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EQUITY - MARKET SCREENER

AAVAS Financiers Ltd
Industry :  Finance - Housing
BSE Code
ISIN Demat
Book Value()
541988
INE216P01012
325.6052062
NSE Symbol
P/E(TTM)
Mar.Cap( Cr.)
AAVAS
69.02
22451.78
EPS(TTM)
Face Value()
Div & Yield %
41.21
10
0
 

As on: Jan 18, 2022 09:57 AM

To

The Shareholders,

AAVAS FINANCIERS LIMITED (‘COMPANY')

Your Directors are pleased to present the Eleventh Annual Report on the operational and business performance of the Company together with the Audited Financial Statements (Standalone and Consolidated) for the Financial Year ended March 31, 2021.

FINANCIAL PERFORMANCE

The summarized standalone financial performance for the Financial Year ended March 31, 2021 are as under:

( Rs in crore)

Particulars For the Year ended March 31, 2021 For the Year ended March 31, 2020
A Total Income 1,105.34 903.09
Less:
Total Expenditure before Depreciation & Amortization and provision (694.26) (566.14)
Impairment on financial instruments (37.14) (15.34)
Depreciation & Amortization (20.60) (19.56)
B Total Expenses (752.01) (601.04)
C Profit Before Tax (A-B) 353.33 302.05
D Less: Provision for Taxations (Net of Deferred Tax) (63.83) (52.93)
E Profit After Tax (C-D) 289.50 249.12
F Add: Other Comprehensive Income (Net of Tax) 0.83 (0.05)
G Total Comprehensive Income (E+F) 290.33 249.07
Transfer to Statutory Reserve 58.07 49.81

Your Company posted Total Income (Total Interest Income and Other Income) of RS 1,105.34 crore and total Comprehensive Income of RS 290.33 crore for the Financial Year ended March 31, 2021, as against RS 903.09 crore and RS 249.07 crore respectively for the previous Financial Year.

10 YEARS OF A GLORIOUS JOURNEY

On February 22, 2021, your Company completed 10 years of establishment. Since inception, the Company focused on catering to the housing needs of low-and-middle income self-employed and salaried customers in semi-urban and rural areas. Through these 10 years, your Company fulfilled the dreams of lakhs of customers.

Major events and milestones of this journey are as follows:

Calendar Year Details
2011 Incorporated as "Au Housing Finance Private Limited", a wholly owned subsidiary of AU Small Finance Bank Limited (formerly, Au Financiers (India) Limited) ("AU Bank") Registered with National Housing Bank ("NHB") as a ‘housing finance institution without accepting public deposits' and started business operations from Rajasthan
2012 Received first rating "BBB+/Stable" from CRISIL for long term bank facilities
2013 Converted into a public limited company
Received its first refinancing assistance from NHB
Expanded operations to states of Maharashtra, Gujarat and Madhya Pradesh
2014 Issued first Non-Convertible Debentures ("NCDs") to raise debt
Expanded its operations to Delhi NCR
2015 Entered into its first Assignment/ Securitisation transaction of retail loans
Identified as a ‘financial institution' under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("SARFAESI")
Manpower strength crossed the mark of 1000
Asset under Management ("AUM") crossed the mark of RS 1,000 crore and active loan accounts grown to 17,000+
2016 AU Bank divested its majority stake in the Company to "Kedaara Capital" and "Partners Group".
Received the ASSOCHAM Excellence Award for being the "Best Housing Finance Company" in the affordable housing segment
Received its first subsidy from NHB under ‘Credit Linked Subsidy Scheme - Pradhan Mantri Awas Yojana' (CLSS- PMAY)
AUM crossed the mark of RS 2,000 crore
2017 Name changed to "Aavas Financiers Limited" from "Au Housing Finance Limited"
Manpower strength crossed the mark of 3000
Branch network crossed the mark of 100
AUM crossed the mark of RS 3,000 crore
2018 Launched Initial Public Offer (IPO) and listed its shares on stock exchanges
Upgradation of long term rating to A+ by rating agencies
Expanded its presence in 10 states and branch network crossed the mark of 200
Active loan accounts grown to 50,000 +
AUM crossed the mark of RS 5,000 crore
2019 Active loan accounts grown to 75,000+
AUM crossed the mark of RS 7,000 crore
Upgradation of CARE rating to "CARE AA-/Stable" for long term facilities
2020 AUM crossed the mark of RS 8,000 crore
Manpower strength crossed the mark of 5000
Multilateral/Development Financial Institutions such as Asian Development Bank ("ADB"), International Finance Corporation (IFC) and CDC Group PLC extended credit lines to the Company
Mr. Ghanshyam Rawat, Chief Financial Officer was awarded with the best "CA-CFO" of the Year under the category of "Emerging Corporate (BFSI)" by ICAI
Active loan accounts grown to 1,00,000+
Expanded its branch network to 11 states with 280 branches
2021 AUM crossed the mark of RS 9,400 crore
Active loan accounts grown to 1,25,000 +
Mr. Sushil Kumar Agarwal, Managing Director & CEO was conferred with the prestigious EY (Ernst and Young)
Entrepreneur of the Year Award in the Financial Services category
Upgradation of ICRA rating to "ICRA AA-/Stable" for long term facilities

With a decade of history in business, the Company experienced multiple business cycles. In each instance in the past such as demonetization, liquidity tightness and implementation of Goods and Service Tax ("GST") law, the Company not only demonstrated agility in responding to those challenges but also converted them into opportunities and grew its business.

In the current pandemic situation also, your Company remained confident to emerge stronger. The Company's expanding presence across un-served and underserved geographies will be instrumental in driving the growth. Your Directors express their gratitude to the Customers, Regulators, Employees, Lenders, Shareholders and other Stakeholders for their continued support in achieving this milestone.

COVID-19 - A GLOBAL PANDEMIC AND THE COMPANY'S APPROACH

The year 2020-21 was challenging. The COVID-19 pandemic had a significant impact on lives, livelihoods and the businesses. In compliance with the lockdown order announced by the Government and local authorities from time to time, certain branches temporarily remained closed and business operations were managed remotely to the extent possible as per Business Continuity Plan of the Company.

We summarise here below the impact of COVID-19 on the business of your Company and the Company‘s approach.

Operations and business continuity

The challenges increased due to restricted movement and the disrupted economic cycle. The situation gradually improved from the end of the first quarter as the restrictions were lifted in a phased manner. As the second wave of the pandemic unfolded in April 2021, your Company focused on protecting the health and safety of employees and customers, while ensuring minimum business disruption.

The Company believed that going digital is the future, not only for business growth but also for product and service differentiation. During the Financial Year under review, your Company focused on digital offerings, made its processes and decision-making through data analytics for faster customer service, paperwork reduction, improved turnaround time and better risk management.

COVID-19 – Regulatory Packages and Resolution Framework for COVID-19-related Stress

The Reserve Bank of India (RBI) issued ‘COVID-19 – Regulatory Packages' dated March 27, 2020, April 17, 2020 and May 23, 2020 to mitigate the impact of COVID-19 pandemic on the financial services sector. Under stipulated guidelines, the Company implemented a ‘Policy on Deferment of PEMI/ EMI (COVID-19)' and offered moratorium on the payment of installments and/or interest, as applicable, falling due between March 01, 2020 and August 31, 2020 to all eligible borrowers of the Company.

The RBI issued ‘Resolution Framework for COVID-19 related Stress' dated August 06, 2020 for granting relief to borrowers impacted by COVID-19, by providing the facility of rescheduling of loans and/or for conversion of outstanding interest into a separate credit facility. The Company framed and implemented a ‘Policy on Resolution Framework for loans of borrowers affected by COVID-19'.

