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EQUITY - MARKET SCREENER

IIFL Finance Ltd
Industry :  Finance & Investments
BSE Code
ISIN Demat
Book Value()
532636
INE530B01024
116.6205157
NSE Symbol
P/E(TTM)
Mar.Cap( Cr.)
IIFL
16.19
12071.24
EPS(TTM)
Face Value()
Div & Yield %
19.64
2
2.2
 

As on: May 25, 2022 12:33 PM

Dear Shareholders,

Your Directors present the Twenty Sixth Annual Report of IIFL Finance Limited (Formerly known as IIFL Holdings Limited) ("your Company / the Company") together with the Audited Financial Statements for the financial year ended March 31, 2021. The Company is registered with the Reserve Bank of India ("RBI") as a Systemically Important Non-Banking Financial Company ("NBFC") not accepting public deposits (NBFC-ND-SI).

This was an unprecedented year, with the Covid-19 pandemic affecting countries, businesses and individuals in India and across the world. Lockdown and restrictions imposed on various activities due to the pandemic called for extraordinary changes in the way operations were managed at the Company. Our technological investments and timely and decisive steps towards remote working ensured business continuity even as the pandemic unfolded across locations of our presence.

The Company extended wholehearted support to vulnerable sections of society during this period in a number of ways. More details of the COVID-19 relief work are covered in the CSR Report attached to this report.

1. FINANCIAL RESULTS

A summary of the financial performance of your Company and its major subsidiaries, for the financial year ended March 31,2021 is as under:

(Rs. in Million)

Name of the Company Revenue Profit After Tax
IIFL Finance Limited 34,362.05 3,425.77
IIFL Home Finance Limited 20,677.50 4,010.95
Samasta Microfiinance Limited 7,021.30 666.23

Consolidated Financial Results

A summary of the consolidated financial performance of your Company, for the financial year ended March 31,2021, is as under:

(Rs. in Million)

Particulars 2019-20 2020-21
Gross total income 59,893.95 49,261.25
Profit before Finance Cost, depreciation, share of loss of Joint Venture, exceptional items and taxation 37,359.55 32,358.51
Finance Cost 26,258.27 24,050.18
Depreciation 1,053.44 1,056.49
Profit before share of loss of Joint Venture, exceptional items and tax 10,047.84 7,251.84
Profit before exceptional items and tax 10,047.84 7,251.84
Exceptional items - -
Profit before tax 10,047.84 7,251.84
Taxation - Current tax 3,173.53 1,778.98
- Deferred tax (779.46) 466.34
- Short or excess provision for income tax 45.67 (28.21)
Net profit for the year 7,608.10 5,034.74
Other Comprehensive Income (243.17) (66.60)
Total Comprehensive Income before Non-Controlling interest 7,364.93 4,968.13
Attributable to:
Owners of the Company 7,358.03 4,951.77
Non-controlling interests 6.90 16.36
Less: Appropriations
Dividend (1,135.41) (817.05)
Dividend Distribution Tax - (167.95)
Transfer to/ from Other Reserves (1,624.48) (1,476.92)
Change in Minority 2.73 2.27
On account of Merger - (25.83)
Add: Balance brought forward from the previous year 10,872.03 8,405.73
Balance to be carried forward 15,472.90 10,872.03

*Previous periods figures have been regrouped / rearranged wherever necessary.

Standalone Financial Results:

A summary of the standalone financial performance of your Company, for the financial year ended March 31, 2021, is as under:

(Rs. in Million)

Particulars I 2020-21 2019-20
Gross total income 34,362.05 26,712.00
Profit before Finance Cost, depreciation, share of loss of Joint Venture, exceptional items and taxation 20,203.03 15,697.95
Finance Cost 15,549.75 12,483.57
Depreciation 908.83 894.09
Profit before share of loss of Joint Venture, exceptional items and tax 3,744.45 2,320.29
Profit before exceptional items and tax 3,744.45 2,320.29
Exceptional items 530.50 46.06
Profit before tax 4,274.95 2,366.35
Taxation
- Current tax 972.83 419.33
- Deferred tax (167.48) 479.68
- Short or excess provision for income tax 43.83 (20.69)
Net profit for the year 3,425.77 1,488.03
Other Comprehensive Income (211.07) (24.86)
Total Comprehensive Income 3,214.70 1,463.17
Less: Appropriations
Dividend (1,135.41) (817.05)
Dividend Distribution Tax - (79.34)
Transfer to/ from Other Reserves (686.80) (686.05)
On account of Merger - (25.82)
Add: Balance brought forward from the previous year 3,193.73 3,338.83
Balance to be carried forward 4,586.23 3,193.73

*Previous periods figures have been regrouped / rearranged wherever necessary.

Transfer to Reserve

The Company during the year under review has transferred below mentioned amount to General Reserve out of the Retained Earnings. Further, in accordance with Section 45 IC of the Reserve Bank of India Act, 1934, the Company has also transferred below mentioned amount to Special Reserve.

(Rs. in Million)

Particulars Consolidated Standalone
2020-21 2020-21
Special Reserve during the year (Pursuant to Section 45 IC of the Reserve Bank of India Act, 1934) 819.59 686.80
Special Reserve during the year (Pursuant to Section 29C of National Housing Bank Act, 1987) 805.00 -
General Reserve during the year 6.82 6.82

2. REVIEW OF BUSINESS AND OPERATIONS AND STATE OF AFFAIRS OF YOUR COMPANY

During the year under review, your Company's total income, on a consolidated basis, amounted to Rs. 59,894 million compared to Rs. 49,261 million in the previous year. We recorded our highest ever preprovision operating profit of Rs. 21,734 million during the year, driven by volume growth, reduction in cost of funds and better cost management compared to Rs. 11,914 million in the previous year. Profit before tax stood at Rs. 10,048 million compared to Rs. 7,252 million in the previous year and Profit after tax (TCI post noncontrolling interest) stood at Rs. 7,358 million compared to Rs. 4,952 million in the previous year.

Our Loan assets under management (AUM) grew 18% y-o-y to Rs. 446,880 million compared to Rs. 379,511 million in the previous year. The core segments of our portfolio namely Home loans, Gold loans, Business loans (excluding Healthcare Finance) and Microfinance loans, grew faster at 22% y-o-y to Rs. 396,324 million compared to Rs. 325,206 million in the previous year. The primary drivers of the AUM growth were Gold loans, which grew by 44% y-o-y and Microfinance loans, which grew by 40% y-o-y. The synergistic products of Construction & Real-Estate finance and Capital Market loans continue to have a declining share in the portfolio.

The Company is in the process of transferring a substantial part of its Construction & Real Estate (CRE) loan assets that are in the form of non-convertible debentures to an Alternative Investment Fund wherein, the Company will continue to own at least a third of the AIF's units. The AIF has a target fund size of Rs. 36 billion. The capital released by the above transaction, will strengthen Company's balance sheet and help to focus sharply on retail lending, in line with Company's strategy.

