salem erode investments ltd share price Directors report


To,

The Members,

Salem Erode Investments Limited

Your Directors present before you the 91st Annual Report of Salem Erode Investments Limited ("hereinafter referred to as "the Company") together with the audited financial statements for the financial year ended March 31, 2022.

I. Financial Summary and Highlights

a) Operations

The Company has opened 8 branches across South India during the financial year 2021 -22 and is having 12 branches as on reporting date. The Company together with its Holding Company, ICL Fincorp Limited aims to open more branches across the Country in the coming years. Currently the workforce of the Company is 37 dedicated employees as on reporting date.

Further to an order from the Regional Director, Eastern Region, Ministry of Corporate Affairs, Kolkata confirming alteration in clause II of the Memorandum of Association of the Company for shifting of Registered Office from the State of West Bengal to the State of Tamil Nadu, the Registrar of Companies, Tamil Nadu has approved the said shifting vide. certificate of registration of regional director order for change of State on 31.08.2021.

The commercial operations during the year under report were progressive. The Company has earned an income of Rs.2,80,69,427/- (Rupees Two Crores

Eighty Lakhs Sixty Nine Thousand Four Hundred and Twenty Seven Only) as compared to Rs. 2,50,84,645/- (Rupees Two Crores Fifty Lakhs Eighty Four Thousand Six Hundred and Forty Five Only) during the previous year. The total expenditure of the Company for the year was Rs. 1,71,25,807/- (Rupees One Crore Seventy One Lakhs Twenty Five Thousand Eight Hundred and Seven Only) as compared to Rs. 60,05,299/- (Rupees Sixty Lakhs Five Thousand Two Hundred and Ninety Nine Only). The Company incurred a Net profit of Rs.71,22,881/- (Rupees Seventy One Lakhs Twenty Two Thousand Eight Hundred and Eighty One Only) as against net profit amounting to Rs. 1,37,19,450/- (Rupees One Crore Thirty Seven Lakhs Nineteen Thousand Four Hundred and Fifty Only) during the previous financial year. The reduction in profit of the Company as compared to previous financial year is mainly due to increase in finance cost, administrative and other normal expenses of the Company, which occurred due to expansion of branches and fund raising. Your Directors are hopeful to further expand the operations of the Company in the coming years.

Financial Summary

Particulars For the year ended March 31, 2022 (Rs.) For the year ended March 31, 2021 (Rs.)
Total Income 2,80,69,427 2,50,84,645
Total Expense 1,71,25,807 60,05,299
Profit/Loss before Tax 1,09,43,620 1,90,79,345
Less Current Income Tax 31,98,353 44,64,296
Less Deferred Tax 2,39,514 7,53,495
(Excess)/Short provision of previous years 3,82,872 1,42,104
Net Profit/Loss after Tax 71,22,881 1,37,19,450
Earnings per share (Basic) 0.62 1.20
Earnings per Share (Diluted) 0.62 1.20

b)

c) Reserves

During the year the Company had transferred an amount of Rs. 17,00,000/- (Rupees Seventeen Lakhs Only) and Rs. 1,36,550/- (Rupees One Lakh Thirty Six Thousand Five Hundred and Fifty Only) to the Statutory Reserve and Impairment Reserve respectively. An amount of Rs. 52,86,331 /- (Rupees Fifty Two Lakhs Eighty Six Thousand Three Hundred and Thirty One Only) is proposed to be retained in the statement of Profit and Loss account.

d) Dividend

With a view to conserve profit for proposed expansion activities of the Company, the Board of Directors has not recommended any dividend on Equity Shares of the Company for the financial year ended March 31,2022.

e) Change in Accounting Standards

The Company is following the Indian Accounting Standards during the year under report.

II. State of Companys affairs

a) Segment-wise position of business and its operations

The Company has been mainly focussing on Gold Loans, which is secured by way of the gold jewellery provided as security by the customers. The Loan to Value ratio is restricted to a maximum of 75% as prescribed by the Reserve Bank of India ("hereinafter also referred to as "RBI"). The Company provides Loans at lesser Loan to Value ratios with lesser interest rates to the customers, so as to reduce the interest burden for needy customers.

During the year 2021-22 the Company has opened more new branches and thus there is a phenomenal increase in the Gold Loans. New schemes were introduced offering lesser interest rates considering the economic conditions after the raging pandemic hit the common man in its second wave during the year.

The following are the comparison of the Gold Loan schemes for the year 2020-21 & 2021 -22: Financial year 2020-21:

Scheme name Rate of Interest AVG Loan to Value Ratio Amount Outstanding (In Rs.)
SEIL (60 Days Interest Payment Scheme) 18% 71.04% 1,16,66,266

 

Financial year 2021-22:

Scheme name Rate of Interest AVG Loan to Value Ratio Amount Outstanding (In Rs.)
SEIL (60 Days Interest Payment Scheme) 18% 71.36% 64,92,813
SEIL 107 (Monthly Interest Payment Scheme) 14% 70.76% 4,17,07,011
SEIL 111 (Monthly Interest Payment Scheme) 16% 70.80% 48,32,367
SEIL 112 (60 Days Interest Payment Scheme) 14% 73.27% 3,42,388
SEIL 116 (30 Days Interest Payment Scheme) 8.33% 50.08% 4,29,882
SEIL 117 (30 Days Interest Payment Scheme) 8.33% 67.90% 3,24,47,251
Total 8,62,51,712

** Actual LTV - 75%

As the Company is in its nascent stage of expanding its business, the other loan categories are yet to be prioritised. This will be carried out in the coming years, as the Company starts new branches and more funds are raised through various sources such as Non-Convertible Debentures, Loan from banks etc.

b) Change in status of the Company

The Company has complied with provisions of the Companies Act, 2013 (hereinafter also referred to as "the Act") & rules made there under in respect of its status under the Act and is active.

c) Key Business Developments

i. Branch Network

ii. During the year under report, 8 more branches were opened across South India besides four branches that were already opened in the last financial year. The Company aims to open more branches in the near future after doing a detailed research on the market structure and the experiences garnered from ICL Fincorp Limited (Holding Company). Having a widespread branch network will enable the Company to service and support the existing as well as fresh customers from proximate locations which gives easy access to services and also enables the Company to reach new potential customers.

 

iii. Merging, shifting or closure of branches

The Company is in the process of improving efficiency of operations of existing branches by identifying those branches which are below the Break Even Point in terms of revenue generation and taking appropriate actions like merging, shifting or closure through due statutory procedures. The Company had recently taken some crucial action like decision of shifting the branch after identifying the perfect location for business or immediate closure of the branch due to less profitability.

 

iv. Fund Raising

The Company had vide Postal Ballot through e- voting on 23rd day of February, 2021 approved borrowing powers not exceeding Rs.300,00,00,000/- (Rupees Three Hundred Crores Only). In accordance with said approval, the Company had raised an amount of Rs. 10,96,65,000/- (Rupees Ten Crores Ninety Six Lakhs and Sixty Five Thousand Only) by issuing Unlisted

Redeemable Secured Non-Convertible Debentures on private placement basis. Further discussions on public issue of Non-Convertible Debentures and Equity Shares are also in progressive mode.

d) Other material event having an impact on the affairs of the Company

i. Impact of third wave Coronavirus disease (COVID-19)

Your Board is of an opinion that Non Banking Finance Company (hereinafter also referred to as "NBFC") sector are likely to face minimal impact due to the third wave of COVID-19. However, the Company need to be more careful about NonPerforming Assets considering an aftermath of the COVID-19 in the near future. As the Company has navigated the periods of disruptions during the first two COVID-19 waves by taking sufficient measures to ensure adequate liquidity is available at all times during the pandemic period by proper Asset Liability Management, tweaking prcesses, digitizing certain operations, restricting operating hours and physical movement, slowing down disbursements, vaccinating the staff etc. the impact of COVID-19 in this financial year will remain bare minimum. Your Board expects a positive recovery or growth in the overall operating environment and the collection efficiencies will also tend to remain stable and there is also a possibility of exploring new areas and locations for a more profitable business market in the absence of major lockdowns.

