Spandana Sphoorty Financial Ltd Directors Report.

To

The Members of Spandana Sphoorty Financial Limited,

Your Directors have pleasure in presenting the 16th Annual Report on the business and operations of the Company together with the audited accounts for the financial year ended 31st March, 2019.

 

1. FINANCIAL SUMMARY /PERFORMANCE OF THE COMPANY:

The standalone and consolidated financial statements for the financial year ended 31st March, 2019, forming part of this Annual Report, have been prepared in accordance with the Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs. Key highlights of financial performance of your Company for the financial year 2018-19 is summarized below:

(Rs. in crore)
Partic ula rs Standalone Consolidated
31-Mar-19 31-Mar-18 31-Mar-19 31-Mar-18
Income fr om Operations 1,036.28 587.27 1043.10 587.31
Other Income 5.43 0.23 5.43 0.23
Profit before Depreciation, Interest and Tax (PBDIT) 832.77 520.23 838.30 520.22
Depreciation 6.92 5.72 6.97 5.72
Financial charges 356.47 231.79 357.86 231.79
Profit Before Tax 469.38 282.72 473.47 282.70
Provision for Tax - Current year 160.63 94.75 161.57 94.75
Profit/(Loss) After Tax 308.75 187.97 311.90 187.95
Transfer to Statutory Reserves 61.75 34.37 61.75 34.37
Balance carried to Balance sheet 247.00 153.60 250.15 153.58

During the current financial year, the Income from Operations of the company grew by 76.46% to Rs. 1,036.28 crores and the Profit after Tax grew 1.64 times to Rs. 308.75 crores. The improvement in financial performane of the company is on account of business growth recorded during the year.

 

2. DIVIDENDS:

Considering your Companys growth, and future strategy and plans, your Directors consider it prudent to conserve resources and despite having sufficient distributable profits, do not recommend any dividend on equity shares for the financial year under review.

Further, the dividend on CCPS and OCRPS, has been paid upon conversion of the said instruments into equity shares as per the terms of issuance of the respective instruments.

 

3. BRIEF DESCRIPTION OF THE COMPANYS WORKING DURING THE YEAR / STATE OF COMPANYS AFFAIR:

The operational highlights of your company are as follows:

Details Mar-17 Mar-18 Mar-19
No. of States 13 15 17
No. of Branches 526 694 899
No. of Districts 192 222 263
No. of Villages 44,461 52,727 72,326
No. of Employees 3,044 2,751 6,500
No. of Borrowers (Rs. in lakh) 10.69 15.86 24.03
Gross Disbursements (Rs. in crore) 2,059.17 3,857.67 4,915.73
Loan Portfolio (Rs. in crore) on Balance Sheet 1,296.92 2,481.61 3,465.24
Asset Under Management- AUM (Rs. crore) 1,296.92 3,166.21 4,269.46

During FY19, the Company started operations in the State of Tamil Nadu and Pondicherry besides the earlier existing operations from 15 states (viz. Madhya Pradesh, Andhra Pradesh, Telangana, Karnataka, Kerala, Maharashtra, Odisha, Goa, Chhattisgarh, Gujarat, Jharkhand, Uttar Pradesh, West Bengal, Rajasthan and Bihar).

During FY19, number of borrowers grew by 52% to 24.03 lakh borrowers from 15.86 lakh. Number of branches grew by 30% from 694 to 899 across the existing and new states.

Disbursements increased by 27% from Rs. 3,858 crore in FY18 to Rs. 4,916 crore for FY19 and that helped your company to grow the Gross AUM by 35% from Rs. 3,166 crore to Rs. 4,269 crore.

 

3.1 Securitisation:

Your Company has used securitisation to improve its asset and liability mix in line with extant guidelines of RBI on securitisation. Gross Securitisations during the year to the tune of Rs. 1,459 crore have been done by issuing Pass Through Certificates (PTCs). As on 31st March, 2019, the total Asset under management out of securitised portfolio is Rs. 804 crores (including DA of Rs. 140 crores).

 

3.2 Public Deposits:

Your Company is registered with Reserve Bank of India (RBI), as a non-deposit accepting NBFC under section 45-1A of the RBI Act, 1934 and reclassified as NBFC-MFI, effective from April 13, 2015. Your Directors hereby report that the Company has not accepted any public deposits during the year under review and it continues to be a non-deposit taking non banking financial company in conformity with the guidelines of the RBI. As such no amount of principal and interest was outstanding during the year.

 

3.3 RBI Guidelines:

As on 31st March 2019, the Company is in compliance of the regulatory requirements of net owned funds (‘NOF) and Capital to Risk Assets Ratio (‘CRAR), as defined under section 45-IA of the Reserve Bank of India Act, 1934, to carry on the business of a non-banking financial institution (‘NBFI). Your Companys Capital Adequacy Ratio is as follows:

Capital Adequacy Ratio 2018-19 2017-18
i) CAR –Tier I Capital (%) 42.01 37.16
ii) CAR – Tier II Capital (%) 00.45 00.00
Capital Adequacy Ratio (CAR) 42.46 37.16

 

3.4 Auction of gold jewellery for recovery of overdues of loans against them:

No Auctions were done during the financial year 2018-19 of gold jewellery for recovery of overdues of loans against them.

 

3.5 Reserve Fund:

As per section 45IC of RBI Act 1934, the Company has transferred Rs. 61.75 crores in reserve fund i.e. aggregating of 20% of its net profit.

 

4. MANAGEMENT DISCUSSION & ANALYSIS:

The Company has closed FY2019 with an AUM of Rs. 4,269 Crores (growth of 35% YoY) with a PBT of Rs. 460 Crores. The Company has its presence across 17 states and 263 districts through 899 branches.

The long term credit rating of the Company has been upgraded to [ICRA] A-(Stable) from [ICRA] BBB+(Stable), the only NBFC-MFI to receive an upgrade post the crisis in September 2018 and in an uncertain market scenario. It is the third credit rating upgrade in a span of less than 2 years, since CDR exit in March 2017. It is an external reaffirmation of the measured growth over this period and reflects incredible strength of the Company. An upgrade despite multiple hiccups over last 6 months in the form of Kerala floods, liquidity squeeze and state elections, further shows the Companys ability to withstand and out-perform the microfinance industry, on all fronts. Our microfinance grading has also been upgraded from M2+ to M1 by ICRA (top-most grade for a MFI).

With a continuous focus on serving our customers in the best possible way with a constant eye on asset quality, your Board is very confident that the Company will continue its growth trajectory.

 

5. CREDIT RATING:

The ICRA Limited has revised the rating assigned to the Companys debt instruments during the financial year 2018-19, the details of the same are as follows:

Rating Agency Facilities Rated Previous rating Current rating with revised outlook
ICRA Limited Non-convertible Debentures (INR 821 crores) [ICRA] BBB- (positive outlook) [ICRA]A- (Stable)
ICRA Limited Line of Credit (INR 2,500 crores) [ICRA] BBB- (positive outlook) [ICRA]A- (Stable)

 

6. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE:

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and companys operations in future,therefore the disclosure under rule 8 (5)(vii) of Companies (Accounts) Rules, 2014,is not applicable to the Company.

 

7. CONSOLIDATED FINANCIAL STATEMENT:

The Consolidated Financial Statements of the Company prepared in accordance with relevant Indian Accounting Standards (IND-AS) viz. (include the relevant standards) forms part of this Annual Report.

 

8. FILLING OF DRAFT RED HERRING PROSPECTUS:

During the year under review, the Board of Directors of the Company approved taking steps to initiate the process for an Initial Public Offering (IPO) by way of fresh issue of such number of equity shares aggregation upto Rs. 4000 million ("fresh issue") and an offer for sale of up to 13,146,595 equity shares ("offer for sale"). This is subject to relevant regulatory and other approvals, as applicable.

