [RD / NCLT / Court] Appeal made if any (give details)
A. Company
Penalty Nil N.A. N.A. N.A. N.A.
Punishment Nil N.A. N.A. N.A. N.A.
Compounding Nil N.A. N.A. N.A. N.A.
B. Directors
Penalty Nil N.A. N.A. N.A. N.A.
Punishment Nil N.A. N.A. N.A. N.A.
Compounding Nil N.A. N.A. N.A. N.A.
C. Other Officers in Default
Penalty Nil N.A. N.A. N.A. N.A.
Punishment Nil N.A. N.A. N.A. N.A.
Compounding Nil N.A. N.A. N.A. N.A.

"Annexure 2"

Ujjivan Nomination and Remuneration Policy

(Updated as on March 25 2015)

The Governance Nomination & Remuneration Committee of Ujjivan Financial ServicesPrivate Limited ("the Company") was constituted on December 18 2009 and as onMarch 25 2015 the Committee consists of four Non-Executive (three Independent)

Directors. In order to align with the provisions of the Companies Act 2013 the Boardon May 16 2014 clubbed the "Governance Committee" and "Nomination andRemuneration Committee together and re-named it as "Governance Nomination andRemuneration Committee" which for all the purposes of the Companies Act 2013 wouldbe treated as Nomination and Remuneration Committee.

1. Objective

The Governance Nomination and Remuneration Committee (‘hereinafter referred to as‘Nomination Committee’ or ‘the Committee’) and this Policy are toensure compliance with Section 178 of the Companies Act 2013 read along with theapplicable rules.

Section 178(1) prescribes that the Board of Directors of every listed company and suchother class or classes of companies as may be prescribed shall constitute the Nominationand Remuneration Committee consisting of three or more non-executive directors out ofwhich not less than one-half shall be independent directors:

However the Chairperson of the Company (whether executive or non-executive) may beappointed as a member of the

Nomination and Remuneration Committee but shall not chair such Committee.

The Key Objectives of the Committee would be:

a) To develop and recommend to the Board a set of corporate governance principlestakes a leadership role in shaping the corporate governance of the company.

 

b) To identify assess and recommend to the Board nominees for appointment asindependent Directors and as Lead Director/Non-Executive Chairman.

 

c) To make recommendations to the Board as to the size composition structure ofthe Board and also evaluation criteria of the independent directors includingNon-Executive Chairman conduct annual review of the performance of the Chief ExecutiveOfficer and also oversee the Company’s Chief Executive Officer’s successionplanning process.

 

d) To guide the Board in relation to appointment and removal of Directors KeyManagerial Personnel and Senior Management.

 

e) To recommend to the Board on Remuneration payable to the Directors KeyManagerial Personnel and Senior Management.

2. Effective Date

This policy has been formulated by the Governance Nomination and RemunerationCommittee and adopted by the Board of Directors at its meeting held on 25th November2014.This policy shall be operational with immediate effect.

3. Definitions

(a) "Committee"- Committee means Governance Nomination and RemunerationCommittee of the Company as constituted or reconstituted by the Board from time to time.

(b) "Independent Director" - An Independent Director in relation to acompany means a director other than a managing director or a whole-time director or anominee director :

 

1) Who in the opinion of the board is a person of integrity and possessesrelevant expertise and experience;

 

2) (I) who is or was not a promoter of the company or its holding subsidiary orassociate company;

(Ii) Who is not related to promoters or directors in the company its holdingsubsidiary or associate company;

 

3) Who has or had no pecuniary relationship with the company its holdingsubsidiary or associate company or their promoters or directors during the twoimmediately preceding financial the current financial year;

 

4) None of whose relatives has or had pecuniary relationship or transaction withthe company its holding subsidiary or associate company or their promoters ordirectors amounting to two per cent. Or more of its gross turnover or total income orfifty lakh rupees or such higher amount as may be prescribed whichever is lower duringthe two immediately preceding financial years or during the current financial year;

 

5) Who neither himself nor any of his relatives:

 

(1) Holds or has held the position of a key managerial personnel or is or has beenemployee of the company or its holding subsidiary or associate company in any of thethree financial years immediately preceding the financial year in which he is proposed tobe appointed;

 

(2) Is or has been an employee or proprietor or a partner in any of the threefinancial years immediately preceding the financial year in which he is proposed to beappointed of:

 

(i) A firm of auditors or company secretaries in practice or cost auditors of thecompany or its holding subsidiary or associate company; or

 

(ii) Any legal or a consulting firm that has or had any transaction with thecompany its holding subsidiary or associate company amounting to ten per cent. Or moreof the gross turnover of such firm;

 

(iii) Holds together with his relatives two per cent. Or more of the total votingpower of the company; or

 

(iv) Is a chief executive or director by whatever name called of any nonprofitorganisation that receives twenty- five per cent. Or more of its receipts from thecompany any of its promoters directors or its holding subsidiary or associate companyor that holds two per cent. Or more of the total voting power of the company; or

 

6) Who possesses such other qualifications as may be prescribed.

(c) "Key Managerial Personnel" - Key Managerial Personnel means

 

(i) Chief Executive Officer or the Managing Director or the Manager;

 

(ii) Company Secretary

 

(iii) Whole-time Director;

 

(iv) Chief Financial Officer; and

 

(v) Such other Officer as may be prescribed.

