SRG Housing Finance Ltd Directors Report

Note: Figures have been regrouped/reclassified/rounded off wherever necessary

During the year under review, SRG Housing maintained robust growth. The Gross Loan Book as at March 31, 2024 stood at Rs 601.59 Crores as against Rs 438.36 Crores as at March 31, 2023, growth of 37.24%. As at March 31, 2024 the Loan Portfolio contributing Housing loans as 69.84%, (previous year 66.14%) and Loan against properties (LAP) as 30.16% (previous year 33.86%).

During the Financial Year under review, your Company sanctioned housing loans of Rs 207.44 Crores as compared to Rs 124.72 crores in the previous financial year and LAP sanctioned Rs 104.63 crores as compared to Rs 77.22 crores in previous financial year.

During the Financial Year under review, your Company disbursed housing loans of Rs 187.44 Crores as compared to Rs 118.97 crores in the previous financial year and LAP disbursed Rs 96.17 crores as compared to Rs 71.77 crores in previous financial year.

The profit before tax for FY24 increased by 24.05% to Rs 26.10 crores (FY23: Rs 21.04 crores).

The profit after tax for FY24 increased by 23.45% to Rs 21.06 crores (FY23: Rs 17.06 crores).

The Gross NPA of your Company as on March 31, 2024 was Rs 13.76 Crore; 2.29% (previous year Rs 10.97 Crore; 2.50%). The Net NPA as on 31st March 2024 was Rs 4.11 Crore; 0.69% (previous year 2.18 Crore; 0.52%). No account has been written off during FY 24 (FY23: Nil).

The regulatory and compliance reporting, has been done in accordance with the prudential guidelines for Non-Performing Assets (NPAs) issued by the Reserve Bank of India under Master Direction - Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021.

Your Company has made adequate provision for the assets on which instalments are overdue for more than 90 days and on other assets, as required. For details on the impairment provisioning, please refer note no. 59 to the financial statements.

The Company has maintained cumulative NPA provision of Rs 9.65 Crores against the required provision of Rs 6.64 crores (Previous year Rs 8.79 crores against requirement of Rs 5.35 crores). Further for standard assets Company carries provision of Rs 2.01 Crores (Previous year Rs 1.47 Crores).

On November 12, 2021, RBI issued a notification on Prudential Norms on Income Recognition, Asset Classification and Provisioning (IRACP) pertaining to Advances Clarification, with the objective of harmonising regulatory guidelines for all lending institutions. RBI stipulated that borrower accounts be flagged as overdue as part of their day-end process for the due date accordingly the Company has revised its process of NPA classification to flagging of the borrower accounts as overdue as part of the day-end processes for the due date. RBI also stipulated that NPA accounts can only be upgraded to standard provided all outstanding dues have been fully repaid. In February 2022, RBI provided time till September 30, 2022 for NBFCs to comply with the upgradation criteria.

Pursuant to the cited norms classification of loans amounting to Rs 0.51 Crs as non-performing assets (Stage 3) as at Mar24.

The Company maintains an adequate Capital Adequacy Ratio which is far higher than the minimum required level of 15% under the RBI Master Directions signifying the strong position of the Company.

As per the RBI notification, Housing Finance Companies (HFCs) are categorized as Middle Layer and accordingly HFCs are required to have internal assessment of the need for capital, commensurate with the risks in their business.

Accordingly, we have designed its ICAAP Policy and assessed applicable risk in ICAAP, as per internal methodology, which is proportionate to the scale and complexity of our operations

Your Directors felt it prudent to retain the earnings for the year under review to be ploughed back in business, which shall result in further augmentation of the Companys growth and Shareholders wealth.

The Company believes that its success is largely determined by the quality of its workforce and their commitment towards achieving the goals of the Company. In order to enable the employees of the Company to participate in the future growth and success of the Company, Employee Stock Option Scheme - 2023 ("Scheme") was adopted by the Company. In terms of Regulation 14 of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations 2014, the disclosures for the FY23-24 with respect to ESOP 2023 have been provided on the website of the Company.

ESOP plan of the Company are in compliance with the provisions of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (SEBI SBEB and Sweat Equity Regulations) as amended from time to time.

