Central Depository Services (India) Ltd Directors Report.

Your Directors have pleasure in presenting the Twenty-first Annual Report, along with Audited Statement of Accounts of your Company for the year ended 31st March, 2019. The operational income of the Company has marginally increased from 15,083.17 Lakhs to 15,234.12 Lakhs, resulting in an increase of total income from 17,887.12 Lakhs to 18,847.00 Lakhs.

Financial Highlights

Particulars Year ended 31st March, 2019 ( in Lakhs) Year ended 31st March, 2018 ( in Lakhs)
Income from Operations 15,234.12 15,083.17
Other Income 3,612.88 2,803.95
Total Income 18,847.00 17,887.12
Expenditure 6,687.89 6,194.17
Profit before Depreciation and Taxation 12159.11 11,692.95
Depreciation 825.51 646.42
Profit before contribution to IPF & Tax 11,333.60 11,046.53
Contribution to IPF 367.65 408.39
Profit Before Tax 10,965.95 10,638.14
Provision for Taxation 2,510.00 2,962.40
Provision for Deferred Tax for the year 18.22 (92.96)
Profit after Tax 8,437.73 7,768.70
Other Comprehensive Income (Net of Tax) 0.57 (0.45)
Total Comprehensive Income 8,438.30 7,768.25
Balance brought forward 38,679.60 34,684.56
Profit available for appropriation 47,117.90 42,452.81
Dividend 3,657.50 3,135.00
Dividend Distribution Tax (including surcharge and education cess) 751.98 638.21
Surplus carried to Balance Sheet 42,708.42 38,679.60

The income from Operations comprising of Transaction charges, Annual Issuers Charges, Account Maintenance Charges, Settlement Charges, Corporate Action Charges, etc. during the year 2018-19 increased from 15,083.17 Lakhs to 15,234.12 Lakhs, recording an increase of 1% over the year 2017-18.Pursuant to regulation 73 of the SEBI (Depositories & Participants) Regulations, 2018, transfer of 367.65 Lakhs is made to Investor Protection Fund (IPF). After contribution to Investor Protection Fund, Profit before Tax (PBT) for the year ended 31st March, 2019 is 10,965.95 Lakhs as against 10,638.14 Lakhs of previous year. Similarly, Profit after Tax (PAT) is at 8,437.73 Lakhs as against 7,768.70 Lakhs. Thus, Profit before Tax & Profit after Tax for the year ended 31st March, 2019 has increased by 3% and 9% respectively over the previous year.

Highlights of performance of subsidiaries, associates and joint venture companies and their contribution to the overall performance of the Company during the financial year 2018-19

Financial performance of CDSL subsidiaries for the year ended March 31, 2019

in Lakhs

CDSL Ventures Limited CDSL Insurance Repository Limited CDSL Commodity Repository Limited
Total Income 4,999.01 275.87 455.94
Total Expenses 1,426.92 88.42 360.73
PBT 3,572.09 187.45 95.21
PAT 2,733.29 199.31 112.30
Contribution to Overall CDSL PAT % 24% 1% 1%

Dividend

Considering the performance of the Company for the year under review, your Directors have recommended a dividend of 4/- (Rupees Four only) per share (40%) for the year ended 31st March, 2019.

Share Capital and Shareholding

As on 31st March, 2019 the Share Capital of the Company is as given hereunder:

Authorised Share Capital: 150,00,00,000 divided into 15,00,00,000 equity shares of Rs 10 each.

Issued and Paid Up Share Capital: 104,50,00,000 divided into 10,45,00,000 equity shares of Rs 10 each.

Demat holding of Shareholders

As of 31st March, 2019, out of 10,45,00,000 shares, 10,44,99,590 shares are in demat mode and 410 shares are in physical mode.

The Capital Market Environment

During FY 2018-19, BSE-30 Sensex opened at 33,255 on 2nd April, 2018 and touched a high of 38,896 in August 2018 and thereafter closed at 38,672 on 29th March, 2019.

According to International Monetary Fund, Indias growth forecast for FY 2019-20 is projected at 7.5% based on strengthening of investment and robust private consumption. Indias economy is poised to pick up in 2019, benefiting from lower oil prices and a slower pace of monetary tightening than previously expected, as inflation pressures ease. Indias GDP is expected to grow at 7.3 per cent in the fiscal year 2018-19, and 7.5 per cent in the following two years, the World Bank has forecast, attributing it to an upswing in consumption and

investment. The bank said India will continue to be the fastest growing major economy in the world.