(d) "Senior Management" - Senior Management means personnel of thecompany who are members of its core management team excluding the Board of Directors. Thiswould also include all members of management one level below the executive directorsincluding all functional heads.

 

Unless the context otherwise requires words and expressions usedinthispolicyand notdefined herein but defined in years or during the Companies Act 2013 as may beamended from time to time shall have the meaning respectively assigned to them therein.

4. Applicability

The Policy is applicable to

 

All Directors (Executive Non Executive and

Independent)

 

Key Managerial Personnel

 

Senior Management Personnel

5. Constitution Of The Committee

1.1 The Committee shall consist of a minimum 3 non-executive directors majority ofthem being independent.

 

1.2 Minimum two (2) members shall constitute a quorum for the Committee meeting.

 

1.3 Chairman of the Committee shall be an Independent Director.

 

1.4 Chairperson of the Company may be appointed as a member of the Committee butshall not be a Chairman of the Committee.

 

1.5 In the absence of the Chairman the members of the Committee present at themeeting shall choose one amongst them to act as Chairman. 1.6 Chairman of theCommittee or in his absence any other member of the Committee authorised by him shallattend the General Meetings of the Company.

 

1.7 Membership of the Committee shall be disclosed in the Annual Report.

 

1.8 Term of the Committee shall be continued unless terminated by the Board ofDirectors.

 

1.9 The Board has the power to constitute/ reconstitute the Committee from time totime in order to make it consistent with the Company’s policy and applicablestatutory requirement.

6. Role of committee

The role of the Committee inter alia will be the following: 1.1 To makerecommendations to the Board as to the size composition structure of the Board and alsoevaluation criteria of the independent directors including non-Executive Chairmanconduct annual review of the performance of the Chief Executive Officer and also overseethe Company’s Chief Executive Officer’s succession planning process. 1.2 Toformulate a criteria for determining qualifications positive attributes and independenceof a Director. 1.3 To recommend to the Board the appointment and removal of SeniorManagement 1.4 To carry out evaluation of Director’s performance and recommendto the Board appointment/ removal based on his/ her performance.

 

1.5 To recommend to the Board on (i) policy relating to remuneration for DirectorsKey Managerial Personnel and Senior Management and (ii)Executive Directors remunerationand incentive. 1.6 To make recommendations to the Board concerning any mattersrelating to the continuation in office of any Director at any time including thesuspension or termination of service of an Executive Director as an employee of theCompany subject to the provision of the law and their service contract;

 

1.7 Ensure that level and composition of remuneration is reasonable and sufficientrelationship of remuneration to performance is clear and meets appropriate performancebenchmarks

 

1.8 To devise a policy on Board diversity;

7. Frequency of meetings

The meeting of the Committee shall be held at such regular intervals as may berequired

8. General appointment criteria

1.1 The Committee shall consider the ethical standards of integrity and probityqualification expertise and experience of the person for appointment as Director KMP orat Senior Management level and accordingly recommend to the Board his / her appointment. 1.2The Company should ensure that the person so appointed as Director/ IndependentDirector/ KMP/

Senior Management Personnel shall not be disqualified under the Companies Act 2013rules made thereunder or any other enactment for the time being in force.

 

1.3 The Director/ Independent Director/ KMP/ Senior Management Personnel shall beappointed as per the procedure laid down under the provisions of the Companies Act 2013rules made thereunder or any other enactment for the time being in force.

9. Additional Criteria for Appointment of Independent Directors

The Committee qualifications for shall consider

Independent Directors as mentioned in herein earlier under the head‘Definitions’ and also their appointment shall be governed as per the provisionsof the Companies Act 2013 and the respective Schedule IV and the rules made thereunder.

Term/ Tenure:

The Term/ Tenure of the Directors shall be governed as per provisions of the CompaniesAct 2013 and rules made thereunder as amended from time to time.

Removal:

Due to reasons for any disqualification mentioned in the Companies Act 2013 rulesmade thereunder or under any other applicable Act rules and regulations or any otherreasonable ground the Committee may recommend to the Board for removal of a Director KMPor Senior Management Personnel subject to the provisions and compliance of the said Actrules and regulations.

10. Criteria for evaluation of independent director and the board

Following are the Criteria for evaluation of performance of Independent Directors andthe Board:

 

A. Executive Directors

The Executive Directors shall be evaluated on the basis of targets/ Criteria given toexecutive Directors by the board from time to time

 

B. Non-executive Director:

The Non Executive Directors shall be evaluated on the basis of the following criteriai.e. whether they:

 

(a) Act objectively and constructively while exercising their duties; (b) Exercisetheir responsibilities in a bona fide manner in the interest of the company; (c) Devotesufficient time and attention to their professional obligations for informed and balanceddecision making;

 

(d) Do not abuse their position to the detriment of the company or its shareholdersor for the purpose of gaining direct or indirect personal advantage or advantage for anyassociated person;

 

(e) Refrain from any action that would lead to loss of his independence (f)Inform the board immediately when they lose their independence (g) Assist thecompany in implementing the best corporate governance practices.

