Motilal Oswal Financial Services Ltd Directors Report.

Dear Members,

The Directors of your Company have the pleasure in presenting the Fifteenth Boards Report together with the Audited Financial Statements for the financial year ended March 31, 2020.

Financial Results

The summary of the Companys financial performance, both on a consolidated and standalone basis, for the Financial Year ("FY") 2019-20 as compared to the previous FY2018-19 is given below:

(R in Lakhs)

Particulars

Consolidated

Standalone

2019-20 2018-19 2019-20 2018-19
Total Revenue 236,541 246,174 130,639 124,869
Profit before Interest, Depreciation, Taxation and exceptional items 81,937 91,870 35,318 51,579
Interest 49,447 51,685 12,924 10,428
Depreciation 3,971 2,395 2,984 1,801
Profit before taxation 28,519 37,790 19,410 39,350
Add/(Less) : Provision for Taxation
Current Tax 13,371 18,426 7,056 8,914
Deferred Tax (6,424) (9,100) (7,326) (1,927)
Less : Tax for earlier year(s) 32 (61) - -
Tax Expenses 6,979 9,265 (270) 6,987
Profit after Taxation from Continuing Operations 21,540 28,526 19,680 32,363
Loss from discontinuing operations before tax - - - (186)
Tax on discontinuing operations - - - 54
Loss from discontinuing operations after tax - - - 132
Share of Profit from Associates and Joint Ventures (net of taxes) (2,582) 1,306 - -
Profit for the Period 18,958 29,831 19,680 32,231
Add/Less: Other Comprehensive Income (OCI)
Acturial gain/(loss) 201 190 57 34
Fair value gain/(loss) of investment held through FVOCI (6,914) (470) (4,489) (737)
Tax on OCI 727 (10) 499 74
Total Comprehensive Income 12,972 29,541 15,747 31,603
Less: Total comprehensive income attributable to (618) (436) -
Non-controlling interests
Total comprehensive income attributable to Owners of parent 12,354 29,105 15,747 31,603
Add: Balance brought forward from previous year 2,17,715 2,05,063 185,181 167,001
Profit Available for appropriation 12,354 29,105 15,747 31,602
Less: Appropriations
Transfer to Statutory Reserve (782) (42) - -
Transfer to Capital redemption Reserve - (245) - -
Interim Dividend and Final Dividend (12,984) (12,505) (12,491) (12,374)
Dividend Distribution Tax (2,603) (2,733) (2) (1,048)
Expected Credit Loss Impairment reserve (62) - - -
Transfer to General Reserve 133 - - -
Transfer to Minority interest 1,148 (928) - -
Balance of Profit carried forward 2,14,919 2,17,715 188,435 185,181

FINANCIAL PERFORMANCE Standalone

The standalone revenues in FY2019-20 stood at R 1,306 crores vs R 1,249 crores in FY2018-19. Total expenses (before interest and depreciation) for the year came in at R 953 crores which increased by 30% over previous year. People cost increased 12% to R 312 crores. Operating expenses increased by 5% to R 333 crores. Other costs were R 150 crores, an increase of 11% over previous year. The profit before depreciation, interest, exceptional items and taxation (EBITDA) stood at R 353 crores. Reported net profit for the year came in at R 197 crores.

Consolidated

The consolidated revenues during the year under review were R 2,365 crores, a decrease of 4% as compared to the previous year.

Broking and related income grew 8% YoY to R 1,225 crores. The average daily traded volumes (ADTO) for the equity markets during FY2019-20 stood at R 14.44 lakh crores, up 45% YoY from R 9.93 lakh crores in FY2018-19. The overall Cash market ADTO reported growth of 11% YoY at R 39,068 crores in FY2019-20. Delivery saw growth of 3% YoY to R 9,140 crores v/s 8% de-growth in FY2018-19. Within derivatives, future volumes increased 0.4% YoY to R 87,950 crores while options rose 51% to R 13.17 lakh crores. Amongst cash market participants, retail constitutes 52% of total cash volume, institution constitutes 25% of total cash volume and prop constitutes 23%. The proportion of DII in the cash market was 10.1%. The increase in demat accounts during the year stood at 13% with total number of accounts as on March, 2020 at 4.08 crores. The revival in market sentiments is expected to give push to the primary market activities and overall volumes.

- The company had more than 14,48,935 retail broking and distribution clients growing at a CAGR of 16% from FY2019-20. Client acquisition stood at ~2,42,000 during the year, +72% YoY.

- The distribution revenues contribute 15%/9.3% of the gross/net total income respectively with continual traction in distribution business. Our financial product distribution AUM was R 9,034 crores as of March, 2020, with net sales of R 924 crores in FY2020.

- Investment banking fee saw a decline over the previous year, to R 12 crores. The overall market volatility caused due to various issues like economic slowdown, global trade war and the COVID-19 pandemic kept the IPO & QIP transactions muted during the year. The pipeline remains robust and is likely to fructify once the pandemic ends.

- Asset management income declined by 4% YoY to R 556 crores, as compared to last year. Total assets under management/advice across mutual funds, PMS and private equity businesses was R 29,691 crores, down 24% YoY. Within this, the mutual fund AUM was down 20% YoY to R 15,981 crores, PMS AUM was down 27% YoY to R 11,628 crores and AIF AUM was R 1,891 crores. The company entered into the arena of passive investing and launched six index funds this year.

