Max Financial Services Ltd Directors Report.

Dear Members,

Your Directors have pleasure in presenting the Thirty-third Boards Report of Max Financial Services Limited ("MFSL" or "the Company") along with the audited Financial Statements for the financial year ended March 31, 2021.

Standalone Results

The highlights of the standalone financial results of your Company along with previous years figures are as under:

(Rs. in crore)
Year ended 31.03.2021 Year ended 31.03.2020
Revenue from operations 306.37 494.94
Other income 1.43 0.08
Total income 307.80 495.02
Expenses
Finance costs 0.21 0.20
Impairment loss on investment in subsidiary 88.16
Loss on sale of investment in subsidiary 32.89
Employee benefits expenses 21.25 22.86
Depreciation and amortization expense 3.80 9.89
Legal and professional expenses 18.32 44.39
Other expenses 13.70 21.36
Total expenses 178.34 98.70
Profit before tax 129.46 396.32
Tax expense 30.24 123.78
Profit after tax for the year 99.22 272.54
Other comprehensive income for the year 0.02 (0.12)
Total comprehensive income 99.24 272.42

Your Company is primarily engaged in the business of making and holding investments in its subsidiary, Max Life Insurance Company Limited ("Max Life")

and providing management consultancy services to group companies and accordingly in terms of extant RBI guidelines, your Company is an Unregistered Core Investment Company (Unregistered CIC) as it does not meet the criteria stipulated by RBI for Systematically important CIC.

The net worth of your Company on a standalone basis grew by around 191% to Rs 6,645 crore as of March 31, 2021 as against Rs. 2,280 crore as of March 31, 2020. The increase in the net worth was on account of (i) issuance of Equity Shares to Mitsui Sumitomo Insurance Company Limited ("MSI") on a preferential basis with a face value of Rs. 15.09 crore and recognition of share premium of Rs 4,249 crore on swap transaction with MSI, (ii) recognition of share premium on allotment of shares on exercise of ESOPs and (iii) profits.

Consolidated Results

In accordance with the Companies Act, 2013 ("the Act") and applicable accounting standards, the audited consolidated financial statements are enclosed as part of this Annual Report.

In FY 2020-21, MFSL reported consolidated revenues of Rs. 31,288 crore, 72% higher compared to the previous year, due to mark-to-market gain on debt and equity portfolio. Excluding investment gains, consolidated revenues have grown by 18%. The Gross Premiums at Rs. 19,018 crore, grew at 18% compared to the previous year. The Company reported consolidated Profit after Tax of Rs. 560 crore, a jump of 105% compared to the previous year. The steep surge in the Consolidated Profit after Tax was aided by reversal of provision for impairment on financial assets, lower tax expense and a partial offset by new business strain due to shift in product mix towards Non-Par business

Max Life achieved a significant milestone this year with its Assets under Management (AUM) crossing the Rs. 90,000 crore mark in Q4FY21. The AUM as of March 31,2021 stood at Rs. 90,407 crore, growing 32% over the previous year, owing to mark-to-market gain

on debt and equity portfolio. Another benchmark set by Max Life was in the Claims Paid Ratio category. The claims paid ratio improved to 99.35% in FY21 from 99.22% in FY20, The Market Consistent Embedded value of Max Life as on March 31, 2021 was Rs.11,834 crore, with an Operating Return on Embedded Value (RoEV) of 18.5% and the value of a new business at Rs. 1,249 crore. has grown 39% with the margins at 25.2%, 360 bps improvement year-on-year.