 

(h) Strive to attend all meetings of the board of directors and the committees;

 

(i) Participate constructively and actively in the committees of the board in whichthey are chairpersons or members;

 

(j) Strive to attend the general meetings of the company;

 

(k) Keep themselves well informed about the company and the external environment inwhich it operates;

 

(l) Do not unfairly obstruct the functioning of an otherwise proper board orcommittee of the board;

 

(m) Moderate and arbitrate in the interest of the company as a whole in situationsof conflict between management and shareholder’s interest. (n) Abide bycompany’s memorandum and articles of association company’s policies andprocedures including code of conduct insider trading guidelines etc.

11. Remuneration

The Committee will recommend to the Board for approval the remuneration to be paid tothe Managing Director Independent Directors Nominee Directors KMP’s and SeniorManagement Personnel. The level and composition of remuneration so determined by theCommittee shall be reasonable and sufficientto attract retain and motivate directors

Key Managerial Personnel and Senior Management of the quality required to run thecompany successfully.

The relationship of remuneration to performance should be clear and meet appropriateperformance benchmarks. The remuneration should also involve pay reflectingabalancebetween short and long-term performance objectives appropriate to the working ofthe company and its goals:

 

A. Director/Managing Director

Besides the above Criteria the remuneration/ compensation/commission etc to be paid toDirector/Managing Director etc. shall be governed as per provisions of the Companies Act2013 and rules made thereunder or any other enactment for the time being in force andbased on the recommendation and evaluation of the Nomination and Remuneration Committee.

 

B. Independent Directors

The Independent Directors will be entitled to receive any sitting fees or otherreimbursements in accordance with the provisions of the Articles of Association of theCompany as amended from time to time and any revision will be based on the recommendationof the Nomination and Remuneration Committee and as agreed by the Board.

 

C. Non-Executive Nominee Directors

The Nominee Directors will be entitled to receive any sitting fees or otherreimbursements in accordance with the provisions of the Articles of Association of theCompany as amended from time to time and any revision will be based on the recommendationof the Nomination and Remuneration Committee and as agreed by the Board.

 

D. KMPs / Senior Management Personnel etc.

The remuneration to be paid to KMPs/ Senior Management Personnel shall be based on theexperience qualification and expertise of the related personnel and governed by thelimits if any prescribed under the Companies Act 2013 and rules made thereunder or anyother enactment for the time being in force. The remuneration will also be guided andbased on market and industry trends to ensure that Ujjivan is able to attract and retainthe KMPs and Senior Management Personnel required for the success of the Company.

The Nomination and Remuneration Committee in close coordination with the HR Committeeof the Company will evaluate the performance of the KMPs and Senior Management andrecommend any revisions and incentivize their short-term and long-term performanceobjectives. The above evaluation and revisions will be based on the industry and marketdynamics.

 

E. Directors’ and Officers’ Insurance

Where any insurance is taken by the Company on behalf of its Directors KMPs SeniorManagement Personnel etc. for indemnifying them against any liability the premium paidon such insurance shall not be treated as part of the remuneration payable to any suchpersonnel.

 

F. Remuneration Review and Approval

• The HR Committee shall present a detailed remuneration revision proposal to theNomination and Remuneration Committee/ Board at least once a year that:

• Shares data and trends of remuneration of Directors KMPs and Senior Management

• Includes the recommended levels of remuneration to ensure that Ujjivan is ableto attract retain and motivate directors KMPs and Senior Management to run the Companysuccessfully

• Takes into account the financial performance and remuneration philosophy of theorganisation

• Outlines with clarity the relationship between remuneration and performance andmechanism to incentivize short-term and long-term performance objectives specifically forKMPs and Senior Management

12. Committee Members’ Interests

• A member of the Committee is not entitled to be present when his or her ownremuneration is discussed at a meeting or when his or her performance is being evaluated.

• The Committee may invite such executives as it considers appropriate to bepresent at the meetings of the Committee.

13. Secretary

• The Company Secretary of the Company shall act as Secretary of the Committee.

14. Voting

• Matters arising for determination at Committee meetings shall be decided by amajority of votes of Members present and voting and any such decision shall for allpurposes be deemed a decision of the Committee.

• In the case of equality of votes the Chairman of the meeting will have acasting vote.

15. Nomination Duties

The duties of the Committee in relation to nomination matters include:

• Ensuring that there is an appropriate induction & training programme inplace for new Directors and members of Senior Management and reviewing its effectiveness;

• Ensuring that on appointment to the Board Independent Directors receive aformal letter of appointment in accordance with the Guidelines provided under theCompanies Act 2013;

• Identifying and recommending directors who are to be put forward for retirementby rotation.

• Determining the appropriate size diversity and composition of the Board;

• Setting a formal and transparent procedure for selecting new directors forappointment to the Board;

• Developing a succession plan for the Board and senior management and regularlyreviewing the plan;

• Evaluating the performance of the Board members and senior management in thecontext of the Company’s performance from business and compliance perspective;

• Making recommendations to the Board concerning any matters relating to thecontinuation in office of any Director at any time including the suspension or terminationof service of an Executive Director as an employee of the Company subject to the provisionof the law and their service contract.

• Delegating any of its powers to one or more of its members or the Secretary ofthe Committee;

• Recommend any necessary changes to the Board.

• Considering any other matters as may be requested by the Board

16. Minutes Of Committee Meeting

Minutes of the Committee meetings will be tabled at the subsequent Committee and Boardmeeting and must be signed by the Chairman of the Committee at the subsequent meeting.

