central depository services india ltd share price Directors report


To the Members,

Your Directors are pleased to present the Twenty-Fourth Annual Report on the business and operations of Central Depository Services (India) Limited ["CDSL / the Company"], along with the audited financial statements (standalone as well as consolidated) for the year ended March 31, 2022 ("FY 2021-22").

1. STATE OF AFFAIRS:

A. FINANCIAL HIGHLIGHTS:

(Rs in lakhs)
Particulars Consolidated Standalone
Year ended March 31, 2022 Year ended March 31, 2021 Year ended March 31, 2022 Year ended March 31, 2021
Income from Operations 55,133.08 34,371.71 41,480.33 27,058.39
Other Income 5,456.88 5,691.70 6,532.76 4,176.60
Total Income 60,589.96 40,063.41 48,013.09 31,234.99
Expenditure 18,447.76 13,191.02 13,268.40 9,869.43
Profit before Depreciation, share of profit / 42,142.20 26,872.39 34,744.69 21,365.56
(Loss) from Associates and Taxation
Depreciation 1,146.28 920.05 1,010.02 728.98
Profit before Share of net profits of investments 40,995.92 25,952.34 33,734.67 20,636.58
accounted for using equity method and tax
Share of profit/(Loss) of associates (141.20) 0.00 0.00 0.00
Profit before Tax 40,854.72 25,952.34 33,734.67 20,636.58
Tax Expense 9,673.91 5,825.61 7,358.43 4,630.82
Profit after Tax 31,180.81 20,126.73 26,376.24 16,005.76
Other Comprehensive Income (Net of Tax) (143.39) (8.90) (217.96) (4.63)
Total Comprehensive Income 31,037.42 20,117.83 26,158.28 16,001.13

B. FINANCIAL PERFORMANCE: (i) CONSOLIDATED RESULTS:

On a consolidated basis, the operational income of the Company for the year ended March 31, 2022 is at Rs 55,133.08 lakhs as against Rs 34,371.71 lakhs for the previous year ended March 31, 2021, higher by 60%, resulting in total income to Rs 60,589.96 lakhs for the year ended March 31, 2022 as against Rs 40,063.41 lakhs for the previous year ended March 31, 2021. Profit before Tax (PBT) for the year ended March 31, 2022, is Rs 40,854.72 lakhs as against

_ 25,952.34 lakhs for the previous year ended March 31, 2021. Similarly, Profit after Tax (PAT) for the year ended March 31, 2022 is at Rs 31,180.81 lakhs as against Rs 20,126.73 lakhs for the previous year ended March 31, 2021. Thus, Profit before Tax & Profit after Tax for the year ended March 31, 2022, has increased by 57% and 55% respectively, over the previous year ended March 31, 2021.

(ii) STANDALONE RESULTS:

On a standalone basis, the operational income of the Company for the year ended March 31, 2022 is at Rs 41,480.33 lakhs as against Rs 27,058.39 lakhs for the previous year ended March 31, 2021, higher by 53%, resulting in total income to Rs 48,013.09 lakhs for the year ended March 31, 2022 as against Rs 31,234.99 lakhs for the previous year ended March 31, 2021. The income from operations comprising of transaction charges, annual issuers charges, account maintenance charges, settlement charges, corporate action charges, etc. . Pursuant to Regulation 73 of the SEBI (Depositories & Participants) Regulations, 2018, transfer of Rs 1,360.10 lakhs is made to CDSL Investor Protection Fund (IPF). After contribution to CDSL Investor Protection Fund, Profit before Tax (PBT) for the year ended March 31, 2022, is Rs 33,734.67 lakhs as against Rs 20,636.58 lakhs for the previous year ended March 31, 2021. Similarly, Profit after Tax (PAT) is at Rs 26,376.24 lakhs as against Rs 16,005.76 lakhs. Thus, Profit before Tax & Profit after Tax for the year ended March 31, 2022 has increased by 63% and 65% respectively over the previous year ended March 31, 2021.

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 subsidiary 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 of Form AOC-1 is appended as Annexure-A to the Boards Report. The statement also provides details of the performance and financial position of each of the subsidiary company.

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 https://www.cdslindia.com/InvestorRels/AnnualReports.html. These documents will be available for inspection till the date of AGM during business hours at the registered office of the Company.

