IIFL Wealth Management Ltd Directors Report.

To the Members of

IIFL WEALTH MANAGEMENT LIMITED

Your Directors have pleasure in presenting the Fourteenth Annual Report of IIFL Wealth Management Limited (“the Company”) together with the Audited Financial Statements for the year ended March 31, 2021.

1 Financial Results - The Highlights Of The Financial Results For The Year Under Review Are As UNDER:

Consolidated Financial Results

Particulars 2020-21 2019-20
Gross Total Income 16,590.20 15,274.76
Less: Expenditure 11,740.96 12,410.55
Profit / (Loss) Before Taxation 4,849.24 2,864.21
Less: Taxation – Current 1,239.61 693.56
– Deferred (82.29) 159.01
Net Profit / (Loss) After Tax 3,691.92 2,011.64
Other Comprehensive Income 1.18 52.82
Total comprehensive income for the year (Comprising profit and other comprehensive income for the year) 3,693.10 2,064.46

Standalone Financial Results

Particulars 2020-21 2019-20*
Gross Total Income 7,667.61 5,684.07
Less: Expenditure 1,011.43 3,741.22
Profit / (Loss) Before Taxation 6,656.18 1,942.85
Less: Taxation - Current 211.46 51.04
- Deferred 41.02 (42.95)
Net Profit / (Loss) After Tax 6,403.70 1,934.76
Other Comprehensive Income 0.48 (5.68)
Total comprehensive income for the year (Comprising profit and other 6,404.18 1,929.08
comprehensive income for the year)

*The Results includes results from discontinued operations. For details Refer Note 32 of the Standalone Financial Statements.

 

2 REVIEW OF BUSINESS AND OPERATIONS

Total Assets under management including custody assets are Rs.2,46,083 Crs as on March ‘21. The wealth management business has client assets of

Rs.208,711 Crs, including custody assets, while the Asset Management business has Rs.37,372 Crs of assets under management as on March ‘21 of which Rs.23,700 Crs are AIF Assets, Rs.11,196 Crs are PMS Assets and Rs.2,476 Crs are Mutual Fund assets. Continuing focus on increasing Recurring Revenues has resulted in an increase in ARR generating assets by 62.9% to Rs.1,01,969 Crs and an increase in Recurring revenues by 9.1% YoY to Rs.583 Crs. The mix between ARR

Assets and TBR Assets is now almost equal (50:50).

IIFL-One has been well received by clients with Assets Under Management increasing by 57.7% YoY to Rs.27,940 Crs and Revenues increasing 58.6% YoY to Rs.55 Crs.

Total Net flows during the year were Rs.24,096 Crs, despite lockdowns constraining new account opening for almost 6 months of the year. Net Flows in Wealth Management were Rs.15,138 Crs (including Rs.9,919 Crs on account of acquisition of L&T Capital Markets) and

Rs.8,957 Crs in Asset Management.

Total Consolidated Revenue for the year was up 23.4% YoY at Rs.1,053 Crs, as compared to Rs.851 Crs for FY 20, while Revenue from Operations remained largely flat, down 0.5% YoY at Rs.915 Crs.

Total Retention on Assets basis Revenue from Operations stood at 0.50 bps. Retention on Wealth Management Assets was 0.46 bps and Retention on Asset Management Assets was 0.70 bps.

Overall Costs for the year remained flattish, up 0.6% to

Rs.568 Crs.

Employee Costs were up 8.5% overall YoY at Rs.417 Crs, of which Fixed Employee costs reduced by 12.8% YoY to Rs.261 Crs and Variable cost, including ESOP cost increased 83.5% YoY to Rs.156 Crs.

On account of remote operations, Admin and Other expenses reduced 16.3% YoY to Rs.150 Crs.

Operating PBT (OPBT) was down 2.2% YoY to Rs.348 Crs. Profit before tax (PBT) for the year was up 69.3% YoY to

Rs.485 Crs.

Profit After Tax (PAT) for FY21 was up 78.9% atRs.369 Crs from Rs.206 Crs in FY20.

Consolidated Net worth stood at Rs.2,828 Crs as against

Rs.2,992 Crs in FY20. This was largely on account of a Dividend payout of Rs.70 during the year (Rs.40 special dividend).

During the year, the Company has obtained the

Merchant Banking License from SEBI and the Company intends to pursue Merchant Banking business on going forward basis.

Return on Equity (ROE) for the year was at 12.5% and RoE Ex-Goodwill & Intangibles was 15%, up 94% YoY.

 

3 MACROECONOMIC OVERVIEW

Year in review

2020 has been by far one of the most challenging years for the global economy, with the onset and continued evolution of the COVID 19 pandemic resulting in a -3.3% degrowth in global real GDP as per IMF the first such decline in over 10 years.

However, aided by massive fiscal packages, ultra-supportive monetary policies, and the creation and deployment of vaccines by major economies, we have witnessed a V-shaped recovery in global equities with global markets amazingly closing the year in the green, a situation that 12 months ago seemed almost impossible. Many global equity indices not only regained their previous highs, some have gone on to scale new peaks as well. A fresh surge in Covid 19 related infections, rising US treasury yields, and increased mobility curbs to rein in infections by a few major economies has since reigned in investor and market exuberance, however with the continued roll out of vaccines the global economic turnaround appears to be a factor of “when”, rather than “if”.