As per Prime Database, 42 public issues have raised 36,405 crores in FY 2018-19 as compared to 81 public issues mobilizing 98,984 crores in FY 2017-18. In contrast to the sluggish sentiment in the equity markets, public bonds saw renewed momentum, with 26 issues raising Rs 36,715 crore — marking a five year high. The amount mobilised in FY 2018-19 was seven times higher than the Rs 5,167 crore raised FY 2017-18.

Operational Highlights

The markets witnessed diverse magnitude of volatility and growth levels based on global and domestic scenario and investor participation. Despite several challenges including the liquidity crisis in the domestic non-banking financial companies (NBFCs), global trade tensions and high international crude oil prices, the Indian markets have performed reasonably well during the financial year 2018-19. The digitization of various processes has helped to have easier access to stock markets and depository services. This has resulted in record increase in opening of demat accounts. In order to sustain the growth in its depository business, your Company continues to focus on enhancement of operational efficiency, upgradation of technology, service quality and enhanced emphasis on investor education through seminars / workshops.

Securities admitted

Securities like equity shares, preference shares, mutual fund units, debt instruments, government securities, certificates of deposit, commercial papers and a host of other instruments are available for dematerialization by the investors.

Details of the securities admitted with CDSL are given below:

Securities Year Year (%)change
ended 31st ended 31st over the
March 2019 March 2018 previous year
Equity Shares 12049 9938 21.24
Debt Instruments 8207 8503 -3.48
Other

Securities

23880 22257 7.29
Total 44136 40698 8.45

Position of Securities held in the System

The value and volume of securities held with CDSL in the year under review as compared to the previous year are indicated below:

Holding of Securities Year ended Year ended Increase over
31st March 31st March, the previous
2019 2018 year(%)
Value (in million ) 20,796,934 19,839,810 4.82
Volume (in million) 362,030 283,920 27.51

Depository Participants and Service Centers

As on 31st March, 2019, 597 depository participants held valid registration certificates of Securities and Exchange Board of India (SEBI) as compared to 594 valid SEBI registrations as on 31st March

2018. During the year, new registrations were received for 28 DPs and registrations of 25 DPs were withdrawn/ cancelled. With a large DP network, investors spread across 28 States and 7 Union Territories can avail of CDSLs depository services. Further, investors have access to 19,359 DP service centers spread across India.

Beneficial Owner Accounts

During the year under review, 29.30 Lakh Beneficial Owner (BO) accounts were added, taking the total number of such accounts to 223.35 Lakhs with the net BO accounts at 173.86 Lakhs as on 31st March,

2019. The comparative figures of gross and net BO accounts as on 31st March, 2018 and 31st March, 2019 are given in the following table:

Year ended 31st March 2019

Year ended 31st March, 2018

Increase over the previous years cumulative figure

Number Percentage (%)
(Gross) 22,335,222 (Gross) 19,404,479 2,930,743 15.10
(Net) 17,386,276 (Net) 14,840,058 2,546,218 17.15

Investor Awareness / Education Seminars

CDSL regularly conducts Investor Awareness Programs in association with various market intermediaries, MIIs and SEBI. Capital Market Awareness for retail investors through such programs has been a major focus area. We believe investor education can become a significant key to achieving financial inclusion in the Capital market. To this end, CDSL Investor Protection Fund (IPF) has conducted more than 450 Investor Awareness Programs (IAPs) in this year. Out of these more than 330 programs were conducted in tier 2 & tier 3 cities and towns. This initiative allowed investors across geographies, professions and age groups including students, corporate employees, government servants to come together and learn

the basics of Capital Markets, advantages of holding securities in demat form, importance of Financial Planning, Investment avenues available, etc. CDSL IPF has also conducted IAPs in association with financial institutions, ICSI, AMCs and regional Seminars & IAPs with SEBI in various cities. We have also conducted webinar to reach investors digitally. Although, these IAPs reach out to investors in major metros, we have focussed to reach the investors in tier-2 and tier-3 cities to inculcate the habit of investment in securities. CDSL IPF has tied up with various regional newspapers to attract large number of investors to attend these IAPs. During the IAPs, informative booklets in English, Hindi and other regional languages were distributed for the benefit of investors.