C. DIVIDEND:

Considering the performance of the Company for the year under review, your Directors have recommended a final dividend of Rs 15/- per equity share of the face value of

Rs 10/- each, fully paid for the financial year ended March 31, 2022, subject to the approval of the shareholders as compared to the final dividend of Rs 9/- per equity share of the face value of Rs 10/- each paid in the previous year ended March 31, 2021.

The final dividend, if approved, would result in a cash outflow of Rs 15,675 lakhs with a dividend payout ratio at 59.43% of the standalone profits of the Company.

The dividend recommended is in accordance with the principles and criteria as set out in the Dividend Distribution Policy. The Policy can also be accessed on the Companys website at https://www.cdslindia.com/ InvestorRels/CorporateGovernance.html.

2. SHARE CAPITAL:

A. CAPITAL STRUCTURE:

Authorised Share Capital of your Company is Rs 150,00,00,000 divided into 15,00,00,000 equity shares of Rs 10/- each whereas the Issued and Paid-Up Share Capital is Rs 104,50,00,000 divided into 10,45,00,000 equity shares of Rs 10/- each. As of March 31, 2022, out of 10,45,00,000 shares, 10,44,99,689 shares are in demat mode and 311 shares are in physical mode. There was no change in the capital structure of the Company during the FY 2021-22.

3. BUSINESS OUTLOOK AND OVERVIEW:

A. THE CAPITAL MARKET ENVIRONMENT:

The FY 2021-22 was one of the most challenging years for the Indian Economy. During FY 2021-22, the S&P BSE Sensex opened at 49,868 on April 01, 2021 and touched a high of 62,245 on October 19, 2021 and thereafter closed at 58,568 on March 31, 2022. During same period Nifty opened at 14,798 and hit a high of 18,604 on October 19, 2021 and thereafter closed at 17,464 on March 31, 2022.

The International Monetary Fund (IMF), in its latest World Economic Outlook report, has slashed its forecast for Indias FY 2022-23 gross domestic product growth to 8.2% from 9.0%, saying that the higher commodity prices will weigh on private consumption and investments. This was one of the steepest cuts for emerging economies compared to IMFs earlier forecast. Global Economic prospects have worsened significantly due to commodity price volatility and disruption of supply chains caused by the war in Europe, IMF has cut its global growth outlook for calendar year 2022 to 3.6% from 4.4% and said that both Russia and Ukraine could experience large GDP contractions.

The World Bank has slashed the GDP growth forecast for India in FY 2022-23 to 8.0% in bi-annual "South Asia Economic Focus" report, due to the negative impact of the war in Ukraine on FY 2022-23 growth. Earlier in January 2022, the growth forecast for FY 2022-23 was estimated at 8.7%.

B. OPERATIONAL PERFORMANCE:

The capital market plays a significant role in building the economy as it channelizes domestic saving into sustainable financial assets. The Indian capital markets are robust and deep. The markets have witnessed diverse magnitude of volatility and growth levels based on global and domestic scenario and investor participations. The digitization of various processes has helped to have easier access to stock markets and depository services. This has led to increased participation from Tier I and Tier II cities in financial markets. 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.

C. BENEFICIAL OWNER ACCOUNTS:

During the year under review, 295.59 lakhs net Beneficial Owner (BO) accounts were added, taking the total number of such accounts to 629.97 lakhs as on March 31, 2022, making us the first depository to cross the 600 lakhs milestone.

The comparative figures of net BO accounts as on March 31, 2021 and March 31, 2022 are given in the following table:

Year ended March 31, 2022 Year ended March 31, 2021

Increase over the previous years cumulative figure

Number Percentage (%)
6,29,97,046 3,34,37,873 2,95,59,173 88.40

D. 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 ended March 31, 2022 Year ended March 31, 2021 (%) change over the previous year
Equity Shares 17,336 15,619 10.99
Debt Instruments 9,517 9,154 3.97
Other Securities 25,994 25,474 2.04
Total 52,847 50,247 5.17

E. 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 financial year are indicated below:

Holding of Securities Year ended Change over the previous year (%)
March 31, 2022 March 31, 2021
Value (Rs in lakh crore) 37.17 27.44 35.47
Volume (in crore) (Number of Securities) 56,757 47,449 19.63

F. DEPOSITORY PARTICIPANTS AND SERVICE CENTERS:

As on March 31, 2022, 584 Depository Participants held valid registration certificates of Securities and Exchange Board of India (SEBI) as compared to 592 valid SEBI registrations as on March 31, 2021. Further, Investors have access to 21,728 DP service centers spread across India.