The AUM of standalone IIFL Finance Limited (holding Company) grew 20% y-o-y to Rs. 191,988 million from Rs. 160,566 million in the previous year. The AUM of IIFL Home Finance Ltd grew 12% y-o-y to Rs. 206,937 million as of March 31,2021 from Rs. 184,947 million in the previous year and that of Samasta Microfinance Limited grew 41% y-o-y to Rs. 47,956 million as on March 31, 2021 from Rs. 33,998 in the previous year. Our book continues to get more granular with about 90% of the book as at March 31, 2021 being retail in nature. Moreover, 36% of the loans are compliant with RBI's priority sector lending norms. Gold loans are not deemed to be PSL compliant. The large share of retail and PSL compliant loans are of significant value in the prevailing environment as they can be easily securitised/assigned with banks to raise long-term resources.

Our average cost of borrowings for the year declined by 28 bps y-o-y to 9.00% and Net Interest Margin (NIM) on Balance Sheet loans increased by 46 bps y-o-y to 6.83%. Consolidated GNPAs and NNPAs, recognised as per RBI's prudential norms and provisioned as per Expected Credit Loss (ECL) method prescribed in Ind AS, stood at 1.98%^ and 0.89%^ of loans respectively as against 2.04%^ and 0.82%^ respectively in previous year '.

Provision coverage (incl. standard assets provision), under Ind AS norms, on stage 3 assets for the year was 185.76%.

Return on assets for the year was at 1.96% as compared to 1.46% in the previous year. Similarly return on equity for the year was at 14.83% as compared to 11.07% in the previous year. It has mainly increased due to higher profits driven by increase in net interest income and cost optimisation. Net interest income has mainly increased due to superior product mix and savings in cost of funds.

Despite the challenging environment for the industry, we have managed our liquidity well with adequate margin of safety. We raised long-term funds (excluding assigned and securitised) of Rs. 102.83 billion in FY 2020-21, including Rs. 6.70 billion from public issue of unsecured subordinated non-convertible debentures. Our exposure to commercial paper continues to be Nil. We completed securitisation and assignment transactions of Rs. 112.33 billion in FY 2020-21. Our outstanding liability (excluding assignment and securitisation) mix remained well diversified with NCDs including sub-ordinate debt constituting 37%, Bank term loans and working capital finance constituting 53% and NHB re-finance constituting 10%. Our outstanding securitization / assignment balance grew by 27% y-o-y to Rs. 149,040 million. We had a positive ALM throughout the year, whereby inflows covered or exceeded expected outflows across all buckets.

 

C'GNPA and NNPA numbers excluding discontinued Healthcare equipment finance (HCF) business.)

Outlook

Though the pandemic brought challenges on the NBFC sector, it gave rise to greater opportunities such as realignment of strategies, cost optimisation and more focus on digital mode for sustainable growth. With the second wave of Covid-19 leading to partial lockdown and restricted business activities, the upside is vaccination drives are in full swing across the country. The outlook for FY 2021-22 looks promising especially in the retail segment, since macroeconomic indicators show that this segment is highly under penetrated. For eg. mortgage to GDP ratio of India is hardly 10%. Our investment in digital and technology initiatives has enabled us to seamlessly conduct business in an uninterrupted manner even during lockdown periods. Wherever required, our staffs are working from home. Disbursements and physical collections which were impacted during the onset of Covid-19 are back to pre-Covid levels. IIFL Finance is well prepared to seize opportunities and manage risks at every stage of our value chain.

The Government and RBI have introduced several liquidity and stimulus measures to support the NBFC industry, which have slowly started to yield results. Disbursements are picking up sequentially across the NBFC sector, driven by moratorium exit, pent-up and seasonally strong demand. The NBFC industry remains an important functionary in the economic ecosystem to fulfil credit requirement of credit starved and new to credit customers by bringing them into formal financial services ecosystem.

3. IMPACT OF COVID-19 PANDEMIC

The detailed disclosure on the material impact of Covid-19 pandemic on the Company is forming part of the Financial Statements of the Company. You may refer to Note no. 8 of the Standalone Financial Statement for the same.

4. MACROECONOMIC OVERVIEW

Indian economy has experienced a massive hit due to the spread of second wave of COVID-19. Partial restrictions and lockdowns slowed down business activities across the country. The wave of positivity came with the roll out of vaccines and revival of several infrastructure projects by the Government. This helped uplift morale while also boosting economic activities. Though uncertainty looms around on account of the second wave, the recovery momentum should not be affected backed by vaccine rollout. The economy is strongly fighting against the second wave of COVID-19 to handle the downside risks posed by cases.

The economy slowly graduated out of the contraction zone from a dip of 23.90% in June 2020 to a positive 0.40% in December 2020 (Source: MOSPI). The latest GDP numbers support the economy's narrative of a strong sequential recovery. However, the pace of ongoing recovery and its ability to return to prepandemic levels remain slow. The eight core sector industries' index has shown a positive momentum with minor dips in the short-term. The outlook for the future remains optimistic with recovery in business activities. The Indian economy is expected to show decisive and strong signs of recovery. These positive signals are underpinned by the confidence post the vaccine roll out, low interest rates, resurgence of consumer confidence and other investment-attracting measures. With strong prospects of robust growth gaining grounds in consumption and investment, along with a lower base effect, GDP is estimated to grow at 11% in FY 2021-22 (Source: Economic Survey 2020-21)

5. DIVIDEND ON EQUITY SHARES

During the year 2020-21, the Board of Directors of the Company declared and paid an interim dividend of Rs. 3/- per equity share (i.e. 1.50 times of the face value of Rs. 2/- per equity share). This led to an outgo of Rs. 1,135.41 million owing to dividend. Your Directors recommend that the said interim dividend be considered as final. The dividend paid during the previous financial year 2019-20 was Rs. 2.25/- per equity share.

The dividend payout for the year under review is in accordance with the Company's policy to pay sustainable dividend linked to long-term growth objectives of the Company, to be met by internal cash accruals.

Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors of the Company has adopted a Dividend Distribution Policy which is annexed as "Annexure V" to this report and is available on the website of the Company i.e. www.iifl.com.

6. KEY INITIATIVES / DEVELOPMENTS

Public Issue of Unsecured Sub-Ordinated Redeemable Non-Convertible Debentures

During the year under review, IIFL Finance Limited, raised through Public Issue of Unsecured SubOrdinated Redeemable Non-Convertible Debentures ("NCDs") an amount aggregating to Rs. 6,708.6 million. These NCDs are listed and traded on the NSE and BSE.