- The private equity income excluding the share of lumpy profits on investment exits stood at R 107 crores. The income from wealth management business stood at R 100.7 crores. The wealth management AUM continued to attract assets with closing AUM for FY2020 at R 15,624 crores.

- Housing finance related gross income of R 233 crores. The focus was more on improving the asset quality and risk management. HFC loan book was R 3,667 crores, as of March, 2020

In line with the long term strategy to grow RoE sustainably, Motilal Oswal Financial Services Limited (MOFSL) had made strategic allocation of capital to long term RoE enhancing opportunities like Motilal Oswal Home Finance Limited, and sponsor commitments to our mutual fund and private equity funds. As of March, 2020, our total quoted equity investments stood at R 1,220 crores. Unrealized gain on all investments was ~R 172 crores.

Total expenses (before interest and depreciation) for the year at R 1,546 crores registered a marginal increase of 0.2% over previous year. Profit before depreciation, interest, exceptional items and taxation (EBITDA) stood at R 819 crores, a decline of 11% from the previous year. Profit for the year (post minority interest) declined by 26% to R 209 crores.

The detailed results of operations of the Company are given in the Management Discussion & Analysis forming part of this Report.

FUTURE OUTLOOK

Our strategy to diversify our business model towards more annuity sources of earnings is showing definite results. The annuity nature of earnings in the new businesses like asset based businesses and housing finance business has brought in visibility of our earnings. Our businesses have stood strong in the volatile year of FY2020 while maintaining operating parameters. Our brand is now being recognized across each of our businesses. The opportunity size in all our business segments is still huge, and our businesses are well placed to benefit from the growth potential they offer.

CONSOLIDATED FINANCIAL STATEMENT

As per Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") and applicable provisions of the Companies Act, 2013 ("the Act") read with the Rules issued thereunder (as amended from time to time), the Consolidated Financial Statement of the Company for the FY2019-20 have been prepared in compliance with applicable Indian Accounting Standards and on the basis of Audited Financial Statement of the Company and its subsidiaries, as approved by the respective Board of Directors.

The Consolidated Financial Statement together with the Auditors Report forms part of this Annual Report.

COVID-19 - MOFSL POWERING AHEAD

The COVID-19 pandemic continues to spread rapidly across the globe including India. The COVID-19 outbreak was declared a global pandemic by the World Health Organization and has caused social and economic disruption. As the human toll mounts, so does the capital markets damage.

The Indian government had announced nationwide lockdown in India. In this nation-wide lock-down period, though all the services across the nation were suspended (except the specified essential services), some establishments including securities market intermediaries could operate and were exempted from the lock-down. Accordingly, your Company continued its operations through minimal staff working at office premises and rest all working from home.

Your Company adopted several measures to fight against COVID-19 and to ensure business continuity across its offices and branches. Some of the measures taken by the Company are as follows:

- Contribution of R 5 crores at Group level to Prime Ministers Relief Fund and R 1 crore to Maharashtra Chief Ministers Relief Fund

- Payment of Bonus to reward the efforts put in by employees in FY2019-20 and Salaries were credited in advance for the month of April, 2020

- Implementation of various Operational Plans for Business Continuity and Associate Safety

- Work from Home facility for employees was provided 1 week in advance before announcement of lockdown without compromising any commitments

- IT infrastructure support was rolled out overnight to help our employees shift to this new work paradigm

- Necessary Food & Stay Arrangements at Office for Business Critical Employees (BCEs) i.e. employees working from Office Premises

- Providing Appreciation Certificate(s) to BCEs

- Conducting temperature checks of all employees/staffs/visitors at entry of all offices/branches

- Various online contest/challenges were conducted to keep employees engaged, motivated and connected by allowing them to showcase their other skills/talents.

- Motivational mails sent by CEO/HR head and awareness mails circulated by HR team.

- Conducting Virtual Meetings

- Following of social distancing norms i.e. minimum 6 ft distance to be followed

- No entry in Offices/Branches for external visitors

- Provision of hand sanitizers and N95 masks, compulsory hand sanitization for all individuals at frequent intervals and daily periodic sanitization of offices, work-area etc.

- HR team personally ensuring the well-being of employees through calls

Your Company strongly believes that when the going gets tough; the tough get going. With a strong balance sheet, a passionate team and a positive, enterprising attitude; we hope to sail over any hurdle that come our way. Tough times dont last; tough people do.

INFORMATION ON THE STATE OF AFFAIRS OF THE COMPANY

The Information on the state of affairs of the Company has been given as part of Management Discussion & Analysis Report forming part of Annual Report of the Company.

MATERIAL CHANGES AND COMMITMENTS, AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments, affecting the financial position of the Company, which have occurred between the end of the financial year of the Company and the date of this Report.

DIVIDEND

The Board of Directors of the Company has approved the Dividend Distribution Policy ("Policy") in line with the requirements of the Listing Regulations. The Board of Directors at its Meeting held on March 21, 2020 has amended the policy thereby changing the circumstances under which shareholders may not expect dividend and financial parameters mentioned in the Policy. The Policy is appended as "Annexure 1" to the Boards Report and is also been uploaded on the Companys website at https://www.motilaloswalgroup.com/Downloads/IR/206776066708.-Dividend-Distribution-Policy.pdf

The Board of Directors of the Company at its meeting held on January 22, 2020, had declared and paid an Interim Dividend of R 4.00/- per Equity Share for the FY2019-20, out of the profits of the Company for the third quarter and nine months ended December 31, 2019, on 14,79,98,193 Equity Shares of face value of R 1/- each, aggregating to R 59,19,92,772/-.

