Capital India Finance Ltd Directors Report.

To,

The Members,

CAPITAL INDIA FINANCE LIMITED ("the Company")

Your Board of Directors ("Board") take pride in presenting their 26th Annual Report together with the Audited Financial Statements (both on standalone and consolidated basis) ("Financial Statements") for the Financial Year ended on March 31, 2020 ("FY 2019-20" or " period under review"). The summarised consolidated and standalone financial performance of your Company is as follows:

1. FINANCIAL HIGHLIGHTS

(Rs. In Lakhs)

Particulars Consolidated Standalone
Year ended 31st March, 2020 Year ended 31st March, 2019 Year ended 31st March, 2020 Year ended 31st March, 2019
Total Income 11,899.48 5965.19 10,524.04 5,689.15
Less: Total Expenditure 9,465.24 4845.80 6,399.65 4,097.94
Profit before tax 2,434.24 1119.39 4,124.39 1,591.21
Less: Tax Expense 1,048.18 468.41 1,086.13 471.13
Profit for the year (Owners of the Company) 1,723.08 650.98 3,038.26 1,120.08
Other Comprehensive Income 11.59 (5.08) 7.08 (5.08)
Total Comprehensive Income for the year (Owners of the Company) 1,734.67 645.90 3,045.34 1,115.00
Add: Balance brought forward from previous year 534.99 135.17 1,020.09 151.16
Less: Appropriations:
Transfer to Special Reserve under Section 45-IC of the RBI Act, 1934 607.64 203.91 607.65 203.91
Dividend on equity shares 310.94 35.03 310.94 35.03
Tax on Dividend 63.98 7.13 63.98 7.13
Other Additions/Deductions during the year 93.33 - - -
Surplus in the Statement of Profit and Loss 1,193.77 534.99 3,082.86 1,020.09

2. RESERVES

In order to comply with the provisions of Section 45-IC of the Reserve Bank of India Act, 1934, ("RBI Act, 1934"), the Company has transferred Rs. 607.64 Lakhs to Special Reserve Funds and has also made a provision of Rs.67.83 Lakhs for Employee Stock Options and Rs. 1,338.98 Lakhs for Expected Credit Losses (‘ECL) during the period under review. Total provisions for ECL of the Company as at the end of FY 2019-20 is Rs. 1,733.71 Lakhs.

Except as mentioned above, no amount was transferred to any reserve by the Company during the period under review.

3. SHARE CAPITAL

During the period under review, there is no change in the Authorised and Paid up share Capital of the Company.

As on March 31, 2020, the authorised share capital of the Company is Rs. 21,400 Lakhs divided in to 21,40,00,000 (Twenty-one crore forty lakhs) equity shares of Rs.10/- (Rupees Ten only) each and paid up share capital of the Company is Rs. 7,773.43 Lakhs divided into 7,77,34,260 (Seven crore seventy-seven lakhs thirty-four thousand two hundred sixty) equity shares of Rs.10/- (Rupees Ten only) each.

4. NON-CONVERTIBLE DEBENTURES

During the period under review, the Securities Issuance Committee of the Board had vide resolution dated January 13, 2020, allotted 40 (Forty) Unlisted Unrated Redeemable Non-Convertible Debentures having face value of Rs.100 Lakhs each on private placement basis for an aggregate amount of Rs. 4,000 Lakhs. Necessary disclosures in this connection has been made to BSE Limited, the stock exchange where the equity shares of the Company are listed.

5. INFORMATION ON THE STATE OF AFFAIRS OF THE COMPANY

The Company is engaged in the business of finance and investments as a Non-Banking Financial Company without accepting public deposits for which the certificate of registration has been obtained from the Department of NonBanking Supervision, Reserve Bank of India.

During the period under review, on standalone basis, the Companys total income was Rs.10,524.04 Lakhs as compared to Rs.5,689.15 Lakhs during the previous financial year and the Company has earned a Profit Before Tax of Rs. 4,124.39 Lakhs as compared to Rs. 1,591.21 Lakhs during the previous financial year.

The inter-corporate loans and investments made by the Company during the period under review, were in the ordinary course of business and at arms length. The Financial Statements are forming part of this Annual Report.

6. CHANGE IN NATURE OF BUSINESS

There was no change in the nature of business activity of the Company during the period under review.

