Shriram Transport Finance Company Ltd Directors Report.

To the Members,

Your Directors have pleasure in presenting their Forty-Second Annual Report and the Audited Statements of Accounts for the financial year ended March 31, 2021.

FINANCIAL HIGHLIGHTS

Particulars 2020_21 2019_20
Profit Before Depreciation And Taxation 3,415.37 3,579.72
Less: Depreciation, amortization and impairment 137.36 141.05
Profit Before Tax 3,278.01 3,438.67
Less: Provision for taxation 790.75 936.83
Profit A_er Tax 2,487.26 2,501.84
Add: Balance brought forward from previous year 9,257.73 8,070.47
Balance available for appropriation 11,744.99 10,572.31
Appropriations
General reserve 248.73 250.19
Statutory reserve 497.46 500.38
Debenture redemption reserve 311.00 235.79
Dividend on equity shares of Rs.10/- each 303.67 272.26
Tax on dividend - 55.96
Balance carried to 10,384.13 9,257.73

CREDITRAT ING

COVID -19 pandemic adversely affected almost all sectors of Indian economy. is led to revision of the Companys Ratings to negative outlook/Credit Watch by the Rating Agencies which felt that the weak macroeconomic environment and post imposition of lockdown by the government, the Companys asset quality would be under pressure.

However, post the moratorium period and with the gradual reopening up of the economy, the monthly collection efficiency jumped to almost 95% in September 2020. is improvement was sustained with collection efficiency crossing 100% in December 2020. During the second half of the Financial Year 2020-21, the Company regained its Ratings due to its sustained earnings profile, improvement in asset quality closer to pre-pandemic level, improvement in month-on-month collection efficiencies, continued strong market position in the pre-owned vehicle finance segment, long track record in the vehicle financing business, understanding of the target customer segment and relationship based lending model.

restructuring in the loan portfolio was at much lower level than initial estimate of 2.5%.

Gross Stage 3 metrics stood at 8.36% and 7.06% as of March 31, 2020 and March 31, 2021 respectively.

Despite business volumes dropping till the first half of fiscal 2021 and provision of Rs.2,591.48 crores towards Covid related provisioning from Q4FY20 till Q4FY21, the Companys earnings profile remains resilient. This comes on the back of the high yields on the portfolio given the focus of STFCL on pre-owned vehicle financing.

Company demonstrated its ability to raise funds from diversified resources including Rights Issue of Equity shares, issuance of Senior Secured Notes in the international market under its USD 3 Billion GMTN Programme, issue of Redeemable Non-Convertible Debentures (NCDs) on private placement basis, despite the challenges of weak macroeconomic environment. is fund raising coupled with higher Collections enabled the Company to sustain good liquidity throughout the Financial Year 2020-21. The credit costs, however, had slightly increased to 2.48% in the

Financial Year 2020-21 from 2.43% in the Financial Year 2019-20.

credit rating positions of the Company was as under:

Name of Rating Agency_ Instrument Ratings as on March 31, 2021
CRISIL Bank Loan Long Term CRISIL AA+/Stable
Bank Loan Short Term_______ CRISIL A1+
Long Term Principal Protected Market CRISIL PP-MLD AA+r/Stable
Linked Debentures
Non-Convertible Debentures__ CRISIL AA+/ Stable
Subordinated Debt___ CRISIL AA+/Stable
Short Term Debt____ CRISIL A1+
Fixed Deposit__ CRISIL FAAA /Stable
India Ratings & Research Private Limited_ Non-Convertible Debentures____ ________ IND AA+/ Stable outlook
Structured Non-Convertible Debentures Provisional IND AAA (CE)/ Stable
Dual Recourse Bond IND AAA (CE)/ Stable
Principal Protected Market Linked IND PP-MLD AAA(CE)emr/ Stable
Debentures (Dual Recourse)
Subordinated Debt____ IND AA+/Stable outlook
Commercial Paper_ IND A1+
CARE Non-Convertible Debentures______ ____ CARE AA+/Stable
Subordinated Debt____ CARE AA+/ Stable
Commercial Paper______ CARE A1+
ICRA Fixed Deposit MAA+ with Stable
Non-Convertible Debentures Provisional [ICRA] AAA (CE) (Stable)
Standard & Poors Ratings Long-Term Issuer Credit Rating BB -/ Stable
Short-Term Issuer Credit Rating B
Senior Secured Notes BB-
Fitch Ratings Long-Term Issuer Default Rating__ BB /Negative
Short-Term Issuer Default Rating_ B
Senior secured Long Term Rating BB
Local Currency Long Term Issuer Default BB /Negative
Rating