Accordingly, the Company filed Draft Red Herring Prospectus with Securities and Exchange Board of India on 25th June, 2018. Subsequently, BSE Limited (BSE) and National Stock Exchange of India Limited (NSE) have granted its in-principle approval of the Companys listing application on 16th July, 2018 and 24th July, 2018 respectively and SEBI observations has been received on 12th October, 2018.

The Company had also filed an application to Reserve Bank of India (RBI) seeking prior approval for change in more than 26% of shareholding of the Company through the proposed Initial Public Offering (IPO) on 28th June, 2018. The RBI has accorded its approval vide its letter no. DNBS (H) CMS NDSI/No796/00.00.574 /2018-19 dated 15th October, 2018 for the change in shareholding of the Company through the proposed IPO.

 

9. AUDITORS:

9.1 Statutory Auditors:

As per Section 139 of the Companies Act, 2013 (‘the Act), read with the Companies (Audit and Auditors) Rules, 2014, the Members of the Company at the 15th Annual General Meeting (AGM), held on 3rd August, 2018, has re-appointed M/s S R Batliboi & Co. LLP, (Firm Registration No. 301003E/E300005), Chartered Accountants, as the Statutory Auditors of the Company for a further period of 5 years i.e. to hold office from the conclusion of that the 15th AGM till the conclusion of the 20th AGM of the Company. Pursuant to amendments in Section 139 of the Companies Act, 2013, the requirements to place the matter relating to such appointment for ratification by members at every annual general meeting has been omitted with effect from 7th May, 2018.

The Report given by M/s. B S R & Co. LLP, Chartered Accountants on the financial statement of the Company for the year 2018 is part of the Annual Report. The Auditors Report read along with the Notes on the Financial Statements are self explanatory and does not call for any further comments. There has been no qualification, reservation or adverse remark or disclaimer in their Report. During the year 2018, the Auditors had not reported any matter under Section 143 (12) of the Act, therefore no detail is required to be disclosed under Section 134(3)(ca) of the Act.

 

9.2 Secretarial Audit:

Pursuant to the requirements of Section 204(1) of the Act and Rule 9 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s RPR & Associates, Company Secretaries, (CP No. 5360), to conduct Secretarial Audit for the financial year 2018-19. The Report for the financial year ended 31st March, 2019, is annexed to this report as "Annexure –A". There has been no qualification, reservation or adverse remark or disclaimer in their Report. During the year 2018, the Secretarial Auditors had not reported any matter under Section 143 (12) of the Act, therefore no detail is required to be disclosed under Section 134 (3)(ca) of the Act.

In terms of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Audit Committee recommended and the Board of Directors appointed M/s RPR & Associates, Company Secretaries, (CP No. 5360) as the Secretarial Auditors of the Company in relation to the financial year ending 31st March, 2020. Your Company had received their written consent that the appointment will be in accordance with the applicable provisions of the Act and rules framed thereunder.

During the year 2018, your Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

 

9.3 Internal Audit:

The Company has its own internal audit team as per the Internal Audit Policy. Each branch is audited at least once in 3 months. Risk areas were identified every month and branches were audited more than once wherever there were triggers of risk. Branches are audited more frequently, at least once in a month where risk was perceived to be higher.

In terms of Section 138 of Companies Act, 2013, and Companies (Accounts) Rules, 2014, the Board of Directors at its Meeting held on 15th May, 2018, upon recommendation of Audit Committee, had appointed M/s BDO India LLP, as Internal Auditors of the Company, for the financial year 2018-19, for conducting the audits at Head Office (HO) level.

 

10. SHARE CAPITAL/DEBENTURES:

During the Financial Year 2018-19, the Company has converted following preferential shares and warrants into equity shares , the details of the said conversion and allotment is given herein:

Sl. No. Name of the Sharehold er Date Type of Preference Share No. of Preference shares Converted No of equity shares alotted pursuant to conversio n
1 Kangchenjunga Limited 15th May, 2018 Class A 0.001% CCPS 229,999,532 9,767,263
Kedaara Capital Alternative
2 Investment Fund – Kedaara 15th May, 2018 Class A 0.001% CCPS 5,000,465 212,352
Capital AIF 1
3 Kangchenjunga Limited 15th May, 2018 Class A1 0.001% CCPS 11,66,76,087 4,954,819
Kedaara Capital Alternative
4 Investment Fund – Kedaara 15th May, 2018 Class A1 0.001% CCPS 25,36,673 107,723
Capital AIF 1
5 Kangchenjunga Limited 15th May, 2018 Class B 0.001% CCPS 774,176,271 8,758,017
Kedaara Capital Alternative
6 Investment Fund – Kedaara 15th May, 2018 Class B 0.001% CCPS 16,831,450 190,408
Capital AIF 1
7 Mrs. Padmaja Gangireddy 20th June, 2018 Series C 0.001% OCRPS 11,35,085 11,35,085
8 Mrs. Padmaja Gangireddy 20th June, 2018 FY18 Series A 0.001% OCRPS 283,771 283,771
9 Mrs. Padmaja Gangireddy 20th June, 2018 FY18 Series B 0.001% OCRPS 283,771 283,771
10 Mrs. Padmaja Gangireddy 20th June, 2018 FY19 Series A 0.001% OCRPS 283,771 283,771
11 Mrs. Padmaja Gangireddy 20th June, 2018 FY19 Series B 0.001% OCRPS 283,771 283,771
12 Mrs. Padmaja Gangireddy 20th June, 2018 Warrants 14,88,544 14,88,544

*CCPS – Compulsorily Convertible Preference Shares, OCRPS – Optionally Convertible Redeemable Preference Shares.

During the Financial Year 2018-19, the Company has issued and allotted following shares in the Capital of the Company on private placement basis:

Sl. No. Name of the Alottees Type of Share Allotted No. of Shares Alotted
1 Mrs. Padmaja Gangireddy Equity Shares of Rs. 10/ each at premium of Rs. 225.48 2,031,988
2 Mr.Ch. Venkata Nageswararao Equity Shares of Rs. 10/ each at premium of Rs. 225.48 9,748
3 Mr. Danttu Raju Equity Shares of Rs. 10/ each at premium of Rs. 225.48 9,185
4 Mr. Abdul Feroz Khan Equity Shares of Rs. 10/ each at premium of Rs. 225.48 72,402
5 Ms. Abanti Mitra Equity Shares of Rs. 10/ each at premium of Rs. 225.48 4,247
Total 21,27,570

During the Financial Year 2018-19, the Company has issued and allotted following debentures:

Number and Class of Debentures Face Value Cal ed up value Total paid up Value Date of Alotment Date of Listing ISIN Security Code
1500 (Fift een Hundred) 12.45% Rated, Listed, Senior, Secured, Redeemable, Taxable, Non- Convertible Debentures Secured, Redeemable, Taxable, Non- Convertible Debentures

10,00,000

10,00,000

1,500,000,000

31/5/2018

12/06/2018

INE572J07083

957972

820 (Eight Hundred and Twenty) Secured, Rated, Listed, Redeemable, Transferable Non- convertible Debentures 10,00,000 10,00,000 820,000,000 07/12/2018 18/12/2018 INE572J07109 958432

 

11. EMPLOYEE STOCK OPTION PLAN (ESOP PLAN) AND EMPLOYEE STOCK OPTION SCHEME (ESOP SCHEME):

The Company has instituted Stock Option Plan, 2018 (the "Plan") and Stock Option Scheme, 2018 ("the "Scheme") to attract, retain, motivate the personnel for positions of substantial responsibility and to provide additional incentive to the Management team, Directors and Employees of the Company and its Subsidiaries.