Recently, under the new leadership of Joe Biden the United States approved a $1.9TN fiscal stimulus bill, this being in addition to the fiscal stimulus package announced in 2020 of $3 TN. These financial stimulus packages are expected to aid the US economy and in turn, also assist the global economies, including Asian economies in supporting global recoveries and consequent economic growth.

The Indian Economy also faced severe disruptions on account of the pandemic, with fiscal strains, along with sector wide lower demand and operational stresses. The country saw its worst ever GDP contraction of

23.9% YoY in the first quarter of FY 2021, primarily on account of the stringent lockdowns imposed on account of the widespread pandemic. These restrictions were slowly eased second quarter onwards and the economy commenced its journey towards recovery.

According to estimates of the provisional Annual National Income in 20-21 by the National Statistical

Office (NSO), Indian GDP was estimated to contract by

7.3% in FY21, compared to the growth it had seen in the preceding year of 4%. However, the Economic survey 2020-21, also a primary source for the NSO, estimated a sharp V-shaped recovery of the Indian economy, with the real GDP estimated to record a 11% growth in FY 2021-22 – the highest ever since independence.

 

Source: National Statistics 31, 2021

* Economic Survey - 2020-21 P: Projected

The sharp recovery in Indian equity markets in FY 21 was supported by all-timehighforeigninflows.Factors like favorable monetary policy stance from RBI, declining COVID cases over the second half of the financial year, vaccine inoculations and procurement, attractive valuations and the prospect of a sharp increase in earnings growth over the next few years and upbeat cues from global markets upheld investor sentiments.

The World Bank (WB) elevated its forecast of Indias

GDP growth for FY22 to 10.1%, noticeably higher than the 5.4% it had projected in January.

While the new wave of COVID-19 and the resultant lockdown in certain parts of countries will act as an overhang on the headline numbers, most state governments pushing for higher vaccination inoculations are expected to normalize the curve of patients with serious complications thereby reducing the burden on existing medical infrastructure. We believe the volatility could increase in the near term owing to inflationary pressures at global and domestic levels, however, pick up in earnings growth may auger well for Indian equities, albeit the pace could be slower than anticipated. The market polarization is likely to reverse as the recovery becomes more broad-based and hence provide ample room for wealth creation.

There are obvious risks to this recovery in the near term that need to be monitored:

(1) Return to normalcy could take longer than anticipated given the unprecedented rise in the COVID-19 cases across the country

(2) Lockdown / strict restrictions in certain states may remain for longer than anticipated.

Going forward, implementation of various measures efficiency announcedduringtheUnionbudgetandthe and pace of vaccination along with global cues and capital flows would be amongst the key events to monitor.

FUTURE BUSINESS OUTLOOK

Our conscious focus on driving cost and productivity enhancements at a firm level have now begun to reap benefits. These measures have been taken using a combination of cost reduction initiatives, deployment of technology to improve productivity as well as taking judicious calls on outsourcing of select activities to derive scale benefits. The benefits are beginning to reflect in our Cost to Income ratios, which have been

 

FY21 Provisional Estimates dated May

steadily declining. We expect going forward that these efforts will generate positive operating leverage, thereby enhancing firmwide productivity metrics. Investments will continue in strengthening key organizational areas of Digital, Compliance and Risk.

We intend to further grow and consolidate our overall market position and to enhance our platform and proposition via differentiated product offerings, as well as continuously evaluating inorganic opportunities to expand growth trajectory.

We will continue to find the right intersections between wealth creation and wealth preservation, between our expertise and clients level of involvement, between old age values and new-age technology, between clients needs for today and our clients familys needs for tomorrow. We continue to invest in building a high-quality team and imbibe a culture which encourages innovation and strong orientation towards knowledge-based service.

India has seen a strong economic bounce and investment sentiment remains buoyant on the back of excess liquidity and savings. There are strong tail winds across the Wealth Management and Asset Management businesses as evidenced by sustained growth in HNI/

UHNI clients driven by large number of monetization events and continued growth in next tier locations along with strong traction on institutional mandates in the Asset Management business and strong momentum across our Unlisted Differentiated strategies.

EQUITY MARKETS

Growing optimism around the global economic recovery, persistent drop in new cases and the progress of vaccination drives supported the global equity markets in the latter half of FY 21. Vaccination roll-outs across the globe, continued economic recovery, strengthened expectations of a fiscal stimulus in the US and dollar weakness kept investor sentiments strong for

EM equities. This was further aided by strong portfolio inflows amid supportive surplus liquidity across the globe. The Hang Seng Index (Hong Kong) and Nikkei 225 Index (Japan) shot up by 20.2% and 54.3%, last year.

