piramal enterprises ltd share price Directors report


Dear Shareholders,

Your Directors have pleasure in presenting the 76th Annual Report on the business and operations of Piramal Enterprises Limited (the Company or PEL) and the Audited Financial Statements for the financial year ended March 31, 2023.

(Rs in Crores)

Consolidated

Standalone

Particulars FY2023 FY2022

(Restated)

FY2023 FY2022

(Restated)

Interest Income 7,798.62 7,522.78 1,736.47 1,910.05
Other Operating Income 1,135.68 202.72 3,007.61 384.32
Total Operating Income 8,934.30 7,725.50 4,744.08 2,294.37
Less: Interest Expense 4,041.18 4,281.72 729.86 1,283.46
Net Interest Income 4,893.12 3,443.78 4,014.22 1,010.91
Other Income 152.44 185.39 51.91 101.68
Total Income, net of interest expenses 5,045.56 3,629.17 4,066.13 1,112.59
Less: Operating expenses 2,214.84 1,171.75 333.86 317.89
Pre-Provision Operating Profit 2,830.72 2,457.42 3,732.27 794.70
Less: Loan Loss Provisions & FV losses/(Gains) 5,295.06 829.92 1,333.59 (392.74)
Profit Before Tax (2,464.34) 1,627.50 2,398.68 1,187.44
Current & Deferred Tax (3,978.05) 406.19 (22.40) 213.04
Profit After Tax (PAT) 1,513.71 1,221.31 2,421.08 974.40
Share of net profits from Associates and Joint Ventures# 388.61 593.85 - -
PAT Before Exceptional Items 1,902.32 1,815.16 2,421.08 974.40
Exceptional (Expenses) / Gains 8,066.26 (152.92) 11,912.22 (10.20)
PAT After Exceptional Items 9,968.58 1,662.24 14,333.30 964.20
Profit from Discontinuing Operations (net of tax) - 336.53 - 33.48
Reported Net Profit after Tax 9,968.58 1,998.77 14,333.30 997.68
Other comprehensive income for the year (net of tax)
- Continuing Operations 131.21 (25.80) 145.57 28.36
- Discontinuing Operations - 98.74 - -
Total Comprehensive Income for the year 10,099.79 2,071.71 14,478.87 1,026.04
Basic EPS per share ( C per share) 417.68 80.70 600.56 41.87
Diluted EPS per share ( C per share) 416.30 80.40 598.58 41.71

# Income under Share of Associates and Joint Ventures primarily includes Groups share of net profits/(loss), as per the applicable accounting standards.

Note:

In terms of the sanction of the Composite Scheme of Arrangement by Honble National Company Law Tribunal, the prior period comparative figures for standalone and consolidated financials i.e. for FY 2022 are restated in this report, to reflect as per the requirements of Appendix A to Ind AS 103.

DIVIDEND

The Board has recommended a dividend of C31 (Rupees Thirty-One only) i.e. @ 1,550 % per equity share of the face value of C2 each for the financial year ended March 31, 2023.

As per Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI Listing Regulations), the Company has adopted a Dividend Distribution Policy which is available on the website of the Company at https://www.piramal.com/investor/piramal-enterprises-limited/ corporate-governance/policies-code-and-compliances/

The dividend declared by the Company for the financial year ended March 31, 2023 is in compliance with the Dividend Distribution Policy of the Company.

CHANGE IN NATURE OF BUSINESS

Pursuant to the sanction of the Composite Scheme of Arrangement amongst the Company, Piramal Pharma Limited, Convergence

Chemicals Private Limited, Hemmo Pharmaceuticals Private Limited, PHL Fininvest Private Limited (PFPL) and their respective shareholders and creditors (the Scheme) by the Honble National Company Law Tribunal, Mumbai Bench (Honble NCLT), vide its order dated August 12, 2022 and upon the Scheme becoming effective, PFPL, a wholly owned subsidiary and Systemically Important Non-Deposit taking Non-Banking Financial Company (NBFC), merged with the Company and as a result, the Company is a NBFC after grant of license by the Reserve Bank of India (RBI) dated July 21, 2022 which was received on July 26, 2022 enabling the Company to commence the business of non-banking financial institution without accepting public deposits. As a NBFC, the Company is having its primary activities of lending and investment.

TRANSFER TO RESERVES

The Company has transferred an amount of C484.27 Crores to the Statutory Reserves as required under Section 45-IC of the Reserve Bank of India Act, 1934.

SHARE CAPITAL

During the year under review, there was no change in the issued and paid-up share capital of the Company. As at March 31, 2023, the issued share capital of the Company stood at C47,73,76,546 made up of 23,86,88,273 equity shares of C2 each and subscribed and paid up share capital of the Company stood at C47,73,27,400 consisting of 23,86,63,700 equity shares of face value of C2 each fully paid.