Awards and recognition

During the year 2018-2019, your Company has won the following awards:

Award Category Organizer
Innovative CIO Award CIO BitStreamMediaworks Pvt. Ltd. (BSM)
Express Security Strategist Award Information Security Indian Express
Infosec Maestros Award Information Security BitStreamMediaworksPvt Ltd.
Big CIO 100 award IT Leadership Trescon
Big 50 BFSI Innovator award Technology innovation Trescon
IDC Insight Award Excellence in operations IDC
BFSI Digital Innovation Award Enterprise Application Indian Express

New Initiatives

Consolidated Account Statement (CAS)

Your Company provides to a demat account holder holding mutual fund units in Statement of Account (SOA) form the CAS with information about transactions and securities held across multiple demat accounts with various Depository Participants-across depositories along with mutual fund units held in SOA form. The CAS also provides additional information with respect to mutual fund investments like total purchase value / cost of investment in each scheme of mutual fund in monthly transaction CAS and information like the amount of actual commission paid by AMCs/Mutual Funds (MFs) to distributors (in absolute terms) during the half-year period against the concerned investors total investments in each MF scheme, the schemes average Total Expense Ratio (in percentage terms) for the halfyear period, etc. CDSL also provides a facility to its demat account holders to access its website and download CAS after providing certain security information. The demat account holders can also update/ modify the email ID and opt for receipt of electronic CAS using CDSLs website.

System Enhancements

During the year your Company released a number of system enhancements for increasing the efficacy of processes

a. Transfer in favor of demat account of the Investor Education and Protection fund Authority of securities in respect of which dividend has not been paid or claimed for a period of seven consecutive years or more. CDSL maintains the details of shareholders whose securities have been transferred and the subsequent corporate actions thereon. CDSL also released online facility to IEPF Authority to process requests received for Refund of shares to the Holder of the shares whose shares were earlier transferred to IEPF Authority Account. Various MIS reports are being provided to the IEPF Authority and the RTAs.

b. A system for monitoring of foreign investment limits in listed companies.

c. To bring more flexibility in the existing process, CDSL in coordination with NSCCL developed and released a functionality wherein NSE CMs can now create a pledge in favor of NSCCL for Collateral and / or Margin purpose from their designated ‘Collateral Account(s) maintained with any DP of CDSL to the designated account of NSCCL as a pledgee maintained with NSCCL. This facility is in addition to the existing mechanism to pledge the securities through demat account maintained with the approved custodians.

d. Development of CDSL Online Application System for admission of unlisted companies wherein Issuers and also Registrar and Transfer Agents (RTAs) can log in and facilitate the admission process of unlisted companies in CDSL. The Online Application System provides a convenient, dependable and secure mode of admission of unlisted companies in CDSL. Through this system, unlisted companies and RTAs who wish to admit securities for dematerialization in CDSL can electronically provide all the required information to CDSL and also upload digitally signed documents in the system. On submission of digitally signed documents, the Issuer / RTA need not submit physical documents to CDSL

Transaction Cum Holding Statements

As of 31st March, 2019 210 Depository Participants (DPs) have availed of the service of dispatch of transaction cum holding statements (DOTS and e-DOTS). In 2018-19, CDSL has processed 19.77 Lakh statements.

Corporate Bond database

The Corporate Bond database maintained by your Company as mandated by SEBI vide its Circular No. CIR/IMD/DF/17/2013 dated October 22, 2013, contains information of over 23,888 bonds issued in demat form by over 2,806 Issuers. The database provides comprehensive information on the corporate debt instruments including details of Issuers, Instruments issued along with the listing status, Redemption details, Names of Debenture Trustees and Credit Ratings along with the names of the Rating Agencies.

The credit rating agencies CRISIL, CARE, ICRA and India Rating are accessing your Companys corporate bond database through the secure login and are verifying the credit rating displayed and also updating subsequent rating migrations. The comprehensive and updated information disseminated by your Company at a single place provides valuable information to the investors and assists them in taking a more informed investment decision.

Trade Repository of Corporate Bonds

Your Company has data of about 9,172 ISINs for primary market issuances and about 9,379 ISINs pertaining to secondary market being traded in the stock exchanges.

Technology Initiatives:

As a part of continual upgradation process,

CDSL has migrated its interface provided to BO/ CM(easi/Easiest) to latest .net technology and now is in the process of migration DP /RTA interface to .net platform. CDSL has also upgraded it database version to latest one. Further considering growth over next 5 years, CDSL has procured and deployed new reporting servers at Main and DR site. CDSL always benchmarks its practices against ISO standards and accordingly has undergone periodic audit for ISO 27001 conducted by DNV and is recommended for continuity of certificate. Further CDSL has also undergone recertification audit for ISO 22301:2012 (Business Continuity Management System) and has been recommended for Certification with validity of 3 years. CDSLs e-Voting services has also undergone recertification audit for ISO 9001:2015 certification and has been recertified for period of 3 years.