DIVIDEND

Board of Directors approved payment of two interim dividends for the Financial Year 2020-21:-The first interim dividend of Rs. 6/- per equity share of Rs.10/- each fully paid-up (60%) was declared on October 29, 2020 and the second interim dividend of Rs. 6/- per equity share of Rs.10/- each fully paid-up (60%) was declared on March 25, 2021.

The first interim dividend and second interim was paid to eligible Members on November 26, 2020 and April 16, 2021 respectively. total interim dividend involved a cash outflow of Rs.303.67 crores. interim dividend was paid to Members, subject to deduction of tax at source as per the applicable rate.

The Board of Directors has recommended a final dividend of

Rs. 6/- per equity share of nominal face value of Rs.10/- each fully paid up i.e. 60 %, for the Financial Year 2020-21 subject to approval by Members in the ensuing 42nd Annual General Meeting (42nd AGM) of the Company. With this the total dividend for the Financial Year 2020-21 will be Rs. 18/- per share (i.e. 180 %).

Dividend Distribution Policy forms part of the Corporate Governance Report and is also available on the website of the Company at https://cdn.stfc.in/common/Dividend-Distribution-Policy.pdf .

TRANSFERTO RE SERVES

amounts proposed to be transferred to General Reserve, Statutory Reserve and Debenture Redemption Reserve are mentioned in the Financial Highlights under the heading ‘Appropriations.

CAPITAL ADEQUACY RATIO

Your Companys total Capital Adequacy Ratio (CAR), as of March 31, 2021, stood at 22.50% of the aggregate risk weighted assets on and risk adjusted value of the off- items, which is above the regulatory minimum of 15%.

Capital Adequacy Ratio has improved due to further strengthening of capital through Rights Issue of Equity shares in the month of August, 2020 called Tier 1 Capital.

Tier 1 ratio as on March 31, 2021 improved to 19.94% as against 18.13% as on March 31, 2020. companys overall gearing (Debt/Tangible Net-worth) as on March 31, 2021 improved to 5.20x as against 5.45x as on March 31, 2020.

Tier 2 ratio as on March 31, 2021 was 2.56% as against 3.86% as on March 31, 2020.

OPERATIONS AND COMPANYS PERFORMANCE

For the Financial Year ended March 31, 2021, your Company earned Profit Before Tax of Rs. 3,278.01 crores as against Rs.3,438.67 crores in the previous Financial Year and the Profit After Tax of Rs. 2,487.26 crores as against Rs. 2,501.84 crores in the previous Financial Year.

total income for the year under consideration was Rs. 17,436.40 crores and total expenditure was Rs. 14,158.39 crores.

Mobilization of funds from following sources/instruments was as under:

(Rs. in crores)
Sr. No. Particulars 2020-21 2019-20
1 Non-Convertible Debentures – Institutional 5,133.30 2,960.30
2 Term Loans from Banks – Secured 17,650.36 19,121.64
3 Term Loans from Financial Institutions/ corporates – Secured 3,550.00 -
4 Commercial Papers 200.00 4,130.00
5 Fixed Deposit 6,927.36 4,226.21
6 Inter Corporate Deposits 176.90 207.40
7 Non-Convertible Debentures Public Issue- Secured - 533.61
8 External Commercial Borrowings (Loan) - 1,636.10
9 U.S. Dollar Senior Secured Notes 5,302.85 8,744.63
10 Cash Credit 4,197.50 784.00

total Assets Under Management had increased to Rs. 117,242.82 crores from Rs. 109,749.24 crores. During the

Financial Year 2020-21, the Company securitized its assets worth Rs. 13,622.00 crores (accounting for 11.62% of the total assets under management as on March 31, 2021) as against Rs. 16,581.13 crores during the Financial Year 2019-20.