The highlights of the consolidated financial results of your Company and its subsidiary are as under:

(Rs. in crore)
Year ended 31.03.2021 Year ended 31.03.2020
Revenue from operations 31,273.91 18,239.98
Other income 14.11 1.78
Total income 31,288.02 18,241.76
Expenses
Finance costs 0.27 0.28
Impairment on financial instruments (55.24) 71.43
Employee benefits expenses 60.80 35.95
Depreciation and amortization expense 5.32 11.37
Legal and professional expenses 18.32 44.39
Policyholders Expenses of Life Insurance operations 30,634.31 17,595.24
Other expenses 31.34 39.32
Total expenses 30,695.12 17,799.28
Profit before tax 592.90 442.48
Tax expense 33.14 169.63
Profit after tax for the year (including non-controlling interests) 559.75 272.85
Other comprehensive income for the year (4.37) 12.99
Total comprehensive income (after tax) 555.38 285.84
Total comprehensive income attributable to
Owners of the company 419.81 154.38
Non-controlling interests 135.58 131.46

Material Changes affecting Financial Position

There are no material changes and commitments, affecting the financial position of the Company which has occurred between the end of the financial year of the Company i.e., March 31, 2021 and the date of the Directors report i.e. June 8, 2021, other than divestment of a portion of shareholding in Max Life as detailed below:

Subsequent to the year end, the Company had transferred 172,731,531 equity shares of Rs. 10 each of Max Life to Axis Bank on April 6, 2021, fully paid up at a price of Rs. 32.12 per share for consideration aggregating to Rs. 554.81 crore. Post the Axis Bank stake sale transaction, Axis Bank together with its two subsidiaries hold 12.99% equity shares of Max Life and the Companys investment in equity shares of MLIC has decreased to 81.83%.

Share Swap transaction involving MSI

On December 8, 2020, the Company allotted 7,54,58,088 equity shares of Rs. 2/- each at a price of Rs. 565.11 per equity share amounting to 21.87% of the paid-up share capital of Max Financial Services Limited ("MFSL" or "Company"), to MSI, on a preferential allotment basis in consideration for the transfer of equity shares constituting 20.57% of the paid up share capital of Max Life held by MSI to MFSL ("Share Swap Transaction").

With this allotment, the paid-up equity share capital of the Company stood increased to Rs.69,00,65,184/- as of December 8, 2020.

Post the Share Swap transaction, MSI holds 21.87% equity shares of the Company and the Companys investment in equity shares of MLIC had increased from 72.52% to 93.10% as of December 8, 2020. Further, Mr. Hideaki Nomura and Mr. Mitsuru Yasuda, nominees of MSI, were appointed as non- executive non-independent additional directors of the Company.

Estimation of uncertainties relating to COVID-19 global health pandemic

The Company has assessed the impact of COVID-19 on its operations as well as its financial results, including carrying amounts of trade receivables, investments, property, plant and equipment and other assets, as of March 31, 2021. In assessing the Carrying value of these assets, the Company has used internal and external sources of information up to the date of approval of the financial statements for the year ended March 31,2021 and based on current estimates, expects the net carrying amount of these assets to be recovered. The Company will continue to closely monitor any material changes to the business and financial statements due to COVID-19.

The subsidiary company viz., Max Life had assessed the impact of COVID-19 on its operations as well as its financial statements, including valuation of investments, valuation of policy liabilities and solvency, for the year ended March 31, 2021. To the best of information available, Max Life has maintained a sufficient amount in policyholders reserve on account of COVID-19 related contingencies over and above the policy level liabilities calculated based on prescribed IRDAI Regulations. Max Life will continue to closely monitor any material changes to the business and financial statements due to COVID-19.

Subsidiaries, Associates & Joint Venture companies

As on March 31, 2021, your Company had only 1 (one) subsidiary vis., Max Life. There were no other associate or joint venture companies.

A report on the performance and financial position of Max Life, included in the consolidated financial statements, presented in Form AOC-1 is attached to this report as Annexure - 1, as per Rule 8(1) of the Companies (Accounts) Rules, 2014.

Further, a detailed update on the business achievements of Max Life, being an operating subsidiary, is furnished as part of the Management Discussion and Analysis section which forms part of this Annual Report.

As provided in Section 136 of the Act, the financial statements and other documents of Max Life are not attached with the financial statements of the Company. The complete set of financial statements including financial statements of the subsidiary of the Company is available on the website of the Company at www.maxfinancialservices.com. These documents will also be available for inspection during business hours at the registered office of the Company.