 

ii. Disbursement & Recovery

As the COVID 19 continued to impact the normal life during the year there were lockdown measures but this hasnt affected the operations of the Company in the same way as last year. The Company has opened 8 new branches during the year which has resulted in increased disbursements in gold loans. Your Company managed the recovery effectively by offering customers the option to make remittances through online banking/phone transfers and other electronic modes. Since the Company is focusing on loan recovery efforts in a stringent manner, there was no adverse impact on the revenue of the Company during the year and also no impact is expected in the coming financial years also.

iii. Non-Performing Assets

The Company opened 8 new branches during the year thereby improving the Gold Loan portfolio, by maintaining the Loan to Value ratio within the prescribed norms. Due to the stringent recovery measures, the Companys Non-Performing Asset levels are at manageable levels. Your Company maintains that it will focus more on Gold Loan category in the future as market value of gold is expected to rise as usual as predicted by the experts.

The Company is maintaining a Loan to Value of 75%, keeping in mind the asset quality. The Company continues to focus on maintaining the gold inventory and also serving the existing customer base of your Company with optimum efficiency and also attain new customers through its branches.

Looking at the current scenario, your Management is predicting that as the economy is recovering from the Covid 19 impact, in the coming years the Company will grow at better levels by introducing new portfolios and branches, as the Holding Company, ICL Fincorp Limited has vast experience, exposure and expertise in handling this situation which has also guided to outclass performance in a most satisfactory manner.

As the Covid 19 related restrictions are being reduced, your Company has restarted the marketing activities including cluster marketing, road shows, brand value additions etc. in a more aggressive manner.

III. Change in the nature of business

There was no change in the nature of the business during the year under report.

IV. Material Changes and Commitments

There was no material changes or commitments, affecting the financial position of the Company having occurred during the year under report or having occurred since the end of the year and till the date of the report. Further, there was no changes in external and internal environment including technical, legal and financial, strikes, lockouts and breakdowns affecting the business of the Company, as on the reporting date.

V. Overview of the industry and important changes in the industry during the last year

Detailed in Management Discussion and Analysis Report as Annexure 1.

VI. External environment and economic outlook

Indias NBFCs are expected to see a rapid recovery in this financial year. There will most likely be a growth of 6% to 8% in the business of NBFC. The GDP is also expected to grow 9.5%. When high growth rates happen, the need for credit also improves, thus giving an expectation for a possible growth in the overall business of NBFC sector. The future of NBFCs is witnessing good growth in consumer lending. The liquidity position has improved and is gradually coming back to normal. In future also, NBFC will play a crucial role in economic development and in financial inclusion. These days the NBFCs are majorly focusing on the weaker sections of the society. NBFCs are offering a varied range of products, financing, leasing, housing finance, gold loans etc. Also it is now an alternative to the Banking sector as it yields more interest than interest received in Banks. More details are mentioned in Management Discussion and Analysis Report as Annexure 1.

VII. Capital and Debt Structure

a) Share Capital of the Company

The Authorized Share Capital of the Company is Rs. 1,20,00,000/- (Rupees One Crore and Twenty Lakhs Only) consisting of 1,20,00,000 Equity Shares of Re.1/- (Rupee One Only) each. The Issued, Subscribed and Paid up Share Capital of the Company is Rs. 1,14,65,520/- (Rupees One Crore Fourteen Lakhs Sixty Five Thousand Five Hundred and Twenty Only) consisting of 1,14,65,520 Equity Shares of Re. 1/- (Rupee One Only) each. There was no change in the capital structure of the Company during the year under report.

b) Non-Convertible Debentures

During the year under review, your Company has issued Unlisted Secured Redeemable NonConvertible Debentures and raised an amount aggregating to Rs.10,96,65,000/- (Rupees Ten Crores Ninety Six Lakhs and Sixty Five Thousand Only) on a private placement basis in various tranches. The funds raised from Non-Convertible Debentures were utilized for the purpose of meeting the working capital requirements and general

corporate purposes of the Company. The details of tenure, interest/coupon rate & periodicity of Monthly Schemes

payment are as follows:

Particulars General Category Senior Citizens
13 months Scheme 11.50 % p.a. 12.00 % p.a
24 months Scheme 12.00 % p.a. 12.50 % p.a
36 months Scheme 12.25 % p.a. 12.75 % p.a

Cumulative Schemes

Particulars General Category Senior Citizens
13 months Scheme 12.00 % p.a 12.50 % p.a
24 months Scheme 12.50 % p.a 13.00 % p.a.
36 months Scheme 12.75 % p.a 13.25 % p.a.

Doubling Scheme (Cumulative)

Particulars General Category Senior Citizens
65 months Scheme 13.66 % p.a. 13.66 % p.a.

The details on Non-Convertible Debentures issued and allotted during the year are as follows:

Date of issue Date of allotment Number of Securities allotted Method of allotment Issue Price Amount raised
22.12.21 31.12.21 29,300 Private Placement 1,000 2,93,00,000
13.01.22 21.01.22 31,535 Private Placement 1,000 3,15,35,000
09.02.22 17.02.22 20,100 Private Placement 1,000 2,01,00,000
19.03.22 30.03.22 28,730 Private Placement 1,000 2,87,30,000

 

Events occurred after Balance Sheet date

The Board of Director of the Company vide meeting held on 30th day of April, 2022 has changed interest/coupon rate of issuing Unlisted Secured Redeemable Non-Convertible Debentures as follows:

Monthly Schemes

Particulars General Category Senior Citizens
13 months Scheme 11.00 % p.a. 11.50 % p.a.
24 months Scheme 11.50 % p.a. 12.00 % p.a.
36 months Scheme 11.75 % p.a. 12.25 % p.a.

Cumulative Schemes

Particulars General Category Senior Citizens
13 months Scheme 11.50 % p.a. 12.00 % p.a.
24 months Scheme 12.00 % p.a. 12.50 % p.a.
36 months Scheme 12.25 % p.a. 12.75 % p.a.

Doubling Scheme (Cumulative)

Particulars General Category Senior Citizens
68 months Scheme 13.01 % p.a. 13.01 % p.a.

VIII. Credit rating

The Credit rating by Infomerics Valuation and Rating Private Limited is as follows:

Facilities Amount (In Rs. Crores) Ratings Date on which the credit rating was obtained Revision in the credit rating Reasons provided by the rating agency for a downward revision, if any
Proposed Non - Convertible Debentures 100 IVR BB/Stable (IVR Double B with Stable Outlook) 21.03.2022 Nil Not applicable

IX. Investor Education and Protection Fund

a) Details of the transfer/s to the Investor Education and Protection Fund (hereinafter also referred to as "IEPF") made during the year as mentioned below:

i. Amount of unclaimed/unpaid dividend and the corresponding shares

The Company has transferred unpaid and unclaimed dividend of Rs. 46,335/- (Rupees Forty Six Thousand Three Hundred and Thirty Five Only) to IEPF on 28th day of June, 2021. Due to the technical issues with the IEPF portal, the Company is unable to transfer few underlying shares as on date.

ii. Redemption amount of preference shares - Not Applicable

iii. Amount of matured deposits, for Companies other than Banking Companies, along with interest accrued thereon - Not Applicable

iv. Amount of matured debentures along with interest accrued thereon - Not Applicable

v. Application money received for allotment of any securities and due for refund along with interest accrued - Not Applicable

vi. Sale proceeds of fractional shares arising out of issuance of bonus shares, merger and amalgamation - Not Applicable

b) Details of the resultant benefits arising out of shares already transferred to the IEPF - Not Applicable

c) Year wise amount of unpaid/unclaimed dividend lying in the unpaid account upto the year and the corresponding shares, which are liable to be transferred to the IEPF and the due dates for such transfer

All unpaid/unclaimed dividend as on reporting date has been transferred to IEPF. The corresponding shares of underlying unpaid/unclaimed dividend to be transferred to IEPF account are as follows:

Sl.No. Year of declaration of Dividend Dividend declaration date Due dates for transfer of shares to IEPF Account Number of Equity Shares to be transferred Current status
01. 2008-09 28.08.09 27.09.16 6,28,160 Transferred
02. 2009-10 27.08.10 26.09.17 64,160 Transferred
03. 2010-11 26.08.11 25.09.18 85,200 Transferred
04. 2011-12 31.08.12 30.09.19 1,54,880 Transferred
05. 2012-13 16.08.13 15.09.20 1,74,320 To be transferred

d) the amount of donation, if any, given by the Company to the IEPF - Nil

e) such other amounts transferred to the IEPF, if any, during the year - Nil

X. Management

a) Directors and Key Managerial Personnel

The changes in the constitution of the Board of Directors and Key Managerial Personnel of the Company during the year under report are as follows:-.

