star housing finance ltd share price Directors report


To,

The Members

Star Housing Finartce Limited

(Formerly kno\vn as Akme Star Housing Finance Limited")

The Board of Directors are pleased to present the Compan/s Seventeenth Annual Report along with the audited financial statement forthefinar>cialyearer>ded March 31,2022.

FINANCIAL SUMMARY OR HIGHLIGHTS/PERFORMANCE OF THE COMPANY

The Boards Report shall be prepared based on the financial statements of the company. The Companys financial performance for the financial year ended MarchSl,2022, is summarized below: -

(Rs. In Lacs)
PARTICULAR 2021-22 2020-21
Gross Income 1,936.54 1,560.29
Less:FinanceCost 617.01 498.83
Employee BenefitExp. 569.02 39726
Overhead 364.43 235.86
Depreciation 2721 14.66
Impairment of Rnancial instruments 50.97 195.25
Profit Before Tax 307.89 218.43
Less: Provision for taxation 69.69 62.78
Profit After tax 238.21 155.66
Balance Brought Forward from last year 1,126.99 1,113.01
Appropriations 238.21 155.66
Transferred to Statutory Reserve under Section 36{l)(viii) of the Income Tax Act, 1961 read with Section 29C of National Housing Bank Act, 1987 61S8 49.66
Transferred to General Reserve Nil Nil
Transferred to Impairment Reserve (Covid-19) Nil 52.83
Others S.54 Nil
Balance Carried ov^to the Bala nee Sheet 1,295.08 1,126.99

 

BUSINESS PERFORMANCE: (Rs. In Lacs)
KEY FACTORS 1 2021-22 2020-21 GROWTH (%)
Loan Portfolio 10408.92 9454.19 10.09%
EPS (Basis) in Rs. 1.49 0.99 51%
CRAR (%) 84.78% 86.35% 0-82%)

Note; Figures have been regrouped whenever necessary while preparing thestatement as p>erlND-ASrequirements.

The above mentioned performance vras amidst very strong headwinds created due to certain events which had contagion effect on the entire sector. It is worth mentioning that due to focusing on fundamentals, which has been the main plank over this decade, enable thecompanynotonlytonavigatethrough this situation but achievedahigherthan the targeted growth.

DIVIDEND

The Board of Directors of the Company have recommer>ded a final dividervd of Rs 0.20/- per equity share of Rs. 10/- each for the year under review.

TRANSFERTO RESERVES

During the year under revlev/, your Company appropriated Rs. 6158 Lakhs to the Statutory Reserve under Section 36(1) (viii) of the Income Tax Act, 1961 read with Section 29C of National Housing Bank (NHB) Act 1987 out of the amount available for appropriation andan amount of Rs. 238.21 Lakhs is proposedto be retained intheProfitand Loss Account SHARE CAPITAL

• Authorized Share Capital

The company has increased the authorized share capital to Rs. 30,00,00,000/- (divided into 3,00,00,000 Equity Shares of Rs.10/-each) vide passing ordinary resolution at an Extra Ordinary General Meeting of the membersof the company held on April 30,2021.

• Issued and Paid-up Capital

Thepaid-up Equity Share Capital of thecompanyisRs.16,58,22.290(divided into 1,65,82,229 EquItySharcsofRs.10/-each) a s on March31.2022.

During the year under review, the company has issued 9,08,729 equity shares of Rs. 10/- each to the Promoters and Non- Promoters on Preferential basis as approved in its Board Meeting hold on 18th November. 2021,

CREDIT RATING

Your Companys financial disciplineand prudence is reflected in the strong credit rating assigned/renewed by India Rati ngs&Research Private Limited, Care Rating Limited and Brickwork Rating India Private Limited durir>g the yearas under.

The details of the same are mentioned below:-

S.NO FACILITIES LIMITS (INCR) TENURE RAHNG
1 Fund based (Bank Facilities) 159 Long Term IND BBB -/ Stable
2 Fund based (Bank Facilities) 167 Long Term CARE BBB-/Stable
3 Fund based (Bank Facilities) 166 Long Term BWR BBB-/Stable

TERM LOAN FROM BANKSANP nNANOALlNSTITUTIONS

During the financial year2021-22your company raised Financial Assistancefrom following institution:

1. Rs. 5.30Crore(RupeesRve Crore Thirty Lakhs only) through termloanfromHinduja Housing Finance Limited

2. Rs. SCrore (Rupees Five Crore only) Ref inarvee Assistance under Special Refinance Facility2021 (SRF-2021) from National Housing Bank.