Material Unlisted Subsidiary

In terms of the provisions of the SEBI Listing Regulations, your Company has a policy for determining Material Subsidiary and the said policy is available on the Companys website at https://www. maxfinancialservices.com/AnnualReport/doc/2020-21/ Annual Reports-Docs-MaxFinancial.zip.

Your Company has one material subsidiary, viz., Max Life Insurance Company Limited.

Dividend

Your Directors have not recommended any dividend for the financial year 2020-21.

The Board of Directors of your Company has approved a Dividend Distribution Policy in line with Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"). The said policy is available on the website of the Company at https://www.maxfinancialservices.com/AnnualReport/ doc/2020-21/Annual Reports-Docs-MaxFinancial.zip.

Transfer to Reserves

The Company has not transferred any amount to reserves during the year under review.

Share Capital

During the year under review, the Company allotted the following Equity shares of Rs. 2/- each:

(i) 1,22,727 equity shares of Rs.2/- each was allotted to the option-holders on the exercise of ESOPs under the Max Employee Stock Plan 2003 ("2003 Plan"); and

(ii) 7,54,58,088 equity shares of Rs. 2/- each to MSI on a preferential basis through Share Swap Transaction.

The Paid up capital of the Company as on March 31, 2021 was Rs. 69,01,80,604/- (Rupees Sixty-nine crore one lakh eighty thousand six hundred four only) comprising of 34,50,90,302 equity shares of Rs. 2/- each.

Further, after the end of the financial year on March 31, 2021 and till the date of this report i.e. June 8, 2021, your Company had allotted 16,466 equity shares of Rs.2/- each under the aforesaid 2003 Plan.

Employee Stock Option Plan

Your Company has an employee stock option plan viz. The 2003 Plan in place. The 2003 Plan provides for the grant of stock options aggregating not more than 5% of the number of issued equity shares of the Company to eligible employees and Directors of the Company. The 2003 Plan is administered by the Nomination and Remuneration Committee constituted by the Board of Directors of the Company. Details of options granted up to March 31, 2 021 and other disclosures as required under SEBI (Share Based Employee Benefits) Regulations, 2014 are enclosed in this report as Annexure - 2.

A certificate confirming that the 2003 Plan Scheme of the Company has been implemented in accordance with the applicable SEBI Regulations and the resolutions passed by the Members in this regard shall be placed before the members at the ensuing Annual General Meeting.

During the year under review, the Nomination and Remuneration Committee of Directors of the Company ("NRC") granted 33,855 Stock Options to Mr. Jatin Khanna, Chief Financial Officer of the Company with effect from April 3, 2020 which will vest with him in a graded manner.

Directors and Key Managerial Personnel

As on date of this report, the Board of Directors of your Company comprises 11 (Eleven) members with 1 (one) Executive Director and 10 (Ten) Non-Executive Directors of which 6 (Six) are Independent Directors. Mr. Analjit Singh (DIN: 00029641), Chairman of the Company is a Non-Executive, Non Independent Promoter Director.

Mr. Hideaki Nomura (DIN: 05304525) and Mr. Mitsuru Yasuda (DIN: 08785791), nominees of MSI were appointed as Non-Executive Non-Independent directors effective December 8, 2020.

Mr. K. Narasimha Murthy was appointed as an Independent Director of the Company for a period of five years with effect from March 30, 2021. Your directors recommend the appointment of Mr. K. Narasimha Murthy as an Independent Director on the Board of the Company for an aforesaid term of five years.

The Board of Directors have evaluated the Independent Directors appointed and re-appointed during the year 2020-21 and opined that the integrity, expertise and experience (including proficiency) of the Independent Directors is satisfactory.

Further, in terms of Section 152 of the Act and the Articles of Association of the Company, Mr. Sahil Vachani is liable to retire by rotation at the ensuing Annual General Meeting. Mr. Sahil Vachani, being eligible, has offered himself for re-appointment at the ensuing Annual General Meeting.

