To the Members,
Your Directors have pleasure in presenting their Forty-Fourth Annual
Report and the Audited Statements of Accounts for the Financial Year ended March 31, 2023.
COMPOSITE SCHEME OF ARRANGEMENT AND AMALGAMATION
The Board of Directors in its meeting held on December 13, 2021
approved a Composite Scheme of Arrangement and Amalgamation ("Scheme of Arrangement
and Amalgamation"), inter-alia, involving amalgamation of (i) Remaining undertaking
of Shriram Capital Limited (SCL) after de-merger of a few undertakings from the said SCL
with the Company and (ii) Shriram City Union Finance Limited (SCUF) with the Company,
under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013
("the Act"). The Members of the Company and Secured Creditors and Unsecured
Creditors of the Company in their respective meetings held on July 04, 2022 approved the
Scheme of Arrangement and Amalgamation with overwhelming majority. The Hon'ble
National Company Law Tribunal, Special Bench - II, Chennai vide its Common Order dated
November 14, 2022 read with corrigendum dated November 17, 2022 to the Common Order
sanctioned the Scheme of Arrangement and Amalgamation. The Appointed Date of the Scheme of
Arrangement and Amalgamation is April 01, 2022.
In order to reflect the diversified business profile of the Company
consequent upon coming into effect of the
Scheme of Arrangement and Amalgamation which has been expanded beyond
financing of transportation vehicles, the name of the Company has been changed from
"Shriram Transport Finance Company Limited" to "Shriram Finance
Limited" with effect from November 30, 2022, pursuant to Clause 6.9 of the Scheme of
Arrangement and Amalgamation and Certificate of Incorporation pursuant to change of
name' issued by the Registrar of Companies, Chennai.
Post coming into effect of the Scheme of Arrangement and Amalgamation,
your Company's nature of business continues to offer retail suite of financial
products to customers with focus on serving the financially underbanked and under- served
customer segments in India. Your Company's asset- based product offerings now
include: (i) financing pre-owned and new commercial vehicles, commercial passenger
vehicles, construction equipment, multi-utility vehicles, tractors, two and three-wheelers
and tractors & farm equipment to First- Time Buyers (FTBs) and Small Road Transport
Operators (SRTOs) (ii) financing to MSME customers typically consisting of self-employed
professionals, wholesale and retail dealers, merchants, builders, small and medium scale
manufacturing concerns and service providers; (iii) gold loans primarily to individuals
who own gold jewellery, but do not have access to formal credit within a reasonable time
or to whom credit may not be available at all to meet their short-term requirements; and
(iv) personal loans to customer segments that do not have easy access to banks or other
modes of financing for immediate short or medium- term funding requirements.
FINANCIAL HIGHLIGHTS
Upon coming into effect of the Scheme of Arrangement and Amalgamation
and the Appointed Date being April 01, 2022, the financial performance figures contained
in the financial statements for the year ended March 31, 2023 are not comparable with the
financial performance figures for the previous year ended March 31, 2022.
(Rs. in crores)
Particulars |
F.Y. 2022-23 |
F.Y. 2021-22 |
Profit Before Depreciation And Taxation |
8,709.07 |
3,684.62 |
Less: Depreciation, amortisation and impairment |
524.18 |
135.37 |
Profit Before Tax |
8,184.89 |
3,549.25 |
Less: Provision for taxation |
2,205.55 |
841.32 |
Profit After Tax |
5,979.34 |
2,707.93 |
Particulars |
F.Y. 2022-23 |
F.Y. 2021-22 |
Add: Balance brought forward from previous year |
12,193.92 |
10,384.13 |
Balance available for appropriation |
18,173.26 |
13,092.06 |
Appropriations |
|
|
General reserve |
(597.94) |
(270.80) |
Statutory reserve |
(1,195.87) |
(541.59) |
Debenture redemption reserve |
(111.85) |
614.13 |
Dividend on equity shares of Rs.10/- each |
(561.64) |
(699.88) |
Effects of Business Combination |
(83.65) |
- |
Amount transferred from share option outstanding on account
of forfeiture of share options |
(0.90) |
- |
Balance carried to Balance Sheet |
15,623.21 |
12,193.92 |
CREDIT RATING
The credit rating of the securities/ instruments/ loans, credit
facilities and other borrowings of the Company as on March 31, 2023 was as follows:
Name of Rating Agency |
Securities / Instruments/ Loans, Credit Facilities and
other Borrowings |
Ratings |
CRISIL |
Bank Loan Long Term |
CRISIL AA+/Stable |
|
Bank Loan Short Term |
CRISIL A1+ |
|
Long Term Principal Protected Market Linked Debentures |
CRISIL PPMLD AA+/Stable |
|
Non-Convertible Debentures |
CRISIL AA+/ Stable |
|
Subordinated Debt |
CRISIL AA+/Stable |
|
Commercial Paper |
CRISIL A1+ |
India Ratings & Research Private Limited |
Non-Convertible Debentures |
IND AA+/ Stable |
|
Dual Recourse Bond |
IND AAA (CE)/Stable |
|
Subordinated Debt |
IND AA+ /Stable |
|
Commercial Paper |
IND A1+ |
|
Term deposits |
IND AA+/ Stable |
|
Bank Loans |
IND AA+/ Stable |
|
Principal protected market link debentures |
IND PP-MLD AA+/Stable |
CARE |
Non-Convertible Debentures |
CARE AA+/Stable |
|
Subordinated Debt |
CARE AA+/ Stable |
|
Commercial Paper |
CARE A1+ |
ICRA |
Fixed Deposit |
[ICRA] AA+ (Stable) |
|
Non-Convertible Debentures |
[ICRA] AA+ (Stable) |
Name of Rating Agency |
Securities / Instruments/ Loans, Credit Facilities and
other Borrowings |
Ratings |
Standard & Poor's Ratings |
Long-Term Issuer Credit Rating |
BB-/ Stable |
|
Short-Term Issuer Credit Rating |
B |
|
U.S. Dollar Senior Secured Notes |
BB- |
|
Offshore Rupee Denominated Bond (Masala Bonds) |
BB- |
Fitch Ratings |
Long-Term Issuer Default Rating |
BB/ Stable Outlook |
|
Short-Term Issuer Default Rating |
B |
|
U. S. Dollar Senior secured Notes |
BB |
|
Local Currency Long Term Issuer Default Rating |
BB/ Stable Outlook |
|
Offshore Rupee Denominated Bond (Masala Bonds) |
BB |
DIVIDEND
Your Directors have declared interim dividend on the increased issued
capital of the Company viz. 37,44,27,276 equity shares of face value of Rs.10/- each fully
paid-up, resulting from issue of 17,43,44,710 new equity shares pursuant to the Scheme of
Arrangement and Amalgamation to the eligible shareholders of the Amalgamating Companies
viz. SCL and SCUF. The interim dividend was declared by the Board of Directors at its
meeting held on December 24, 2022 @ Rs.15/- per equity share (i.e.150%) aggregating to
Rs.5,616,409,140/- (gross) subject to deduction of tax at source as per the applicable
rate(s) to the eligible shareholders for the Financial Year 2022-23. The interim dividend
to the eligible shareholders was paid on January 13, 2023.