Issuance of Non-Convertible Debentures on Private Placement basis

During the year under review, IIFL Finance Limited raised through Private Placement of Secured Redeemable Non-Convertible Debentures ("NCDs") an amount aggregating to Rs. 18,511.7 million. These NCDs are listed on the NSE.

NHB Refinance

During the year under review, National Housing Bank (NHB) sanctioned Rs. 12,020 million refinance facility to IIFL

Home Finance Limited, a Wholly Owned Subsidiary of the Company.

Funds raised by way of other Borrowings

During the year under review, IIFL Finance Limited (consolidated), raised Rs. 66,102.5 million through term loan from various banks.

Sale stake of Samasta Microfinance During the year under review, due to identified synergies and to increase IIFL Home Finance Limited's penetration in semi urban and rural areas in more strategic manner, IIFL Finance Limited sold 6,60,61,285 number of fully paid equity shares of Rs. 10/- each constituting of upto 25% equity shares held by IIFL Finance Limited in Samasta Microfinance Limited, Subsidiary Company to IIFL Home Finance Limited, Wholly-owned Subsidiary Company.

Additional investment in Samasta Microfinance During the year under review the Company invested in Right Issue of equity shares of Samasta Microfinance Limited, a Subsidiary of the Company for an amount of Rs. 675 million. The post allotment, holding of the Company in Samasta Microfinance Limited is 74.09% and the post allotment holding of IIFL Home Finance Limited, a wholly owned subsidiary of the Company in Samasta Microfinance Limited is 25%.

Transfer of real estate credit assets to an Alternate Investment Fund (AIF)

The Company is in the process of transferring a substantial part of its Construction & Real Estate (CRE) loan assets that are in the form of non-convertible debentures to an Alternative Investment Fund wherein, the Company will continue to own at least a third of the AIF's units. The AIF has a target fund size of Rs. 36 billion. The capital released by the above transaction, will strengthen Company's balance sheet and help to focus sharply on retail lending, in line with Company's strategy.

Ex-gratia

Reserve Bank of India vide its circular dated April 07, 2021 instructed all lending institutions to refund / adjust 'interest on interest' to all borrowers including those who had availed of working capital facilities during the moratorium period, irrespective of whether moratorium had been fully or partially availed or not availed. Pursuant to these instructions, The Group has estimated an amount of Rs. 169.8 million and charged the same to Profit and Loss Account for the year ended March 31, 2021 on the basis of the methodology for calculation of the amount of such 'interest on interest' finalised by the Indian Banks Association (IBA) in consultation with other industry participants / bodies.

Co-origination / Co-lending tie-up with banks

During the year under review, IIFL Home Finance Limited did co lending tie ups with ICICI Bank for providing affordable housing and secured MSME loans, with Standard Chartered Bank for secured MSME loans and for CSB Bank IIFL Finance Limited has tied up as Business Correspondent for gold loans. During the year ended March 31,2021, we have already commenced business under the tie-ups with CSB Bank and ICICI Bank.

Corporate Social Responsibility (CSR) Initiative The Corporate Social Responsibility ("CSR") Committee of the Board has formulated and recommended to the Board a CSR Policy indicating the CSR activities which can be undertaken by the Company. The Board approved the CSR Policy which is available on the website of the Company, i.e. www.iifl.com.

IIFL group has set-up India Infoline Foundation (generally referred to as "IIFL Foundation") a Section 8 Company under the Companies Act, 2013, which acts as the principal arm to undertake CSR initiatives on behalf of the Company & its subsidiaries. As per Rule 4(2) of the Companies (Corporate Social Responsibility Policy) Rules, 2014, IIFL Foundation has registered itself with the Central Government by filling the e-Form CSR-1 with the Registrar of Companies.

The Company has identified focus areas for CSR initiatives which includes: -

• Girl Child Illiteracy Eradication programme.

• Redevelopment and digitisation of Maa Bari Learning Centers.

• Improving the quality of education in Government schools through technological interventions.

• Support to the differently abled.

• Financial Literacy and Financial Inclusion.

• Health Initiative and facilities.

• Fight against Covid-19 by contributing to the PM-Cares Fund, providing Personal Protective Equipment (PPEs), Donating oxygen concentrators to rural areas, supporting Covid Care Centers and donating Ventilator machine

• Livelihood support programmes.

During the year under review, your Company deployed 2% of its average net profits (computed as per the relevant provisions of the Companies Act, 2013) of the preceding years on CSR projects, fully utilizing the required amount.

Awards and Recognitions

During the year under review following awards and accolades were conferred by reputable organisations, details of the same is as follows: -

• IIFL Finance is recognised as one of The Economic Times Best Brands 2020

• IIFL Foundation's flagship girl child literacy program 'Sakhiyon Ki Baadi' received Women Empowerment Award at Golden Globe Tigers International Awards

• IIFL Foundation received 'outstanding contribution to the cause of education' award at National Award for CSR Excellence

• IIFL Foundation's flagship girl child education initiative 'Sakhiyon Ki Baadi' received the 'best CSR impact initiative award' at National Award for CSR Excellence

• IIFL Foundation's 'Sakhiyon Ki Baadi' initiative received the most promising CSR program at Goodera Karma Awards

• Ms Madhu Jain, Director, IIFL Foundation received the CSR Leadership Award at Golden Globe Tigers International Awards 2020

• Ms Madhu Jain, Director, IIFL Foundation received the CSR Leadership Award at National Award for CSR Excellence

• IIFL Finance's #SeedhiBaat campaign received the Best PR Campaign award at the Global Marketing Excellence Awards

• IIFL Finance's #SeedhiBaat campaign received the Best Television Campaign award at the Global Marketing Excellence Awards

• IIFL Finance's TVC with Rohit Sharma received the Best Marketing Campaign Award at the National Awards for Marketing Excellence

• IIFL Home Loan recognised as one of The Best BFSI Brands by Economic Times

• IIFL received Golden Peacock Award for National Training 2020 under Financial Services Category

• IIFL Finance received 'Great Place To Work' for the third year in a row

7. SHARE CAPITAL

During the year under review, the total paid up equity share capital of the Company increased from Rs. 75,66,81,844/- to Rs. 75,76,81,352/- pursuant to allotment of 4,99,754 equity shares of Rs. 2/- each under Employee Stock Option Scheme(s) of the Company to the eligible employees.