Brief profiles of aforesaid directors are given in the Annual Report.

The Board met five times during the financial year 2020-21:

S.No. Date Board Strength No. of Directors present
1 April 27, 2020 8 8
2 May 26, 2020 8 8
3 July 30, 2020 8 8
4 Oct 30, 2020 8 8
5 Feb 9, 2021 10 10

The details regarding the number of meetings attended by each Director during the year under review have been furnished in the Corporate Governance Report attached as part of this Annual Report.

As on the date of this Report, Mr. Mohit Talwar, Managing Director, Mr. Jatin Khanna, Chief Financial Officer and Mr. V. Krishnan, Company Secretary are the Key Managerial Personnel of the Company.

Statement of Declaration by Independent Directors

In terms of Section 149(6) of the Act and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the following NonExecutive Directors are categorized as Independent Directors of the Company: Mrs. Naina Lal Kidwai (DIN: 00017806), Mr. Aman Mehta (DIN: 00009364) Mr. Dinesh Kumar Mittal (DIN: 00040000), Mr. Jai Arya (DIN: 0008270093), Sir Charles Richard Vernon Stagg (DIN: 07176980) and Mr. K. Narasimha Murthy (DIN: 00023046).

The Company has received a declaration of independence from all the above-mentioned Independent Directors as per Section 149(7) of the Act, confirming that they continue to meet the criteria of independence. Further, pursuant to Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, all Independent Directors of the Company have confirmed their registration with the Indian Institute of Corporate Affairs (IICA) data base.

Committees of the Board of Directors

The Company has the following committees which have been established as a part of the best corporate governance practices and are in compliance with the requirements of the relevant provisions of applicable laws and statutes. A detailed note on the same is provided under the Corporate Governance Report forming part of this Annual Report.

1. Audit Committee:

The Audit Committee met four times during the financial year 2020-21, viz. on May 26, 2020, July 30, 2020, October 30, 2020 and February 9, 2021. As on the date of this report, the Committee comprises Mr. D.K. Mittal (Chairman), Mr. Aman Mehta, Mrs. Naina Lal Kidwai and Mr. Mitsuru Yasuda. All the recommendations by the Audit Committee were accepted by the Board.

2. Nomination and Remuneration Committee:

The Nomination and Remuneration Committee met thrice during the financial year 2020-21, viz. on May 26, 2020, October 30, 2020 and March 25, 2021. As on the date of this report, the

Committee comprises of Mrs. Naina Lal Kidwai (Chairman), Mr. Analjit Singh, Mr. Aman Mehta, Mr. D.K. Mittal and Mr. Hideaki Nomura.

3. Corporate Social Responsibility Committee:

As on March 31,2021, this Committee comprised of Mr. Aman Mehta, Mr. D.K. Mittal, Mrs. Naina Lal Kidwai, Mr. Jai Arya and Mr. Mohit Talwar. The Committee met on May 26, 2020. This Committee has since been disbanded basis amendments brought into Section 135 of the Companies Act, 2013 as the CSR funding for the Company is not expected to exceed Rs. 50 Lakhs per financial year and that CSR functions for the Company shall be discharged directly by its Board of Directors as and when required.

4. Stakeholders Relationship Committee:

The Committee met one time during the financial year 2020-21, viz. on December 30, 2020. As on the date of this report the Committee comprises of Mr. Sahil Vachani (Chairman), Mr. D.K. Mittal, Mr. Mohit Talwar and Mr. Mitsuru Yasuda.

5. Risk Management Committee:

As on the date of this report, the Committee comprises Mr. Aman Mehta, Mr. Dinesh Kumar Mittal, Mrs. Naina Lal Kidwai, Mr. Jai Arya, Mr. Mohit Talwar and Mr. Mitsuru Yasuda. This Committee met twice during the year under review on May 26, 2020 and March 26, 2021.