With securitisation, the Company ensures better borrowing profile, leading to lower interest liability owing to its lending to priority sector as per RBI.

outstanding direct assigned portfolio stood at Rs. 1,051.23 crores as on March 31, 2021.

The commercial vehicles. relationship based business model enabled us to maintain the leadership position in the pre-owned commercial vehicles financing segment. For further market penetration, the Company opened 59 new Branches and other offices. With this the total number of Branch and other offices across India has now increased to 1,817.

Companys judicious liquidity management framework enabled maintaining adequate liquidity throughout the Financial Year 2020-21 to meet its liabilities, despite challenging pandemic conditions and offering moratoriums to its customers.

ISSUEO F SECURITIES Share Capital

In order to augment capital base, the Company offered Company continued its focus on financing of pre-owned through Rights Issue 2,61,78,777 Equity Shares of face value of Rs. 10 each to the Eligible Equity Shareholders on Record Date at Issue price of Rs. 570/- per share (including premium of Rs. 560/- per Equity share) aggregating to Rs.1,492.19 crores (including share issue expenses of Rs. 19.55 crores), in the ratio of 3 fully paid-up Rights Equity for every 26 Equity Shares held by the Eligible Equity Shareholders on Record Date.

Companys Rights Issue received good response from Foreign Portfolio Investors, Institutional and retail shareholders/investors and was oversubscribed by 1.65 times of the issue size.

Company received 24,081 applications for 4,31,87,941 shares aggregating to Rs. 2,461.71 crores against 2,61,78,777 shares offered in the Rights Issue.

Rights Issue which was opened on July 16, 2020 was closed on the notified date i.e. approval from stock exchanges for listing on August 7, 2020 and trading of the Rights Equity shares on August 10, 2020.

Subscribed and Paid up Equity Share Capital of the Company stood at Rs.253.06 crores consisting of 253,061,513 fully paid-up equity shares of face value of Rs.10/- each as on March 31, 2021.here was no convertible instrument outstanding as on March 31, 2021. None of the Directors of the Company holds instruments convertible into Equity Shares of the Company.

Issue of U.S. Dollar Senior Secured Notes (Social Bonds)

Company updated USD 3 Billion Global Medium Term Note (GMTN) Programme on December 24, 2020. On January 13, 2021, the Company issued USD 500,000,000 4.40 percent Senior Secured Notes due 2024 (Social Bonds) under the USD 3 Billion GMTN

Programme to the Qualified Institutional Buyers (QIBs) under the Rule 144A of the U.S. Securities Act 1933 and to the eligible investors outside United States under Regulation S of the U.S. Securities Act 1933.

Social Bondsgotgoodresponsefrominvestorswithoversubscription of >2x.

Further on March 31, 2021, the Company issued USD 225,000,000 Senior Secured Notes (to be consolidated and form a single series with the USD 500,000,000 4.40 per cent Senior Secured Notes due 2024 issued on January 13, 2021) under the USD 3 Billion GMTN Programme.

proceeds of Senior Secured Notes issued have been (in case of issuance of Social Bonds on January 13, 2021) / are being (in case of issuance of Social Bonds on March 31,2021) utilized by the Company to finance investments in Eligible

Social Projects in accordance with International Capital Market Association Social Bond Principles 2018 as permitted by the ECB Guidelines.

said Social Bonds are listed on the Singapore Exchange Securities Trading Limited. All Senior Secured Notes/Social Bonds issued under the USD 3 Billion GMTN Programme are fully hedged and would not involve any foreign exchange risk to the Company.