"Annexure 3"

Secretarial Audit Report

For The Financial Year Ended 31St March 2015

[Pursuant to section 204(1) of the Companies Act 2013 and rule No.9 of the Companies(Appointment and Remuneration Personnel) Rules 2014]

To

The Members

Ujjivan Financial Services Private Limited

CIN: U65999KA2004PTC035329

Grape Garden No.27 3rd ‘A’ Cross 18th Main 6th Block Koramangala Bangalore- 560095

IhaveconductedtheSecretarialAuditofthecomplianceof applicable statutoryprovisions and the adherence to good corporate practices by UJJIVAN FINANCIAL SERVICESPRIVATE LIMITED (CIN: U65999KA2004PTC035329)

(hereinafter called "the Company"). Secretarial Audit was conducted in amanner that provided me a reasonable basis for evaluating the corporate conducts/statutorycompliances and expressing my opinion thereon.

Based on my verification of the Company’s books papers minute books forms andreturns filed and other records maintained by the company and also the informationprovided by the Company its officers agents and authorized representatives during theconduct of secretarial audit I hereby report that in my opinion the Company has duringthe audit period covering the financial year ended on 31st March 2015 complied with thestatutory provisions listed hereunder and also that the Company has proper Board-processesand compliance-mechanism in place to the extent in the manner and subject to thereporting audit andmade hereinafter:

I have examined the books papers minute books forms and returns filed and otherrecords maintained by the Company for the financial year ended on 31st March 2015according to the provisions of: (i) The Companies Act 2013 and/or The CompaniesAct 1956 (the Act) and the rules made there under; (ii) The Securities Contracts(Regulation) Act 1956 (‘SCRA’) and the rules made there under;

 

(iii) The Depositories Act 1996 and the Regulations and Bye-laws framed thereunder;

 

(iv) Foreign Exchange Management Act 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment and External Commercial Borrowings;

 

(v) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 (‘SEBI Act’):-

 

(a) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009;

 

(b) The Securities and Exchange Board of India (Issue and Listing of DebtSecurities) Regulations 2008.

 

(vi) Following laws Norms and Directions as applicable specifically to Non-BankingFinancial Company Micro Finance Institution (NBFC-MFI):

 

(a) Reserve Bank of India Act 1934;

 

(b) Non-Banking Financial Company – Micro Finance

Institutions (Reserve Bank) Directions 2011;

 

(c) Non-Banking Financial Company-Micro Finance

Institutions’ (NBFC-MFIs) - Directions 2011;

 

(d) Non-Banking Financial (Non-Deposit Accepting or Holding) Companies PrudentialNorms (Reserve Bank) Directions 2007 and Modifications thereof.

I have also examined compliance with the applicable clauses of the Listing Agreementfor debt securities entered into by the Company with Bombay Stock Exchange Mumbai.

Secretarial Standards issued by The Institute of Company Secretaries of India were notapplicable during the financial year as per ICSI Notification No. 1 (SS) of 2015.

During the period under review the Company has complied with the provisions of the ActRules Regulations Guidelines mentioned above.

I further report that based on the information provided by the Company itsofficers and authorized representatives during the conduct of the audit and also on thereview of the details records documents and papers provided in my opinion adequatesystems and processes and control mechanism exist in the Company to monitor and to ensurecompliance with applicable general laws like labour laws competition law andenvironmental law.

I further report that the compliance of applicable financial laws like direct andindirect tax laws have not been reviewed in this Audit since the same have been othersubject to review by statutory financial designated professionals.

I further report that The Board of Directors of the Company is duly constitutedwith proper balance of Executive Directors Non-Executive Directors and IndependentDirectors. The changes in the composition of the Board of Directors that took place duringthe period under review were carried out in compliance with the provisions of the Act.

Adequate notice is given to all directors to schedule the Board Meetings agenda anddetailed notes on agenda were sent at least seven days in advance except for the boardmeeting held on 30th April 2014 for which consent for shorter notice was obtained and asystem exists for seeking and obtaining further information and clarifications on theagenda items before the meeting and for meaningful participation at the meeting.

As per the minutes of the meetings duly recorded and signed by the Chairman thedecisions were carried unanimously and there were no dissenting views.

I further report that there are adequate systems and processes in the Companycommensurate with the size and operations of the Company to monitor and ensure compliancewith applicable laws rules regulations and guidelines.

I further report that during the audit period:

 

1. The Board of Directors duly met 6(Six) times respectively on 30th April 201416th May 2014 06th August 2014 25th November 2014 27th January 2015 and 25th March2015.

 

2. The Annual General Meeting for the financial year ended on 31st March 2014 washeld on 25th July 2014.

 

3. Five Extraordinary General Meetings were held on 07th May 2014 22nd September2014 23rd December 2014 25th February 2015 and 31st March 2015 during the financialyear.

 

4. The Company has obtained necessary approvals from the members as per theprovisions of Section 180 of Companies Act 2013 in the Extraordinary General Meeting heldon 7th May 2014 to borrow up to Rs. 3000 Crore and again approval from the members wasobtained to increase the borrowing limit from Rs. 3000 Crore to Rs. 4500 Crore in theExtraordinary General Meeting held on 23rd December 2014.