The Board of Directors in its meeting held on April 27, 2023 has
recommended a final dividend of Rs.20/- per equity share of face value of Rs.10/- each
fully paid up i.e. 200% for the Financial Year 2022-23, subject to approval by Members in
the ensuing 44th Annual General Meeting (44th AGM) of the Company.
Thus, the total dividend (including interim dividend paid) for the
Financial Year 2022-23, if approved by the members, shall be Rs.35/- per equity share
(i.e.350%) as against the total dividend of i.e. Rs.20/- per equity share (i.e. 200%) for
the Financial Year 2021-22.
As stipulated in Regulation 43A of SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015, ("Listing Regulations") the Dividend
Distribution Policy forms part of the Corporate Governance Report and is also available on
the website of the Company at https://tinyurl.com/5f4km2pm
TRANSFER TO RESERVES
The amounts proposed to be transferred to General Reserve, Statutory
Reserve and Debenture Redemption Reserve are mentioned in the Financial Highlights under
the heading Appropriations'.
CAPITAL ADEQUACY RATIO
Your Company's total Capital Adequacy Ratio (CAR), as on March 31,
2023 stood at 22.61% as compared to 22.97% as on March 31, 2022 of the aggregate risk
weighted assets on balance sheet and risk adjusted value of the off-balance sheet items,
which is well above the regulatory requirement of minimum 15%.
The Tier 1 ratio as on March 31, 2023 improved to 21.20% as against
20.70% as on March 31, 2022. Your Company's overall gearing (Debt/Tangible Net-worth)
as on March 31, 2023 improved to 4.20x as against 4.67x as on March 31, 2022.
The Tier 2 ratio as on March 31, 2023 was 1.41% as against 2.27% as on
March 31, 2022.
OPERATIONS AND COMPANY'S PERFORMANCE
For the Financial Year ended March 31, 2023, your Company earned Profit
Before Tax of Rs.8,184.89 crores as against Rs.3,549.25 crores in the previous Financial
Year ended March 31, 2022. The Profit After Tax for the Financial Year ended March 31,
2023 was Rs. 5,979.34 crores as against Rs. 2,707.93 crores in the previous Financial
Year. The total income for the year under consideration was Rs. 29,802.89 crores and total
expenditure was Rs. 21,618 crores. The detailed analysis of income and expenditure and
financial ratios is made in the Management Discussion and Analysis Report forming part of
the Annual Report.
Mobilisation of funds during the year under review from following
sources/ instruments was as under:
(Rs. in crores)
Sr. No. Particulars |
F.Y. 2022-23 |
F.Y. 2021-22 |
1 Non-Convertible Debentures - Institutional |
7,961.70 |
8,800.00 |
2 Term loan/cash credit from Banks |
36,136.96 |
25,210.41 |
3 Term Loans from Financial Institutions/ Corporates |
3,100.00 |
3,200.00 |
4 Commercial Papers |
- |
4,325.00 |
5 Fixed Deposits |
16,360.88 |
11,273.18 |
6 Inter Corporate Deposits |
24.61 |
99.43 |
7 External Commercial Borrowings (Loans) |
5,424.68 |
187.35 |
8 U.S. Dollar Senior Secured Notes |
1,233.00 |
3,512.86 |
9 Subordinated Debts |
165.00 |
- |
The total Assets Under Management stood at Rs. 185,682.86 crores.
During the Financial Year 2022-23, the Company securitised its assets worth Rs. 16,965.25
crores (accounting for 9.14% of the total assets under management as on March 31, 2023).
With securitisation, the Company ensures better borrowing profile, leading to lower
interest liability owing to its lending to priority sector. The outstanding direct
assigned portfolio stood at Rs. 2,344.44 crores as on March 31, 2023. The Company had
2,922 Branches and other offices across India as on March 31, 2023.
The Company's prudent liquidity management techniques and strategy
of maintaining adequate liquidity buffer throughout the Financial Year 2022-23 not only
ensured seamless lending for our business operations but also ensured meeting our
liabilities on time, thereby further strengthening the trust and confidence reposed on us
by our creditors, fixed deposit holders and security holders. This is evident from the
success of our fund raising programme implemented during
the year under review from domestic as well as international market.
CAPITAL STRUCTURE Share Capital
Pursuant to the Scheme of Arrangement and Amalgamation coming into
effect, the Authorised Share Capital of your Company has increased from Rs. 15,970,000,000
divided into 647,000,000 Equity Shares of face value of Rs.10/- each and 95,000,000
preference shares of Rs.100/- each to Rs.42,655,000,000 divided into 2,975,500,000 Equity
Shares of face value of Rs.10/- each and 129,000,000 preference shares of Rs.100/- each.