Pursuant to the sanction of the Scheme, the authorised share capital of the Company increased from C155,00,00,000 to C5155,00,00,000 by creation of additional 25,00,00,00,000 equity shares of C2 each on account of clubbing of authorised share capital of PFPL with that of the Company.

CAPITAL ADEQUACY

The Companys capital adequacy ratio was at 43.63% as on March 31, 2023 as against the statutory minimum capital adequacy of 15% prescribed by RBI.

CHANGES IN SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

Changes in subsidiaries, joint ventures and/or associate companies during the year under review are listed in Annexure A to this Report.

FINANCIAL DETAILS OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013 (the Act), a statement containing salient features of the financial statements of subsidiaries, joint venture and associates companies in Form AOC-1 is attached to the financial statements.

The separate financial statements of the subsidiaries are available on the website of the Company and can be accessed at https://www. piramal.com/investor/piramal-enterprises-limited/financial-reports/ subsidiarv-annual-reports/.

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR 2023

Composite Scheme of Arrangement amongst the Company, Piramal Pharma Limited (PPL), Convergence Chemicals Private Limited (CCPL), Hemmo Pharmaceuticals Private Limited (HPPL) and PHL Fininvest Private Limited (PFPL)

The Honble NCLT vide its order dated August 12, 2022 had sanctioned the Composite Scheme of Arrangement amongst the Company, PPL, CCPL, HPPL, PFPL and their respective shareholders and creditors (the Scheme). The appointed date of the Scheme was April 1, 2022 and the Scheme became effective from August 18, 2022. Consequently, the demerged undertaking i.e. the pharma business stood transferred to PPL and PFPL has been merged with the Company thereby resulting into segregation of the financial services and pharmacueticals businesses.

In accordance with the Scheme, the shareholders of the Company were allotted 4 equity shares of C10 each of PPL for every 1 equity share of C2 each of the Company, as on the record date of September 1, 2022.

The amalgamation of PFPL into the Company has been accounted for under the pooling of interest method referred to in Appendix C of Ind AS 103 - Business Combinations and other accounting principles

prescribed under the Companies (Indian Accounting Standards) Rules, 2015, as amended and notified under Section 133 of the Act, as prescribed by the Scheme. Accordingly, all assets and liabilities and other reserves of PFPL (Transferor under the Scheme) as on the appointed date of the Scheme have been aggregated with those of the Company at their respective book values.

Through this Scheme, there is a simplification of the corporate structure and the shareholders of the Company directly own shares in both the listed entities i.e. PEL and PPL, without any cross-holdings and minority stakes.

The demerger of the pharma business created one of Indias largest listed diversified NBFC, having significant presence across both retail and wholesale financing, offering multiple retail products through a technology-driven platform.

On completion of the demerger, both PEL and PPL have a greater focus and ability to pursue accelerated growth. It created an optimal capital structure for each business. It gave both the entities the ability to independently pursue growth plans organically and inorganically. The demerger firmly empowered both entities to be future-ready and enabling them to independently pursue their growth strategies with sharper focus and identity.

Divestment of stake in Piramal Holdings (Suisse) SA

In December 2022, agreement was executed by the Company divesting its entire stake in Piramal Holdings (Suisse) SA (PHSA), a non-operative, non-material wholly owned subsidiary of the Company to Heather Investment in Commercial Enterprises & Management Co. LLC, UAE for a consideration of USD 200,436. Consequent to the divestment, PHSA ceased to be wholly owned subsidiary of the Company.

Acquisition of PRL Agastya Private Limited

Piramal Capital & Housing Finance Limited (PCHFL), a wholly owned subsidiary of the Company acquired 100% stake in PRL Agastya Private Limited (PRL Agastya), promoter group company for a consideration of C90 Crores, consequent to which, PRL Agastya has become a wholly owned subsidiary of PCHFL.

Restructuring of Shriram Group

Pursuant to the restructuring of Shriram Group, PEL received shares in multiple Shriram group companies. PEL own 8.34% in Shriram Finance Limited which is the listed entity. PEL also owns 20% stake in each of the three holding companies namely Shriram GI Holdings Private Limited, Shriram LI Holdings Private Limited and Shriram Investment Holdings Limited. Pursuant to this, PEL effectively owns 13.33% in Shriram General Insurance Company Limited and 14.91% in Shriram Life Insurance Company Limited.

Re-classification of Promoter Group entities of the Company

BSE Limited and National Stock Exchange of India Limited vide their respective letters dated March 23, 2023, had granted their approval for re-classification of Kosamba Glass Deco Private Limited, Ansa Deco Glass Private Limited and The Address Makers Developers Private Limited from Promoter Group category to Public category of the Company.

SIGNIFICANT EVENTS AFTER BALANCE SHEET DATE

There are no significant events after the balance sheet date.