Order of Supreme Court of India on declaring accounts as Non-Performing Asset (NPA)

The matter of declaring defaulting accounts as NPAs (not declared as NPAs till August 31, 2020 as per RBI guidelines) was kept on hold by the Hon'ble Supreme Court of India vide orders dated September 03, 2020 and September 28, 2020. Accordingly, the Company did not classify any account covered under the said orders as NPA. Thereafter the Hon'ble Supreme Court of India in Small Scale Industrial Manufactures Association (Regd.) vs Union of India and others vide a judgment dated March 23, 2021 ("Judgement") directed that the interim order granted on September 03, 2020 stands vacated. In this regard, RBI vide its circular dated April 07, 2021 issued instructions in accordance to which your Company resumed recognizing overdue accounts as NPA as per regulatory guidelines.

Scheme for Grant of ex-gratia payment

To provide relief to the borrowers in difficulty due to COVID-19, the Central Government on October 23, 2020, approved to provide ex-gratia payment of difference between compound interest and simple interest by way of relief for the period from March 01, 2020 to August 31, 2020 to borrowers in specified loan categories. In accordance with the above, the Company implemented the ‘Policy on Scheme for Grant of Ex-gratia Payment' to extend the benefit to eligible borrowers of the Company.

Further in conformity with the judgment, the RBI vide its circular dated April 07, 2021, advised all lending institutions to refund/adjust the ‘interest on interest' charged to all the borrowers during the moratorium period, i.e. March 1, 2020 to August 31, 2020. In accordance with the above, the Company implemented the ‘Policy on refund/adjust the Interest on interest' to extend the benefit to all the borrowers of the Company.

DIVIDEND

Your Directors have considered reinvesting the profits in the business of the Company in order to build a strong base for the long-term growth of the Company and maintain a liquidity cushion due to ongoing COVID-19 pandemic. Accordingly, no dividend has been recommended for the Financial Year ended March 31, 2021.

Your Company has formulated Dividend Distribution Policy in accordance with Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘SEBI LODR Regulations') for bringing transparency in the matter of declaration of dividend and to protect the interest of investors. The Dividend Distribution Policy is available on the website of the Company at https://www.aavas.in/ dividend-distribution-policy and forms part of this Report as ‘Annexure-5'.

SHARE CAPITAL

The issued and paid-up Equity Share Capital of the Company as on March 31, 2021 stood at RS 78,50,45,510 (Rupees Seventy eight crore fifty lakh forty five thousand five hundred and ten) consisting of 7,85,04,551 (Seven crore eighty five lakh four thousand five hundred and fifty one) Equity Shares of RS 10/- each as compared to RS 78,32,26,610 (Rupees Seventy eight crore thirty two lakh twenty six thousand six hundred and ten) consisting of 7,83,22,661 (Seven crore eighty three lakh twenty two thousand six hundred and sixty one) Equity Shares of RS 10/- each in the previous year.

During the Financial Year under review, the paid-up Equity Share Capital of the Company has been increased on account of issuance and allotment of 1,81,890 Equity Shares of RS 10/- each pursuant to the exercise of stock options by the eligible employees of the Company under Employee Stock Option Plans (ESOPs) of the Company.

SPECIAL RESERVE (U/S 29C OF THE NHB ACT, 1987)

Your Company transferred RS 58.07 crore i.e. 20% of net profits to Statutory Reserves during the Financial Year under review, as required under the provisions of Section 29C of the NHB Act, 1987 read with Section 36 (1) (viii) of Income Tax Act, 1961.

REVIEW OF OPERATIONS

Your Company is registered as a Housing Finance Company (HFC) with NHB to carry out the housing finance activities in India.

To build a quality loan book, your Company endeavors to adopt superior underwriting practices backed by robust monitoring and recovery mechanism. Your Company is committed towards improving efficiency in all its processes and service levels for its customers.

Your Company's thrust continues to be the affordable housing segment, with its focus on catering to the aspirations of low and middle-income Indian families who dream to own their homes. Your Company has been facilitating credit access to the low and middle-income self-employed customers in semi-urban and rural areas in India. The majority of your Company's customers have limited access to formal banking credit facilities.

The operating and financial performance of your Company has been covered in detail in the Management Discussion and Analysis report (MDA), which forms part of this Annual Report.

During the Financial Year under review, your Company delivered a resilient performance, which is reflected in the following financial snapshot:

Income & Profits

Total Income grew by 22% to RS 1,105.34 crore for the Financial Year ended March 31, 2021 as compared to RS 903.09 crore for the previous Financial Year. Profit Before Tax (PBT) was 17% higher at RS 353.33 crore as compared to RS 302.05 crore for the previous Financial Year.

The Total Comprehensive Income for the Financial Year 2020-21 increased by 17% from RS 249.07 crore in the previous Financial Year to RS 290.33 crore in the current Financial Year.

Sanctions

During the Financial Year under review, your Company sanctioned housing loans for RS 2,812.94 crore as compared to RS 3,034.00 crore in the previous Financial Year registering a de-growth of 7% due to subdued disbursements in the first half of the Financial Year. The cumulative loan sanctions since inception of your Company stood at RS 14,459.14 crore as at March 31, 2021. Your Company has not granted any loan against the collateral of Gold Jewellery.

Disbursements

During the Financial Year under review, your Company disbursed housing loans for RS 2,656.85 crore as compared to RS 2,930.39 crore in the previous Financial Year and recorded a de-growth of 9% in disbursements.

The cumulative loan disbursement since inception as at March 31, 2021 was RS 13,754.76 crore.

Assets Under Management (AUM)

The AUM of your Company stood at RS 9,454.29 crore (including assignment of RS 2,004.68 crore) as at March 31, 2021 as against RS 7,796.09 crore (including assignment of RS 1,739.64 crore) in the previous Financial Year, with a growth of 21%. As of March 31, 2021, the average size of loan sanctioned was RS 8.49 lakh and average tenure was 184.53 months in the AUM (on origination basis).

Affordable Housing

Over the last Financial Year, your Company developed an experienced, trained and exclusive team for catering to the PMAY (Urban) product focusing on Economically Weaker Sections ("EWS") and Low Income Group ("LIG") segments and Mid Income Group (MIG) 1 and 2.

Your Company signed a Memorandum of Understanding ("MOU") with various State Governments for the CLSS under the PMAY for EWS, LIG and MIG segments.

Since the inception of the Scheme, your Company received CLSS subsidy of RS 152.17 crore with respect to 7576 beneficiaries and the same was passed on to customers.

Non-Performing Assets (NPA)

Your Company is in adherence to the provisions of Indian Accounting Standards ("Ind AS") with respect to computation of Stage-3 Assets (NPA). Your Company's assets have been classified based on expected performance. Exposure at Default (EAD) is the total amount outstanding including accrued interest as on the reporting date. Further, in compliance with Ind AS accounting framework, interest earned on NPA's is recognized net of expected losses, if the present realisable value of the security is greater than the outstanding loan dues.

Using a pro-active collection strategy, consistent engagement with the customers during the lockdown and recovery management system supported by analytical decision making, your Company was able to contain its gross NPAs at RS 73.91 crore (0.98% of the loan assets) as at March 31, 2021. Your Company reviews the delinquency and loan portfolio on regular basis.

Your Company conforms to a defined policy with proper procedures to address delinquencies and collections. As a result, Gross NPA and Net NPA as at March 31, 2021 were 0.98% and 0.71% respectively (against 0.46% and 0.34% respectively in the previous Financial Year).

Further, the business overview, outlook, and state of affairs of your Company have been discussed in detail in the MDA, which forms a part of this Annual Report.