The Board of Directors in its meeting held on December 12, 2022
allotted 17,43,44,710 Equity Shares of face value of Rs.10/- each to the shareholders of
erstwhile SCUF and erstwhile SCL as per the following details:
Name of the transferor company |
Number of Equity Shares held as on Record
Date i.e. November 30, 2022 |
Share Exchange Ratio as per the Scheme of
Arrangement and Amalgamation |
Number of new Equity Shares of face value
of Rs.10/- each of the Company, fully paid-up allotted |
SCUF |
4,46,65,546 (excluding 2,23,71,594 Equity
Shares held by SCL in SCUF out of total 6,70,37,140 Equity Shares) |
for every 100 equity shares of Rs.10/- each
fully paid up of SCUF, 155 equity shares of Rs.10/- each fully paid up of the Company |
6,92,31,596 |
SCL |
107,44,13,131 |
for every 10,00,00,000 Equity Shares of Rs.
l/- each fully paid up of SCL, 97,83,305 Equity Shares of Rs.10/- each fully paid up of
the Company |
10,51,13,114 |
TOTAL |
|
|
17,43,44,710 |
Consequent to the above allotment of new Equity Shares and cancellation
of 7,04,37,147 Equity Shares held by erstwhile SCL in the Company, the paid-up Share
Capital of the Company stood increased from Rs.270,51,97,130/- (27,05,19,713 Equity Shares
of Rs.10/- each fully paid-up) to Rs.374,42,72,760/- (37,44,27,276 Equity Shares of
Rs.10/- each fully paid-up).
No Equity Shares were issued with differential rights as to dividend,
voting or otherwise.
The Company has not resorted to any buy back of its Equity Shares
during the year under review.
None of the Directors of the Company holds instruments convertible into
Equity Shares of the Company.
No equity shares (including sweat equity shares) were issued to
employees of the Company during the Financial Year 2022-23, under any scheme.
Shriram Finance Limited Employee Stock Option Scheme 2023 (No.1)
Consequent to amalgamation of erstwhile SCUF with the Company, all
employees in the service of erstwhile SCUF were transferred to and became employees of the
Company without interruption of their service and on the terms and conditions no less
favourable than those on which they were engaged by erstwhile SCUF. The eligible employees
of erstwhile SCUF were granted stock options under employee stock option plan of erstwhile
SCUF titled Shriram City Union Finance Limited Employee Stock Option Scheme 2013 (SCUF
ESOS 2013). As an integral part of the Scheme of Arrangement and Amalgamation and in order
to continue the stock option benefits of the eligible employees of erstwhile SCUF, the
Board of Directors of the Company in its meeting held on March 15, 2023 approved
"Shriram Finance Limited Employee Stock Option Scheme 2023 (No.1)" or "SFL
ESOS 2023 (No.1)" created in lieu of SCUF ESOS 2013. The Nomination and Remuneration
Committee of the Company in its meeting held on April 26, 2023 (i) granted 21,26,875 Fresh
Options under SFL ESOS 2023 (No.1) to the eligible employees in lieu of 13,71,779 unvested
and unexercised stock options under the SCUF ESOS 2013 and (ii) vested 20,82,059 Fresh
Options out of 21,26,875 Fresh Options granted under SFL ESOS 2023 (No.1) to the eligible
employees taking into account the share exchange ratio as provided for in the Scheme of
Arrangement and Amalgamation to restore the value of the stock options post amalgamation
of erstwhile SCUF with the Company in the manner provided in terms of clause 3.35.17 of
the Scheme of Arrangement and Amalgamation.
The SFL ESOS 2023 (No.1) is in line with the Securities and Exchange
Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021
("SBEB & SE Regulations"). Disclosure pursuant to the provisions of
Regulation 14 of the SBEB & SE Regulations as at March 31, 2023 is annexed as Annexure-I.
The same is also hosted on the website of the Company at
https://www.shriramfinance.in/investors/ financials.
Non-Convertible Debentures
During the year under review, the Company has raised Rs. 7,961.70
crores through issuance of privately placed Listed, Secured, Redeemable, Non-Convertible
Debentures. The proceeds of the issue have been utilised for financing of commercial
vehicles, small enterprise finance segment, two wheelers, gold, auto loans, personal
loans, refinancing of existing debt and other general purposes of the Company.
Subordinated Debts
During the year under review, the Company has raised Rs. 165.00 crores
through issuance of subordinated, unsecured, rated, listed, privately placed, redeemable
Non-convertible Debentures in the form of subordinated debt for inclusion as Tier II
Capital.
External Commercial Borrowings (Senior Secured Notes & Loans)
Commitment towards socio-economic advancement is at the core of the
Company's business. Your Company is primarily engaged in providing financial
assistance to FTBs and SRTOs by offering affordable finance on pre-owned commercial
vehicles who typically do not qualify for financial assistance from organised sources due
to the lack of stable income. Your Company also provides financial services for the
underbanked and under-served individuals, communities and micro, small and medium
enterprises (MSMEs) that struggle to access conventional financial services in India.
Considering the additional financing avenue, the Company had updated the Social Finance
Framework in December 2022 for issuance of Social Bonds and/or availing Loans to finance
or refinance a portfolio of new and/or existing Eligible Social Projects to promote
sustainability. In the past the Company availed loans from various international agencies
including Asian Development Bank (ADB), US Development Finance Corporation (DFC), MUFG
International Financial Corporation, Proparco, OeEB etc. The Company's Social Finance
Framework meets the criteria and guidelines for the allocation of proceeds of the Social
Bonds as per International Capital Market Association ("ICMA") Social Bond
Principles 2021 ("SBP") and Social Loan Principles 2021 ("SLP"). More
details in this regard are available in the ESG Report forming part of the Annual Report.
The Social Finance Framework is available on the Company's website at:
https://tinyurl.com/ycxjjh8f
During the year, the Company availed Loans of USD 675 Million under the
Company's Social Finance framework.