Continuing Professional Education (CPE) Programs - Depository Operations Certification Examination (DOCE)

National Institute of Securities Markets (NISM) has been offering Continuing Professional Education (CPE) Programs for Associated Persons in the Securities Market Intermediaries.

CDSL, as a NISM Accredited CPE Provider for conducting CPE Programs, has successfully carried out 47 programs for 778 participants during the year.

CVLs National Academic Depository(C-NAD)

National Academic Depository (NAD) is a Digital Depository of Academic Awards (X & XII Certificates, Diplomas, Degrees, Marksheets, Transcripts, etc.). The Government of India, Ministry of Human Resources Department (MHRD) has designated University Grants Commission (UGC) as the authorised body for implementation of NAD.

As on 31st March, 2019 NAD has over 521 Academic Institutions (Universities/Boards, etc.), 1,04,88,960 Academic Awards, 2,70,000 plus Students and 114 Verifying entities as compared to 277 Academic Institutions, 29,08,721 Academic Awards, 23,000 plus Students and 100 Verifying entities in last financial year.

e-Voting

As on 31st March, 2019, 5,441 companies have signed agreements with CDSL to conduct e-Voting. So far the e-Voting system recorded 21,380 instances of voting carried out by 4,757 Companies.

e-Notices

In the light of Green Initiative in the Corporate Governance by Ministry of Corporate Affairs, CDSL has started offering the services to companies for sending documents to its shareholders electronically. As on 31st March, 2019, a total of 349 companies have signed for availing this services.

Corporate Social Responsibility (CSR)

The Board has framed a CSR Policy in compliance with the requirements of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014. In accordance with its CSR philosophy and the specified activities under the Act, the CSR activities of the Company has thrust areas including eradicating extreme hunger and poverty; promotion of education; promoting gender equality and empowering women; reducing child mortality and improving maternal health; combating human immuno deficiency virus, acquired immune deficiency syndrome, malaria and other diseases; ensuring environmental sustainability; employment enhancing vocational skills; social business projects; contribution to the Prime Ministers National Relief Fund or any other fund set up by the Central Government or the State Governments for socio-economic development and relief and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women. Your Company has constituted a robust and transparent governance structure to oversee the implementation of its CSR Policy.

The Corporate Social Responsibility Policy can be accessed on website of the Company www. cdslindia.com.

The Company has been actively associated with various NGOs in providing various facilities involving Capital expenditure for a sustainable impact of CSR activities.During the FY 2018-19, your Company has sponsored various projects and the report on CSR activities pursuant to section 135 and Schedule VII of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014 is given in (\ (Annexure A)

Risk Management Policy

The risk management policy identifying the various elements of risk is explained in detail in the Management Discussion and Analysis Report attached as (Annexure G). The Risk Management

Policy of your Company can be accessed on the website of the Company www.cdslindia.com.

Change in the Nature of Business

The Company has not undergone any changes in the nature of the business during the Financial Year 2018-19.

Material changes affecting the financial position which have occurred between the end of the financial year and the date of the report.

No material changes affecting the financial position have occurred between the end of the financial year and the date of the report.

Prevention of Money Laundering Act

The Prevention of Money Laundering Act, 2002 (PMLA) has been brought into force with effect from 1st July, 2005. Subsequent amendments were made to the PMLA Act 2002 and Prevention of Money-laundering (Maintenance of Records) Rules 2005 vide SEBI circular CIR/MIRSD/1/2014 dated 12th March, 2014. CDSL and its depository participants fall under the category of ‘intermediaries under section 12 of the SEBI Act and hence, PMLA and the policy guidelines issued by the regulators to combat money laundering are applicable to depository operations.

As required under the guidelines, CDSL has designated Principal Officer, Alternate Officer and Designated Director to ensure compliance with these guidelines. CDSL has prepared policy guidelines for implementation of PMLA and the same is reviewed periodically.

CDSL conducted training programs across the country and updated depository participants and their internal auditors on compliance with PMLA provisions and filing of Suspicious Transaction Reports

Details of Subsidiary Companies

Your Company has following subsidiary Companies as on 31st March, 2019

1. CDSL Ventures Limited (CIN U93090MH2006PLC164885)

2. CDSL Insurance Repository Limited (CIN U74120MH2011PLC219665)

3. CDSL Commodity Repository Limited (CIN U74999MH2017PLC292113)

• CDSL Ventures Limited

Your Companys wholly owned subsidiary, CDSL Ventures Limiteds

main business continues to be KYC business for the Capital market intermediaries. CVL continues to be the largest KYC Registration Agency (KRA) controlling about 60% of the market share in the KYC of Capital market. In addition to its core business of being a KRA for Capital market, CVL has also initiated work on the following business lines, which are in various stages of implementation / completion.