FIXED DEPOSITS

As on March 31, 2021, there were 8,897 fixed deposits aggregating to Rs. 106.74 crores that have matured but remained unclaimed. There were no deposits, which were 30, 2020. The Company has received claimed but not paid by the Company.

unclaimed deposits have since reduced to 5,912 deposits amounting to Rs. 60.30 crores. Appropriate steps are being taken continuously to obtain the depositors instructions so as to ensure renewal/ repayment of the matured deposits in time.

DIRECTORS

Mr. Puneet Bhatia (DIN 00143973), non-executive non–independent director ceased to be Director of the Company on expiry of his tenure on August 19, 2020 as the ordinary resolution for his re-appointment as director retiring by rotation was not passed by requisite majority in the last 41st Annual General Meeting held on 19th August, 2020.

Board of Directors have placed on record its appreciation of the invaluable services rendered by Mr. Puneet Bhatia.

Retirement of director by rotation

Mr. D. V. Ravi (DIN 00171603), non-executive non– independent director of the Company will retire by rotation at the ensuing 42nd Annual General Meeting (AGM) and being eligible, offers himself for re-appointment. Mr. D. V. Ravi is Managing Director of Shriram Capital Limited, promoter of the Company. Mr. D. V. Ravi has wide experience in corporate strategy and services, corporate finance, information technology and process activities of the Shriram Group. His profile is given in the Notice of the 42nd Annual General Meeting, forming part of this Annual Report.

Nomination and Remuneration Committee and the Board of directors recommend to Members passing of the ordinary resolution for re-appointment of Mr. D. V. Ravi as director retiring by rotation.

Declaration by Independent Directors

Pursuant to the provisions of Section 149 of the Companies Act, 2013 ("the Act"), the independent directors have submitted declarations that each of them meet the criteria of independence as provided in Section 149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of the SEBI Listing Regulations. There has been no change in the circumstances affecting their status as independent directors of the Company.

Policies on appointment of Directors and Remuneration

The management of the Company is immensely benefitted from the guidance, support and mature advice from members of the Board of Directors who are also members of various committees. Board consists of directors possessing diverse skill, rich experience to enhance quality of its performance. Company has adopted a Policy on Board Diversity formulated by the Nomination and Remuneration Committee. Companys Remuneration Policy has laid down a framework for remuneration of Directors (Executive and Non-Executive), Key Managerial Personnel and Senior Management Personnel. These Policies are available on the Companys website at the weblink: https://bit.ly/2QQvCg4 and https://bit.ly/3hREkWC. Company has formulated policy on Succession Planning for Directors and Key Managerial Personnel for continuity and smooth functioning of the Company.

Number of Meetings of the Board

9 (Nine) Board Meetings were held during the Financial Year.

details of the Board and various Committee meetings are given in the Corporate Governance Report.

Performance evaluation at Board and Independent Directors Meetings

Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its various Committees for the Financial Year 2020-21. The evaluation was conducted on the basis of a structured questionnaire which comprises performance criteria such as performance of duties and obligations, independence of judgement, level of engagement and participation, attendance of directors, their contribution in enhancing the Boards overall effectiveness, etc. Board has expressed their satisfaction with the evaluation process. observations made during the evaluation process were noted and based on the outcome of the evaluation and feedback of the Directors, the Board and the management agreed on various action points to be implemented in subsequent meetings.

evaluation process endorsed cohesiveness amongst directors, smooth communication between the Board and the management and the openness of the management in sharing the information with the Board and placing various proposals for the Boards consideration and approval. Independent Directors met on January 29, 2021 without the presence of other directors or members of Management. All the Independent Directors were present at the meeting. In the meeting, the independent directors reviewed performance of Non–Independent Directors, the Board as a whole and Chairman. They assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board. minutes of the Independent Directors meeting were placed before the Board Meeting held on March 25, 2021 and the same were noted by the Board.