CREDIT RATING

During the year under review, ICRA Limited reaffirmed the long term credit rating of [ICRA] AA" Rating with a stable outlook to the Non-Convertible Debentures ("NCDs") Programme of R 350 crores of the Company.

CRISIL Limited reaffirmed the Credit Rating of "CRISIL A1+" and India Rating & Research Private Limited has also reaffirmed the Credit Rating of "IND A1+" to the Commercial Programme of R 1,300 Crores of the Company. Accordingly, there was no revision in the credit ratings during the year under review. The ratings indicate a very strong degree of safety regarding timely servicing of financial obligations.

Further, CRISIL has upgraded credit rating to AA- with a stable outlook from earlier A+ (stable) for Long Tem Borrowings Programme of Motilal Oswal Home Finance Limited, material subsidiary of the Company.

Further, during the year under review, the Company does not have any fixed deposit programme or any scheme or proposal involving mobilization of funds in India or abroad during the year under review.

SHARE CAPITAL

During the year under review, the Company has allotted 10,55,432 Equity Shares under various Employee Stock Option Schemes of the Company. Further, the Company has allotted 13,30,928 equity shares under preferential allotment for consideration other than cash.

Pursuant to the allotment of the Equity Shares, the paid up Equity Share Capital of the Company as on March 31, 2020 is R 14,80,66,718/- (Rupees Fourteen Crores Eighty Lakhs Sixty Six Thousand Seven Hundred and Eighteen only).

The Authorised Share Capital of the Company as on March 31, 2020 is R 149,00,00,000/- divided into 92,50,00,000 Equity Shares of R 1/- each and 56,50,000 Preference Shares of R 100/- each.

BUY-BACK OF EQUITY SHARES

The Board of Directors at its Meeting held on March 21, 2020 approved the proposal of Buy-back of equity shares of the Company from the open market through the stock exchanges for a total amount not exceeding R 150,00,00,000/- at a price not exceeding R 650/- per equity share. The Buy-back period commenced on April 01, 2020.

DEBENTURES

1,500 NCDs of R 10 Lakhs each aggregating to R 150 Crores issued by the Company are outstanding as on March 31, 2020.

The details of the Debenture Trustee of the Company is as under:

Vistra ITCL (India) Limited

IL & FS Financial Centre,

Plot No C22, G Block, 7th Floor, Bandra Kurla Complex,

Bandra - East, Mumbai - 400051

Direct: +91 22 6593662, Website: www.vistraitcl.com

EMPLOYEE STOCK OPTION SCHEMES

The disclosures required to be made under the SEBI (Share Based Employee Benefits) Regulations, 2014 ("SBEB Regulations") (as amended from time to time), are available on the website of the Company at www.motilaloswalgroup.com.

Further, the Company confirms that all the Employee Stock Options Schemes of the Company are falling under direct route and not Trust route and accordingly the provisions related to Trust route as specified in the SBEB Regulations are not applicable to the aforesaid schemes of the Company. Further, all the permanent employees (except the persons as mentioned in the regulations) of the Company, its holding company and its subsidiary companies are entitled to participate in said schemes of the Company. Further, the

Company confirms that the Company has not granted employee stock options equal to or exceeding one percent of the issued capital of the Company at the time of grant of stock options to any employees of the Company/Holding Company/Subsidiary Company.

The certificate from the Statutory Auditors, confirming compliance with the aforesaid provisions is available on the website of the Company at www.motilaloswalgroup.com

The Employee Stock Option Schemes are administered by the Nomination and Remuneration Committee of the Board of the Company, in accordance with the applicable SBEB Regulations.

SUBSIDIARY COMPANIES

The Company along with its subsidiaries, offers a diversified range of financial products and services such as Loan against Securities, Investment Activities, Private Wealth Management, Broking and Distribution, Asset Management, Housing Finance, Institutional Equities, Private Equity and Investment Banking.

Further, the Company has incorporated wholly owned subsidiary namely Glide Tech Investment Advisory Private Limited ("GTIAPL") at Mumbai on November 25, 2019 to provide registered investment advisory services through IT enabled platform.

As of March 31, 2020, the Company had 19 subsidiaries (including step down subsidiaries). The details of these subsidiaries are set out in form MGT-9 forming part of the Annual Report. There are no associate companies or joint venture within the meaning of Section 2(6) of the Act as on March 31, 2020.

Further, pursuant to the provisions of Section 136(1) of the Act, the financial statement for the period ended March 31, 2020 of each subsidiary of the Company is available on the website of the company at www.motilaloswalgroup.com.

MATERIAL SUBSIDIARIES

As required under Regulations 16(1)(c) and 46 of the Listing Regulations, the Board of Directors has approved the Policy on Determination of Material Subsidiaries ("Policy"). The said policy is available on the website of the Company at https://www.motilaloswalgroup.com/Downloads/IR/212618793Policv-on-Determination-of-Material-Subsidiaries.pdf. Accordingly, Motilal Oswal Home Finance Limited ("MOHFL"), Motilal Oswal Asset Management Company Limited ("MOAMC") and Motilal Oswal Finvest Limited ("MOFL") are material subsidiaries of the Company.