1. National Academic Depository (NAD)

2. C KYC Processing

3. eSign (electronic signature based on aadhaar number)

4. Claim registry for life insurance companies that offer Pradhan Mantri Jeevan JyotiBimaYojana (PMJJBY)

5. GST Suvidha Provider Services

6. RTA Activity

7. Certifying Authority

8. PACL Project

CDSL Insurance Repository Limited (CDSL IR)

Your Company had under the "Guidelines on Insurance repositories and electronic issuance of insurance policies" issued by IRDAI, floated a separate subsidiary viz:- CDSL Insurance Repository Ltd. (CDSL IR), in the year 2011 to provide policyholders a facility to keep insurance policies in electronic form and to undertake changes, modifications and revisions in the insurance policy with speed and accuracy in order to bring about efficiency, transparency and cost reduction in the issuance and maintenance of insurance policies. Leading public sector and private sector insurance companies have contributed to the equity Capital of CDSL IR. At the time of launch in August 2013 the insurance repository services was restricted only to Life insurance policies. However, later on IRDAI has extended the scope of services to Health insurance policies and Motor insurance policies. As on 31st March, 2019 the repository has opened upwards of 5-Lakh e-Insurance Accounts (e-IA) in which it holds about 2.28 lakhs life insurance policies, about 7,798 Health insurance policies and 136

Motor insurance policies in electronic form. CDSL IR had tied up with twenty- two life insurance companies, four health insurance companies and eighteen general insurance companies for holding policies in electronic form.

• CDSL Commodity Repository Limited (CCRL):

Your Company has floated a subsidiary in the name and style of CDSL Commodity Repository Limited (CCRL) to establish and run a Commodity Repository on the lines of a Securities Depository. Warehousing Development and Regulatory Authority (WRDA) is the regulator for CCRL. CCRL received the certificate of commencement of business / registration from WDRA on September 26, 2017 and commenced operations from September 30, 2017. Multi Commodity Exchange of India Ltd. (MCX) and BSE Investments Ltd. have each taken up 24% of the stake in CCRL in May 2018 and August, 2018 respectively.

During the year, the Board of Directors of the Company reviewed the affairs of its subsidiaries. In accordance with section 129 (3) of the Companies Act, 2013, your Company has prepared the consolidated financial statements of the Company and of all its subsidiaries companies in the same form and manner as that of its own and in accordance with applicable accounting standards, which forms part of this annual report. Further a separate statement containing the salient features of the financial statement of our subsidiaries in the prescribed format AOC 1 is appended as (Annexure B) to the Boards report. The statement also provides details of the performance and financial position of each of the subsidiary.

In accordance with section 136 of the Companies Act, 2013, the audited financial statements including the consolidated financial statements and all other related documents and information of the Company and separate audited accounts in respect of each of the subsidiary are available on our website www.cdslindia.com. These documents will be available for inspection till the date of AGM during business hours at the registered office of the Company.

Deposits

Your Company has not accepted any deposits within the meaning of Section 73 & 76 of the Companies Act, 2013 and the Rules made thereunder. There are no deposits remaining unpaid or unclaimed as at the end of the year and there has been no default in repayment of deposits or payment of interest thereon during the year.

Details of Deposits not in Compliance with the Requirements of the Act

Since the Company has not accepted any deposits during the Financial Year ended on March 31, 2019, there has been no non-compliance with the requirements of the Companies Act, 2013.

Directors and KMPs

The SEBI (Depositories and Participants) Regulations, 2018 were notified on 3rd October, 2018. As per regulation 25 of SEBI (Depositories and Participants) Regulations,

2018, the appointment and re-appointment of all Shareholder Directors on the board of depository shall be with the prior approval of SEBI. The Public Interest Directors on the board shall be nominated by SEBI. As per Regulation 24(9) of the SEBI (Depositories and Participants) Regulations,

2018 no depository participant or their associates and agents, irrespective of the depository of which they are members shall be on the governing board of the depository.

During the year under review, Shri Venkat Nageswar Chalasani, Shareholder Director nominated by State Bank of India,has vide his letter no. GM/ECM/2018-19 dated 10th January,

2019 tendered his resignation as a Director from the Governing Board of the Company w.e.f. 10.01.2019.