On March 29, 2023, the Company issued USD 150,000,000 Senior Secured
Floating Rate Notes due 2026 (Social Bonds) equivalent to Rs.12,326,445,000/- under the
USD 3,500,000,000 Global Medium Term Note Programme through updated Offering Circular
dated March 23, 2023 to the eligible investors outside United States under Regulation S of
the U.S. Securities Act, 1933. The said Social Bonds are listed on the India International
Exchange (IFSC) Limited (India INX').
The proceeds of Loans and Senior Secured Notes issued have been
utilised by the Company to finance investments in Eligible Social Projects in accordance
with International Capital Market Association Social Bond Principles 2021 and Social Loan
Principles 2021 as permitted by the ECB Guidelines.
All External Commercial Borrowings are fully hedged to mitigate risk of
exchange rate volatility.
FIXED DEPOSITS
The mobilisation of funds of the Company is broad-based through
diversified sources. The fixed deposits mobilisation during the Financial Year ended March
31, 2023 continues to be encouraging on account of popularity of the Company's Fixed
Deposit Schemes due to its long track record of offering better return and safety of
investment and giving good services to fixed deposit holders.
During the Financial Year ended March 31, 2023, the Company's fund
mobilisation from fixed deposits was higher at Rs. 16,360.88 crores as against
Rs.11,273.18 crores in the Financial Year ended March 31, 2022. As on March 31, 2023,
there were 9,275 fixed deposits aggregating to Rs.134.21 crores that have matured but
remained unclaimed. There were no deposits, which were claimed but not paid by the
Company. The unclaimed deposits have since reduced to 6,424 deposits amounting to Rs.74.67
crores. Appropriate steps are being taken continuously to obtain the depositors'
instructions so as to ensure renewal/ repayment of the matured deposits in time.
In accordance with the Master Direction - Non-Banking Financial
Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016, the Company has
created a floating charge on the statutory liquid assets comprising of investment in
government securities (face value) to the extent of Rs.5,346.44 crores in favour of
trustees on behalf of the public deposit holders of the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Appointment of Directors
The Board of Directors based on the recommendation of the Nomination
and Remuneration Committee and in terms of Article 21 of the Articles of Association of
the Company and Section 161(1) of the Act in its meeting held on December 04, 2022
appointed Mr. Jugal Kishore Mohapatra (DIN 03190289) and Mrs. Maya S. Sinha (DIN 03056226)
as Additional Directors of the Company, in the category of Non-executive Independent
Directors, not liable to retirement by rotation, for a term of 3 (three) consecutive years
and 2 (two) consecutive years respectively with effect from December 04, 2022, subject to
approval of Members of the Company. On February 21, 2023, the Members of the Company
passed the Special Resolutions through Postal Ballot for the appointment of Mr. Jugal
Kishore Mohapatra (DIN 03190289) and Mrs. Maya S. Sinha (DIN 03056226) as Independent
Directors of the Company.
Mr. Y. S. Chakravarti, was Managing Director & CEO of erstwhile
SCUF. He also held directorship of the Company in the capacity of non-executive,
non-independent director from December 13, 2021. The Board of Directors in its meeting
held on December 04, 2022 appointed Mr. Y. S. Chakravarti (DIN 00052308) as Managing
Director & CEO of the Company from December 05, 2022, subject to approval of the
Members of the Company. On February 21, 2023, the Members of the Company passed the
Ordinary Resolution through Postal Ballot for the appointment of Mr. Y. S. Chakravarti
(DIN 00052308) as Managing Director & CEO of the Company and payment of remuneration
to him w.e.f. December 05, 2022.
Change in designation of Director
The Board of Directors in its meeting held on December 04, 2022
re-designated Mr. Umesh Revankar (DIN 00141189) as Executive Vice Chairman of the Company.
On February 21, 2023, the Members of the Company passed the Ordinary Resolutions through
Postal Ballot for re-designation of
Mr. Umesh Revankar (DIN 00141189) as Executive Vice Chairman of the
Company and for restructuring and revision of remuneration of Mr. Umesh Revankar w.e.f.
December 05, 2022.
Cessation of Directors
Mr. S. Lakshminarayanan (DIN 02808698), Independent Director and
Chairman of the Board and Mrs. Kishori Udeshi (DIN 01344073), Independent Director
resigned from directorship of the Company with effect from commencement of business hours
on December 05, 2022. Mr. S. Lakshminarayanan was associated with the Company as director
for more than 13 years from September 22, 2009, out of which he was Chairman of the Board
for about 8 years. Mrs. Kishori Udeshi held directorship of the Company for more than 10
years from October 30, 2012. The Company and senior management was immensely benefited
from their mature advice and guidance. The Board had expressed its sincere gratitude and
placed on record its appreciation of their significant contribution during their tenure as
Directors of the Company.
Retirement of director by rotation
Mr. D. V. Ravi (DIN 00171603), non-executive, non- independent director
of the Company will retire by rotation at the ensuing 44th AGM and being
eligible, offers himself for re-appointment. The Board of Directors in its meeting held on
April 27, 2023 based on the recommendation of Nomination and Remuneration Committee
recommended to the Members re-appointment of Mr. D. V. Ravi as a director of the Company
retiring by rotation.
Mr. D. V. Ravi is the Vice Chairman and Managing Director of Shriram
Capital Private Limited (formerly known as Shriram Financial Ventures (Chennai) Private
Limited), Promoter of the Company. He has been part of the Shriram Group since 1992 and
has an extensive experience and expertise in the financial services and insurance domains
and has gained expertise in Corporate Strategies, Building Teams and creating Synergy,
Mergers & Acquisitions, Risk Management, Corporate Finance, Leadership development and
Technology initiatives. Your Company continues to immensely benefit from his guidance in
strategic matters and expert knowledge and advice. His profile is given in the Notice of
the ensuing 44th AGM forming part of the Annual Report.
The Nomination and Remuneration Committee and the Board of Directors
recommends to the Members passing of the ordinary resolution for re-appointment of Mr. D.
