icra ltd share price Directors report

To,

The Members,

ICRA Limited

Your Directors have the pleasure in presenting the 32^nd Annual Report of your Company along with the Audited Financial Statements for the year ended March 31, 2023.

Financial Performance

Revenue from consolidated operations for the year was Rs 40,323 lakhs, compared to Rs 34,281 lakhs in the previous year, an increase of 18%. The overall Operational Expense for the year was Rs 27,157 lakhs, against Rs 23,159 lakhs in the previous year. Profit after tax was Rs 13,673 lakhs, against Rs 11,353 lakhs in the previous year.

Consolidated
Particulars	2022-23	2021-22
	(Rs lakhs)	(Rs lakhs)
Revenue from operations	40,323	34,281
Other income	4,955	4,088
Total income	45,278	38,368
Total expenses	27,157	23,159
Profit before tax	18,121	15,209
Total tax expense	4,449	3,855
Profit for the year	13,673	11,353
Total other comprehensive income, net of tax	(163)	(38)
Total comprehensive income for the year	13,510	11,316

 

Standalone
Particulars	2022-23 (Rs lakhs)	2021-22 (Rs lakhs)
Revenue from operations	22,254	19,473
Other income	6,557	4,542
Total income	28,811	24,015
Total expenses	17,097	14,680
Profit before tax	11,713	9,335
Total tax expense	2,120	2,004
Profit for the year	9,593	7,331
Total other comprehensive income, net of tax	(42)	47
Total comprehensive income for the year	9,551	7,378

Review of Operations Rating Services

Market and Business Overview

The credit rating industry grew significantly in FY2023 despite the inflationary pressures and the fears of global recession due to the geo-political challenges arising out of the Russia-Ukraine war. The growth in rated volumes for the industry was backed by growth in bank credit outstanding by more than 15% and bond issuances by 28%. High global interest rates as global central banks tackled inflation and uncertainty on exchange rates pushed the domestic borrowers to the domestic funding market. Bank credit showed stronger growth in the first two quarters over bond issuances as bond yields rose faster than the bank Marginal Cost of Funds-based Lending Rate [MCLR], reflecting quicker transmission of the increase in policy rates by the Reserve Bank of India [RBI] to stem inflationary pressures.

Bank credit offtake to large industries witnessed a strong rebound after sluggish growth during the pandemic years. This growth was supported by higher working capital requirements due to inflationary pressures and an uptick in private capex. In addition, bank funding was available at cheaper rates compared with bonds and overseas borrowing. After a sluggish first half, bond issuances grew strongly in the second half of the year as bank MCLRs increased bond issuances from the NBFCs and corporates as interest rates on

bank loans started converging with bond yields. Strong bank credit growth resulted in banks tapping infrastructure bonds, tier II bonds and Certificates of Deposits(CDs). As mutual funds (MFs) preferred to invest in CDs, the Commercial Paper (CP) outstanding remained flat in FY2023.

Your Company grew its share in both the bank loan and the market debt segment as private sector borrowings increased sharply and your Company was able to improve its share of the same. Your Company was able to enhance its market position in terms of the volume of debt rated and also added some prominent and leading companies to its list of clients. Some novel transactions were rated involving-

• First cross collateralised loan structure for retail malls

• Two of the largest Electric two-wheeler Original Equipment Manufacturers

• Several SPVs of a group running Electric Vehicle (EV) bus operations

• PTC transaction involving pool originated under colending partnership

• AIF ratings addressing the capital protection available to the investors

In addition, your Company has been able to gain a sizeable share of ratings of Security Receipts [SRs] of Asset Reconstruction Companies [ARCs] in the last year.

Your Company, in the last financial year, continued to benefit from its focus on the growth segments of the economy such as the financial and infrastructure segments. Adoption of this approach helped improve the revenue compared to the previous year. The structured finance business saw an increase in the number of transactions and volumes over the previous year with growth in the books of NBFCs/HFCs. In terms of ratings quality, your Company has been appreciated for its accuracy and timely rating actions and continues to be a rating agency of choice for the issuers and investors.

Corporate Sector

The Indian Corporate sector witnessed steady business momentum supported by consumption and investment activity. The pace of private sector capital expenditure improved in the second half of FY2023 and, if sustained, would also be a positive for the credit demand from corporates. Private capex, over the near to medium term, would continue to be supported by the general uptick in macroeconomic activity, as well as several supportive policy measures in place such as the PLI, Aatmanirbhar Bharat etc. In addition to these policy-tailwinds, the China+1 strategy adopted by many global players augurs well for Indian companies, and investments in sectors where India can emerge as a major exporter.

Overall, ICRA expects the pick-up in private capex to be more visible in select sectors. For example, several steel players announced expansion plans with a pick-up in infrastructure and industrial activity, resulting in healthy demand. In the automotive sector, demand pick-up coupled with investments for localisation under several schemes such as Phased Manufacturing Programme (PMP) under the FAME II, the PLI for auto-components and Advanced Chemistry Cells (ACC) etc. are supporting investments in both the OEMs as well as the ancillary space. Investments in infrastructure such as data centres, to support the digitisation journey of the country, are also picking up momentum and are expected to remain healthy over the near to medium term. Regulatory and policy push for environment-related mandates also augurs well for investment in related infrastructure such as green hydrogen, scrappage centres, recycling facilities, renewable energy, charging infrastructure etc. to enable compliance to these policies. In addition, the oil & gas and petrochemicals sectors continue to invest in brownfield capex on modernisation, and expansion. Accordingly, there are several avenues for private capex to pick up pace going forward. Nonetheless, sectors or entities that face demand pressures, have limited pricing power, and are high on leverage are likely to face pressure on their credit profiles in FY2024, when the impact of the higher interest rates gets transmitted to the MCLR/base rate linked loans.

Financial Sector

As the effects of pandemic on the asset quality of lenders waned, we witnessed all categories of lenders i.e., banks, non-banking financial companies (NBFCs), housing finance

companies (HFCs) pursue credit growth in FY2023. The strong credit growth across banks, the NBFCs and the HFCs amid tighter liquidity conditions fuelled refinancing demand, thereby leading to higher quantum of bond issuances from all-India financial institutions (AIFIs). To meet the increased funding requirements amid tighter liquidity conditions and slower deposit growth, banks bond issuances (including AIFIs) nearly doubled to Rs 2.0 trillion in FY2023 compared to the previous year.

