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The Directors take pleasure in presenting the 70th Annual Report together with the audited financial statements of the Company for the year ended March 31, 2019.
The Company is a Core Investment Company and holds substantial investments in the following three key financial services / risk management companies of Murugappa Group and serves large number of customers by providing loans for asset acquisition through financing, asset and family protection through general insurance and risk management services.
Cholamandalam Investment and Finance Company Limited (CIFCL), is engaged in non-banking financial business;
Cholamandalam MS General Insurance Company Limited (CMSGICL), is engaged in general insurance business;
Cholamandalam MS Risk Services Limited (CMSRSL) is engaged in risk management and engineering solutions business.
The name of the Company got changed from "TI Financial Holdings Limited" to "Cholamandalam Financial Holdings Limited" with effect from March 27, 2019. Approval for change in name has been obtained from the Registrar of Companies and the Stock Exchanges in which the Companys securities are listed.
The paid up equity share capital as on March 31, 2019 was Rs. 18.77 Crore. During the year 158538 equity shares were allotted upon exercise of stock options by eligible option grantees under the Companys Employees Stock Option Schemes 2007 and 2016.
MACRO ECONOMIC REVIEW
India is today one of the most vibrant global economies backed by robust banking and insurance sectors and grew at an impressive rate during the first half year of FY 19. The effects of GST implementation, deflationary effects from demonetization and supply chain disruptions, got stabilised during the year. However, Indias external position slowed down significantly during the second half year due to large portfolio outflows triggered by monetary policy changes in developed economies and fears of contagion from stress in some emerging market economies. The nominal exchange rate depreciated and foreign reserves declined by over eight percent till October 2018. However, since then, the drop in oil prices and the United States Fed signaling a slower pace of normalisation than initially anticipated led to a partial setback. Inflation dynamics have been passive over most of FY 19. The relaxation of foreign investment rules has received a positive response from the insurance sector, with many companies announcing plans to increase their stakes in joint ventures with Indian companies. Over the coming quarters there could be a series of joint venture deals between global insurance giants and local players. The GDP growth is estimated at around 7.3% in FY 19, driven by industrial growth of 7.9%, making up for a deceleration in services and robust growth in agriculture at 4%.
The GDP growth is expected to accelerate moderately in FY 20, driven by continued investment strengthening, particularly private-improved export performance and resilient consumption. With robust growth, and food prices poised to recover, inflation is expected to converge to 4% and both the current account and the fiscal deficit are expected to narrow. In FY 20, inflation which had risen last year, is expected to soften which could lead to another rate cut later in the year. Private consumption growth in next fiscal is softer interest rates and improvement in rural income.
Another significant factor determining for FY 20 would be the outcome of general elections. A stable government would facilitate market stability and give market a clear direction on the reforms and way forward.
Indias financial sector is a highly diversified undergoing rapid expansion, both in terms of strong growth of existing financial services firms and new entities entering the market. The sector comprises commercial banks, insurance companies, non-banking financial companies, co-operatives, pension funds, mutual funds and other smaller financial entities. The financial sector is predominantly driven by banking segment wherein the regulator has allowed payment banks to operate.
The Government of India has introduced several reforms to liberalise, regulate and enhance this industry. The Government and Reserve Bank of India (RBI) have taken various measures to facilitate easy access to finance for Micro, Small and Medium Enterprises (MSMEs). These measures include launching Credit Guarantee Fund Scheme for Micro and Small Enterprises, issuing guideline to banks regarding collateral requirements and setting up a Micro Units Development and Refinance Agency (MUDRA).
With a combined thrust by both government and private sector, the country is one of the worlds most vibrant capital markets.
During the year, Securities and Exchange Board of India (SEBI) proposed direct overseas listing of Indian companies besides other regulatory changes and has aided companies with a broader investor base, better valuation, increased awareness, analyst coverage and visibility.
NBFCs have continuously played a critical role in encouraging growth of the Indian economy and have made commendable contribution towards the governments agenda of financial inclusion. Amongst the lending NBFCs, vehicle finance segment recorded a strong growth during the first half of FY 19 following a healthy demand from freight generation sectors and infrastructure pick-up. The adverse impact due to tightening of financing succeeding the liquidity crunch, higher fuel costs and weak freight rates affected the demand in the second half year. The housing finance market in India has grown rapidly, with mortgage lending significantly contributing to growth in construction and demand for housing. The affordable housing segment has been growing at more than 30% with strong demand and government support through special schemes. Due to recent liquidity crisis, the housing finance credit growth had a set back in the later part of the year. However, there was no drop in the consumer demand levels. The housing finance market is expected to grow in the coming years, aided by higher finance penetration and demand for affordable housing.