During the year 2018-19 ,the Company has approved the "Spandana Employee Stock Option Plan 2018" (the "Plan") and Spandana Employee Stock Option Scheme, 2018 (the "Scheme") at its Extra Ordinary General Meeting held 14th June, 2018,empowering the Board and Nomination & Remuneration Committee of the Board to execute the same.

The Company has granted 11,56,354 options to 312 eligible employees of the Company and 13,500 options to 7 eligible employees of Criss Financial Holdings Limited, Subsidiary of the Company. The options granted entitle the employees to purchase options at an exercise price of Rs. 263.35/- per option as determined by the Nomination and Remuneration Committee.

The Nomination & Remuneration Committee monitors the Plan in compliance with the Companies Act, 2013 and related laws. Disclosure with respect to the ESOP Plans in terms of Section 62 of the Act read with Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014, have been provided at "Annexure –B" to this Boards Report.

 

12. HOLDING / SUBSIDIARY COMPANIES / ASSOCIATES / JOINT VENTURES:

During the year 2018-19, the Company became a subsidiary of Kanchenjunga Limited, a Foreign Company incorporated under the laws of Mauritius and holds a Category 1 Global Business License under the provisions of the Financial Services Act of the Republic of Mauritius.

The Company has following subsidiaries as on 31st March, 2019:

S. No. Name of the Company Particular Date of becoming Subsidiary
1. Caspian Financial Services Limited Wholly owned Subsidiary Company since its Incorporation i.e., 13th October, 2017.
2. Criss Financial Services Limited Subsidiary Company 27th December, 2018.

The statement required to be provided with respect to subsidiaries, associate companies and joint ventures pursuant to the provisions of Section 129(3) of the Companies Act, 2013 and Rule 5 of the Companies (Accounts) Rules, 2014 in Form AOC – 1 is annexed herewith as "Annexure – C".

The Audited Financial Statements, the Auditors Report thereon and the Boards Report for the year ended 31st March, 2019 of the subsidiary companies shall be available for inspection by the Members at its registered office, during business hours on all working days upto the date of the Annual General Meeting. A member who is desirous of obtaining a copy of the accounts of the subsidiaries companies is requested to write to the Company.

During the financial year none of the Company ceased to be the Companys subsidiaries, joint ventures or associate companies.

Regulation 16(1)(c) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, (SEBI LODR), defines "material subsidiary" as a subsidiary whose income or net worth exceeds 20% of the consolidated income or net worth respectively, of the listed holding company and its subsidiaries at the end of the immediately preceding accounting year. The Board of Directors of the Company at its meeting held on 14th June, 2018, has approved a Policy for determining material subsidiaries in line with the SEBI LODR. The Policy has been uploaded on the Companys website athttp://www.spandanaindia.com/-investors/index.html.

None of the subsidiaries mentioned hereinabove is a material subsidiary as per the thresholds laid down under the SEBI LODR.

 

13. EXTRACT OF THE ANNUAL RETURN:

The extract of annual return in Form MGT 9 as required under Section 92(3) of the Companies Act, 2013 and Rule 12 of the Companies (Management and Administration) Rules, 2014 is available on the website of the Company at the link: http://www.spandanain-dia.com/pdfs/MGT19.pdf

 

14. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

Information required under Section 134(3)(m) of the Act read with Rule, 8 of the Companies (Accounts) Rules, 2014 for the financial year ended 31st March, 2019 are as follows:

 

14.1 Conservation of Energy:

Our operations are not energy-intensive. However, significant measures are taken to reduce energy consumption by using energy efficient computers and electrical equipments. Our field staff generally uses two wheeler vehicles to reach to our customers for client servicing. We endeavour to reduce the fuel consumption by our field staff, by minimizing the requirements of travelling. Further the Company believes in optimum utilisation of alternative resources available in order to reduce usage and conserve energy. We are also promoting use of renewable energy sources among clients at their households.

 

14.2 Research and Development (R&D):

Social research and development of new products and methodologies continue to be an ongoing process for the Company. This helps us to enhance quality of service and customer satisfaction through continuous innovation. The Company has been adapting various lending models within the limited scope of MFI norms and has successfully implemented fortnightly lending product.

 

14.3 Technology absorption, adaptation and innovation:

Technology is being used as a business enabler at Spandana. We are improving our processes and controls with higher technology development and adoption to get better operational efficiencies. The Company has migrated to a browser based application e-FIMO which has the accounts, loans and insurance modules integrated. The e-FIMO has enabled us to have the entire data in a single database and have real time data available without any time lag. Collection efficiency of each branch is tracked on a daily basis. Credit bureau verification is integrated and the bureau check happens seamlessly. To avoid data manipulation at the branch level, applications login has been centralized. A back office team with a strength of more than 200 data including entry operators, team leads and managers processes the loan application. Branches upload the scanned copies of loan applications and KYC documents. Applications are logged on FIMO for bureau verification and processing of loans.

 

14.4 Foreign exchange earnings and outgo:

There was no Foreign exchange earnings during the year and the details of foreign outgo is specified herein below:-

Name of the Party Amt Paid (Rs. In Crores)
Intra Link Inc., USA 0.34
Clifford Chance Pte. Limited 1.44
Total 1.78

 

15. CORPORATE SOCIAL RESPONSIBILITY (CSR) :

In terms of section 135 and Schedule VII of the Companies Act, 2013 read with rules made thereunder, the Board of Directors of your Company have constituted a CSR Committee. The current composition of the Committee is as follows.

Sl. No. Name Designation& Category
1 Mr. Ramachandra Kasargod Kamath Chairman, Nominee Non Executive Director
1 Mrs. Padmaja Gangireddy Member, Managing Director
2 Ms. Abanti Mitra Member, Independent Non Executive Director

The details of the Corporate Social Responsibility Policy adopted by the Company has been disclosed on the website of the Company at http:// http://www.spandanaindia.com/investors/index.html

The Annual Report on CSR activities is annexed to this report as "Annexure D".

 

16. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Affairs of your Company are being managed by a professional Board comprising of eminent personalities having experience and expertise suited to guide the Company in right direction. Present Directors of your Company are:

Name of the dir ector Desig nation
Mr. Deepak Calian Vaidya* Chairman and Independent Non Executive Director
Mr. Bharat Dhirajlal Shah Independent Non Executive Director
Mr. Jagdish Capoor* Independent Non Executive Director
Ms. Abanti Mitra Independent Non Executive Director
Mrs. Padmaja Gangireddy$ Managing Director
Mr. Ramachandra Kasargod Kamath# Nominee Director
Mr. Kartikeya Dhruv Kaji Nominee Director
Mr. Sunish Sharma Nominee Director
Mr. Amit Sobti Nominee Director
Mr. Darius Dinshaw Pandole Nominee Director

* Mr. Jagdish Capoor and Mr. Deepak Calian Vaidya were appointed as Additional Directors of the Company w.e.f. 6th June, 2018, upon recommendation of Nomination and Remuneration Committee, and their appointment as Independent Directors was approved by the Members of the Company at the Extra-ordinary General Meeting held on 14th June, 2018.

# Designation of Mr. Ramachandra Kasargod Kamath was changed to Non-executive Nominee Director at the Board Meeting held on 14th June, 2018. $The Members of the Company at the Extra-ordinary General Meeting held on 11th March, 2019, has re-appointed Mrs. Padmaja Gangireddy as Managing Director of the Company for a period of three years i.e. from April 19th, 2019 to April 18th, 2022.

 

16.1 Rotation of Directors:

As per Section 152 (6) (a) of Companies Act, 2013, not less than one-third of the total number of retiring directors should retire by rotation, at every AGM. For the purpose of this section, the total number of directors to retire by rotation shall not include "Independent Directors".