V. Ravi as a director retiring by rotation.
Declaration by Independent Directors
Pursuant to the provisions of Section 149 of the Act the independent
directors have submitted declarations that each of them meets the criteria of independence
as provided in Section 149(6) of the Act along with Rules framed thereunder and Regulation
16(1)(b) of the Listing Regulations. There has been no change in the circumstances
affecting their status as independent directors of the Company.
Policies on appointment of Directors and Remuneration
The management of the Company is immensely benefitted from the
guidance, support and mature advice from members of the Board of Directors who are also
members of various committees. The Board consists of directors possessing diverse skill,
rich experience to enhance quality of its performance. The Company has adopted a Policy on
Board Diversity formulated by the Nomination and Remuneration Committee. The
Company's Remuneration Policy is framed for remuneration of Directors (Executive and
Non-Executive), Key Managerial Personnel and Senior Management Personnel in line with the
requirement of the Section 178 of the Act, Regulation 19 read with Part D of Schedule II
of the Listing Regulations and Scale Based Regulation framework issued by the Reseve Bank
of India ("RBI") and as per the Guidelines on Compensation of Key Managerial
Personnel and Senior Management in NBFCs issued by RBI. These Policies are available on
the Company's website at the weblink: https://tinyurl.com/ycxf4rnj and
https://tinyurl.com/45y352cc. The Company has formulated policy on Succession Planning for
Directors and Key Managerial Personnel for continuity and smooth functioning of the
Company.
Number of Meetings of the Board
10 (Ten) Board Meetings were held during the Financial Year 2022-23.
The details of the Board and various Committee meetings are given in the Corporate
Governance Report.
Performance evaluation at Board and Independent Directors'
Meetings
The Board, the Committees of the Board and independent directors
continuously strive for efficient functioning of Board and its Committees and better
corporate governance practices. A formal performance evaluation was carried out at the
meeting of the Board of Directors held on March 15, 2023 where the Board made an annual
evaluation of its own performance, the performance of directors individually as well as
the evaluation of the working of its various Committees for the Financial Year 2022-23 on
the basis of a structured questionnaire on performance criteria. The Board expressed its
satisfaction with the evaluation process. The observations made during the evaluation
process were noted and based on the outcome of the evaluation and feedback of the
Directors, the Board and the management agreed on various action points to be implemented
in subsequent meetings.
The evaluation process endorsed cohesiveness amongst directors, the
openness of the management in sharing the information with the Board and placing various
proposals for the Board's consideration and approval.
The Independent Directors met on March 16, 2023 without the presence of
other directors or members of Management. All the Independent Directors were present at
the meeting. In the meeting, the Independent Directors reviewed performance of
Non-Independent Directors, the Board as a whole and the Chairman. They assessed the
quality, quantity and timeliness of flow of information between the Management of the
Company and the Board. The Minutes of the Independent Directors' meeting were placed
before the Board Meeting held on April 27, 2023 and the same were noted by the Board. The
Independent Directors expressed satisfaction over the performance and effectiveness of the
Board, individual Non Independent Directors and the Chairman.
They also expressed satisfaction with regard to the flow of information
between the Management of the Company and the Board. The Management took note of various
suggestions made in the meeting of Independent Directors.
The Independent Directors played active role in Board as well as
Committee Meetings in which they are members. The members of the Audit Committee without
the presence of members of Management had a separate meeting with the Joint Statutory
Auditors which covered Audit issues in general and the framework and the process of
Internal Audit in specific. The members of the Audit Committee without the presence of
members of Management also had a separate meeting with credit rating agencies.
KEY MANAGERIAL PERSONNEL
Mr. Vivek Achwal, Company Secretary & Compliance Officer retired
from services of the Company upon attaining the age of superannuation with effect from the
close of business hours on August 31, 2022.
The Board of Directors in its meeting held on July 28, 2022 placed on
record its appreciation of his performance, knowledge, skills and commitment demonstrated
by him during his tenure as Company Secretary & Compliance Officer of the Company and
appointed Mr. U Balasundararao as Company Secretary & Compliance Officer of the
Company on the recommendation of the Nomination and Remuneration Committee with effect
from September 01, 2022.
The Nomination and Remuneration Committee periodically reviews career
growth plan of senior management personnel who possess ability to build teams and nurture
leaderships for future growth plans of the Company. The Board of Directors at its meeting
held on December 04, 2022, on the recommendation of Nomination and Remuneration Committee,
appointed/designated Mr. R. Chandrasekar, Joint Managing Director & Chief Compliance
Officer, Mr. G M Jilani, Joint Managing Director, Mr. K. Srinivas, Joint Managing Director
and Mr. Aseem Gandhi, Executive Director as Key Managerial Personnel of the Company
pursuant to Section 2(51) of the Act in addition to the existing Key Managerial Personnel.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134(3)(c) and Section 134(5) of
the Act the Directors confirm that, to the best of their knowledge and belief:
a) In the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to material
departures;
b) That such accounting policies as mentioned in note 1 to 7 to the
Standalone financial statements and note 1 to 8 to the Consolidated financial statements
have been selected and applied consistently and judgments and estimates have been made
that are reasonable and prudent so as to give a true and fair view of the state of affairs
of the Company as at March 31, 2023 and of the profit of the Company for the year ended on
that date;
c) That proper and sufficient care has been taken for the maintenance
of adequate accounting records in accordance with the provisions of the Act for
safeguarding the assets of the Company and for preventing and detecting fraud and other
irregularities;
d) The annual accounts have been prepared on a going concern basis;
e) The Company had followed the internal financial controls laid down
by the directors and that such internal financial controls are adequate and were operating
effectively; and
f) The directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were adequate and operating
effectively.
RBI GUIDELINES
The Company continues to comply with the Master Direction for
Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and
Deposit taking Company (Reserve Bank) Directions, 2016 and all the applicable laws,
regulations, guidelines, etc. prescribed by RBI from time to time.