The Nomination & Remuneration Committee monitors the ESOP Schemes in compliance with the Act, SEBI SBEB and Sweat Equity Regulations and SEBI LODR Regulations.

A Certificate from Secretarial Auditors of the Company, confirming that the above ESOP Schemes have been implemented in accordance with the SEBI SBEB and Sweat Equity Regulations as amended from time to time and are as per the resolutions passed by the Members of the Company will be available for the inspection of the Members of the Company.

During the year under review, the Companys share capital increased due to allotment of 300,000 equity shares to Mr. Vinod Kumar Jain. On exercise of warrants alloted to Mr. Vinod Kumar Jain (promoter), the board has alloted 3,00,000 equity shares to him on March 19, 2024. These shares were issued at a price of Rs 200 per share, with a face value of Rs 10 each and a premium of Rs 190 per share.

As of March 24, 2024, the share capital of the Company stands at Rs 13,30,00,000/-. Apart from the aforementioned allotment, there were no other changes in the share capital of the Company during FY 2023-24.

The Company has a diverse set of lenders that include public sector banks, private sector banks, the National Housing Bank and other financial institutions. Funds were raised in accordance with the Companys Resource Planning Policy, through term loans from banks, FIs and re-finance facilities from NHB. The Companys long-term nature of borrowings and adequate liquidity have ensured a well- matched ALM.

The Company availed Rs 262.80 Cr. in FY 24 out of which 39.51% from Banks and rest from Financial Institutions and NHB.

In FY24 the outstanding borrowing was Rs 491.26 Crore vs Rs 357.24 Crore in FY23.

Disclosure in accordance with the RBI Master Direction - Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021.

i. The total number of non-convertible debentures which have not been claimed by the investors or not paid by the housing finance Company after the date on which non-convertible debentures became due for redemption - Nil

ii. The total amount in respect of such Debentures remaining unclaimed or unpaid beyond the date of such debentures become due for redemption- Nil

Debenture Trust Agreement(s) were executed in favour of Catalyst Trusteeship Limited for NCDs issued by the Company on private placement basis. As on March 31, 2024 all the NCDs were redeemed

Further details of borrowings are provided under notes to accounts.

In accordance with the provisions of Sections 124, 125 and other applicable provisions, if any, of the Act, read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (hereinafter referred to as IEPF Rules) (including any statutory modification(s) or re-enactment(s) thereof for the time being in force), the amount of dividend remaining unclaimed or unpaid for a period of seven years from the date of transfer to the Unpaid Dividend Account is required to be transferred to the Investor Education and Protection Fund (IEPF) maintained by the Central Government. Further, according to the IEPF Rules, the shares in respect of which dividend has not been paid or claimed by the Shareholders for 7 (Seven) consecutive years or more are also required to be transferred to the demat account created by the IEPF Authority

Under the provisions of Section 125 of The Companies Act, 2013, Matured NCDs and/or Interest thereon, remaining unclaimed and unpaid for a period of seven years from the date they became due for payment are required to be credited to Investor Education and Protection Fund (IEPF) established by the Government of India.

As at March 31, 2024 there was no NCDs amount or interest thereon, which remained unclaimed and unpaid.

Pursuant to Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) and Master directions issued by Reserve Bank of India (RBI), Report on Management Discussion and Analysis is forming part of this Annual Report.

During the year under review the Company does not have any Subsidiary, Associate or Joint venture Companies.

No material changes and commitments, affecting the financial position of the Company have occurred between the financial year ended March24 and date of this Directors Report.

In pursuance of Section 134 (3) (c) read with Section 134(5) of The Companies Act, 2013, and based on the information provided by the management, your Directors hereby confirm that:

a. In the preparation of the annual accounts for the year ended on March 31, 2024, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b. Accounting policies selected were applied consistently. Reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the Company as at March 31, 2024 and of the profit of the Company for the year ended March 31, 2024.

c. 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 frauds and other irregularities;

d. The annual accounts of the Company have been prepared on a going concern basis;

e. Internal Financial Controls have been laid down to be followed by the Company and such Internal Financial Controls were adequate and operating effectively;

f. Systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

The Company has not issued any shares with differential rights and hence no information as per provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.

