Sakthi Finance Ltd Directors Report.

To the Members

Your Directors are pleased to present their Sixty Fourth Annual Report together with the audited financial statements of the company for the year ended 31st March 2021.

1. FINANCIAL PERFORMANCE (Rs lakh)

Particulars 2020 - 21 2019-20
Total Income (A) 17,133.66 17,023.01
Less : Finance Costs 10,415.94 10,109.40
Other Expenditure 4,250.87 4,317.53
Depreciation, Amortization and } Impairment 1,209.41 1,195.05
Total Expenses (B) 15,876.22 15,621.98
Profit before Exceptional Items and Taxes (A-B) 1,257.44 1,401.03
Exceptional Items - -
Profit before Tax 1,257.44 1,401.03
Less : Provision for Tax: Current Tax 508.42 449.61
Deferred Tax (176.77) (166.52)
Profit after tax for the year 925.79 1,117.94
Balance brought forward from earlier years 3,089.90 2,803.87
Profit available for Appropriation 4,015.69 3,921.81
Add : Other Comprehensive Income / (Loss) 13.58 (5.54)
Less : Dividend paid on Equity Shares (2020 & 2019) 388.24 500.00
Tax on Dividend (2020 & 2019) - 102.78
Statutory Reserve 185.16 223.59
Balance carried forward 3,455.87 3,089.90

2. BUSINESS

For the financial year ended 31st March 2021, the company disbursed an amount of Rs 52,800 lakh in hire purchase financing operations as against Rs 67,132 lakh disbursec during the previous financial year. The overall collection efficiency has been satisfactory. Your directors hope tc achieve better business disbursements and profitability during the current financial year.

3. COVID -19 PANDEMIC IMPACT

The financial year 2020-2021 started with outbreak ol Covid-19 pandemic from March 2020 - July 2020. India and your Company was no exception to the outbreak ol the pandemic. Your Companys operations, in relation tc business disbursements and collections, were impacted to an extent and management of liquidity position wa: also challenging during that period. The Reserve Bank ol India ("RBI") had risen to the occasion and supported the Indian economy by announcing moratorium on loans up

to May 2020, which was further extended up to August 2020 to lessen the burden of the borrowers.

The Government of India and RBI announced various measures and relaxations to ensure that sufficient liquidity is in the hands of the businessmen and borrowers so that the negative effect of the pandemic is mitigated to some extent. Our Company also adopted a policy of moratorium and extended the benefits to our customers so as to relieve the burden of debt servicing by them, as per the approved terms of Government of India and RBI.

4. change in nature of business, if any

During the year, there was no change in the nature of business of the company.

5. DIVIDEND

A. Preference shares

Your Directors have, at their meeting held on 13th February 2021 and 30th June 2021 respectively, declared a pro rata interim dividend of Rs 9 per share on 9% Redeemable Cumulative Preference Shares of Rs 100 each and Rs 8.25 per share on 8.25% Redeemable Cumulative Preference Shares of Rs 100 each for the financial year ended 31st March 2021 amounting to Rs 134.75 lakh, after deduction of a tax deducted at source of Rs 5.54 lakh.

B. Equity shares

Your Directors are pleased to recommend a dividend of 0.60 per equity share (6% on the face value of equity shares of Rs 10 each) for the year ended 31st March 2021 amounting to Rs 388.24 lakh, subject to deduction of tax, wherever applicable. Equity Dividend recommended by the Board of Directors for the financial year 2020-21, if approved by the members, will be recognized as a liability during the financial year 2021-22.

6. transfer to reserves

No amount has been transferred to General Reserve from current year profits.

7. CHANGE IN THE CAPITAL

During the year, the Company allotted 11,69,000 number of 8.25% Redeemable Cumulative Preference Shares of Rs 100 each aggregating Rs 1,169.00 lakh and redeemed 8,35,000 numbers of 9% Redeemable Cumulative Preference Shares of Rs 100 each aggregating Rs 835.00 lakh. Accordingly, the paid-up share capital stands increased to Rs 8,304.59 lakh from Rs 7,970.59 lakh.

8. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under Regulation 34(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 ("listing Regulations"), a report on Management Discussion and Analysis, which forms part of this report, is set out in Annexure 1.