INVESTMENT IN SUBSIDIARIES

During the year under review, the Company paid the initial subscription money of R 1,00,00,000/- comprising of 10,00,000 equity shares of R 10/- each towards incorporation of GTIAPL and R 2,40,00,000/- comprising of 24,00,000 equity shares of R 10/- each towards incorporation of Motilal Oswal Finsec IFSC Limited and acquired 1,98,83,877 equity shares of R 10/- each of MOFL, wholly owned subsidiary of the Company.

Further, the Company acquired 1,79,63,624 equity shares of R 1/- each of MOAMC, 13,200 equity shares of R 1/- each of Motilal Oswal Wealth Management Limited ("MOWML") and 1,274 equity shares of R 10/- each of MOPE Investment Advisors Private Limited ("MOPE"), subsidiaries of the Company, from employees of MOAMC/MOWML/MOPE respectively in exchange of allotment of equity shares of the Company on preferential basis i.e. for consideration other than cash, to said employees in accordance with swap arrangement entered by the Company with employees and respective aforesaid subsidiary companies.

PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARIES

As required under Rule 5 and Rule 8(1) of the Companies (Accounts) Rules, 2014, a report on the highlights of performance of subsidiaries, associates and joint venture companies and their contribution to the overall performance of the Company has been appended as "Annexure 2" to the Boards Report. Pursuant to the provisions of Section 129(3) of the Act, a statement containing salient features of financial statement of subsidiaries in Form AOC-1 is annexed to the Consolidated Financial Statement in the Annual Report. In accordance with provisions of Section 136 of Act, the separate audited financial statement in respect of each of the subsidiary company is also available on the website of your Company at www.motilaloswalgroup.com. These documents will also be available for inspection in electronic mode.

PUBLIC DEPOSITS

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

BOARD OF DIRECTORS

The composition of the Board of Directors of the Company is in accordance with the provisions of Section 149 of the Act and Regulation 17 of the Listing Regulations, with an appropriate combination of Executive, Non-Executive and Independent Directors.

The Company has 8 (Eight) Directors comprising of 1 (One) Non-Executive Chairman, 1 (One) Managing Director & Chief Executive Officer, 1 (One) Managing Director, 1 (One) Whole-time Director and 4 (Four) Independent Directors. The complete list of Directors of the Company has been provided in the Report on Corporate Governance forming part of this Report.

During the year under review, the Board of Directors at its Meeting held on July 31, 2019 appointed Mr. Raamdeo Agarawal as Non-Executive Chairman of the Company w.e.f. October 14, 2019 at the remuneration of R 12 lacs per annum by way of monthly commission of R 1 lac per month, as his term as Joint Managing Director has expired on closure of business hours of October 13, 2019 and he continues as Non-Executive Director of the Company.

Section 152 of the Act provides that unless the Articles of Association provide for the retirement of all directors at every AGM, not less than two-third of the total number of directors of a public company (excluding the Independent Directors) shall be persons whose period of office is liable to determination by retirement of directors by rotation. Accordingly, Mr. Navin Agarwal, Managing Director will retire by rotation at the ensuing AGM and being eligible, has offered himself for re-appointment. The details of Mr. Navin Agarwal is stated in the notice of the AGM of the Company.

The resolution for the re-appointment of Mr. Navin Agarwal as detailed in the Notice of AGM would be placed for your approval at the ensuing AGM.

MEETINGS AND COMPOSITION OF BOARD OF DIRECTORS AND COMMITTEE(S)

The details of the Meetings of the Board and Committee(s) of the Company held during FY2019-20 are disclosed in the Report on Corporate Governance forming part of Annual Report of the Company.

The Composition of Board and Committee(s) as on March 31, 2020 are disclosed in the Report on Corporate Governance.

DECLARATION BY INDEPENDENT DIRECTORS

All Independent Directors have submitted the declaration of independence, as required pursuant to provisions of the Section 149(7) of the Act, stating that they meet the criteria of independence as provided in Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations and are not disqualified from continuing as Independent Directors of the Company. Further, all the Independent Directors have confirmed their registration on Independent Directors Databank. These declarations/confirmations have been placed before the Board.

DISCLOSURE ON MAINTENANCE OF COST RECORDS

The Company engaged in Stock Broking Activity during the year under review is not required to maintain cost records in accordance with the provisions of the Act.

FAMILIARIZATION PROGRAMMES

The Company has familiarized the Independent Directors with the Company, their roles, responsibilities in the Company, nature of industry in which the Company operates, business model of the Company, various businesses in the group etc. The details of the familiarization Programmes are available on the website of the Company at https://www.motilaloswalgroup.com/Downloads/IR/315816220Familiarization-Programmes-for-Independent-Director 2020.pdf

CODE OF CONDUCT

Pursuant to Regulation 26(3) of the Listing Regulations, all the Directors of the Company have affirmed compliance with the Code of Conduct of the Company.