 

5. The Company has altered the Memorandum of Association of the Company in theExtraordinary General Meeting held on 22nd September 2014 for increase in authorizedshare capital.

 

6. The Company has altered the provisions of its Articles of Association of theCompany thrice in the Extraordinary General Meetings of the Company held on 25th July2014 25th February 2015 and on 31st March 2015.

 

7. The Company has issued and allotted 20551606

Equity shares of Rs.10/- each at a premium of Rs.136.35 during the financial year onpreferential basis as per Section 62(1)(c) of Companies Act 2013 and the Company obtainedapproval of the Members in the Extraordinary General Meeting held on 23rd December 2014for issue and allotment of above said Equity Shares.

Details of allotments are as follows:

Sl No. Date of allotment No. of equity shares Name of allottees
01 30.01.2015 5124702 Bajaj Holdings & Investment Limited
02 05.02.2015 1366587 CX Partner Fund 1 Limited
03 16.02.2015 819952 Elevar Equity Mauritius
04 18.02.2015 2307669 International Finance Corporation
05 18.03.2015 10932696 CDC Group PLC

 

8. The Company has issued and allotted 2250 listed rated redeemable Securednon-convertible debentures of face value of Rs.1000000/- each during the financial yearon Private placement basis as per Section 42 Companies Act 2013 and the Company hasobtained approval of the Members for issue of above said NCDs on 7th May 2014.

Details of issue are as follows:

Sl No. Date of issue & allotment No. of NCDs Interest rate Name of allottees
01 01.07.2014 600 12.60% International Finance Corporation
02 12.12.2014 250 13.65% UTI Income Opportunities Fund
250 13.65% UTI Unit Linked Insurance Plan
03 26.12.2014 400 13.25% Oiko Credit Ecumenical Development Cooperative Society
04 20.03.2015 750 13.00% Reliance Capital Trustee Co. Limited (A/c. Reliance Regular Savings Fund-Dept Option)

 

9. The Company has redeemed 230 secured redeemable non-convertible debenturescarrying an interest rate of

12.86% and having face value of Rs. 1000000/- each (Rupees Ten Lakhs only) aggregateamount of Rs. 230000000 (Rupees Twenty Three Crore Only) on 26th July 2014 and 170secured redeemable non-convertible debentures carrying an interest rate of 12.75% andhaving face value of Rs. 1000000/- each (Rupees Ten Lakhs only) aggregate amount of Rs.170000000 (Rupees Seventeen Crore Only) on 28thAugust 2014 .

Date: 04.06.2015 K. Jayachandran
Place: Bangalore ACS No.: 11309
CP No.: 4031

Note: This report is to be read with our letter of even date which is annexed as‘Annexure A’ and forms an integral part of this report

Annexure A

To

The Members

Ujjivan Financial Services Private Limited

Grape Garden No.27 3rd ‘A’ Cross 18th Main

6th Block Koramangala Bangalore Karnataka

India – 560 095

Our report of even date is to be read along with this letter.

1. Maintenance of secretarial record is the responsibility of the management of theCompany. Our responsibility is to express an opinion on these secretarial records based onour audit.

2. We have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents oftheSecretarialrecords.Theverification was done on test basis to ensure that correct factsare reflected in secretarial records. We believe that the processes and practices wefollowed provide a reasonable basis for our opinion.

3. We have not verified the correctness and appropriateness of financial records andBooks of Accounts of the company.

4. Wherever required we have obtained the Management representation about thecompliance of laws rules and regulations and happening of events etc.

5. The compliance of the provisions of Corporate and other applicable laws rulesregulations standards is the responsibility of management. Our examination was limited tothe verification of procedures on test basis.

6. The Secretarial Audit report is neither an assurance as to the future viability ofthe company nor of the efficacy or effectiveness with which the management has conductedthe affairs of the company.

Date: 04:06.2015 K. Jayachandran
Place: Bangalore ACS No.: 11309
CP No.: 4031

Ujjivan Corporate Social Responsibility Policy

A. Ujjivan’s Mission & Objective on Corporate Social Responsibility (CSR)

Ujjivan mission and objective is to provide full range of financial services to theeconomically active poor to enable customers lead a "better life reaching out tounderserved communities is a part of our DNA. This entails transcending business interestsand grappling with the "quality of life" challenges that underserved communitiesface and working towards making a erence to their lives. The company also diff meaningfulhas a holistic approach to poverty reduction and in partnership with Parinaam Foundationis engaged in social welfare programs in healthcare education vocational trainingcommunity development shelter and disaster relief.

B. Ujjivan’s Vision of CSR

In order to enable NBFCs to adopt best practices and greater transparency in theiroperations RBI has on May Through sustainable measures actively contribute to theSocial Economic and Environmental Development of the community in which we operateensuring participation from the community and thereby create value for the nation.

C. Ujjivan CSR Committee of the Board Of Directors

The Board of Directors of Ujjivan has constituted a board committee for CSR called asCorporate Social Responsibility Committee which is constituted by at least One IndependentDirector and Two Non Independent Directors. The CSR committee will review the progress ofCSR activities and the funds utilized with impact achieved on a periodical basis.