While the impact of rising bond yields and uncertainty posed by the war impacted bond issuances by the NBFCs and the HFCs during Q1 FY2023, strong financial performance and attractive bond yields lured investors with bond issuances rising by an overall 27% on a YoY basis to Rs 4.0 trillion in FY2023. Apart from strong traction in the debt issuances by financial sector entities, the strong growth in assets under management for the NBFCs and the HFCs also led to increase in credit flow from banks to these institutions in FY2023.

The bank credit to the NBFCs and the HFCs including public financial institutions rose by 32% during FY2023 [year-on- year as of Feb 2023] to Rs 13 lakh crore. To meet the strong credit growth vis-a-vis deposit growth, the certificate of deposits (CDs) volume outstanding rose by 65% on YoY basis to over Rs 3.0 lakh crore. As the mutual funds preferred CDs over CPs, the latter saw a muted growth of just 0.4% in terms of the outstanding amount for FY2023. With higher bond yields and uncertainty on outlook on yield movements, many mutual funds (MFs) launched target maturity schemes leading to an increase in demand for ratings of various mutual fund schemes.

The rate transmission of recent policy rate hikes was more gradual in the deposit rates of banks vis-a-vis debt capital markets, creating an attractive opportunity for life insurance companies to push guaranteed return products. The recent changes in regulatory guidelines for raising sub-debt by insurance companies could see a rise in bond issuances by insurance companies to meet capital requirements. Despite an expected moderation in loan growth amid rising interest rates, the growth outlook for lenders continues to remain positive for the current year; however, changes in taxation laws could impact the near-term growth in life insurance and the MF segments.

Structured Finance

The domestic securitisation volumes witnessed a sharp uptick to about Rs 1.8 lakh crore in FY2023 against about Rs 1.2 lakh crore in FY2022 supported by the healthy credit demand for the NBFCs and the HFCs as the macro-economic situation improved in the country. The securitisation volumes in Q4 of the fiscal were the highest quarterly volumes seen since the spread of the pandemic. The investor sentiments have revived supported by the stable performance of the retail loan pools seen over the past year. Growth in securitisation is expected to continue in line with the economic and credit growth in the country, further accelerated by new originators venturing into securitisation to support their funding needs.

The investor preference for retail loan pools of secured asset classes remained high with mortgage-backed loans being the dominant asset class in securitisation during the year followed by securitisation of commercial vehicle loans. Securitisation of unsecured asset classes, mainly microfinance loans, business loans and personal loans, had also seen a good pick-up during the year as the challenges arising from the pandemic have abated. The need for certain loan pools to meet priority sector lending (PSL) targets for banks has also driven growth in the securitisation market.

In FY2023, your Company continued to maintain its position as a leading credit rating agency (CRA) in the structured finance segment. Your Company saw a sharp increase in the number of fresh transactions rated / loss estimation reports prepared during the year for the second year in a row as the overall market size improved and also managed to deepen its presence by carrying out assignments for new originators, including the maiden transactions for some large-size NBFCs. In FY2023, your Company was involved in rating new and complex structures such as revolver structures as well as securitisation of trade receivables. Your Company also saw a healthy growth in recovery rating of Security Receipts issued by Asset Reconstruction Companies (ARCs) and increased its partnership with such ARCs. Your Company remains a thought leader in structured finance and continues to publish, on a periodic basis, reports on the securitisation market and new products and structures.

Outlook

On the near-term outlook for the economy, ICRA expects the expansion in Indian GDP (at constant 2011-12 prices) in FY2024 to moderate to 6.0%, with global slowdown concerns likely to constrain exports. Domestic demand is expected to be resilient albeit uneven, with consumption of services likely to continue to be prioritised over goods. A potential El Nino- weakening monsoon rainfall and high crude oil prices pose upside risks to inflation and could affect the pace of demand in FY2024. The sharp expansion in capital spending budgeted by the Government of India (GoI) and several states should support investment activity, although execution remains key. ICRA expects a rise in capacity utilisation to ~75% in Q4 FY2023, which should boost private sector capacity expansion in FY2024. An upside to our projections could occur with a faster-than-expected pick-up in Government spending, with a downside of up to 50 bps stemming from a deficient monsoon.

Inflation is expected to moderate but print well above the mid-point of the Monetary Policy Committees (MPCs) medium-term target band of 2-6%. After 250 bps of rate hikes in FY2023, the MPC unanimously voted to keep the policy repo rate unchanged at 6.5% in its First Bi-monthly Monetary Policy Review for FY2024. While it retained the stance of ‘withdrawal of accommodation, it revised the wordings to ‘ensure inflation progressively aligns with the target, while supporting growth. Given the heightened uncertainty around financial conditions in advanced economies, as well as evolving domestic inflation risks arising from adverse weather conditions and the El Nino,

the MPC has highlighted that it will continue to stay vigilant and would not hesitate to take further action as may be required in its future meetings. If inflation does not fall in line with the MPCs assessment for Q1 FY2024, a final hike could be in the offing, especially if financial stability concerns recede. Following the unexpected pause, short term rates eased, steepening the yield curve. The trajectory of the commodity prices and the borrowing costs would in turn have a bearing on the capital expenditure budgets and the viability of infrastructure investments - both ongoing and those in the pipeline.

Notwithstanding the expectations of some moderation in credit demand because of higher interest rates, credit growth is expected to remain strong in FY2024. This will also be aided by the high likelihood that domestic funding sources will continue to remain competitive vis-a-vis elevated global rates for most borrowers. As the incremental credit demand in FY2023 was partially met by lenders by drawing down the excess on-balance sheet liquidity, we expect that the resource mobilisation activity will remain strong in FY2024 despite expected moderation in credit growth. The incremental bank credit growth is expected to be strong at Rs 15-16 lakh crore during the current year and will be the highest for any year barring FY2023. A higher base would, however, moderate the YoY bank credit growth to 11.0-11.7% for FY2024. A moderation in bank credit growth could result in moderation in bond issuances by banks compared to FY2023, however, we expect that tighter liquidity conditions will result in a further improvement in credit spreads. This shall support investor appetite for corporate bonds whereas rising benchmark lending rates of banks could make bonds an attractive option for the issuers. Hence despite an expected moderation in bond issuances from banks, we expect the bond issuances to remain stable at near all-time high levels of Rs 8.7 lakh crore witnessed in FY2023.

The investment outlay envisaged under the National Infrastructure Pipeline (NIP) wherein an investment of Rs 111 trillion is expected during 2020-2025 in major infrastructure sub sectors - notably in Power, Roads, Railways and Urban Infrastructure - will give a fillip to the economy. To meet the NIP targets, significant catchup in budgetary allocations is required in the next couple of years. This is also reflected in the increase in capex allocations by the Government of India to Rs 10 lakh crore in FY2024 BE which augurs well for the sector.