OPERATIONS REVIEW

Standalone

Total income from continuing operations on a standalone basis for FY 2023, increased by 100.16% to C4,795.99 Crores as compared to C2,396.05 Crores in FY 2022. Earnings before interest, taxes, depreciation and amortisation (EBITDA) for FY 2023 on a standalone basis from continuing operations increased by 26% to C3,151.54 Crores as compared to C2,493.02 Crores in FY 2022. Net Profit for the year after exceptional items and taxes from continuing and discontinuing operations was C14,333.30 Crores as compared to C997.68 Crores in FY 2022. Basic and Diluted Earnings per share from continuing and discontinuing operations was C600.56 and C598.58 respectively for the year as compared to C41.87 and C41.71 respectively per share during the previous year.

Consolidated

The Companys consolidated income increased by 14.86% to C9,086.74 Crores in FY 2023 as compared to C7,910.89 Crores in FY 2022. EBITDA for FY 2023 on a consolidated basis from continuing operations decreased by 72% to C1,699.72 Crores as compared to C5,983.50 Crores in FY 2022. Net Profit for the year after exceptional items and taxes from continuing and discontinuing operations was C9,968.58 Crores as compared to C1,998.77 Crores in FY 2022. Basic and Diluted Earnings per share from continuing and discontinuing operations was C417.68 and C416.30 respectively for the year as compared to C80.70 and C80.40 respectively per share during the previous year.

A detailed discussion on operations for the year ended March 31, 2023 is provided in the Management Discussion and Analysis Report, which is presented in a separate section forming part of this Annual Report.

SUBSIDIARY COMPANIES

Piramal Dutch IM Holdco B.V.

The total income for FY 2023 was at C43.82 Crores. Profit before tax for the year was at C43.25 Crores. Piramal Dutch IM Holdco B.V. reported a net profit after tax of C43.25 Crores for the year. As on the date of this report, Piramal Dutch IM Holdco B.V. is under liquidation.

Piramal Capital & Housing Finance Limited (Formerly known as Dewan Housing Finance Corporation Limited) [Consolidated]

Piramal Capital & Housing Finance Limited (Consolidated) includes financials of:

i. DHFL Investments Limited

ii. DHFL Advisory & Investments Private Limited

iii. DHFL Holdings Limited

iv. Piramal Payments Services Limited

v. Piramal Finance Sales and Services Private Limited

vi. PRL Agastya Private Limited

vii. DHFL Venture Trustee Company Limited

viii. Pramerica Life Insurance Limited

Consolidated income for FY 2023 was at C6,669.15 Crores. Consolidated loss before tax and after exceptional items for the year was at C12,793.52 Crores. Piramal Capital & Housing Finance Limited (Consolidated) reported a net loss of C7,401.36 Crores for the year.

Piramal Fund Management Private Limited [Consolidated]

Piramal Fund Management Private Limited (Consolidated) includes financials of Indiareit Investment Management Co., Piramal Asset Management Private Limited, Singapore and Asset Resurgence Mauritius Manager. The total income for FY 2023 was at C20.34 Crores. Loss before tax and after exceptional items for the year was at C9.08 Crores. Piramal Fund Management Private Limited (Consolidated) reported a net loss of C9.77 Crores for the year. As on the date of this report, Piramal Asset Management Private Limited, Singapore is under liquidation.

Piramal Securities Limited

Income from operations for FY 2023 was at C0.37 Crores. Loss before depreciation and tax for the year was at C0.98 Crores. Piramal Securities Limited reported a net loss of C0.98 Crores for the year.

Viridis Power Investment Managers Private Limited

Viridis Power Investment Managers Private Limited ceased to be subsidiary of the Company and reported negligible loss for FY 2023 upto the date of it being struck - off.

Viridis Infrastructure Investment Managers Private Limited

Viridis Infrastructure Investment Managers Private Limited reported negligible loss for FY 2023.

Piramal Holdings (Suisse) SA

During the year under review, Piramal Holdings (Suisse) SA (PHSA) ceased to be a subsidiary of the Company and up to the date of divestment its total income was at C0.05 Crores. Loss before tax for the year was at C2.94 Crores and PHSA reported a net loss of C2.99 Crores.

Piramal Consumer Products Private Limited

The total income for FY 2023 was at C0.74 Crores. Profit before interest, depreciation and tax for the year was at C0.62 Crores. Piramal Consumer Products Private Limited reported a net profit of C0.32 Crores for the year.

Piramal Systems & Technologies Private Limited [Consolidated]

Piramal Systems & Technologies Private Limited (Consolidated) includes financials of Piramal Technologies SA (PTSA). Total income for FY 2023 amounted to C0.04 Crores. Loss before tax for the year was at C0.74 Crores. Piramal Systems and Technologies Private Limited (Consolidated) reported a net loss of C0.77 Crores for the year. As on the date of this report, PTSA is under liquidation.

PEL Finhold Private Limited

PEL Finhold Private Limited recorded total income of C0.10 Crores for FY 2023. Profit before depreciation and tax for the year was at C0.08 Crores. PEL Finhold Private Limited reported a net profit of C0.06 Crores for the year.