6. Independent Directors:

The Board of Directors includes 6 Independent Directors as on March 31, 2021 viz. Mr. Aman Mehta, Mr. Dinesh Kumar Mittal, Mrs. Naina Lal Kidwai, Mr. Jai Arya, Sir Charles Richard Vernon Stagg and Mr. K. Narasimha Murthy. Mr. K. Narasimha Murthy was appointed effective March 31, 2021. The Independent Directors had separate meetings on May 26, 2020 and on June 8, 2021. The meetings were conducted to:

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

b) Review the performance of the Chairperson

of the Company, taking into account the views of executive Directors and nonexecutive Directors; and

c) Assess the quality, quantity and timeliness of the flow of information between the Company management and the Board that is necessary for the Board to perform their duties effectively and reasonably.

Performance Evaluation of the Board

As per the requirements of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a formal Annual Evaluation process has been carried out for evaluating the performance of the Board, the Committees of the Board and the Individual Directors including Chairperson.

The performance evaluation was carried out by obtaining feedback from all Directors through a confidential online survey mechanism through Diligent Boards, a secured electronic medium through which the Company interfaces with its Directors. The outcome of this performance evaluation was placed before the meetings of the Nomination and Remuneration Committee and Independent Directors and the Board meeting for the consideration of the members.

The review concluded by affirming that the Board as a whole as well as its Chairman, all of its members, individually and the Committees of the Board continued to display a commitment to good governance by ensuring a constant improvement of processes and procedures and contributed their best in the overall growth of the organization.

Human Resources

We are primarily engaged in growing and nurturing business investment as a holding company in the business of life insurance and providing management advisory services to group companies. The remuneration of our employees is competitive with the market and rewards high performers across levels. The remuneration to Directors, Key Managerial Personnel and Senior Management are a balance between fixed, incentive pay, and long-term equity program based

on the performance objectives appropriate to the working of the Company and its goals and is reviewed periodically and approved by the Nomination and Remuneration Committee of the Board.

Details pursuant to Section 197(12) of the Act, read with the Rule 5(1) and Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached to this report as Annexure - 3A and Annexure - 3B.

As on March 31, 2021, there were 15 employees on the rolls of the Company.

Nomination and Remuneration Policy

In adherence to the provisions of Sections 134(3)(e) and 178(1) & (3) of the Act, the Board of Directors on the recommendation of the Nomination and Remuneration Committee, had approved a policy on Directors appointment and remuneration. The said policy includes terms of appointment, criteria for determining qualifications, performance evaluation and other matters. Copy of the same is available on the website of the Company at https://www. maxfinancialservices.com/AnnualReport/doc/2020-21/ Annual Reports-Docs-MaxFinancial.zip.

Corporate Social Responsibility ("CSR")

The Board of Directors of your Company had constituted a Corporate Social Responsibility Committee and adopted a CSR policy, as approved by the CSR Committee, copy of which is available on the website of the Company at https://www. maxfinancialservices.com/AnnualReport/doc/2020- 21/AnnualReports-Docs-MaxFinancial.zip. The CSR Policy comprises Vision and Mission Statement, philosophy and objectives. It also explains the governance structure along with clarity on roles and responsibilities.

In terms of Section 135 of the Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014, all Companies meeting the prescribed threshold criteria, i.e., net worth of Rs. 500 crore or more or turnover of Rs. 1,000 crore or more or net profits of Rs. 5 crore or more during the immediately preceding financial year are required to spend at least 2% of the average net profits of the Company

For immediately preceding 3 financial years.

As per rule 2(h) of the Companies (Corporate Social Responsibility Policy) Rules, 2014, any dividend received from other companies in India which are already covered and complying with the provisions of the CSR, shall not be included for the purposes of computation of net profits For a company.

As Max Life from whom the Company has been receiving dividend, from time to time, discharged its CSR responsibilities for the financial year 2020-21, the dividend income received by the Company will be excluded for the purposes of computation of its net profits. After excluding the dividend income received from Max Life, the Company does not have net profits computed as per the CSR rules. Therefore, the Company is not mandatorily required to spend on Corporate Social Responsibility for the financial year 2020-21. However, the Company has voluntarily made certain donations.