PRUDENTIAL NORMS FOR THE HFCs ISSUED BY RBI

The Finance Act, 2019 (the "Finance Act"), passed by the Parliament and which has received the assent of the President of India, has introduced various amendments to legislations. Amongst others, the Finance Act includes amendments to the NHB Act, 1987 which has transferred the regulation authority over the housing finance sector from NHB to RBI. The Amendments to the NHB Act have come into force with effect from August 9, 2019. RBI on June 17, 2020, issued a draft for review of extant regulatory framework for HFCs and had invited comments from the stakeholders on the same. After considering the inputs received, the RBI, on October 22, 2020 issued the revised Regulatory Framework for HFCs (‘RBI Regulations').

Subsequently, RBI issued the Master Direction – Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021 on February 17, 2021 ("RBI Master Directions"). The Directions broadly accumulate the regulatory requirements, from the Regulations notified on October 22, 2020, erstwhile Master Circular for Housing Finance Companies (NHB) Directions, 2010 and other applicable circulars on HFCs.

Your Company continues to comply with the guidelines issued by RBI from time to time including but not limited to accounting guidelines, prudential norms for asset classification, income recognition, provisioning, capital adequacy, concentration of credit/investments, credit rating, Know Your Customer (KYC) guidelines, Anti Money Laundering (AML) standards, fair practices code, Asset Liability Management (ALM) system, Most Important Terms & Conditions (MITC), Grievance Redressal Mechanism, recovery of dues, real estate and capital market exposures norms. Further, your Company has taken steps for effective management of operational risk including technology risk as outlined in the Information Technology framework for HFCs. Your Company has also put a reporting system in place for recording frauds as stipulated in Master Direction - Monitoring of Frauds in NBFCs (Reserve Bank) Directions, 2016 issued by RBI.

The recognition of income and impairment on financial instruments (Expected Credit Loss) has been made in the books as per the Ind AS.

No significant or adverse remarks have been made by the NHB and RBI with respect to any regulatory compliance and inspection of the Company carried out during the Financial Year. Further, RBI and NHB have not levied any penalty on the Company during the Financial Year.

CAPITAL ADEQUACY RATIO

As per the provisions of the clause 6.1 of Chapter IV- Capital of RBI Master Directions, your Company was required to maintain a minimum capital adequacy of 14% on a standalone basis on March 31, 2021.

Your Company's Capital Adequacy Ratio as at March 31, 2021 was 54.38% (previous Financial Year 55.86%) which is far above the minimum required level of 14%.

CREDIT RATING

During the Financial Year under review, ICRA Limited has upgraded the long-term ratings of the Company from ‘ICRA A+/Positive to ICRA AA-/Stable'.

Despite lot of challenges and headwinds faced during the COVID-19 pandemic, upgradation of existing credit ratings from ICRA Limited is a positive reflection of the Company's comfortable liquidity and resource profile and its leadership position in affordable housing segment, its experienced management team and strong brand equity in the regional markets where it has presence. The ratings also derive strength from adequate risk management and control systems put in place by the Company, asset quality as well as good growth opportunities in the affordable housing segment.

Further, all the other credit ratings assigned to the Company have been reaffirmed by respective credit rating agencies.

The details of the same are mentioned below:

Rating Agency Rating Type Nature of Borrowing External Credit Rating
CARE Long Term Rating Long Term Banking Facilities, Non-Convertible Debentures (‘NCDs') and Instrument-Subordinated Debt ‘CARE AA- / Stable'
Short Term Rating Commercial Paper ‘CARE A1+'
ICRA Long Term Rating Long Term Banking Facilities and Non-Convertible Debentures (‘NCDs') ‘ICRA AA- /Stable'
Short Term Rating Commercial Paper ‘ICRA A1+'
India Ratings Short Term Rating Commercial Paper ‘IND A1+'

Regulatory & Statutory Compliances

During the Financial Year under review, the RBI and NHB have issued various notifications, circulars and guidelines to Housing Finance Companies.

The circulars and the notifications issued by RBI and NHB were also placed before the Board of Directors at regular intervals to update the Board Members and report on actions initiated on the same, and your Company has adhered to all the Circulars, Notifications and Guidelines issued by RBI and NHB from time to time.

The Government of India has set up the Central Registry of Securitization, Asset Reconstruction and Security Interest of India (CERSAI) under Section 21 of the SARFAESI Act, 2002 to have a central database of all mortgages created by lending institutions. The object of this registry is to compile and maintain data relating to all transactions secured by mortgages. Accordingly, your Company is registered with CERSAI and has been submitting data in respect of its loans.

Your Company is also in compliance with the provisions of the Companies Act, 2013 ("the Act") including the Secretarial Standards, SEBI LODR Regulations and other applicable statutory requirements.

During the Financial Year, no penalty was imposed on the Company by any regulator/ supervisor/ enforcement authority.

DEPOSITS

During the Financial Year under review, your Company has neither invited nor accepted nor renewed any fixed deposits from public within the meaning of Chapter V of the Act read with the Companies (Acceptance of Deposits) Rules, 2014. Therefore, the disclosure in terms of RBI Master Directions is not required.

AWARDS AND RECOGNITION

Mr. Sushil Kumar Agarwal, Managing Director & CEO of the Company was conferred with the prestigious EY (Ernst and Young) Entrepreneur of the Year Award in the Financial Services category. The award ceremony held virtually on March 25, 2021 where it celebrated ‘The Unstoppables' winners who stand for extraordinary stories of a strong mission and purpose backed with continuous innovation in their respective category.

Your Company continued to enjoy following ISO certifications for its key customer facing departments and workflow processes from TUV Nord India reflecting the superior customer experience:

ISO 9001:2015 for Lending process; e-disbursements and client servicing including Grievance Redressal Mechanism and;

ISO 10002:2014 for customer satisfaction and complaint handling process.

RESOURCE MOBILIZATION

Your Company's overall borrowing is guided by a policy duly approved by the Board of Directors. Your Company has vide Special Resolution passed on July 22, 2020, under Section 180 (1) (c) of the Act, authorized the Board of Directors to borrow money upon such terms and conditions as the Board may think fit in excess of the aggregate of paid up share capital and free reserves of the Company up to an amount of RS 12,500 crore and the total amount so borrowed shall remain within the limits as prescribed by RBI.

Your Company manages its borrowing structure through prudent asset-liability management and takes various measures, which include diversification of the funding sources, tenure optimization, structured interest rates and prudent timing of borrowing to maintain its borrowing cost at optimum level.

During the Financial Year under review, your Company continued to diversify its funding sources by exploring the Debt Capital Market through private placement of Secured NCDs to Mutual Funds and Banks, NHB Refinance, Securitization/ Direct assignment and banking products like Priority Sector/ Non-Priority Sector Term Loans, Cash Credit Facilities and Working Capital Demand Loans.

The weighted average borrowing cost as at March 31, 2021 was 7.40% (including Securitization/ Assignment) as against

8.44% as at the end of the previous Financial Year. As at March 31, 2021, your Company's sources of funding were primarily in the form of long Term Loans from Banks and Financial Institutions (34.1%), followed by Securitization/Direct assignment (24.3%), NHB Refinance (22.7%), NCDs issued to Multilateral/ Development Financial Institutions (11.0%), NCDs issued to Banks and Domestic Financial Institutions (4.3%), Masala Bonds issued to Multilateral Institutions (2.4%) and Subordinated Debts (1.2%).

Term Loans from Banks and Financial Institutions

The Company, during the Financial Year, received aggregate fresh loan sanctions amounting to RS 1550 crore and has availed loans aggregating to RS 840 crore. The outstanding term loans from Banks and Financial Institutions as at March 31, 2021 were RS 2818.98 crore with average tenure of 9.12 years.