The loan against property (LAP) market rapidly grew between FY 14 to FY 17. During the last two years due to demonetization, stagnant property prices and tighter liquidity conditions the growth rate decelerated. LAP products predominantly funds MSME sector and is expected to register higher growth in the next 2 years. NBFC industry is expected to witness growth in the coming years, backed by a continuous expansion of the asset classes and higher market share for the key players in the market.
Cholamandalam Investment and Finance Company Limited (CIFCL) is a non banking finance company and one of the leading financial service provider. CIFCL commenced business as an equipment financing company and has today emerged as a comprehensive financial service provider offering vehicle finance, home loans, home equity loans, SME loans and provides investment advisory services, stock broking and a variety of other financial services to customers through its subsidiaries.
During FY 19 vehicle finance business of CIFCL recorded a consistent growth in terms of disbursements. Growth in Vehicle Finance ("VF") segment is primarily driven by optimal product mix strategy which has always been a combination of Product, Geography and Customer segment. Disbursements in VF segment during FY 19 was Rs. 24806.70 Crore as against Rs. 20539.97 Crore in the previous year recording a growth of 21%. The Home Equity ("HE") business performed well during the year with the business delivering growth across key metrics such as Disbursements, AUM and Profits. Disbursements in HE segment during FY 19 was Rs. 3836.55 Crore as against Rs. 3174.04 Crore the previous year. The Home Loans business of CIFCL also had a fine performance during FY 19. The business recorded a growth over 90% across all key metrics and has a book size of around Rs. 1912.45 Crore as at March 31, 2019. During the first half of FY 19, maintained optimum asset liability management (ALM) position while ensuring cost of funds kept under control.
In the second half, the focus shifted to holding higher liquid cash on account of market concerns on NBFC sector. Key focus areas of CIFCL are strengthening underwriting process, improving sales team productivity, effective engagement of direct selling agents, improve turnaround time for the customers, use of analytics in improving collections and digitization of its existing processes to enhance customer delight.
In the Insurance sector, the Gross Direct Premium of non-life insurers (excluding Standalone Health & Specialised insurers) is reported at around Rs. 1501 billion, a growth of 13% over the previous year. The market share of public sector companies was 46% and the private sector companies with a year-on-year growth of 25% constituted 54%. The Crop Insurance Scheme launched by the Government of India called "Pradhan Mantri Fasal Bima Yojana" (PMFBY) resulted an increase in crop insurance premium to Rs. 282 billion (including Agricultural Insurance Corporation), a growth of 12% over previous comparable period. During the year, IRDAI notified MISP (Motor
Insurance Service Provider) guidelines to regulate the distribution of Motor Insurance by automobile dealers and further mandated long term third party covers for new cars and two wheelers. The "Ayushman Bharat - National Health Protection Scheme" launched by the Government, offers health insurance for over 10 Crore poor and vulnerable families providing a coverage up to Rs. 5 lakh per family per year for secondary and tertiary care hospitalization. Motor, Health and Crop segments continued to constitute a significant portfolio at about 80% of the business.
Cholamandalam MS General Insurance Company Limited (CMSGICL), engaged in general insurance business, registered a growth in gross written premium of 11% at Rs. 4541.10 Crore. Growth in business operations continued to be driven by strong performance in retail channel with Motor & Health insurance contributing over 75% of the premiums with a good mix across metros & non metros. CMSGICL services around 8.9 million customers across India. Business teams successfully leveraged its bancassurance expertise and significantly enhanced its customer base through the large bank branch network. During the year CMSGICL renewed its partnership agreement with two of its major financier partners for a further 5 year period.
Business from proprietary channel grew by widening of distribution reach into Tier 3 and Tier 4 towns through a digitally enabled model of providing an enhanced customer experience, strong performance in OEM (Original Equipment Manufacturers) partnerships and continued growth in existing distribution partnerships. CMSGICL continued to implement its strategy of growing in preferred geographies and product lines and further plans to continue its thrust on building distribution through its digitally enabled model in select unserved markets across the country in a phased manner.