Your Board had appointed Mr. A.A. Balan (DIN: 01996253) as an Independent Director (Additional) with effect from 29th September, 2021 to hold office upto the date of 91st Annual General Meeting of the Company. The Board is of the view that association of Mr. A.A. Balan with his rich experience and knowledge would definitely benefit the Company and would support the Board to discharge its functions and duties effectively. Further, Mr. A.A.Balan also posess appropriate skills, expertise and competencies in the context of the Companys present and proposed businesses. In the opinion of the Board, Mr. A.A.Balan fulfills the conditions specified in the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter also referred to as "Listing Regulations") for the proposed appointment as an Independent Director of the Company and is independent of the management. Further, Mr. A.A.Balan is not disqualified from being appointed as a Director in terms of section 164 of the Act. The Board has verified credentials and satisfied with regard to integrity, expertise and experience, including the proficiency of the said person for the position of Independent Director. Being eligible for appointment and in the best interest of the Company, your Board recommends the appointment of Mr. A.A.Balan as an Independent Director of the Company with effect from 29th September, 2021 for a term of 5 consecutive years i.e. from 29th day of September, 2021 to 28th day of September, 2026, not liable to retire by rotation.

Mr. Natarajan R., a Member of the Institute of Chartered Accountants of India (Membership No: A035898) was appointed as the Chief Financial Officer of the Company with effect from 30th day of June, 2021 in place of Mr. Subramanian R., (Membership No: 026299) former Chief Financial Officer of the Company, who resigned from the said position with effect from 21st day of June, 2021, due to personal reasons.

Thereafter Mr. Madhavankutty T., a Member of the Institute of Chartered Accountants of India (Membership No. 210870) was appointed as the Chief Financial Officer with effect from 13th day of January, 2022 in place of Mr. Natarajan R., (Membership No: A035898) former Chief Financial Officer of the Company, who resigned from the said position with effect from 24th September, 2021, due to difference of opinion on certain matters.

The members of the Company vide. 90th Annual General Meeting held on 25th day of September, 2021 had re-appointed Mr.K.G. Anilkumar, Managing Director (DIN: 00766739), who retires by rotation and being eligible offered himself for reappointment.

Ms. Umadevi Anilkumar, Non-Executive Director (DIN: 06434467) of the Company, who retires by rotation and being eligible offered herself for reappointment. Being eligible for re-appointment and in the best interest of the Company, your Board recommends the re-appointment of Ms. Umadevi Anilkumar as a Director of the Company, liable to retire by rotation.

There was no change in Directors or Key Managerial Personnel after the end of the year and up to the date of the report.

b) Declaration from Independent Directors on annua/ basis

The Company has received necessary declaration from all the Independent Directors of the Company as per section 149 (7) of the Companies Act, 2013 confirming that they meet with the criteria of Independence as laid down under section149 (6) of Act and regulation 16 (1) (b) of the Listing Regulations. Further, the Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Act and Code of Conduct for Directors and senior management personnel of the Company. Further, the Board after taking these declarations/disclosures on record and acknowledging the veracity of the same, concluded that the Independent Directors are persons of integrity and possess relevant proficiency, expertise and experience to qualify as Independent Directors of the Company and are independent of the management 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, as amended, Independent Directors of the Company have registered themselves with the databank maintained by The Indian Institute of Corporate Affairs, Manesar and the said registration is renewed and active. All the independent Directors of the Company have passed online proficiency self-assessment test conducted by the said institute.

c) Meetings of the Board of Directors of the Company

During the year, the Board of Directors of the Company had convened 12 (twelve) meetings, details of the same as mentioned below.

Sl. No. Date of the meeting Present throughout the meeting Percentage of attendance
Mr. K. G. Anilkumar
01. 28.04.2021 Ms. Umadevi Anilkumar 100%
Mr. T.G. Babu
Mr. Saseendran V.
Mr. K. G. Anilkumar
02. 30.06.2021 Ms. Umadevi Anilkumar 100%
Mr. T.G. Babu
Mr. Saseendran V.
Mr. K. G. Anilkumar
03. 13.08.2021 Ms. Umadevi Anilkumar 100%
Mr. T.G. Babu
Mr. Saseendran V.
Mr. K. G. Anilkumar
04. 27.08.2021 Ms. Umadevi Anilkumar 100%
Mr. T.G. Babu
Mr. Saseendran V.
Mr. K. G. Anilkumar
05. 29.09.2021 Ms. Umadevi Anilkumar 100%
Mr. T.G. Babu
Mr. Saseendran V.
Mr. K. G. Anilkumar
Ms. Umadevi Anilkumar
06. 11.11.2021 Mr. T.G. Babu 100%
Mr. Saseendran V.
Mr. A. A. Balan
Mr. K. G. Anilkumar
Ms. Umadevi Anilkumar
07. 22.12.2021 Mr. T.G. Babu 100%
Mr. Saseendran V.
Mr. A. A. Balan
Mr. K. G. Anilkumar
08. 13.01.2022 Ms. Umadevi Anilkumar 80%
Mr. T.G. Babu
Mr. Saseendran V.
Mr. K. G. Anilkumar
Ms. Umadevi Anilkumar
09. 09.02.2022 Mr. T.G. Babu 100%
Mr. Saseendran V.
Mr. A. A. Balan
Mr. K. G. Anilkumar
Ms. Umadevi Anilkumar
10. 14.02.2022 Mr. T.G. Babu 100%
Mr. Saseendran V.
Mr. A. A. Balan
Mr. K. G. Anilkumar
Ms. Umadevi Anilkumar
11. 25.02.2022 Mr. T.G. Babu 100%
Mr. Saseendran V.
Mr. A. A. Balan
Mr. K. G. Anilkumar
Ms. Umadevi Anilkumar
12. 19.03.2022 Mr. T.G. Babu 100%
Mr. Saseendran V.
Mr. A. A. Balan

d) General Meetings held during the financial year

During the financial year one General Meeting through e-voting of the shareholders were held, details of the same are disclosed as below:

Nature of meeting Date of meeting Number of members attended Percentage of attendance
90th Annual General Meeting 25.09.2021 11 2.07%

e) Composition of the Board of Directors & Key Managerial Personnel

The Board of the Company is headed by Mr. T.G. Babu, Independent Director, an eminent person of high credentials and of considerable professional experience, who actively contributed in the deliberations of the Board. As on close of business hours of March 31,2022, the Board comprised of 5 Directors and headed by 2 Key Managerial Personnel as mentioned below:

Sl. No. Name DIN/PAN Designation
01. Mr. K.G. Anilkumar 00766739 Managing Director (Executive)
02. Ms. Umadevi Anilkumar 06434467 Director (Non-Executive)
03. Mr. T.G. Babu 08315374 Independent Director (Non-Executive)
04. Mr. Saseendran V. 08205871 Independent Director (Non-Executive)
05. Mr. A.A.Balan 01996253 Independent Director
(Additional Non-Executive)
06. Mr. Madhavankutty T. ACXPT7620E Chief Financial Officer
07. Ms. Manisha N.Menon. BPFPM6140C Company Secretary & Compliance Officer

f) Committees of the Board

The Company has various Committees which have been constituted as a part of good corporate governance practices and the same are in compliance with the requirements of the relevant provisions of applicable laws and statutes.

i. Audit Committee

i) Description & Terms of reference

The Company has constituted and maintained independent, competent and qualified Audit Committee by complying the provisions of section 177 of the Act, read with rule 6 of the Companies (Meetings of Board and its Powers) Rules, 2014 and applicable regulations of the Lisitng Regulations and amendments made thereunder. The functions of the Audit Committee include the following:

• Review of financial statements and Auditors report.

ii) Composition

• Recommendation for appointment, retention, termination, remuneration and terms of appointment of Statutory Auditors of the Company and allied matters.

• Recommendation for appointment, retention, termination, remuneration and terms of appointment of Internal Auditors of the Company, review of Internal Auditors report and allied matters.

• Recommendation for appointment, retention, termination, remuneration and terms of appointment of Chief Financial Officer of the Company.

• Statement of uses/application of funds.

• Approval of Related Party Transactions and such other subsequent related modifications.

• Such other matters envisaged in the aforesaid provisions of the Companies Act, 2013 and rules made thereunder.

The Audit Committee of the Company comprised of following members:

Name & Designation Nature of directorship Position in Committee
Mr. T.G.Babu Independent Director Chairman
Mr. Saseendran V. Independent Director Member
Ms. Umadevi Anilkumar Non-Executive Director Member

iii) Meetings & Attendance

During the year, the Audit Committee of the Company had convened 11 (eleven) meetings, details of the same are as mentioned below.