Japans Nikkei 225 crossed the 30,000 mark for the first time in more than three decades. This surge can mainly be attributed to Japans economy growing by 12.7% in October-December quarter FY 2020-21 on a YoY basis. European equities suffered from a relatively slow roll-out of COVID-19 vaccines, political uncertainty in Italy and slower economic recovery amid lockdown restrictions. Brexit uncertainty along with second wave of virus infections have battered the UK, with the FTSE

100 Index being the slowest performing regional equity market.

Meanwhile, Indian equity markets outperformed the broader EM indices, with the Nifty 50 increasing by 70.9% and Nifty 500 by 76.0% in 12 months ending March

2021. Persistent traction in foreign flows and brighter domestic economic outlook as reflected through steady improvement in several high frequency indicators and better than expected Q4 FY 2020-21 corporate earnings also kept investor sentiments buoyant. This was further supported by stimulus measures announced by the

Government and liquidity measures adopted by RBI.

Despite COVID-induced turbulence, Indian equity markets showed their best performance in a decade in FY 2020-21. Surge in trading by retail investors and Foreign Institutional Investors (FIIs) fuelled a rally in equity markets post the sharp correction of March 2020. FIIs net investment recorded an all-time high in

FY 2020-21 at USD 37.1 billion which is approximately 14 times higher than that of USD 2.6 billion in FY 2019-20, owing to continuous rally in equity prices. Unlike FIIs,

Domestic Institutional Investors (DIIs) remained strong sellers of Indian equities with net outflows of USD 19.0 billion in FY 2020-21. Net investment by DIIs remained negative due to redemption pressures and profit-booking as equity valuations touched lifetime highs.

An exponential rise in COVID infections in the second half of March 2021 compelled re-imposition of restrictive measures and raised concerns on the ongoing economic recovery, however markets seem unperturbed by the rising number of infections in the ongoing second wave of COVID-19. The likely reason is that markets see the same as a temporary bump in the course of recovery and expect activities to normalise over time. Further, the impact on the earnings of majority of the NIFTY50 sectors is likely to be temporary and limited.

Debt Market Outlook

FY 20-21 was an action-packed year for Indian fixed income markets. 10-year G-sec yields, which spiked in early April 2020 on the back of massive FPI selling and the fear of a significant rise in fiscal deficit, reversed its course soon and started trending lower. The yield fell below 6%, driven by aggressive monetary easing, but inched up again and hovered around 6% throughout the year. The 10-year yield ended only 3 bps higher than last year despite the central governments fiscal deficit rising sharply from the budgeted 3.8% to 9.2% of GDP. This was mainly due to the RBIs intervention through open market operations (OMOs). Term spread however, jumped in March 2020 from ~1% to over 2% and remained at elevated levels as the shorter end of the yield curve was firmly anchored due to ample liquidity. Domestic liquidity remained in ample surplus supported by liquidity infusion by the RBI and the further rise in government spending and the muted credit growth also added to the surplus.

FPI flows into Indian debt markets in FY 20-21 were weak, albeit better than the previous year. The net FPI outflow amounted to ~$2.2 bn in FY 20-21 (FY 19-20: $5.4 bn).

Going forward, the outlook on yields remains uncertain as rise in international crude prices, increase in 10-year US treasury yields, elevated fiscal deficit and CPI, especially core CPI, pose an upside risk to yields. The high statutory liquidity ratio (SLR) investment holdings of banks and signs of a broad-based improvement in economic activity can also push yields higher. However, the RBI has been consistently intervening to stem any significant rise in yields and may continue to do so in the foreseeable future. Also, muted credit growth, low global rates and ample liquidity bode well for yields in

India.

During the year, credit markets faced heightened volatility, resulting in the widening of spreads. This followed from Yes Bank AT1 bonds being written off (in February 2020), imposition of the lockdown, announcement of the winding up of six debt schemes by Franklin Templeton, etc. The spreads normalised from

Q2FY 21 onwards, supported by the RBIs monetary and regulatory easing measures, recovery in economic activity, lower than expected impact of the pandemic on financial efficiency of banks and NBFCs, and other such factors.

 

4 DIVIDEND

During the period under review, your Company has declared interim dividends of Rs.40/- and Rs.30/- per share on August 19, 2020 and February 2, 2021, respectively, for shares having face value Rs.2/- each, involving a total outlay of Rs.612.72 Crs.

The dividend payout for the year under review is in accordance with the Companys policy to pay sustainable dividend linked to long-term growth objectives of the Company, to be met by internal cash accruals.

In terms of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations,

2015 (“Listing Regulations”), the Company has adopted a Dividend Distribution Policy which is annexed as

Annexure IV and is available on the Companys website at https://www.iiflwealth. .

 

5 SHARE CAPITAL

The total paid-up share capital of the Company as on March 31, 2021, was increased to Rs.17,57,65,540 divided into 8,78,82,770 equity shares, increased from

Rs.17,43,62,084 divided into 8,71,81,042 equity shares as on March 31, 2020, of Rs.2/- each. The increase in share capital was due to issue of equity shares pursuant to exercise of stock options during the year.

 

6 TRANSFER TO RESERVES

During FY21, the Company has transferred Rs.0.16 million to general reserve.

 

7 DEPOSITS

During the period under review, your Company has not accepted/ renewed any deposit within the meaning of Section 73 of the Companies Act, 2013, read with applicable rules thereto.