KEY MANAGERIAL PERSONNEL

During the year under review, due to the appointment of Mr. Raamdeo Agarawal as Non-Executive Chairman of the Company, he ceases to be the Key Managerial Personnel of the Company w.e.f. October 14, 2019.

As at March 31, 2020, the Company has the following Key Managerial Personnel:

1) Mr. Motilal Oswal - Managing Director & Chief Executive Officer

2) Mr. Navin Agarwal - Managing Director

3) Mr. Ajay Menon - Whole-time Director

4) Mr. Shalibhadra Shah - Chief Financial Officer

5) Mr. Kailash Purohit - Company Secretary & Compliance Officer

COMPANYS POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

Section 178 of the Act and Regulation 19 read with Part D of Schedule II of the Listing Regulations, as amended from time to time, requires the Nomination and Remuneration Committee ("NRC") to formulate a Policy relating to the remuneration for the Directors, Key Managerial Personnel ("KMP"), Senior Management and other employees of the Company and recommend the same for approval of the Board.

Accordingly, in compliance to provisions to the aforesaidprovisions, the Nomination and Remuneration Policy ofthe Company is available on the website of the Company at https://www.motilaloswalgroup.com/Downloads/IR/724496156Nomination-and-Remuneration-Policv.pdf. The salient features of the Policy are given below:-

Appointment criteria and qualifications:

1. The Committee shall identify and ascertain the integrity, qualification, expertise and experience of the person for appointment as Director, KMP or Senior Management and recommend to the Board his/her appointment.

2. A person should possess adequate qualification, expertise and experience for the position he/she is considered for appointment. The Committee has discretion to decide whether qualification, expertise and experience possessed by a person are sufficient/satisfactory for the concerned position.

3. The Company shall not appoint or continue the employment of any person as Managing Director/Whole-time Director/ Manager who has attained the age of seventy years.

Provided that the term of the person holding this position may be extended beyond the age of seventy years with the approval of shareholders by passing a special resolution based on the explanatory statement annexed to the notice for such motion indicating the justification for extension of appointment beyond seventy years.

• Evaluation:

The performance evaluation shall be carried out as given below:-

Performance Evaluation by Of Whom
Nomination and Remuneration Committee Every Directors performance
Board of Directors - All Directors and Board and Committees as a whole

- All Independent Directors excluding the Director being evaluated

Independent Directors Review the performance of Non Independent Directors and Chairman of the Company

The Committee shall carry out evaluation of performance of every Director at regular interval (yearly).

• Removal:

Due to reasons for any disqualification mentioned in the Act, rules made there under or under any other applicable Act, rules and regulations, the Committee may recommend, to the Board with reasons recorded in writing, removal of a Director, KMP or Senior Management subject to the provisions and compliance of the said Act, rules and regulations.

• Retirement:

The Director, KMP and Senior Management shall retire as per the applicable provisions of the Act and the prevailing internal policy of the Company. The Board will have the discretion to retain the Director, KMP, Senior Management in the same position/remuneration or otherwise even after attaining the retirement age, for the benefit of the Company.

PROVISIONS RELATING TO REMUNERATION OF MANAGERIAL PERSON, KMP AND SENIOR MANAGEMENT

• General:

1. The remuneration/compensation/commission etc. to Managerial Person, KMP and Senior Management will be determined by the Committee and recommended to the Board for approval. The remuneration/compensation/commission etc. shall be subject to the prior/post approval of the shareholders of the Company and such other approval, wherever required.

2. The remuneration and commission to be paid to Managerial Person shall be as per the statutory provisions of the Act and Listing Regulations, and the rules made there under for the time being in force.

3. Increments to the existing remuneration/compensation structure may be recommended by the Committee to the Board which should be within the slabs approved by the Shareholders in the case of Managerial Person.

4. The remuneration structure will have a right mix of guaranteed (fixed) pay, pay for performance and long term variable pay based on business growth and other factors such as growth in shareholder value to ensure that it is competitive and reasonable

5. Where any insurance is taken by the Company on behalf of its Managerial Person, KMP and for Senior Management for indemnifying them against any liability, the premium paid on such insurance shall not be treated as part of the remuneration payable to any such personnel.

• Remuneration to Managerial Person, KMP and Senior Management:

1. Fixed pay:

Managerial Person, KMP and Senior Management shall be eligible for a monthly remuneration as may be approved by the Board on the recommendation of the Committee in accordance with the statutory provisions of the Act and the rules made there under for the time being in force. The break-up of the pay scale and quantum of perquisites including employers contribution to Provident Fund(s), pension scheme(s), medical expenses, club fees etc. shall be decided and approved by the Board on the recommendation of the Committee and approved by the shareholders and such other approval, wherever required.

2. Variable Pay:

The Company may in its discretion structure any portion of remuneration to link rewards to corporate and individual performance, fulfilment of specified improvement targets or the attainment of certain financial or other objectives set by the Board. The amount payable shall be based on performance against pre-determined financial and non-financial metrics.

3. Provision for excess remuneration:

If, in any financial year, the Company has no profits or its profits are inadequate, the Company shall pay remuneration to its Managerial Person in accordance with the provisions of Schedule V of the Act. If any Managerial Person draws or receives, directly or indirectly by way of remuneration any such sums in excess of the limits prescribed under the Act or without such approval, wherever required, he/she shall refund such sums to the Company and until such sum is refunded, hold it in trust for the Company.