This Committee has since been disbanded basis amendments brought in to Section 135 of the Companies Act, 2013 as the CSR funding for the Company is not expected to exceed Rs. 50 Lakhs per financial year and that CSR functions for the Company shall be discharged directly by its Board of Directors as and when required.

Business Responsibility Report

In terms of Clause 34(2)(f) of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, a Business Responsibility Report, on various initiatives taken by the Company, is enclosed to this report as Annexure - 4. In addition to the statutory disclosures made in the said Annexure, the significant ESG initiatives taken by the Company and its subsidiary, Max Life are available at https://www. maxfinancialservices.com/AnnualReport/doc/2020-21/ Annual Reports-Docs-MaxFinancial.zip.

Policy for Prevention of Sexual Harassment

Your Company has a requisite policy for Prevention of Sexual Harassment, which is available on the website of the Company at www.maxfinancialservices.com/ shareholder-information. The comprehensive policy ensures gender equality and the right to work with

dignity to all employees (permanent, contractual, temporary and trainees) of the Company. Your company has complied with provisions relating to the constitution of the Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. No case was reported to the Committee during the year under review.

Loans, Guarantees or Investments in Securities

The details of loans given and investments made by the company pursuant to the provisions of Section 186 of the Act are provided in Note nos. 6 and 7 respectively, to the standalone financial statements of the Company for the FY 2020-21.

Management Discussion & Analysis

In terms of Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a review of the performance of the Company, including those of your Companys subsidiary, is provided in the Management Discussion & Analysis section, which forms part of this Annual Report.

Report on Corporate Governance

The Company has complied with all the mandatory requirements of Corporate Governance specified by the Securities and Exchange Board of India through Part C of Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. As required by the said Clause, a separate report on Corporate Governance forms part of the Annual Report of the Company.

A certificate from M/s Chandrasekaran Associates, Practicing Company Secretaries regarding compliance with the conditions of Corporate Governance pursuant to Part E of Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is Annexed to this Report as Annexure - 5. Further, a certificate from the Managing Director and Chief Financial Officer on compliance of Part B of Schedule II of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of the Corporate Governance Report.

Copies of various policies adopted by the Company are available on the website of the Company at

www.maxfinancialservices.com/shareholder-information.

Statutory Auditors and Auditors Report

Pursuant to Sections 139 & 142 of the Act, M/s Deloitte Haskins and Sells, LLP, Chartered Accountants (Firm Registration Number: 117366W/W-100018), were appointed as the Statutory Auditors of the Company at the 32nd Annual General Meeting ("AGM") held on December 30, 2020 for a period of five years. They continue as the Statutory Auditors of the Company.

There are no audit qualifications, reservations, disclaimers or adverse remarks or reporting of fraud in the Statutory Auditors Report given by M/s Deloitte Haskins and Sells, LLP, Statutory Auditors of the Company for the financial year 2021-21 annexed in this Annual Report.

Secretarial Auditors and Secretarial Audit Report

Pursuant to Section 204 of the Act, your Company had appointed M/s Chandrasekaran Associates, Practicing Company Secretaries, New Delhi as its Secretarial Auditors to conduct the secretarial audit of the Company for the FY 2020-21. The Company provided all assistance and facilities to the Secretarial Auditor for conducting their audit. The Report of Secretarial Auditor for the FY 2020-21 is annexed to this report as Annexure - 6.

There are no audit qualifications, reservations, disclaimers or adverse remarks in the said Secretarial Audit Report.

Your Company complies with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India and notified by the Ministry of Corporate Affairs.

Further, Max Life Insurance Company Limited, the material subsidiary of the Company has undergone Secretarial Audit for the year ended March 31, 2021. The Secretarial Audit report issued by M/s Chandrasekaran Associates, Practicing Company Secretaries, New Delhi is enclosed as Annexure-7. The said report is self-explanatory and does not contain any qualifications, reservations, adverse remarks or disclaimers.