 

8 MERGER AND ACQUISITIONS

During the year under review, IIFL Wealth Prime Limited (formerly known as IIFL Wealth Finance Limited) a wholly-owned subsidiary Company, had acquired IIFL Wealth Capital Markets Limited (formerly known as L&T

Capital Markets Limited) on April 24, 2020.

 

9 DETAILS OF SUBSIDIARIES institutions, improvement in collection

In accordance with Section 129(3) of the Companies

Act, 2013, the consolidated financial statements of the Company and all its subsidiaries, which form part of the Annual Report, have been prepared and are also available on the website of the Company. You may refer to the annexure to the consolidated financial statements of the Company, which contains the statement containing the salient features of the financial statement of the subsidiaries in the prescribed format AOC-1.

As per the provisions of Section 129, 134 and 136 of the Companies Act, 2013, read with applicable Rules,

Regulation 33 of SEBI Listing Regulations, 2015 and applicable Indian Accounting Standards(“Ind AS”), the

Board of Directors at its meeting held on May 18, 2021, approved the Consolidated Financial Statements of the

Company and its subsidiaries. Copies of the Balance Sheet, Profit and Loss Account, Report of the Board of Directors and Report of the Auditors of each of the subsidiary companies are not attached to the accounts of the Company for the financial year 2020-21. The Company will make these documents/ details available upon request by any Member of the Company. These documents/details will also be available for inspection by any Member of the Company at its registered office and at the registered offices of the concerned subsidiaries during business hours on working days and through electronic means. Members can request the same by sending an email to secretarial@iiflw. till the Annual General Meeting. The audited financials of all the subsidiaries are available on the website of the Company at https://www.iiflwealth.com . The Companys financial statements including the accounts of its subsidiaries, which form part of this Annual Report are prepared in accordance with the Companies Act, 2013 and Ind AS 110.

As at date of report, your Company has following subsidiaries:

Domestic Subsidiaries:

i. IIFL Wealth Prime Limited (formerly known as IIFL

Wealth Finance Limited) ii. IIFL Wealth Distribution Services Limited (formerly known as IIFL Distribution Services Limited)

iii. IIFL Asset Management Limited

iv. IIFL Investment Adviser and Trustee Services Limited

v. IIFL Wealth Portfolio Managers Limited (formerly known as IIFL Portfolio Managers Limited)

vi. IIFL Trustee Limited

vii. IIFL Wealth Securities IFSC Limited

viii. IIFL Wealth Altiore Limited (formerly known as Altiore Advisors Private Limited)

ix. IIFL Wealth Capital Markets Limited (formerly known as L&T Capital Markets Limited)

x. IIFLW CSR Foundation

International Subsidiaries: i. IIFL Asset Management (Mauritius) Limited ii. IIFL Private Wealth Management (Dubai) Limited iii. IIFL (Asia) Pte. Limited iv. IIFL Inc. v. IIFL Capital (Canada) Limited vi. IIFL Capital Pte. Limited vii. IIFL Securities Pte. Limited

IIFL Wealth Prime Limited (formerly knowns as IIFL Wealth Finance Limited) and IIFL Asset Management Limited, are the material subsidiaries of the Company during the period under review.

During the year under review, the Company has invested USD 10 Million into the step-down subsidiary IIFL Capital Pte. Ltd., Singapore.

The Company does not have any associate/joint venture company.

The Annual Report which consists of the financial statements of your Company on standalone basis as well as consolidated financial statements of the group for the year ended March 31, 2021, is being sent to all the members of your Company.

The policy on determining the material subsidiary is available on the website of the Company.

 

10 CORPORATE GOVERNANCE

Pursuant to SEBI Listing Regulations, 2015 a separate section ‘Report on Corporate Governance has been included in this Annual Report. The Report of Corporate

Governance also contains certain disclosures required under the Companies Act, 2013.

 

11 ANNUAL RETURN

Pursuant to Section 92(3) and Section 134(3)(a) of the Companies Act, 2013, read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the Annual Return of the Company as on March

31, 2021, is available on the Companys website: www. iiflwealth.com.

 12 DIRECTORS AND KEY MANAGERIAL PERSONNEL a. Directors

The Board of your Company consists of Mr. Karan Bhagat, Managing Director, Mr. Nilesh Vikamsey (Chairman of the Board), Ms. Geeta Mathur, Dr. S.

Narayan and Mr. Pankaj Vaish who are Independent Directors, Mr. Nirmal Jain, Mr. R. Venkataraman, Mr. Gopalakrishnan Soundarajan and Mr. Yatin Shah who are Non-Executive Directors and Mr. Sandeep Naik and Mr. Shantanu Rastogi who are Nominee Directors (nominated by General Atlantic Singapore Fund Pte Ltd) of the Company.

Mr. Nilesh Vikamsey, Dr. S. Narayan, Mr. Pankaj Vaish and Ms. Geeta Mathur have submitted their declaration of independence under Section 149(6) of the Companies Act, 2013.

Directors retiring by rotation

Mr. Nirmal Jain and Mr. Venkataraman Rajamani shall retire by rotation at the Fourteenth Annual General Meeting (AGM) of the Company and are eligible for re-appointment.