The Company has been identified for categorisation as NBFC-Upper Layer
under Scale Based Regulation (SBR), a Revised Regulatory Framework for NBFCs as per the
list issued by RBI in its Press Release 2022-2023/975 dated September 30, 2022. In
compliance with the requirement of Scale Based Regulatory Framework read with Notification
dated April 11, 2022 for Compliance Function and Role of Chief Compliance Officer (CCO) -
NBFCs, the Company has appointed Mr. R. Chandrasekar, Joint Managing Director as Chief
Compliance Officer of the Company for a period of 3(three) years with effect from December
04, 2022.
The Board of Directors have framed various policies as applicable to
the Company including Risk based internal audit policy. The Board periodically reviews the
policies and approves amendments as and when necessary.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
Pursuant to Regulation 34(2)(f) of the Listing Regulations, the
Business Responsibility and Sustainability Report is annexed and forms part of the Annual
Report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The CSR Committee comprises of following directors namely, Mr. Umesh
Revankar - Chairman, Mr. Pradeep Kumar Panja and Mr. Y. S. Chakravarti. The CSR Report for
the Financial Year 2022-23 is annexed to this report as Annexure-II. The details of
the ongoing CSR projects/ programmes/ activities are included in the CSR Report/section.
The CSR Policy is uploaded on the Company's website at the web link:
https://tinyurl.com/8uypxf76
ANNUAL RETURN
In accordance with the provisions of Section 92(3) of the Act, Annual
Return in Form No. MGT-7 of the Company is hosted on website of the Company at
https://tinyurl.com/4e2upet9.
DISCLOSURES AS PER THE SECTION 134 OF THE COMPANIES ACT, 2013 READ WITH
RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014
Conservation of Energy, Technical Absorption and Foreign Exchange
Earnings and Outgo
The information pursuant to Section 134(3)(m) of the Act read with
Companies (Accounts) Rules, 2014 is as follows:
a. The Company continues its initiatives for conservation of energy,
the details of which are given in Business Responsibility and Sustainability Report. The
Company's business operations do not involve any activity for technology absorption.
b. The Company earned Foreign Exchange Earnings of Rs. 1.17 crores.
c. Outgo under Foreign Exchange - Rs. 109.21 crores.
Loans, guarantee or investments in securities
The loan made, guarantee given or security provided in the ordinary
course of business by a NBFC registered with RBI are exempt from the applicability of the
provisions of Section 186 of the Act. As such, the particulars of loans and guarantee have
not been disclosed in this Report.
During the year under review, the Company has invested surplus funds in
various securities in the ordinary course of business. For details of the investments of
the Company, refer to Note 13 of the financial statements.
Contracts or Arrangements with Related Parties
All the related party transactions were entered into in the ordinary
course of business on an arm's length basis. Hence, no disclosure in Form AOC-2 is
necessary and the same does not form part of this report. For details of the transactions
with related party entered into in the ordinary course of business on an arm's length
basis, refer to Note 50 to the financial statements.
As required under the Master Direction - Non-Banking Financial Company
- Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve
Bank) Directions, 2016, the policy on materiality of related party transactions and
dealing with related party transactions as approved by the Board is uploaded on the
Company's website at the web link: https://tinyurl.com/zuwy4knp
There are no materially significant related party transactions made by
the Company with Promoters, Directors, Key Managerial Personnel or other designated
persons which may have a potential conflict with the interest of the Company at large.
None of the Directors has any pecuniary relationship or transaction vis-a-vis the Company
save and except the payment of sitting fees and commission paid to the Independent
Directors, remuneration to Directors apart from transactions in the ordinary course of
business and on arm's length basis at par with any member of general public. The
Company did not advance any loans to any of its Directors. The details of the transactions
with Related Parties are provided in the Note 50 to the Financial Statements.
Whistle Blower Policy/ Vigil Mechanism
The Company's Whistle Blower policy provides a mechanism under
which an employee/director of the Company may report unethical behaviour, suspected or
actual fraud, violation of code of conduct and personnel policies of the Company. The
Vigil Mechanism ensures standards of professionalism, honesty, integrity and ethical
behaviour. The Whistle Blower Policy/Vigil Mechanism is uploaded on the Company's
website: https://tinyurl.com/hrtapv3s
Financial summary/highlights
Income for the Financial Year 2022-23 increased by 54.63% to
Rs.29,802.89 crores as compared to Rs.19,274.23 crores in the previous Financial Year
2021-22;
Income from operations for the Financial Year 2022-23 was Rs.29,772.16
crores as compared to Rs.19,255.17 crores in the previous Financial Year 2021-22, a growth
of 54.62%;
Profit before tax for the Financial Year 2022-23 was Rs.8,184.89 crores
as compared to Rs.3,549.25 crores in the previous Financial Year 2021-22;
Profit after tax for the Financial Year 2022-23 was Rs.5,979.34 crores
as compared to Rs.2,707.93 crores in the previous Financial Year 2021-22.
The overall disbursement during Financial Year 2022-23 stood at
Rs.1,11,848.44 crores as compared to Rs. 61,808.60 crores in the previous Financial Year
2021-22.
Our interest income increased by 53.42% from Rs.18,646.26 crores for
the year ended March 31, 2022 to Rs. 28,607.36 crores for the year ended March 31, 2023.
Finance costs increased by 28.88 % from Rs.9,734.31 crores for the year
ended March 31, 2022 to Rs.12,545.76 crores for the year ended March 31, 2023.
Other expenses increased from Rs.905.61 crores for the year ended March
31, 2022 to Rs.1,579.17 crores for the year ended March 31, 2023.
Our fees and commission expenses for the financial year 2022-23 was
Rs.303.61 crores as compared to Rs.91.74 crores in FY 2021-22.
Risk Management and Internal Financial Control System
The Company's Risk Management Policy deals with identification,
mitigation and management of risks across the organisation. This has been dealt with the
Management Discussion and Analysis annexed to the Annual Report.