Securitization/Assignment of Loan Portfolio

Your Company has actively tapped Securitization/Direct Assignment market, which has enabled it to create liquidity, reduce the cost of funds and minimizing asset liability mismatches.

During the Financial Year under review, your Company received purchase consideration of RS 549.59 crore from assets assigned in pool buyout transactions.

The pool buyout transactions were carried out in line with RBI guidelines on Securitization of Standard Assets and securitized assets were de-recognized in the books of the Company.

Refinance from National Housing Bank (NHB)

NHB continued to extend its support to your Company through refinance assistance and during the Financial Year under review, your Company has received fresh sanction of refinance assistance of RS 850 crore under the NHB refinance scheme and RS 366 crore under Special Refinance Scheme. Your Company availed funds of RS 1161 crore under various Refinance Scheme such as for Affordable Housing Fund, Regular Refinance Scheme and Special refinance Facility. Total outstanding refinance at the end of the current Financial Year stood at RS 1872.39 crore (previous year RS 951.29 crore).

Non-Convertible Dbentures (NCDs)

During the Financial Year under review, your Company diversified its borrowing by raising funds through NCDs from banks. During the previous Financial Year, the Company's funding through NCDs were as following:

I. Multilateral/Development Financial Institutions

As on March 31, 2021, the Company's outstanding NCDs stood at RS 911.38 crore as compared to RS 909.86 crore as on March 31, 2020.

II. Domestic Financial Institutions

As on March 31, 2021, the Company's outstanding NCDs from Domestic Financial Institutions stood at RS 109.41 crore as compared to RS 59.92 crore as on March 31, 2020. Your Company's Debentures are listed on Wholesale Debt Market segment of the BSE Ltd.

III. Banks

During the Financial Year under review, your Company issued Rated, Secured, Listed and Redeemable NCD's to Kotak Mahindra Bank and Central Bank of India.

As on March 31, 2021, the Company's outstanding NCDs from Banks stood at RS 244.9 crore as compared to H Nil as on March 31, 2020. Your Company's Debentures are listed on Wholesale Debt Market segment of the BSE Ltd.

As on March 31, 2021, Your Company's outstanding subordinated debt in the form of NCDs stood at H 99.74 crore as compared to H 99.66 crore as on March 31, 2020.

Your Company has not issued any Commercial Paper & Short-Term Instrument during the Financial Year 2020-21 and as on March 31, 2021, the Company's Commercial Paper outstanding is NIL.

Masala Bonds issued to Multilateral/Development Financial Institutions

As on March 31, 2021, your Company's outstanding balance of Masala Bonds issued to Multilaterals stood at H 198.97 crore.

During the Financial Year under review, the interest on Non-Convertible Debentures and Masala Bonds issued on private placement basis were paid by the Company on their respective due dates and there was no instance of interest amount not claimed by the investors or not paid by the Company.

Your Company, being listed HFC, is exempted from the requirement of creating Debenture Redemption Reserve (DRR) on privately placed debentures. Therefore, your Company has not created DRR. Further the requirement to invest or deposit a sum of not less than 15% of the amount of debentures which are maturing during the year, ending on March 31 of the next year as provided under Rule 18 of the Companies (Share Capital and Debentures) Rules, 2014 has been done away for listed Companies vide notification of Ministry of Corporate Affairs ("MCA") dated June 05, 2020.

Disclosure under Chapter XI-Guidelines on Private Placement of Non-Convertible Debentures (NCDs) of RBI Master Directions:

(i) The total number of NCDs which have not been claimed by the Investors or not paid by the Company after the date on which the non-convertible debentures became due for redemption: Nil

(ii) The total amount in respect of such debentures remaining unclaimed or unpaid beyond the date referred to in Paragraph (i) as aforesaid: Nil

Debenture Trustees

Debenture Trust Agreement(s) were executed in favour of IDBI Trusteeship Services Limited and Catalyst Trusteeship Limited for NCDs issued by the Company on private placement basis.

BRANCH EXPANSION

Your Company has been successful in continuous expansion of its branch network with a view to support its growth, deeper penetration in the states in which the Company operates and enhancing customer reach. During the Financial Year under review, the Company added 30 more branches and thereby expanded its branch network to 11 states with 280 branches as of March 31, 2021. Your Company now operates in Rajasthan, Maharashtra, Gujarat, Madhya Pradesh, Haryana, Chhattisgarh, Delhi, Uttar Pradesh, Uttarakhand, Punjab and Himachal Pradesh. Your Company has its Registered Office in Jaipur, Rajasthan, and its branch network as on March 31, 2021 vis--vis the previous Financial Year is detailed hereunder:

State Branches (As on March 31, 2021) Branches (As on March 31, 2020)
Rajasthan 95 88
Maharashtra 44 42
Gujarat 39 37
Madhya Pradesh 40 36
Haryana 15 14
Chhattisgarh 7 5
Delhi 4 4
Uttar Pradesh 21 15
Uttarakhand 9 8
Punjab 2 1
Himachal Pradesh 4 -
Total number of branches 280 250

DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board of the Company comprises nine Directors, consisting of three Independent Directors (including two Women Directors), five Non-Executive Nominee Directors and a Managing Director and CEO as on March 31, 2021 who bring in a wide range of skills and experience to the Board.

The Board of Directors of the Company comprises:

Name of the Director Designation DIN
Mr. Sandeep Tandon Chairperson and Independent Director 00054553
Mr. Sushil Kumar Agarwal Managing Director and CEO 03154532
Mrs. Kalpana Iyer Independent Director 01874130
Mrs. Soumya Rajan Independent Director 03579199
Mr. Ramchandra Kasargod Kamath Non-Executive Nominee Director 01715073
Mr. Vivek Vig Non-Executive Nominee Director 01117418
Mr. Nishant Sharma Promoter Nominee Director 03117012
Mr. Manas Tandon Promoter Nominee Director 05254602
Mr. Kartikeya Dhruv Kaji Promoter Nominee Director 07641723

The Independent Directors have confirmed that they satisfy the criteria prescribed for Independent Directors as stipulated in the provisions of the Section 149(6) of the Act and Regulation 16(1)(b) & 25 of SEBI LODR Regulations. The names of all the Independent Directors of the Company have been included in the Independent Director's databank maintained by Indian Institute of Corporate Affairs ("IICA"). The Company has obtained declaration of independence from all the Independent Directors of the Company. None of the Directors have any pecuniary relationship or transactions with the Company. None of the Directors of the Company are related to each other and have confirmed that they are not disqualified from being appointed as Directors in terms of Section 164 of the Act and are not debarred from holding the office of Director by virtue of any SEBI order or any other such authority. Your Company has also obtained a certificate from a Company Secretary in practice confirming that none of the Directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as Directors of companies by SEBI/MCA or any such statutory authority. The same forms part of this Annual Report as ‘Annexure-1'.

Appointment & Resignation of Directors Appointments

During the Financial Year under review, the Board at its Meeting held on May 14, 2020 reappointed Mr. Sandeep Tandon, Independent Director of the Company as Chairperson of the Board with effect from conclusion of Tenth Annual General Meeting (‘AGM') of the Company held on July 22, 2020, who shall hold office up to the date of ensuing AGM.

The Members of the Company at 10th AGM held on July 22, 2020 had approved the appointment of Mrs. Soumya Rajan as an Independent Director of the Company not liable to retire by rotation, to hold office for a term of 5 (five) consecutive years effective from August 29, 2019 till August 28, 2024.