The movement of share capital was as under:

Particulars No. of shares allotted Cumulative outstanding capital (no. of shares with face value of Rs. 2 each)
Capital at the beginning of the year - 75,66,81,844
Allotment of shares to employees on August 14, 2020 pursuant to exercise of options granted under IIFL Finance Employee Stock Option Plan 2020 - Merger Scheme 27,135 75,67,36,114
Allotment of shares to employees on September 21, 2020 pursuant to exercise of options granted under Employee Stock Option Plan 2008 and IIFL Finance Employee Stock Option Plan 2020 - Merger Scheme 27,510 75,67,91,134
Allotment of shares to employees on December 02, 2020 pursuant to exercise of options granted under Employee Stock Option Plan 2008 and IIFL Finance Employee Stock Option Plan 2020 - Merger Scheme 52,274 75,68,95,682
Allotment of shares to employees on December 22, 2020 pursuant to exercise of options granted under Employee Stock Option Plan 2008 and IIFL Finance Employee Stock Option Plan 2020 - Merger Scheme 21,668 75,69,39,018
Allotment of shares to employees on February 08, 2021 pursuant to exercise of options granted under Employee Stock Option Plan 2008 and IIFL Finance Employee Stock Option Plan 2020 - Merger Scheme 56,689 75,70,52,396
Allotment of shares to employees on March 16, 2021 pursuant to exercise of options granted under Employee Stock Option Plan 2008 and IIFL Finance Employee Stock Option Plan 2020 - Merger Scheme 3,14,478 75,76,81,352

8. INVESTOR EDUCATION AND PROTECTION FUND (lEPF)

In accordance with the applicable provisions of Companies Act, 2013 read with Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules"), all unclaimed dividends are required to be transferred by the Company to the IEPF, after completion of seven (7) years. Further, according to IEPF Rules, the shares on which dividend has not been claimed by the shareholders for seven (7) consecutive years or more shall be transferred to the demat account of the IEPF Authority. The details relating to amount of dividend transferred to the IEPF during 2020-21 and corresponding shares on which dividends were unclaimed for seven (7) consecutive years, are provided in the General Shareholders Information section of Corporate Governance report forming part of this Annual Report.

9. SECURITISATION OF LOAN PORTFOLIO

During the year under review, your Company (consolidated) as an originator has undertaken securitisation transactions of total book value of loan assets amounting to Rs. 34,128.72 million and Direct Assignment transactions of total book value of loan assets amounting to Rs. 89,581.21 million.

10. EMPLOYEES STOCK OPTION SCHEMES (ESOS)

The Company has in force the following Schemes which are prepared as per the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014 ("SBEB Regulations"):

1. IIFL Finance Employees Stock Option Plan 2007 ("ESOS Scheme 2007")

2. IIFL Finance Employee Stock Option Plan 2008 ("ESOS Scheme 2008")

3. IIFL Finance Employee Stock Option Plan 2020 - Merger Scheme ("ESOS Scheme 2020")

Further, no stock options were granted to the employees during the year under the ESOS Scheme 2007 and ESOS 2020 Merger Scheme. The Company granted 50,000 Stock Options to eligible employee during the year under ESOS Scheme 2008.

During the year under review 27,315 stock options granted under ESOS Scheme 2008 got lapsed and the same have been added back to the pool, which can be used for further grant and 34,58,788 stock options granted under ESOS 2020 Merger Scheme got lapsed and the same are not available for further grant.

Under Ind AS, equity settled share based payment transactions with employees are required to be accounted for as per Ind AS 102 "Share-based Payment", whereby the fair value of options as on the grant date should be estimated and recognised as an expense over the vesting period. In accordance with above, the Company has followed fair value method for equity options in its accounts.

There is no material change in Employees' Stock Option Scheme during the year under review and the Scheme is in line with SBEB Regulations. A certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the SBEB Regulations and the resolution passed by the Members would be placed at the ensuing Annual General Meeting ("AGM") for inspection by Members through electronic means. The disclosures relating to ESOPs required to be made under the provisions of the Companies Act, 2013 and the SBEB Regulations are provided on the website of the Company i.e. www.iifl.com and the same is available for inspection by the Members at the Registered Office of the Company on all working days, except Saturdays, Sundays and Public Holidays, during business hours and through electronic means. Members can request the same by sending an email to shareholders@iifl.com till the AGM.

11. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Particulars of investments made, loans given, guarantees given and securities provided along with the purpose for which the loan or guarantee or security was proposed to be utilised by the recipient are given at the respective places in the Standalone Financial Statement (please refer to Note 8, 9 and 37 to the standalone financial statement).

12. SUBSIDIARY COMPANIES

The Company is having following 2 (Two) subsidiaries and, does not have any Associate / Joint Venture:

Particulars
1 IIFL Home Finance Limited
2 Samasta Microfinance Limited

During the year under review, Clara Developers Private Limited, ceased to be the wholly-owned subsidiary of the Company with effect from July 27, 2020 due to sale of Clara Developers Private Limited.

As per the provisions of Section 129, 134 and 136 of the Companies Act, 2013 read with applicable Rules, Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and applicable Indian Accounting Standards ("Ind AS"), the Board of Directors had at their meeting held on May 06, 2021 approved the Consolidated Financial Statements of the Company and its subsidiaries. Copies of the Balance Sheet, Profit and Loss Account, Report of the Board of Directors and Report of the Auditors of each of the subsidiary companies are not attached to the accounts of the Company for 2020-21. The Company will make these documents / details available upon request by any Member of the Company. These documents / details will also be available for inspection by any Member of the Company at its registered office and at the registered offices of the concerned subsidiaries during business hours on working days and through electronic means. Members can request the same by sending an email to shareholders@iifl.com till the Annual General Meeting. The Annual Reports of all the subsidiaries are available on the website of the Company i.e. www. iifl.com. The Company's financial statement including the accounts of its subsidiaries which forms part of this Annual Report is prepared in accordance with the Companies Act, 2013 and Ind AS 110.

A report on the performance and financial position of each of the subsidiaries of the Company, as per the Companies Act, 2013 is provided in the prescribed Form AOC-1 as Annexure A of the Consolidated Financial Statements and hence not repeated here for the sake of brevity.

Pursuant to Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, IIFL Home Finance Limited and Samasta Microfinance Limited were the Material Subsidiaries of the Company for the financial year 2020-21 and shall be the Material Subsidiaries for the financial year 2021-22. In line with the provisions of Regulation 24(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Mr. Arun Kumar Purwar, Independent Director on the Board of the Company is also an Independent Director of IIFL Home Finance Limited. The policy on determining the material subsidiary is available on the website of the Company, i.e. www.iifl.com.

13. CAPITAL ADEQUACY

The capital adequacy ratio (Standalone) was at 25.40% as on March 31,2021, comprising Tier I capital ratio of 17.51% against the ratio of 10% as prescribed by the RBI.

14. ANTI CORRUPTION MECHANISM

The Company with a high regard for honesty and institutional integrity, formulated an Anti-Corruption framework which consists of Anti-Corruption, Gift and Whistle Blower/Vigilance policy applicable to all our employees and in our subsidiaries. The Company has responsibility both to the members and to the communities to which we do business to be transparent in all our dealings.