The Board of Directors at its Meeting held on 14th June, 2018, have approved the alteration in the terms of appointment of following Nominee Directors of the Company, whose office shall be liable to retire by rotation:

(1) Mr. Sunish Sharma

(2) Mr. Amit Sobti

(3) Mr. Ramachandra Kasargod Kamath

(4) Mr. Darius Dinshaw Pandole

In terms of the provisions of Section 152 of the Companies Act, 2013 Mr. Ramachandra Kasargod Kamath (DIN: 01715073) and Mr. Darius Dinshaw Pandole (DIN: 00727320), Nominee Directors of the Company, being longest in the office, retires at the ensuing Annual General Meeting and being eligible, offers them self for re-appointment. The brief resume and other details of Mr. Ramachan-dra Kasargod Kamath and Mr. Darius Dinshaw Pandole as required under the Companies Act, 2013 and SEBI LODR for their re-appointment as Director, are provided in the Notice of 16th Annual General Meeting of your Company.

 

16.2 Declaration by Independent Directors:

The Company has received a declaration from all the Independent Directors of the Company, confirming that they meet with the criteria of independence as prescribed under sub section (6) of section 149 of the Companies Act, 2013.

 

16.3 Key Managerial Personnel of the Company:

The Key Managerial Personnel of the Company in terms of provisions of Section 203 of Companies Act, 2013 are as follows:

Sl. No. Name Desig natio n
1 Mrs. Padmaja Gangireddy Managing Director (DIN: 00004842)
2 Mr. Deepak Nath Goswami* Chief Financial Of icer
3 Mr. Sudhesh Chandrasekar** Chief Financial Of icer
4 Mr. Rakesh Jhinjharia Company Secretary (Membership No. F8325)
5 Mr. Abdul Feroz Khan# Chief Strategy Of icer
6 Mr. Nitin Agrawal@ Chief Risk Of icer

* Mr. Deepak Nath Goswami, Chief Financial Officer and Key Managerial Personnel of the Company, has resigned w.e.f. close of the business hours on 10th April, 2019.

** Mr. Sudhesh Chandrasekar, has been appointed as Chief Financial Officer and Key Managerial Personnel of the Company, by the Board at its meeting held on 17th May, 2019.

# Mr. Abdul Feroz Khan was designated as our Chief Strategy Officer w.e.f 15th May, 2018, upon recommendation of Nomination and Remuneration Committee.

@ Mr. Nitin Agrawal was appointed as the Chief Risk Officer of the Company w.e.f 28th May, 2018, upon recommendation of Nomi nation and Remuneration Committee and resigned w.e.f 28th March, 2019.

 

17. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:

The ratio of the remuneration of each director to the medians employees remuneration and other details in terms of Section 197(12) of Companies Act,2013 read with Rule 5(1) of the Companies (Companies Appointment and Remuneration of Managerial Personnel) Rules,2014, have been annexed herewith as "Annexure-E" to the Directors Report.

The statement containing particulars of employees as required under Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in a separate annexure forming part of the Directors Report. In terms of Section 136 of the Companies Act, 2013, the Directors Report and the Accounts are being sent to the Members excluding the aforesaid annexure and the same is open for inspection at the Registered Office of the Company. A copy of the statement may be obtained by the Members, by writing to the Company Secretary of the Company.

 

18. CORPORATE GOVERNANCE

Your Companys philosophy on Corporate Governance envisages adherence to the highest levels of transparency, accountability and fairness, in all areas of its operations. The Company deals with clients who are by and large, excluded from the mainstream financial markets. The Company does not view Corporate Governance principles as set of binding obligations, but believes in using it as a framework to be followed in true spirit. The Company being an NBFC-MFI, adopts best practices and follows guidelines issued by RBI from time to time. As a part of Corporate Governance, various Committees were formed to look after the progress made, putting in place a progressive risk management system, policy and strategy to be followed in conformity with corporate governance standards.

 

19. MEETINGS OF THE BOARD OF DIRECTORS

Eight (8) Board Meetings were held during the financial year 2018-19.Your Board approved various agenda items through circular resolution as well, based on the urgency of the matter. The details of Board meetings are given below:

Date of Meeting Board Strength No. of Dir ectors Present
18th April, 2018 9 3
15th May, 2018 8 8
14th June, 2018 10 7
20th June, 2018 10 5
25th June, 2018 10 5
14th August, 2018 10 7
14th November, 2018 10 9
8th February, 2019 10 10

 

20. NOMINATION AND REMUNERATION COMMITTEE:

The current composition of the Committee is as follows:

Sl. No. Name Desig natio n & Category
1. Mr. Bharat Dhirajlal Shah Chairman, Independent Non Executive Director
2. Ms. Abanti Mitra Member, Independent Non Executive Director
3. Mr. Kartikeya Dhruv Kaji Member, Nominee Non Executive Director

The Nomination and Remuneration (N&R) Committee has adopted a policy which, inter alia, deals with the manner of selection of Board of Directors, Managing Director, CFO, Senior Executives and their remuneration. The Policy is available at http://www.spandanaindia.com/investors/index.html

During the year 2018-19, the committee met four (4) times i.e., on 14th May, 2018, 13th August, 2018, 13th November, 2018 and 7th Febru-ary, 2019 to discharge the roles and responsibilities given by Board of Directors from time to time. The Committee functions in line with the provisions contained in Section 178 of the Companies Act, 2013 and in terms of the provisions of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR).

The terms of reference of the Nomination and Remuneration Committee, are as follows

a) Formulate the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy, relating to the remuneration of the directors, key managerial personnel and other employees in accordance with Section 178(4) of the Companies Act, 2013;

b) Formulation of criteria for the performance of evaluation of independent directors and the Board;

c) Devising a policy on Board diversity;

d) Identify persons who are qualified to become directors or who may be appointed in senior management in accordance with the criteria laid down, recommend to the Board their appointment and removal and shall carry out evaluation of every directors performance. The Company shall disclose the remuneration policy and the evaluation criteria in its annual report;

e) To determine key performance indicators of senior executives of the Company and specify deliverables for the executive in line with the business plan of the Company. "Senior executive to include the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Whole Time Directors, the Head of Departments of various functions and other key managerial personnel as decided from time to time in consultation with the Board of the Company and other stakeholders."

f) To objectively examine the annual manpower plan in relation to the business plan of the company and to examine management recommendations regarding manpower strategy and suggest corrective actions, if required.

g) To finalise top tier organization structure including top field level functionaries and direct reportees on a periodical basis or as and when required.

h) To evaluate and approve the compensation packages of above mentioned persons with particular reference to fixed and variable pay (including bonuses and Employees Stock Options).

i) To recommend to the Board a policy, relating to remuneration for the Directors and Key Managerial Personnel.

j) Determining the Companys policy on specific remuneration packages for executive directors including pension rights and any compensation payment, and determining remuneration packages of such directors;

k) Perform such functions as are required to be performed by the compensation committee under the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, including the following:

(i) administering employee stock option schemes, employee stock purchase schemes, stock appreciation rights schemes, general employee benefits scheme and retirement benefit schemes (the "Schemes");

(ii) delegating the administration and superintendence of the Schemes to any trust set up with respect to the Schemes;

(iii) formulating detailed terms and conditions for the Schemes including provisions specified by the Board of Directors of the Company in this regard;

(iv) determining the eligibility of employees to participate under the Schemes;

(v) granting options to eligible employees and determining the date of grant;

(vi) determining the number of options to be granted to an employee;

(vii) determining the exercise price under of the Schemes; and

(viii) Construing and interpreting the Plan and any agreements defining the rights and obligations of the Company and eligible employees under the Schemes, and prescribing, amending and/or rescinding rules and regulations relating to the administration of the Schemes.

l) Framing suitable policies and systems to ensure that there is no violation of securities laws by, the Company, its employees or trust set up with respect to the Schemes, if any, of any applicable laws in India or overseas, including:

(i) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, as amended; and

(ii) The Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities Market) Regulations, 2003, as amended;

m)Determine whether to extend or continue the terms of appointment of the independent directors, on the basis of the report of performance evaluation of independent directors; and

n) Perform such other activities as may be delegated by the Board of Directors and/or are statutorily prescribed under any law to be attended to by such committee.