Sl. No. Date of the meeting Present throughout the meeting Percentage of attendance
01. 23.04.2021 Mr. T.G. Babu 100%
Ms. Umadevi Anilkumar
Mr. Saseendran V.
02. 21.06.2021 Mr. T.G. Babu 100%
Ms. Umadevi Anilkumar
Mr. Saseendran V.
30.06.2021 Mr. T.G. Babu
03. Ms. Umadevi Anilkumar 100%
Mr. Saseendran V.
Mr. T.G. Babu
04. 14.07.2021 Ms. Umadevi Anilkumar 100%
Mr. Saseendran V.
Mr. T.G. Babu
05. 26.07.2021 Ms. Umadevi Anilkumar 100%
Mr. Saseendran V.
Mr. T.G. Babu
06. 13.08.2021 Ms. Umadevi Anilkumar 100%
Mr. Saseendran V.
Mr. T.G. Babu
07. 27.08.2021 Ms. Umadevi Anilkumar 100%
Mr. Saseendran V.
Mr. T.G. Babu
08. 29.09.2021 Ms. Umadevi Anilkumar 100%
Mr. Saseendran V.
09. 11.11.2021 Mr. T.G. Babu 66.67%
Ms. Umadevi Anilkumar
Mr. T.G. Babu
10. 10.01.2022 Ms. Umadevi Anilkumar 100%
Mr. Saseendran V.
Mr. T.G. Babu
11. 14.02.2022 Ms. Umadevi Anilkumar 100%
Mr. Saseendran V.

ii. Nomination & Remuneration Committee

i) Description & Terms of reference

The Company has constituted and maintained competent and qualified Nomination and Remuneration Committee by complying the provisions of section 178 of the Act, read with rule 6 of the Companies (Meetings of Board and its Powers) Rules, 2014 and applicable provisions of the Listing Regulations and amendments made thereunder. The functions of the Nomination and Remuneration Committee include the following:

• Review and approval of appointment, removal, resignation and retirement of Directors, Key Managerial Personnel and Senior Management Staff of the Company.

ii) Composition

• Review and approval of remuneration of Directors, Key Managerial Personnel and Senior Management Staff of the Company.

• Evaluation of performance of Directors, Key Managerial Personnel, Senior Management Staff and Committees of Board.

• Review of the performance of Directors, Key Managerial Personnel and Senior Management.

• Such other matters envisaged in the aforesaid provisions of the Companies Act, 2013 and rules made thereunder.

The members of the Nomination and Remuneration Committee are as follows:

Name & Designation Nature of directorship Position in Committee
Mr. T.G. Babu Independent Director Chairman
Mr. Saseendran V. Independent Director Member
Ms. Umadevi Anilkumar Non-Executive Director Member

iii) Meetings & Attendance

During the year, the Nomination and Remuneration Committee of the Company had convened 6 (six) meetings, details of the same as mentioned below.

Sl. No. Date of the meeting Present throughout the meeting Percentage of attendance
01. 23.04.2021 Mr. T.G. Babu 100%
Ms. Umadevi Anilkumar
Mr. Saseendran V.
02. 21.06.2021 Mr. T.G. Babu 100%
Ms. Umadevi Anilkumar
Mr. Saseendran V.
03. 14.07.2021 Mr. T.G. Babu 100%
Ms. Umadevi Anilkumar
Mr. Saseendran V.
04. 27.08.2021 Mr. T.G. Babu 100%
Ms. Umadevi Anilkumar
Mr. Saseendran V.
05. 29.09.2021 Mr. T.G. Babu 100%
Ms. Umadevi Anilkumar
Mr. Saseendran V.
06. 10.01.2022 Mr. T.G. Babu 100%
Ms. Umadevi Anilkumar
Mr. Saseendran V.

iii. Stakeholders Relationship Committee

i) Description & Terms of reference

The Company has constituted and maintained competent and qualified Stakeholders Relationship Committee by complying the provisions of section 178 (5) of the Act, applicable regulations of the Listing Regulations and amendments made thereunder. The functions of the Stakeholders Relationship Committee include the following:

• Ensure that the views/concerns of the shareholders are highlighted to the Board at appropriate time and that the steps are taken to address such concerns.

• Resolve complaints related to transfer/transmission of shares, non-receipt of annual report and non-receipt of declared dividends, General Meetings, issue of new/duplicate certificates and new certificates on split/consolidation/renewal etc., transfer/transmission, dematerialization and rematerialization of Equity Shares in a timely manner and oversee the performance of the Registrar and Transfer Agents.

• Review the process and mechanism of redressal of investor complaints and suggesting measures of improving the existing system of redressal of investor grievances

• Such other matters envisaged in the aforesaid provisions of the Companies Act, 2013 and rules made thereunder.

ii) Composition

The members of the Stakeholders Relationship Committee are as follows:

Name & Designation Nature of directorship Position in Committee
Mr. T.G. Babu Independent Director Chairman
Mr. Saseendran V. Independent Director Member
Ms. Umadevi Anilkumar Non-Executive Director Member

iii) Meetings & Attendance

During the year, the Stakeholders Relationship Committee of the Company had convened 3 (three) meetings, details of the same are as mentioned below.

Sl. No. Date of the meeting Present throughout the meeting Percentage of attendance
Mr. T.G. Babu
01. 14.07.2021 Ms. Umadevi Anilkumar 100%
Mr. Saseendran V.
Mr. T.G. Babu
02. 10.08.2021 Ms. Umadevi Anilkumar 100%
Mr. Saseendran V.
Mr. T.G. Babu
03. 19.03.2022 Ms. Umadevi Anilkumar 100%
Mr. Saseendran V.

iv. Corporate Social Responsibility Committee

i) Description & Terms of reference

The Company has constituted and maintained competent and qualified Corporate Social Responsibility (hereinafter also referred to as "CSR") Committee by complying the provisions of section 135 of the Act and amendments made thereunder. The functions of the CSR Committee include the following:

• Prepare a detailed CSR Action Plan, delineating the CSR activities to be carried out during the upcoming financial years, including the budgets thereof, manner of execution, implementation schedules, modalities of utilization of funds and monitoring & reporting mechanism for the CSR activites and submit before the Board for approval on annual basis.

• Formulation and recommend to the Board, a CSR Policy which shall indicate the projects/activities to be undertaken by the Company in areas or subject, as specified in Schedule VII.

ii) Composition

Corporate Social Responsibility Committee consists of following members:

Name & Designation Nature of directorship Position in Committee
Mr. T.G. Babu Independent Director Chairman
Mr. Saseendran V. Independent Director Member
Ms. Umadevi Anilkumar Non-Executive Director Member

iii) Meetings & Attendance

During the year, the Corporate Social Responsibility Committee of the Company had convened 2 (two) meetings, details of the same as mentioned below.

Sl. No. Date of the Meeting Present throughout the meeting Percentage of attendance
01. 14.07.2021 Mr. T.G. Babu
Ms. Umadevi Anilkumar 100%
Mr. Saseendran V.
02. 19.03.2022 Mr. T.G. Babu
Ms. Umadevi Anilkumar 100%
Mr. Saseendran V.

v. Debenture and Bond Committee

i) Description & Terms of reference

The Company has constituted and maintained competent and qualified Debenture & Bond Committee by considering the provisions of the Companies Act, 2013 and amendments made thereunder. The functions of the Debenture & Bond Committee include the following:

• Processing, verifying and approving of Debenture, Bond or other debt instrument applications, offer letters, record of offers and such other related documents.

• Approval of issue and allotment of Secured Redeemable Non-Convertible Debentures, Bonds or Unsecured Redeemable NonConvertible Debentures or such other debt instruments on private placement basis.

• Valuation of undertakings or assets of the Company, wherever it is necessary.