The Company has not issued any sweat equity shares during the year under review and hence no information as per provisions of Section 54(1)(d) of the Act read with Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.

During the year under review, there were no instances of non-exercising of voting rights in respect of shares purchased directly by employees under a scheme hence no information pursuant to Section 67(3) of the Act read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014 is furnished.

During the year under review the Company has not made any application nor any proceedings are pending under the Insolvency and Bankruptcy Code, 2016. Further there were no instances of one-time settlement for any loans taken from the Banks or Financial Institutions.

The Company is in compliance with applicable Circulars, Notifications and Guidelines issued by RBI and NHB from time to time.

Your Company is also in compliance with the applicable provisions of the Companies Act, 2013 and Rules thereunder, Secretarial Standards, SEBI LODR Regulations and other applicable statutory requirements.

For more details regarding Compliances, please refer the Secretarial Audit Report enclosed to this Report.

During the Financial Year, no penalty was imposed on the Company by any regulator/ supervisor/ enforcement authority.

The Reserve Bank of India in 2021 issued Scale Based Regulation (SBR) a revised regulatory framework for NBFCs which is applicable to your Company being a NBFC HFC category falling under middle layer.

Your Company has taken adequate steps to adhere to all the stipulations laid down in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, RBI Master Directions and the Companies Act, 2013 and Rules thereto, as amended from time to time.

Pursuant to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, RBI Master Directions and disclosures as required under The Companies Act, 2013 and the Rules thereto, a separate Section titled Report on Corporate Governance forms part of this Annual Report.

The certificate by the Secretarial Auditor confirming compliance with the conditions of Corporate Governance as stipulated in the SEBI (LODR) Regulations, 2015 forms part of this report.

The said certificate for financial year 2023-24 does not contain any qualification, reservation or adverse remarks.

In terms of Section 136 of The Companies Act, 2013, the reports and accounts are being sent to the members and others entitled thereto.

As on March24 your Company adhered to the Internal Guidelines on Corporate Governance adopted in accordance with Master Directions-Non-Banking Finance Company (Housing Finance Company), (Reserve Bank) Directions, 2021, which inter-alia, defines the legal, contractual and social responsibilities of the Company towards its various Stakeholders and lays down the Corporate Governance practices of the Company. The said policy is available on the website of the Company and can be accessed at https:// srghousing.com/PoliciesCode

All contracts / arrangements / transactions entered by the Company with related parties are in the ordinary course of business and on an arms length basis. Your directors draw attention of the Members to Note no. 34 to the Financial Statements which sets out related party disclosures. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with Section 188 of Companies Act, 2013 accordingly information in Form AOC-2 is not annexed.

All related party transactions are approved by the Audit Committee or Board or members at a general meeting, as applicable.

The policy on transactions with related parties is given as elsewhere in this to this report and also available at the website of the Company www.srghousing.com.

Pursuant to Section 134 (3) (n) of The Companies Act, 2013, The SEBI (LODR) Regulations, 2015 and RBI Master directions, the Company has in place a risk management framework approved by the Board of Directors SRGHFLs Risk Management framework provides the mechanism for risk assessment and mitigation. Company has in place Risk Management Committee. The details of the Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Directors Report.

At present the Company has not identified any element of risk which may threaten the existence of the Company.

In accordance with the provisions of Section 135 of The Companies Act, 2013 and the rules framed thereunder, the Company has a Corporate Social Responsibility Committee. The role of the CSR Committee is to review the CSR policy, indicate activities to be undertaken by the Company towards CSR activities and formulate a transparent monitoring mechanism to ensure implementation of projects and activities undertaken by the Company towards CSR activities.

The total amount spent during financial year 2023-24 was Rs 65.10 Lakhs (Previous Year Rs 48.43 Lakhs). The Annual Report on CSR activities including brief contents are provided to this report.

Further, your Company has constituted a separate entity named as "SRG Foundation" to effectively channelize CSR Funds to provide impetus on philanthropic initiatives of your Company. Your Company plans to drive CSR initiatives directly as well as through the SRG Foundation.

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined by board. To maintain its objectivity and independence, the Internal Auditor reports to the Chairman of the Audit Committee of the Board and/or to the Managing Director.