 

21. AUDIT COMMITTEE:

The Board of Directors at its meeting held on 14th June, 2018, had re-constituted the Audit Committee with the following Members to the Committee:

Sl. No. Name Desig nation & Category
1. Mr. Bharat Dhirajlal Shah Chairman, Independent Non Executive Director
2. Ms. Abanti Mitra Member, Independent Non Executive Director
3. Mr. Kartikeya Dhruv Kaji Member, Nominee Non Executive Director

The Board of Directors at its meeting held on 14th November, 2018, had again re-constituted the Audit Committee with the following members to the Committee:

Sl. No. Name Desig natio n & Category
1 Ms. Abanti Mitra Chairperson, Independent Non Executive Director
2 Mr. Bharat Dhirajlal Shah Member, Independent Non Executive Director
3 Mr. Deepak Calian Vaidya Member, Independent Non Executive Director
4 Mr. Jagdish Capoor Member, Independent Non Executive Director
5 Mr. Kartikeya Dhruv Kaji Member, Nominee Non Executive Director

During the year 2018-19, one (1) Meeting of the erstwhile Audit and Risk Management Committee was held on 14th May, 2018, and three (3) Meetings of the Audit Committee were convened and held on 13th August, 2018, 13th November, 2018 and 7th February, 2019. The Committee functions in line with the provisions contained in Section 177 of the Companies Act, 2013. Terms of reference of the Committee are:

a) Overseeing the Companys financial reporting process and disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible;

b) Recommending to the Board, the appointment, re-appointment, and replacement, remuneration, and terms of appointment of the statuto ry auditor, internal auditor and cost auditor;

c) Reviewing and monitoring the auditors independence and performance and the effectiveness of audit process;

d) Approving payments to the statutory auditors, internal auditor and cost auditor, for any other services rendered by them;

e) Reviewing with the management, the annual financial statements and auditors report thereon before submission to the Board for approval, with particular reference to:

(i) Matters required to be stated in the Directors responsibility statement to be included in the Boards report in terms of Section 134(3)(c) of the Companies Act, 2013;

(ii) Changes, if any, in accounting policies and practices and reasons for the same;

(iii) Major accounting entries involving estimates based on the exercise of judgment by management;

(iv) Significant adjustments made in the financial statements arising out of audit findings;

(v) Compliance with listing and other legal requirements relating to financial statements;

(vi) Disclosure of any related party transactions; and (vii) Qualifications and modified opinions in the draft audit report.

f) Reviewing with the management, the quarterly, half-yearly and annual financial statements before submission to the Board for approval;

g) Scrutiny of inter-corporate loans and investments;

h) Valuation of undertakings or assets of the Company, wherever it is necessary;

i) Evaluation of internal financial controls and risk management systems;

j) Approval or any subsequent modification of transactions of the Company with related parties; Explanation: The term "related party transactions" shall have the same meaning as provided in Clause 2(zc) of the SEBI Listing Regulations and/or the applicable Accounting Standards and/or the Companies Act, 2013.

k) Reviewing with the management, the statement of uses/application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document/prospectus/notice and the report submitted by the monitoring agency monitoring the utilization of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter;

l) Establishing a vigil mechanism for directors and employees to report their genuine concerns or grievances;

m) Reviewing, with the management, the performance of statutory and internal auditors and adequacy of the internal control systems;

n) Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit;

o) Discussion with internal auditors on any significant findings and follow up thereon;

p) Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board;

q) Discussion with statutory auditors, internal auditors and cost auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern;

r) Looking into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors;

s) Approval of appointment of the chief financial officer (i.e., the whole-time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience and background, etc. of the candidate;

t) Reviewing the functioning of the whistle blower mechanism, in case the same is existing;

u) Carrying out any other functions as provided under the Companies Act, the Listing Regulations and other applicable laws;

v) To formulate, review and make recommendations to the Board to amend the Audit Committee charter from time to time;

w) To review the financial statement with respect to its subsidiaries, if any, in particular investments made by the unlisted subsidiaries;

x) To examine the efficacy of audit functions and systems and suggesting steps on a periodic basis (quarterly, half yearly) for its improvement.

y) To facilitate smooth conduct of audits by external agencies, Statutory Auditors, Reserve Bank of India (RBI), lenders and any other external auditors as appointed by the Company or any other stakeholders (lenders, shareholders, regulators, government etc.)

z) To report, on a quarterly basis, the key findings of the quarter , as well as the action taken report on the same for previous quarters, to the Board of Directors.

aa) To review compliance of various inspections and audit reports of internal, concurrent and statutory auditors and commenting on the action taken report prepared by the management and ensuring submission to the Board of the Company from time to time.

bb) To monitor and review all frauds that may have occurred in the Company involving an amount of Rs. 0.1 million and above or as decided from time to time.

cc) To report such frauds and other flag-offs to the Board of Directors regulators and other stakeholders, as the case warrants, along with the extent of losses. This would include drafting a calendar of reporting frauds and the remedial measures taken, to the Board of the Company.

dd) To conduct a root cause analysis and identify the systemic lacunae, if any, that may have facilitated perpetration of the fraud and put in place measures to rectify the same. Also, to ascertain reasons for delay in detection of such frauds, if any.

ee) To ensure the staff accountability is examined at all levels in all the cases of frauds and actions, if required, is completed quickly without loss of time.

ff) To review efficacy of remedial actions taken to prevent recurrence of frauds, such as strengthening internal controls and putting in place other measures as may be considered relevant to strengthen preventive mechanism.

gg) Reviewing and recommending to the board of directors of the Company potential risks involved in any new business plans and processes; and

hh) Framing, devising, monitoring, assessing and reviewing the risk management plan and policy of the Company from time to time and recommend for amendment or modification thereof;

ii) Any other similar or other functions as may be laid down by Board from time to time and/or as may be required under applicable laws."

 

22. RISK MANAGEMENT COMMITTEE:

The Board of Directors at its meeting held on 14th November, 2018, had re-constituted the Risk Management Committee with the following members:

Sl. No. Name Desig natio n & Category
1 Mr. Ramachandra Kasargod Kamath Chairman, Nominee Non Executive Director
2 Mr. Bharat Dhirajlal Shah Member, Independent Non Executive Director
3 Mr. Jagdish Capoor Member, Independent Non Executive Director
4 Mr. Darius Dinshaw Pandole Member, Nominee Non Executive Director
5 Mr. Kartikeya Dhruv Kaji Member, Nominee Non Executive Director

During the year 2018-19, one (1) Meeting of the erstwhile Audit and Risk Management Committee was held on 14th May, 2018, and three (3) Meetings of the Risk Management Committee were convened and held on 13th August, 2018, 13th November, 2018 and 7th February, 2019. Terms of reference of the Committee are:

a) To review companys risk management policies in relation to various risks (credit, market, liquidity, operational and reputation risk)

b) To review the risk return profile of the Company, Capital adequacy based on risk profile of the MFIs balance sheet, business continuity plan and disaster recovery plan, key risk indicators and significant risk exposures and implementations of enterprise risk management.

c) To hold such risk reviews to ensure adequate monitoring as may be felt necessary by the internal as well as external stakeholders and to apprise the Board of the Company on a periodic basis.