7. DETAILS OF HOLDING, SUBSIDIARY, JOINT VENTURE OR ASSOCIATE COMPANY(IES)

During the period under review, the Company does not have any Holding/Joint Venture/Associate Company and has the following 7 (Seven) subsidiaries:

S.No. Name of Subsidiary Percentage of Shareholding
1 Capital India Home Loans Limited 99.70%
2 Capital India Asset Management Private Limited 100%
3 Capital India Wealth Management Private Limited 100%
4 CIFL Holdings Private Limited 100%
5 CIFL Investment Manager Private Limited 100%
6 Rapipay Fintech Holding Private Limited 100%
7 Rapipay Fintech Private Limited 62.8%*

including 26.66% of holding through its Subsidiary Company i.e. Rapipay Fintech Holding Private Limited Note:

• As required under Rule 8 (1) of the Companies (Accounts) Rules, 2014, the Boards Report has been prepared on Standalone Financial Statements and a Report on the Performance and Financial Position of each of the subsidiaries, as included in the Consolidated Financial Statements, is presented herewith in Form AOC-I as Annexure-I.

• In terms of Regulation 16(1)(c) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), the Board of Directors adopted a Policy for Determining Material Subsidiary (" Material Subsidiary Policy") in terms of which none of the subsidiaries are material subsidiaries of the Company. Details of the Material Subsidiary Policy are given in the Corporate Governance Report which is annexed to and forms an integral part of this Boards Report.

• The standalone audited financial statements of each of the subsidiaries are available on the website of the Company at https://capitalindia.com under the "Investors" tab. Members interested in obtaining a copy of the standalone audited financial statements of the subsidiaries may write to the Company Secretary at the Registered Office of the Company.

• In accordance with the third proviso of Section 136 (1) of the Companies Act, 2013 and rules made thereunder, the Annual Report of the Company, containing therein its Financial Statements would be placed on the website of the Company at https://capitalindia.com ("Website") under the "Investors" tab.

8. DIVIDEND

Your Directors are pleased to recommend a final dividend of Re. 0.10/- (Rupee Ten Paisa only) per equity share for the FY 2019-20 payable to those shareholders whose names appear in the Register of Member as on the Record Date. The final dividend on 7,77,34,260 (seven crores seventy-seven lakhs thirty four thousand two hundred and sixty) equity shares, if approved by the members of the Company at the ensuing Annual General Meeting, would entail an outflow of Rs. 77,73,426/- (Rupees Seventy-seven lakhs seventy three thousand four hundred twenty six only) towards dividend.

9. INTERNAL CONTROL SYSTEM AND INTERNAL FINANCIAL CONTROLS

The Company has in place an adequate Internal Financial Control System with reference to the financial statements and Internal Control System, commensurate with the size, scale and complexity of its operations.

The Directors have laid down Internal Financial Control procedures to be followed by the Company which ensures the compliance with various policies, practices and statutes, keeping in view the organizations pace of growth and increasing complexity of operations for orderly and efficient conduct of its business.

The Audit Committee of the Board, is vested with the powers to evaluate the adequacy and effectiveness of the Internal Financial Control system of the Company, thereby ensuring that:

1. Systems have been established to ensure that all the transactions are executed in accordance with the managements general and specific authorisation.

2. Systems and procedures exist to ensure that all the transactions are recorded so as to permit preparation of Financial Statements in conformity with the Generally Accepted Accounting Principles (GAAP) or any other criteria applicable to such Statements, and to maintain accountability for effective and the timely preparation of reliable financial information.

3. Access to assets is permitted only with the managements general and specific authorisation. No assets of the Company are allowed to be used for personal purposes, except in accordance with the terms of employment or except as specifically permitted.

4. The existing assets of the Company are verified /checked at reasonable intervals and appropriate action is taken with respect to differences, if any.

5. Appropriate systems are in place for prevention and detection of frauds and errors and for ensuring adherence to the Companys various policies as listed on the Website and otherwise disseminated internally.

10. DIRECTORS AND KEY MANAGERIAL PERSONNEL

The composition of the Board is governed by the relevant provisions of the Companies Act, 2013 and rules made thereunder, the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Articles of Association of the Company, and all other applicable laws and is in accordance with the best practices in corporate governance from time to time.

i. Board of Directors

The Company aims for an appropriate mix of Executive, Non-Executive and Independent Director to maintain the independence of Board and separate its functions of governance and management. As on March 31, 2020, the Board of the Company consists of following 6 (Six) directors:

Sr. No Name DIN Designation Details
1. Mr. Vinod Somani 00327231 Independent Director Appointed as an Additional Director in the capacity of Non - Executive Independent Director by the Board w.e.f. December 20, 2017 and as an Independent Director by the shareholders in their Annual General Meeting held on June 2, 2018.
2. Mr. Yogendra Pal Singh 08347484 Independent Director Appointed as an Additional Director in the capacity of Non - Executive Independent Director by the Board w.e.f. February 13, 2019 and as an Independent Director by the shareholders in their Annual General Meeting held on September 30, 2019
3. Mr. Keshav Porwal 06706341 Managing Director Appointed as an Additional Director in the capacity of Managing Director by the Board w.e.f. November 27, 2017 and as Managing Director by the shareholders in their Annual General Meeting held on June 2, 2018.
4. Mr. Amit Sahai Kulshreshtha 07869849 Executive Director & CEO Appointed as an Additional Director in the capacity of Executive Director & CEO by the Board w.e.f. November 27, 2017 and as an Executive Director & CEO by the shareholders in their Annual General Meeting held on June 2, 2018.
5. Mr. Vineet Kumar Saxena 07710277 Non Executive Director Appointed as an Additional Director of the Company in the capacity of Non - Executive Director by the Board w.e.f. November 27, 2017 and as Non - Executive Director by the shareholders in their Annual General Meeting held on June 2, 2018.
6. Ms. Shraddha Suresh Kamat 07555355 Non Executive Director Appointed as an Additional Director of the Company in the capacity of Women Non - Executive Director by the Board w.e.f. November 27, 2017 and as Women Non - Executive Director by the shareholders in their Annual General Meeting held on June 2, 2018.

Further, none of the Directors of your Company are disqualified under the provisions of Section 164 of the Companies Act, 2013 and rules made thereunder.

ii. Fit and Proper Criteria

All the Directors of the Company duly meet the fit and proper criteria stipulated by the Reserve Bank of India.

iii. Directorships ceased during the year

Mrs. Promila Bhardwaj resigned from the position of Independent Director with effect from April 1, 2019 due to her personal reasons. Mr. Subodh Kumar resigned from the position of Non-Executive Director with effect from August 31, 2019 due to his personal reasons.

iv. Declaration of Independence:

All the Independent Directors of the Company have submitted the declaration of their independence in conformity of Section 149(7) of the Companies Act, 2013 and rules made thereunder, stating that they meet the criteria of independence as provided in Section 149(6) of the Act and are not disqualified from continuing as Independent Directors.

During the period under review, the Independent Directors of the Company had no pecuniary relationship or transactions with the Company, other than the sitting fees, commission and reimbursement of expenses incurred by them for the purpose of attending the meetings of the Company.

v. Retirement by Rotation

In accordance with the provisions of the Companies Act, 2013 and rules made thereunder, and the Articles of Association of the Company, Mr. Vineet Kumar Saxena, Non-Executive Director of the Company, is liable to retire by rotation at the ensuing Annual General Meeting and has offered his candidature for re-appointment as a Non-Executive Director of the Company at the ensuing Annual General Meeting.

vi. Key Managerial Personnel

As on March 31, 2020, the Company has the following KMPs in accordance with the provisions of the Companies Act, 2013 and rules made thereunder:

Mr. Keshav Porwal - Managing Director
Mr. Amit Sahai Kulshreshtha - Executive Director & Chief Executive Officer
Mr. Neeraj Toshniwal - Chief Financial Officer
Mr. Rachit Malhotra - Company Secretary & Compliance Officer

During the period under review, there was no change in the Key Managerial Personnel ("KMP") of the Company.

vii. Board Meetings

During the period under review, 4 (Four) Board meetings were held and the intervening gap between the meetings were within the period prescribed under the Companies Act, 2013 and rules made thereunder.

viii. Committees of the Board

The following are the Committees constituted by the Board:

i) Audit Committee;

ii) Nomination & Remuneration Committee;

iii) Stakeholder Relationship Committee;

iv) Investment Committee;

v) Risk Management Committee;

vi) Asset-Liability Committee;

vii) Management Committee;

viii) Credit Committee;

ix) Securities Issuance Committee; and

x) IT Strategy Committee.

xi) Corporate Social Responsibility Committee

ix. Composition of the Committees:

The following was the composition of the Committees during the period under review:

Sl.No. Committee meeting Composition
1 Audit Committee Mr. Vinod Somani (Chairman)
Mr. Yogendra Pal Singh (Member)
Mr. Vineet Kumar Saxena (Member)
2 Nomination & Remuneration Committee Mr. Vinod Somani (Chairman)
Mr. Yogendra Pal Singh (Member)
Mr. Vineet Kumar Saxena (Member)
3 Stakeholders Relationship Committee Mr. Vinod Somani (Chairman)
Mr. Yogendra Pal Singh (Member)
Mr. Vineet Kumar Saxena (Member)
4 Investment Committee Mr. Vineet Kumar Saxena (Chairman)
Mr. Keshav Porwal (Member)
Mr. Amit Sahai Kulshreshtha (Member)
5 Risk Management Committee Mr. Achal Kumar Gupta (Chairman)
Mr. Keshav Porwal (Member)
Mr. Amit Sahai Kulshreshtha (Member)
6 Asset-Liability Committee Mr. Vinod Somani (Chairman)
Mr. Keshav Porwal (Member)
Mr. Amit Sahai Kulshreshtha (Member)
7 Management Committee Mr. Keshav Porwal (Chairman)
Mr. Amit Sahai Kulshreshtha (Member)
Mr. Vineet Kumar Saxena (Member)
8 Credit Committee Mr. Vinod Somani (Chairman)
Mr. Keshav Porwal (Member)
Mr. Amit Sahai Kulshreshtha (Member)
Mr. Vineet Kumar Saxena (Member)
9 Securities Issuance Committee Mr. Vinod Somani (Member)
Mr. Amit Sahai Kulshreshtha (Member)
Mr. Vineet Kumar Saxena (Member)
10 IT Strategy Committee Mr. Yogendra Pal Singh (Chairman)
Mr. Amit Sahai Kulshreshtha (Member)
Mr. Vineet Kumar Saxena (Member)
Mr. Manish Gupta (Member)
11 Corporate Social Responsibility Committee Mr. Yogendra Pal Singh (Chairman)
Mr. Keshav Porwal (Member)
Mr. Amit Sahai Kulshreshtha (Member)

x. Board and Committee Meetings

Details of meetings of Board and Committees are as below:

S. No Board of Directors / Committee No. of meetings Date of Meetings
1. Board of Directors (Board) May 10, 2019
August 14, 2019
4 November 12, 2019
February 14, 2020
2 Audit Committee (AC) May 10, 2019
August 14, 2019
4 November 12, 2019
February 14, 2020
3 Stakeholder Relationship Committee (SRC) 1 November 12, 2019
4 Nomination & Remuneration Committee May 10, 2019
(NRC) May 20, 2019
5 August 14, 2019
November 12, 2019
February 14, 2020
5 Risk Management Committee (RMC) May 10, 2019
3 August 20, 2019
November 21, 2019
6 Asset-Liability Committee (ALCO) May 10, 2019
August 14, 2019
4 November 12, 2019
February 14, 2020
7 Investment Committee (IC) April 15, 2019
August 14, 2019
September 16, 2019
7 November 12, 2019
November 27, 2019
January 11, 2020
February 26, 2020
8 IT Strategy Committee (IT) August 14, 2019
2 November 12, 2019
9 Securities Issuance Committee (SIC) Nil Nil
May 3, 2019
July 16, 2019
September 4, 2019
10 Management Committee (MC) 14 November 12, 2019
December 5, 2019
January 27, 2020
March 9, 2020
11 Credit Committee (CC) Nil Nil
12 Corporate Social Responsibility Committee 1 September 27, 2019

xi. Attendance of Directors/Members at the Board and Committee meetings

As per clause 9 of the Secretarial Standard-I on Meetings of the Board of Directors, issued by the Institute of Company Secretaries of India, the attendance of Directors/Members at the Board and Committee meetings held during the period under review is provided as under:

Name of Director/ Member Board AC NRC SRC RMC IC SIC MC IT ALCO
Mr.Vinod Somani 4/4 4/4 5/5 1/1 - - - - - 4/4
Mr. Yogendra Pal Singh 4/4 4/4 5/5 1/1 - - - - 2/2 -
Mr. Keshav Porwal 4/4 - - - 3/3 7/7 - 6/7 - 4/4
Mr. Amit Sahai Kulshreshtha 4/4 - - - 3/3 7/7 - 7/7 2/2 4/4
Mr. Vineet Kumar Saxena 4/4 4/4 5/5 1/1 - 7/7 - 7/7 2/2 -
Ms. Shraddha Suresh Kamat 2/4 - - - - - - - - -
Mr. Subodh Kumar* 1/2 - - - - - - - - -
Mr. Achal Kumar Gupta - - 3/3 - - - -
Mr. Manish Gupta - - - - - - - - 2/2 -

*Resigned from the position of Non-Executive Director w.e.f. August 31, 2019

xii. Separate Meeting of Independent Directors

In accordance with the provisions of Schedule IV to the Act and Regulation 25(3) of the SEBI (LODR) 2015, separate meeting of Independent Directors of the Company was held on February 5, 2020 to discuss relevant items including the agenda items as prescribed under the applicable laws. The meeting was attended by all the Independent Directors of the Company.