While a large share of the funding will be coming from the Central and state allocations and public-sector infrastructure NBFCs, the corporate bond market is also expected to play a modest role, wherein Central PSUs in power and roads are expected to mobilise resources from the capital markets. Moreover, asset monetisation through InvITs is expected to gain traction and is estimated at Rs 2.5 trillion in the next three years, which will benefit both the bond market issuances as well as bank loans through refinancing. Besides the infrastructure companies, general corporates in capital intensive sectors such as oil & gas, metals, telecom and cement, are also expected to borrow from the capital markets. However, there is a risk of significant supply of Government bonds crowding out corporate bonds.

The securitisation market is poised for a healthy growth in FY2024 supported by improving economic conditions and growing business activities of the NBFCs and the HFCs.

The healthy disbursements seen in H2 FY2023 would also increase the quantum of eligible loans available to securitise in the current year after taking care of the RBIs requirements for a minimum holding period. The impending merger of a large HFC with a bank would reduce the loan sell-down market, though your Companys business would remain unimpacted as rating agencies were not involved in these transactions. ICRA expects securitisation volumes to continue to be supported by the requirement of banks to meet their PSL requirements. The increase in the purchase of non-PSL pooled loans is also a healthy trend that will result in healthy growth in issuance volumes. Any significant traction in the priority sector loan certificates (PSLCs) market or widespread adoption of the loan co-origination framework by banks for sourcing PSL assets could, however, restrict issuance volumes in the medium to long term.

Overall, your Company will benefit from the anticipated pickup in the debt market and the infrastructure space.

Trends in Credit Quality of ICRA-rated Companies

India Inc.s credit quality continued its strong rebound in FY2023, sustaining the positive momentum initiated in FY2022, post the pandemics adverse impact on businesses seen in the previous year. Although rating reaffirmations largely reverted to the 10-year average of 80% in FY2023 (compared to 77% in FY2022), the ratings that underwent a change remained skewed towards upgrades. As in the previous fiscal, FY2023 saw almost three upgrades for every downgrade.

As the credit quality improved, the occurrence of defaults were also lower in FY2023. There were only 22 defaults in ICRAs portfolio in FY2023, compared with 42 in FY2022 and 44 in FY2021. This trend has been consistent with the general improvement witnessed in the asset quality indicators of banks and non-banking finance companies.

Real estate, financials, and textiles were the top three sectors in terms of rating upgrades. The warehousing and the office segments, where improved leasing activity and rising occupancy levels supported credit profiles, led upgrades in the real estate sector. In the financial sector, several small to mid-sized NBFCs and housing finance companies (HFCs) were upgraded. These entities had been showing a track record of consistent business growth while maintaining/ improving their asset quality and capitalisation metrics. In the textiles sector, ICRA upgraded the ratings of several branded apparel manufacturers and retailers with their business volumes benefiting from the tailwinds of formalisation, including the shift in customer preferences towards branded wear.

The hospitality sector, among the most severely affected by the pandemic, witnessed an equally strong rebound over the past one year. With both revenues as well as profitability expected to exceed the pre-Covid levels in FY2024, the credit quality is set to improve, which has been driving upgrades in the sector since the second half of FY2023. ICRA has a Positive outlook on the hospitality sector.

Inflationary pressure amid weak pricing power was one prominent credit themes that prompted downgrades in FY2023. The debilitating effect of cost inflation was seen across multiple sectors, including building materials, food products, pharmaceuticals, gas-based power plants, etc. Rs depreciation against the US Dollar provided another inflationary prop to commodity prices, and hence weighed on profits.

With economic growth in the advanced economies expected to falter in FY2024, the export-oriented sectors like textiles and gems & jewellery will likely face demand headwinds in the near term, a phenomenon already in play since H2 FY2023. The IT services sector too could face demand challenges depending on the extent to which discretionary IT spending slows, following the global macro-economic headwinds, setbacks seen in the financial services sector in the US (marked by recent regional bank failures), and the adverse impact on the technology sector caused by the retraction of easy money policies and its manifestation in employee lay-offs.

Another risk to watch out for is the interest rate risk. While the asset quality of banks and financial institutions has been improving steadily, the key downside risk stems from the possibility of an unexpected rise in bad loans when the full impact of the rise in interest rates in FY2023 starts reflecting in the P&L of borrowers in FY2024. A further rise in interest rates (beyond the 250-bps hike in repo rates in FY2023) will test the resilience of the asset quality improvement trends.

Furthermore, looking ahead, the geopolitical machinations and the attendant risks of supply chain disturbances, stubborn inflation, and volatile capital flows, could challenge the gains in credit quality.

Rating Accuracy Trends

The performance of any credit rating system is measured by metrics like default rates, stability rates and average default position. ICRAs robust methodologies and their consistent application over the years is reflected in the low default rates in the investment grade suggesting that ICRAs ratings have done well to distinguish between safer and riskier credits.

The default rates along the rating scale, from AAA to C, have shown ordinality which reflects the ability at differentiating among credits across the risk spectrum. This apart, ICRAs ratings demonstrated a healthy one-year rating stability depicted across all investment grade rating categories—a high rating stability suggests that ICRAs rating decisions do not get influenced by the stage of the business cycle but remain strongly focused on assessing the credit worthiness of entities through the cycle. Finally, the average default position (ADP) of ICRA-assigned ratings—a measure of the tendency of a rating agency to commit type-1 and type-2 errors—remains healthy and has systematically improved over the years.

Latest short-run average default rates for long-term instruments (reflects an average of two years; computation approach as defined by SEBI)

Rating Category	1-Year Default Rate	2-year Cumulative Default Rate	3-year Cumulative Default Rate
aaa	o.o%	0.1%	0.8%
aa	o.o%	0.1%	0.6%
a	o.o%	0.4%	0.9%
BBB	0.4%	1.4%	3.0%
BB	3.0%	5.3%	7.8%
B	2.6%	5.5%	8.8%
c	11.0%	16.4%	22.5%

Latest short-run average default rates for short-term instruments (reflects an average of two-years; computation approach as defined by SEBI)

Rating Category	1-Year Default Rate
A1+	o.o%
A1	o.o%
A2	0.1%
A3	0.4%
A4	2.6%

Latest five-year average of one-year rating transition rates for long-term ratings (computation approach as defined by SEBI)

Rating Category	AAA	AA	A	BBB	BB	B	C	D
AAA	97.6%	0.9%	0.0%	0.7%	0.2%	0.0%	0.0%	0.5%
AA	2.7%	93.9%	3.1%	0.1%	0.0%	0.0%	0.0%	0.2%
A	0.3%	5.5%	90.3%	3.6%	0.1%	0.1%	0.1%	0.1%
BBB	0.0%	0.3%	7.3%	87.0%	4.2%	0.1%	0.0%	1.0%
BB	0.0%	0.1%	0.2%	5.6%	86.5%	2.6%	0.1%	4.9%
B	0.0%	0.0%	0.0%	0.0%	7.6%	81.4%	0.3%	10.7%
C	0.0%	0.0%	0.0%	0.0%	0.0%	14.8%	45.9%	39.3%

Industry Research

The research reports of your Company continue to be well appreciated by various stakeholders for their analytical content. Your Company introduced multiple thematic reports across sectors covering relevant events and their impact on the industry which were particularly appreciated by the clients. These reports helped in positioning your Company as a thought leader. Some of these reports were - The ICRA Business Activity Monitor, Investment Tracker, Interest Rate Outlook, The Climate Series reports, NBFC- MFIs, export duties etc.