 

23. STAKEHOLDERS RELATIONSHIP COMMITTEE:

The Board of Directors at its meeting held on 14th November, 2018, had re-constituted the Stakeholders Relationship Committee with the following members to the Committee:

Sl. No. Name Desig natio n & Category
1 Ms. Abanti Mitra Chairperson, Independent Non Executive Director
2 Mr. Ramachandra Kasargod Kamath Member, Nominee Non Executive Director
3 Mr. Kartikeya Dhruv Kaji Member, Nominee Non Executive Director
4 Mr. Deepak Calian Vaidya Member, Independent Non Executive Director
5 Mr. Jagdish Capoor Member, Independent Non Executive Director

During the year 2018-19, three (3) Meetings of the Stakeholders Relationship Committee were convened and held on 13th November, 2018 and 7th February, 2019.

The terms of reference of the Committee were amended by the Board of Directors at its Meeting held on 8th February, 2019, to align it with the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, as follows: During the year 2018-19, three (3) Meetings of the Stakeholders Relationship Committee were convened and held on 13th November, 2018 and 7th February, 2019.

The terms of reference of the Committee were amended by the Board of Directors at its Meeting held on 8th February, 2019, to align it with the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, as follows:

a) Various aspects of interest of shareholders, debenture holders and other security holders, including complaints related to the transfer of shares, including non receipt of share certificates and review of cases for refusal of transfer/transmission of shares and debentures, non-receipt of balance sheet, non-receipt of annual reports, non-receipt of declared dividends, issue of new/duplicate certificates, general meetings, or any other documents or information to be sent by the Company to its shareholders, etc. and assisting with quarterly reporting of such complaints;

b) Allotment of shares, approval of transfer or transmission of shares, debentures or any other securities;

c) Dematerialisation of shares and re-materialisation of shares, issue of duplicate certificates and new certificates on split/consolidation/renewal;

d) Overseeing the performance of the registrars and transfer agents of our Company and to recommend measures for overall improvement in the quality of investor services;

e) Review of measures taken for effective exercise of voting rights by shareholders.

f) Review of adherence to the service standards adopted by the Company in respect of various services being rendered by the Registrar & Share Transfer Agent.

g) Review of the various measures and initiatives taken by the Company for reducing the quantum of unclaimed dividends and ensuring timely receipt of dividend warrants/annual reports/statutory notices by the shareholders of the company; and

h) Carrying out any other function as prescribed under the Listing Regulations, Companies Act, 2013 and the rules and regulations made thereunder, each as amended or other applicable laws

 

24. IT STRATEGY COMMITTEE:

The Board of Directors at its Meeting held on 23rd January, 2018 had constituted this Committee and delegated the power to review the compliance of IT framework, with the following Members:

Sl. No. Name Desig natio n
1. Ms. Abanti Mitra Chairperson, Independent Non Executive Director
2. Mr. Amit Sobti Member, Nominee Non Executive Director
3. Mr. Kartikeya Dhruv Kaji Member, Nominee Non Executive Director

During the year 2018-19, two (2) Meetings of the IT Strategy Committee were convened and held on 13th August, 2018 and 13th November, 2018.

The terms of reference of the Committee as approved by the Board are as follows:

a) Approving IT strategy and policy documents and ensuring that the management has put an effective strategic planning process in place

b) Ascertaining that management has implemented processes and practices that ensure that the IT delivers value to the business

c) Ensuring IT investments represent a balance of risks and benefits and that budgets are acceptable;

d) Monitoring the method that management uses to determine the IT resources needed to achieve strategic goals and provide high-level direction for sourcing and use of IT resources;

e) Ensuring proper balance of IT investments for sustaining NBFCs growth and becoming aware about exposure towards IT risks and controls."

 

25. MANAGEMENT COMMITTEE:

The Management Committee of the Board of Directors comprises of the following Members:

Sl. No. Name Desig natio n & Category
1. Mrs. Padmaja Gangireddy Member, Managing Director
2. Mr. Sunish Sharma Member, Nominee Non Executive Director
3. Mr. Kartikeya Dhruv Kaji Member, Nominee Non Executive Director

During the year 2018-19, the Committee met Twenty Seven (27) times.

The terms of reference of the Committee as approved by the Board are as follows:

a) to apply for loans and to provide security including hypothecation of book debts of the Company at such terms and conditions as may be decided by the Committee from time to time;

b) to borrow moneys subject to a maximum of Rs. 400 crore per facility/ loan;

c) to determine the terms of the Issue(s) of Debentures, and finalise the terms and conditions of such Issue(s) including the number of Debentures to be allotted in each Issue, Issue Price, Face Value, Rate of Interest, Redemption Period, the nature of security etc. for the purpose of raising funds in its absolute discretion deem fit and to do all such acts, deeds and things as may be required necessary in this regard

d) to sell loan portfolios of the Company upto a limit of Rs. 300 crore per sanction;

e) to purchase book debts of other micro-finance/ NBFC Companies upto a limit of Rs. 50 crore per sanction;

f) to grant loans including inter corporate loans and advances on such terms and conditions as it may deem fit;

g) to authorize Company official/s for execution of documents, including loan documents and affixing common seal of the company thereon, if required;

h) to invest funds of the Company in Fixed Deposits to the extent necessary to avail credit facilities/ loans from the Banks/ Financial Institutions etc. and to invest surplus funds in liquid funds (i.e. mutual funds etc.) for the benefit of the Company;

i) to decide remuneration including basic salary, allowances, incentives, perquisites, travel allowance and any other welfare measures for the benefit of the employees of the Company other than Directors;

j) to incur capital expenditure outside the annual business plan up to a limit of Rs. 10 lakh between two Board Meetings.

k) to appoint /authorize Company official/s for execution of documents, agreement, deeds and papers as may be required from time to time in relation to day to day operations of the Company and to affix common seal of the company thereon, if required

l) to make applications for obtaining licenses, registrations, connections, clearances, services etc. and to authorize/appoint directors/employees/officers for signing applications, returns, forms, bonds, agreements, documents, papers etc. and for representing Company before the authorities under various Laws including but not limited to Corporate Laws, Industrial Laws, Tax Laws, Labour Laws and other Business Laws applicable to the Company in respect of all present and future offices of the Company, for compliance of all provisions, rules, clauses, regulations, directives and other related matters under the said Laws, which may be applicable to the Company.

m) To manage the Balance Sheet of the Company within the risk parameters laid down by the Board of Directors or a Committee thereof, with a view to manage the current income as well as to take steps for enhancing the same.

n) To review the capital & profit planning and growth projections of the Company in line with the business plan and ensure that the same is reported to the Board of the Company

o) To put in place an effective liquidity management policy, including, inter alia, the funding strategies, liquidity planning under alternative crisis scenarios, prudential limits and to review the same periodically.

p) To articulate the interest rate view of the Company and decide the pricing methodology for advances in line with extant regulatory guidelines.

q) To oversee the implementation of the Asset Liability Management (ALM) system and review the functioning periodically and to ensure that the decisions taken on financial strategy are in line with the objectives of the Committee.

r) To consider and recommend any other matter related to liquidity and market risk management to the Board of Directors of the Company for suitable action.

s) To set up standard operating processes with regard to the conduct of field staff with the customers and to monitor adherence to the same by internal as well as third-party evaluations.

t) To approve new products as specified in the policy of the company or by the regulator and rolling out of business in new geographies in which products (new as well as existing) can be rolled out.

u) To review lease, assign, sell, transfer or otherwise dispose of, any fixed assets or investments, whether by one transaction or by a series of transactions (whether related or not).

v) To report such transactions, on a quarterly basis, to the Board of the company.

 

26. IPO COMMITTEE:

The Board of Directors at its Meeting held on 15th May, 2018 had constituted IPO Committee, with the following Members.