• Remuneration to Non-Executive/Independent Director:

1. Remuneration/Commission:

The remuneration/commission, if any, shall be in accordance with the statutory provisions of the Act and the rules made there under for the time being in force.

2. Sitting Fees:

The Non-Executive/Independent Director may receive remuneration by way of fees for attending meetings of Board or Committee thereof.

Provided that the amount of such fees shall not exceed the maximum amount as provided in the Act, per meeting of the Board or Committee or such amount as may be prescribed from time to time.

3. Limit of Remuneration/Commission:

Remuneration/Commission may be paid to Non-Executive Directors within the monetary limit approved by shareholders, subject to the limit not exceeding 1% of the net profits of the Company computed as per the applicable provisions of the Act.

PERFORMANCE EVALUATION

Pursuant to the provisions of section 134(3)(p) and Schedule IV of the Act and in accordance to Regulation 17(10), 25(4) of the Listing Regulations, the Board has carried out the annual performance evaluation of the Board as a whole, various Committees of the Board and of the individual Directors. The performance evaluation of the Independent Directors was carried out by the entire Board. The Directors expressed their satisfaction with the evaluation process. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report annexed to this Report.

A declaration to the effect that they meet the criteria of independence as provided in sub-section (6) of Section 149 of the Act has also been received from Independent Directors of the Company.

The Board and the Nomination and Remuneration Committee reviewed the performance of the individual Directors on the basis of the criteria such as Transparency, Performance, etc.

In a separate meeting of Independent Directors, performance of non-independent Directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the views of the executive directors and nonexecutive directors. The same was discussed in the Board meeting that followed the meeting of independent directors, at which the performance of the Board, its committee and individual Directors was also discussed.

PARTICULARS OF EMPLOYEES

In accordance with the provisions of Section 197(12) of the Act, the ratio of the remuneration of each Director to the median employees remuneration and other details in terms of sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report and has been appended as "Annexure 3" to the Boards Report.

In terms of first proviso to Section 136 of the Act, the Report and Financial Statements are being sent to the Members and others entitled thereto, excluding the information on employees particulars as required pursuant to provisions of Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

In accordance with the provisions of Section 197 of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the annexure pertaining to the names and other particulars of employees is available for inspection in electronic mode. Any shareholder interested in obtaining a copy of the said Annexure may write to the Company Secretary & Compliance Officer in this regard.

The Board of Directors affirms that the remuneration paid to employees of the Company is as per the Nomination and Remuneration Policy of the Company.

REPORT ON CORPORATE GOVERNANCE

The Report on Corporate Governance for the year under review, is forming part of the Annual Report. The certificate from the Statutory Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated in Regulation 34 and Schedule V to the Listing Regulations is annexed to the Report on Corporate Governance.

BUSINESS RESPONSIBILITY REPORT

In terms of Regulation 34(2)(f) of the Listing Regulations, top 1000 listed entities based on their market capitalisation as on March 31, are required to prepare a Business Responsibility Report ("BRR") forming part of the Annual Report.

Accordingly, the Company has prepared the BRR describing the initiatives taken by the Board from an environmental, Social and Governance perspective and has also constituted the Business Responsibility Committee to overview the Business Responsibility Report and frame and overview such polices as may be required from time to time.

The said BRR is forming part of Annual Report of the Company and is also uploaded on the website of the Company at www.motilaloswalgroup.com.

STATUTORY AUDITORS

Pursuant to the provisions of Section 139(2) of the Act and the rules made thereunder, the Members at their Twelfth Annual General Meeting ("AGM") held on July 27, 2017, had appointed M/s. Walker Chandiok & Co. LLP, Chartered Accountants, as the Statutory Auditors of the Company for a term of five years, i.e. from the conclusion of Twelfth AGM till the conclusion of the Seventeenth AGM.

Mr. Sudhir Pillai, Partner, Walker Chandiok & Co. LLP, Chartered Accountants, Statutory Auditors, has signed the Audited Financial Statements of the Company.

STATUTORY AUDITORS REPORT

The Statutory Auditors Report issued by Walker Chandiok & Co. LLP for the year under review does not contain any qualification, reservations or adverse remarks. The Notes to the Accounts referred to in the Auditors Report are self-explanatory and therefore do not call for any further clarifications under Section 134(3)(f) of the Act. Further, pursuant to Section 143(12) of the Act, the Statutory Auditors of the Company have not reported any instances of frauds committed in the Company by its officers or employees.

SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (as amended from time to time), the Company had appointed M/s. U. Hegde and Associates, Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the FY2019-20.

The Secretarial Audit Report is appended as "Annexure 4" to the Boards Report.

Further, the Secretarial Compliance Report for the financial year ended March 31, 2020 was obtained from M/s. U. Hegde and Associates, Practicing Company Secretaries , in relation to compliance of all applicable SEBI Regulations/circulars/guidelines issued thereunder, pursuant to requirement of Regulation 24A of Listing Regulations.

There is no adverse remark, qualifications or reservation in the Secretarial Audit Report and Secretarial Compliance Report.

Further, pursuant to the provisions of Regulation 24A of Listing Regulations, the Secretarial Audit Report of MOHFL and MOAMC is available at website of the Company at www.motilaloswalgroup.com. However, since MOFL became material subsidiary from April 01, 2020, the secretarial audit report of MOFL will be annexed with Boards Report of FY2020-21.