G. INVESTOR AWARENESS / EDUCATION SEMINARS:

CDSL conducts various investors awareness activities aiming at promoting financial education from the depository point of view in particular and other capital market initiatives in general to educate investors to take an informed decision with respect to any matter related to Capital Market and become ‘Atmanirbhar Niveshak or the self-sufficient investor.

CDSL regularly conducts Investor Awareness Programs (IAPs) in association with SEBI, Market Infrastructure Institutes (MIIs), market intermediaries like Depository Participants (DPs), Associations of Brokers & DPs and financial educational institutions like Institute of Company Secretaries of India (ICSI), Colleges and Universities. for retail and potential investors as a major focus area. We believe investor education can become a significant key to achieving financial inclusion in the capital market. During FY 2021-22, CDSL Investor Protection Fund (CDSL IPF) conducted 1,076 IAPs in English, Hindi and 20 other regional languages viz. Marathi, Gujarati, Tamil, Kannada, Malayalam, Bengali and Telugu, etc., through online and offine mode and reached to almost 78,372 investors across India including Tier 2, Tier 3 and Tier 4 Towns / Cities. This initiative allows CDSL to reach investors across geographies, professions and age groups including students, corporate employees, government employees. This year, even during the national lockdown due to the pandemic of COVID-19, CDSL IPF conducted IAPs to educate the investors on continuous basis. CDSL has also reached out to investors in various social media platforms like Facebook (@cdslindia), Twitter (@ cdslindia), LinkedIn (@cdslindia). On September 10, 2021, we extended our social media reach by adding to KOO App (@cdslindia), Instagram (@cdslindia) and YouTube (@cdslindiaLtd). Various posts i.e. pictures, GIFs, videos related to IAPs, posts, awareness materials about various services provided by CDSL are uploaded for the benefit of retail investors in these social media channel.

CDSL also provides various information beneficial to investors on its website under the head Investors Corner. Informative booklet on "Securities Market Understanding from Investors Perspective" which was prepared jointly by Securities and Exchange Board of India (SEBI), BSE Limited (BSE), National Securities Depository Limited (NSDL), National Stock Exchange of India Limited (NSE), Metropolitan Stock Exchange of India Limited (MSEI) and Central Depository Services (India) Limited (CDSL) in 13 languages namely English, Malayalam, Punjabi, Hindi, Marathi, Gujarati, Telugu, Tamil, Oriya, Kannada, Assamese, Manipuri, Bengali to reach out to investors. This booklet is shared with Investors during IAPs and is also available on the CDSL website at https://www.cdslindia.com/Investors/ InvestorCorner.aspx

3. NEW INITIATIVES

A. APPLICATION PROGRAM INTERFACE (API):

CDSL has developed few more APIs viz. eDIS for T+1 trades etc., for its Depository Participants (DPs), which will assist the DPs in automating their processes and back-office operations. APIs for account opening, common transaction upload (which includes off-market, on-market, early pay-in & inter depository transactions), pledge / unpledge / con_scation transactions, Margin Pledge & Margin Funding transactions that were made available is being used by large number of DPs. This will lead to ease in operations of all the CDSL DPs and the market participants.

B. SYSTEM ENHANCEMENTS:

CDSL believes in the power of digitization and continuously tries to enhance its systems to increase the efficiency of processes as pescribed by SEBI. Some of the important system enhancements are enumerated below - a) Validation of Standard reason codes for off-market was implemented. b) Implementation of T+1 Settlement of the securities in the depository system. c) E-Voting system: i. Provision was made available to issuer companies to update the details of AGM viz. record date, E-Voting start date, E-Voting end date, Meeting date, etc. ii. On the Issuer entering the detail of E-Voting, SMS and emails are sent by the depository to all the shareholders having account in the depository intimating them about the E-Voting event. iii. Enabling the demat account holders to vote for any company irrespective of the E-Voting service provider. d) Block mechanism in demat account of clients undertaking sale transactions.

C. TRANSACTION CUM HOLDING STATEMENTS:

As on March 31, 2022, 225 Depository Participants (DPs) have availed of the service of dispatch of transaction cum holding statements (DOTS and e-DOTS). In FY 2021-22, CDSL has processed 54.13 lakhs statements. During the FY 2021-22, 6.52 crore statements have been sent electronically and 55.17 lakhs statements have been sent for the purpose of Consolidated Statement (CAS).