Shri Kumarapuram Venkateswaran Subramanian, a Shareholder Director nominated by Standard Chartered Bank has vide his letter dated 28th January, 2019 tendered his resignation as a Director from the Board of the Company.

The term of Shri Taruvai Subbayya Krishna Murthy, Chairman and Public Interest Director of the Company has expired with effect from close of business hours on March 29, 2019.

The term of Shri P. S. Reddy, Managing Director & Chief Executive Officer of CDSL expired with effect from close of business hours on March 31,

2019. Consequent to the completion of his term as Managing Director, Shri P. S. Reddy tendered his resignation as Director w.e.f. March 31, 2019.

The Board has placed on record its appreciation for the valuable services rendered by Shri Venkat Nageswar Chalasani, Shri Kumarapuram Venkateswaran Subramanian, Shri Taruvai Subbayya Krishna Murthy and Shri P.S. Reddy during their tenure as Directors of the Company.

The Independent Directors have given declaration under sub-section (7) of section 149 of the Companies Act, 2013 confirming that they satisfy the criteria of "independence" under section 149(6) the Companies Act, 2013.The independent director have submitted declarations that they meet the criteria of independence as provided in clause (b) of sub-regulation (1) of regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2018 and that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact his ability to discharge their duties with an objective independent judgment and without any external influence. The board of directors have taken on record the declaration and confirmation submitted by the independent director after undertaking due assessment of the veracity of the same.

As per the provisions of Section 152(6) (d) of the Companies Act, 2013, Shri Nayan Mehta, the Shareholder Director liable to retire by rotation and being eligible offered himself to be reappointed was considered for being re-appointed as Directors at the ensuing Annual General Meeting. A brief resume of Shri Nayan Mehta is enclosed as (Annexure C)

During the year under report Shri Amol Purandare, AVP-Legal and Company Secretary and Compliance Officer resigned w.e.f. 26th June, 2018 and Shri Lalit Sharma was appointed as VP- Legal and Company Secretary and Compliance Officer w.e.f. 27th October, 2018.

Nomination & Remuneration Policy for Directors

The Nomination & Remuneration Policy was approved by SEBI on December 6, 2018 and the same can be accessed on website of the Company www.cdslindia.com.

In compliance with the requirements set out under Section 178 of the Companies Act, 2013 and Regulation 19(4) read with Part D of Schedule II of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and SEBI (Depositories and Participants) Regulations, 2018, the Nomination and Remuneration Policy has been framed in

order to set our principles, parameters and governance framework of the appointment and remuneration for Shareholder Directors, Public Interest Directors, Managing Director & CEO and Key Managerial Personnel of the Company. The Policy encompasses the various factors laid down under Section 178(4) of the Companies Act, 2013 including the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the Company successfully; relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and remuneration to Directors and Key Managerial Personnel involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the Company and its goals. The Policy also includes the criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of section 178.

Statutory Auditors & Audit Report

M/s. S. R. Batliboi & Co. LLP (Firm Registration No. 301003E/E300005), Chartered Accountants, Mumbai were appointed as Statutory Auditors of the Company in the Twentieth Annual General Meeting held on August 20, 2018 to hold office from the conclusion of the 20th Annual General Meeting till the conclusion of the 25th Annual General Meeting. Accordingly, M/s. S. R. Batliboi & Co. LLP are the Statutory Auditors of the Company for the financial year 2018-19 and shall continue as Statutory Auditors of the Company till the conclusion of the 25th Annual General Meeting.

There are no qualifications, reservations or adverse remarks or disclaimer made by M/s. S. R. Batliboi& Co. LLP, Chartered Accountants, Mumbai, Statutory Auditors in their report. There are no frauds reported by auditors under subsection (12) of section 143 of the Companies Act, 2013.

Internal Auditors

In terms of the provisions of Section 138 of the

Companies Act, 2013 read with Rule 13 of the Companies (Accounts) Rules, 2014, the Company had appointed M/s. Ray & Ray, (Firm Registration No. 301072E), Chartered Accountants as Internal Auditors & Concurrent Auditors of the Company for the FY 2018-19.

There are no qualifications, reservations or adverse remarks or disclaimer made by the Internal Auditors and Concurrent Auditors in their report.