Sl. No. Name Desig natio n & Category
1. Mrs. Padmaja Gangireddy Member, Managing Director
2. Mr. Sunish Sharma Member, Nominee Non Executive Director
3. Mr. Kartikeya Dhruv Kaji Member, Nominee Non Executive Director

During the year 2018-19, one (1) Meetings of the IPO Committee were convened and held on 22nd June, 2018. The terms of reference of the Committee as approved by the Board are as follows:

a) To make applications seeking clarifications, obtain approvals and seek exemptions from wherever necessary, to the RBI, SEBI, the Registrar of Companies, Hyderabad and any other governmental or statutory authorities as may be required in connection with the Offer and accept on behalf of the Board such conditions and modifications as may be prescribed or imposed by any of them while granting such approvals, permissions and sanctions as may be required;

b) To finalize, settle, approve, adopt and file, in consultation with the BRLMs, where applicable, the DRHP, the RHP the Prospectus, the preliminary and final international wrap and any amendments, supplements, notices, addenda or corrigenda thereto, and take all such actions as may be necessary for the submission and filing of these documents including incorporating such alterations/corrections/ modifications as may be required by SEBI, the RoC or any other relevant governmental and statutory authorities or in accordance with Applicable Laws;

c) To decide in consultation with the BRLMs on the size, timing, pricing, discount, reservations and all the terms and conditions of the Offer, including the price band(including the offer price for anchor investors), bid period, Offer price, and to accept any amendments, modifications, variations or alterations thereto;

d) To appoint and enter into and terminate arrangements with the BRLMs, underwriters to the Offer, syndicate members to the Offer, brokers to the Offer, escrow collection bankers to the Offer, refund bankers to the Offer, registrars, legal advisors, auditors, experts, printers, advertising agency(ies), monitoring agency, if any, and any other agencies or persons or intermediaries to the Offer and to negotiate, finalise and amend the terms of their appointment, including but not limited to the execution of the mandate letter with the BRLMs and negotiation, finalization, execution and, if required, amendment of the offer agreement with the BRLMs and the Selling Shareholders;

e) To negotiate, finalise and settle and to execute and deliver or arrange the delivery of the DRHP, the RHP, the Prospectus, offer agreement, syndicate agreement, underwriting agreement, share escrow agreement, cash escrow agreement, registrar agreement, ad agency agreement, monitoring agency agreement and all other documents, deeds, agreements and instruments as may be required or desirable in relation to the Offer;

f) To approve suitable policies on insider trading, whistle-blowing, risk management, and any other policies as may be required under the Listing Regulations or any other Applicable Laws;

g) To approve any corporate governance requirements, code of conduct for the Board, officers and other employees of the Company that may be considered necessary by the Board or the IPO Committee or as may be required under the Listing Regulations or any other Applicable Laws;

h) To seek, if required, the consent/ waiver of the lenders of the Company, parties with whom the Company has entered into various commercial and other agreements, all concerned government and regulatory authorities in India or outside India, and any other consents/ waivers that may be required in relation to the Offer or any actions connected therewith;

i) To open and operate bank accounts in terms of the escrow agreements and to authorize one or more officers of the Company to execute all documents/deeds as may be necessary in this regard;

j) To open and operate bank accounts of the Company in terms of Section 40(3) of the Companies Act, 2013, as amended, and to authorize one or more officers of the Company to execute all documents/deeds as may be necessary in this regard;

k) To authorize and approve incurring of expenditure and payment of fees, commissions, brokerage, remuneration and reimbursement of expenses in connection with the Offer;

l) To issue receipts/allotment letters/confirmation of allotment notes either in physical or electronic mode representing the underlying Equity Shares in the capital of the Company with such features and attributes as may be required and to provide for the tradability and free transferability thereof as per market practices and regulations, including listing on one or more stock exchange(s), with power to authorize one or more officers of the Company to sign all or any of the aforestated documents;

m) To authorize and approve notices, advertisements in relation to the Offer in consultation with the relevant intermediaries appointed for the Offer;

n) To authorize any director or directors of the Company or other officer or officers of the Company, including by the grant of power of attorney, to do such acts, deeds and things as such authorized person in his/her/its absolute discretion may deem necessary or desirable in connection with any issue, transfer, offer and allotment of Equity Shares in the Offer;

o) To give or authorize any concerned person on behalf of the Company to give such declarations, affidavits, certificates, consents and authorities as may be required from time to time;

p) To seek, if required, any approval, consent or waiver from the Companys lenders, and/or parties with whom the Company has entered into various commercial and other agreements, and/or any/all concerned government and regulatory authorities in India, and/or any other approvals, consents or waivers that may be required in connection with any issue, transfer, offer and allotment of Equity Shares and to take such actions or give such directions as may be necessary or desirable and to obtain such approvals, permissions, consents, sanctions, as it may deem fit or as the Board may suo-moto decide;

q) To settle any question, doubt or difficulty that may arise with regard to or in relation to raising of funds in the Fresh Issue;

r) To take on record the approval of the Selling Shareholders for offering their Equity Shares in the Offer for Sale;

s) To decide in consultation with the BRLMs, the withdrawal of the DRHP or the RHP or any decision not to proceed with the Offer at any stage in accordance with Applicable Laws;

t) To finalize, and arrange for the submission of the DRHP to be submitted to the SEBI and the Stock Exchanges for receiving comments, the RHP and the Prospectus to be filed with the RoC, and any corrigendum, amendments supplements thereto;

u) To finalize the basis of allotment of the Equity Shares;

v) To do all such acts, deeds, matters and things and execute all such other documents, etc., as may be deemed necessary or desirable for such purpose, including without limitation, to finalize the basis of allocation and to allot the shares to the successful allottees as permissible in law, issue of allotment letters/confirmation of allotment notes, credit of Equity Shares to the demat accounts of the successful Allottees, share certificates in accordance with the relevant rules;

w) To take all actions as may be necessary and authorized in connection with the Offer for Sale and to approve and take on record the transfer of Equity Shares in the Offer for Sale, extending the Bid/Offer period, revision of the Price Band, allow revision of the Offer for Sale portion in case any Selling Shareholder decides to revise it, in accordance with applicable laws;

x) To do all such acts, deeds and things as may be required to dematerialize the Equity Shares and to sign and / or modify, as the case maybe, agreements and/or such other documents as may be required with the National Securities Depository Limited, the Central Depository Services (India) Limited, registrar and transfer agents and such other agencies, authorities or bodies as may be required in this connection and to authorize one or more officers of the Company to execute all or any of the afore stated documents;

y) To make applications for listing of the Equity Shares in one or more stock exchange(s) for listing of the Equity Shares and to execute and to deliver or arrange the delivery of necessary documentation to the concerned stock exchange(s) in connection with obtaining such listing including without limitation, entering into listing agreements and affixing the common seal of the Company where necessary;

z) To settle all questions, difficulties or doubts that may arise in regard to the Offer, including such issues or allotment and matters incidental thereto as it may deem fit and to delegate such of its powers as may be deemed necessary and permissible under Applicable Laws to the officials of the Company; and

aa) To negotiate, finalize, settle, execute and deliver any and all other documents or instruments and to do or cause to be done any and all acts or things as the IPO Committee may deem necessary, appropriate or advisable in order to carry out the purposes and intent of this resolution or in connection with the Offer and any documents or instruments so executed and delivered or acts and things done or caused to be done by the IPO Committee shall be conclusive evidence of the authority of the IPO Committee in so doing.

 

27. DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES :

Your Company has established the Vigil Mechanism to encourage employees to report suspected legal violations, fraudulent or irregular conduct of an employee or business associate of the Company. Such incidents, if not reported would breach trust and endanger the Companys reputation. Through this mechanism, the Company provides a channel to the employees and Directors to report to the management about unethical behavior, actual or suspected fraud or violation of the Codes of Conduct or legal or regulatory requirements incorrect or misrepresentation of any financial statements and reports, etc.

The Company has a Fraud Reporting Policy to deal with instances of fraud and mismanagement, if any. This Policy ensures that strict confidentiality is maintained whilst dealing with concerns and also that no discrimination will be meted out to any person for a genuinely raised concern. A Committee has been constituted which looks into the complaints raised.