10 POLICIES GOVERNING THE APPOINTMENT AND REMUNERATION OF THE DIRECTORS AND EMPLOYEES

The Nomination & Remuneration Committee develops the competency requirements of the Board based on the industry and strategy of the Company, conducts a gap analysis and recommends the reconstitution of the Board, as and when required. It also recommends to the Board, the appointment of Directors having good personal and professional reputation and conducts reference checks and due diligence, before recommending them to the Board. Besides the above, the Nomination & Remuneration Committee ensures that the new Directors are familiarized with the operations of the Company and endeavors to provide relevant training to the Directors.

In accordance with the provisions of Section 178 of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has adopted a Policy on diversity of the Board of Directors and a Policy on remuneration of the directors, key managerial personnel and other employees. The Policy on Diversity of the Board of Directors have been framed to encourage diversity of thought, experience, knowledge, perspective, age and gender in the Board. The Policy on remuneration of the directors, key managerial personnel and other employees is aligned to the philosophy on the commitment of fostering a culture of leadership with trust.

The Policy on remuneration of the directors, key managerial personnel and other employees aims:

(a) that the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors, Executives and Other Employees of the quality required to run the Company successfully;

(b) that relationship of remuneration to performance is clear and meets appropriate performance benchmarks;

(c) that remuneration to Directors, Executives and Other Employees involves a balance between fixed and variable pay reflecting short and long-term performance objectives appropriate to the working of the Company and its goals; and

(d) to enable the Company to provide a well-balanced and performance-related compensation package, taking into account shareholder interests, industry standards and relevant Indian corporate regulations. The detailed policy on remuneration of the directors, key managerial personnel and other employees is available on the Website of the Company at URL https://capitalindia.com

The Company has also formulated a Fit and Proper Criteria policy for inter alia determining the qualification, technical expertise, positive attributes, integrity and independence of the directors. The Company has received declarations from all the Directors of the Company that they are meeting the criteria laid down in the Fit and Proper Criteria Policy and the applicable provisions of the Master Direction - Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 ("Master Directions") issued by the Reserve Bank of India in this regard.

11 REMUNERATION OF THE EMPLOYEES

Disclosure with respect to the ratio of remuneration of each of the Director and employees of the Company as required under the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is forming part of this report as Annexure II.

The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Companies Act, 2013, read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure on the website of the Company which forms part of this report. In terms of Section 136 of the Companies Act, 2013, the said annexure is open for inspection at the Registered Office and Corporate Office of the Company.

12 PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

The Company has framed a Policy on Prevention of Sexual Harassment at Workplace in accordance with the applicable laws for all employees of the Company to inter alia ensure that the women employees are not subject to any form of sexual harassment and to constitute the Internal Complaints Committee to redress the complaints, if any. Your company is fully committed to protect the rights of any women, of any age, whether employed or not, who alleges to have been subjected to any act of sexual harassment within the Companys premises. Your Company provides a safe and healthy work environment.

During the period under review, there were no cases of sexual harassment reported to the Company.

13 POLICY ON PERFORMANCE EVALUATION OF THE DIRECTORS, BOARD AND ITS COMMITTEES

The Nomination & Remuneration Committee has devised a policy for the performance evaluation of the Independent Directors, Board, its Committees and the other individual Directors and has laid down the performance evaluation and assessment criteria/parameters. The Independent Directors in terms of Schedule IV to the Companies Act, 2013 and the provisions of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, at its separate meeting, evaluated the performance of the Chairman, Non-Independent Directors and the Board as a whole.

The Nomination & Remuneration Committee carried out the evaluation of every Directors performance and the Board carried out a formal evaluation of its own performance, Board Committees and the performance of each of the Directors, without the presence of the Director being evaluated. The criteria/parameters laid down for the evaluation of performance of the Independent Directors is provided in the Corporate Governance report, forming part of this Annual Report.

14 MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report is enclosed as a part of this Annual Report.

15 DIRECTORS RESPONSIBILITY STATEMENT

The Board acknowledges the responsibility for ensuring compliance with the provisions of Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013 in preparation of the Financial Statements for the financial year ended on March 31, 2020 and state:

a. that in the preparation of Annual Accounts for the Financial Year ended as at March 31, 2020, the applicable Accounting Standards have been followed along with the proper explanation relating to the material departures.

b. that the Directors have selected such Accounting Policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the Financial Year ended as at March 31, 2020 and of the profit and loss of the Company for the Financial Year ended on March 31, 2020.

c. that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud or other irregularities.

d. that the Directors have prepared the annual accounts on a going concern basis.

e. that the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

f. there is a proper system to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and external consultants, including audit of internal financial controls over financial reporting by the statutory auditors, and the reviews performed by management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Companys internal financial controls were adequate and effective during the period under review.