Independent Directors expressed satisfaction over the performance and effectiveness of the Board, individual Non-Independent Directors and the Chairman. Considering the unhealthy and stressful background of lockdown the performance of the Managing Director and Chief Financial Officer was found to be outstanding and exemplary in cutting costs, ensuring collections and team building. Independent Directors also expressed improvement in the flow of information between the company management and the Board. Management took note of various suggestions made in the meeting of Independent Directors, including IT and Cyber security systems, CSR projects, benchmarking of interest rates on fixed deposits etc.

Independent Directors played active role in the committee meetings including Audit Committee. Audit Committee which consists of four independent directors held separate meetings in addition to quarterly meetings to discuss related party transactions, review policies of the Company, approval of Budget for Financial Year 2021-22. The members of the

Audit Committee also had separate meetings with joint statutory auditors and Rating Agencies in compliance with the applicable law and SEBI Circular.

KEY MANAGERIAL PERSONNEL

ere was no change (appointment/resignation) in the Key Managerial Personnel namely, Managing Director, the Chief Financial Officer and the Company Secretary of the Company during the financial year. Based on the recommendation of the Nomination and Remuneration Committee, the Board of Directors have elevated and re-designated Mr. Umesh Revankar as Vice Chairman and Managing Director with effect from April 01, 2021. Board of Directors also elevated and re-designated Mr. Parag Sharma, as Joint Managing Director and Chief Financial Officer, not being part of Board of Directors, with effect from April 01, 2021.

ELEVATION OFS ENIOR MANAGERIAL PERSONNEL

Based on recommendation of the Nomination and Remuneration Committee and approval of the Board of Directors, Mr. S. Sunder, Mr. P. Sridharan, Mr. Sudarshan Holla and Mr. Nilesh Odedara have been elevated as Joint Managing Directors, not being part of Board of Directors, with effect from April 01, 2021.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) and Section 134(5) of the Companies Act, 2013, the Directors confirm that, to the best of their knowledge and belief:

a) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) at such accounting policies as mentioned in note 1 to 7 to the financial statements have been selected and applied consistently, and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2021 and of the profit of the Company for the year ended on that date;

c) at proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) annual accounts have been prepared on a going concern basis.

e) The Company had followed the internal controls laid down by the directors and that such internal financial controls are adequate and were operating effectively.

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

RBI GUIDELINES

Company continues to comply with all the requirements prescribed by the Reserve Bank of India from time to time.

BUSINESS RESPONSIBILITY REPORT

Pursuant to Regulation 34(2)(f) of the Listing Regulations, the Business Responsibility Report is annexed and forms part of the Annual Report.

CORPORATE SOCIAL RESPONSIBILITY _CSR_

The to this report as Annexure-I. composition of CSR Committee and the details of the ongoing CSR projects/ programs/activities are included in the CSR report/section. CSR Policy is uploaded on the Companys website at the web link: https://bit.ly/3wnTqHg.

ANNUAL RETURN

In accordance with the provisions of Section 92(3) of the Act, Annual Return of the Company is hosted on website of the

Company at https://bit.ly/2RMEkMZ

DISCLOSURES AS PER THE SECTION 134 OF THE COMPANIES ACT, 2013 READ WITH RULE 8 OF THE COMPANIES _ACCOUNTS_ RULES, 2014 Conservation of Energy, Technical Absorption and Foreign Exchange Earnings and Outgo

information pursuant to Section 134(3)(m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 is as follows: a. Company has no activity involving conservation of energy or technology absorption. b. Com pany does not have any Foreign Exchange Earnings. financial c. Outgo under Foreign Exchange – Rs. 23.29 crores.

Loans, guarantee or investments in securities

loan made, guarantee given or security provided in the ordinary course of business by a NBFC registered with Reserve Bank of India are exempt from the applicability of provisions of Section 186 of the Act. As such, the particulars of loans and guarantee have not been disclosed in this Report.