Internal Auditors

The Company follows a robust Internal Audit process and audits are conducted on a regular basis, throughout the year, as per the agreed audit plan. During the year under review, M/s MGC, Global Risk Advisory LLP were re-appointed as Internal Auditors for conducting the Internal Audit of key functions and assessment of Internal Financial Controls etc.

Internal Financial Controls

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed. The Management has reviewed the existence of various risk-based controls in the Company and also tested the key controls towards assurance for compliance for the present fiscal.

In the opinion of the Board, the existing internal control framework is adequate and commensurate with the size and nature of the business of the Company. Further, the testing of the adequacy of internal financial controls over financial reporting has also been carried out independently by the Statutory Auditors as mandated under the provisions of the Act.

During the year under review, there were no instances of fraud reported by the auditors to the Audit Committee or the Board of Directors.

Risk Management

Your Company considers that risk is an integral part of its business and therefore, it takes proper steps to manage all risks in a proactive and efficient manner. The Board has formed a Risk Management Committee to identify the risks impacting the business, formulate strategies/ policies aimed at risk mitigation as part of risk management. Further, a core team of senior management has also been formed to identify and assess key risks, risk appetite, tolerance levels and formulate strategies for mitigation of risks identified in consultation with process owners.

The Company has adopted a Risk Management policy, whereby risks are broadly categorized into Strategic, Operational, Compliance and Financial &

Reporting Risks. The Policy outlines the parameters of identification, assessment, monitoring and mitigation of various risks which are key to the business performance.

There are no risks which, in the opinion of the Board, threaten the very existence of your Company. However, some of the challenges / risks faced by its subsidiary have been dealt with in detail in the Management Discussion and Analysis section, forming part of this Annual Report.

Vigil Mechanism

The Company has a vigil mechanism pursuant to which a Whistle Blower Policy has been adopted and is in place. The Policy ensures that strict confidentiality is maintained whilst dealing with concerns raised and also that no discrimination will be meted out to any person for a genuinely raised concern in respect of any unethical and improper practices, fraud or violation of the Companys Code of Conduct.

The said Policy, covering all employees, Directors and other persons having association with the Company, is hosted on the Companys website at https://www. maxfinancialservices.com/AnnualReport/doc/2020-21/ Annual Reports-Docs-MaxFinancial.zip. A brief note on Vigil Mechanism / Whistle Blower Policy is also provided in the Report on Corporate Governance, which forms part of this Annual Report.

Cost Records

Your Company is not required to maintain cost records as specified by the Central Government under Section 148(1) of the Act.

Public Deposits

During the year under review, the Company has not accepted or renewed any deposits from the public.

Contracts or Arrangements with Related Parties

All transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arms length basis, except an ongoing transaction with Max Life Insurance Company Limited for allowing usage of trademarks without any consideration

and an approval has already been obtained from shareholders of the Company in 2016 for the said transaction.

There is no material contract or arrangement in terms of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Form AOC-2 furnishing particulars of contracts or arrangements entered by the Company with related parties referred in Section 188(1) of the Companies Act, 2013, is annexed to this report as Annexure - 8.

The details of all the Related Party Transactions form part of Note no. 31 to the standalone financial statements attached to this Annual Report.

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Companys website at https://www. maxfinancialservices.com/AnnualReport/doc/2020-21/ AnnualReports-Docs-MaxFinancial.zip.

Particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo

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

a) Conservation of Energy

(i) the steps are taken or impact on the conservation of energy: Regular efforts are made to conserve the energy through various means such as the use of low energy consuming lightings, etc.

(ii) the steps taken by the Company for using alternate sources of energy: Since your Company is not an energy-intensive unit, utilization of alternate sources of energy may not be feasible.

(iii) capital investment on energy conservation equipment: Nil

b) Technology Absorption

Your Company is not engaged in manufacturing

activities, therefore there is no specific information to be furnished in this regard.