D. CORPORATE BOND DATABASE:

Your Company is in the process of creating a state of the art system using block chain/distributed ledger technology (DLT) to chart the life cycle of the non-convertible secured debts from the time of creation of the instrument with underlying assets offering security, to the approval of the same by the Debenture Trustee to the rating given by the Credit Rating Agency to the listing of the instrument to the regular/periodic interest payments to the ultimate step of payment of the final redemption amount. This is likely to bring in greater transparency in the manner in which the secured instruments are handled in the capital market.

E. TECHNOLOGY INITIATIVES:

As a part of continual upgradation process, CDSL continuously works on upgrading the technology, features and functionalities of the Depository applications. We have recently upgraded our storage and server infrastructure to support the business growth and providing faster services to our customers.

CDSL has also further enhanced the appropriate cyber security framework and controls as prescribed by SEBI from time to time to mitigate the cyber security risks.

F. 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 4 programs for 66 participants during the year.

G. E-VOTING:

As on March 31, 2022, total 6,145 companies have signed agreements with CDSL to conduct e-Voting. So far, the e-Voting system recorded 31,801 instances of voting carried out by 5,408 companies.

H. 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 March 31, 2022, a total of 470 companies have signed for availing these services.

4. MANAGEMENT:

A. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

The SEBI (Depositories and Participants) Regulations, 2018, were notified on October 03, 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 the 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.

Directors on the Governing Board of CDSL as on March 31, 2022 are as follows:

Name Category
Shri Balkrishna V Chaubal, Chairperson Public Interest Director
Prof. (Dr.) Bimalkumar N Patel Public Interest Director
Smt. Preeti Saran Public Interest Director
Shri Sidhartha Pradhan Public Interest Director
Prof. Umesh Bellur Public Interest Director
Shri Masil Jeya Mohan P. Shareholder Director
Shri Nayan Mehta Shareholder Director
Shri Nehal Vora Managing Director & CEO

B. CHANGE IN COMPOSITION DURING THE YEAR:

The changes taken place in the constitution of Directors and KMPs of CDSL during the FY 2021-22 are as follows: Shri Masil Jeya Mohan P. was re-appointed as Shareholder Director of the Company by the shareholders at the Annual General Meeting of the Company on September 21, 2021. SEBI vide its letter dated October 26, 2021, had approved the re-appointment of Shri Masil Jeya Mohan P. as Shareholder Director on the Governing Board of CDSL, who shall be liable to retire by rotation and accordingly, the re-appointment of Shri Masil Jeya Mohan P. was effective from October 26, 2021.

Smt. Amita Paunikar, Vice President - Legal and Company Secretary and Compliance Officer resigned w.e.f. April 05, 2021.

Shri Nilay Shah, Group Company Secretary and Head Legal was appointed w.e.f. August 02, 2021.

Shri Vinay Madan, Chief Risk Officer was appointed w.e.f. August 10, 2021.

C. DECLARATION FROM DIRECTORS: a. The Company has received necessary declarations from the Independent Directors viz. Public Interest Directors as required under sub-section (6) of section 149 of the Companies Act, 2013 and under clause (b) of sub-regulation (1) of Regulation 16 of the SEBI

(Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI Listing Regulations). There has been no change in the circumstances affecting their status as Independent Directors viz. Public Interest Directors of the Company; and b. They have registered themselves with the Independent Directors database maintained by the Indian Institute of Corporate Affairs (IICA) and have passed the pro_ciency test or are exempted from the same.

As per the provisions of Section 152(6)(d) of the Companies Act, 2013, Shri Nayan Mehta, the Shareholder Director is liable to retire by rotation and being eligible has offered himself for reappointment. Accordingly, he would be considered for being re-appointed as Shareholder Director at the ensuing Annual General Meeting.

D. DECLARATION BY THE COMPANY:

None of the Directors of the Company are disqualified for being appointed as Directors as specified in Section 164 (2) of the Act read with Rule 14 of Companies (Appointment and Qualifications of Directors) Rules, 2014.

E. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS AND ITS VARIOUS COMMITTEES:

14 (Fourteen) meetings of the Board of Directors were held during the year under review. The details of Meetings of Board and Committees held during the year, attendance of Directors at the meetings and constitution of various Committees of the Board are included separately in the Corporate Governance Report, which is enclosed as

Annexure-G.