Piramal Alternatives Private Limited (Formerly known as Piramal Asset Management Private Limited)

The total income for FY 2023 was at C6.62 Crores. Loss before depreciation and tax for the year was at C30.62 Crores. Piramal Alternatives Private Limited reported a net loss of C31.51 Crores for the year.

Piramal Investment Advisory Services Private Limited

The total income for FY 2023 was at C0.66 Crores. Profit before depreciation and tax for the year was at C0.45 Crores. Piramal Investment Advisory Services Private Limited reported a net profit of C0.13 Crores for the year.

Shrilekha Business Consultancy Private Limited

The Company had an effective 74.95% equity stake in Shrilekha Business Consultancy Private Limited. Share of profit of Shrilekha Business Consultancy Private Limited considered in consolidation of the Company for FY 2023 amounts to C259.73 Crores up to the date of pronouncement of order passed by Honble National Company Law Tribunal, Chennai Bench with respect to the sanction of the Composite Scheme of Arrangement and Amalgamation of Shriram Group.

Piramal International

As on the date of this report, Piramal International is under liquidation.

JOINT VENTURES AND ASSOCIATE COMPANIES

Investment in joint ventures and associates are accounted for using the equity method of accounting. Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the Companys share of post-acquisition profits or losses and other comprehensive income of joint ventures and associates. Dividends received or receivable from associates or joint ventures are recognised as a reduction in the carrying amount of the investment.

India Resurgence ARC Private Limited is a 50:50 joint venture between the Company and Bain Capital Credit India Investments (a company existing under the laws of the Republic of Mauritius). Share of loss of India Resurgence ARC Private Limited considered in consolidation for FY 2023 amounts to C1.52 Crores.

India Resurgence Asset Management Business Private Limited is a 50:50 joint venture between the Company and Bain Capital Credit India Investments. Share of loss of India Resurgence Asset Management Business Private Limited considered in consolidation for FY 2023 amounts to C4.72 Crores.

India Resurgence Fund - Scheme 2, is a Category II, SEBI registered AIF which is managed by India Resurgence Asset Management Business Private Limited, a 50:50 joint venture between the Company and Bain Capital Credit India Investments. The Companys share of profit of C78.59 Crores in India Resurgence Fund - Scheme 2 has been considered in consolidation for FY 2023.

Asset Resurgence Mauritius Manager is a joint venture between Bain Capital Credit Member LLC and Piramal Fund Management Private Limited. Share of profit of Asset Resurgence Mauritius Manager considered in consolidation for FY 2023 amounts to Rs1.30 Crores.

Pramerica Life Insurance Company Limited (formerly known as DHFL Pramarica Life Insurance Company Limited) is a joint venture between DHFL Investments Limited, a wholly-owned subsidiary of Piramal Capital & Housing Finance Limited and Prudential International Insurance Holdings Ltd., a wholly owned subsidiary of Prudential Financial, Inc. Share of profit of Pramerica Life Insurance Company Limited considered in consolidation for FY 2023 amounts to C20.96 Crores.

DEPOSITS FROM PUBLIC

The Company being a non-deposit taking NBFC, has not accepted any deposits from the public during the year under review.

STATUTORY AUDITORS AND AUDITORS REPORT

M/s. Suresh Surana & Associates LLP, Chartered Accountants (Firm Registration No. 121750W/W-100010), were appointed as the Statutory Auditors of the Company by the Members at the 75th Annual General Meeting (AGM) held on July 29, 2022, for a term of 3 (three)

consecutive years to hold office from the conclusion of 75th AGM until the conclusion of the 78th AGM of the Company, to be held in the calendar year 2025.

Pursuant to the receipt of the NBFC license and commencing the business as a NBFC, the Company was required to appoint a Joint Statutory Auditor along with M/s. Suresh Surana & Associates LLP, existing Statutory Auditor, in line with the Guidelines for Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs) dated April 27, 2021 issued by RBI (RBI Guidelines).

Accordingly, Bagaria & Co LLP (Firm Registration No.: 113447W/ W-100019), Chartered Accountants were appointed as one of the Joint Statutory Auditor of the Company for a period of three consecutive years i.e. until the conclusion of the 78th AGM of the Company, to be held in calendar year 2025, as approved by the Members through Postal Ballot on December 11, 2022, in terms of the provisions of Sections 139 and 142 of the Act read with the Companies (Audit and Auditors) Rules, 2014 and the aforementioned RBI Guidelines.

The Joint Statutory Auditors Report does not contain any qualification, reservation or adverse remark on the financial statements for the year ended March 31, 2023. The notes on financial statements referred to in the Joint Statutory Auditors Report are self-explanatory and do not call for any further comments.

CORPORATE SOCIAL RESPONSIBILITY

The annual report on Corporate Social Responsibility (CSR) containing, details of CSR Policy, composition of CSR Committee, CSR projects undertaken and web-link thereto on the website of the Company, as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014, is set out under Annexure B of this Report.