D. Ujjivan CSR activities

The company constantly strives to ensure strong corporate culture which emphasizes onintegrating CSR values with business objectives. It pursues initiatives to eradicatehunger poverty; promoting preventive health care and making available safe drinking water;promoting education including special education employment enhancing vocational skilltraining for women promoting gender equality programs for empowering women andprojects for environmental protection .

Ujjivan CSR activities span five key areas and our single-minded goal here is toholistically approach poverty reduction and bettering quality of lives through socialdevelopment projects.

Community Infrastructure Development Projects

Minor constructions and renovations such as bus stands (waiting sheds) public parksschools and anganwadis public toilets water connections and public taps public libraryConstruction of foot over bridges reconstruction / renovation of existing damagedinfrastructure etc.

Environmental Projects

Ensuring environmental sustainability recharge-pit for bore wells solar lamps atpublic places (e.g. Government hospitals) conservation of natural resources andmaintaining quality of soil air and water.

Public amenities Health and Hygiene: a) Safe drinking water facility at publicplaces (bus stand schools hospitals etc) b) safety for public (fencing electrictransforms road signals) c) Public health and hygiene (supporting PHCs & maternityhomes cleaning public places clearing garbage dumps providing dust bins improvingdrainage area spraying for Malaria Chikengunya Dengue public awareness programs etc)

Promoting Education:

Providing facilities in schools & Anganwadis Initiatives for Girl childeducation merit scholarships for technical education.

Social Welfare:

• Relief programs and facilities to orphanages old age homes mentally &physically challenged personals etc.

• Any other projects that are relevant and qualifies for CSR activities under theCompanies Act 2013.

E. Ujjivan Management Commmitment on CSR Implementation

Our Board of Directors our Management and all of our employees subscribe to thephilosophy of proactive participation in the social development programmes as a part oftheir Corporate Social Responsibility and commitment to human welfare. We believe and acton an ethos of generosity and compassion characterized by a willingness to build asociety and make it a better place to live in that works for everyone. This is thecornerstone of our CSR policy.

Our Corporate Social Responsibility policy conforms to the provisions of the CompaniesAct 2013 Schedule VII of the Act and the Companies (Corporate Social ResponsibilityPolicy) Rules 2014.

F. Ujjivan CSR Funds

The corpus for the purpose of carrying on the aforesaid activities would include thefollowings:

• 2% of the average Net Profit made by the Company during immediately precedingthree Financial Years.

• Any income arising there from.

• Surplus arising out of csr activities carried out by the company and suchsurplus will not be part of business profit of the company.

G. Monitoring

The CSR department will provide regular progress report to the CSR Committee of theBoard. This report would indicate:

1. Achievement since last progress report / during the last quarter in terms ofcoverage compared to the target.

2. Achievement of the year-to-date in terms of coverage compared to the target plansto overcome shortfalls if any and support required from the CSR

Committee/Board to overcome the shortfalls.

3. Actual year-to-date spends compared to the budget and reasons for variance.

The Board shall seek a short progress report from the CSR Committee on a quarterlybasis.

"Annexure 5"

Ujjivan Financial Services Private Limited Vigil Mechanism / Whistle Blower Policy

1) Preface

Section 177 of the Companies Act 2013 and the Rules thereunder prescribes that (a)every listed company (b) the Companies which accepts deposits from the public and (c) theCompanies which have borrowed money from banks and public financial institutions in excessof Rupees FiftyCrore shall establish a Whistle

Blower policy / Vigil Mechanism for the directors and employees to report genuineconcerns or grievances about unethical behavior actual or suspected fraud or violation ofthe company’s Code of Conduct or Ethics Policy. The Company has adopted a Code ofConduct for Directors and Senior Management Executives ("the

Code") which lays down the principles and standards that should govern theactions of the Company and its employees. Any actual or potential violation of the Codehowsoever insignificant or perceived as such would be a matter of serious concern for theCompany. Such a vigil mechanism shall provide for adequate safeguards againstvictimization of directors and employees who avail of such mechanism and also makeprovisions for direct access to the Chairperson of Audit Committee in exceptional cases.

Ujjivan Financial Services Private Limited ("Ujjivan" or "theCompany") being a Listed Company (its NCDs being listed with BSE) and has borrowedfund in excess of Rupees Fifty provisions of the Companies Act 2013 and the rules madethereunder proposes to establish a Whistle Blower Policy/ Vigil Mechanism and toformulate a policy for the same.

2. Policy objectives

The Company is committed to adhere to the highest standards of ethical moral and legalconduct of business operations. To maintain these standards the Company encourages itsemployees who have concerns about suspected misconduct to come forward and express theseconcerns without fear of punishment or unfair treatment. A Vigil (Whistle Blower)mechanism provides a channel to the employees and Directors to report to the managementabout unethical behavior actual or suspected fraud or violation of the Codes of conductor legal or regulatory requirements incorrect or misrepresentation of any financialstatements and reports etc.

3. Scope of the Policy

This Policy intends to cover serious concerns that could have grave impact on theoperations and performance of the business of the Company and malpractices and eventswhich have taken place / suspected to have taken place misuse or abuse of authorityfraud or suspected fraud violation of company rules manipulations negligence causingdanger to public health and safety misappropriation of monies and other matters oractivity on account of which the interest of the Company is affected and formally reportedby whistle blowers concerning its employees. The policy neither releases employees fromtheir duty of confidentiality in the course of their work nor is it a route for taking upa grievance about a personal situation.