F. AUDIT COMMITTEE RECOMMENDATIONS:

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

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 in accordance with the regulatory requirements and as per the policy of evaluating performance of the Board of Directors and of its Committees and Individual Directors on the basis of a structured questionnaire, drafted in accordance of the guidelines issued by SEBI, which comprises evaluation criteria taking into consideration various performance related aspects. All the Directors participated in the evaluation process. Recommendations arising from this entire process were deliberated upon by the Board to augment its effectiveness and optimize individual strengths of the Directors. The detailed criteria for evaluation for each of the above is enumerated in the Corporate Governance Report.

H. 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.

I. NOMINATION & REMUNERATION POLICY FOR DIRECTORS:

The Nomination and Remuneration Policy has been framed in order to set out principles, parameters and governance framework for the appointment and remuneration for Public Interest Directors, Shareholder Directors, Managing Director & CEO, Key Managerial Personnel, Key Management Personnel and Senior Management of the Company. The Nomination & Remuneration Policy can be accessed on website of the Company at https://www.cdslindia.com/InvestorRels/CorporateGovernance.html.

J. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY:

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-H.

K. COMPLIANCE WITH SECRETARIAL STANDARDS:

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

L. ANNUAL RETURN:

The Annual Return of the Company as on March 31, 2022 in Form MGT-7 in accordance with section 92(3) of the Act read with the Companies (Management and Administration) Rules, 2014, is available on the website of the Company at https://www.cdslindia.com/InvestorRels/ GeneralMeeting.html

5. SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

Details of Subsidiary Companies, Associate and Joint Venture Companies: Your Company has following Subsidiary / Associate Companies as on March 31, 2022:

Sr. Name of No Company CIN Subsidiary/ Associate
1. CDSL Ventures Limited U93090MH2006PLC164885 Subsidiary
2. CDSL Insurance Repository Limited U74120MH2011PLC219665 Subsidiary
3. CDSL Commodity Repository Limited U74999MH2017PLC292113 Subsidiary
4. CDSL IFSC Limited U65990GJ2021PLC121672 Subsidiary
5. India International Bullion Holding IFSC Limited U67100GJ2021PLC123076 Associate

(i) CDSL VENTURES LIMITED ("CVL"):

CDSL Ventures Limited ("CVL") is registered with Securities Exchange Board of India (SEBI), Goods and Services Tax Network (GSTN), Unique Identification Authority of India (UIDAI) and Controller of Certifying Authorities (CCA).

CVL is the first KYC Registration Agency (KRA) registered with SEBI. CVL is also registered with SEBI as a Registrar & Transfer Agent (RTA) to provide RTA services to corporates. CVL is registered as GST (Goods and Service Tax) Suvidha Provider (GSP) with GSTN to facilitate entities to file their GST returns. CVL is registered as an Authentication User Agency AUA/eKYC User Agency (KUA) with UIDAI for offering Aadhaar based eKYC services. CVL is registered as a Certifying Authority (CA) with the CCA for offering Aadhaar based eSign services. CVL is registered as Accredited Agency with SEBI to provide Accredited Investor services.

CVL is a wholly owned subsidiary of Central Depository Services (India) Limited (CDSL).

CVL began its journey in 2008 by handling Customer Pro_ling and Record keeping of Mutual Fund Investors on account of the Prevention of Money Laundering Act, 2002 (PMLA Act, 2002) related KYC requirements. After the introduction of the KRA regulations in 2011, CVL was the first entity to register as a KYC Registration Agency (KRA) with SEBI. As a KRA, CVL provides fully digitized KYC services to all intermediaries in the Capital Markets. CVL currently holds over 4 Crores fully digitized KYC records.

CVL is also offering the following as part of its service portfolio:

1. CKYC Services: CVL assists intermediaries to become CKYC compliant by facilitating upload of KYC documents to CERSAI

2. Aadhaar based eKYC services

3. Aadhaar based esign services

4. Registrar and Transfer Agent services

5. Pradhan Mantri Jeevan Jyoti Bima Yojna (PMJJBY) services: Maintaining a Claim Repository and performing dedupe activity for claims under PMJJBY scheme.

6. GST Suvidha Provider Services for filing GST Returns

7. Processing and handling Refund payments to investors of PACL Ltd. pursuant to Justice (Retd.) R M Lodha Committee. CVL has received approval for reappointment for a period of 5 years with effect from April 01, 2022.

8. CVL has received recognition from SEBI as an Accreditation Agency for a period of 3 years with effect from February 01, 2022.