Reappointments

The Board at its Meeting held on April 29, 2021, on the basis of recommendation of Nomination & Remuneration Committee, reappointed Mrs. Kalpana Iyer as an Independent Director of the Company not liable to retire by rotation, to hold office for a second term of 5 consecutive years effective from June 23, 2021. Her reappointment is being proposed at the ensuing AGM of the Company. Mrs. Iyer presently serving as Chairperson of Audit Committee and Member of CSR Committee. Your Board believes that it would be in the beneficial interest of the Company to continue to avail her services as an Independent Director viewing her vast experience and contribution to the Company. Her reappointment as an Independent Director of the Company is placed before the Shareholders for consideration and approval.

Resignation or Retirement

During the Financial Year under review, none of the Directors of the Company resigned from the Board of the Company.

Directors Retiring by Rotation

Pursuant to the provisions of Section 152 of the Act, Mr. Kartikeya Dhruv Kaji and Mr. Manas Tandon, Promoter Nominee Directors of the Company, retired and being eligible, were re-appointed with the approval of Members at the 10th AGM held on July 22, 2020.

Further, in accordance with the provisions of the Act, Mr. Nishant Sharma, Promoter Nominee Director and Mr. Vivek Vig, Nominee Director of the Company are liable to retire by rotation at the ensuing 11th AGM of the Company. They are eligible and have offered themselves for re-appointment. Resolutions for their reappointment are being proposed at the 11th AGM and their Profiles are included in the Notice of the 11th AGM.

Appointments/Resignations of the Key Managerial Personnel (KMP)

Mr. Sushil Kumar Agarwal- MD and CEO, Mr. Ghanshyam Rawat- Chief Financial Officer and Mr. Sharad Pathak- Company Secretary and Compliance Officer are the KMP in terms of Section 2(51) of the Act.

No KMP has been appointed or resigned from the Company during the Financial Year under review.

Disclosure under Section 197(14) of the Act

The MD and CEO of the Company has not received any commission from the Company's holding or subsidiary company.

Number of Board Meetings held during the Financial Year

During the Financial Year 2020-21, 4 (Four) Board Meetings were convened and held through Video Conference facility. By taking precautionary measures against COVID-19, MCA has allowed holding Meetings through Video Conferencing. MCA issued circulars to extend the time period for conducting Board Meetings through Video Conference /Other Audio-Visual Means for approving financial statements, Board's Report, Prospectus and other restricted agenda items by its notifications dated March 18, 2020, June 23, 2020, September 28, 2020 and December 30, 2020 respectively. MCA as a onetime relaxation extended the gap between two consecutive meetings of the Board to 180 days instead of 120 days as required under the Act, but your Company standing by its philosophy, complied with all the earlier provisions and the Board Meetings were scheduled with a gap, not exceeding 120 days between any two Meetings during the year under review. The details related to the Board Meetings are appended in Corporate Governance Report forming part of this Report.

The Notice and Agenda including all material information and minimum information required to be made available to the Board under Regulation 17 read with Schedule II Part-A of the SEBI LODR Regulations, were circulated to all Directors, well within the prescribed time, before the Meeting or placed at the Meeting.

Performance Evaluation of the Board

Your Company is following the most effective way to ensure that Board Members understand their duties and adopt good governance practices. In furtherance to this, the Directors of your Company commit to act in good faith to promote the objects of the Company for the benefit of its Employees, the Stakeholders including Shareholders, the Community and for the protection of environment.

Your Company has defined the manner of evaluation as per the provisions of the Act, SEBI LODR Regulations for the Evaluation of performance of the Board, Committees of Board & Individual Directors.

The above manner is based on the Guidance Note on Board Evaluation issued by SEBI on January 05, 2017.

Further, your Company is adhering to the Fit and Proper Criteria as laid down under RBI Master Directions and also has in place a Board approved Policy for ascertaining the same at the time of appointment of Directors and on a continuing basis.

The Board carried out the evaluation of Directors performance and its own performance and Statutory Board Committees namely, Audit Committee, Nomination & Remuneration Committee, Corporate Social Responsibility ("CSR") Committee, Stakeholders Relationship Committee and Risk Management Committee and all the Independent Directors without the presence of the Director being evaluated. The Board expressed its satisfaction on performance evaluation.

During the Financial Year under review, a separate Meeting of the Independent Directors was held on October 16, 2020, without the attendance of Non-Independent Directors and the Management of the Company to review the performance of the Non-Independent Directors and the Board as a whole, after assessing the quality, quantity and timeliness of flow of information between the Management and the Board which is necessary for the Board to effectively and reasonably perform its duties.

Major aspects of Board evaluation included who is to be evaluated, process of evaluation including laying down of objectives and criteria to be adopted for evaluation of different persons, feedback to the persons being evaluated and action plan based on the results. The manner in which the evaluation has been carried out, has been explained in the Report on Corporate Governance forming part of this Report as ‘Annexure-2'. As required under the SEBI LODR Regulations, a certificate from Mr. Manoj Maheshwari, Practicing Company Secretary (Membership No. FCS 3355), partner of M/s V. M. & Associates, Company Secretaries, certifying that the Company has complied with the provisions of Corporate Governance as stipulated by SEBI LODR Regulations has been obtained. The said certificate forms part of the Directors' Report as

‘Annexure-3'.

Company's Policy on Director's Appointment, Remuneration & Evaluation

The Board on the recommendation of the Nomination & Remuneration Committee adopted a ‘Policy on Nominations

& Remuneration for Directors, Key Managerial Executives, Senior Management and Other Employees', which, inter-alia, lays down the criteria for identifying the persons who are qualified to be appointed as Directors and/or Senior Management Personnel of the Company, along with the criteria for determination of remuneration of Directors, KMPs, Senior Management and other employees and their evaluation and includes other matters, as prescribed under the provisions of Section 178 of the Act and SEBI LODR Regulations.

The ‘Policy on Nominations & Remuneration for Directors, Key Managerial Executives, Senior Management and Other Employees' ("Remuneration Policy") of the Company is placed on the website of the Company.

The Remuneration paid to the Directors is in line with the Remuneration Policy of the Company. Details of Remuneration paid to all the Directors during the Financial Year 2020-21 is more particularly defined in Annual Return in form ‘MGT-7' as available on the website of the Company and can be accessed at https://www.aavas.in/investor-relations/annual-reports.

The Nomination & Remuneration Policy can be accessed through the following link https://www.aavas.in/remuneration-policy.

COMMITTEES OF THE BOARD

The Company has the following Nine (9) Board level Committees, which have been constituted in compliance with the requirements of the business and relevant provisions of applicable laws and statutes:

1. Audit Committee

2. Nomination & Remuneration Committee (NRC)

3. Stakeholders Relationship Committee (SRC)

4. Corporate Social Responsibility (CSR) Committee

5. Risk Management Committee (RMC)

6. Asset Liability Management Committee (ALCO)

7. IT Strategy Committee

8. Executive Committee

9. Customer Service & Grievance Redressal (CS&GR) Committee

During the Financial Year under review, all recommendations made by above Committees were accepted by the Board.

The details with respect to the composition, terms of reference, number of Meetings held, etc. of these Committees are given in the Report on Corporate Governance, which forms part of this Report.

EMPLOYEE STOCK OPTION (ESOP) SCHEMES

ESOP-2020

During the Financial Year under review, ‘Equity Stock Option Plan for Employees 2020' ("ESOP-2020") has been approved by Members in the 10th AGM of the Company held on July 22, 2020.

The ESOP-2020 empowers the Board and Nomination & Remuneration Committee to execute the scheme.

During the Financial Year under review, there have been no changes in the scheme.