During the year under review the Company has invested surplus funds in various securities in the ordinary course of business. For details of the investments of the Company refer to Note 13 of the financial statements.

Contracts or Arrangements with Related Parties

All the related party transactions were entered in ordinary course of business on an arms length basis. Hence, no disclosure in Form AOC-2 are necessary and the same does not form part of this report. For details of the transactions with related party entered in ordinary course of business on an arms length basis refer to the Note 50 to the financial statements.

As required under the Master Direction - Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016, the policy on materiality of related party transactions and dealing with related party transactions as approved by the Board is uploaded on the Companys website at the web link: https://bit.ly/3vfdL1c.

There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. None of the Directors has any pecuniary relationships or transactions vis--vis the Company save and except the payment of sitting fees and commission paid to Independent Directors.

Risk Management

Companys Risk Management Policy deals with identification, mitigation and management of risks across the organization. same has been dealt with the Management Discussion and Analysis annexed to the Annual Report.

Whistle Blower Policy/ Vigil Mechanism

Companys Whistle Blower policy provides a mechanism under which an employee/director of the Company may report unethical behaviour, suspected or actual fraud, violation of code of conduct and personnel policies of the Company. Vigil Mechanism ensures standards of professionalism, honesty, integrity and ethical behaviour. Whistle Blower Policy/Vigil Mechanism is uploaded on the Companys website: https://bit.ly/3uy3dZY

Financial summary/highlights

Income for the Financial Year 2020-21 increased by 5.19% to Rs.17,436.40 crores as compared to Rs.16,575.76 crores in the Financial Year 2019-20;

Income from operations for the Financial Year 2020-21 was Rs.17,420.45 crores as compared to Rs.16,555.49 crores in the Financial Year 2019-20, a growth of 5.22 %; Profit before tax for the Financial Year 2020-21 was Rs.3,278.01 crores as compared to Rs.3,438.67 crores in the Financial Year 2019-20;

Profit after tax for the Financial Year 2020-21 was Rs.2,487.26 crores as compared to Rs.2,501.84 crores in 2019-20. Our interest income increased by 5.29% from Rs.16,267.46 crores in the year ended March 31, 2020 to Rs.17,128.14 crores in the year ended March 31, 2021.

Finance costs increased by 9.48% from Rs.8,270.26 crores in the year ended March 31, 2020 to Rs.9,054.26 crores in the year ended March 31, 2021.

Other expenses increased from Rs.863.20 crores in the year ended March 31, 2020 to Rs. 863.23 Crores in the year ended March 31, 2021.

Our fees and commission income decreased by 40.58 % from Rs. 194.97 crores in the year ended March 31, 2020 to Rs. 115.86 crores in the year ended March 31, 2021.

Internal Financial Control System

The Companys well-defined organizational structure, documented policy guidelines, defined authority matrix and internal financial controls ensure efficiency of operations, protection of resources and compliance with the applicable laws and regulations. Moreover, the Company continuously upgrades its systems and undertakes review of policies.

The internal financial control is supplemented by extensive internal audits, regular reviews by management and standard policies and guidelines to ensure reliability of financial and all other records to prepare financial statements and other data.

Audit Committee of the Board reviews internal audit reports given along with management comments. Audit Committee also monitors the implemented suggestions.

Composition of Audit Committee

Audit Committee comprised of following directors namely, Mr. S. Sridhar – Chairman, Mrs. Kishori Udeshi, Mr. Pradeep Kumar Panja and Mr. S. Lakshminarayanan.

Others

There were no material changes and commitments, affecting the financial position of the Company which has occurred between the end of the financial year of the Company and the date of the Directors report. impact of pandemic has been dealt with in the Management Discussion and Analysis annexed to the Annual Report.

There are no significant and the regulators or courts or tribunals impacting the going concern status and companys operations in future. For other orders, please refer to Note 49 of the financial statement containing details of the contingent liabilities.