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

Particulars regarding conservation of energy, technology absorption, foreign exchange earnings and outgo are given as Annexure C to this Report.

ANNUAL RETURN

The Annual Return for FY 2023 is available on the website of the Company at https://www.piramal.com/investor/overview.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Members of the Company at the 75th AGM held last year, approved appointment of Mr. Rajiv Mehrishi (DIN: 00208189) as an Independent Director, not liable to retire by rotation, for a term of 5 (five) years with effect from May 26, 2022 to May 25, 2027.

The Board of Directors of the Company (Board) had based on the recommendation of Nomination and Remuneration Committee (NRC) and subject to approval of the Members, approved appointment of Mr. Gautam Doshi (DIN: 00004612) as an Additional Director and also as an Independent Director, not liable to retire by rotation, for a term of 5 (five) years i.e. from October 31, 2022 to October 30, 2027.

In accordance with Regulation 17(1C) of the SEBI Listing Regulations, with effect from January 1, 2022, approval of the shareholders for appointment of a person on the Board of Directors is required to be

obtained either at the next general meeting or within a time period of three months from the date of appointment, whichever is earlier. The approval of the shareholders of the Company was required within three months for appointment of Mr. Gautam Doshi. The Company received approval of its Members on December 11, 2022 through Postal Ballot, for appointment of Mr. Gautam Doshi as an Independent Director on the Board of the Company.

Ms. Nandini Piramal (DIN: 00286092) held the position of Whole-Time Director, a Key Managerial Personnel (KMP) in both PEL and PPL. Upon the sanction of the Scheme by Honble NCLT and on completion of allotment and listing of its equity shares on the Stock Exchanges, PPL ceased to be a subsidiary of the Company. As per Section 203(3) of the Act, a whole-time KMP cannot hold office in more than one company except in its subsidiary company at the same time. Hence, Ms. Nandini Piramal stepped down from the position of Whole-Time Director & KMP of PEL with effect from August 26, 2022 and continues to serve as a Non-Executive Non-Independent Director of the Company, liable to retire by rotation.

Further, the following Directors resigned during the year under review:

1. Mr. Khushru Jijina as an Executive Director of the Company with effect from August 31, 2022;

2. Mr. N. Vaghul as an Independent Director of the Company with effect from close of business hours on November 9, 2022.

The Board places on record its appreciation and gratitude for the invaluable contributions made by Mr. Khushru Jijina and Mr. N. Vaghul during their tenure as Directors of the Company.

In line with the provisions of the Act and the Articles of Association of the Company, Mr. Vijay Shah (DIN: 00021276) will retire by rotation at the ensuing 76th AGM and being eligible, has offered himself for re-appointment. The Board recommends his re-appointment for the consideration of the Members of the Company at the ensuing 76th AGM.

The Company has received declarations from all its Independent Directors, confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of the SEBI Listing Regulations. In the opinion of the Board, the Independent Directors appointed during the year under review, are persons with integrity and possess requisite experience, expertise and proficiency required under applicable laws and the policies of the Company.

In terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, Independent Directors of the Company have confirmed that they have registered with the databank maintained by the Indian Institute of Corporate Affairs.

The Board on the recommendation of the NRC and Audit Committee (erstwhile Audit & Risk Management Committee) had approved appointment of Mrs. Upma Goel as the Chief Financial Officer (CFO) and cessation of Mr. Vivek Valsaraj as CFO with effect from the date of the Scheme being effective. On sanction of the Scheme by the Honble NCLT and upon filing the certified copy of the Order with the Registrar of Companies on August 18, 2022, the effective date of appointment of Mrs. Upma Goel and date of cessation of Mr. Vivek Valsaraj as CFO of the Company is August 18, 2022.

BOARD EVALUATION

Evaluation of performance of all Directors is undertaken annually. The Company has implemented a system of evaluating performance of the Board and of its Committees and the Non-Executive Directors on the basis of a structured questionnaire which comprises evaluation criteria taking into consideration various performance related aspects. The performance of the Executive Directors is evaluated on the basis of achievement of their Key Result Areas.

The Board of Directors has expressed its satisfaction with the evaluation process.

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

During the year under review, seven Board Meetings were convened and held, details of which are given in the Report on Corporate Governance forming part of this Annual Report.

VIGIL MECHANISM/WHISTLE BLOWER POLICY FOR DIRECTORS AND EMPLOYEES

The Company has established a Vigil Mechanism, which includes a Whistle Blower Policy, for its Directors and Employees, to provide a framework to facilitate responsible and secure reporting of concerns of unethical behaviour, actual or suspected fraud or violation of the Companys Code of Conduct & Ethics.

During the year under review, the Company commenced the business as a NBFC pursuant to which the Whistle Blower Policy of the Company was amended to align it with the applicable RBI Guidelines/Master Circulars. The details of establishment of Vigil Mechanism/Whistle Blower Policy are posted on the website of the Company at https:// www.piramal.com/investor/piramal-enterprises-limited/corporate- governance/policies-code-and-compliances/.