The Company's well-defined organisational structure, documented
policy guidelines, defined authority matrix and internal financial controls ensure
operational effectiveness, reliability of financial data and compliance with applicable
laws, regulations and Company's policies.
The financial control framework includes internal controls, delegation
of authority procedures, segregation of duties, system access controls and document filing
and storage procedures. The Internal Auditor ensures the continued effectiveness of the
Company's internal control system. The Audit Committee reviews internal financial
control reports prepared by the internal auditor. The Company has framed risk based
internal audit policy as part of its oversight function. The objective of risk based
internal audit review is to identify the key activities and controls in the business
processes, review effectiveness of business processes and controls, assess the operating
effectiveness of internal controls and provide recommendations for business process and
internal control improvement.
Composition of Audit Committee
The Audit Committee comprises of the following Independent Directors
namely, Mr. S. Sridhar - Chairman, Mr. Pradeep Kumar Panja and Mrs. Maya S. Sinha.
Others
There were no material changes and commitments, affecting the
financial position of the Company which has occurred between the end of the financial year
of the Company and the date of the Directors' report.
There are no significant and material orders passed by the
regulators or courts or tribunals impacting the going concern status and company's
operations in future. For other orders, please refer to Note 49 of the financial statement
containing details of the contingent liabilities.
There was no fraud reported by the Statutory Auditors and the
Secretarial Auditors of the Company under the Section 143(12) of the Act to the Audit
Committee.
Your Company adopted ISO 27001 standards, practices its
processes and upgrades its implementation on regular basis to maintain the information
security as per the market trend. The Company is prepared to face emerging cyber threats
such as Zero-day attacks, remote access threats and targeted threats. Your company has
established disaster recovery centers and various security controls in place to mitigate
risks, also safeguard the Company against security breaches and technological lapses
located in different seismic zones, periodic upgrading of servers and data storage,
adopting new technology for data management. On regular basis different type of system
audits is conducted by the external and internal auditors. Board represented strategy
committee governs the security policies and its implementation as per the Company's
corporate governance process.
The Company has a policy for prevention of Sexual Harassment for
Women at Workplace. An Internal Complaints Committee has been constituted in line with the
Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
(POSH'). During the year under review, there were no cases filed under the
Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
On February 01, 2023, the Company had arranged an online orientation programme, for its
Internal Committee Members under POSH Act, at PAN India Level, in order to make them
proficient to discharge their duties. The training was attended by all the Internal
Committee Members at PAN India. The Company has in place a Module on "PREVENTION OF
SEXUAL HARASSMENT IN WORKPLACE (POSH) in - MyCoach E-Learning Platform, for sensitising
the employees with the provisions under the POSH.
Disclosure regarding details relating to deposits covered under
Chapter V of the Act is not applicable since our Company is a Non-Banking Financial
Company regulated by RBI. The Company accepts deposits as per the Master Direction -
Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions,
2016.
The Company has obtained a certificate from the statutory
auditor certifying that the Company has complied with the requirements of the Regulation 9
of the Master Direction - Foreign Investment in India with regard to downstream
investments.
The Company has complied with Secretarial Standards issued by
the Institute of Company Secretaries of India on Board Meetings, General Meetings and
Dividend.
The Company, in the capacity of Financial Creditor, has not
filed any applications with National Company Law Tribunal under the Insolvency and
Bankruptcy Code, 2016 during the Financial Year 2022-23 for recovery of outstanding loans
against any customer being Corporate Debtor.
The details of difference between amount of the valuation done
at the time of one time settlement and the valuation done while taking loan from the Banks
or Financial Institutions along with the reasons thereof - Not Applicable
The provision of Section 148 of the Act relating to maintenance
of cost records and cost audit are not applicable to the Company.
The Company has not defaulted in repayment of loans from banks
and financial institutions. There were no delays or defaults in payment of
interest/principal of any of its debt securities.
The equity shares of the Company were not suspended from trading
during the year on account of corporate actions or otherwise.
Disclosures pursuant to RBI Master Directions, unless provided
in the Directors' Report and Corporate Governance Report, form part of the notes to
the standalone financial statements.
CONSOLIDATED FINANCIAL STATEMENTS
Consequent to the Scheme coming into effect, Shriram Housing Finance
Limited, unlisted subsidiary of erstwhile SCUF became a subsidiary of the Company. Shriram
Housing Finance Limited CIN - U65929TN2010PLC078004 ("SHFL") is a housing
finance company registered with the National Housing Bank and regulated by RBI
(Registration Number- 08.0094.11). The equity shares of SHFL are not listed on any stock
exchange, but has its debt securities listed on BSE Limited. The primary operation of SHFL
is providing loans for the purchase or construction of residential space and loans against
property.
SHFL is not a material subsidiary within the meaning of the Listing
Regulations. The Company's policy for determination of material subsidiary, as
adopted by the Board of Directors, in conformity with Regulation 16 of the Listing
Regulations, can be accessed on the Company's website at https://tinyurl.com/tkn8vhbu
Provision of Regulation 24 of the Listing Regulations relating to subsidiary companies, to
the extent applicable, have been duly complied with.
Mr. Y. S. Chakravarti, Managing Director & CEO of the Company is a
Non-Executive, Non-Independent Director on the Board of SHFL.
SHFL has 131 branches as on March 31, 2023 across India. SHFL has
35,575 customers with loans in its portfolio as on March 31, 2023. The total employee
strength of SHFL as on March 31, 2023 was 1,748. The CAGR of loan disbursement of SHFL
over last five years was around 40% with total disbursement during the year being Rs.4,146
crores. The total borrowings of SHFL as on March 31, 2023 was Rs.6,296.06 crores out of
which Rs.1,252.42 crores was by way of issuance of NCDs and the balance amount of
Rs.5,043.64 crores was through borrowings from Banks, National Housing Bank, Financial
Institutions and securitisation through banks & financial institutions.