Independent Directors Data Base & Proficiency Test

Pursuant to a notification dated October 22, 2019, issued by the Ministry of Corporate Affairs, name of every Independent Director should be registered in the database of Independent Directors maintained by

Indian Institute of Corporate Affairs, Manesar (“IICA”).

Accordingly, the Independent Directors of the Company have registered themselves with the IICA for the said purpose.

The opinion of the Board with regard to integrity, expertise and experience (including the proficiency) of

Independent Directors is complied with.

i. Meetings of the Board of Directors

The Board of Directors have met seven (7) times during the period under review to discuss and approve various matters including financials, declaration of interim dividend, review of audit reports and other board businesses. For further details kindly refer the Corporate Governance Report.

ii. Committees of the Board

In accordance with the Companies Act, 2013, the Board has constituted following Committees as per the applicable provision of the Companies Act, 2013 and the

SEBI (Listing Obligation and Disclosure Requirements)

Regulations, 2015.

(i) Audit Committee;

(ii) Nomination and Remuneration Committee; (iii) Corporate Social Responsibility Committee; (iv) Stakeholders Relationship Committee;

(v) Risk Management Committee.

(i) Audit Committee

The Audit Committee comprises of Mr. Nilesh Vikamsey, Ms. Geeta Mathur, Mr. Pankaj Vaish and Mr. Shantanu Rastogi. Ms. Geeta Mathur is the Chairperson of the Committee. The role, terms of reference and powers of the Audit Committee are in conformity with the requirements of the Companies Act 2013, the SEBI

Listing Regulations, 2015 and the internal policies. The Committee met seven (7) times during the year under review and discussed financials, audit issues and appointment of auditors. During the period under review, all the recommendations of the Audit Committee were accepted by the Board of Directors of the Company.

The details including the meetings, role, terms of reference etc. of the Audit Committee are provided in the Corporate Governance Report.

(ii) Nomination and Remuneration Committee

The Nomination and Remuneration Committee (“NRC”) comprises Mr. Nilesh Vikamsey, Ms. Geeta Mathur, Mr. Nirmal Jain and Mr. Sandeep Naik. Ms. Geeta Mathur is the Chairperson of the Committee. As per the provisions of Section 178 of the Companies Act, 2013, the NRC had formulated a Nomination and Remuneration policy. The same is annexed as an Annexure I to this Report.

The details including the frequency of meetings, role, terms of reference, etc. of the Nomination and Remuneration Committee are provided in the Corporate Governance Report.

(iii) Corporate Social Responsibility Committee

The Corporate Social Responsibility Committee (“CSR Committee”) comprises of Mr. Nilesh Vikamsey,

Mr. Nirmal Jain, Mr. Karan Bhagat and Mr. Sandeep Naik. Mr. Karan Bhagat is the Chairman of the Committee.

The Company has also incorporated IIFLW CSR foundation, under Section 8 of the Companies Act, 2013, to execute IIFL Wealth group CSR activities.

The details including the meetings, role, terms of reference etc. of the CSR Committee are provided in the Corporate Governance Report.

(iv) Stakeholders Relationship Committee

Stakeholders Relationship Committee comprises of

Mr. Venkataraman Rajamani, Mr. Pankaj Vaish and Mr. Yatin Shah.

The details including the frequency of meetings, role, terms of reference etc. of the Stakeholders Relationship

Committee are provided in the Corporate Governance Report.

(v) Risk Management Committee

Risk Management Committee comprises of Mr. Venkataraman Rajamani, Ms. Geeta Mathur, Mr.

Karan Bhagat, Mr. Shantanu Rastogi and Mr. Nilesh

Vikamsey.

The objective of the Risk Management Committee is to oversee the risk management governance structure, define and review the framework for identification, assessment, monitoring, mitigation and reporting of risks. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

The details including the role, objectives/ terms of reference of the Risk Management Committee are provided in the Corporate Governance Report.

iii. Separate meeting of Independent Directors

In compliance with provisions of the Companies Act, 2013, a separate meeting of Independent Directors was held on March 23, 2021, inter alia, to discuss the following:

Review the performance of non-independent directors and the Board as a whole;

Review the performance of the Chairperson of the Company, taking into account the views of Executive Directors and Non-Executive Directors;

Assess the quality, quantity and timeliness of of information between the management and the

Board that is necessary for the Board to effectively and reasonably perform their duties.

Upon conclusion of the meeting, the Independent Directors expressed their satisfaction over the performance of the other Directors and Board as a whole. They also expressed their satisfaction over the quality, quantity and flow management and the Board / Committees of the Board from time to time.

iv. Annual Evaluation of the Board

Pursuant to the provisions of the Companies Act, 2013 and SEBI Listing Regulations, 2015 and SEBI Circular no. SEBI/HO/CFD/CMD/ CIR/P/2017/004 dated January 05, 2017, the Board of Directors has carried out an annual performance evaluation of its own performance, the Directors individually including Independent Directors based out of the criteria and framework adopted by the Board. The Board approved the evaluation results as collated by the Nomination and Remuneration Committee (“NRC”).

The Board noted the key improvement areas emerging from the exercise in 2020-21 and action plans to address these are in progress.