Other ESOP Schemes

Sl. No. Particulars Equity Stock Equity Stock Equity Stock ESOP 2019
Option Plan for Employees 2016 Option Plan for Management Team 2016 Option Plan for Directors 2016
A Date of Shareholders' approval The Schemes was approved by the Shareholders of the Company by a Special Resolution passed on February 22, 2017. The scheme was approved by the Shareholders of the Company by a Special Resolution passed on August 01, 2019.
B Authorization The schemes empowers the Board and Nomination & Remuneration Committee to execute the scheme.
C Variation (if any) During the Financial Year under review, there have been no changes in the schemes.

All the above stated ESOP plans are in compliance with the provisions of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (‘SEBI SBEB Regulations').

The Nomination & Remuneration Committee monitors the ESOP Schemes in compliance with the Act, SEBI SBEB Regulations and SEBI LODR Regulations. The Company shall make available at the ensuing AGM a certificate received from its Auditors confirming that the above ESOP Schemes have been implemented in accordance with the SEBI SBEB Regulations and are as per the Resolutions passed by the Members of the Company for the inspection of the Members of the Company by electronic means. The disclosures as required under the SEBI SBEB Regulations have been placed on the website of the Company at https://www.aavas.in/investor-relations/annual-reports.

AUDITORS

Statutory Auditors

M/s S.R. Batliboi & Associates LLP, Chartered Accountants (Firm Registration No: 101049W/E300004) Statutory Auditors of the Company were appointed by the Members of the Company in the 7th AGM of the Company held on July 26, 2017 to hold office as Statutory Auditors from conclusion of the 7th AGM to the conclusion of 12th AGM of the Company to be held in the Calendar Year 2022.

The RBI on April 27, 2021 issued the fresh guidelines for appointment of Statutory Auditors. The provisions of guidelines states that Statutory Audit firm is required to be rotated after completion of a period of 3 years. The guidelines have to be adopted from the second half of Financial Year 2021-22 onwards. Since M/s S.R. Batliboi & Associates LLP, Chartered Accountants has completed the specified time period as the Statutory Auditors, the Company would have to appoint new audit firm for conducting the Statutory Audit for a continuous period of three years from Financial Year 2021-22. The Company is in the process of identifying suitable audit firms and the requisite approval of the Members will be sought at a future date. Meanwhile, the existing Statutory Audit firm will continue to act as Statutory Auditors of the Company as per above mentioned RBI guidelines.

Auditors' Report

The Statutory Auditors have not made any adverse comments or given any qualification, reservation or adverse remarks or disclaimer in their Audit Report on the Financial Statements for the Financial Year 2020-21 and the Report is self-explanatory.

Further, the Statutory Auditors have not reported any fraud in terms of Section 143(12) of the Act.

Secretarial Auditors and Secretarial Audit Report

In accordance with Section 204 of the Act and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, M/s V. M. & Associates, Company Secretaries (Firm Registration No: P1984RJ039200) were appointed as Secretarial Auditors to conduct the Secretarial Audit of the Company for the Financial Year 2020-21. The Report of Secretarial Auditors for the Financial Year 2020-21 is annexed to this Report as ‘Annexure-4'.

The Report of Secretarial Auditors is self-explanatory and there were no observations or qualifications or adverse remarks in their Report.

Further, the Secretarial Auditors have not reported any fraud in terms of Section 143(12) of the Act.

The Board of Directors of the Company at its meeting held on April 29, 2021, appointed M/s. Chandrasekaran Associates, Practicing Company Secretaries as Secretarial Auditors of the Company for the Financial Year 2021-22.

INTERNAL AUDIT & INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY

Your Company has an Internal Audit Department supported by Independent Internal Auditors who conduct comprehensive audit of functional areas and operations of the Company to examine the adequacy of compliance with policies, procedures, statutory and regulatory requirements.

The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company.

Significant audit observations and corrective actions thereon are presented to the Audit Committee at periodic intervals.

The Audit Committee reviews and evaluates adequacy and effectiveness of the Company's internal control environment and monitors the implementation of audit recommendations.

The Audit Committee and Board of Directors have approved a documented framework for the internal financial control to be followed by the Company and such policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Company's policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information and disclosures. The Audit Committee periodically reviews and evaluates the effectiveness of internal financial control system.

MATERIAL CHANGES/EVENTS AND COMMITMENTS, IF ANY

There are no material changes and commitments affecting the financial position of the Company, which have occurred after March 31, 2021 till the date of this report.

There has been no change in the nature of business of your Company.

No significant or material orders have been passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and / or the Company's operations in future.

MAINTENANCE OF COST RECORDS

Being an HFC, the Company is not required to maintain cost records as per sub-section (1) of Section 148 of the Act.

INFORMATION TECHNOLOGY

Technology is a key enabler and backbone of the Company's business operations. Your Company has created robust technology framework for seamlessly conducting all its business operations across sourcing, underwriting, disbursement, collections, and customer service functions. 'Customer First' has been the theme for Financial Year 2020-21, as a part of which, the Company has taken several initiatives to deliver greater customer experience by leveraging multiple digital channels and it has helped service our customers uninterruptedly even during multiple lockdowns.

Employees of the Company are equipped with technology systems to service customers without location constraints. Multi-lingual call center teams of the Company are able to operate remotely and service customers from wherever they are.

Your Company worked in connecting with existing Customers, Employees and business partners by involving them to refer business leads under various referral programs. It leveraged the power of technology with a seamless flow of information across frontline digital systems and backend operational systems to make this possible. This led to a swifter conversion of leads to loans and resulted in gradual increase in volume of lead flow and disbursements through such emerging channels.

Your Company strongly believes that technology will continue to be a key business enabler going forward and it would like to leverage new-age technologies to the best possible level.

The RBI has mandated the applicability of Master Direction

- Information Technology Framework for the NBFC Sector dated June 08, 2017 on HFCs in order to enhance the safety, security, efficiency in processes leading to benefits for HFCs and their customers.

Your Company is in compliance with the aforesaid guidelines.

Your Company conducts audit of its IT systems through external agencies at regular intervals. The external agencies' suggestions and recommendations are reported to the IT Strategy Committee and Audit Committee and implemented wherever found feasible.

FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS

The Familiarization Programme of your Company aims to familiarize Independent Directors with the Housing industry scenario, the Socio-economic environment in which your Company operates, the business model, the operational and financial performance of your Company, to update the Independent Directors on a continuous basis on significant developments in the Industry or regulatory changes affecting your Company, so as to enable them to take well informed decisions in a timely manner. The familiarization programme also seeks to update the Independent Directors on their roles, responsibilities, rights and duties under the Act and other relevant legislations.

The details of the familiarization programmes have been hosted on the website of the Company and can be accessed via the following link: https://www.aavas.in/familiarization-programme.

HUMAN RESOURCE DEVELOPMENT

Your Company's success depends largely upon the quality and competence of its human capital. Attracting and retaining talented professionals is therefore a key element of the Company's strategy and a significant source of competitive advantage.

Your Company has a team of dedicated individuals and qualified professionals like Chartered Accountants, Management Professionals, Company Secretaries, Lawyers, Engineers and

Software Developers having academic qualifications from various premier institutions and relevant industry experience to strengthen and grow the business of the Company. Across all its business operations, your Company had a workforce of 4336 permanent employees as on March 31, 2021.

Your Company provides induction training to all its new recruits to help them better understand the mission, vision and values of the Company and to help them align with its culture. The Company has been organizing regular in-house training programmes for all its employees besides also nominating employees to attend external training programmes across various specialied functions. Further, the Company sponsors its employees to pursue professional courses from reputed institutes such as Indian Institutes of Management to ensure career enrichment and personal development.