During the year FY2023, your Company has shown a strong growth in its research revenue with subscription from entities across sectors - MFs, banks, NBFCs, corporates, multilaterals, consulting firms as well as management institutes. A good renewal rate amongst the existing clients along with acquisition of many new clients underscores the quality of your Companys research reports. Your Company continues to actively engage with the investor community by regularly holding interactive sessions on macro economy and industries and rating roundups through its webinar series, including a few with Moodys Investors Services, thereby building a strong market franchise. Your company also published many high impact notes on emerging themes making research a high value proposition for its clients.

Your Companys Credit Perspective Reports (CPRs) continue to attract eyeballs because of the enhanced analytical content, making it valuable for the investors.

ICRA Research has an ongoing coverage on more than 60 industries, including several sub-segments within the corporate, financial and structured finance sectors. ICRA remained a thought leader in the structured finance sector, publishing regular research notes on the securitisation market and credit quality trends across asset classes.

Franchise Development

Your Company took several initiatives to strengthen its franchise through outreach efforts. We organised physical conferences on contemporary topics such as Infrastructure, Renewable Energy, InvITs/REITs, Data Centres and Financial sector revival, which attracted overwhelming participation by investors, intermediaries, and issuers. We also continued with our practice of organising webinars on various industry related developments, with a good mix of internal and external panelists, which saw robust participation from various stakeholders. Some of these were coupled with media interactions to promote your Companys visibility and brand.

Automation Initiatives at ICRA

ICRAs automation initiatives have yielded tangible benefits over the past year, and these efforts have allowed ICRA to streamline processes, reduce manual effort, improve the overall quality of work, and help strengthen compliance to the regulatory framework.

Significant investments have been made into improving ICRAs technology stack over the past year, including the automation of standardised documents, system-generated alerts for regulatory timelines, and digitisation of internal rating frameworks. These initiatives helped improve turnaround times, reduced errors, and provided clients with higher quality deliverables. Furthermore, the initiatives helped strengthen ICRAs controls framework and ensured compliance with regulatory requirements.

Your Company has also enhanced its customer relationship management (CRM) solution thereby helping to achieve efficiencies in business development, invoicing, revenue recognition and internal controls. This has also helped improve the lead to opportunity conversion and conduct data analytics.

As part of its efforts to improve its overall technology, ICRA developed a comprehensive three-year technology roadmap that includes upgrading existing infrastructure, investing in new technologies, and enhancing IT security measures. The company is committed to building a state-of-the-art infrastructure that will enable it to better serve clients and support growth ambitions. Efforts are also under way to integrate ICRAs various systems and platforms, which will streamline processes, reduce manual effort, and improve the overall quality of work. The company has also got the right talent, which is critical for success in this area, and has invested in recruiting and retaining top talent.

ICRAs renewed focus on creating a dynamic, agile and integrated information technology infrastructure is in line with the vision to improve operations and better serve clients. ICRA is confident that these efforts will enable it to maintain its leadership position in the industry and deliver even greater value to clients.

Change in Nature of Business

During 2022-23, there was no change in the nature of business of your Company. The CRAs are not allowed to carry out any non-rating activity except only those activities that are specifically permitted by SEBI or any of the specified financial sector regulators. In FY2021-22, SEBI mandated the credit rating agencies to monitor the end use of equity issue proceeds, which was till then being done by banks. During this year, SEBI further expanded this role to include monitoring of preferential issues and Qualified Institutional Placements (QIPs) as well.

Analytics Business

During the year under review, ICRA Analytics Limited (ICRA Analytics), a material subsidiary of your Company registered a 23% growth in operating revenue to Rs 17,413 lakhs (previous year Rs 14,107 lakhs) and profit after tax (PAT) going up by 26 % to Rs 6,254 lakhs (previous year Rs 4,972 lakhs).

Drawing upon more than two decades of experience and a track record of executing over 10,000 assignments, ICRA

Analytics has developed extensive expertise across diverse domains. Clientele includes banks, NBFCs, fund managers, intermediaries, investors, and corporates. Leveraging domain expertise and functional competence, your Company has successfully designed and implemented products, services, and solutions in Risk Management, Data Management, Financial and Accounting Analysis, Bond Valuation, and Financial & Risk Advisory. In addition to expanding reach to previously untapped client segments, ICRA Analytics has introduced new offerings to the portfolio, such as Treasury Solution, workflow & decision facilitation tool/platform for fund managers and other bespoke offering for clients. Keeping pace with the evolving landscape, your Company has enhanced capability with cutting-edge technologies like analytics, automation, and cloud, utilizing them to launch contemporary cloud-hosted products with heightened analytical proficiency for all client segments.

Your Company had a very robust orderbook made possible by significant wins from new and existing clients across all lines of business. Several new assignments and initiatives were undertaken across all the businesses leading to growth in business and capabilities. Grading of Energy Services companies, developing a framework for stress testing of securities portfolio, automating generation of scheme summary documents, online polling tool to collate opinion on market movement from market participants, complex analytical support work for ESG, Corporate Finance, etc. are examples of new work executed by your Company. Apart from extending the out-reach activities, roll-out of new and enhanced solutions like cloud-hosted workflow and analytical solution for corporate treasuries, mutual fund ranking tool, capability assessment of fund management added to the product repository of your Company. Launch of an improved company SEO-friendly website with e-commerce capabilities was another notable achievement.

ICRA Analytics demonstrates a strong process and compliance orientation, as evident from the ISO27001:2013 and ISO9001:2015 certifications. These frameworks enable the Company to continually improve productivity, operations, and security measures. Based on the recent certification exercise, ICRA Analytics has been re-certified as a Great Place to Work for the CY 2023, for fourth consecutive years. The organization remains dedicated to upskilling and engaging with its talent pool of over 800+ trained and qualified personnel, as a key initiative to add value to its customers through innovation and efficiency.