The Independent Directors expressed their satisfaction with overall functioning and implementations of their suggestions given earlier.

v. Declaration by Independent Directors

The Company has received necessary declaration from each Independent Director under Section 149(7) of the Companies Act, 2013 that they meet the criteria of Independent laid down in Section 149(6) of the

Companies Act, 2013 and Regulation 16(1)(b) of SEBI

Listing Regulations, 2015.

There has been no change in the circumstances or situation, which exist or may be reasonably anticipated, that could impair or impact the ability of Independent Directors to discharge their duties with an objective of independent judgment and without any external influence.

b. Key Managerial Personnel

The following officials are the “Key Managerial

Personnel” of the Company, pursuant to the provisions of Section 203 of the Companies Act, 2013:

Mr. Karan Bhagat, Managing Director,

Mr. Mihir Nanavati, Chief Financial Officer and flow Mr. Amit Bhandari, Company Secretary and Compliance Officer (with effect from February 2,

2021).

During the year Mr. Ashutosh Naik has resigned as

Company Secretary and Compliance Officer of the Company with effect from October 14, 2020 and Mr. Amit Bhandari was appointed as Company Secretary and Compliance Officer with effect from February 2, 2021.of information between the

 

13 BOARD EFFECTIVENESS

Familiarisation Program for the Independent Directors

In compliance with the requirements of SEBI Listing

Regulations, 2015, the Company has put in place a Familiarisation Programme for Independent Directors to familiarise them with the working of the Company, their roles, rights and responsibilities vis--vis the Company, the industry in which the Company operates and business model etc.

On a quarterly basis, presentations are made at the meeting of Board and Committees, on business, operations and performance updates of the Company and the group, important developments in the subsidiaries, relevant statutory and regulatory changes applicable to the Company, update on important legal matters pertaining to the Company and its subsidiaries.

Details of the Familiarisation Programme are provided in the Corporate Governance Report and are also available on the website of the Company.

 

14 CORPORATE SOCIAL RESPONSIBILITY (CSR)

We at IIFL Wealth Management Limited strongly believe in enabling inclusive development. The core focus of our CSR is aimed at reducing inequality by enabling access to opportunities to underserved or marginalised communities. Through our CSR, we wish to implement sustainable programmes that move the needle on social impact by addressing some of the most critical developmental challenges. To consolidate our efforts towards catalytic CSR, we established the IIFLW CSR Foundation (“Foundation”) to design and deliver CSR activities on behalf of the IIFL Wealth Management Limited group entities.

Our vision for the Foundation is to bring about a positive change in the lives of underprivileged individuals and communities by enabling a strategic and collaborative partnership to maximise social impact. We believe that meaningful impact can be achieved through effective collaboration. We wish to partner with our clients and leverage their passion for social impact to amplify the scale of our CSR programmes.

The first year of the Foundations initiatives focused on critical and relevant thematic areas such as Education and Healthcare including COVID relief. Our focus going forward will be to support interventions in Healthcare, Education, Livelihoods and Financial Inclusion, which will enable us to build resilience in various communities.

As experts in financial sector, we would like to leverage our core competencies and expertise beyond providing mere funds as part of our responsibility to society.

As we move forward in our social impact journey, we wish to evolve towards a more strategic and impactful model for our CSR where we envision our role in mobilising both philanthropic capital and other types of capital to create more collaborative, meaningful, sustainable solutions that uplift lives of underserved and under-represented individuals and communities.

This will also enable a multiplier effect of our funds and make our programmes sustainable in the longer run.

The Annual Report on CSR activities by the Company is annexed as Annexure II.

 15 PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act,

2013 (“the Act”) read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in “Annexure III” to this report.

Further, a statement showing names and other particulars of employees drawing remuneration in excess of the limits as set out in the Rules 5(2) and 5(3) of the aforesaid Rules, forms part of this report.

However, in terms of first proviso to Section 136(1) of the

Act, the Annual Report and Accounts are being sent to the Members and others entitled thereto, excluding the aforesaid information. The said information is available for inspection by the Members at the Registered Office of the Company during business hours on working days and through electronic means, up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary at secretarial@ iiflw.com, whereupon a copy would be sent.

 

16 EMPLOYEE STOCK OPTION SCHEME

The stock options granted to the employees of the Company and its subsidiaries currently operate under the following Schemes which are prepared as per the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014 (“SBEB Regulations”):

IIFL Wealth Employee Stock Option Scheme 2012

IIFL Wealth Employee Stock Option Scheme 2015

IIFL Wealth Employee Stock Option Scheme 2019

IIFL Wealth Employee Stock Option Scheme-

Demerger Scheme

IIFL Wealth Employee Stock Option Scheme 2021

During the year, the Company has implemented IIFL Wealth Employee Stock Option Scheme- 2021 for the employees of the Company and its subsidiaries.