• Such other matters envisaged in the applicable provisions of the Companies Act, 2013 and rules made thereunder.

ii) Composition

The Debenture & Bond Committee had been constituted during the year 2021-22 and the members of the Committee during the year under report are as follows:

Name & Designation Nature of directorship Position in Committee
Mr. T. G. Babu Independent Director Chairman
Mr. K. G. Anilkumar Managing Director Member
Ms. Umadevi Anilkumar Non-Executive Director Member

iii) Meetings & Attendance

During the year, the Debenture & Bond Committee of the Company had convened 4 (four) meetings, details of the same are as mentioned below:

SI. No. Date of the meeting Present throughout the meeting Percentage of attendance
Mr. T.G. Babu
1. 31.12.2021 Mr. K.G. Anilkumar 100%
Ms. Umadevi Anilkumar
Mr. T.G. Babu
2. 21.01.2022 Mr. K.G. Anilkumar 100%
Ms. Umadevi Anilkumar
Mr. T.G. Babu
3. 17.02.2022 Mr. K.G. Anilkumar 100%
Ms. Umadevi Anilkumar
4. 30.03.2022 Mr. T.G. Babu 66.67%
Ms. Umadevi Anilkumar

vi. Risk Management Committee

i) Description & Terms of reference

The Company has constituted and maintained competent and qualified Risk Management Committee by complying the provisions of the Companies Act, 2013, directions under Non-Banking Financial Company-Non Systemically Important Non-Deposit taking Company (Reserve Bank) Directions, 2016 and amendments made thereunder. The Committee reviews the Risk Management Policy, document and improve risk management practices, ensure appropriate/adequate reporting to the Board, manage the integrated risk, review the functioning of the Risk Management Department and any other matter as the Committee may deem fit.

The Committee is involved in the process of identification, measurement, monitoring and mitigation of the various risks faced by the Company.

ii) Composition

The Risk Management Committee had been constituted during the year 2021-22 and the members of the Committee during the year under report are as follows:

Name & Designation Nature of directorship Position in Committee
Mr. T.G. Babu Independent Director Chairman
Mr. K.G. Anilkumar Managing Director Member
Mr. Saseendran V. Independent Director Member

iii) Meetings & Attendance

During the year, Risk Management Committee of the Company had convened 2 (two) meetings, details of the same are as mentioned below:

SI. No. Date of the meeting Present throughout the meeting Percentage of attendance
Mr. T.G. Babu
01. 15.09.2021 Mr. K.G. Anilkumar 100%
Mr. Saseendran V.
Mr. T.G. Babu
02. 19.03.2022 Mr. K.G. Anilkumar 100%
Mr. Saseendran V.

vii. Asset-Liability Management Committee

i) Description & Terms of reference

The Company has constituted Asset-Liability Management Committee in line with provisions of Non-Banking Financial Company-Non Systemically Important Non-Deposit taking Company (Reserve Bank) Directions, 2016. The Committee ensures the adherence to the risk tolerance/limits set by the Risk Management Committee as well as implanting the risk management strategy, policies and procedures of the Company and will support the Risk Management Committee to establish a framework for the Companys risk management process and implementation.

ii) Composition

The Asset-Liability Management Committee had been constituted during the year 2021-22 and the members of the Committee during the year under report are as follows:

Name & Designation Nature of directorship Position in Committee
Mr. K.G. Anilkumar Managing Director Chairman
Ms. Umadevi Anilkumar Non-Executive Director Member
Mr. T.G. Babu Independent Director Member

In addition to the above, persons holding the positions of the Finance Manager & Accounts Manager from time to time shall be the permanent members of the Committee.

iii) Meetings & Attendance

During the year, the Asset Liability Management Committee of the Company had convened 2 (two) meetings, details of the same are as mentioned below:

SI. No. Date of the meeting Present throughout the meeting Percentage of attendance
Mr. K.G. Anilkumar
01. 15.09.2021 Ms. Umadevi Anilkumar 75%
Mr. T.G. Babu
Mr. K.G. Anilkumar
02. 19.03.2022 Ms. Umadevi Anilkumar 75%
Mr. T.G. Babu

*Position of Finance Manager was vacant during the year under report.

viii. Branch Authorisation Committee

i) Description & Terms of reference

The Company has constituted Branch Authorisation Committee by complying the provisions of the Companies Act, 2013 and amendments made thereunder with powers to open new branches on PAN India basis, close, merge or shift the existing branches etc. and with ample powers for opening/closure of bank account/changes in signatories of bank accounts of all branches of the Company.

ii) Composition

The Branch Authorisation Committee had been constituted during the year 2021-22 and the members of the Committee during the year under report are as follows:

Name & Designation Nature of directorship Position in Committee
Mr. K.G. Anilkumar Managing Director Chairman
Ms. Umadevi Anilkumar Non-Executive Director Member

 

Events occurred after Balance Sheet date

Mr. Saseendran V., Independent Director of the Company was inducted to the Branch Authorization Committee on 30th day of April, 2022.

iii) Meetings & Attendance

During the year, the Branch Authorisation Committee of the Company had convened only 1 (one) meeting, details of the same as mentioned below:

SI. No. Date of the meeting Present throughout the meeting Percentage of attendance
Mr. K.G. Anilkumar
01. 03.02.2022 Ms. Umadevi Anilkumar 100%

ix. Internal Complaints Committee

i) Description & Terms of reference

The Company has constituted and maintained competant and qualified Internal Complaints Committee by considering the provisions of the Sexual Harrasment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and amendments made thereunder. The functions of the Internal Complaints Committee include the following:

• Supervising the development and implementation of this policy, including the work of the Nodal Officer and Investigation Team, if any.

• Receive reports from the Nodal Officer concerning the conciliation, inquiry and resolution of complaints made pursuant to this policy on a quarterly basis.

• Responsibility for co-ordinating the conciliation and inquiry of any serious sexual harassment complaints concerning alleged violation of any laws, rules or regulations those apply to the Company.

ii) Composition

• Ensure all employees are encouraged to reinforce the maintenance of a work environment free from sexual harassment.

• Organise workshops and awareness programmes at regular intervals for sensiting the employees with the provisions of the said Act and orientation programmes for the members of the Committee on periodical basis.

• Periodically review the policy to consider whether ammendments are necessary, and if so revise the same and recommend to the Board for approval.

• Sign and submit copies of the reports of the investigations and such other supporting documents with any judicial, quasi judicial, regulatory, other government department or anyone concerned or interested in the matter signed by the Chairman of the Committee, whenever and wherever required

• Review and submit Annual Report for the approval of Board of Directors of the Company

The Internal Complaints Committee had been constituted during the year 2021-22 and the members of the Committee during the year under report are as follows:

Name & Designation Nature of directorship/ designation Position in Committee
Ms. Umadevi Anilkumar Non-Executive Director Chairman
Mr. Sam S. Maliakal Human Resource Manager Member
Ms. Simi Binil Human Resource Administration Manager of ICL Fincorp Limited Member
Adv. Sandhya Pran External Member Member

 

Events occurred after Balance Sheet date

Ms. Simi Binil who was a member of the Committee had resigned from the designation of Human Resource Administration Manager of ICL Fincorp Limited on 23rd day of April, 2022.

iii) Meetings & Attendance

During the year, the Internal Compliants Committee of the Company had convened 2 (two) meetings, details of the same are as mentioned below:

SI. No. Date of the meeting Present throughout the meeting Percentage of attendance
Ms. Umadevi Anilkumar
1. 15.09.2021 Mr. Sam S. Maliakal 100%
Ms. Simi Binil
Adv. Sandhya Pran
Ms. Umadevi Anilkumar
2. 19.03.2022 Mr. Sam S. Maliakal 75%
Adv. Sandhya Pran

x. IT Strategy Committee

i) Description & Terms of reference

The Company has constituted and maintained competent and qualified IT Strategy Committee by complying the provisions of the Companies Act, 2013, directions under Non-Banking Financial Company-Non Systemically Important Non-Deposit taking Company (Reserve Bank) Directions, 2016 and amendments made thereunder. The functions of the IT Strategy Committee include the following:

• Approving IT Strategy and Policy documents, implementation of process and practices, ensuring proper balance of IT investments for sustaining the Companys growth and identifying the potential risks and control of the Company.

• Develop internal framework, guidelines, plans of action and specimen formats supporting the implementation of IT policy by providing the best corporate practices and submit with the Board on annual basis for approval.

• Communicating significant IT risks to the Risk Management on periodic basis.

• Recommendation of a senior official in hierarchy of the Company, who possess adequate professional qualification and experience in the area of IT framework to the position of Chief Information Officer of the Company along with terms and conditions including a fixed tenure with the Board of Directors of the Company.

• Provide necessary directions to the Steering Committee from time to time to ensure orderly and efficient execution of the IT risk management measures in accordance with this Policy.