In the context of continued good economic growth of the country and capital infusion in the banking sector, the business segments of Motor, Health and SME are expected to grow strongly in FY 20. The possibilities of El Nino could dampen the crop line of business. Nevertheless, the general insurance industry is poised to grow at over 11%.
Cholamandalam MS Risk Services Limited (CMSRSL), is engaged in providing risk management and engineering solutions in the field of safety, health in association with Cholamandalam MS General Insurance Company Limited. During the year, CMSRSL has strengthened its consultancy portfolio by expanding services to Eastern part of Indian Market. Business increased the market proximity by assigning Regional Advisors in Eastern Region and growth managers in key operating sectors. CMSRSL continues to support CMSGICL and its clients through value added services like thermography, safety audits, and cargo loss minimization studies. The business outlook of CMSRSL is bright as it looks at constantly strengthening its consultancy portfolio through the launch of newer services.
ADOPTION OF INDIAN ACCOUNTING STANDARDS
Effective April 1, 2018, the Company has adopted Indian Accounting Standards (IND-AS) notified under section 133 read with rule 4A of Companies (Indian Accounting Standards) Rules, 2015, as amended, with April 1, 2017 as the transition date. The transition was carried out from Indian Accounting principles generally accepted in India (IGAAP).
Accordingly, the financial statements of the Company were prepared under Ind-AS for the year ended March 31, 2019. The principal adjustments made in restating the IGAAP financial statements including the balance sheet are given under Note 17 and Note 51 in the standalone and consolidated financial statements respectively.
STANDALONE FINANCIAL HIGHLIGHTS
Summary of the Companys financial performance duringFY 2018-19 as compared to the previous FY 2017-18 is given in the following table:
|Rs. ( in Crore)|
|Profit Before Tax||70.91||61.44|
|Profit for the year||66.53||59.39|
|Other Comprehensive Income||(0.68)||0.62|
|Total Comprehensive Income||65.85||60.01|
During the year the Company has transferred Rs. 13.31 Crore to statutory reserve (previous year Rs. 11.9 Crore) as required under RBI regulations.
During the year the Company earned a revenue of Rs. 73.52 Crore mainly through dividend income received on its long-term investments in group companies as stated in the earlier paragraphs. Profit before tax for the year was environment, Rs. 70.91 Crore and profit for the year was Rs. 66.53 Crore.
These companies performed well during the year and the summary of their financial performance is detailed below.
Cholamandalam Investment & Finance Company Limited (CIFCL)
The Company holds 46.4% of the paid up and subscribed equity share capital of CIFCL, is a leading, comprehensive financial service provider offering vehicle finance, business finance, home loans, home equity loans and provides stock broking & distribution of financial products through its subsidiaries. CIFCL presently operates from 907 branches spread across 27 states in India with Assets Under Management of Rs. 54279 Crore. CIFCL is a listed company, with its equity shares traded on the National Stock Exchange of India Limited (NSE) and the BSE Limited (BSE).
CIFCL, an associate company under the Companies Act, 2013, is considered as a subsidiary under Ind-AS. Rationale for the same is provided under Note 20 of standalone financial statements.
CIFCL has performed well in FY 19. The companys aggregate loan disbursements grew by 21% from Rs. 25113.51 Crore in FY 18 to Rs. 30450.95 Crore in FY 19, contributed by significant disbursements. CIFCLs profit before tax wasRs. 1823.15 Crore (previous year: Rs. 1401.37 Crore) and profit for the year was Rs. 1186.15 Crore (previous year: Rs. 918.30 Crore) which recorded a growth of 30% and 29% respectively. CIFCL paid an interim dividend of Rs. 4.50 per share and further recommended a final dividend of Rs. 2/- per equity share of face value of Rs. 10/- each for the year ended March 31, 2019.
The Board of CIFCL approved sub-division of its equity shares of face value of Rs. 10/- each into five face value of Rs. 2/- each fully paid-up.
Cholamandalam MS General Insurance Company Limited (CMSGICL)
The Company holds 60% of the paid up and subscribed equity share capital of CMSGICL - a joint venture with Mitsui Sumitomo Insurance Company Ltd., Japan, engaged in general insurance business and is a subsidiary of the Company. CMSGICL offers a wide range of insurance products for individuals and corporates. For individuals, various products are offered under Motor, Travel, Health, Accident and Home Insurance.