AUDIT COMMITTEE

The Audit Committee comprises of the following as on March 31, 2023:

Name Category
Mr. Rajiv Mehrishi - Chairman* Non-Executive, Independent
Mr. Gautam Doshi* Non-Executive, Independent
Mr. Puneet Dalmia* Non-Executive, Independent

^Appointed with effect from October 31, 2022

The Company earlier had a combined Audit & Risk Management Committee which discharged functions of both the Committees. During the year under review, consequent to the Company commencing business as a NBFC regulated by RBI, the Audit & Risk Management Committee was re-constituted and the nomenclature was changed to Audit Committee and a separate Risk Management Committee (RMC) of the Board was constituted, thereby segregating the functions of both the Committees and further details of RMC are given in the Report on Corporate Governance forming part of this Annual Report. Mr. N. Vaghul, ceased to be Chairman, Mr. S. Ramadorai and Mr. Suhail Nathani ceased to be members of the erstwhile Audit & Risk Management Committee effective October 31, 2022.

Further details on the Audit Committee are provided in the Report on Corporate Governance forming part of this Annual Report.

NOMINATION AND REMUNERATION POLICY

The Board of Directors has approved a Nomination Policy which lays down a framework for selection and appointment of Directors and Senior Management and for determining qualifications, positive attributes and independence of directors.

During the year under review, on account of the Company commencing the business as a NBFC, the Board on the recommendation of the NRC approved amendment to the Remuneration Policy, effective April 1, 2023 in line with the RBI Guidelines on Compensation of Key Managerial Personnel (KMP) and Senior Management in NBFCs, dated April 29, 2022.

The Nomination Policy and the amended Remuneration Policy are given in Annexure D to this Report and is available on the website of the Company at https://www.piramal.com/investor/piramal-enterprises- limited/corporate-governance/policies-code-and-compliances/.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The Company being an NBFC registered with RBI and engaged in the business of giving loans in ordinary course of its business, is exempted from the disclosures regarding particulars of loans made, guarantees given and securities provided in accordance with the provisions of Section 186 of the Act.

The details with regards to the investments made by the Company, are given in Note no. 6 of the standalone financial statements, forming part of this Annual Report.

RELATED PARTY TRANSACTIONS

During the year under review, all contracts/arrangements/transactions entered into by the Company with related parties were in ordinary course of business and on an arms length basis. There were no material related party transactions by the Company during the year under review. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Act in Form AOC-2 is not applicable.

Systems are in place for obtaining prior omnibus approval of the Audit Committee on an annual basis for transaction with related parties which are of a foreseeable and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted and a statement giving details of all transactions with related parties are placed before the Audit Committee for their review on a periodic basis.

The Company has formulated a policy for dealing with related party transactions which is also available on website of the Company at https://www.piramal.com/investor/piramal-enterprises-limited/ corporate-governance/policies-code-and-compliances/.

MANAGERIAL REMUNERATION

A) Remuneration to Directors and Key Managerial Personnel (KMP)

i. The percentage increase in remuneration of each Director, Chief Financial Officer and Company Secretary during FY 2023 and the ratio of the remuneration of each Director to the median remuneration of the employees of the Company for FY 2023 are as under:

Sr. No Name of Director /KMP and Designation Remuneration of Director/ KMP for FY 2023 ( in Lakhs) % increase / decrease in remuneration in FY 2023 Ratio of remuneration of each Whole - Time Director to median remuneration of employees
1. Mr. Ajay G. PiramalA Chairman N.A. N.A. N.A.
2. Dr. (Mrs.) Swati A. PiramalA Vice - Chairperson N.A. N.A. N.A.
3. Ms. Nandini Piramal+ Non - Executive Director N.A. N.A. N.A.
4. Mr. Vijay Shah

Non - Executive Director

N.A. N.A. N.A.
5. Mr. Anand Piramal Non - Executive Director N.A. N.A. N.A.
6. Mr. Khushru Jijina* Executive Director N.A. N.A. N.A.
7. Mr. S. Ramadorai Independent Director 49.50 N.A. N.A.
8. Mr. N. Vaghul** Independent Director 46.00 N.A. N.A.
9. Mr. Suhail Nathani Independent Director 50.00 N.A. N.A.
10. Mr. Kunal Bahl Independent Director 45.00 N.A. N.A.
11. Ms. Anjali Bansal Independent Director 47.00 N.A. N.A.
12. Mr. Puneet Dalmia Independent Director 26.50 N.A. N.A.

 

13. Ms. Anita George Independent Director 12.50 N.A. N.A.
14. Ms. Shikha Sharma Non - Executive Director 9.00 N.A. N.A.
15. Mr. Rajiv Mehrishi# Independent Director 11.00 N.A. N.A.
16. Mr. Gautam Doshi@ Independent Director 9.50 N.A. N.A.
17. Mr. Vivek ValsarajAA Chief Financial Officer N.A. N.A. N.A.
18. Mrs. Upma Goel& Chief Financial Officer 75.22 N.A. N.A.
19. Mr. Bipin Singh Company Secretary 154.36 20.55 N.A.