16 PUBLIC DEPOSITS

The Company did not accept any public deposits during the year under review. Therefore, the disclosures as required under the Companies Act, 2013 and the rules made thereunder, and Master Directions are not applicable on the Company.

17 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 forms part of the Notes to the Financial Statements provided in this Annual Report.

18 AUDITORS

a) STATUTORY AUDITORS:

Pursuant to the provisions of Section 139 of the Companies Act, 2013, M/s Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Regn. No.: 117366W/W100018), were appointed as the Statutory Auditors of the Company at the 24th Annual General Meeting ("AGM") of the Company for a period from the conclusion of the said 24th AGM till the conclusion of the 29th AGM of the Company.

The report submitted by the Statutory Auditors on the Financial Statements of the Company forms part of this Annual Report. There has been no qualifications, reservations or adverse remarks or disclaimer given by the Statutory Auditors in their report.

b) SECRETARIAL AUDITORS

The Board had appointed M/s Naveen Garg & Associates, Company Secretaries, as the Secretarial Auditors of the Company to undertake the Secretarial Audit for the financial year 2019-20 in terms of the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

The Secretarial Auditors have submitted their report in the Form MR-3, which forms part of this Annual Report. There are no observations, reservations or adverse remarks in the Secretarial Audit Report.

c) INTERNAL AUDITORS

The Board had appointed M/s Aneja Associates, Chartered Accountants, as the Internal Auditors to undertake internal audit of the Company for the financial year 2019-20 in terms of the provisions of Section 138 of the Companies Act, 2013 and rules made thereunder.

19 COST RECORDS

The provisions of the Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014, are not applicable on the Company for the period under review.

20 EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as "Annexure III".

The extract of annual return of the Company has been placed on the website of the Company and can be accessed at the Website of the Company at URL https://capitalindia.com.

21 CORPORATE GOVERNANCE REPORT

It has always been the Companys endeavor to excel through better Corporate Governance and fair and transparent practices. The Company has put in place efficient and effective system to ensure proper compliance with regulatory provisions. The Company understands and respects its fiduciary role and responsibility towards its stakeholder and society at large.

The report on Corporate Governance under regulation 34 read with Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 for the financial year 2019-20 is appended to this Annual Report.

In accordance with the Non-Banking Financial Companies - Corporate Governance (Reserve Bank) Directions, 2015, issued by Reserve Bank of India, the Company has adopted the Internal Guidelines on Corporate Governance.

22 RELATED PARTY TRANSACTIONS

During the period under review, the transactions entered into with related parties were placed before the Audit Committee of the Board for its consideration and noting. The Audit Committee of the Board noted that such transactions were in the ordinary course of business and at arms length. None of the transaction with related party(ies) comes within the ambit of Section 188 of the Companies Act, 2013. Accordingly, the particulars of the transactions as prescribed in Form AOC - 2 of the rules prescribed under Chapter IX relating to Accounts of Companies under the Companies Act, 2013 are not required to be disclosed as they are not applicable.

All related party transactions entered are disclosed in Note 36 of Financial Statements of the Company forming part of this Annual Report.

In terms of section 188 of the Act read with rules framed thereunder and Regulation 23 of the Listing Regulations, your Company has in place Policy on Related Party Transactions dealing with Related Party Transaction. The policy is placed on the website of the Company at URL https://capitalindia.com.

23 CODE OF CONDUCT

The Board has approved a Code of Conduct which is applicable to the members of the Board and all the employees in the course of day to day operations of the Company. The Code of Conduct has been placed on the website of the Company at URL https://capitalindia.com.

The Code of Conduct lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in workplace, in business practices and in dealing with stakeholders. All the members of the Board and the Senior Management Personnel have confirmed compliance with the Code of Conduct.

24 VIGIL MECHANISM / WHISTLE BLOWER POLICY

Pursuant to the provisions of Section 177(9) & (10) of the Companies Act, 2013 read with the rules made thereunder and pursuant to the provision of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has established a Vigil Mechanism to be known as the ‘Vigil Mechanism Policy for its Directors and employees, to report instances of unethical behaviour and actual or suspected fraud or violation of the Companys Code of Conduct. The aim of the policy is to provide adequate safeguards against victimisation of the whistle blower who avails the mechanism and provides direct access to the Chairman of the Audit Committee, in appropriate or exceptional cases.