Subsidiary Companies (including step-down subsidiaries)

At the beginning of the year 2022-23, your Company had five subsidiaries, including one step-down subsidiary. There are no associates and/or joint ventures, as defined under the Companies Act, 2013.

There has been no material change in the nature of the business of the subsidiaries.

As of March 31, 2023, your Company had the following subsidiaries, including the step-down subsidiary:

S. Name of Subsidiary No. Companies	Category	Country of Incorporation
1. ICRA Analytics Limited	Subsidiary	India
Pragati Development 2. Consulting Services Limited	Step-down subsidiary	India
3. PT. ICRA Indonesia*	Subsidiary	Indonesia
4. ICRA Lanka Limited**	Subsidiary	Sri Lanka
5. ICRA Nepal Limited	Subsidiary	Nepal

liquidation initiated by the Company

**credit rating licence surrendered to the Securities and Exchange Commission, Sri Lanka, effective from February 28, 2023. ICRA Lanka Limited will initiate the voluntary liquidation which will be subject to approval of the regulator(s) in Sri Lanka

Highlights of performance of subsidiary companies and their contribution to the overall performance of the Company during the year 2022-23 are provided in the Management Discussion and Analysis Report.

The consolidated financial statements of Group ICRA, consisting of ICRA Limited, its subsidiaries, including step- down subsidiary, for the year 2022-23, which form a part of the Annual Report, are attached. The Auditors Report on the consolidated financial statements is also attached. In compliance with the relevant provisions of the Companies Act, 2013, a statement containing the salient features of the financial statements in Form AOC-1 as per Rule 5 of the Companies (Accounts) Rules, 2014, of the said subsidiaries, is annexed to the consolidated financial statements, prepared in accordance with the prescribed Accounting Standards.

As required under the provisions of Section 136 (1) of the Companies Act, 2013, the financial statements, including consolidated financial statements and other documents required to be attached thereto, have been uploaded on the Companys website, www.icra.in. Further, your Company has also uploaded on its website the audited financial statements of each subsidiary company.

Branches of the Company

Your Company operates its business from its offices in New Delhi, Gurugram, Mumbai, Kolkata, Chennai, Ahmedabad, Bengaluru, Hyderabad, and Pune.

Board Meetings Held During the Year

During the year, six meetings of the Board of Directors of your Company were held, on May 12, 2022, August 4, 2022, August 29, 2022, October 20, 2022, February 13, 2023, and March 23, 2023. The details regarding the attendance of Directors at the Board meetings are furnished in the Corporate Governance Report attached as Annexure-II to this Report. The Company has complied with secretarial standards issued by the Institute of Company Secretaries of India on board meetings and general meetings, as notified by the Ministry of Corporate Affairs.

Human Resources

Our human capital function has a strategic approach to nurturing and supporting employees and ensuring a positive workplace environment. During the year, the HR Department continued to uphold the Companys talent management strategy aligned to its business strategy focused on building leaders of tomorrow to foster business growth. A fundamental belief of our management philosophy is to invest in our employees and enable them to develop mutually beneficial skills and capabilities. With this objective, an Organisation Training Matrix was created based on key themes of need and development that were identified, and subsequently implemented training across levels and functions. A total of 16,159 manhours were spent on training and development during the Financial Year.

In alignment with the Companys long-term strategic plan, a robust Annual Talent Review process has been established via 9 Box assessment, which contributes to succession planning for critical positions. A 12-month journey - Leadership Accelerator Management Programme (LAMP) - was launched with the intent to provide a growth framework to individuals identified as High Potential.

Pursuant to the Companys talent management strategy and to enhance talent attraction and retention, we have revisited our Performance and Total Rewards Proposition by undertaking Benchmarking studies. Our overall benefits proposition was restructured in keeping with the latest market trends and practices.

We also seek to add value to the workplace by being cognizant of the changing dynamic of the workforce, particularly in the areas of diversity and equity. At ICRA, 50% board members are women, 35% of the total workforce comprises women, and they constitute 20% of the proportion of senior leadership. Almost 36% of the high performers are women and 34% of all promotions have been of women. Women contribute less to attrition (34%), and 31% of our hiring has been of female candidates.

Employee engagement is of paramount importance for our organisation and plays a critical role in creating an enhanced employee value proposition. During the year, numerous fun events were organised for employees and their families to participate in. The festive events saw good traction and were aimed at enhancing employee recreation. Additionally, frequent Employee Assistance Programme (EAP) sessions have also been conducted on themes of employee health and well-being.

Employees Stock Option Scheme (ESOS)

The members of your Company in the Annual General Meeting held on August 9, 2018, by passing a special resolution, adopted a new scheme called the Employees Stock Option Scheme 2018 (‘ESOS 2018), in compliance with SEBI (Share-based Employee Benefits) Regulations, 2014, under which an aggregate of 31,950 stock options were proposed to be granted. Permanent employees (excluding promoters and Independent Directors) of your Company and its subsidiaries are eligible to participate in the ESOS 2018. An estimated 31,950 stock options (shares of which are with the ICRA Employees Welfare Trust) may be granted under the ESOS 2018.

During the year, there were no changes in the ESOS 2018.

A certificate from the Secretarial Auditors of your Company certifying that the schemes are implemented in accordance with the Securities and Exchange Board of India (Share-Based Employee Benefits and Sweat Equity) Regulations, 2021, and the resolutions passed by the members of the Company will be made available in electronic mode to the members of the Company for inspection at the Annual General Meeting.

The disclosures in terms of Regulation 14 of the SEBI (Share- Based Employee Benefits and Sweat Equity) Regulations, 2021 read with Circular No CIR/CFD/POLICY CELL/2/2015, dated june 16, 2015, issued by SEBI, are available on the Companys website; the web-link for the same is:https://www.icra.in/InvestorRelation/ ShowCorpGovernanceReport/?Id=27&Title=Corporate%20 Governance&Report=Disclosure%20by%20Board%20 of%20Directors%20(ES0P)_2023.pdf

Particulars of Employees

The disclosure under the provisions of Section 197(12) of the Companies Act, 2013, regarding the ratio of the remuneration of each Director to the median employees remuneration and such other details as specified in Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to the Directors Report (Annexure I).

A statement showing the names of the top ten employees in terms of remuneration drawn and other particulars of the employees drawing remuneration in excess of the limits set out in Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as well as the names and other particulars of every employee covered under the rule, are available at the registered office of the Company, and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished without any fee.