The outbreak of COVID-19 pandemic resulted in lot of fear, insecurity and desperation across the world. During these tough times, the Company prioritized safety and wellbeing of its employees. In strict adherence to the local guidelines, the Company incorporated a culture of social distancing across all its branches and allowed employees to work from home. The Company also engaged doctors, who were readily available on-call for employees seeking medical advice. The Company offered cashless medical facilities and assistance in cases where any employee or family member tested COVID positive, including treatment at home, hospitalization, plasma arrangement and medicines. While a lot of work was being done virtually, the Company also made sincere efforts to keep in touch with employees and inquire about their wellbeing with the help of HR Connect and COVID-awareness webinars.

During the Financial Year under review, your Company implemented COVID-19 relief policies for its employees. In case any employee contracts COVID-19, the policy provides for reimbursement of COVID-19 testing expenses and financial assistance for medical treatment. In case of an eventuality of death of an employee due to COVID-19, the policy provides for Ex-gratia payment of monthly support to the family of deceased employees up to 24 months, compassionate employment to Spouse or Adult Child (18 Years & above) of deceased employee on merit and early vesting of ESOPs. In addition, all the Company's employees are covered under Group Term Life Insurance Plan, which provides an adequate safeguard to family of deceased employees

RISK MANAGEMENT FRAMEWORK

Your Company has in place a Board constituted Risk Management Committee. The details of the Committee and its terms of reference are set out in the Corporate Governance Report forming part of this Report.

Your Company has Board approved Risk Management Policy wherein risks faced by the Company are identified and assessed. Your Company has set up a policy framework for ensuring better management of various risk associated with the business. The principle business risks (assessed function-wise) are credit risk, concentration risk, market risk, asset-liability management risk, liquidity risk and reputation risk. These are measured and reported to the Risk Management Committee on a quarterly basis.

Your Company gives due importance to prudent lending practices and has put in place suitable measures for risk mitigation, which include, verification of credit history from credit information bureaus, personal verification of customer's business place and residence, in house technical and legal verification, conservative loan to value parameters, and insurance coverage. The Risk management framework of your Company seeks to minimize adverse impact of risks on the key business objectives and enables your Company to leverage market opportunities effectively.

In compliance with the clause 51 of Chapter IX- Corporate Governance of Non-Banking Financial Company –Housing Finance Company (Reserve Bank) Directions, 2021, Mr. Ashutosh Atre is designated as Chief Risk Officer (CRO) of the Company who has direct reporting to MD & CEO of the Company.

In accordance with the above referred directions, 4 (Four) separate Meetings were held between Mr. Atre and the Board without the presence of MD and CEO of the Company.

During the Financial Year under review, the Risk Management Committee reviewed the risks associated with the business of your Company, undertook its root cause analysis and monitored the efficacy of the measures taken to mitigate the same.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

Your Company believes in conducting its affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behaviour. Your Company is committed to develop a culture, which provides a platform to Directors and employees to raise concerns about any wrongful conduct.

The Board of Directors has approved the vigil mechanism/ whistle blower policy of the Company, which provides a framework to promote a responsible and secure whistle blowing. It protects Directors/ employees wishing to raise a concern about serious irregularities within the Company. It provides for a vigil mechanism to channelize reporting of such instances/ complaints/ grievances to ensure proper governance. The Audit Committee oversees the vigil mechanism. Employees have been facilitated direct access to the Chairperson of Audit Committee, if need be. The whistle blower policy is placed on the website of the Company and can be accessed at https:// www.aavas.in/vigil-mechanism-policy.

DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013 READ WITH RULES

Your Company has zero tolerance towards any action on the part of any of its employees, which may fall within the ambit of ‘Sexual Harassment' at workplace. Your Company recognizes and promotes the right of women to get protection from sexual harassment and the right to work with dignity as enshrined under the Constitution of India and the Convention on the Elimination of all forms of Discrimination against Women (CEDAW).

Pursuant to the requirements of Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 read with Rules there under, the Internal Complaints Committee of the Company has not received any complaint of sexual harassment during the Financial Year under review.

The following is a summary of sexual harassment complaints received and disposed of during the Financial Year 2020-21:

No. of complaints received: Nil

No. of complaints disposed of: Nil

CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING IN COMPANY'S SECURITIES

Your Company has formulated Code of Conduct for Prevention of Insider Trading in Company's Securities (‘Code') in accordance with SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended. The objective of this Code is to protect the interest of Shareholders at large, to prevent misuse of any price sensitive information and to prevent any insider trading activity by way of dealing in securities of the Company by its Designated Persons. Mr. Sharad Pathak, Company Secretary and Compliance Officer of the Company is authorized to act as Compliance Officer under the Code.

PARTICULARS OF HOLDING/SUBSIDIARY/ ASSOCIATE COMPANIES

Your Company doesn't have any holding company.

The Shareholder having the substantial interest in the Company is Lake District Holdings Limited.

As on March 31, 2021, your Company has one unlisted wholly owned subsidiary named ‘AAVAS FINSERV LIMITED'. The subsidiary Company has not started any business operations as on the date of this Report.

Pursuant to the provisions of Section 129(3) of the Act, your Company has prepared Consolidated Financial Statements of the Company, which forms part of this Annual Report. Further, a Statement containing salient features of financial statements of the Subsidiary, in the prescribed format AOC-1, pursuant to

Section 129(3) of the Act read with the Companies (Accounts) Rules, 2014, is annexed as ‘Annexure-6' to this Report.

In accordance with Section 136 (1) of the Act, the Annual Report of your Company containing inter alia, Financial Statements including consolidated Financial Statements, has been placed on our website: www.aavas.in. Further, the Financial Statements of the subsidiary have also been placed on our website: www.aavas.in.

INVESTOR RELATIONS

Your Company has an effective Investor Relations Program through which the Company continuously interacts with the investment community through various communication channels viz Periodic Earnings Calls, Annual Investors/Analysts Day, Individual Meetings, Videoconferences, Participation in conferences, One-on-One interaction.

Your Company ensures that critical information about the Company is made available to all its investors by uploading such information on the Company's website under the Investors section. Your Company also intimates stock exchanges regarding upcoming events like earnings calls, declaration of quarterly & annual earnings with financial statements and other such matters having bearing on the share price of the Company.

EMPLOYEE REMUNERATION

The statement containing particulars of employees as required under Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, annexed as ‘Annexure-7' to the Directors' Report.

In accordance with the provisions of Rule 5(2) of the above-mentioned rules, the names and particulars of the top ten employees in terms of remuneration drawn are set out in the Annexure to this report. In terms of the provisions of Section 136(1) of the Act, the Directors' Report including the said annexure is being sent to all Shareholders of the Company.

CSR INITIATIVE

In line with the provisions of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules 2014, Aavas Foundation- a Public Charitable Trust settled by the Company for the purpose of carrying its CSR Activities has undertaken various CSR projects in the area of health care, promoting gender equality, empowering women, education, promoting traffic rules, regulation and road safety, providing safe drinking water and promoting Sports which are in accordance with the Schedule VII of the Act and CSR Policy of the Company.

The national and local impact of the COVID-19 crisis was highly heterogeneous, with significant implications for crisis management and policy responses not only at the company level but also at community level. The Company being a responsible Corporate has supported the community since lockdown. It focuses its CSR efforts on such areas where it could provide maximum benefits to adversely affected groups. During the previous Financial Year, it worked with Government Medical department towards arranging and supplying oxygen concentrators, PPE kits, sanitizers and masks and gloves to corona warriors, supplying cooked food to impacted community, starting awareness programs and producing more than 80,000 cotton masks for distribution in the community, with the help of women residing in rural areas, in order to support their livelihood. The Company devoted its best efforts to support migrant workers and others who suffered the most during lockdown.