4. Definitions

4.1 "Audit Committee" means the Audit Committee constituted by the Boardof Directors of the Company in accordance with Section 292A of the Companies Act 1956 /Section 177 of the Companies Act 2013 and in compliance with RBI Guidelines on CorporateGovernance for NBFCs. 4.2 "Employee" means every employee of the Companyincluding the Directors in the employment of the Company. 4.3 "ProtectedDisclosure" means a concern raised by a written communication made in good faith thatdiscloses or demonstrates information that may evidence unethical or improper activity.Protected Disclosures should be factual and not speculative in nature 4.4 "Code"mean Conduct for Directors and Senior Management Personnel adopted by Ujjivan FinancialServices Private Limited 4.5 "Subject" means a person against or inrelation to whom a Protected Disclosure has been made or evidence gathered during thecourse of an investigation.

 

4.6 "Whistle Blower" means an Employee making a Protected Disclosureunder this Policy.

 

4.7 "Whistle and Ethics Officer" means an officer of the companynominated by Competent Authority to conduct detailed investigation under this policy andto receive protected disclosure from Whistle blowers maintain record thereof placing thesame before the Audit Committee for its disposal and informing the Whistle blower theresults thereof.. 4.8 "Company" means "Ujjivan Financial ServicesPrivate Limited

5. Eligibility

All Employees of the Company and various stakeholders of the company are eligible tomake Protected Disclosures under the Policy in relation to matters concerning the Company.

6. Receipt And Disposal Of Protected Disclosures :

6.1 All Protected Disclosures should be reported in writing by the complainant assoon as possible after the Whistle

Blower becomes aware of the same so as to ensure a clear understanding of the issuesraised and should either be typed or written in a legible handwriting in English. 6.2 TheProtected Disclosure should be submitted in a closed and secured envelope and should besuper scribed as "Protected disclosure under the Whistle Blower policy".Alternatively the same can also be sent through email with the subject "Protecteddisclosure under the Whistle Blower policy". If the complaint is not superscribed and closed as mentioned above it will not be possible for the Audit Committee toprotect the complainant and the protected disclosure will be dealt with as if a normaldisclosure. In order to protect identity of the complainant the Whistle &

Ethics Officer will not issue any acknowledgement to the complainants and they areadvised neither to write their name/address on the envelope nor enter into any furthercorrespondence with the Whistle & Ethics Officer. The Whistle & Ethics Officershall assure that in case any further clarification is required he will get in touch withthe complainant. 6.3 The Company shall not entertain anonymous/ pseudonymousdisclosures. 6.4 The Protected Disclosure should be forwarded under a coveringletter signed by the complainant. The Whistle and Ethics Officer or the Chairman of theAudit Committee/CEO & MD as the case may be shall detach the covering letter bearingthe identity of the Whistle Blower and process only the Protected Disclosure. 6.5 AllProtected Disclosures should be addressed to the Whistle and Ethics Officer of the Companyor to the Chairman of the Audit Committee/ CEO & MD in exceptional cases. The contactdetails of the Whistle and Ethics Officer are as under:-

Name and Address – Mr. Sunil Kutty – Head HR

Ujjivan Financial Services Private Limited

Grape Garden No. 27 3rd A Cross 18th Main 6th Block Bangalore – 560095Karnataka Email- sunil.kutty@ujjivan.com 6.6 Protected Disclosureagainst the Whistle and Ethics Officer should be addressed to the CEO & MD of theCompany and the Protected Disclosure against the CEO & MD of the Company should beaddressed to the Chairman of the Audit Committee.

Name and Address of CEO & MD of the Company:

Mr. Samit Ghosh

Ujjivan Financial Services Private Limited

Grape Garden No. 27 3rd A Cross 18th Main 6th Block

Bangalore - 560095

Karnataka

Email: samit.ghosh@ujjivan.com

Name and Address of Chairman (Audit Committee):

Mr. K. R. Ramamoorthy

D - 302 Mantri Gardens

Jayanagar 1st Block

Bangalore - 560011

Karnataka

Email: ram@bankconsult.co.in

 

6.7 On receipt of the protected disclosure the Whistle and Ethics Officer / MD& CEO / Chairman of the Audit Committee as the case may be shall make a record ofthe Protected Disclosure and also ascertain from the complainant whether he was the personwho made the protected disclosure or not. The record will include:

• Brief facts;

• Whether the same Protected Disclosure was raised previously by anyone and ifso the outcome thereof;

• Whether the same Protected Disclosure was raised previously on the same subject;

• Details of actions taken by Whistle and Ethics Officer/ Chairman/CEO forprocessing the complaint

• Findings of the Audit Committee

• The recommendations of the Audit Committee/ other action(s). 6.8 TheAudit Committee if deems fit may call for further information or particulars from thecomplainant.

7. Investigation

7.1 All Protected Disclosures reported under this Policy will be thoroughlyinvestigated by the Whistle and

Ethics Officer of the Company who will investigate / oversee the investigations underthe authorization of the Audit committee. Chairman of Audit Committee

/ Whistle and Ethics Officer may at its discretion consider involving any investigatorsfor the purpose of Investigation.

 

7.2 The decision to conduct an investigation taken into a Protected Disclosure byitself is not an acceptance of the accusation by the Authority and is to be treated as aneutral fact-finding process because the outcome of the investigation may or may notsupport accusation.