Notes:

1. Non-Executive Directors are entitled to sitting fees and commission as per the statutory provisions and within the limits approved by shareholders. Remuneration details for Non-Executive Directors in the above table, is comprised of sitting fees and commission. Details in the corresponding columns are applicable for Whole-Time Directors and KMPs.

2. During the FY 2023, Mrs. Upma Goel and Mr. Bipin Singh did not exercise ESOPs under the Companys ESOP Scheme.

3. Mr. Anand Piramal and Mr. Vijay Shah, Non-Executive Director do not receive any sitting fees or any other remuneration.

4. Remuneration details have been provided on the basis of remuneration, commission for the FY 2022 which was paid during the FY 2023 and sitting fees for meetings attended during the FY 2023.

Considering the macroeconomic scenario and business performance, the Promoter Executive Directors i.e. Mr. Ajay G. Piramal and Dr. (Mrs.) Swati A. Piramal, had decided to forego their remuneration for the financial year ended March 31, 2023, hence the percentage change in their remuneration and ratio of remuneration to median remuneration of employees is not applicable. Mr. Ajay G. Piramal and Dr. (Mrs.) Swati A. Piramal received ^286.41 lakhs and ^138.85 lakhs respectively, as performance linked incentives for the FY 2022, which was paid during the FY 2023.

+ Ms. Nandini Piramal stepped down from the position of Whole-Time Director of the Company and continues to serve as a Non-Executive Director of the Company with effect from August 26, 2022 and received remuneration from Piramal Pharma Limited and hence, the percentage change in remuneration and ratio to median remuneration of employees is not applicable. Further, she did not receive any sitting fees or any other remuneration.

* Mr. Khushru Jijina resigned with effect from August 31, 2022 and received remuneration from PHL Fininvest Private Limited (PFPL), wholly owned subsidiary of the Company up the date of his employment in PFPL and hence the percentage change in remuneration and ratio to median remuneration of employees is not applicable.

** Resigned as an Independent Director with effect from close of business hours of November 9, 2022.

# Appointed as an Independent Director of the Company with effect from May 26, 2022.

@ Appointed as an Independent Director of the Company with effect from October 31, 2022.

 

AAMr. Vivek Valsaraj ceased to be Chief Financial Officer of the Company with effect from August 18, 2022 and received his remuneration from Piramal Pharma Limited. Hence, the percentage change in remuneration and ratio to median remuneration of employees is not applicable.

&Mrs. Upma Goel was appointed as a Chief Financial Officer of the Company with effect from August 18, 2022, and hence the percentage change in her remuneration is not applicable.

ii. The median remuneration of employees of the Company during FY 2023 was C24,70,000$;

iii. In the financial year, there was 399% increase in the median remuneration of employees5;

iv. There were 180 permanent employees on the rolls of the Company as on March 31, 2023$;

v. Average percentage increase made in the salaries of employees other than the managerial personnel during FY 2023 was -8%. As regards, comparison of Managerial Remuneration of FY 2023 over FY 2022, details of the same are given in the above table at Sr. No. (i)$;

vi. It is hereby affirmed that the remuneration paid is as per the Remuneration Policy for Directors, KMP and other Employees.

 

$Consequent to the Composite Scheme of Arrangement approved by the Honble National Company Law Tribunal by order dated August 12, 2022, the Companys pharmaceuticals business has been demerged into Piramal Pharma Limited, thus resulting in a decrease in the number of permanent employees on the payroll of the Company. Accordingly, the information in Sr. Nos. (ii), (iii), (iv), and (v) above has changed significantly in FY 2023.

B) Employee Particulars

Details of employee remuneration as required under the provisions of Section 197 of the Act and Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in a separate statement and forms part of the Annual Report. Further, this Report is being sent to the Members excluding the said statement. In terms of Section 136 of the Act, the said statement will be open for inspection upon specific request made in writing to the Company by the Members. Any Member interested in obtaining a copy of the same may write to the Company Secretary.

Requisite details relating to ESOPs are available on the Companys website at https://www.piramal.com/investor/overview.

SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Act and the Rules made thereunder, the Company has appointed N.L Bhatia & Associates, Practicing Company Secretaries as the Secretarial Auditor of the Company. The Secretarial Audit Report is annexed as Annexure E and forms an integral part of this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

As per the requirements of the SEBI Listing Regulations, Piramal Capital & Housing Finance Limited, material subsidiary of the Company has undertaken secretarial audit for the financial year 2022-23. The Secretarial Audit Report of the material subsidiary does not contain any qualification, reservation or adverse remark and is attached as Annexure E1 to this Report

CERTIFICATIONS FROM COMPANY SECRETARY IN PRACTICE

A certificate has been received from N.L Bhatia & Associates, Practicing Company Secretaries, that none of the Directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as Directors of companies by SEBI, Ministry of Corporate Affairs or any such statutory authority. The certificate is attached as Annexure F to this Report.