Accordingly, the Vigil Mechanism Policy has been formulated with a view to provide a mechanism for the Directors and employees of the Company to approach the Ethics Officer or the Chairman of the Audit Committee of the Company.

The purpose of this policy is to provide a framework in order to promote responsible and secure whistle blowing. It protects employees willing to raise a concern about serious irregularities within the Company.

During the period under review, no such complaint of unethical or improper activity has been received by the Company.

25 COMPLIANCE WITH THE REGULATIONS ISSUED BY THE RESERVE BANK OF INDIA

The Company continues to fulfill all the norms and standards laid down under the Master Directions and the other applicable regulations issued by the Reserve Bank of India, from time to time.

26 PREVENTION OF INSIDER TRADING

The Company has adopted a revised policy on insider trading with effect from February 14, 2020 namely, the Prohibition of Insider Trading Code ("Code")with a view to regulate the trading in securities by the designated persons of the Company. The Code requires pre-clearance for dealing in the Companys shares and prohibits the purchase or sale of Company shares by the designated persons while in possession of unpublished price sensitive information in relation to the Company and during the period when the trading window is closed. The Board is responsible for the implementation of the Code.

The Code can be accessed from the website of the Company at URL https://capitalindia.com/.

27 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS/ OUTGO

a) CONSERVATION OF ENERGY

(i) Steps taken or impact on conservation of energy - The operations of your Company are not energyintensive. However, adequate measures have been initiated for conservation of energy.

(ii) Steps taken by the Company for utilising alternate source of energy - though the operations of the Company are not energy intensive, the Company shall explore alternative source of energy, as and when the necessity arises.

(iii) Capital investment on energy conservation equipment - Nil

b) TECHNOLOGY ABSORPTION

(i) Efforts made towards technology absorption - The minimum technology required for the business has been absorbed.

(ii) Benefits derived like product improvement, cost reduction, product development or import substitution - Not Applicable

(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year) - Not Applicable

(a) the details of technology imported;

(b) the year of import;

(c) whether the technology has been fully absorbed; and

(d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof

(iv) Expenditure incurred on Research and Development - Not Applicable

c) FOREIGN EXCHANGE EARNINGS AND OUTGO

During the year under review, there were no earnings and outgo on account of foreign exchange transactions.

28 FRAUD REPORTING

There was no fraud reported by the Statutory Auditors of the Company, under Section 143(12) of the Companies Act, 2013 and rules made thereunder, to the Board during the period under review.

29 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 have been no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Companys operations in future.

Further, no penalties have been levied by the Reserve Bank of India / any other Regulators, during the period under review.

30 MATERIAL CHANGES AND COMMITMENTS, IF ANY

There were no material changes and commitments affecting the financial position of the Company which occurred between the end of the financial year to which these financial statements relate and the date of this Report.

31 CORPORATE SOCIAL RESPONSIBILITY

During the period under review, pursuant to the provisions of Section 135 and Schedule VII to the Companies Act, 2013, and rules made thereunder, the Company has constituted the Corporate Social Responsibility Committee and also approved the Corporate Social Responsibility Policy ("CSR Policy") on August 14, 2019.

The Company has settled a registered trust namely "Atulya Foundation" to inter alia undertake the CSR activities permissible under Schedule VII to the Companies Act, 2013.

The Company has contributed Rs.15.00 Lakhs in Atulya Foundation to undertake the CSR activities on the behalf of the Company during the financial year 2019-20.

The CSR Policy is placed on the website of the Company at URL https://capitalindia.com and a brief outline of the policy and CSR initiatives undertaken by the Company during the year as set out in Annexure-IV of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014.

32 CREDIT RATING

During the period under review, the Company has been rated ‘A-‘by Acuite Ratings and Research Limited for raising Long term debt of upto Rs. 500 Crore.

33 CONSOLIDATED FINANCIAL STATEMENTS

The audited consolidated financial statements for the financial year ended on March 31, 2020 are provided in this Annual Report which have been prepared in accordance with the relevant Accounting Standards issued by the Institute of Chartered Accountants of India.

The Annual Report including the Balance Sheet, Statement of Profit & Loss, other statements and notes thereto is available on the Companys website at URL www.capitalindia.com.