The Company takes a zero tolerance approach to bribery and other forms of unlawful payment. The Company's Anti-Corruption framework requires that we do not engage in bribery or corruption in any form and explicitly mentions that we will not pay or procure payment of a bribe or unlawful fee to encourage the performance of a task or one which is intended or likely to compromise the integrity of another. We will not accept any payment, gift or inducement from a third party which is intended to compromise our own integrity.

The Vigilance Policy of the Company urges employees to report and escalate unfair transactions without any fear of retribution. The Code of Conduct also includes procedures dealing with Gifts and Entertainment, conflicts of interest and other important matters. Risk Assessment framework identifying inherent corruption risks has been prepared and implemented for all business and support verticals. The same is audited by our internal auditors. E-learning training and declaration on anti-corruption is mandatory for our employees to ensure understanding of anti-corruption policy and ways to mitigate such risk.

15. BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report, in terms of Regulation 34(2)(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, describing the initiatives taken by the Company from an environmental, social and governance perspective is attached as part of the Annual Report.

16. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In accordance with Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Non-Banking Financial Company-Systemically Important Non-Deposit taking Company and Deposit taking Company Directions, 2016, as amended ("RBI Master Direction") the Management Discussion and Analysis Report forms part of this report.

17. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Members of the Company's Board of Directors are eminent persons of proven competence and integrity. Besides experience, strong financial acumen, strategic astuteness and leadership qualities, they have a significant degree of commitment to the Company and devote adequate time to meetings and preparation. In terms of requirement of Listing Regulations, 2015, the Board has identified core skills, expertise and competencies of the Directors in the context of the Company's business for effective functioning, which are detailed in the Corporate Governance Report. The Board meets at regular intervals to discuss and decide on Company / business policy and strategy, apart from other Board business. The Board exhibits strong operational oversight with regular business presentations of meetings. The Company has complied with secretarial standards issued by the Institute of Company Secretaries of India on Board meetings and Annual General Meetings.

a. Directors

The Board comprises Mr. Nirmal Jain and Mr. R. Venkataraman as Executive Directors of the Company in their capacity of Chairman and Managing Director respectively. Mr. Nilesh Vikamsey, Mr. Arun Kumar Purwar, Mr. Vijay Kumar Chopra and Ms. Geeta Mathur are Independent Directors. Mr. Chandran Ratnaswami is NonExecutive Director and Mr. Nagarajan Srinivasan is Non-Executive Director (Investor Director representing CDC Group Plc) of the Company. The Board composition is in compliance with the requirements of the Companies Act, 2013 ("the Act"), SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") and the RBI Master Directions.

The Board is of the opinion that the Independent Directors of the Company has the required integrity, expertise and experience (including the proficiency).

b. Key Managerial Personnel

Mr. Nirmal Jain - Chairman and Whole Time Director, Mr. R. Venkataraman - Managing Director, Mr. Rajesh Rajak - Chief Financial Officer and Ms. Sneha Patwardhan - Company Secretary are the Key Managerial Personnel as per the provisions of the Act and Rules made thereunder.

c. Appointment and Cessation of Directors and Key Managerial Personnel

In accordance with Section 152 of the Act read with Article 157 of the Articles of Association of the Company, Mr. R. Venkataraman is liable to retire by rotation at the ensuing Annual General Meeting ("AGM") and being eligible has offered himself for re-appointment. The Board recommends the same for the approval of Shareholders.

During the year Mr. Sumit Bali ceased to be the Chief Executive Officer of the Company w.e.f. June 30, 2020.

During the year, Mr. Gajendra Thakur ceased to be the Company Secretary of the Company w.e.f. July 31,2020 and Mr. Jayesh Sharma was appointed as Company Secretary of the Company w.e.f. August 01, 2020 in place of Mr. Gajendra Thakur. Thereafter, Mr. Jayesh Sharma ceased to be the Company Secretary of the Company w.e.f. November 03, 2020 and Ms. Sneha Patwardhan was appointed as the Company Secretary of the Company w.e.f. November 03, 2020.

18. MEETING OF DIRECTORS & COMMITTEE / BOARD EFFECTIVENESS

0 Meetings of the Board of Directors

The Board met 8 (Eight) times during the year to discuss and approve various matters including financials, appointment of auditor, declaration of dividend, review of audit reports and other board businesses. For further details, please refer to the report on Corporate Governance.

0 Committees of the Board

In accordance with the applicable provisions of the Companies Act, 2013 ("the Act") and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") and RBI Master Directions, the Board constituted the following Committees:

• Audit Committee

• Nomination and Remuneration Committee

• Corporate Social Responsibility Committee

• Stakeholders Relationship Committee

• Risk Management Committee

• Asset Liability Management Committee (ALCO)

• IT Strategy Committee

Audit Committee

The Audit Committee comprises Mr. Vijay Kumar Chopra, Independent Director, Mr. Nilesh Vikamsey, Independent Director, Ms. Geeta Mathur, Independent Director and Mr. Nagarajan Srinivasan, Non-Executive Director.

The role, terms of reference and powers of the Audit Committee are in conformity with the requirements of the Act, Listing Regulations and RBI Master Directions and the same has been provided in the Corporate Governance Report.

The Committee met during the year under review and discussed on various matters including financials, internal audit reports and Audit Report. During the period under review, the Board of Directors of the Company accepted all the recommendations of the Audit Committee.

The details of Committee meetings held during the year under review are provided in the Corporate Governance Report.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee comprises Mr. Vijay Kumar Chopra, Independent Director, Mr. Nilesh Vikamsey, Independent Director, Mr. Arun Kumar Purwar, Independent Director and Mr. Nagarajan Srinivasan, Non-Executive Director as members of the Committee.

The role, terms of reference and powers of the Nomination and Remuneration Committee are in conformity with the requirements of the Act, Listing Regulations and RBI Master Directions and the same has been provided in the Corporate Governance Report.

The Board has, on the recommendation of the Nomination and Remuneration Committee framed a Nomination and Remuneration policy in compliance with the aforesaid provisions for selection and appointment of Directors, Key Managerial Personnel, Senior Management Personnel of the Company. The Nomination and Remuneration policy is available on the website of the Company, i.e. www.iifl.com.

The said policy and the details of Committee meetings held during the year under review are provided in the Corporate Governance Report.

Corporate Social Responsibility Committee (CSR Committee)

The CSR Committee comprises Mr. Nirmal Jain, Chairman, Mr. Nilesh Vikamsey, Independent Director and Mr. R. Venkataraman, Managing Director.

The Committee has approved CSR Policy of the Company and the same is available on the website of the Company i.e. www.iifl.com. The CSR Report on activities in accordance with the Companies (Corporate Social Responsibility Policy) Rules, 2014 is attached as "Annexure I" to this report.

The roles, details of Committee meeting held during the year and the terms of reference of CSR Committee are provided in the Corporate Governance Report.