Sr. no. Heading Particulars
A Number of options granted during the year 1,17,530
B Exercise Price (per share) 831 shares @ Rs.417
4,300 shares @ 16
83,725 shares @ 282
2,62,936 shares @ Rs.339
1,98,416 shares @ Rs.417
1,25,026 shares @ Rs.861
25,265 shares @ 82.02
372 shares @ Rs.82.73
857 shares @ Rs.218.71
C Options Vested during the year 12,25,953
D Options Exercised during the year 7,01,728
E Total no. of shares arising as result of exercise of Options 7,01,728
F Options lapsed (Re-allocable)* 1,25,735
E Variation in terms of Options Nil
G Money realised by exercise of Options (In ) 30,58,38,384.33
Sr. no. Heading Particulars
H Total number of options in force 29,67,520
I Employee-wise details of options granted to:
- Key Managerial Personnel NIL
- any other employee who receives a grant in any one year of option amounting to 5% or more of option granted during that year Name (ESOP Scheme 2019)
Options
- Amit Kumar (Principal)
7,500 @ Rs.900.00
- Anshuman Maheshwary (Chief Operating Officer)
10,000 @ Rs.1147.00
- Kevin Chen Jong Woei (Senior Vice President)
10,000 @ Rs.900.00
- Kunal Haria (Principal)
9,000 @ Rs.900.00
- Manoj Shenoy (Executive Director)
24,967 @ Rs.900.00
- Sugat Dhara (Senior Vice President)
10,000 @ Rs.900.00
- Sugat Dhara (Senior Vice President)
10,000 @ Rs.1147.00
- identified emplo yees who were granted option, during any one year, equal to or exceeding 1% of the issued capital (excluding warrants and conversions) of the company at the time of grant Nil

*Options Lapsed for 2012 Scheme, 2015 Scheme and Demerger Scheme are not re-allocable.

A certificate from the Auditors of the Company that the

Schemes have been implemented in accordance with the SBEB Regulations would be placed at the ensuing

Annual General Meeting (“AGM”) for inspection by Members through electronic means.

The disclosure requirements under the Securities and Exchange Board of India (Share-Based Employee Benefits) Regulations, 2014, for the aforesaid ESOP

Schemes, in respect of the year ended March 31, 2021, are disclosed on the Companys website: www.iiflwealth. com.

 

17 RISK MANAGEMENT POLICY AND INTERNAL CONTROL ADEQUACY

The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuous basis. These are discussed at the meetings of the Audit Committee,

Risk Management Committee and Board of Directors of the Company. and material orders

The internal processes have been designed to ensure adequate checks and balances and regulatory compliances at every stage. Authority matrices have been defined going down from the Board of Directors, to provide authority to approve various transactions.

The Company has in place adequate internal controls with reference to financial statements and operations and the same are operating effectively. These are encapsulated in the Risks & Controls Matrix (RCM). The Internal Auditors tested the design and effectiveness of the key controls and no material weaknesses were observed in their examination. Further, Statutory

Auditors verified the Design and Implementation (D&I) of controls and testing of operating effectiveness of controls for material class of transactions, account balances and disclosures and have confirmed that they do not have any significant or material observations in relation of deficiencies in design and controls.

 

18 SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY AND THE COMPANYS FUTURE OPERATIONS

passed There are no significant by the Regulators or Courts or Tribunals which would impact the going concern status and the Companys future operations.

 

19 STATUTORY AUDITORS

At the 13th Annual General Meeting held on September

11, 2020, M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W/

W100018), were appointed as Statutory Auditors of the

Company to hold office till the conclusion of the 18th Annual General Meeting to be held in the year 2025.

 

20 AUDITORS REPORT

The Reports of the Statutory Auditors on Standalone and Consolidated Financial Statements of the Company form part of this Annual Report.

There are no qualifications, by the Statutory Auditors in their reports for the financial year ended March 31, 2021.

The Notes to the financial statements referred in the

Auditors Reports are self-explanatory and therefore do not call for any comments under Section 134 of the Companies Act, 2013.

The Statutory Auditors have not reported any incident of fraud committed in the Company by its officers or employees to the Audit Committee under Section 143 (12) of the Companies Act, 2013, in the year under review.

 

21 SECRETARIAL AUDIT

During the year under review, the Secretarial Audit was conducted by M/s. Mehta & Mehta, Practicing

Company Secretaries. The report of the Secretarial Audit is annexed herewith as Annexure V. There are no qualifications contained, during the said Report.

As per Regulation 24A of the SEBI Listing Regulations, a listed company is required to annex a secretarial audit report of its material unlisted subsidiary to its Directors Report. The secretarial audit reports of Material subsidiaries of the Company i.e. IIFL Asset Management Limited and IIFL Wealth Prime Limited for FY 2020-21 are annexed herewith.

 

22 FEMA COMPLIANCE

With reference to Circular No. D/o IPP F. No. 5(1)/2017-

FC-1 dated August 28, 2017 (“FDI Policy”) relating to Foreign Direct Investment Policy, the Company complied with FDI Policy and various circulars issued by

Reserve Bank of India from time to time.

 

23 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

The details of loans, guarantees or investments made are provided in the standalone financial statement.

 

24 PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

The Company has put in place a policy for Related Party Transactions (RPT Policy), which has been approved by the Board of Directors. The Policy provides for identification of Related Party Transactions (RPTs), necessary approvals by the Audit Committee/Board/ Shareholders, reporting and disclosure requirements in compliance with the Companies Act, 2013 and provisions of SEBI Listing Regulations, 2015.