9. PUBLIC ISSUE / REDEMPTION OF NON-CONVERTIBLE DEBENTURES

a. Public issue of Secured and Unsecured, Redeemable, Non-Convertible Debentures for Rs 20,000 lakh

During June - July 2021, the Company made a Public Issue of Secured and Unsecured, Redeemable, Non-Convertible Debentures ("NcDs") of Rs 1,000 each up to Rs 10,000 lakh, with an option to retain over-subscription up to Rs 10,000 lakh, aggregating Rs 20,000 lakhs. The NCD issue opened on 29th June 2021 and closed on 23rd July 2021. The Company received a subscription of Rs 21,047.52 lakh. The Company made allotment of 19,85,365 NCDs aggregating Rs 19,853.65 lakh to the eligible allottees on 29th July 2021. The NCDs have been listed and admitted for trading with BSE Limited with effect from 2nd August 2021. The proceeds of the NCD issue are being used towards the objects stated in the Prospectus.

b. Redemption of Secured, Redeemable, Non-Convertible Debentures ("NCDs")

As per the terms and conditions of the Public Issue Prospectus dated 28th March 2019, your company has redeemed the Secured, Redeemable, Non-Convertible Debentures issued under Options I and II aggregating Rs 2,272.03 lakh (Principal : Rs 1,999.39 lakh and Interest : Rs 272.63 lakh). The repayment was made on 15th May 2021 to the respective Debenture holders and accordingly the NCDs under Options I and II were fully redeemed.

10. Deposits

The total deposits with the company as at 31st March 2021 stood at Rs 16,347.71 lakh as against Rs 18,482.25 lakh as at the end of the previous year.

As at the end of the financial year 2020-2021, 237 public deposits aggregating Rs 301.26 lakh were due for repayment, but remained unclaimed. The Company has been regularly reminding the depositors about the maturity and out of the said deposits, 110 deposits amounting to Rs 136.11 lakh have since been claimed and paid / renewed as per their instructions.

11. TRANSFER TO investor education AND protection FUND ("IEPF")

During the financial year 2020-21, your Company has transferred unclaimed dividend, unclaimed matured debentures, including interest, amounting to Rs 12.90 lakh to IEPF. Further, the Company has also transferred 37,980 equity shares of Rs 10 each in respect of which dividend has remained unclaimed for seven consecutive years to IEPF.

12. Directors AND KEY managerial PERSONNEL

a. Retirement by rotation

In accordance with the provisions of Section 152(6) of the Act, Sri M. Srinivaasan Director (DIN: 00102387) will retire by rotation at the ensuing AGM of the Company and being eligible, offers himself for reappointment. The Board recommends his reappointment.

b. Number of Meetings of the Board

Eight (8) meetings of the Board of Directors of the Company were held during the year. For details of the meetings, please refer to Corporate Governance Report, which forms part of this Report.

c. Key Managerial Personnel ("KMPs")

The Board of Directors have, based on the recommendations of Nomination and Remuneration Committee and Audit Committee, appointed Sri Srinivasan Anand as Chief Financial Officer ("CFO") of the Company with effect from 3rd September 2021. He was earlier the Chief Compliance Officer of the Company.

In terms of Section 203 of the Act,

Sri M Balasubramaniam, Vice Chairman and Managing Director, Dr. S. Veluswamy, Director (Finance and Operations) and CFO, Sri Srinivasan Anand, CFO and Sri S Venkatesh, Company Secretary and Chief Compliance Officer are the Key Managerial Personnel ("KMPs") of the Company.

d. Appointment of Chief Operating Officer ("COO")

The Board of Directors have, based on the recommendations of Nomination and Remuneration Committee appointed Sri K S Venkitasubramanian as Chief Operating Officer of the Company with effect from 3rd September 2021.

e. Remuneration Policy

Companys policy on Directors appointment and remuneration including the criteria for determining qualifications, positive attributes, independence of a director and other matters provided under Section 178(3) of the Act are covered in the Corporate Governance Report which forms part of the Boards Report. The policy on remuneration is enclosed in Annexure 2.

f. Independent Directors Declaration

Dr A Selvakumar, Sri P S Gopalakrishnan, Smt. Priya Bhansali and Sri K P Ramakrishnan, who are Independent Directors, have submitted declarations that each of them meet the criteria of independence as provided in sub-section (6) of Section 149 of the Act and Regulation 25 of the Listing Regulations. Further, in terms of Regulation 25 of the Listing Regulations, they are not aware of any circumstance or situation which exist or may reasonably be anticipated that could impair or impact their ability to discharge the duties with an objective independent judgement and without any external influence and they are independent of the management.

The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, expertise and experience (including proficiency) in the field of information technology, banking and finance, finance and accounting, FDI, international taxation etc. and that they hold highest standards of integrity.

The Independent Directors of the Company have undertaken requisite steps towards inclusion of their name in the data bank of independent Directors maintained with the Indian Institute of Corporate Affairs ("IICA") in terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules 2014 and a declaration to that effect has been obtained from them.