Shriram Automall India Limited (SAMIL), associate of the Company
provides fee-based facilitation services for the sale of pre-owned commercial and
passenger vehicles, agricultural and construction equipment, dealer's stock of
pre-owned two wheelers, etc. repossessed by banks and financing companies. SAMIL has 136
Automalls (Feeder Yards and Park and Sale point Yards) located across the Country. As per
the audited financial statements of SAMIL for the year ended March 31, 2023, its total
income from operations and Net Profit was Rs.223.02 crores and Rs.19.20 crores
respectively, on consolidated basis. The said financial statements of SAMIL will be made
available to Members on request.
Pursuant to Section 129 of the Act read with Rule 5 to the Companies
(Accounts) Rules, 2014, the statement containing salient features of the financial
statement of subsidiary and associate company in Form AOC-1 forms part of the Annual
Report. The consolidated financial statements forming part of this Annual Report are
prepared in compliance with the applicable Indian Accounting Standards and Listing
Regulations. Pursuant to the provisions of Section 136 of the Act, the financial
statements of the Company and its subsidiary (SHFL) are placed on the Company's
website at https://www.shriramfinance.in/investors/financials.
The annual report and the annual accounts of SHFL shall be made
available to the Members of the Company seeking such information. The annual accounts
shall also be kept for inspection by the Members at the Registered Office of the Company
and of SHFL. The Company shall furnish hard copy of details of accounts of SHFL to any
shareholder on demand.
During the Financial Year 2022-23, there was no other entity which
became or ceased to be subsidiary, joint venture or associate company of the Company.
PARTICULARS OF EMPLOYEES AND REMUNERATION
Disclosures required under the provisions of Section 197(12) ofthe Act
read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, as amended, containing, inter-alia, the ratio of remuneration of
directors to median remuneration of employees, percentage increase in the median
remuneration, are annexed to this Report as Annexure-III.
Statement containing the particulars of top ten employees and the
employees drawing remuneration in excess of limits prescribed under Section 197(12) of the
Act read with Rule 5(2) and (3) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 is an annexure forming part of this Report. In terms of
the proviso to Section 136(1) of the Act, the Report and Accounts are being sent to the
Members excluding the aforesaid annexure. The said statement is available for inspection
with the Company. Any Member interested in obtaining a copy of the same may write to the
Company Secretary at secretarial@shriramfinance.in
The Managing Director & CEO of the Company as per the terms of his
appointment, does not draw any commission or remuneration from SHFL, subsidiary company.
Hence, no disclosure as required under section 197(14) of the Act has been made.
AUDITORS
In compliance with the RBI Guidelines on appointment of statutory
auditor(s) by Non-Banking Financial Company ("NBFC") vide Circular
RBI/2021-22/25 Ref. No. DoS. CD.ARG/SEC.01/08.91.001/2021-22 dated April 27, 2021
("RBI Guidelines") and pursuant to Section 139(8)(i) of the Act, the Members of
the Company appointed M/s. Sundaram & Srinivasan Chartered Accountants, Chennai (ICAI
Firm Registration No. 004207S) and KKC & Associates LLP, Mumbai (ICAI Firm
Registration No. 105146W/ W-100621) as the Joint Statutory Auditors of the Company at the
43rd Annual General Meeting held on Thursday, June 23, 2022 to hold office from
conclusion of 43rd Annual General Meeting till the conclusion of 45th
Annual General Meeting of the Company to conduct the audit of accounts of the Company for
the financial year ending March 31, 2023 and March 31, 2024 on such remuneration plus out
of pocket expenses, if any, as may be mutually agreed upon between the Board of Directors
of the Company and the said Joint Statutory Auditors. The Joint Statutory Auditors holds a
valid peer review certificate as prescribed under Listing Regulations.
The Auditors' Report to the Members for the year under review is
unmodified, i.e. it does not contain any qualification, reservation or adverse remark or
disclaimer.
In terms of the RBI Master Directions - Non-Banking Financial Companies
Auditors' Report (Reserve Bank) Directions, 2016, Joint Statutory Auditors have also
submitted an additional report dated April 27, 2023, for the Financial Year 2022-23 which
has been filed with RBI. There were no comments or adverse remarks in the said report as
well.
SECRETARIAL AUDIT
Pursuant to the provisions of Section 204 of the Act read with the
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and
Regulation 24A of the Listing Regulations, the Secretarial Audit Report in Form MR-3 for
the Financial Year 2022-23 issued by SPNP & Associates, Practicing Company Secretaries
(Peer Review No.: 1913/2022) is annexed to this report as Annexure-IV. The report
does not contain any qualification, reservation or adverse remark.
CORPORATE GOVERNANCE
Pursuant to Schedule V of the Listing Regulations the following
Reports/ Certificates form part of the Annual Report:
the Report on Corporate Governance;
the Certificate duly signed by the Managing Director & CEO
and the Joint Managing Director & Chief Financial Officer on the Financial Statements
of the Company for the year ended March 31, 2023 as submitted to the Board of Directors at
its meeting held on April 27, 2023;
the declaration by the Managing Director & CEO regarding
compliance by the Board members and senior management personnel with the Company's
Code of Conduct; and
the Management Discussion & Analysis Report
The Auditors' Certificate on Corporate Governance is annexed to
this report as Annexure-V.
ACKNOWLEDGEMENT
The Board of Directors would like to place on record their gratitude
for the guidance and co-operation extended by RBI and the other regulatory authorities.
The Board of Directors also thank the Shareholders, Secured Creditors and Unsecured
Creditors for having approved the Scheme of Arrangement and Amalgamation with overwhelming
majority. The Board takes this opportunity to express its sincere appreciation for the
excellent patronage received from the Banks and Financial Institutions and for the
continued enthusiasm, total commitment, dedicated efforts of the executives and employees
of the Company at all levels. We are also deeply grateful for the continued confidence and
faith reposed on us by all the Stakeholders including Shareholders, Depositors, Debenture
holders and Debt holders.
|
For and on behalf of the Board of Directors |
|
Jugal Kishore Mohapatra |
New Delhi |
Chairman |
April 27, 2023 |
(DIN 03190289) |
|