• Review and submit an Annual Report for the approval of Board of Directors of the Company along with such other roles and responsibilities of the Committee.

ii) Composition

The IT Strategy Committee had been constituted during the year 2021-22 and the members of the Committee during the year under report are as follows:

Name & Designation Nature of directorship/ designation Position in Committee
Mr. T.G. Babu Independent Director Chairman
Ms. Umadevi Anilkumar Non-Executive Director Member
Mr. Saseendran V. Independent Director Member

In addition to the above, persons holding the positions of the Finance Manager, Accounts Manager and Information Technology Manager from time to time shall be the permanent members of the Committee.

iii) Meetings & Attendance

During the year, the IT Strategy Committee of the Company had convened 2 (two) meetings, details of the same are as mentioned below:

SI. No. Date of the meeting Present throughout the meeting Percentage of attendance
Mr. T.G. Babu
1. 15.09.2021 Ms. Umadevi Anilkumar 60%
Mr. Saseendran V.
Mr. T.G. Babu
2. 19.03.2022 Ms. Umadevi Anilkumar 60%
Mr. Saseendran V.

*Position of Finance Manager was vacant during the year under report.

xi. IT Steering Committee

i) Description & Terms of reference

The Company has constituted and maintained competent and qualified IT Steering Committee by complying the provisions of the Companies Act, 2013, directions under Non-Banking Financial Company- Non Systemically Important Non-Deposit taking Company (Reserve Bank) Directions, 2016 and amendments made thereunder. The functions of the IT Steering Committee include the following:

• To provide oversight and monitoring of the progress of the project, including deliverables to be realized at each phase of the project and milestones to be reached according to the project timetable.

• Assist IT Strategy Committee in organizing IT training, awareness and orientation programmes at regular intervals for sensitizing the members of the Board and all Committees and employees at all levels with the IT framework of the Company.

• Formulate teams like operational staff, staff from Information System, Technology Support, Systems Development, network and Operations Services, Voice Communications, Key Business Units etc. for effective implementation of IT Policy.

• Support IT Strategy Committee to establish a framework for the Companys risk management process and implementation.

• Assist IT Strategy Committee in maintaining a culture of co-operation and openess between the Board of Directors, management, Statutory Auditors, Internal Auditors, System Auditors etc.

• Review and submit quarterly reports and Annual Report before IT Strategy Committee.

ii) Composition

The IT Steering Committee had been constituted during the year 2021-22 and the members of the Committee during the year under report are as follows:

Name & Designation Nature of directorship/ Designation Position in Committee
Mr. K.G. Anilkumar Managing Director Chairman
Ms. Umadevi Anilkumar Non-Executive Director Member

In addition to the above, persons holding the positions of the Finance Manager, Accounts Manager, Information Technology Manager, Human Resource Manager and Operations Manager from time to time shall be the permanent members of the Committee.

iii) Meetings & Attendance

During the year, the IT Steering Committee of the Company had convened 2 (two) meetings, details of the same are as mentioned below:

SI. No. Date of the meeting Present throughout the meeting Percentage of attendance
1. 15.09.2021 Mr. K.G. Anilkumar 40%
Ms. Umadevi Anilkumar
2. 19.03.2022 Mr. K.G. Anilkumar 40%
Ms. Umadevi Anilkumar

*Position of Finance Manager and Operations Manager were vacant during the year under report.

xii. Meeting of independent Directors

During the year, the Independent Directors of the Company had convened 1 (one) meeting, without presence of the Executive Director(s) and the Non-Executive Non-Independent Directors, details of the same are as mentioned below:

SI. No. Date of the meeting Present throughout the meeting Percentage of attendance
Mr. T.G. Babu
1. 19.03.2022 Mr. Saseendran V. 100%
Mr. A.A. Balan

g) Policy on appointment of Directors and remuneration

Pursuant to the provisions of Section 134(3)(e), salient features of the Companys policy on Directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under Section 178(3) is annexed as Annexure 2.

Your Board has adopted a revised Nomination and Remuneration Committee Policy on 27th day of August, 2021, which may be accessed on the Companys website at:

https://www.salemerode.com/downloads/policies/

Nomination%20and%20Remuneration%20Policy.pdf

h) Board Evaluation

Your Board has in place a well-defined performance evaluation framework for evaluating the performance of the Board, its Committees and of individual Directors, inter-alia, includes factors like participation at Board/Committee meetings, managing relationship with fellow Board Members, knowledge and skill, personal attributes like ethics and integrity, independent judgment with regard to corporate strategy, performance, risk management, corporate governance implementation and knowledge about the Company and external environment in which it operates, confidentiality level, adherence to the applicable code of conduct for Directors etc. The questionnaires and self assessment sheets used for performance evaluation, which were further reviewed and improvised during financial year are comprehensive for evaluation.

i) Corporate Social Responsibility Initiatives

The CSR Policy of the Company has been developed in accordance with section 135 of the Companies Act, 2013 and Schedule VII of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 and such other applicable rules, regulations and amendments made thereunder. The CSR Policy includes guiding principles for carrying out the CSR activities in accordance with the provisions contained in Act and for ensuring CSR activities are conducted in all respects according to ethical, professional & legal standards and enhancing social value of the Company. The CSR Policy of the Company outlines composition of CSR Committee, role and responsibilities of the CSR Committee, role and responsibilities of CSR Compliance Officer, CSR budget, designing & selection of CSR activities, implementation, evaluation, reporting etc.

The Company has contributed an amount of Rs. 8,48,000/- (Rupees Eight Lakhs and Forty Eight Thousand Only) to Covid related preventive measures like ventilators, vehicle services etc. to help Covid affected patients to get the treatment on emergency basis, which falls under item no. (i) of Schedule VII of the Act. The total amount to be spend towards CSR activities during the financial year was Rs.5,53,545/- (Rupees Five Lakhs Fifty Three Thousand Five Hundred and Forty Five Only), which is adjusted against the total contribution of Rs. 8,48,000/- (Rupees Eight Lakhs and Forty Eight

Thousand Only) and thereby created a surplus amount of Rs.2,94,455/- (Rupees Two Lakhs Ninety Four Thousand Four Hundred and Fifty Five Only) available for set off in succeeding financial years.

The Corporate Social Responsibility initiatives taken by the Company during the financial year is detailed in the report on CSR activity which is enclosed herewith as Annexure 3. As reported by the CSR Committee, the implementation and monitoring of the CSR Policy is in compliance with the CSR objectives and policy of the Company. Your Board has adopted a revised Corporate Social Responsibility policy on 27th day of August, 2021, which can be accessed on the Companys website at:

https://www.salemerode.com/downloads/policies/

Corporate%20Social%20Responsibilitv%20Policv.pdf

j) Directors Responsibility Statement

Pursuant to the requirements under Section 134 (3) (c) of the Companies Act, 2013 with respect to Directors Responsibility Statement, it is hereby confirmed:

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

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

c. that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. that the Directors had prepared the annual accounts for the year ended March 31,2022 on a going concern basis;

e. that the Directors have laid down internal financial controls for the Company and such internal financial controls are adequate and were operating effectively; and

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

k) Internal Financial Control

The Company has in place adequate internal controls with reference to financial statements and operations, which is commensurate with the size and nature of its business. The internal control system is supported by an internal audit department which conducts regular internal audits. Your Board had appointed M/s. Saji Mathew and Associates, Chartered Accountants (FRN: 018048S), Kochi as the Internal Auditors of the Company. The scope of work includes review of processes for safeguarding the assets of the Company, review of operational efficiency, effectiveness of systems and processes, and assessing the internal control strengths in all areas. During the year under review, internal controls were evaluated and no significant weakness was identified either in the design or operation of the control.

l) Frauds reported during the year

There were no frauds reported during the financial year.

XI. Deposits

Your Company has not accepted any Deposits from public within the meaning section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposit) Rules, 2014 during the year under review. The Company has not accepted any loan from Directors or relative of Directors during the year under report.

XII. Details of subsidiary/joint ventures/associate Companies

No Company became or ceased to be Subsidiary or Joint Venture or Associate of the Company during the year and till the date of the report. ICL Fincorp Limited, holding 75% of the Equity Shares continues to be the Holding Company.

XIII. Loans, guarantees or investments of the Company

During the financial year 2019-2020, the Company has extended unsecured loan of Rs. 20,65,00,000/- (Rupees Twenty Crores and Sixty Five Lakhs Only) to its Holding Company, ICL Fincorp Limited as Inter Corporate loan. Out of the said unsecured loan, the Company has received an interest repayment of Rs. 1,79,24,389/- (Rupees One Crore Seventy Nine lakhs Twenty Four Thousand Three Hundred and Eighty Nine Only) by the end of March 31, 2022 and the remaining interest of Rs. 4,99,318/- (Rupees Four Lakhs Ninety Nine Thousand Three Hundred and Eighteen Only) for the financial year 2021-2022 was received by May 07, 2022, thereby making a total interest payment of Rs. 1,84,23,707/- (Rupees One Crore Eighty Four Lakhs Twenty Three Thousand Seven Hundred and Seven Only).