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

No equity shares (including sweat equity shares) were issued to employees of your company, under any scheme.

The Company has not resorted to any buy back of its equity shares during the year under review.

There was no change in the nature of business of the

Company.

There was no fraud reported by the Auditors of the

Company under the Section 143(12) of the Act to the Audit Committee.

Your company adopted ISO 27001 standards, practices its processes and upgrade its implementation on regular basis to maintain the information security as per the market trend. Company is prepared to face emerging cyber threats such as Zero-day attacks, remote access threats and targeted threats. Your company has established disaster recovery centres and various security controls in place to mitigate risks, also safeguard the Company against security breaches and technological lapses located in different seismic zones, periodic upgrading of servers and data storage, adopting new technology for data management. On regular basis different type of system audits is conducted by the external and internal auditors. Board represented strategy committee governs the security policies and its implementation as per the company corporate governance process. material orderspassedby The Company has a policy for prevention of Sexual

Harassment for Women at Workplace. An Internal Complaints Committee has been constituted in line with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (‘POSH). During the year under review, there was one case filed under the said Act and it was settled. The

Company also conducted an exhaustive video based learning module for all employees from awareness and compliance perspective on POSH.

Disclosure regarding details relating to deposits covered under Chapter V of the Act is not applicable since our company is a Non-Banking Financial Company regulated by Reserve Bank of India. Company accepts deposits as per Master Direction - non-banking financial companies acceptance of public deposits

(Reserve Bank) Directions, 2016.

The Company has obtained a certificate from the statutory auditor certifying that the Company has complied with the requirements of the Regulation 9 of the Master Direction – Foreign Investment in India with regard to downstream investments.

The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings, Annual General Meetings and Dividend.

Company, in the capacity of Financial Creditor, has not filed any applications with National Company Law

Tribunal under the Insolvency and Bankruptcy Code,

2016 during the financial year 2020-21 for recovery of outstanding loans against any customer being Corporate Debtor.

The details of difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof. –Not Applicable

CONSOLIDATED FINANCIAL STATEMENTS

ere was no entity which became or ceased to be subsidiary, joint venture or associate company of the Company during the financial year ended March 31, 2021.

Shriram Automall India Limited (SAMIL), associate of the Company provides fee-based facilitation services for the sale of pre-owned commercial and passenger vehicles, agricultural and construction equipment, dealers stock of pre-owned two wheelers, etc. repossessed by banks and financing companies.

SAMIL has 89 Automalls located across the Country. As per the unaudited financial statements of SAMIL for the year ended March 31, 2021, its total income from operations and Net Profit was Rs. 158.96 crores and Rs. 25.96 crores respectively, on consolidated basis. The said financial statements of SAMIL will be made available to Members on request. Pursuant to Section 129 of the Act read with Rule 5 to the Companies (Accounts) Rules, 2014, the statement containing salient features of the financial statement of associate company in Form AOC 1 forms part of this Annual

Report. The consolidated financial statements forming part of this Annual Report are prepared in compliance with the applicable Indian Accounting Standards and Listing Regulations. Pursuant to the provisions of Section 136 of the Act, this Annual Report is available on the website of the Company https://www.stfc.in/investors/annual-reports/.

PARTICULARS OF EMPLOYEES

Company has not employed any individual whose remuneration falls within the purview of the limits prescribed under the provisions of Section 197 of the Act, read with Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Disclosure required as under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to this report as Annexure-II.

AUDITORS

Pursuant to the provisions of Section 139 of the Act and the Companies (Audit and Auditors) Rules, 2014, M/s Haribhakti & Co. LLP, Chartered Accountants, Mumbai (Firm Registration No. 103523W/W100048) and M/s Pijush Gupta & Co. Chartered Accountants, Gurugram (Firm Registration No. 309015E) had been appointed as Joint Statutory Auditors of the Company at the 38th AGM held on June 29, 2017 to hold office from the conclusion of the 38th AGM until the conclusion of the 43rd AGM of the Company.