IRDAI has deferred the implementation of Ind-AS for insurance companies till FY 2020-21. Therefore, financials of CMSGICL have been restated as per Ind-AS for consolidation purposes and the figures reported for CMSGICL in the annual report are under Ind-AS.
For SMEs and Corporate clients, CMSGICL offers customized insurance services such as Property & Engineering Insurance, Liability Insurance, Marine Insurance etc., CMSGICL achieved a Gross Direct Premium of Rs. 4541.10 Crore during the FY 19 (previous year: Rs. 4102.57 Crore), a growth of 11% and the profit before tax was Rs. 280.30 Crore (previous year: Rs. 287.65 Crore). With a view to conserve its resources, CMSGICL has not recommended dividend for FY 2018-19.
Cholamandalam MS Risk Services Limited (CMSRSL)
The Company holds 49.5% of the paid up and subscribed equity share capital of CMSRSL, a joint venture with Mitsui Sumitomo Insurance Company Ltd., Japan and has a technical collaboration with Inter Risk, a group company of Mitsui Sumitomo Insurance Group.
CMSRSL offers comprehensive risk management and engineering solutions in the field of Safety, Health and Environment. CMSRSL achieved a revenue of Rs. 40.82 Crore during the year (previous year: Rs. 56.28 Crore). During the year, the profit before tax was Rs. 4.88 Crore (previous growth year: in Rs. 4.20vehicle Crore).finance CMSRSL recommended a dividend of Rs. 2.50 per share on its equity share of face value of Rs. 10/- each for FY 2018-19.
Cholamandalam Health Insurance Limited (Chola Health)
Chola Health was incorporated in July 2017 to offer health insurance services and the Company has invested 99.9% in its paid up capital. Chola Health has not commenced its operations. In view of the present market scenario, the proposal to register Chola Health as a standalone health insurance company with the Regulator has been deferred. equitysharesof
The Company paid an interim dividend on the equity shares at the rate of 60% i.e., Rs. 0.60 per share of Rs. 1/- each as approved by the Board of Directors on February 4, 2019 for the year ended March 31, 2019. The Board recommends a final dividend of 65% i.e. Rs. 0.65 per share of Rs. 1/- each on the paid-up shares of the Company. With this, the total dividend will be Rs. 1.25 per equity share of Rs. 1/- each for the year ended March 31, 2019.
CONSOLIDATED FINANCIAL HIGHLIGHTS
|Rs. ( in Crore)|
|Profit Before Share of Profits from|
|Associate / Joint Venture and Tax|
|Share of Profit from Associate /|
|Joint Venture (Net of Taxes)|
|Profit Before Tax||2135.90||1695.61|
|Profit for the year||1414.83||1126.88|
|Net Profit for the year||696.70||549.91|
BUSINESS REVIEW SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES
The Companys subsidiaries are Cholamandalam MS General Insurance Company Limited and Cholamandalam Health Insurance Limited. Cholamandalam Investment and Finance Company Limited is an associate and Cholamandalam MS Risk Services Limited is a joint venture of the Company. There has been no change in the nature of business of these companies during the year. Business performance of these companies are detailed in earlier paragraphs of this report.
The statement containing salient features of the financial statements of the Companys associate, subsidiary and joint venture company is annexed to this Report as Annexure A.
The consolidated financial statements of the Company, prepared in accordance with the Companies Act, 2013 ("the Act") and the relevant Accounting Standards, forms part of the annual report.
The annual report containing standalone and consolidated financial statements will be posted on the website of the Company, www.cholafhl.com. The annual accounts of the subsidiary companies will also posted on the Companys website and be made available for inspection by shareholders during the business hours at the Registered Office of the Company until the date of the Annual General Meeting ("AGM"). A copy of the annual accounts of subsidiaries will be provided to shareholders upon request.
At the 69th AGM held on July 31, 2018, Mr. M M Murugappan was appointed as a director liable to retire by rotation. Mr. M B N Rao retired at the conclusion of the 69th AGM held on July 31, 2018 and Mr. N Srinivasan, stepped down from the Board with effect from August 1, 2018. The Board places on record its appreciation for the contribution made by Mr. Rao and Mr. Srinivasan during their tenure on the Companys Board.