The Company has further extended Term Loan of Rs. 6,00,00,000/- (Rupees Six Crores Only) to its Holding Company, ICL Fincorp Limited on an interest of 12.50% p.a. on Equated Monthly Instalment basis. Out of the said Loan Amount, the Company has received an interest repayment of Rs. 4,16,667/- (Rupees Four Lakhs Sixteen Thousand Six Hundred and Sixty Seven Only) by the end of March 31, 2022 and the remaining interest of Rs. 1,47,362/- (Rupees One Lakh Forty Seven Three Hundred and Sixty Two Only) for the financial year 2021-2022 was received by April 28, 2022, thereby making a total interest payment of Rs. 5,64,029/-(Rupees Five Lakh Sixty Four Thousand and Twenty Nine Only). All loans are being utilized by the Holding Company for general corporate and working capital purposes of the Company.

The Company has not given any guarantee or provided a security in connection with a loan to any other body corporate or any person in respect of a loan availed by them as per the provisions of the Companies Act, 2013.

XIV. Particulars of contracts or arrangements with related parties

The Company has complied with the provisions of Section 188 (1) of the Companies Act, 2013 and rules made thereunder with respect to the contracts or arrangements with related parties, details of the same is enclosed as Annexure 4.

XV. Particulars regarding conservation of energy, technology absorption and foreign exchange earnings & outflow

a) Conservation of Energy

Due to nature of business, energy conservation has limited applicability. However, the Company follows a practice of purchase and use of energy efficient electrical and electronic equipment and gadgets in its operations.

b) Technology Absorption

During the year under review there was no major technology absorption undertaken by the Company. However, the Company has been increasingly using information technology in its operations and promotes conservation of resources.

c) Foreign Exchange Earnings and Outgo

During the year under review, the Company has not entered into any transactions resulting in foreign exchange earnings or foreign exchange outflow.

XVI. Risk Management Policy

The Company has internal Risk Management Policy wherein all material risks faced by the Company are managed by competent personnel and the same is reviewed by Risk Management Committee on a periodic basis. The Company is generally exposed to the following types of risks.

 

a) Strategic Risks (External Risks)

Strategic Risks are potential business threats arising from events and trends that can adversely impact the Companys strategic growth trajectory and destroy shareholder value. Strategic risks includes the following:

a. Political/Government related Risks

b. Competition Risk

c. Reputational Risk

d. Force Majeure

e. Legal Risk

f. Regulatory & Compliance Risk

g. Credit Rates Risk

 

b) Operating Risks (Internal Risks)

Operating risk is the level of uncertainty associated with the core operations of a business. Operating risks includes the following:

a. Liquidity Risk

b. Currency Risk

c. Interest Rate risk

d. Credit Risk

e. Employee Risk

f. Information Technology Risk

g. Fraud Risk

The Risk Management Committee will periodically review these various risks faced by the Company and will advise the Board on risk mitigation plans on such risks. To cut it short, the risks and the mitigation plans are explained briefly as follows:

 

Political Government related risks

This includes changes in the government policies or any socio-political contingencies which may adversely affect the business of the Company. Mitigation Plan: Reviewing and monitoring the changes in rules and regulations in relation to NBFCs by the Government will help the Company to oversee the consequences and act accordingly to a certain extend.

 

Competition Risks

Major competitions faced by the Company are from other NBFCs, different types of banking Companies including public sector/private sector banks, Cooperative banks, foreign banks, India Post, local money lenders and other unauthorized financiers.

Mitigation Plan: Your Company is having a good internal quality check mechanism to keep a close watch on competitors strengths, weaknesses, competition dynamics etc. and focus on the awareness campaigns as per the directions of Reserve Bank of India among its employees, stakeholders etc. The marketing department will concentrate on these areas and ensure that these competitions do not affect the smooth functioning of the Company.

 

Reputational Risks

Damage to the trust and confidence of the stakeholders that may materially and adversely affect the business, future financial performance and results of operations of the Company constitute reputational risks of the Company.

Mitigation Plan: Ensures accuracy in its documents published through Website, Regulatory Bodies and Social media and keeping prompt compliance with regulatory directives and other laws both in letter and spirit.

 

Force Majeure

This includes Covid-19 outbreak in the society as well as within the Companys premises that adversely affect the financial position as well as the operating results of the Company Mitigation Plan: Your Company developed a disaster management plan with delegation of responsibility and set up Nodal Disaster Management Committee to prevent any such loss.

 

Legal, Regulatory and Compliance Risk

Being a NBFC, the Company has to follow various acts and any non-compliance in relation to the above areas will lead to huge penalty and loss of reputation for the Company.

Mitigation Plan: Your Company retained well- structured professionals including Chartered Accountants, Company Secretaries, Cost Accountants, Advocates, high profile retired hands etc. to ensure all the compliances are being done in a fair and timely manner.

 

Credit Rates Risks

Any, downgrade of credit ratings would increase borrowing costs and constrain access to debt and bank lending markets and thus, would adversely affect business.

Mitigation Plan: Oversee the factors determining the credit ratings of the Company will prevent downgrading of credit ratings.

 

Liquidity Risks

This includes financial risk due to uncertain liquidity. Liquidity Risk management in NBFCs are defined as the risk of being unable either to meet their obligations to depositors or unable to invest to meet unacceptable costs or losses occurred.

Mitigation Plan: Your Company is having a reliable Management Information System to provide timely and forward-looking information on the liquidity position of the Company and report to the Asset Liability Management Committee, both under normal and stress situations.

 

Interest Rate Risk

Interest rate risk is the risk where changes in market interest rates might adversely affect the Companys financial condition.

Mitigation Plan: Your Company estimates the behavioral pattern of various components of assets and liabilities on the basis of past data/empirical studies to classify assets and liabilities in the appropriate time buckets.

 

Credit Risk

Credit Risk is one of the major inevitable financial risks charged with every NBFC. It may be defined as the potential that a borrower or counter party will fail to meet their obligations in accordance with agreed terms.

Mitigation Plan: Well structed customer verification, recovery management etc. will support reduction of credit risks of the Company.

 

Employee Risk

The Company rely significantly on the performance of Board of Directors, Key Managerial Personnel and Top Level Management. Loss of any member from the said category may adversely affect business and results of operation. Identifying potential and caliber candidatures in right position of the Company and maintain them for future is another employee related risk.

Mitigation Plan: Equal opportunity in terms of position & remuneration, continuous training and development programs etc. will prevent the employee turnover of the Company.

 

Fraud Risk

Fraudulent risks arises from different types of frauds involving Directors, employees of the Company, employees of subsidiary or Group Companies, security holders, other agencies deployed for the Companys activities, whether working from any of the Companys offices or any other location, contractors, vendors, suppliers or agencies.

Mitigation Plan: Security arrangements both physical & electronic form and periodically check of all areas of operations through gold audit, internal audit etc. will help the Company to reduce the fraudulent risks.

In the opinion of the Board there are no risks which may threaten the existence of the Company.

XVII. Vigil Mechanism and Whistle Blower Policy

The Company has established a vigil mechanism to promote ethical behavior in all its business activities and has in place a mechanism for employees to report any genuine grievances, illegal, unethical behaviors, suspected fraud, violation of laws, rules and regulation or conduct to the Whistle Blower Officer or Audit Committee or the Board of Directors of the Company. The policy also provides for adequate protection to the whistle blower against victimization or discriminatory practices. Further, vigil mechanism ensures direct access to the higher levels of supervisors and/or to the Chairman of the Audit Committee, in appropriate or exceptional cases. The details of the Whistle Blower Policy are available on the website of the Company at www.salemerode.com.

XVIII. Significant and Material Orders passed by the Regulators

During the year under review, there were no significant or material orders passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in future.

XIX. Statutory Auditors

The Company in its 90th Annual General Meeting held on 25th day of September, 2021 had reappointed the Statutory Auditors, M/s Mohandas & Associates (Firm Registration No. 02116S), Chartered Accountants, Sree Residency, 3rd Floor, Press Club Road, Thrissur, Kerala - 680001 for 5 (five) consecutive financial years commencing from 2021-2022 to 2025-2026. M/s. Mohandas &

Associates fulfills the conditions specified in the Act, read with the Companies (Audit and Auditors) Rules, 2014 and Listing Regulations, for continuing as the Statutory Auditors of the Company and is independent of the management.