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

The initiatives take by the Company for conservation of energy and technology absorption is provided in Business Responsibility Report annexed to this Report.

Details of the foreign exchange earnings and outgo are given in the Note No. 47 to the Financial Statement.

TRANSFER OF SHARES PERTAINING TO UNCLAIMED/UNPAID DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, the shares of the shareholders in respect of whom the dividend is unpaid/unclaimed for seven consecutive years are required to be transferred to Investor Education and Protection Fund ("IEPF") after giving an opportunity to shareholders to claim the said unpaid/unclaimed dividend.

Accordingly, the Company issued the reminder letters to such shareholders to claim the dividend and also published the notice to such effect in the leading newspaper in English and regional language having wide circulation and accordingly informed them that in the event of failure to claim said divided, the unpaid/unclaimed dividend along with shares pertaining to unpaid/unclaimed dividend would be transferred to IEPF.

Subsequently, the Company has transferred 1,243 equity shares to IEPF on September 16, 2019 and 55 equity shares on November 29, 2019 under review. The details of such shares are available on the website of the Company at https://www.motilaloswalgroup.com/Investor-Relations/Disclosures/IEPF. The concerned shareholders are requested to claim the said shares by directly approaching IEPF Authority.

Disclosure of Details of Unclaimed Equity Shares in the Suspense Account:

Pursuant to Regulation 34 and Schedule V of Listing Regulations, the Company reports the following details in respect of unclaimed equity shares that are kept in Specific Demat Accounts of Motilal Oswal Financial Services Limited.

Particulars Number of Shareholders Number of Equity shares
Aggregate Number of Shareholders and the outstanding shares in the suspense account lying as on April 1, 2019 5 575
Number of Shareholders who approached the Company for transfer of shares from suspense account during the year - -
Number of Shareholders to whom shares were transferred from the suspense account during the year - -
Aggregate Number of Shareholders and the outstanding shares in the suspense account lying as on March 31, 2020 5 575

DEPOSITORY SYSTEM

The Equity Shares of the Company are compulsorily tradable in electronic form. As on March 31, 2020, out of the Companys total paid-up Equity Share Capital comprising of 14,80,66,718 Equity Shares, only 27,060 Equity Shares are in physical form and the remaining shares are in electronic form (demat form). In view of the numerous advantages offered by the Depository System, the Members holding shares in physical form are advised to avail the facility of dematerialization.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Act, the Board of Directors confirm that, to the best of its knowledge and belief:

1) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

2) the Directors have 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 as at March 31, 2020 and of the profit of the Company for that period;

3) the Directors have 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;

4) the Directors have prepared the annual accounts on a going concern basis;

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

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

INTERNAL FINANCIAL CONTROLS

The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate. The Internal Financial Control procedure adopted by the Company are adequate for safeguarding its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information. During the year under review, the Internal Financial Controls were operating effectively and no material or serious observation has been received from the Auditors of the Company for inefficiency or inadequacy of such controls.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

Pursuant to Rule 7 of the Companies (Meetings of Board and its Powers) Rules 2014 read with Section 177(9) of the Act and as per Regulation 22 of the Listing Regulations, the Company has framed Vigil Mechanism/Whistle Blower Policy ("Policy") to enable Directors and employees to report genuine concerns or grievances, significant deviations from key management policies and reports any non-compliance and wrong practices, e.g., unethical behavior, fraud, violation of law, inappropriate behavior/conduct etc.

The functioning of the Vigil Mechanism is reviewed by the Audit Committee from time to time. None of the Directors or employees have been denied access to the Audit Committee of the Board.

The objective of this mechanism is to maintain a redressal system which can process all complaints concerning questionable accounting practices, internal controls, or fraudulent reporting of financial information.

The Policy framed by the Company is in compliance with the requirements of the Act and Listing Regulations and available on the website of the Company at https://www.motilaloswalgroup.com/Downloads/IR/1677814951Vigil-MechanismWhistle-Blower-Policy.pdf

CORPORATE SOCIAL RESPONSIBILITY

The Company recognizes the responsibilities towards society and strongly intends to contribute towards development of knowledge based economy.

In accordance with the requirements of the provisions of Section 135 of the Act, the Company has constituted a Corporate Social Responsibility ("CSR") Committee. The composition and terms of reference of the CSR Committee is provided in the Corporate Governance Report forming part of Annual Report.

The Company has also formulated a CSR Policy which is available on the website of the Company at https://www.motilaloswalgroup.com/Downloads/IR/148712535002.-CSR-Policv.pdf. Further, the detailed CSR initiatives undertaken by the Company is available at https://www.motilaloswal.com/foundation/

In the wake of COVID-19 pandemic, the Company extended and will continue to extend full support and co-operation in adhering to the directives issued by from the Government and steps taken by the Government to overcome the crisis. In order to further strengthen the efforts, your Company alongwith other group companies has contributed R 5 crores to PM-CARES fund and R 1 crore to Maharashtra Chief Ministers Relief Fund. Additionally, your Company is also supporting local Non-Government Organisations (NGOs) and groups to provide food and other essential services to needy people. Further, your Company supported "Stand with Daily Wage Earners initiative and raised R 10 lacs through contribution by employees, friends and family.