The Internal Auditor monitors and evaluates the efficacy and adequacy of Internal Control System in the Company, its compliance with operating systems, accounting procedures and policies of the Company.

Based on the report of Internal Auditor, respective heads undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board and/or to the Managing Director.

The composition of the Board is in accordance with Section 149 of the Act and Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with an appropriate combination of Executive, Non-executive and Independent Directors.

The Board of the Company comprises 7 Directors, consisting of 4 Independent Directors, 2 Non-Executive Women Directors and a Managing Director as on March 31, 2024.

Details of Board of Directors along with Key Managerial Personnel as on March 2024 is mention below:

Pursuant to the provisions of Section 152 of the Act, Mrs. Garima Soni, Non-Executive Director being the longest in office among directors who are liable to retire by rotation, retires and being eligible; offers herself for re-appointment at the ensuing 25th Annual General Meeting.

All the Directors of the Company have confirmed that they satisfy the fit and proper criteria as prescribed under the applicable regulations and that they are not disqualified from being appointed as directors in terms of Section 164(2) of the Companies Act, 2013 and are not debarred from holding the office of Director by virtue of any SEBI order or any other such authority.

Details of managerial remuneration as required under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this report.

Further no director has been resigned from the Company during the Financial Year under review.

During the year under review Mr. Archis Jain has been appointed as Chief Executive Officer of the Company with effect from April 24, 2023, except this there is no other change in the Key Managerial Personnel of the Company.

In terms of the Act, the following are the KMPs of the Company as on 31st March24:

1. Mr. Vinod Kumar Jain - Managing Director

2. Ms. Divya Kothari - Company Secretary

3. Mr. Archis Jain - Chief Executive Officer

4. Mr. Ashok Kumar - Chief Financial Officer

The Independent Directors have confirmed that they satisfy the criteria prescribed for Independent Directors as stipulated in the provisions of the Section 149(6) of the Act and Regulation 16(1)(b) & 25 of SEBI LODR Regulations. The names of all the Independent Directors of the Company have been included in the Independent Directors databank maintained by Indian Institute of Corporate Affairs ("MCA"). The Company has obtained declaration of independence from all the Independent Directors of the Company.

All the Directors of the Company have given the declaration to the effect that they are Fit & Proper, to be appointed as Director, as per the criteria prescribed by RBI / NHB.

The Company has defined a manner of evaluation as per the provisions of the Act and SEBI Listing Regulations and for the evaluation of the performance of the Board, Committees of Board & Individual Directors. The above manner is based on the Guidance Note on Board Evaluation issued by the SEBI on January 05, 2017

The Board carried out the evaluation of every Directors performance, its own performance, the Committees namely Audit Committee, Nomination & Remuneration Committee, Corporate Social Responsibility Committee, Stakeholders Relationship Committee and Risk Management Committee and all the Independent Directors.

During the financial year under review, a separate meeting of the Independent Directors was held on March 19, 2024 without the attendance of Non-Independent Directors and the Management of the Company. The Independent Directors had discussed and reviewed the performance of the Non-Independent Directors and the Board as a whole and also assessed the quality, quantity and timeliness of the flow of information between the Management and the Board, which is necessary for the Board to effectively and reasonably perform its duties.

Pursuant to the provisions of Section 139, 142 and all other applicable provisions of the Companies Act, 2013 and Rules made thereunder, at the 23rd Annual General Meeting held on August 5, 2022 the members had appointed M/s Valawat & Associates (FRN: 003623C), Chartered Accountant as statutory auditor for a term of five years beginning from the conclusion of 23rd AGM till the conclusion of 28th AGM.

The Statutory Auditors have audited the books of accounts of the Company for the financial year ended March 31, 2024 and have issued the Auditors Report thereon.

The Statutory auditors report annexed to the financial statements for the year under review does not contain any qualifications, reservations or adverse remarks.

The details of remuneration paid by the Company to M/s. Valawat & Associates Chartered Accountants are provided in note no. 27 of the financial statements.

During the year under review, the statutory auditor has not reported any instances of fraud committed in the Company by its officers or employee to the Board/Audit Committee under Section 143(12) of the Companys Act, 2013.