With regard to the provisions of Section 136(1) of the Companies Act, 2013, the Directors Report, excluding the information provided in compliance with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is being sent to the members of the Company.

Annual Return

In terms of Section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, the Annual Return is available on the Companys website at https://www.icra.in/InvestorRelation/ShowInvestorCom- municationReport/?Id=599&Title=Annual⁰/o20Return&Re- port=Annual⁰/o20Return⁰/o202022-23.pd f

Corporate Governance

The report of the Board of Directors of your Company on Corporate Governance is presented as a separate section (Annexure II) titled Corporate Governance Report, which forms a part of the Annual Report.

The composition of the Board, the Audit Committee, the Nomination and Remuneration Committee, the Stakeholders Relationship Committee, the Corporate Social Responsibility Committee, the Risk Management Committee and other committees of the Board, the number of meetings of the Board and committees of the Board, and other matters are presented in the Corporate Governance Report.

The certificate of the Statutory Auditors of your Company regarding compliance with the Corporate Governance requirements as stipulated in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations) is annexed to the Directors Report.

Your Company has obtained a certificate from a practising company secretary that none of the Directors on the Board of your Company have been debarred or disqualified from being appointed or continuing as directors of companies by the SEBI /Ministry of Corporate Affairs or any such statutory authority.

Management Discussion & Analysis

The Management Discussion and Analysis is annexed to the Annual Report (Annexure III).

Insider Trading Regulations

Based on the requirements under the SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended from time to time, the Code of Conduct for prevention of insider trading is in force in your Company. The Board of Directors of the Company has adopted the Code of Practises and Procedures for Fair Disclosure of Unpublished Price Sensitive Information, the policy for determination of legitimate purposes, and policy for enquiry in case of the leak of unpublished price sensitive information in compliance with the said regulations and the same have been uploaded on the Company website.

Material Changes and Commitments

No material changes and commitments that would affect the financial position of the Company have occurred between the end of the financial year to which the attached financial statements relate and the date of this report. Further, as per the disclosure required under Section 134 of the Companies Act, 2013 read with Rule 8(5) of the Companies (Accounts) Rules, 2014, no significant and material orders have been passed by the regulators or courts or tribunals impacting the going concern status and the Companys operations in future.

Share Capital

As on March 31, 2023, the Companys issued, subscribed and paid-up equity share capital stood at Rs 9,65,12,310 (Nine Crore Sixty-Five Lakh Twelve Thousand Three Hundred and Ten Only) divided into 96,51,231 equity shares of Rs 10/- each.

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

As your Company is not involved in any manufacturing activity, the particulars relating to conservation of energy and technology absorption, as mentioned in the Companies (Accounts) Rules, 2014, are not applicable to it. However, emphasis is placed on the employing techniques that result in the conservation of energy. Details on the foreign exchange earnings and expenditure of your Company appear in the notes to the financial statements.

Directors and Key Managerial Personnel

During 2022-23, Dr. Min Ye, Non-Executive, NonIndependent Director of your Company, resigned from the Board of your Company, inclusive of membership in any and all committees of the Board. The resignation of Dr. Ye was effective from May 13, 2022. The Board places on record its appreciation for his valuable contribution and guidance throughout his tenure.

The Board of Directors of your Company had appointed Mr. Stephen Arthur Long as an Additional Director of your Company under the category of Non-Executive NonIndependent. Mr. Longs appointment was effective from May 13, 2022. The approval from members was obtained in Annual General Meeting held on August 4, 2022 for appointment of Mr. Long under the category of Non-Executive Non-Independent Director, liable to retire by rotation.

Pursuant to the provisions of Section 152 of the Companies Act, 2013, and the Articles of Association of your Company, Ms. Wendy Huay Huay Cheong is due to retire by rotation, and being eligible, has offered herself for reappointment, subject to approval by the Members of the Company at the forthcoming Annual General Meeting.

Proposals for the above appointments form a part of the Agenda for the forthcoming Annual General Meeting and the resolutions are recommended for your approval. The profile of Ms. Cheong is presented in the Notice of the 32^nd Annual General Meeting, as required under the Companies Act, 2013, secretarial standards issued by the Institute of Company Secretaries of India on general meetings and the Listing Regulations.

Except for Ms. Ranjana Agarwal, who is serving as a Non-Executive Chairperson and Independent Director on the Board of ICRA Analytics Limited, an unlisted material subsidiary of the Company, and who receives remuneration by way of commission, no other Directors are in receipt of any remuneration or commission from any of the subsidiaries of the Company.

During 2022-23, Mr. Amit Kumar Gupta, the Chief Financial Officer, appointed for an interim period, had stepped down as Chief Financial Officer, effective from August 30, 2022, and the Board of Directors at its meeting held on August 29, 2022, had approved the appointment of Mr. Venkatesh Viswanathan as a Group Chief Financial Officer effective from August 30, 2022, as recommended by the Audit Committee and the Nomination and Remuneration Committee of your Company.

Independent Directors Declaration

Pursuant to the provisions of Section 149(7) of the Companies Act, 2013 read with Schedule IV of Companies Act, 2013, the Independent Directors have submitted declarations that each of them meets the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 along with rules made thereunder and Regulation 16(1)(b) of the Listing Regulations. There has been no change in the circumstances affecting their status as Independent Directors of the Company. The following Non-Executive Directors of the Company are independent in terms of Section 149(6) of the Companies Act, 2013 and the Listing Regulations:

1. Mr. Arun Duggal

2. Ms. Ranjana Agarwal

3. Ms. Radhika Vijay Haribhakti

Further, in terms of Section 150 of the Companies Act,

2013 read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, Independent Directors of the Company have confirmed that they have registered themselves with the databank maintained by the Indian Institute of Corporate Affairs (IICA) and have passed the proficiency test or avail the exemption from that, as applicable.

Directors Responsibility Statement

As required under the provisions contained in Section 134 of the Companies Act, 2013, your Directors hereby confirm that:

(i) in the preparation of the Annual Accounts for the year ended March 31, 2023, the applicable accounting standards have been followed and there are no material departures from the same;

(ii) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that year;

(iii) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records, in accordance with the provisions of the Companies Act, 2013, to safeguard the assets of the Company and to prevent and detect fraud and other irregularities;

(iv) the Directors had prepared the Annual Accounts on a going concern basis;

(v) the Directors had laid down the internal financial controls followed by the Company and that such internal financial controls are adequate and were operating effectively; and

(vi) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Policy on Directors Appointment

The Nomination and Remuneration Committee works with the Board to determine the appropriate characteristics, skill and experience that are required of the members of the Board. The members of the Board should possess the expertise, skills and experience needed to manage and guide the Company in the right direction and to create value for all stakeholders. The Board needs to consist of eminent persons of proven competency and integrity with an established track record. Besides having financial literacy, experience, leadership qualities and the ability to think strategically, the members are required to have a significant degree of commitment to the Company and should devote adequate time in preparing for the Board meeting and attending the same. The members of the Board of Directors are required to possess the education, expertise, skills and experience in various sectors and industries needed to manage and guide the Company. The members are also required to look at strategic planning and policy formulations.