34 RISK MANAGEMENT

The Risk Management Committee constituted by the Board, has framed and implemented a Risk Management framework depicting the process for loan proposal approval, loan management post disbursement and day to day monitoring to manage credit risk. It sets out the standards helpful in achieving a high-quality loan portfolio with optimal returns.

The framework is regularly reviewed and enhanced in response to changes in the external environment and business processes.

35 HUMAN RESOURCE-INITIATIVES

During the period under review, your Company has strengthened its Management team and Core Leadership team to steer the Companys business conscientiously and diligently. Efforts have been put in to attract the best talent from the industry to build a strong foundation.

Your Company provides an employee friendly environment where employees are empowered and given an opportunity to demonstrate their talent, that eventually boost their career growth in the Company.

36 LISTING OF SECURITIES

Presently, the equity shares of the Company are listed on the BSE Limited, Mumbai. The listing fee for the Financial Year 2019-20 has been duly paid.

37 STATEMENT ON COMPLIANCES OF APPLICABLE SECRETARIAL STANDARDS

Your Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards and such systems are adequate and operating effectively.

38 EMPLOYEE STOCK OPTIONS SCHEME

In order to motivate, incentivize and reward employees, your Company has instituted the Employee Stock Option Scheme in the name of CIFL Employee Stock Option Plan - 2018 ("CIFL ESOP Plan"). The Nomination & Remuneration Committee monitors the CIFL ESOP Plan. The CIFL ESOP Plan is in compliance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 ("SEBI SBEB Regulations"). Relevant disclosures pursuant to SEBI SBEB Regulations, as on March 31, 2020 are available on the Website of the Company at URL https://capitalindia.com.A certificate from M/s Deloitte Haskins & Sells LLP, Chartered Accountants (Statutory Auditors of the Company), with respect to the implementation of CIFL ESOP Plan would be placed before the members at the ensuing Annual General Meeting ("AGM") of the Company and a copy of the same shall be available for inspection at the registered office and the corporate office of the Company during the working hours.

There has been no material change in the CIFL ESOP Plan of the Company during the period under review.

39 BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report ("BRR") of your Company for the year 2019-20 forms part of this Annual Report as required under Regulation 34(2) (f) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and is appended as "Annexure-V".

40 GENERAL DISCLOSURES

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the period under review:

a) The Company has not bought back any of its securities;

b) The Company has not issued any bonus share;

c) The Company has not issued any sweat equity shares;

d) The Company has not issued equity shares with differential rights as to dividend, voting or otherwise;

e) The Company is not liable to transfer amount of dividend lying in the unpaid dividend account to Investor

Education and Protection Fund (IEPF) pursuant to provisions of Section 125 of the Companies Act, 2013; and

f) There was no revision in the financial statements between the end of the financial year and the date of this report.

41 MEASURES TAKEN BY THE COMPANY FOR NOVEL CORONAVIRUS DISEASE ("COVID-19")

In January 2020, the World Health Organization ("WHO") declared the outbreak of a new coronavirus disease in Hubei Province, China to be a Public Health Emergency of International Concern. Given the magnitude and the extent of its spread, the WHO declared it a Pandemic. Apart from human suffering, it also caused major economic disruptions. WHO and public health authorities around the world are taking actions to contain the COVID-19 outbreak. In order to deal with this public health situation, the corporate sector are playing a key role in implementing the strategic policy decision of social distancing, which is most crucial for reducing the rate and extent of the disease transmission at community level.

Your Company has taken the following measures to contribute towards the containment of the spread of the disease:

1. The Company adopted the wok from home policy from March 18, 2020, well in advance of the spread of the disease in and around the offices and/or branches of the Company, so as to maintain the safety of the employees and other people;

2. The Company has duly filed the web-form ‘Company Affirmation of Readiness towards COVID-19 deployed by the Ministry of Corporate Affairs, on March 23, 2020; and

3. The Company has pursuant to the Reserve Bank of India circular vide no.: RBI/2019-20/186DORNo.BP. BC.47/21.04.048/2019-20 dated March 27, 2020, on COVID-19 - Regulatory Package (COVID Regulatory Package), has formulated a Policy on Moratorium of Instalments under COVID-19 RBI Regulatory Package that is applicable to all term loan accounts of the Company where in payments are falling due between March 1, 2020 to May 31, 2020.

42 ACKNOWLEDGEMENTS

Your Directors would gratefully like to place their appreciation for the assistance and co-operation received from the Companys bankers during the period under review. The Directors also acknowledge, with appreciation, the support and co-operation rendered by various Government Agencies and Departments. Your Directors would also wish to place on record their deep sense of appreciation for the continued support from all the investors of the Company.