Stakeholders Relationship Committee

The Stakeholders Relationship Committee comprises Mr. Arun Kumar Purwar, Independent Director, Mr. Vijay Kumar Chopra, Independent Director and Mr. R. Venkataraman, Managing Director.

The role, terms of reference and power of the Stakeholders Relationship Committee are in conformity with the requirements of the Act and Regulation 20 of Listing Regulations and the same has been provided in the Corporate Governance Report.

The details of Committee meeting held during the year under review and status of complaints are provided in the Corporate Governance Report.

Risk Management Committee

The Risk Management Committee comprises Mr. Arun Kumar Purwar, Independent Director, Mr. R. Venkataraman, Managing Director, Mr. Nilesh Vikamsey, Independent Director, Ms. Geeta Mathur, Independent Director, Mr. Nagarajan Srinivasan, Non-Executive Director and Mr. Sanjeev Srivastava, Chief Risk Officer. The role, terms of reference and power of the Risk Management Committee are in conformity with the requirements of Regulation 21 of Listing Regulations and RBI Master Directions and the same has been provided in the Corporate Governance Report.

The details of Committee meetings held during the year under review are provided in the Corporate Governance Report.

Asset Liability Management Committee (ALCO)

The ALCO comprises Mr. Vijay Kumar Chopra, Independent Director, Mr. R Venkataraman, Managing Director, Mr. Rajesh Rajak, Chief Financial Officer, Mr. Sanjeev Srivastava, Chief Risk Officer and Mr. Govind Modani, V.P. Treasury.

The role, terms of reference and power of the ALCO are in conformity with the requirements of the provisions of RBI Master Direction and Asset Liability Management (ALM) System for NBFCs - Guidelines and the same has been provided in the Corporate Governance Report.

IT Strategy Committee

The IT Strategy Committee comprises Mr. Nilesh Vikamsey, Chairman, Ms. Geeta Mathur, Member, Mr. Aditya Sisodia, Member, Mr. Raghunathan Balaji, Member, Mr. Sanjeev Srivastava, Member, Mr. Sanjay Tiwari, Member and Mr. Shankar Ramrakhiani, Member.

The role, terms of reference and power of the IT Strategy Committee are in conformity with the requirements of the Master Direction - Information Technology Framework for the NBFC Sector issued by the RBI and the same has been provided in the Corporate Governance Report.

Besides the aforesaid Committees, the Board of Directors of the Company has constituted Committees comprising of Senior Management Persons for day to day operations of the Company viz. Finance Committee, Group Credit Committee, Credit Committee, Environment Social and Governance Committee, etc.

Board Effectiveness

• Familiarisation Program for the Independent Directors

In compliance with the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has put in place a Familiarisation Programme for Independent Directors to familiarise them with the working of the Company, their roles, rights and responsibilities vis-a-vis the Company, the industry in which the Company operates and business model etc.

On a quarterly basis, presentations are made at the meeting of Board and Committees, on business, operations and performance updates of the Company and the group, important developments in the subsidiaries, relevant statutory and regulatory changes applicable to the Company, update on important legal matters pertaining to the Company and its subsidiaries.

Details of the Familiarisation Programme are provided in the Corporate Governance Report and are also available on the website of the Company i.e. www.iifl.com.

• Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and SEBI Circular no. SEBI/HO/CFD/CMD/CIR/P/2017/004

dated January 05, 2017, the Board of Directors has carried out an annual performance evaluation of its own performance, the Directors individually including Independent Directors based out of the criteria and framework adopted by the Board. The Board approved the evaluation results as collated by the Nomination and Remuneration Committee ("NRC"). The evaluation process, manner and performance criteria for Independent Directors in which the evaluation has been carried out is explained in the Corporate Governance Report. The Board considered and discussed the inputs received from the Directors. Also, the Independent Directors at their meeting held on March 24, 2021 reviewed the following:

(a) Performance of Non-Independent Directors, various Committee of Board and the Board as a whole.

(b) Performance of the Chairperson of the Company.

(c) Assessed the quality, quantity and timeliness of flow of information between the Company's management and the Board, which is necessary for the Board to effectively and reasonably perform their duties.

The Independent Directors expressed their satisfaction with overall functioning and implementations of their suggestions.

The evaluation process endorsed the Board Members' confidence in the ethical standards of the Company, the cohesiveness that exists amongst the Board Members, the two-way candid communication between the Board and the Management and the openness of the Management in sharing strategic information to enable Board Members to discharge their responsibilities.

• Declaration by Independent Directors

The Company has received necessary declaration from each Independent Director of the Company that they meet the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 ("the Act") and Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations").

The above declarations were placed before the Board and in the opinion of the Board all the Independent Director fulfils the conditions specified under the Act and the Listing Regulations and are Independent to the Management.

There has been no change in the circumstances or situation, which exist or may be reasonably anticipated, that could impair or impact the ability of Independent Directors to discharge their duties with an objective of independent judgment and without any external influence.

The Independent Directors of your Company have registered on the Independent Directors' Databank as per the requirements of Section 149 of the Companies Act, 2013 and the applicable rules thereto.

• Fit and Proper Criteria & Code of Conduct

Your Company has received undertaking and declaration from each Director on fit and proper criteria in terms of the provisions of RBI Master Directions. The Board of Directors has confirmed that all existing Directors are fit and proper to continue to hold the appointment as Directors on the Board, as reviewed and recommended by the Nomination and Remuneration Committee on fit and proper criteria under RBI Master Directions.

All the Directors of the Company have affirmed compliance with the Code of Conduct of the Company. The Declaration of the same is provided in the Corporate Governance Report.

• Board Diversity

The Company recognises and embraces the importance of a diverse Board in its success. The Company believes that a truly diverse Board will leverage difference in thought, perspective, knowledge, skills, regional and industry experience, cultural and geographical backgrounds, age, ethnicity, race, gender that will help us retain our competitive advantage. The policy adopted by the Board sets out its approach to diversity. The policy is available on the website of the Company i.e. www.iifl.com.

19. RISK MANAGEMENT

The Company has in place a Risk Management Committee constituted in accordance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and RBI Master Directions to assist the Board in overseeing the Risk Management activities of the Company, approving measurement methodologies and suggesting appropriate risk management procedures mitigating all the risks that the organisation faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks which have been identified and assessed. There is an adequate risk management infrastructure in place capable of addressing those risks.

In light of Covid-19 pandemic, the organisation has put in place an exhaustive framework to manage any event specific risk. This framework included:

i. A quick response team comprising of senior management personnel to address any people risk, be it on health front or psychological support;

ii. Customer support team to seamlessly address any customer grievances / complaints;

iii. Information technology steering committee to address technology related challenges and support;

iv. Senior management team who undertook an ongoing evaluation of asset quality and liquidity in lieu of the fast changing external environment. On an ongoing basis updates were sent to Board to appraise them on the ground situation and provide an outlook.