XX. Comments by the Board on qualification, reservation or adverse remark or disclaimer made by the Statutory Auditors

The Statutory Auditor has not made any qualification, reservation or adverse remark or disclaimer in the audit report for the financial year 2021-22.

XXI. Secretarial Auditor

Your Board has appointed Mr. Yacob P.O., Practising Company Secretary having office at 02nd Floor, Kalarikkal Building, Karingachira, Tripunithura, Kerala - 682301 as the Secretarial Auditor of the Company. The Secretarial Audit Report in form MR 3 is enclosed as Annexure 5 forms part of this report.

XXII. Comments by the Board on qualification, reservation or adverse remark or disclaimer made by the Secretarial Auditor:

The Secretarial Auditor has made few qualifications in the secretarial audit report for the financial year 2021-22. The said qualifications does not have any material adverse effect on the financial statements or on the functioning of the Company. However, your Board has taken a serious view and corrective measures has already been taken to avoid the same in future. Explanation to Secretarial Auditors qualifications is enclosed as Annexure 6.

XXIII. Compliance with Secretarial Standards

The Company has complied with all the provisions stipulated under Secretarial Standards issued by the Institute of Company Secretaries of India.

XXIV. Failure to implement any corporate action

The Company has completed corporate actions with respect to issue of Non-Convertible Debentures within the specified time limit. Other than the same, there was no other corporate actions like buy back of securities, payment of dividend declared, mergers and de-mergers, delisting, split and issue of any other securities occurred during the year under report.

XXV. Annual Return

The Annual Return in form MGT-7 as per Section 134(3)(a) & Section 92(3) of the Companies Act, 2013, read with rule 12 of Companies (Management & Administration) Rules, 2014 is available on the website of the Company at https://www.salemerode.com/downloads/policies/ MGT-7.pdf.

XXVI. Other Disclosures

a) The Consolidated Financial Statements will be presented by ICL Fincorp Limited, Holding Company.

b) The Company has taken sufficient measures to maintain good and well-structured Stakeholder relationship, Customer relationship, Environment, Sustainability and Health and Safety and various Committees were constituted and maintained to monitor the same.

c) The Company has convened its Annual General Meeting within stipulated time as specified under the Companies Act, 2013.

d) The cost records required to be maintained by the Companies pursuant to an order of the Central Government is not applicable to the Company.

e) General Disclosures

i. The Company has not issued any Equity Shares or Preference Shares or any other securities which carry a right or option to convert such securities into shares;

ii. There was no issue of Equity Shares with differential rights as to dividend, voting or otherwise;

iii. There was no issue of Sweat Equity Shares to Directors or employees of the Company under any scheme;

iv. There was no raising of funds/issue of shares through preferential allotment, rights issue or qualified institutional placement;

v. There was no options in respect of Employee Stock Options Scheme(s) granted, lapsed, excercised etc;

vi. There was no shares held in trust for the benefit of employees;

vii. The Company has not issued any warrants during the year;

viii. There were no voting rights which are not directly exercised by the employees in respect of equity shares for the subscription/purchase of which loan was given by the Company (as there is no scheme pursuant to which such persons can beneficially hold shares as envisaged under section 67(3)(c) of the Act);

ix. There was no suspension of trading of securities of the Company;

x. There was no revision made in financial statements or the Boards Report of the Company in respect of any of the three preceding financial years;

xi. There was no change in financial year;

xii. There was no activities carried out in relation to acquisition, merger, expansion, modernization and diversification;

xiii. There was no activities carried out in relation to developments, acquisition and assignment of material Intellectual Property Rights;

xiv. The Company has not inducted any strategic and financial partners during the year;

xv. The Company has not delisted its Equity Shares, during the year or till the date of the report;

xvi. The Company has not reclassified or sub-divided the Authorised Share Capital;

xvii. There was no reduction of share capital or buy back of shares occurred during the year;

xviii. There was no change in the capital structure resulting from restructuring; and

xix. There was no change in voting rights of shareholders of the Company.

XXVII. Disclosure under the Sexual Harassment of Women at the Work Place (Prevention, Prohibition and Redressal) Act, 2013

The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has not received any complaint of sexual harassment during the year under report.

XXVIII. Compliance with NBFC Regulations

Your Company has complied and continues to comply with all the regulatory requirements applicable to Non- Banking Financial Institutions as per Reserve Bank of Indias guidelines pertaining to Non-Performing Assets, Know Your Customer, Loan to Value, Fair Practices Code, Capital Adequacy, Leverage Ratios etc.

XXIX. Particulars of Employees

The Company does not have any employee whose remuneration exceeding the limits prescribed under section 197 (12) of the Companies Act, 2013 read with rule 5 (2) of the Companys (Appointment and Remuneration of Managerial Personnel Rules), 2014. Further details are given in Annexure 7 forming part of the Board Report.

XXX. Remuneration received by Managing/Whole time Director from holding or subsidiary Company

Mr. K.G. Anilkumar, Managing Director was paid sitting fees of Rs. 32,700/- (Rupees Thirty-Two Thousand and Seven Hundred Only) as sitting fees for attending Board Meetings of the Company and was not paid any other commission or sitting fees for attending Committee Meetings of the Company and neither was he paid any remuneration in the previous financial year. The Managing Director of the Company is also the Managing Director of ICL Fincorp Limited, Holding Company and has received a total remuneration of Rs. 1,20,00,000/- (Rupees One Crore and Twenty Lakhs Only) and Rs.

57,000/- (Rupees Fifty Seven Thousand Only) as sitting fees for attending Board Meeting from the Holding Company during the financial year 2021 -22.

XXXI. Other Matters

a) Statement of deviation or variation

The Company has utilized the funds raised by way of issue of Unlisted Redeemable Secured NonConvertible Debentures for the purpose as mentioned in the private placement offers.

b) Corporate Governance

Pursuant to regulation 15 of Chapter IV of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 Corporate Governance compliances as specified in regulation 17 to regulation 27, clauses (b) to (i) and (t) of subregulation (2) of regulation 46 and para C, D, and E of Schedule V is not applicable to the Company and a declaration in this effect is submitted with the Stock Exchange at regular intervals. However, your Board ensures good corporate governance in the Company.

c) Details of auctions

There was no public auctions of gold pledged with the Company occurred during the year under report.

d) Capital Adequacy Ratio

The Company maintain Capital Adequacy Ratio ("CRAR") well above the statutory requirement and achieved a CRAR of 18.52% in financial year 2021 - 22 compared to 18.79% in the previous financial year. The CRAR for tier I assets stood at 18.50% in financial year 2021-22 compared to 18.79% in the previous financial year. The CRAR for tier II assets rose from 0% to 0.02% in financial year 2021-22.

e) Listing

Equity Shares of your Company are listed only on BSE Limited. Your Company has paid applicable listing fees to Stock Exchange.

f) Grievance Redressal

The Company has designated Ms. Rayanath Ali, Secretary to CMD as Customer Grievances Redressal Officer. The communication details for reporting grievances is as follows:

Ms. Rayanth Ali

Secretary to CMD

Salem Erode Investments Limited,

V.K.K. Building, Main Road,

Irinjalakuda - 680121

Phn No.0480 2828071,

E-mail id: grievanceredressal@salemerode.com

The Company has designated Mr. Sam S. Maliakal, Human Resources Manager as Employee Grievances Redressal Officer. The communication details for reporting grievances is as follows:

Mr. Sam S. Maliakal,

Human Resource Manager,

Salem Erode Investments Limited,

V.K.K Building, Main Road, Irinjalakuda - 680121

Phn No. 0480 2828071,

Mail id: hrm@iclfincorp.com

XXXII. Acknowledgement

The Board wishes to place on record its sincere appreciation to the Companys Customers, Central and State Government Bodies, Auditors, Legal Advisors, Consultants, Registrar and Bankers for their continued support to the Company during the year under report. The Board also expresses its sincere gratitude to the members, other security holders and employees of the Company for their continued trust, co-operation and support.

By order of Board of Directors,
For Salem Erode Investments Limited
Sd/- Sd/-
K.G. Anilkumar Umadevi Anilkumar
Place: Irinjalakuda Managing Director Director
Date: 23.08.2022 (DIN: 00766739) (DIN: 06434467)