The members of the Board should not be related to any executive or independent director of the Company or any of its subsidiaries. They are not expected to hold any executive or independent positions in any entity that is in direct competition with the Company. Board members are expected to attend and participate in the meetings of the Board and its Committees, as relevant. They are also expected to ensure that their other commitments do not interfere with the responsibilities they have by virtue of being a member of the Board of the Company. While reappointing Directors on the Board and Committees of the Board, the contribution and attendance record of the concerned Director shall be considered in respect of such reappointment. Each Independent Director shall hold office as a member of the Board for a maximum term as per the provisions of the Companies Act, 2013 and the rules made thereunder, in this regard from time to time, and in accordance with the provisions of the Listing Regulations. The appointment of the Directors shall be formalised through a letter of appointment.

The Executive Directors, with the prior approval of the Board, may serve on the Board of any other entity if there is no conflict of interest with the Companys business.

Board and Directors Performance Evaluation

The Board of Directors of the Company, based on the recommendations of the Nomination and Remuneration Committee, has formulated a Board and Directors

Performance Evaluation Policy, thereby setting out the performance evaluation criteria for the Board and its Committees and each Directors performance, including the Chairman of the Company.

Your Companys Board had undertaken a formal performance evaluation in a comprehensive and structured manner as a part of the strengthening exercise. Based on the recommendations of the Nomination and Remuneration Committee, the Board has adopted a process of receiving anonymous feedback and discussing the same at the meeting to ensure the Directors collective participation and meaningful discussion over the performance of the Board, its Committees, individual Directors and Chairperson of the Board.

Your Companys Board believes that trust in the evaluation process and its confidentiality is critical for the success of the evaluation exercise, therefore, the Board encourages fair and transparent evaluations and maintains anonymity of those providing the feedback.

During the evaluation process, various suggestions were made by individual Board members to further enhance the effectiveness of your Companys Board. The results of the feedback were discussed with the Board and its respective committee members. Individual feedback was shared by the Chairman with each Board member separately.

The Board of Directors of the Company believes that the effectiveness of its governance framework can continue to be improved through periodic evaluation of the functioning of the Board as a whole, its committees and individual directors performance evaluation.

The Board of Directors acknowledges that Independent Directors on the Board have integrity and possess expertise and experience, including proficiency.

Auditors

M/s. B S R & Co. LLP, Chartered Accountants, were appointed as Statutory Auditors of your Company, at the 28^th Annual General Meeting to hold office until the conclusion of the 33^rd Annual General Meeting. As mentioned in the notice of the Annual General Meeting, the Board of Directors and the Audit Committee shall be given the power to alter and vary the terms and conditions arising out of an increase in the scope of work, amendment in Auditing Standards or regulations and such other requirements resulting in change in scope of work. Any such change in the terms and conditions of appointment and remuneration of Statutory Auditors would be intimated in the Directors Report of the Company in the relevant year.

The disclosures relating to fees paid/payable to Statutory Auditors have been made in the Corporate Governance Report annexed to this Report.

Comments on Auditors Report

The notes to the financial statements referred to in the Auditors Report are self-explanatory and do not call for any further comments.

The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company in the year under review.

Secretarial Audit

The Board of Directors of the Company has appointed M/s. Chandrasekaran Associates, Company Secretaries, as the Secretarial Auditor of the Company for the financial year 2022-23 in terms of Section 204 of the Companies Act,

2013 and Regulation 24A of the Listing Regulations. The Secretarial Audit Report for financial year 2022-23 has been annexed to this Report (Annexure IV). The Secretarial Audit Report does not contain any qualifications.

The Secretarial Audit Report issued by the material subsidiary of the Company, ICRA Analytics Limited, is also annexed to this Report (Annexure IV-A).

Transfer to Reserves

Your Company proposes not to transfer any amount to the General Reserve.

Dividend

The Board of Directors recommends for approval of the Members at the forthcoming Annual General Meeting, payment of dividend of Rs 40 per equity share of the face value of Rs 10 each, and a special dividend of Rs 90 per equity share. The Board of Directors recommends a total dividend of Rs 130 per equity share for the financial year ended March 31, 2023. If the members approve the dividend at the forthcoming Annual General Meeting, the dividend shall be paid to: (i) all those members whose names appear in the Register of Members as on Friday, July 28, 2023; and (ii) all those members whose names appear on that date as beneficial owners as furnished by the National Securities Depository Limited and Central Depository Services (India) Limited.

Dividend Distribution Policy

Your Company has formulated a Dividend Distribution Policy (‘the Policy) pursuant to Regulation 43A of the Listing Regulations. The objective of the Policy is to maintain stability in the dividend pay-out of the Company, subject to the applicable laws, and to ensure a regular dividend income for the members and long-term capital appreciation for all stakeholders of the Company.

Your Company would ensure to strike the right balance between the quantum of dividend paid and the amount of profits retained in the business for various purposes. The Board of Directors refers to this Policy while declaring/ recommending dividends on behalf of the Company.

Through this Policy, the Company would try to maintain a consistent approach to dividend pay-out plans, subject to the applicable laws. The Policy has been uploaded on the website of your Company at: https://www.icra.in/RegulatoryDisclosure/ ShowCodePolicyReport/7

Transfer to Investor Education and Protection Fund

The Company sends reminder letters to all members whose dividends are unclaimed to ensure that they receive their rightful dues. Your Company has also uploaded on its website, www.icra.in , information regarding unpaid/ unclaimed dividend amounts lying with your Company.

During 2022-23, the unclaimed dividend amount of Rs 99,144 towards the unpaid dividend account of the Company for the financial year 2014-15 was transferred to the Investor Education and Protection Fund. The said amount had remained unclaimed for seven years, despite reminder letters having been sent to each of the members concerned.

Pursuant to Section 124(6) of the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 and its amendments, all shares in respect of which dividend has not been paid or claimed for seven consecutive years or more, shall be transferred by the Company in the demat account of Investor Education and Protection Fund (IEPF) Authority (‘the Authority) within a period of 30 days of such shares becoming due to be transferred to the IEPF, as per the procedure mentioned in the said Rules. Accordingly, your Company has transferred 85 equity shares to the demat account of the Authority in accordance with the provisions of the Companies Act, 2013 and rules made thereunder. All benefits accruing on such shares viz. bonus shares, split, consolidation, fraction shares etc., except any right issue, shall also be credited to such a demat account.