Secretarial Auditors and Secretarial Audit Report

M/s. Ragini Choksi & Company (C.P.No. 1436/ Membership No. 2390), Practicing Company Secretaries,Mumbai we reappointed as Secretarial Auditor of the Company for the FY 2018-19.In accordance with Section 204(1) of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2018, a copy of the secretarial audit report issued in form MR-3 by M/s. Ragini Choksi & Company, Secretarial Auditors is enclosed as an (Annexure D) to this report. The secretarial audit report of CDSL Ventures Limited, a material unlisted subsidiary of the Company issued in form MR-3 by M/s. Ragini Choks i & Company, Secretarial Auditors also forms part of (Annexure D) to this report.

There are no qualifications, reservations or adverse remarks or disclaimer made by M/s. Ragini Choksi & Company, Practicing Company Secretaries, Mumbai, in their report.

Related party transactions:

All related party transactions entered during the financial year 2018-19 were in the ordinary course of business and on an arms length basis.

Disclosure of related party transactions pursuant to section 134 (3) (h) read with Rule 8(2) of the Companies (Accounts) Rules, 2014 in form AOC 2 are attached as (Annexure E)

The Disclosures of Related Party Disclosures for annual results pursuant to clause 2 of para A of Schedule 5 of the SEBI (LODR) Regulations, 2015 are stated below:

Sr. Particulars

1. In the Accounts of Central Depository Services (India) Limited (CDSL) (Holding Company)

Loans and advances in the nature of loans to subsidiaries by name and amount.

Loans and advances in the nature of loans to associates by name and amount.

Loans and advances in the nature of loans to firms/ companies in which directors are interested by name and amount.

Subsidiary Name Amount ( Lakhs) Associate Name Amount ( Lakhs) Companies where directors are interested Amount ( Lakhs)
CDSL Ventures Limited NIL

Not applicable

NIL

Not applicable

NIL

CDSL Insurance Repository Limited NIL
CDSL Commodity Repository Limited NIL
2

In the Accounts of Central Depository Services (India) Limited (CDSL) (Subsidiary Company)

Loans and advances in the nature of loans to subsidiaries by name and amount.

Loans and advances in the nature of loans to associates by name and amount.

Loans and advances in the nature of loans to firms/ companies in which directors are interested by name and amount.

Subsidiary Name Amount ( Lakhs) Associate Name Amount ( Lakhs) Companies where directors are interested Amount ( Lakhs)
Not applicable NIL Not applicable NIL Not applicable NIL
3

In the Accounts of Central Depository Services (India) Limited (CDSL) (Holding Company)

Investments by the loanee in the shares of parent Company and subsidiary Company, when the Company has made a loan or advance in the nature of loan.

NIL

The Disclosures of transactions of the Company with any person or entity belonging to the promoter/ promoter group which hold(s) 10% or more shareholding in the listed entity, in the format prescribed in the relevant accounting standards for annual results pursuant to clause 2A of para A of Schedule 5 of the SEBI (LODR) Regulations, 2015 are stated below:

Particulars

As at 31.03.2019 ( Lakhs)

As at 31.03.2018 ( Lakhs)

BSE Limited
Rendering of services

107.12

384.69

Receiving of services

1.42

240.83

License agreements-Rent and Maintenance

67.47

173.63

Dividend Paid

877.80

1,568.94

Loans and advances - opening deposit received

72.77

-

Particulars

As at

As at

31.03.2019

31.03.2018

( Lakhs)

( Lakhs)
Balances outstanding at the end of the year
Trade receivables

12.31

24.66
Loans and advances-Deposits given

-

72.77

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

Considering the nature of operations of your Company, the provisions of Section 134(3) (m) of the Companies Act, 2013 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, relating to information to be furnished on conservation of energy and technology absorption are not applicable though the Company uses all the possible ways in conserving energy. The Company has, however, used information technology extensively in its operations.

Foreign Exchange Earnings and Outgo

Details of foreign exchange earnings and outgo during the year under review are as under:

Particulars As at As at
31.03.2019 31.03.2018
(Rs Lakhs) (Rs Lakhs)
Earnings Nil Nil
Travel expenses 63.40 19.25
Others 12.15 8.18
Total 75.55 27.43

Cost Records

The Company is not required to maintain cost records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013 and accordingly such accounts and records are neither made nor maintained.