The Company's management monitors and reports principal risks and uncertainties that can affect its ability to achieve its strategic objectives. The Company's management systems, organisational structures, policy, processes, standards, and code of conduct together form the risk management governance system of the Company.

The Company has in place a Risk Management Policy and introduced several measures to strengthen the internal controls systems and processes to drive a common integrated view of risks, optimal and mitigation responses. This integration is enabled through a dedicated team and Risk Management, Internal Control and Internal Audit systems and processes.

20. INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal controls with reference to financial statements and operations and the same are operating effectively. The Internal Auditors tested the design and effectiveness of the key controls and no material weaknesses were observed in their examination. Further, Statutory Auditors verified the systems and processes and confirmed that the Internal Financial Controls system over financial reporting are adequate and such controls are operating effectively.

21. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

The Company has put in place a policy for Related Party Transactions (RPT Policy), which has been approved by the Board of Directors. The policy provides for identification of Related Party Transactions (RPTs), necessary approvals by the Audit Committee / Board / Shareholders, reporting and disclosure requirements in compliance with the Companies Act, 2013 and provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

All contracts executed by the Company during the financial year with related parties were on arm's length basis and in the ordinary course of business. All such RPTs were placed before the Audit Committee/ Board for approval, wherever applicable. The Audit Committee reviews all RPTs quarterly.

The Company has obtained the shareholder's approval on Material Related Party Transaction in the previous Annual General Meeting.

During the year, the Company has entered into contract/ arrangement / transaction with related parties, which could be considered material in accordance with Regulation 23 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the policy of the Company on materiality of RPTs. The policy for determining 'material' subsidiaries and the policy on materiality of RPTs and dealing with RPTs as approved by the Board may be accessed on the website of the Company i.e. www.iifl.com. You may refer to Note no. 40 of the Standalone Financial Statement, which contains related party disclosures. Since all RPTs entered into by the Company were on an arm's length basis and in the ordinary course of business. The Company has not entered into any transaction requiring disclosure in Form AOC-2, hence the same is not provided.

Considering the Company is being NBFC and its nature of business and operations, the Company will be/continue entering into various Related Party Transactions in the ordinary course of business and accordingly the Company has sought approval from shareholders for Material Related Party Transactions and details of same can be sought from the Notice Convening the Annual General Meeting of the Company.

22. ANNUAL RETURN

As required under Section 92(3) of the Act and the Rules made thereunder and amended from time to time, the Annual Return of the Company in prescribed Form MGT-7 is available on the website of the Company i.e. www.iifl.com.

23. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments affecting the financial position of the Company, which had occurred between the end of the financial year of the Company to which the financial statements relate and the date of this annual report.

24. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on energy conservation, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is appended as "Annexure - MI" and forms part of this Report.

25. WHISTLE BLOWER POLICY/ VIGIL MECHANISM

In Compliance of the Companies Act, 2013 and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has adopted a Whistle Blower Policy / Vigil Mechanism and has established the necessary vigil mechanism for Directors, Employees and Stakeholders of the Company to report genuine concerns about unethical behaviour, actual or suspected fraud or violation of the Company's code of conduct or ethics policy. The Company has disclosed the policy on the website of the Company i.e. www.iifl.com.

26. CREDIT RATING

The Company's financial discipline and prudence is reflected in the strong credit ratings ascribed by rating agencies. The following Credit ratings were assigned to the Company as on March 31,2021.

Rating Agency Product Rating As on March 31, 2021 Rating As on March 31, 2020
CARE Non-Convertible Debenture CARE AA Negative CARE AA Stable
Long Term Bank Facilities CARE AA Negative CARE AA Stable
Preference Shares NA CARE AA(RPS) Stable
Subordinate Debt CARE AA Negative CARE AA Stable
ICRA Limited Non-Convertible Debentures Programme [ICRA]AA (Negative) [ICRA]AA (Negative)
Commercial Paper programme [ICRA]A1 + [ICRA]A1 +
Subordinate Debt Programme [ICRA]AA (Negative) [ICRA]AA (Negative)
Long Term Bank Lines [ICRA]AA (Negative) [ICRA]AA (Negative)
Long Term Principle Protected Equity Linked Debenture Programme PP-MLD[ICRA]AA (Negative) PP-MLD[ICRA] AA (Negative)
Long Term Principle Protected Market Linked Debenture Programme PP-MLD[ICRA]AA (Negative) PP-MLD[ICRA] AA (Negative)
Commercial Paper programme (IPO financing) [ICRA]A1 + [ICRA]A1 +
Long term Debt programme NA [ICRA]AA (Negative)
Secured NCD Programme NA [ICRA]AA (Negative)
Un-secured NCD Programme NA [ICRA]AA (Negative)
CRISIL Limited Non-Convertible Debentures CRISIL AA/Stable CRISIL AA/Stable
Subordinate Debt CRISIL AA/Stable CRISIL AA/Stable
Long Term Principal Protected Market Linked Debentures CRISIL PP-MLD AAr/Stable CRISIL PP-MLD AAr/Stable
Commercial Paper programme (IPO financing) CRISIL A1 + CRISIL A1 +
Commercial Paper CRISIL A1 + CRISIL A1 +
Total Bank Loan Facilities Rated (Long Term Rating) CRISIL AA/Stable CRISIL AA/Stable
Brickwork NCDs (Public Issue) BWR AA+ Negative BWR AA+ Negative
Ratings Non-Convertible Debentures BWR AA+ Negative
Secured Non-Convertible Debentures BWR AA+ Negative BWR AA+ Negative
Unsecured Subordinated NonConvertible Debentures BWR AA+ Negative BWR AA+ Negative
Moody's Corporate family rating (CFR) B2 / Stable Ba3 / Stable
Long-term foreign- and local-currency senior secured ratings to USD 1 billion Medium Term Note (MTN) program. B2 / Stable Ba3 / Stable
Fitch Senior secured notes issued under USD 1 billion Medium Term Note (MTN) Programme B+ / Stable B+ / Negative Watch
Senior secured notes issued under USD 400 million bond B+ / Stable
Long-Term Issuer Default Rating (IDR) NA B+ / Negative Watch

• During the year, CARE has reaffirmed the rating i.e. CARE AA however outlook has been revised from Stable to Negative.

• During the year, Fitch has affirmed the rating i.e. B+ however outlook has been revised from Negative to Stable.

• During the year, Moody's has changed its rating from Ba3 to B2.

27. PREVENTION OF SEXUAL HARASSMENT

Your Company recognises its responsibility and continues to provide a safe working environment for women, free from sexual harassment and discrimination. In Compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has put in place a Policy on prevention of Sexual Harassment of Women at workplace and has duly constituted an Internal Complaints Committee under the same. The Company also provides for mandatory online training on Prevention of Sexual Harassment for every new joinee, as well as, all employees on an annual basis.