Mr. Ashok Kumar Barat was appointed as an additional director in the category of an independent director with effect from August 1, 2018 and Mr. Sridharan Rangarajan was appointed as an additional director from August 30, 2018. Mr. B Ramaratnam was appointed as an additional director in the category of an independent director and Mr. V Ravichandran as an additional director at the Board meeting held on March 18, 2019.
The additional directors appointed during the year viz., Mr. Ashok Kumar Barat, Mr. Sridharan Rangarajan, Mr. B Ramaratnam and Mr. V Ravichandran hold office till the date of the forthcoming AGM. The Company has received notice from a shareholder proposing their candidature as Directors in the forthcoming AGM. The Board recommends their appointment as directors of the Company to the shareholders and the resolutions proposing their appointment under relevant provisions of the Act, forms part of the notice for AGM.
Mr. M M Murugappan retires by rotation at the forthcoming AGM under the provisions of section 152 of the Act, and being eligible, offers himself for re-appointment.
The Board recommends the re-appointment of Mr. M M Murugappan as a director at the forthcoming AGM for approval of the shareholders.
The information as required to be disclosed under regulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("the Listing Regulations"), for appointment / reappointment of directors is provided in the notice for AGM.
DECLARATION FROM INDEPENDENT DIRECTORS
The Independent Directors, Ms. Shubhalakshmi Panse, Mr. Ashok Kumar Barat and Mr. B Ramaratnam have submitted declaration stating that they meet the criteria of independence as required under the provisions of section 149 of the Act and regulation 16 of the Listing Regulations.
KEY MANAGERIAL PERSONNEL
Pursuant to the provisions of section 203 of the Companies Act, 2013, Mr. N Ganesh, Manager & Chief Financial Officer and Ms. E Krithika, Company Secretary are the key managerial personnel of the Company and there were no changes during the year.
At the 66th AGM held on August 6, 2015, M/s. S R Batliboi & Associates LLP, Chartered Accountants were appointed as the Statutory Auditors of the Company for a period of five years viz., from the conclusion of the 66 th AGM till the conclusion of the 71st AGM subject to ratification by members at every AGM.
Pursuant to the Companies (Amendment) Act, 2017 notified on May 7, 2018, the requirement for ratification of statutory auditors appointment at every AGM stands omitted. Accordingly, at the 69th AGM held on July 31, 2018, the appointment of M/s. S R Batliboi & Associates LLP, as statutory auditors of the company was ratified by the shareholders from the conclusion of 69th AGM till the conclusion of 71st AGM and the Board was authorised to fix remuneration of the auditors on the recommendation of the Audit Committee.
The Auditors Report to the members for the year ended March 31, 2019 forms part of the annual report and does not contain any qualification or adverse remarks. The Auditors have not reported any incident of fraud during the year to the Audit Committee of the Company.
The Company has not acceptedanyfixeddeposits under Chapter V of the Companies Act, 2013 and as such no amount of principal and interest were outstanding as on March 31, 2019.
Particulars of Loans, Guarantees or Investments
During the year, the Company has not given any loans or guarantees under the provisions of section 186 of the Act. Information regarding investments made during the year is given in the financial statements.
Internal Financial Control Systems with reference to the Financial Statements
The Company has in place adequate internal financial controls to ensure reliability of financial and operational information and regulatory and statutory compliances. The Companys business processes are equipped with monitoring and reporting processes to ensure financial discipline and accountability. The internal financial control systems are monitored both by internal and statutory auditors of the Company. The statutory auditors of the company have also certified on the existence and operating effectiveness of the internal financial controls as on March 31, 2019.
In terms of the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, the Company is required to disclose details of significant financial ratios along with the detailed explanations therefor.
The Company being an investment company and not having any debt, debtors turnover ratio, inventory turnover ratio, interest coverage ratio, current ratio, operating margin ratio, net profit margin ratio and debt equity ratio are not applicable. The return on net worth of the Company was 6.25% as at March 31, 2019 as against 5.83% as at March 31, 2018. Change in the rate is on account of increase in income earned on investment of surplus funds.