Directors Responsibility Statement

Pursuant to Section 134(3)(c) and 134(5) of the Companies Act, 2013, the Board of Directors reports that:

i) in preparation of the annual accounts, the applicable accounting standards have been followed and proper explanations relating to material departure, if any, have been provided;

ii) accounting policies have been selected and applied them consistently and the judgements and estimates made 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 of the Company for that period;

iii) proper and sufficient care has been taken

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 frauds and other irregularities;

iv) the annual accounts have been prepared on a going-concern basis.

v) internal financial controls to be followed by the Company are laid down and that such internal financial controls are adequate and were operating effectively.

vi) proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Corporate Governance Report

As per Regulation 31(1) the SEBI (Depositories and Participants) Regulations, 2018, the disclosure requirements and corporate governance norms as specified for the listed companies mutatis mutandis are applicable to the depository.

The Corporate Governance Report for the year ended 31st March, 2019 is enclosed as (Annexure F)

Management Discussion and Analysis Report

The Management Discussion and Analysis Report for the year ended 31st March, 2019is enclosed as (Annexure G)

Board Evaluation

The Board of Directors of the Company carried out annual evaluation of its own performance, committees of the Board and individual Directors pursuant to various provisions under the Act, Regulation 17, 19 and Schedule II of the Listing Regulations and based on the SEBI circular dated January 5, 2017 which provides further clarity on the process of board evaluation ("SEBI Guidance Note").

The Company has implemented a policy of evaluating performance of the Board of Directors and of its Committees and individual Directors on the basis of a structured questionnaire which comprises evaluation criteria taking into consideration various performance related aspects.

Disclosures as prescribed under SEBI circular dated May 10, 2018 are given below:

Observations of Board evaluation carried out for the year

No observations.

Previous years observations and actions taken

Since no observations were received, no actions were taken.

Proposed actions based on current year observations

Since no observations were received, no actions were required.

The procedure followed for the performance evaluation of the Board, Committees and individual Directors is explained in the Corporate Governance Report enclosed as

(Annexure F)

Disclosures under SEBI (Depository and Participants) Regulations, 2018

The relevant disclosures required to be made under the provisions of the SEBI (Depository and Participants) Regulations, 2018, circulars, notifications etc. applicable to a Depository have been made in the Corporate

Governance Report enclosed as (Annexure F)

Report by Internal Complaints Committee

Your Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The ‘Internal Complaints Committee meets periodically to review the complaints, if any, received from female employees.

During the year the Committee did not receive any complaints in this regard.

Particulars of Employees

Information as required under Sec. 197(12) read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is enclosed to this report as (Annexure H)

Human Resource Development

The Company recognizes its Human assets as a critical resource essential for the growth of the Company. It, therefore, accords high importance to human resource development and consciously endeavors to enhance the quality and competence of its employees across cadres. It conducts induction programme for new entrants. Nominating employees for training at reputed institutions and for attending seminars in India and abroad in Capital market related areas, particularly relating to depositories, has always been a part of human resource development programme of the Company. Industrial relations during the year continued to be cordial.

Particulars of Loans, Guarantees or investments under section 186

Details of Loans, Guarantees or investments under section 186 of the Companies Act, 2013 are given in the notes to the financial statements.

Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in future:

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in future.

Annual Return

In accordance with provisions of section 134(3)(a) of the Companies Act, 2013, the Annual Return referred to in sub-section (3) of section 92 will be placed on the website of the Company www.cdslindia.com.

Extract of Annual Return

Pursuant to section 92 (3) of the Companies Act, 2013 the extract of the annual return to be in Form MGT-9 is enclosed to this report as (Annexure I)

Corporate Policies

The details of the policies approved and adopted by the Board are mentioned in the Corporate Governance Report enclosed as (Annexure F)

Adequacy of internal financial controls

The details in respect of adequacy of internal financial controls with reference to the Financial Statements forms part of the Management Discussion and Analysis Report enclosed as (Annexure G)

Audit Committee Recommendations

During the year, all recommendations of Audit Committee were approved by the Board of Directors.

Secretarial Standards

The Company complies with the applicable Secretarial Standards issued by the ‘Institute of Company Secretaries of India.

Acknowledgement

Your Directors place on record their sincere gratitude for the support, guidance and cooperation the Company received from Ministry of Finance, SEBI and other regulatory agencies. The Directors also acknowledge with thanks the continued support of the BSE Ltd, the Promoter, all other shareholders, Beneficial Owners, Depository Participants, Stock Exchanges, Clearing Houses, Issuers, and Registrar and Transfer Agents. The Directors also express their appreciation for the unflinching dedication of the employees whose performance, professionalism and commitment for rendering high quality services to the clientele of the Company has been commendable.

For and on behalf of the Board

Bontha Prasada Rao Rajender Mohan Malla
Director Director
(DIN:01705080) (DIN:00136657)
Place : Mumbai
Date :3rd May, 2019