The Company shall continue its engagement with stakeholders including NGOs, professional bodies/ forums and the Government and would take up such CSR activities in line with the Government's intent, to maximize the support to societies affected due to COVID-19 pandemic.

The Annual Report on CSR Activities, which forms part of the Directors' Report, is annexed as ‘Annexure-8' to this report.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

In accordance with the provisions of Sec 134 (3) (m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 the requisite information relating to your Company are as under:

A) Conservation of energy:

(i) The Steps taken / impact on conservation of energy:

The operations of the Company, being financial services do not require intensive consumption of electricity. However, your Company is taking necessary steps to reduce its consumption of energy.

(ii) The Steps taken by the Company for utilizing alternate sources of energy:

Your Company has procured the Energy Saving Green IT Equipments and power saving lamps, LEDs that have been installed in branches as a measure for conservation of energy. Your Company has installed High-end Copier Machine in High Print volume in Branches to reduce the Carbon Footprint.

As a part of Save Green efforts, a lot of paper work at branches and the registered office has been reduced by suitable leveraging of technology and promoting digitization.

(iii) The Capital investment on energy conservation equipment:

In view of the nature of the activities carried on by your Company, there is no capital investment on energy conservation equipment.

B) Technology absorption:

(i) the efforts made towards technology absorption:

The Company took a major leap in terms of technology integrations in customer service, which resulted in automation of partial disbursement flow and enabled the customers to request their next disbursal tranche while sitting in the comfort of their homes. It has real time connection with the Bharat Bill Payment System (BBPS) and customers of the Company can now pay their dues digitally through various UPI Payment Apps in India.

As the Company took steps forward in Digitization, it is proud to state that more than 25% of our customer service requests are addressed via various digital channels and a significant volume of loan enquiries are flowing through digital channels, given the nature of customer segment that we are serving.

The Company amalgamated technology with advanced analytics, having launched a variety of machine-learning and AI-powered tools from early days to assess risks and probability of defaults. Its enterprise data and analytics platforms give real time view of the business and enable to track productivity at every level. It has adopted a highly advanced technology governance standards and cyber security framework as per industry best practices.

(ii) the benefits derived like product improvement, cost reduction, product development or import substitution: The Company consistently monitored its cost-to-income ratio, leveraging economies-of-scale, increasing manpower productivity with growing disbursements through the enhanced use of information technology systems, resulting in quicker loan turnaround time and reducing transaction costs.

(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the Financial Year)

a) the details of technology imported: N.A.

b) the year of import: N.A.

c) whether the technology has been fully absorbed: N.A.

d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof: N.A.

(iv) the expenditure incurred on Research and Development: N.A.

C) Foreign exchange earnings and Outgo:

During the Financial Year under review, your Company had no foreign exchange earnings and the aggregate of the foreign exchange outgo during the Financial Year under review was RS 1,829.26 lakh. The aforesaid details are shown in the Note No. 39 of notes to the accounts, forming part of the Standalone Financial Statements. The Members are requested to refer to this Note.

BUSINESS RESPONSIBILITY REPORTING

As required under Regulation 34(2)(f) of SEBI LODR Regulations, Business Responsibility Report describing the initiatives taken by the Company from an environmental, social and governance perspective, forms part of this Annual Report as ‘Annexure-10'.

EXTRACTS OF ANNUAL RETURN

Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Act, read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014. The Annual Return in form MGT-7 as at March 31, 2021 is available on the website of the Company and can be accessed at https://www. aavas.in/investor-relations/annual-reports.

ADDITIONAL DISCLOSURES UNDER COMPANIES (ACCOUNTS) RULES, 2014

a. The details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the Financial Year:

During the Financial Year under review, the Company has made neither any application nor any proceeding is pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016), therefore, it is not applicable to the Company. b. 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.

During the Financial Year under review, it is not applicable to the Company.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Since the Company is an HFC, the disclosure regarding particulars of loans given, guarantees given and security provided in the ordinary course of business is exempted under the provisions of Section 186 (11) of the Act.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

In accordance with the provisions of Section 188 of the Act and rules made thereunder, the transactions entered with related parties are in the ordinary course of business and on an arm's length pricing basis, the details of which are included in the notes forming part of the financial statements.

During the Financial Year under review, your Company had not entered into any arrangements, which constitutes Related Party Transactions covered within the purview of Section 188(1) of the Act. Accordingly, requirement of disclosure of Related Party Transactions in terms of Section 134(3)(Rs) of the Act is provided in Form AOC-2 is not applicable to the Company.

Further as required by RBI Master Directions, ‘Policy on transactions with Related Parties' is given as ‘Annexure-9' to this Report and can be accessed on the website of the Company at https://www.aavas.in/policy-on-transactions-with-related-parties.

INTERNAL GUIDELINES ON CORPORATE GOVERNANCE

During the Financial Year under review, your Company adhered to the Internal Guidelines on Corporate Governance adopted in accordance with clause 55 of chapter IX-Corporate Governance of RBI Master Directions, which inter-alia, defines the legal, contractual and social responsibilities of the Company towards its various stakeholders and lays down the Corporate Governance practices of the Company.

The said policy is available on the website of the Company and can be accessed at https://www.aavas.in/internal-guidelines-on-corporate-governance.

DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(3)(c) read with Section 134(5) of the Act, and based on the information provided by the Management, the Board of Directors report that:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures.

b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent 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 Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities.

d) the Directors had prepared the annual accounts on a going concern basis.

e) 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; and

f) 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.

BUSINESS OVERVIEW & FUTURE OUTLOOK

A detailed business review & future outlook of the Company is appended in the Management Discussion and Analysis Section of Annual Report.

ACKNOWLEDGEMENTS

Your Directors would like to place on record their gratitude for the valuable guidance and support received from the NHB and RBI.

Your Directors would like to acknowledge the role of all its Stakeholders viz., Shareholders, Debenture holders, Bankers, Lenders, Borrowers, Debenture Trustees and all others for the continued support, confidence and faith they have reposed in the Company amidst the ongoing COVID-19 pandemic.

Your Directors further take this opportunity to appreciate and convey their thanks to the Kedaara Capital and Partners Group for their invaluable and continued support and guidance.

Your Directors acknowledge and appreciate the guidance and support extended by all the Regulatory authorities including RBI, NHB, SEBI, MCA, Insurance Regulatory and Development Authority of India (IRDAI), Registrar of Companies-Rajasthan, BSE, National Stock Exchange of India Limited, National Securities Depository Limited and Central Depository Services (India) Limited.

Your Directors thank the Rating Agencies (ICRA, CARE and India Ratings & Research Ltd.), local /statutory authorities and all others for their whole-hearted support during the Financial Year and look forward to their continued support in the years ahead.

Your Directors also wish to place on record their appreciation for the commitment displayed by all the executives, officers, staff and the Senior Management team of the Company, in recording an excellent performance by the Company during the Financial Year.

For and on behalf of the Board of Directors
AAVAS FINANCIERS LIMITED
Sushil Kumar Agarwal Manas Tandon
Managing Director & CEO Promoter Nominee Director
(DIN: 03154532) (DIN: 05254602)
Date: April 29, 2021 Date: April 29, 2021
Place: Jaipur Place: Mumbai
Registered and Corporate Office:
201-202, 2nd Floor, South End Square,
Mansarover Industrial Area, Jaipur 302 020, Rajasthan, India
CIN: L65922RJ2011PLC034297
Tel: +91 14 1661 8800 Fax: +91 14 1661 8861
E-mail: investorrelations@aavas.in | Website: www.aavas.in