CVL aims to be globally respected as an Information Technology Enabled Services company. Ethics, values and are vital to its philosophy. CVL lays special emphasis on integrity of its people because of the trust reposed by its clients. CVL derives confidence from its team, which has a Securities Market Domain Expertise. CVL, believes in empowering its people so that they handle challenging assignments and exceed customer expectations.

CVL has in place a stringent policy and systems to ensure confidentiality of data. Strong electronic and physical security measures ensure security of confidential data. CVL databases are maintained in- house with proper mechanism in place to monitor server capacity utilization and augmentation. There is a proper backup and archival process being followed as per the backup policy defined. CVL has a Primary

Data Center and Disaster Recovery ("DR") Center for all its critical IT Operations. The Disaster Recovery Center is located in a different seismic zone and the data is mirrored on near real time basis. DR drills are conducted once a quarter and an audit trail of the same is maintained. The network management at CVL ensures that the bandwidth requirement is monitored to handle processing of large volumes across multiple processes. CVL is ISO 27001 compliant and is regulated by multiple regulators for different projects.

Since CVL is managing a large number of projects, it has initiated a risk identification and assessment of its projects to strengthen its risk management framework.

Being a subsidiary of a Market Infrastructure Intermediary, the infrastructure, security and risk management practices of CVL are benchmarked to the best in the industry.

(ii) CDSL INSURANCE REPOSITORY LIMITED ("CIRL"):

CDSL Insurance Repository Limited ("CIRL") is regulated by Insurance Regulatory and Development Authority of India (IRDAI) and is in the business of enabling policy holders to hold life policies, motor policies, health policies and in the near future, all other types of general (non-life) policies in electronic form. CIRL has arrangements with several life insurance companies, health insurance companies and general insurance companies enabling the policy holders to hold policies in electronic form.

Your Company had under the "Guidelines on insurance repositories and electronic issuance of insurance policies" issued by IRDAI, floated a separate subsidiary viz. CIRL, in the year 2011. CIRL provides policyholders a facility to keep their insurance policies in electronic form and to undertake changes, modifications and revisions in the insurance policy with speed and accuracy, 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 CIRL. At the time of launch in August 2013, the insurance repository services were restricted only to Life insurance policies. However, later, IRDAI has extended the scope of services to Health and Motor Vehicle insurance policies and soon, to all other types of general insurance. Further, initially only individual policies were allowed in electronic form but subsequently this feature is being extended to corporate and group policies.

As on March 31, 2022, the Company has 7.11 lakhs active eIAs (electronic insurance accounts) as against 6.03 lakhs active eIAs as on March 31, 2021, in the Repository.

As on March 31, 2022, over 5.59 lakhs electronic policies constituting 5.22 lakhs Life e-insurance policies, 1,593 Motor e-insurance policies and 35,187 Health e-insurance policies have been credited in the eIAs as against around 4.22 lakhs electronic policies constituting 4.00 lakhs life insurance policies, 883 motor insurance policies and 20,602 health insurance policies as on March 31, 2021. The above figures indicate that there is a positive trend in creating electronic insurance policies, with a growth rate of 33%.

CIRL has tied up with twenty-two life insurance companies, five health insurance companies and fourteen general insurance companies, which is a total of forty-one insurance companies, for holding policies in electronic form.

CIRL has received a contract from an Insurance company, to operate remote offices on their behalf and provide outsourcing services. Such centers have been established at present and more centers are in the pipeline. We are also interacting with other insurance companies to provide similar services. Considering the trend of companies outsourcing their activities, these services contracts will provide your Company with new revenue streams, apart from the Insurance Repository (IR) business.

(iii) CDSL COMMODITY REPOSITORY LIMITED ("CCRL"):

CDSL Commodity Repository Limited ("CCRL") was establish to run a Commodity Repository on the lines of a securities depository. Warehousing

Development and Regulatory Authority ("WDRA") 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.

CCRL today exclusively serves three derivative commodity exchanges for their derivative trades in Agri-commodities. These are Multi Commodity Exchange of India Limited, Bombay Stock Exchange Limited and Indian Commodity Exchange Limited. As on March 31, 2022, CCRL has opened close to 2,046 client accounts and has issued about 38,033 Electronic Negotiable Warehouse Receipts.

(iv) CDSL IFSC LIMITED:

CDSL, the parent Company has incorporated a wholly owned subsidiary company in the name of CDSL IFSC Limited ("CDSL IFSC") on March 30, 2021.