The risk management framework of the Company provides an integrated approach for identifying, monitoring and mitigating risks associated with the business. The Company has put in place a risk control matrix. The control measures basis the matrices, are tested by the internal auditor and reported to the Audit Committee. The Board reviews the risk framework annually. Further, being an investment company, all investments are subject to a detailed evaluation and approval by the Board.
INTERNAL CONTROL SYSTEM
Internal control systems of an organisation is looked at as the key to its effective functioning. The Company has in place internal control framework to ensure compliance with internal policies, regulatory matters and to safeguard reliability of financial reporting and its disclosures. An audit of systems and processes is conducted by the internal auditor of the Company and the key findings are reported to the Audit Committee every quarter. The Audit Committee evaluates adequacy and effectiveness of the internal controls, recommends improvements and reviews the corrective action taken to address gaps, if any.
The Company firmly believes in committing itself to maintaining high standards of corporate governance. A report on corporate governance of the Company together with a certificate from the Auditors in the Listing Regulations is annexed to this Report as Annexure B. The Report further contains other details which are required to be provided in the Boards Report.
Six meetings of the Board were held during the year, details of which are disclosed in the Report on Corporate Governance.
COMPOSITION OF THE AUDIT COMMITTEE
The Company has constituted an Audit Committee in terms of the applicable provisions of the Act and the Listing Regulations. Details of terms of reference, composition and meetings of the committee are disclosed in the Report on Corporate Governance. key
Pursuant to the provisions of section 134 of the Act and regulation 17 of the Listing Regulations, the Board has carried out an annual evaluation of its own performance, individual directors and its committees. The manner in which evaluation has been carried out is provided in the Report on Corporate Governance.
POLICY ON BOARD NOMINATION AND REMUNERATION
The Board has framed a policy for selection and appointment of directors, senior management and their remuneration. Details of which are furnished in the Report on Corporate Governance.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company being a part of the Murugappa Group, is known for its tradition of philanthropy and community service. The Companys philosophy is to reach out to the community through service-oriented philanthropic institutions in the fields of education and healthcare.
With the enactment of CSR provisions in the Companies Act, 2013, the Company has framed a CSR policy and the policy is available on the Companys website at, http://www.cholafhl.com/article/investors/467.
Pursuant to the provisions of section 135 of the Companies Act, 2013, atleast 2% of the average net profits of the Company shall be spent towards CSR activities. Accordingly, the Company has spent an amount of Rs. 73 Lakh on CSR projects / programmes approved by the CSR Committee during the year ended March 31, 2019 as against the statutory requirement of Rs. 72 Lakh.
Detailed information on the CSR activities undertaken during the year is annexed to this Report as Annexure C.
RELATED PARTY TRANSACTIONS
All transactions that were entered into with related parties during the financial year were in the ordinary course of business and on an arms length basis. There were no materially significant related year which may have a potential conflict with the interest of the Company at large. Necessary disclosures as required under the Indian Accounting Standard (IND AS) have been made in the notes to the financial statements. The Company has framed a policy on related party transactions. None of the Directors had any pecuniary relationships or transactions vis--vis the Company.
HUMAN RESOURCES AND PARTICULARS OF EMPLOYEES
Being a Core Investment Company, the number of employees of the Company as on March 31, 2019 was two. The information required to be disclosed under the provisions of section 197 of the Act read with rule 5 of the Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014 is annexed to this Report as Annexure D.
EMPLOYEE STOCK OPTION (ESOP) SCHEMES
The Companys ESOP Schemes viz., Employee Stock Option Plan 2007 (ESOP 2007) and Employee Stock Option Plan 2016 (ESOP 2016) have been approved by the shareholders. During the year there have been no fresh grants under both the schemes. Details in respect of ESOP 2007 and ESOP 2016 as required under the SEBI (Share Based Employee Benefits) Regulations,2014 are displayed on the Companys website at http://www.cholafhl.com/article/investors/554. Both the schemes are in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014.
As per the scheme of arrangement (demerger), employees of the Company as on the effective date of demerger, i.e. August 1, 2017 were transferred to the manufacturing concern, Tube Investments of India Limited ("the Resulting Company"). The scheme of arrangement provided that the stock options granted by the Company under the existing ESOP Schemes would continue to be held by the employees concerned whether they are employees of the Company or the Resulting Company. Further, as provided in the scheme, post demerger the exercise price of the options of the Company was revised by the Nomination & Remuneration Committee at its meeting held on November 11, 2017. By virtue of this revision, the exercise price of stock options of the Company stands reduced than the original exercise price and the balance of the exercise price becomes the exercise price of the stock options of the Resulting Company.