The Report on Corporate Governance as stipulated in the SEBI Listing Regulations forms part of the Annual Report. The requisite certificate from N.L Bhatia & Associates, Practicing Company Secretaries, confirming compliance with the conditions of Corporate Governance as stipulated under the SEBI Listing Regulations is annexed hereto as Annexure G to this Report.

RISK MANAGEMENT FRAMEWORK

The Company has a robust Risk Management framework to identify, measure, manage and mitigate business and oppurtunities. This framework seeks to create transparency, minimise adverse impact on the business strategy and enhance the Companys competitive advantage. This risk framework thus helps in managing market, credit and operational risks and quantifies potential impact at a Company level.

The Company also has a well-defined Fraud Risk Management framework and the Fraud Risk Management Committee comprising of top management representatives oversees the matters related to fraud risk.

Further, information on the risk management process of the Company is contained in the Management Discussion & Analysis Report which forms part of the Annual Report.

COMPLIANCE WITH SECRETARIAL STANDARDS

The Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

DIRECTORS RESPONSIBILITY STATEMENT

Based on the framework of internal financial controls and systems of compliance which are established and maintained by the Company, audits conducted by the Internal, Statutory and Secretarial Auditors including audit of internal financial controls over financial reporting by the Statutory Auditors and reviews by the Management and the Audit Committee, the Board is of the opinion that the Companys internal financial controls were adequate and effective during FY 2023.

The Directors confirm to the best of their knowledge and ability, that:

(a) in the preparation of the annual financial statements for the year ended March 31, 2023, the applicable accounting standards have been followed with no material departures;

(b) 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, 2023 and of the profit of the Company for the year ended on that date;

(c) 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;

(d) the Directors have prepared the annual financial statements on a going concern basis;

(e) 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; and

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

ASSET LIABILITY MANAGEMENT (ALM)

The Company had a total borrowing of Rs8715.26 Crores on March 31, 2023. The Company has a robust Asset Liability Management Committee and meetings are held as and when required and it continuously monitors asset-liability mismatches to ensure that there are no imbalances on either side of the balance sheet. The ALM position of the Company is based on the maturity buckets as per the guidelines issued by RBI, from time to time.

COST AUDIT

Pursuant to the sanction of the Scheme, the Company has ceased to be a pharmaceutical company from the appointed date of April 1, 2022. Accordingly, maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148 of the Act read with the applicable rules made thereunder are not applicable in respect of the business activities of the Company as a NBFC.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

SEBI had introduced new requirements for sustainability reporting by listed entities. The new reporting called the Business Responsibility and Sustainability Report (BRSR) has replaced the existing Business Responsibility Report. In terms of the aforesaid amendment, with

effect from the financial year 2022 -2023, reporting of BRSR is made mandatory for the top 1000 listed companies (by market capitalisation).

The BRSR of the Company for FY 2023 as required under SEBI Listing Regulations is enclosed with this Report.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 (POSH ACT)

The Company has always believed in providing a safe and harassment free workplace for every individual working in Companys premises through various interventions and practices. The Company always endeavors to create and provide an environment that is free from discrimination and harassment including sexual harassment.

The Company has in place a robust policy on prevention of sexual harassment at workplace which is in line with the requirements of POSH Act. The Company has complied with provisions relating to the constitution of Internal Complaints Committee (ICC) under POSH Act. ICC has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary and trainees) are covered under this policy. ICC has its presence at corporate offices as well as at site locations.

The policy is gender neutral. During the year under review, 1 (One) complaint with allegation of sexual harassment was filed with ICC, detailed investigation was carried out and same was disposed-off as per the provisions of POSH Act.

RBI COMPLIANCES

The Company from the date of receipt of NBFC license continues to comply with all the applicable regulations, guidelines, etc. prescribed by the RBI, from time to time.

As a systemically important non-deposit taking NBFC, the Company always strives to operate in compliance with applicable RBI guidelines and regulations and employs its best efforts towards achieving the same.

OTHERS

The Directors state that no disclosure or reporting is required in respect of the following items, during the year under review:

1. No sweat equity shares and shares with differential rights as to dividend, voting or otherwise were issued;

2. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companys operations in future;

3. None of the Auditors of the Company have reported any fraud as specified under Section 143(12) of the Act; and

4. Neither any application was made, nor any proceeding is pending under the Insolvency and Bankruptcy Code, 2016 against the Company.

ACKNOWLEDGEMENT

We take this opportunity to thank the employees for their dedicated service and contribution to the Company.

We also thank our banks, business associates, members and other stakeholders for their continued support to the Company.

For and on behalf of the Board of Directors
Place: Mumbai Date: May 24, 2023 Chairman