CDSL IFSC was set up primarily as a depository of securities in IFSC. With an intent to operate a single depository in GIFT IFSC, CDSL accorded its approval for the divestment of shares held by CDSL in CDSL IFSC Limited to India International Bullion Holding IFSC Limited ("IIBHIL") owned by the consortium of CDSL, India International Exchange (IFSC) Limited, National Stock Exchange of India Limited, Multi Commodity Exchange of India Limited and National Securities Depository Limited. On May 02, 2022, CDSL has divested 92.5% in CDSL IFSC Limited to IIBHIL and accordingly, CDSL IFSC Limited ceased to be the subsidiary of CDSL with effect from May 02, 2022.

6. MAJOR EVENTS OCCURRED DURING THE YEAR:

A. 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.

B. CHANGE IN THE NATURE OF BUSINESS:

The Company has not undergone any changes in the nature of the business during the FY 2021-22.

C. 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.

7. INVESTOR EDUCATION AND PROTECTION FUND

A. CONTRIBUTION TOWARDS INVESTOR EDUCATION AND PROTECTION FUND (IEPF):

1. Amount of unclaimed/unpaid dividend and the corresponding shares; Not Applicable
2. Amount of matured deposits, if any; Not Applicable
3. Application money received for allotment of any securities and due for refund along with interest accrued; Not Applicable
4. Year wise amount of unpaid/ unclaimed dividend lying in the unpaid account upto the Year and the corresponding shares, which are liable to be transferred to the IEPF, and the due dates for such transfer; Please refer the table below

B. AMOUNT OF UNPAID AND UNCLAIMED DIVIDEND:

Particulars Financial Year
2017-18 2018-19 2019-20 2020-21
(Final Dividend) (Final Dividend) (Final Dividend) (Final Dividend)
As on 31.03.2022 As on 31.03.2022 As on 31.03.2022 As on 31.03.2022
Amount Rs Rs Rs Rs
5,86,852.00 10,40,748.00 17,53,127.50 25,57,256.00
No. of Shares 1,67,672 2,60,187 4,09,501 3,14,882
Due date for transfer of unpaid dividend amount October 18, 2025 November 15, 2026 November 15, 2027 November 19, 2028
Due date for transfer of corresponding shares November 17, 2025 December 15, 2026 December 15, 2027 December 19, 2028

8. PUBLIC DEPOSITS:

A. DEPOSITS:

Your Company has not accepted any deposits within the meaning of Section 73 and 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.

B. 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, 2022, the compliance of the requirements of the Companies Act, 2013 is not applicable to CDSL.

9. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF COMPANIES ACT, 2013:

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

10. AUDITORS:

A. 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.

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.

B. DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS:

There are no frauds reported by auditors under subsection (12) of section 143 of the Companies Act, 2013.

C. 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. Dalal Doctor

& Associates, Chartered Accountants (Firm Registration No. 120833W) for the period from April 01, 2021 to March 31, 2022, as Internal Auditors & Concurrent Auditors of the Company.

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

D. SECRETARIAL AUDITORS AND SECRETARIAL AUDIT REPORT:

M/s. Vatsal Doshi & Associates (C.P.No.22976/Membership No. A50332), Practicing Company Secretaries, Mumbai was appointed as Secretarial Auditor of the Company for the FY 2021-22. 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 Regulations, a copy of the Secretarial Audit Report issued in Form MR-3 by M/s. Vatsal Doshi & Associates, Secretarial Auditors is enclosed as an Annexure-B 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. Vatsal Doshi & Associates, Secretarial Auditors also forms part of to this report and the same is enclosed Annexure-C.

E. COST RECORDS:

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

11. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

A. 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 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.

B. FOREIGN EXCHANGE EARNINGS AND OUTGO:

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

(Rs in lakhs)
Particulars For the year ended March 31, 2022 For the year ended March 31, 2021
Others (Software license) 3.74 4.39
Total 3.74 4.39

12. RISK MANAGEMENT AND COMPLIANCE:

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-H.

13. CORPORATE SOCIAL RESPONSIBILITY (CSR):

The Board has framed a Corporate Social Responsibility (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 promotion of education; promoting gender equality and empowering women; eradicating extreme hunger and poverty; reducing child mortality and improving maternal health; combating human immunode_ciency virus, acquired immune de_ciency 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 disaster relief, 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 https://www.cdslindia.com/InvestorRels/CorporateGovernance.html. During FY 2021-22, 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-D.