 

28. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186:

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Act are given in the Notes to Financial Statements (Refer Note No. 32).

 

29. BOARD EVALUATION:

Pursuant to the provisions of the Companies Act, 2013, the Board has carried out the annual evaluation of its own performance, its Committees and Individual directors including Independent Directors ("Performance Evaluation"). It covers the areas relevant to the functioning as Independent Directors or other directors, member of Board or Committees of the Board. A structured questionnaire was prepared, covering various aspects of the Boards functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance.

The Directors have expressed their satisfaction with the evaluation process.

 

30. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

Your Company has formulated a policy on related party transactions and is available on Companys website at http://www.span-danaindia.com/investors/index.html

This policy deals with the review and approval of related party transactions. The Board of Directors of the Company had approved the criteria for making the omnibus approval by the Audit Committee within the overall framework of the policy on related party transactions. Prior omnibus approval is obtained for related party transactions which are of repetitive nature and entered in the ordinary course of business and on an arms length basis. All related party transactions that were entered into during the financial year were on arms length basis and were in the ordinary course of the business. There are no materially significant related party transactions made by the company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the Company at large. All Related Party Transactions are placed before the Audit Committee for approval.

The particulars of Contracts or arrangements with related parties referred to in section 188(1) of the Companies Act, 2013, in the prescribed Form AOC-2, is annexed herewith marked as "Annexure – F" to this Report

 

31. RISK MANAGEMENT POLICY:

The Board of Directors had constituted Risk Management Committee to identify elements of risk in different areas of operations and to develop policy for actions associated to mitigate the risks. The Committee on timely basis informs the Board of Directors about risk assessment and minimization procedures which in the opinion of the Committee may threaten the existence of the Company, if any. The details of Risk Management Committee and its frequency of meetings form part of this report.

 

32. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

The Company has a sound Internal Control System, commensurate with the nature, size, scale and complexity of its operations which ensures that transactions are recorded, authorized and reported correctly. The Company has put in place policies and procedures for continuously monitoring and ensuring the orderly and efficient conduct of the business, including adherence to the Companys Policies, for safeguarding its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparations of reliable financial disclosures. The Audit Committee periodically reviews and evaluates the effectiveness of internal financial control system.

 

33. DIRECTORS RESPONSIBILITY STATEMENT:

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013: a. that in the preparation of the annual financial statements for the financial year ended 31st March, 2019; the applicable accounting standards had been followed along with proper explanation relating to material departures; b. that such accounting policies as mentioned in Note no. 1 of the Notes 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 31st March, 2019 and of the profit of the Company for the year ended on that date; c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provi sions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d. that the annual financial statements for the financial year ended 31st March, 2019 have been prepared on a going concern basis; and e. that the proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. f. that the Directors, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

 

34. MATERIAL CHANGES AND COMMITMENTS:

No material changes or commitments have occurred after the close of the year till the date of this Report except as mentioned herein below, which may affect the financial position of the Company.

 

35. IMPLEMENTATION OF INDIAN ACCOUNTING STANDARDS (IND-AS):

The Company has prepared its financial statements in accordance with Indian Accounting Standards (Ind AS) under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values in accordance with Section 133 of the Companies Act, 2013 (the "Act") read with the Companies (Indian Accounting Standards) Rules, 2015 and the amendments thereof and guidelines issued by the Securities and Exchange Board of India (SEBI).

The Company has adopted all the Ind AS standards with effect from 1st April, 2018 and the adoption was carried out in accordance with Ind AS 101, first-time adoption of Indian Accounting Standards, with 1st April, 2017 as the transition date. The transition was carried out from the Indian Accounting Principles generally accepted in India as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (IGAAP), which was the previous GAAP.

 

36. DEBENTURE TRUSTEE:

To protect the Interest of the Debenture Holders of the Company, your company has appointed the Debenture Trustee named as:-Catalyst Trusteeship Limited CIN: U74999PN1997PLC110262 Registered Office: GDA House, Plot No. 85, Bhusari Colony (Right), Paud Road, Pune-411038 Tel: +91 (020) 25280081/Fax: 91 (020) 25280275 Website: www.catalysttrustee.com

 

37. LISITING ON STOCK EXCHANGE:

The Non - Convertible Debentures(NCDs) issued by the Company are listed on the Wholesale Debt Market (WDM) segment of the BSE Limited in terms of the issue conditions as applicable and the Company has paid the requisite listing fees in full.

 

38. DEMATERIALISATION OF SHARES:

The detail of shares held by the shareholders in de-materialized and physical form as on 31st March, 2019, is given herein:

Partic ula rs of Shares Demat Physical
Equity Shares 5,96,17,549 16,134

 

39. INFORMATION REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013:

The Company has constituted an Internal Compliant Committee as required to be formed under Section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules made thereunder which were notified on 9thDe-cember 2013.

The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and Redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder.

During FY2018-19, the Committee submitted Annual Report as prescribed in the said Act and there were no complaints received by the Committee.

 

40. DEBENTURE REDEMPTION RESERVE:

Pursuant to Rule 7(b)(ii) of the Companies (Share Capital and Debentures) Rules, 2014 (‘Rules), the Company is not required to create Debenture Redemption Reserve as the Debentures of the Company are privately placed:

 

41. COMPOUNDING UNDER SECTION 441 OF COMPANIES ACT, 2013:

During the financial year 2018-19, the Company and its KMPs, filed an Application before the compounding authority under Section 441 of the Companies Act, 2013 (Act) for Compounding of offence u/s 203 of the Act for non appointment of Chief Financial Officer during the period 13.03.2016 to 30.01.2018. The said application was forwarded to Regional Director (RD), South East Region for consideration.

Regional Director vide its order no.F.NO:9/80/TELANGANA/RD(SER)/203 OF 2013/2018, dated 27th March, 2019 has compounded the aforesaid offence, on payment of the relevant fee by the Company.

 

42. FDI COMPLIANCE IN RELATION TO DOWNSTREAM INVESTMENT:

During the year 2018-19, the Company has made following downstream investment in its Subsidiary Company i.e. "Criss Financial Holdings Limited", in compliance with the provisions of Reserve Bank of India Master Direction on Foreign Investment in India and Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 (TISPRO).

S. No Purpose Date Amount (Rs. in crore)
1 The Company acquired 28,37,135 equity shares from the existing shareholders of the Criss Financial Holdings Limited ("CFHL") at the share price of Rs. 132.26 (including premium of Rs. 122.26) per share resulting into acquisition of more than 95% of total shareholding of the CFHL December 27, 2018 37.52
2 CFHL allotted 18,90,217 (Eighteen Lakh, Ninety Thousand Two Hundred and Seventeen Only) Equity shares of a f ce value of Rs.10/- (Rupees Ten each) at an issue price of Rs 132.26 per share (including premium of Rs. 122.26 to the Company. December 28, 2018 25.00

Further, the Company in terms of the provision of TISPRO regulations has filed the necessary Form DI for the aforesaid downstream investment with Reserve Bank of India (RBI) within the stipulated period.

 

43. GRATITUDE AND ACKNOWLEDGEMENT:

The Board expresses its deep sense of gratitude to the Government of India, Reserve Bank of India and other regulators for the valuable guidance and support the Company has received from them during the year. The Board would also like to express its sincere appreciation of the co-operation and assistance received from its stakeholders, Shareholders, Bankers and other Business Constituents during the year under review. The Board places on record its appreciation of the dedicated services and contributions made by its staff for the overall performance of the Company.

For & on behalf of the Board of Directors
Sd/- Sd/-
Padmaja Gangireddy Kartikeya Dhruv Kaji
Place: Mumbai Managing Director Director
Date: 28th June, 2019 DIN: 00004842 DIN: 07641723