They have also confirmed that they hold a valid peer review certificate as prescribed under Listing Regulations. The

Company seeks approval of Members every year at the Annual General Meeting for payment of remuneration (exclusive of certification fee, goods and services tax and reimbursement of out of pocket expenses) to the Joint Statutory Auditors for the financial year based on recommendation of the Audit

Committee and approval of the Board of Directors pursuant to Section 142 and other applicable provisions of the Act. Reserve Bank of India (RBI) issued guidelines on appointment of statutory auditor (s) by Non-Banking Financial Company (NBFC) vide Circular RBI/2021-22/25 Ref. No. DoS. CD.ARG/SEC.01/08.91.001/2021-22 dated April 27, 2021 (‘Circular/Guidelines). RBI has given flexibility to Non- Banking Financial Companies (NBFCs) to adopt these

Guidelines from H2 (second half) of the Financial Year 2021-

22 in order to ensure that there is no disruption. Accordingly, the NBFCs shall appoint Statutory Auditors for a continuous period of three years from Financial Year 2021-22.

current Joint Statutory Auditors of the Company have conducted audit of the accounts of the Company for four consecutive financial years ending March 31, 2021. In order to give time to NBFCs for smooth transition, Finance Industry Development Council (FIDC), a representative body of asset and loan financing NBFCs, has made request to RBI that the

Circular be made applicable to NBFCs from April 1, 2022 i.e. from Financial Year 2022-23.

In the event RBI accedes to the request of FIDC, it is proposed that the current Joint Statutory Auditors of the Company will continue to hold their office till such period as may be permitted by the law. In that event, it is proposed that they shall be paid the remuneration for conducting audit of Companys accounts for the full financial year ending March 31, 2022. Otherwise, it is proposed that the Joint Auditors shall be paid remuneration as may be fixed

Directors of the Company depending upon scope of their work on pro-rata basis for holding the office of Joint Statutory Auditors for part of the Financial year 2021- 22 as mentioned in the resolution at Item Nos.5 and 6 of the Notice of ensuing 42nd Annual General Meeting. Audit Committee and the Board of Directors have recommended passing of these resolutions by the Members.

Auditors Report to the members for the year under review does not contain any qualification, reservation or adverse remark.

SECRETARIAL AUDIT

Secretarial Audit Report pursuant to the provisions of

Section 204 of the Companies Act, 2013 for the financial year 2020-21 issued by Mr. P. Sriram, Practicing Company

Secretary (Certificate of Practice No.3310) (Membership No.

FCS 4862) is annexed to this report as Annexure-III. report does not contain any qualification, reservation or adverse remark.

CORPORATE GOVERNANCE

Pursuant to Schedule V of the SEBI Regulations the following

Reports/Certificates form part of the Annual Report: the Report on Corporate Governance; the

Managing Director and the Joint Managing Director & Chief Financial Officer on the Financial Statements of the Company for the year ended March 31, 2021 as submitted to the Board of Directors at their meeting held on April 29, 2021;

the declaration by the Vice Chairman & Managing

Director regarding compliance by the Board members and senior management personnel with the Companys Code of Conduct; and

the Management Discussion & Analysis Report The Auditors Certificate on Corporate Governance is annexed to this report as Annexure-IV

ACKNOWLEDGEMENT

Board of Directors would like to place on record their gratitude for the guidance and cooperation extended by Reserve Bank of India and the other regulatory authorities. Board takes this opportunity to express their sincere appreciation for the excellent patronage received from the Banks and Financial Institutions and for the continued enthusiasm, total commitment, dedicated efforts of the executives and employees of the Company at all levels. We are also deeply grateful for the continued confidence and faith reposed on us by all the Stakeholders including Shareholders, Depositors, Debenture holders and Debt holders. duly signed by the Vice Chairman &

For and on behalf of the Board of Directors
S. Lakshminarayanan
New Delhi Chairman
April 29, 2021 (DIN: 02808698)