14. WHISTLE BLOWER POLICY:

The Company has formulated a Whistle Blower Policy pursuant to Regulation 22 of the SEBI Listing Regulations and Section 177(10) of the Companies Act, 2013 enabling stakeholders to report any concern of unethical behaviour, suspected fraud or violation.

The said policy inter-alia provides safeguard against victimization of the Whistle Blower. Stakeholders including Directors and Employees have access to the Chairperson of the Audit Committee.

During the year under review, no stakeholder was denied access to the Chairperson of the Audit Committee.

15. RELATED PARTY TRANSACTIONS:

All Related Party transactions entered during the FY 2021-22 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 V of the SEBI Listing Regulations are stated below:

Sr. Particulars No.

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 (Rs in lakhs) Associate Name Amount (Rs in lakhs) Companies where directors are interested Amount (Rs in lakhs)
CDSL Ventures Limited Nil India International Bullion Holding IFSC Limited Nil Not applicable Not applicable
CDSL Insurance Nil
Repository Limited
CDSL Commodity Nil
Repository Limited
CDSL IFSC 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 Associate Name Amount (Rs in lakhs) Companies where directors are interested Amount (Rs in lakhs)
(Rs in 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 loan 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 Listing Regulations are stated below:

(Rs in lakhs)
Particulars For the year ended March 31, 2022 For the year ended March 31, 2021
BSE Limited
Income
Operational Income 597.76 341.98
Expenditure
Rent 1.10 1.20
Dividend Paid 1,881.00 940.50
Administrative and Other Expenses (Recoveries) 42.40 66.60
Particulars As on March 31, 2022 As on March 31, 2021
BSE Limited
Payable/(Receivable) (123.40) (305.85)

16. PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE:

Your Company has constituted an Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

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

17. HUMAN RESOURCE:

A. 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 program 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 program of the Company. Industrial relations during the year continued to be cordial.

B. PARTICULARS OF EMPLOYEES:

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

18. OTHER DISCLOSURES:

A. MANAGEMENT DISCUSSION AND ANALYSIS:

The Management Discussion and Analysis Report for the year under review as stipulated in SEBI Listing Regulations for the year ended March 31, 2022 is enclosed as

Annexure-H.

B. BUSINESS RESPONSIBILITY REPORT:

As stipulated under Regulation 34 of the SEBI Listing Regulations, the Business Responsibility Report describing the initiatives taken by the Company from an environmental, social and governance perspective is attached as a part of this Annual Report.

C. CORPORATE GOVERNANCE REPORT:

The Corporate Governance Report for the year ended March 31, 2022 is enclosed as Annexure-G.

D. CREDIT RATING OF SECURITIES:

Not Applicable.

E. AWARDS & RECOGNITION:

The details of the Award has been mentioned in the Corporate Overview section of this Annual Report.

F. PREVENTION OF MONEY LAUNDERING ACT:

The Prevention of Money Laundering Act, 2002 (PMLA Act, 2002) has been brought into force with effect from July 01, 2005.

Subsequent amendments have been made to the PMLA Act, 2002 and Prevention of Money-laundering (Maintenance of Records) Rules, 2005 over the years.

CDSL, its depository participants and CDSL Ventures Limited (CVL) 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 a 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 updates depository participants and their internal auditors on compliance with PMLA provisions and filing of

Suspicious Transaction Reports ("STR").

G. DISCLOSURES UNDER SEBI (DEPOSITORY AND PARTICIPANTS) REGULATIONS, 2018:

The disclosures required to be made under the provisions of the SEBI (Depository and Participants) Regulations, 2018 are part of the Corporate Governance Report enclosed as

Annexure-G.

ACKNOWLEDGEMENT:

Your Directors place on record their sincere gratitude for the support, guidance and cooperation received from Ministry of

Finance, Ministry of Corporate Affairs, Securities and Exchange

Board of India ("SEBI"), Reserve Bank of India ("RBI"), Insurance Regulatory Development Authority ("IRDA"), Warehousing Development Regulatory Authority ("WDRA"), UIDAI 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, issuers, and registrar and transfer agents, market infrastructure institutions like the stock exchanges, clearing corporations, depository and commodities exchanges,. The Directors also express their appreciation for the un_inching 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
Central Depository Services (India) Limited
Balkrishna V Chaubal
Chairperson
(DIN: 06497832)
Place: Mumbai
Date: June 25, 2022