Members may note that unclaimed dividend and shares transferred to the demat account of the Authority can be claimed back by them from the Authority by following the procedure mentioned in the said Rules.

Risk Management Policy

Your Company has formulated a risk management policy. The policy is a formal acknowledgement of the commitment of your Company to risk management. The aim of the policy is not to have the risk eliminated completely from the Companys activities, but rather to ensure that every effort is made by the Company to manage risks appropriately to maximise potential opportunities and minimise the adverse effects of risk. The Board and the Risk Management Committee monitor and review the risk management plan.

Risks and concerns are discussed in Section E of the Management Discussion and Analysis Report.

Internal Control System and their Adequacy

Your Company has an internal control system, commensurate with its size, nature of its business and complexities of its operations. The Board of Directors of your Company has adopted policies and procedures for ensuring the orderly and efficient conduct of your Companys business. The Board of Directors of your Company has laid down Internal Financial Controls to provide reasonable assurance with regard to recording and providing reliable financial and operational information, adherence to the Companys policies, safeguarding of assets and prevention and detection of frauds and errors, the accuracy and completeness of accounting records and timely preparation of reliable information. The Board and the Audit Committee regularly evaluate internal financial controls.

Corporate Social Responsibility

Your Company has constituted a Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of the Companies Act, 2013. The CSR policy has been devised on the basis of the recommendations made by the CSR Committee. The composition of the CSR Committee, the CSR policy of the Company, details about the development and implementation of the policy and initiatives taken by the Company during the year as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, have been annexed to this report (Annexure V).

Business Responsibility and Sustainability Report

Your Company, in accordance with the provisions of Regulation 34(2)(f) of the Listing Regulations has prepared a Business Responsibility and Sustainability Report for the year 2022-23 (‘BRSR). The BRSR is an effective compliance and communication tool for a companys nonfinancial disclosures and is the next step in mandatory Environmental, Social and Governance (‘ESG) reporting in India. The BRSR describes the initiatives taken by your Company from the ESG perspective. The BRSR has been annexed to this report (Annexure VI) and forms a part of the Directors Report.

Particulars of Contracts or Arrangements with Related Parties

Your Company has entered into contracts or arrangements with its related parties. The related-party transactions are disclosed in the financial statements for the year ended March 31, 2023. Considering the amendments to definition of the related parties effective from April 1, 2022, under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, ("Listing Regulations"), transactions between the unlisted material subsidiary of the Company, ICRA Analytics Limited ("ICRA Analytics"), and Moodys Corporation (including its affiliates) ("Moodys entities") for providing data outsourcing, research and IT support services, were approved by the Members of the Company as per the Listing Regulations, as the transaction(s) exceeds 10% of the annual consolidated turnover of previous financial year. The transactions are in the ordinary course of business of the concerned subsidiary and at an arms length basis. Except for this transaction, there have been no material-related party transactions

as per Section 188(1) of the Companies Act, 2013 and as per Regulation 23 of the Listing Regulations. The required disclosures of information in Form AOC-2 in terms of Section 188 of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014, are annexed to this report (Annexure VII).

Policy on Prohibition, Prevention and Redressal of Sexual Harassment

Your Company has formulated a Policy on Prohibition, Prevention and Redressal of Sexual Harassment of Women at Workplace in accordance with The Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013. The Company has constituted an Internal Committee for prevention and redressal of sexual harassment at the workplace, separately for all the branches. The Company has not received any complaint during the financial year ended March 31, 2023. The disclosures in relation to The Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013 have also been made in the Corporate Governance Report.

Deposits

The Company has not accepted any public deposits and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.

Maintenance of Cost Records

The Company is not required to maintain cost records as per sub-section (1) of Section 148 of the Companies Act, 2013.

Particulars of Loans, Guarantees and Investments

The particulars of loans, guarantees and investments are disclosed in the financial statements for the year ended March 31, 2023. During the year no security has been provided as per Section 186 of the Companies Act, 2013.

Vigil Mechanism/Whistle-Blower Policy

Your Company has established a vigil mechanism in compliance with the provisions of Section 177 (9) of the Companies Act, 2013, and Regulation 22 of the Listing Regulations. Your Company has adopted a Whistle-Blower Policy to report unethical/illegal/improper behaviour. Your Company has made employees aware of the WhistleBlower Policy to enable them to report instances of leak of unpublished price sensitive information.

The said Policy also provides for adequate safeguards against victimisation of persons who use such vigil mechanism and makes provision for direct access to the chairperson of the Audit Committee in exceptional cases. Further, no stakeholders have been denied access to the Audit Committee.

Composition of the Audit Committee

Your Company has constituted an Audit Committee, the composition of which has been provided in the Corporate Governance Report. During the financial year 2022-23, the Board accepted all the recommendations of the Audit Committee.

Secretarial Standards

During the year under review, the Company complied with all the applicable provisions of Secretarial Standards issued by the Institute of Company Secretaries of India and notified by the Ministry of Corporate Affairs, Government of India.

Covid-19

There was no lockdown imposed in any part of the country in FY23 as Covid-19 was brought under control and many businesses recovered to pre-pandemic levels.

Litigations

There are certain pending cases against your Company which are sub judice in court.

Besides this, the Company has filed an appeal before the Honble Securities Appellate Tribunal (the ‘SAT), challenging the adjudication order in respect of an adjudication proceeding initiated by SEBI in relation to the credit ratings assigned to one of the Companys customers and the customers subsidiaries (the ‘Impugned Order) and deposited the penalty amount of INR 25 lakh as imposed vide the Impugned Order without prejudice to such appeal.

Further, the Securities and Exchange Board of India (SEBI), vide its order dated September 22, 2020, has enhanced the penalty amount to INR 1 crore on ICRA under Section 15HB of SEBI Act, 1992. The Company has filed an appeal challenging the SEBI enhancement order before the SAT and has deposited the additional penalty amount of INR 75 lakh, without prejudice to the rights and contentions of the Company.

Acknowledgements

Your Directors acknowledge the cooperation and assistance received from various institutions, Government agencies, members and professionals from different disciplines.

Your Directors also wish to place on record their appreciation of the contribution made by the members of the staff of your Company.

	For and on behalf of the Board of Directors
	Arun Duggal
Place: Gurugram	Chairman
Date: May 24, 2023	DIN: 00024262