Majority of the Independent Directors of the Company have served as Directors in listed Companies having a paid-up share capital of Rs 10 crore or more for a period of not less than 10 years and hence they are exempt from undertaking the proficiency test as per Rule 4 of the Companies (Appointment and Qualification of Directors) Rules 2014.

Smt Priya Bhansali, Independent Director has successfully completed her on-line proficiency test conducted by IICA, Manesar for being eligible to be an Independent Director of the Company.

g. Code of Conduct for Directors and Senior Management

All the Directors fulfill the Fit and Proper criteria as stipulated by RBI. All the Directors and members of the Senior Management have confirmed compliance with the Code of Conduct of the Company. A declaration to this effect has been signed by Vice Chairman and Managing Director and forms part of the Annual Report.

h. Inter se relationship amongst Directors

Except Dr M Manickam, Chairman, Sri M Balasubramaniam, Vice Chairman and Managing Director and Sri M Srinivaasan, Director, who are related to each other as brothers, none of the other Directors is related to each other within the meaning of the term "relative" as per Section 2(77) of the Act read with the Listing Regulations.

i. Performance Evaluation

In terms of the requirements of the Act and Listing Regulations, the Board has carried out an annual performance evaluation of the individual Directors, Committees of the Board and the Board as a whole.

The evaluation was carried out based on a structured questionnaire which includes performance criteria such as performance of duties and obligations, independence of judgment, level of engagement and participation, contribution in increasing the Boards over all effectiveness etc. Your directors have expressed their satisfaction on functioning and performance of Individual Directors, Board and its Committees.

13. AUDIT COMMITTEE

The present Audit Committee has three non-executive directors as members, of which two are Independent Directors. The composition of the Committee is given below:

a. Dr A Selvakumar, Chairman

b. Sri M Srinivaasan, Member

c. Sri K P Ramakrishnan, Member

14. particulars of loans, guarantees or investments

During the financial year 2020-21, the company has not given / provided any loans, guarantee and securities to parties mentioned in Section 185 of the Act. Hence the provisions of Section 186 of the Act is not applicable to the Company.

15. transactions with related parties

The Company has entered into contracts or arrangements with the related parties in the ordinary course of business and these are on an arms length basis only. There are no contract or arrangement entered into with Related Party(ies) during the year which requires to be disclosed in Form AOC-2 under Sections 188(1) and 134(h) of the Act.

16. internal control

The information about internal controls is set out in the Management Discussion and Analysis Report which forms part of this Report.

17. RISK MANAGEMENT

The Risk Management is overseen by the Risk Management Committee of the Company. The Committee oversees the Companys processes and policies for determining risk tolerance against established levels. Major risks identified by the business and functions are systematically addressed through mitigating actions on a continuous basis. For details, please refer to the Management Discussion and Analysis Report which forms part of the Boards Report.

18. WHISTLE BLOWER POLICY (VIGIL MECHANISM)

The Company has formulated a Whistle Blower Policy (Vigil Mechanism) for Directors and employees to report their genuine concerns. During the year, no complaint has been received in this regard. For details, please refer to Corporate Governance Report which forms part of this Report.

19. SUBSIDIARIES, ASSOCIATE AND JOINT VENTURE

companies

The Company does not have any subsidiary, associate or Joint Venture Company. There was no Company which has become or ceased to be Companys subsidiary, joint venture or associate company during the financial year 2020-21.

20. corporate governance report

As required under Regulation 34(3) and Schedule V to the Listing Regulations, a report on Corporate Governance and a certificate from the auditors of the company regarding compliance of the conditions of Corporate Governance form part of the Annual Report and is set out in Annexure 3.

21. disclosure as per sexual harassment of women

AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT 2013

The Company has put in place a Sexual Harassment Prevention Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013. An Internal Compliance Committee ("ICC") has been formed to redress complaints received regarding sexual harassment. All employees are covered under this Policy. During the year 2020-21, there were no complaints received in this regard by the ICC.

22. ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO The Financial statements

The Company has put in place necessary internal financial controls which are adequate and are operating effectively. The controls are adequate for ensuring the orderly and efficient conduct of the business, completeness of accounting records and timely preparation of reliable financial information, besides adherence to the Companys policies, safeguarding of assets, prevention and detection of frauds and errors, accuracy, etc.

23. DIRECTORS RESPONSIBILITY STATEMENT

As required under Section 134(5) of the Act, your directors confirm, to the best of their knowledge and belief that:

a. in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

b. they 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 at the end of the financial year and of the profit of the company for the financial year;

c. they 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. they have prepared the annual accounts on a going concern basis;

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

24. CORPORATE SOCIAL RESPONSIBILITY ("CSR")

The CSR Policy of the Company and the details about the initiatives taken by the Company on CSR during the year as per the Companies (Corporate Social Responsibility Policy) Rules 2014 have been disclosed in Annexure 4. Further, details regarding composition of Corporate Social Responsibility Committee and other particulars are provided in the Corporate Governance Report which forms part of this report.