The details of complaints received pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 are provided in the Corporate Governance Report.

28. PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 ("the Act") read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in "Annexure - IV" to this report.

Further, a statement showing the names and other particulars of employees drawing remuneration in excess of the limits as set out in the Rules 5(2) and 5(3) of the aforesaid Rules, forms part of this report. However, in terms of first proviso to Section 136(1) of the Act, the Annual Report and Accounts are being sent to the Members and others entitled thereto, excluding the aforesaid information. The said information is available for inspection by the Members at the Registered Office of the Company during business hours on working days and through electronic means, up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary, at shareholders@ iifl.com whereupon a copy would be sent.

29. STATUTORY AUDITORS

Upon resignation of erstwhile Statutory Auditors M/s Deloitte Haskins & Sells LLP Chartered Accountants (Firm's Registration Number 117366W/ W-100018) on June 07, 2020, M/s V Sankar Aiyar & Co, Chartered Accountants (Firm Registration Number 109208W) were appointed as the Statutory Auditors of the Company by the Members at the 25th Annual General Meeting ("AGM") of the Company held on June 30, 2020 for a period of 5 (five) years from the conclusion of the ensuing 25th AGM till the conclusion of the 30th AGM to be held in the year 2025 at such remuneration plus out of pocket expenses and applicable taxes, as may be mutually agreed between the Board of Directors of the Company and the Auditors.

The firm holds a Peer Review Certificate No. 11660 dated April 15, 2019 issued by the Peer Review Board of the Institute of Chartered Accountants of India valid till April 14, 2022.

The Audit for FY 2020-21 was conducted by M/s V Sankar Aiyar & Co, and there are no qualifications, reservations, adverse remarks or disclaimers made by the Statutory Auditor in their Audit Report. The Notes to the financial statements referred in the Auditors Report are self-explanatory and therefore do not call for any comments under Section 134 of the Companies Act, 2013. The Auditors' Report is enclosed with the financial statements in the Annual Report.

30. SECRETARIAL AUDIT

The Board had appointed M/s Nilesh Shah & Associates, Practicing Company Secretaries to conduct Secretarial Audit of the Company for the financial year 2020-21. The Auditor had conducted the audit and their report thereon was placed before the Board. The report of the Secretarial Auditor is annexed herewith as "Annexure - II" to this report. There are no qualifications or observations in the Report.

31. REPORTING OF FRAUDS BY AUDITORS

During the year under review, the Statutory Auditor and the Secretarial Auditor have not reported any instances of frauds committed in the Company by its Officers or Employees to the Audit Committee under Section 143(12) of the Companies Act, 2013, details of which needs to be mentioned in this Report.

32. RBI DIRECTIONS

Your Company complies with the direction(s), circular(s), notification(s) and guideline(s) issued by the RBI as applicable to your Company as a systemically important non-deposit taking NBFC.

The Company has in place the system of ensuring compliance with applicable provisions of Foreign Exchange Management Act, 1999 and rules made thereunder.

33. CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI. The Company has also implemented several best Corporate Governance practices as prevalent globally. The report on Corporate Governance as stipulated under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the RBI Master Directions forms an integral part of this Report. The requisite certificate from the M/s Nilesh Shah & Associates, Practicing Company Secretaries confirming compliance with the conditions of Corporate Governance is attached to the report on Corporate Governance.

Your Company has complied with all the norms prescribed by the RBI including the Fair Practices Code, Anti Money Laundering and Know Your Customer (KYC) guidelines besides other guidelines.

34. COMPLIANCE WITH THE SECRETARIAL STANDARDS

The Board of Directors affirms that the Company has complied with the applicable mandatory Secretarial Standards issued by the Institute of Company Secretaries of India.

35. DEPOSITS

During the period under review, your Company did not accept / renew any deposits within the meaning of Section 73 of the Companies Act, 2013 and the rules made there under and as such, no amount of principal or interest was outstanding as on the balance sheet date. Further, The Company did not hold any public deposits at the beginning of the year nor has it accepted any public deposits during the year under review.

36. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, it is hereby confirmed that:

a) in the preparation of the annual accounts, the applicable accounting standards had been followed and there are no material departures;

b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the 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) the directors had laid down internal financial controls to be followed by the Company 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.

37. GENERAL

Your Directors state that during the financial year 2020-21:

1. The Company has not issued equity shares with differential rights as to dividend, voting or otherwise.

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

3. There are no significant and material orders passed against the Company by the Regulators or Courts or Tribunals, which would impact the going concern status of the Company and its future operations.

4. The Central Government has not prescribed the maintenance of cost records for any of the products of the Company under sub-section (!) of Section 148 of the Companies Act, 2013 and the Rules framed there under.

5. There is no change in nature of business of the Company during the year.

6. The details of Debenture Trustees of the Company are as follows:

Catalyst Trusteeship Limited IDBI Trusteeship Services Limited Milestone Trusteeship Services Private Limited
Address- GDA House, First Floor, Plot No. 85 S. No. 94 & 95, Bhusari Colony (right), Kothrud, Pune- 411038 Address- Asian Building, Ground Floor, 17, R.Kamani Marg, Ballard Estate, Mumbai- 400001 Address- Cowrks Worli, PS56, 3rd Floor, Birla Centurion, Century Mills Compound, Pandurang Budhkar Marg, Worli, Mumbai - 400030
Phone- 022 49220555 Phone-+91 2240807001 Phone- +91 22 628861 19
Fax No- 022 49220505 Fax No- +91 22 6631 1776 Fax No- +91 22 67167077
Email-complianceCTL-Mumbai@ ctltrustee.com Email-itsl@idbitrustee.com Email-compliance@milestonetrustee.in
Website-www.catalysttrustee.com Website- www.idbitrustee.com Website- www.milestonetrustee.in

38. APPRECIATION

Your Directors place on record their sincere appreciation for the assistance and guidance provided by the Reserve Bank of India, the Ministry of Corporate Affairs, the Securities and Exchange Board of India, government and other regulatory Authorities, stock exchanges, other statutory bodies, Company's bankers, Members and employees of the Company for the assistance, cooperation and encouragement and continued support extended to the Company.

Your Directors also gratefully acknowledge all stakeholders of the Company viz. customers, members, dealers, vendors, banks and other business partners for the excellent support received from them during the year. Our employees are instrumental in helping the Company scale new heights, year after year. Their commitment and contribution is deeply acknowledged. Your involvement as shareholders is also greatly valued. Your Directors look forward to your continuing support.

For and on behalf of the Board
NIRMAL JAIN
Date: May 06, 2021 Chairman
Place: Mumbai (DIN: 00010535)