There was no expenditure incurred on Research and Development during the period under review.

c) Foreign Exchange Earnings and Outgo

The foreign exchange earnings and outgo are given below:

Total Foreign Exchange earned Nil
Total Foreign Exchange used Rs. 437.23 Lacs

Annual Return

The extract of Annual Return as at March 31,2021 under Section 92(3) of the Act read with Companies (Management and Administration) Rules, 2014, is available at https://www.maxfinancialservices.com/ AnnualReport/doc/2020-21/AnnualReports-Docs- MaxFinancial.zip.

Directors Responsibility Statement

Pursuant to 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, if any;

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;

c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act 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 were 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.

Significant and material orders passed by the regulators or courts or tribunals

During the year under review, there were no such significant and material orders passed by the regulators or courts or tribunals which could impact the going concern status and companys operations in the future.

Transfer of Unclaimed Dividend and Shares to the Investor Education and Protection Fund

The Company had paid Final Dividend in FY 2012-13 and Interim Dividend in FY 2013-14 and the unpaid dividend were transferred to a separate account in the same year for the aforesaid two dividends. After completion of 7 years, the unpaid amounts still lying in the said account were transferred to the Investor Education and Protection Fund, along with respective shares on which such dividend remained unpaid.

Unclaimed Shares

Regulation 39(4) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 inter alia requires every listed company to comply with certain procedure in respect of shares issued by it in physical form, pursuant to a public issue or any other issue and which remained unclaimed for any reason whatsoever.

The face value of the shares of the Company was split from Rs. 10/- each to Rs. 2/- each in the year 2007. Certain share certificates were returned undelivered and were lying unclaimed. The Company had sent necessary reminders to concerned shareholders, and subsequently such shares were transferred to the Unclaimed Suspense Account.

The voting rights on the equity shares lying in the said Unclaimed Suspense Account shall remain frozen

till the rightful owner claims such shares. Further, all corporate benefits in terms of securities accruing on the said unclaimed shares viz. bonus shares, split, etc., if any, shall also be credited to the said Unclaimed Suspense Account.

The concerned shareholder(s) are requested to write to the Registrar and Share Transfer Agent to claim the said equity shares. On receipt of such claim, additional documents may be called for and

subject to its receipt and verification, the said shares lying in the said Unclaimed Suspense Account shall be transferred to the depository account provided by the concerned shareholder(s) or the physical share certificate shall be delivered to the registered address of the concerned shareholder(s).

The details of Equity Shares held in the Unclaimed Suspense Account are as follows:

S. No. Particulars No. of Shareholders No. of Equity Shares
1. Aggregate number of shareholders and the outstanding shares originally lying in the Unclaimed Suspense Account (as at beginning of the financial year i.e. April 1, 2020) 496 1,19,510
2. Number of shareholders who approached listed entity for transfer of shares from the Unclaimed Suspense Account during the year *108 *23,805
3. Number of shareholders to whom shares were transferred from the Unclaimed Suspense Account, during the year *108 *23,805
4. Aggregate number of shareholders and the outstanding shares in the Suspense Account (as at end of the financial year i.e. March 31,2021) 388 95,705

*This includes 23,755 equity shares which were transferred to 107 shareholders from Investor Education and Protection Fund

Till the date of this report, the Company had approved an overall 1,815 - such claims from shareholders, comprising 3,79,605 shares, for transfer back of their shareholding from the Unclaimed Suspense Account in demat / physical form.

Cautionary Statement

Statements in this Report, particularly those which relate to Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied in the statement depending on the circumstances.

Acknowledgements

Your Directors would like to place on record their appreciation of the contribution made by its management and its employees who through their competence and commitment have enabled the Company to achieve impressive growth. Your Directors acknowledge with thanks the co-operation and assistance received from various agencies of the Central and State Governments, Financial Institutions and Banks, Shareholders, Joint Venture partner and all other business associates.

On behalf of the Board of Directors Max Financial Services Limited

Place: Dubai Analjit Singh
Date: June 8, 2021 Chairman
DIN: 00029641