During the year under review, as a part of the on-going social commitment, your Company supported several educational projects across the country. The Company is delighted with the inauguration of Motilal Oswal- KISS Residential School (Bolangir, Odisha) which will provide free education to 2000 tribal children. Your Company has also joined a collective philanthropic effort of building a world class university at Punjab to offer new age technological education and simultaneously also sponsoring the expansion of hostel facility for Chartered Accountant aspirants in Mumbai. Further, the Company is tirelessly working towards improving the quality of education in the schools of Wada district near Mumbai. We assure you that your Company will continue to work towards

its social commitment and contribute in nation building with the same zeal.

The Company has made contribution through Motilal Oswal Foundation, a not-for-profit charitable company incorporated under Section 25 of the Companies Act, 1956 and to various other not-for-profit organisations.

An Annual Report on activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 (as amended from time to time) has been appended as "Annexure 5" to the Boards Report.

PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN OR SECURITY PROVIDED BY THE COMPANY

The details of loans, guarantees and investments are given in the Notes to the Financial Statement forming part of Annual Report of the Company.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

The Board of Directors has approved the policy on transactions with related parties ("RPT Policy"), pursuant to the recommendation of the Audit Committee. In line with the requirements of the Act and Listing Regulations, the Company has formulated the RPT Policy which is also available on the Companys website at

https://www.motilaloswalgroup.com/Downloads/IR/1568199502MOFSL Policv-on-Materialitv-and-Dealing-with-Related-Partv-Transactions.pdf All related party transactions entered into during the FY2019-20 were on an arms length basis and in the ordinary course of business.

All Related Party Transactions were placed before the Audit Committee for prior approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of unforeseen or repetitive in nature. The details of all such related party transactions entered into pursuant to the omnibus approval of the Committee, were placed before the Audit Committee on a quarterly basis for its review.

During the year under review, there were no material contracts or arrangements or transactions entered into by the Company with related parties pursuant to Section 188 of Act and accordingly Form AOC-2 is not applicable.

The Directors draw attention of the Members to Note No. 52 to the Standalone Financial Statement which sets out related party disclosures.

COMPLIANCE WITH SECRETARIAL STANDARD - 1

The Company has complied with Secretarial Standard-1 (SS-1) on meeting of Board of Directors.

BUSINESS RISK MANAGEMENT

The Company realizes the importance of Enterprise Risk Management ("ERM") framework and had taken early initiatives towards its implementation. The Company has also formulated group risk management policy.

A systematic approach has been adopted that originates with the identification of risk, categorization and assessment of identified risk, evaluating effectiveness of existing controls and building additional controls to mitigate risk and monitoring the residual risk through effective Key Risk Indicators ("KRI"). The implementation is being carried out in phased manner with the objective to encompass the entire line of businesses.

Effective ERM involves a robust implementation of three lines of defense - first line of defense is the front-line employees, the second line of defense is the risk and compliance function and the third line of defense is external and internal auditors. To build an effective risk culture significant effort has been made towards robustness of these lines of defense.

In the opinion of Board, there are no elements of risks threatening the existence of the company.

POLICY FOR PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE

The Company has in place a Policy for Prevention, Prohibition and Redressal of Sexual Harassment at Workplace. Appropriate reporting mechanisms are in place for ensuring protection against Sexual Harassment and the right to work with dignity.

During the year under review, the Company has not received any complaint in this regard.

Further, the Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The details of said Committee is covered in the Report on Corporate Governance forming part of Annual Report of the Company.

EXTRACT OF ANNUAL RETURN AS REQUIRED AND PRESCRIBED UNDER SECTION 92(3) OF THE ACT AND RULES MADE THEREUNDER

The Section 134(3)(a) of the Act has been amended vide notification of Section 36 of the Companies (Amendment), 2017 with effective from July 31, 2018 by the Ministry of Corporate Affairs ("MCA") which requires company to provide "the web address, if any, where annual return referred to in Section 92(3) has been placed. Further, as the amendment to Section 92(3) of the Act vide provisions of Section 23 of the Companies (Amendment), 2017 is not yet notified by the MCA as on date of this Report, the extract of Annual Return in MGT-9 as required under Section 92(3) of the Act and prescribed in Rule 12 of the Companies (Management and Administration) Rules, 2014 is appended as "Annexure 6" to the Boards Report. The Annual Return will be uploaded on the website of the Company at www.motilaloswalgroup.com.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There were no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and companys operations in future during the year under review.

ACKNOWLEDGEMENT

The Directors express their sincere gratitude to the Reserve Bank of India, Securities and Exchange Board of India, BSE Limited, National Stock Exchange of India Limited, Ministry of Finance, Ministry of Corporate Affairs, Registrar of Companies, other government and regulatory authorities, lenders, financial institutions and the Companys Bankers for the ongoing support extended by them. The Directors also place on record their sincere appreciation for the continued support extended by the Companys stakeholders and trust reposed by them in your Company. The Directors sincerely appreciate the commitment displayed by the employees of the Company and its subsidiaries across all levels, resulting in successful performance during the year.

For and on behalf of the Board of
Motilal Oswal Financial Services Limited
Raamdeo Agarawal
Place : Mumbai Chairman
Date: May 11, 2020 (DIN: 00024533)