 

7.3 The identity of a Subjectwillbekeptconfidentialto the extent possible given thelegitimate needs of the investigation. 7.4 Unless there are compelling reasons notto do so Subjects will be given reasonable opportunity for hearing their side during theinvestigation. No allegation of wrongdoing against a Subject shall be considered asmaintainable unless there is good evidence in support of the allegation. 7.5 Subjectsshall have a duty to co-operate with the

Whistle and Ethics Officer / Audit Committee during investigation to the extent thatsuch co-operation sought does not merely require them to admit guilt.

 

7.6 Subjects shall have right to access any document/ information for theirlegitimate need to clarify/ defend themselves in the investigation proceedings. 7.7 Subjectsshall have a responsibility not to interfere with the investigation. Evidence shall not bewithheld destroyed or tampered with and witnesses shall not be influenced coachedthreatened or intimidated by the Subjects. 7.8 Subjects have a right to be informedof the outcome of the investigation. If allegations are not sustained the Subjects shallbe consulted as to whether public disclosure of the investigation results would be in thebest interest of the Subject and the Company.

 

7.9 Whistle and Ethics Officer shall normally complete the investigation within 90days of the receipt of protected disclosure. 7.10 In case allegations against thesubject are substantiated by the Whistle and Ethics Officer in his report the AuditCommittee shall give an opportunity to Subject to explain his side.

8. Protection

8.1 No unfair treatment will be meted out to a Whistle Blower by virtue of his/ herhaving reported a Protected Disclosure under this policy. The company as a policycondemns any kind of discrimination harassment victimization or any other unfairemployment practice being adopted against Whistle Blowers. Complete protection willtherefore be given to Whistle Blowers against any unfair practice like retaliationthreat or intimidation of termination / suspension of service disciplinary actiontransfer demotion refusal of promotion or the like including any direct or indirect useof authority to obstruct the Whistle Blower’s right to continue to perform his duties/ functions including making further Protected Disclosure. The Company will take steps tominimize difficulties which the

Whistle Blower may experience as a result of making the Protected Disclosure. Thus ifthe Whistle Blower is required to give evidence in criminal or disciplinary proceedingsthe Company will arrange for the Whistle Blower to receive advice about the procedureetc.

 

8.2 A Whistle Blower may report any violation of the above clause to the Chairmanof the Audit Committee who shall investigate into the same and recommend suitable actionto the management. 8.3 The identity of the Whistle Blower shall be keptconfidential to the extent possible under law. 8.4 Any other Employee assisting inthe said investigation shall also be protected to the same extent as the Whistle Blower.

9. Secrecy / Confidentiality

9.1 The complainant Whistle and Ethics Officer Members of Audit Committee theSubject and everybody involved in the process shall:

• Maintain confidentiality of all matters under this Policy

• Discuss only to the extent or with those persons as required under this policyfor completing the process of investigations. Not keep papers unattended anywhere at anytime

• Keep electronic mails/ files under password.

10. Decision

10.1 If an investigation leads the Whistle and Ethics Officer/ Chairman of theAudit Committee to conclude that an improper or unethical act has been committed theWhistle and Ethics Officer / Chairman of the Audit Committee shall recommend to themanagement of the Company to take such disciplinary or corrective action as he may deemfit disciplinary or corrective action initiated against the Subject as a result of thefindings of an investigation pursuant to this Policy shall adhere to the applicablepersonnel or staff procedures.

 

10.2 If the report of investigation is not to the satisfaction of the complainantthe complainant has the right to report the event to the appropriate legal orinvestigating agency. A complainant who makes false allegations of unethical and improperpractices or about alleged wrongful conduct of the subject to the Whistle and EthicsOfficer or the Audit Committee shall be subject to appropriate disciplinary action inaccordance with the rules procedures and policies of the Company.

11. Reporting

11.1 The Whistle & Ethics officer shall submit a report to the Chairman of theAudit Committee on a regular basis about all Protected Disclosures referred to him/ hersince the last report together with the results of investigations if any.

12. Access To Chairman Of The Audit Committee

12.1 The Whistle Blower shall have right to access Chairman of the Audit Committeedirectly in exceptional cases and the Chairman of the Audit Committee is authorized toprescribe suitable directions in this regard.

13. Communication

13.1 A Whistle Blower Policy cannot be effective unless it is properly communicatedto employees. The policy should be published on the website of the company.

14. Retention of documents

14.1 All protected disclosures in writing or documented along with the results ofInvestigation relating thereto shall be retained by the Company for a period of 7 (seven)years or such other period as specified by any other law in force whichever is more.

15. Administration and review of the policy

15.1 A quarterly report about the functioning of the

Whistle Blower Mechanism shall be placed before the Audit Committee. A quarterly statusreport on the total number of complaints received if any during the period with summary ofthe findings of Whistle and Ethics Officer / Audit Committee and corrective steps takenshould be send to the Chairman of the company. The Chief Executive Officer shall beresponsible for the administration interpretation application and review of this policy.

16. Amendment

16.1 The Company reserves its right to amend or modify this Policy in whole or inpart at any time without assigning any reason whatsoever. However no such amendment ormodification will be binding on the Employees and Directors unless the same is notified tothem in writing.

.