Mr. Shiv Hari Jalan, Practicing Company Secretary was appointed as the Secretarial Auditor of the Company for the financial year 2023-24 by the Board of Directors pursuant to provisions of the Companies Act, 2013 and Rules framed there under. Secretarial Audit Report along with the Secretarial Compliance Report as prescribed by SEBI as provided by Mr. Shiv Hari Jalan, Practicing Company Secretary is annexed to this Annual Report. The Secretarial Auditors have not submitted any material qualifications, reservations or adverse remarks or disclaimers. Further, the

Secretarial Auditors have not reported any instances of fraud in terms of Section 143 (12) of the Act.

During the year under review, the Company complies with the applicable Secretarial Standards by the Institute of Company Secretaries of India.

During the financial year 2023-24, 10 meetings of the board of directors were held and the related details, including details of various committees and meetings thereof are available in the Report of Directors on Corporate Governance forming part of this Annual Report.

Since the Company is a Housing Finance Company, the disclosures regarding particulars of the loans given, guarantees given and securities provided is exempted under the provisions of Section 186 (11) of the Companies Act, 2013.

As regards investment made by the Company, the details of the same are provided under Note no. 5 forming part of Financial Statements of the Company for the year ended March 31, 2024.

There is no information to disclose under the head Conservation of Energy and Technology Absorption given in the above rules since the Company is engaged in providing financial services activities. However, your Company is taking every step to conserve and minimize the use of energy wherever possible. There were no foreign exchange earnings and outgo, during financial year 2023-24.

The Company being a Housing finance Company is not required to maintain cost records as prescribed under section 148(1) of the Act.

Pursuant to the provisions of Section 134(3)(a) of the Act, the copy of Annual Return in Form MGT-7 as required under Section 92 (3) of the Act is placed on the website of the Company at www.srghousing.com.

As on March 31, 2024 the Company had 1 employee employed throughout the year who was in receipt of remuneration of more than Rs 1.02 crores per annum. Except this no other employee employed throughout the year that was in receipt of remuneration of Rs 1.02 crores or more per annum or Rs 8.50 lacs or more per month if employed for part of the year. Disclosures on managerial remuneration are annexed to this report.

There are no material changes and commitments affecting financial position of the Company between March 31, 2024 and the date of Directors Report.

There are no changes in the nature of business of the Company during the year under review.

The Company has been granted registration by the National Housing Bank as a non-deposit taking Housing Finance Company. Being so, the Company has neither accepted in the past nor has any future plans to accept any public deposits.

During the year, there were no significant or material orders passed by the regulators or courts or tribunals against the Company.

Details of Managerial remuneration as required under Rule 5(1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 read with The Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 is annexed to this report.

Having listed on BSE in 2012, the Company is listed on NSE exchange on 21 Aug 2023 by Direct Listing Application.

The Company confirms that it has paid the Annual Listing Fees for the year 2023-24 to BSE and NSE where the Companys securities are listed.

During the year Company has not received any investor complaints and as on date no investor complaints are pending.

The Company has a policy on prevention, prohibition and Redressal of sexual harassment of women at the workplace and has an Internal Complaints Committee (ICC) in compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Companys policy on the same is placed on the website of the Company www.srghousing.com. The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

In terms of section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, we report that, during 2023-24, no case has been reported under the said act.

There are no loans and advances in the nature of loans to firms/companies in which directors are interested.

Your Board of Directors place on record their appreciation for the advice, guidance and support given by various regulatory authorities including the National Housing Bank (NHB), Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Ministry of Corporate Affairs (MCA), Stock Exchange (BSE), Depositories (NSDL & CDSL), Debenture Trustees, Debenture Holders, and all the Bankers and Lenders of the Company.

The Board of Directors would like to acknowledge the role of all its stakeholders - shareholders, borrowers, key partners, lenders, customers, Statutory and Secretarial Auditors, Registrar & Share Transfer Agent, Rating agencies, local/ statutory authorities, Service Providers and Counselors and all others for their continuing support to the Company.

Your directors also record their appreciation for the dedicated services of the employees and their contribution to the growth of the Company especially during the difficult times of the pandemic.

The Board would also like to express its sincere appreciation to all the Companys valued Shareholders, for their continued support and patronage.