During the financial year, your company is required to spend Rs 37.54 lakh towards CSR expenses. Your Company has so far spent Rs 37.58 lakh during the financial year 2020-21.

25. Auditors

a. statutory Auditors

At the 60th AGM of the Company held on 25th September 2017, M/s. P K Nagarajan & Co, Chartered Accountants (ICAI Firm Regn No. 016676S) ("PKN"), were appointed as the statutory auditors of the company to hold office till the conclusion of the 65th AGM.

In terms of RBI Circular dated 27th April 2021 on "Guidelines for appointment of statutory auditors of banks and NBFCs", PKN will be ineligible to be continued as Statutory Auditors.

Accordingly, the Board of Directors have, at their meeting held on 3rd September 2021, on the recommendation of Audit Committee and subject to the approval of members at the ensuing AGM, considered and recommended the appointment of M/s. CSK Prabhu & Co., Chartered Accountants, Coimbatore (ICAI Firm Regn No: 002485S) as Statutory Auditors of the company for a continuous period of three (3) years from the financial year 2021-22.

The Company has received a written consent and an eligibility certificate in accordance with Sections 139, 141 and other applicable provisions, if any, of the Act and the Rules issued thereunder from M/s. CSK Prabhu & Co., Chartered Accountants. They have also confirmed that they hold a valid Peer Review Certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India ("ICAI") as required under the Listing Regulations.

An Ordinary Resolution seeking the approval of members for the appointment of M/s. CSK Prabhu & Co., Chartered Accountants as Statutory Auditors is included in the Notice convening the ensuing AGM.

b. secretarial Auditors

Pursuant to Section 204 of the Act, your Directors have appointed M/s. S Krishnamurthy & Co, Company Secretaries, to undertake the Secretarial Audit of your company for the year 2020-21. The Secretarial Audit Report for the financial year 2020-2021 is set out in Annexure 5.

c. Cost Records and Cost Audit

Maintenance of cost records and requirements of cost audit as prescribed under the provisions of Section 148(1) of the Act is not applicable for the business activities carried out by the company.

26. AUDITORS REPORT AND SECRETARIAL AUDITORS REPORT

There are no disqualifications, reservations, adverse remarks or disclaimers in the auditors report and secretarial auditors report.

The Statutory Auditors of the Company have not reported any fraud as specified under the second proviso of Section 143(12) of the Act (including any statutory modification(s) or re-enactment(s) for the time being in force).

27. PARTICULARS REQUIRED UNDER SECTION 134 OF THE ACT

Particulars as required under Section 134(3)(m) of the Act read with Companies (Accounts) Rules 2014 are given below:

a. The Company has no activity involving conservation of energy or technology absorption;

b. The Company does not have any Foreign Exchange Earnings; and

c. Foreign Exchange Outgo : Rs 106.94 lakh

28. PARTICULARS OF EMPLOYEES

The disclosures in terms of Section 197(12) of the Act read with Rules 5(1), (2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 relating to remuneration is enclosed as Annexure 6.

29. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURT

There are no significant and material orders passed by the regulators or courts or tribunals affecting the going concern status of your company and its operations in future.

30. MATERIAL CHANGES AND COMMITMENTS

There are no material changes and commitments which occurred between the end of the financial year of the company and the date of this report affecting the Companys financial position.

31. ANNUAL RETURN

A copy of the Annual Return for the financial year 2020-21 will be placed on the website of the Company, www.sakthifinance.com, within 60 days after conclusion of the 64th AGM.

32. pecuniary relationship or transactions of non-executive directors

During the year, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company.

33. secretarial standards compliance

Your Directors confirm that the Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India in relation to Board and General Meetings.

34. oTHER Disclosures

In terms of applicable provisions of the Act and Listing Regulations, your Company discloses that during the financial year under review:

a. there was no issue of shares (including sweat equity shares) to employees of the Company

b. there was no scheme for provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees.

c. there was no issue of shares with differential rights.

35. ACKNOWLEDGEMENT

Your Directors wish to place on record the valuable guidance and excellent co-operation extended by the members, banks, financial institutions, rating agencies, Reserve Bank of India and other regulatory authorities. The Board of Directors wish to convey their sincere thanks to the depositors and debenture holders of the company for their continued patronage. They also wish to appreciate the excellent services rendered by the employees of the company.

We pray the Goddess SAKTHI to continue to shower Her blessings and to guide us in all our endeavours.

3rd September 2021 For and on behalf of the Board M Manickam Chairman
Coimbatore DIN : 00102233