All related party transactions that were entered during the financial year were in ordinary course of the business of the Company, and the transactions were on arms reservations or observations length basis.

No contract/ arrangement has been entered by the

Company with its promoters, directors, key managerial personnel or other persons which may have a potential conflict with the interest of the Company. The transactions with related party are disclosed by way of notes to accounts in the standalone financial results of the Company for the financial year ended March 31,

2021.

The Companys policy on dealing with the Related Party Transactions is available on the Companys website: www.iiflwealth.com.

 

25 MANAGEMENTS DISCUSSION AND ANALYSIS

In terms of the provisions of Regulation 34 of the SEBI Listing Regulations, 2015 the Managements discussion and analysis is set out in this Annual Report.

 

26 ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on energy conservation, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules, 2014, is appended below:

Conservation of energy:

The Company is engaged in providing financial services and as such its operations do not account for substantial energy consumption.

However, the Company is taking all possible measures to conserve energy. Several environment friendly measures were adopted by the Company such as:

Installation of capacitors to save power,

Ins talled Thin Film Transistor (TFT) monitors saves power,

Light Emitting Diode (LED) lights,

Automatic power shutdown of idle monitors,

Restricted access to printers at central hub besides removal of earlier printers.

Environmental awareness communication:

Minimizing air-conditioning usage,

Avoiding disposable cups and plates by encouraging employees to carry their own cups and cutlery,

Shutting off all the lights and air-conditioner when not in use, and

Education and awareness programs for employees. The management frequently puts circulars on corporate intranet, and digital boards in common area for the employees educating them on ways and means to conserve electricity and other natural resources and ensures strict compliance of the same.

Technology absorption and innovation :

The management understands the importance of technology in the business segments. It operates and lays utmost emphasis on system development and use of best technology available in the industry. The management keeps itself abreast of technological advancements in the industry and ensures continued and sustained efforts towards absorption of technology, adaptation as well as development of the same to meet the business needs and objectives.

The management invested considerable resources in deploying the latest technologies in the areas of wide area networking using MPLS, video communications, VoIP, automated dialers and other customer relationship management (CRM) tools and software.

The Company also made significant strides in using cloud technology for customer-facing servers providing rapid and inexpensive ramp-up or down of capacity in line with business requirements.

The management is aware of increasing threats in the Information Security domain and has taken several steps to ensure that the Company is safe guarded against hacking attacks, data leakage and security breaches. IT and certain business processes have been recertified for ISO 27001 systems for practicing industry care standard security implementations and processes. The management has invested resources in implementing controls and continuously monitoring violations, if any. That Research and Development (R & D):

The Company is engaged in distribution of various financial products and advising clients on wealth management through mutual fund and alternative investment fund platform, which entails internal research of investment products, sectors and markets.

FOREIGN EXCHANGE EARNING AND OUTGO:

a) The foreign exchange earnings: Rs.10.87 Million;

b) The foreign exchange expenditure: Rs.62.45 Million.

 

27 DISCLOSURES UNDER SEXUAL HARASSMENT

OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT 2013

Your Company is committed to provide a work environment that ensures every woman employee is treated with dignity and respect and afforded equitable treatment. Your Company is also committed to promote a work environment that is conducive to the professional growth of its women employees and encourages equality of opportunity. Your Company will not tolerate any form of sexual harassment and is committed to take all necessary steps to ensure that its women employees are not subjected to any form of harassment.

Your Directors further state that your Company has formulated and adopted a ‘Policy for Prevention / Prohibition / Redressal of Sexual Harassment of

Women at the Workplace, and that there were no cases filed pursuant to the Sexual Harassment of Women at

Workplace (Prevention, Prohibition and Redressal) Act, 2013.

 

28 DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, it is hereby confirmed that:

a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

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

sufficient c) the Directors had taken proper and 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) the Directors had prepared the annual accounts on a going concern basis;

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

f) 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.

 

29 COMPLIANCE WITH THE SECRETARIAL STANDARDS

The Board of Directors affirms that the Company has complied with the applicable mandatory Secretarial Standards issued by the Institute of Company Secretaries of India.

 

30 BUSINESS RESPONSIBILITY REPORT

A Business Responsibility Report as per Regulation 34 of the SEBI Listing Regulations, 2015 detailing the various initiatives taken by your Company on the environmental, social and governance front, forms an integral part of this report.

 

31 RISK MANAGEMENT REPORT

IntermsoftheprovisionsofSection134oftheCompanies the Companies Act, 2013 a Risk Management Report is set out in the Management Discussion and Analysis Report.

ACKNOWLEDGEMENTS

Your Directors would like to place on record their gratitudeforthevaluableguidanceandsupportreceived from regulatory agencies. Your Directors acknowledge the support of the members and also wish to place on record their appreciation of employees for their commendable efforts, teamwork and professionalism.

For and on behalf of the Board of Directors
-Sd- -Sd-
Karan Bhagat Yatin Shah
Managing Director Non-Executive Director
DIN: 03247753 DIN: 03231090
Date: May 18, 2021
Place: Mumbai