During the year, upon exercise of stock options by the eligible option grantees, 52118 and 106420 equity shares were allotted under ESOP 2007 and ESOP 2016 schemes, respectively. transactions during the
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The Company has no activity relating to consumption of energy or technology absorption etc. The Company does not have any foreign exchange earnings. There was a foreign exchange outgo, by way of repatriation of dividend, amounting to Rs. 0.008 Crore during the year (previous year Rs. 0.003 Crore).
WHISTLEBLOWER / VIGIL MECHANISM
In compliance with the provisions of section 177(9) of the Act read with rules made thereunder and the Listing Regulations, the Company has established a whistleblower / vigil mechanism which inter alia facilitates its employees to report genuine concerns. The mechanism provides for adequate safeguards against victimisation of persons using the mechanism and make provision for direct access to the Chairperson of the Audit Committee in appropriate or exceptional cases. The policy is available on the Companys website at, http://www.cholafhl.com/article/investors/34.
PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
Pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013, the Company has a policy for prevention of sexual harassment at workplace. An Internal Complaints Committee (ICC) is in place to redress complaints received regarding sexual harassment. The policy extends to all employees (permanent, contractual, temporary and trainees). During the year no referrals were received under the policy and no complaints were pending at the beginning of the year.
BUSINESS RESPONSIBILITY REPORT
The Company abides by a set of enduring values and beliefs called the five lights viz., the lights of integrity, passion, quality, respect and responsibility in order to be a socially responsible business, which would on a continuous basis, enhance the interests of all its stakeholders. By steadfastly upholding the principles of good and robust corporate governance ingrained with discipline, accountability, transparency and fairness, the Company constantly endeavours to sustain and enhance itself as a responsible corporate citizen.
Regulation 34(2) of the Listing Regulations mandate that annual report of top 500 listed entities based on market capitalisation, shall include a Business Responsibility Report (BRR) in the prescribed form. Accordingly, a BRR is annexed to this Report as Annexure E.
The extract of annual return as required under section 92(3) of the Companies Act, 2013, in the prescribed form MGT-9 is annexed to this Report as Annexure F. Copy of the return is available on the Companys website, www.cholafhl.com.
COMPLIANCE WITH SECRETARIAL STANDARDS
The Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.
Pursuant to the provisions of section 204 of the Companies Act, 2013, and the rules made thereunder, the Board appointed M/s Srinidhi Sridharan & Associates, Practicing Company Secretaries, as the secretarial auditor to conduct secretarial audit of the Company for the year ended March 31, 2019. The Report issued by the secretarial auditor in the prescribed form MR-3 is annexed to this Report as Annexure G.
The said secretarial audit report does not contain any qualification or adverse remarks.
DIRECTORS RESPONSIBILITY STATEMENT
The Board of Directors confirm that the Company has in place a framework of internal financial control and compliance system, which is monitored and reviewed by the Audit Committee and the Board, besides the statutory, internal and secretarial auditors. Further, pursuant to section 134(5) of the Companies Act, 2013, the Board of Directors confirm that:
a) in the preparation of the annual financial statements for the year ended March 31, 2019, the applicable accounting standards have been followed and that there were no material departures therefrom;
b) they have, in the selection of accounting policies, consulted the statutory auditors and have applied their recommendations consistently and made adjustments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2019 and of the profit of the Company for the year ended on that date;
c) they 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 and other irregularities;
d) they have prepared the annual financial statements on a going concern basis;
e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively during the year ended March 31, 2019; and
f) proper system has been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively during the year ended March 31, 2019.
DECLARATIONS / AFFIRMATIONS
During the year:
there were no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate viz., March 31, 2019 and the date of this Report; &
there were no significant material the regulators or courts or tribunals impacting the Companys going concern status and its operations in future.
The Directors wish to thank all customers, investors, vendors, financial institutions, banks, Central / State Governments and joint venture partners for their continued support to the Companys performance and growth. The Directors also wish to place on record their appreciation for the contribution made by the employees of the Company resulting in good performance during the year.
|On behalf of the Board|
|Place : Chennai||M M Murugappan|
|Date : May 3, 2019||Chairman|