3. Rs.2Croros(RupeesTwoCroreOnly)underTerm Loan fromCaprtalIndiaFinance Limited.

4. Rs. 10 Ciores(Rupees Ten Crore only) under Additiorvsl Refinance from National Housing Bank.

5. Rs. 10 Crores (Rupees Ten Crore only) under Term Loan fromHinduja Leyland Finance Limited.

6. Rs. 10 Crores (Rupees Ten Crore only) under Term Loan from Indian Ov^seasBank.

REVIEW OF OPERATIONS

Your Company isregisteredasa Housing Finance Company (HFC) with NHB to carry outthehousingfinance activities in India.

To build a quality loan book, >our Company endeavors to adopt superior underwriting practices backed by robust monitoring and recovery mechanism. Your Company is com mittedtovvards improving efficiencyin aliits processes and service leveisfor Its customers. Your Companys thrust continues to be theaffordable housing segmentwithitsfocuson catering to the aspirations of low and middle- income Indian Emilies who dream to own their homes. Your Company has been facilitating credit access to the low and middle-income self-employed customers in semi-urban and rural areas in India. The majority of your Companys customers have limited access to formal banking creditfacilities.

During the Rnancial Year under review, your Company delivered a resilient performance, which is reflected in the following financial snap^ot

• lncon>e&Profits

Total Irviome increased by 24.11% to Rs. 1936.54 Lakhs for the Financial Year ended March 31,2022 as compared to Rs. 1.56029 Lakhs in the previous Financial Year. Profit before Tax (P6T) v/as 40.95% higher at Rs. 307.89 Lakhs as compared to Rs. 218.43 Lakhs in the previous Financial Year. The Total Comprehensive Income for the Financial Year 2021-22 irwreased 57.83% from Rs.245.67 Lakhs in the Financial Year to Rs155.66 Lakhs in the Previous Financial Year TheOutstarxling Bank Borrowing as on31.03.2022stood at Rs.7847.79 Lakhs

• Sanctions

During the Financial Year under review, your Company sanctioned housing loans for Rs. 4314.01 Lakhs as compared to Rs. 2822.74 Lakhs in the previous Rnancial Year registering a groy/lh of 49.64%. The cumulative loan sanctiorrs since inception of your Companystood at Rs. 19627.01 Lakhs as on March31,2022.

• Disbursements

During the Financial Year under review, yourCompany disbursed loansfor Rs. 3657.94 Lakhsascomparedto Rs.2943.44 Lakhs in thepreviousRnancialYearand recorded growth of24.27%in disbursements.

• Capital Adequacy

NHB vide its Notification No. NHB.HFC.DIR.22/MD&CEO/2019 dated June 17 2019 has amended capital adequacy ratio for MFCs from 12%to15%byMarch2022.Thecapital adequacy ratioof MFCs istobeincr€asedto15%byMarch31,2022.

Your CompanysCapital Adequacy Ratio asat March31.2022, was84.78%which isfarabovethe minimum required level of 15%

• Assets Under Management (AUM)

The AUM of your company stoodat Rs 10408.92 Lakhs as on March 312022 as against Rs. 945419 Lakhsinthe previous financial year, with a groi\>th of 10.09%.

RegulatoiYFrameworkfor HCFs.l^ed ^ RBI

In August 2019. the RBI tookoverthepowers to regulate MFCs from the NHB. However, the NHBcontinuestocarryout the function of supervision of HFCs

In October2020, the RBI issued changes in the regulatoiy framework for HFC in supersession of the corresponding regulations by the NHB. The new framework introduced certain regulatory changes for HFC such as the principal business criteria for housing finance, definition of housing finance, requirement of minimum percentage of total assets required towards housir>g finance and housing finance for individuals, minimum net owned fund requirements, guidelines on liquidity risk management framevvork and liquidity coverage ratio, amongst others

In November 2020, the RBI issued guidelines around co-lending by Banks and NBFCs (including HFC) to priority sector in order to improve the flow of credit to the unnerved and undeserved sector of the economy and make available furvds to the ultimate beneficiary atan affordable cost considering the lower cost offends from banks andgreater reach of ttieNBFCV HFC On February 17, 2021, the RBI issued Master Direction - Non-Banking Rnancial Company - Housing Finance Company (Reserve Bank) Directiore, 2021 (RBI HFC Directions). These directions came into force with immediate effect.

on January22,2021. Based on the inputsreceived,theRBIhasputinplacea revised regulatoryframeworkforNBFCson Oct22,2021. Regulatory structure for NBFCs shall comprise of four layers based on their size, activity, and perceived riskiness. NBFCs in the lowest layer shall be knov/n as NBFC - Base Layer (N6FC-BL). NBFCs in middle layer and upper layer ^all be knov/n as NBFC - Middle Layer

(NBFC-ML) and NBfC - Upper Layer (NBFC-UL) respectively. The Top Layer is ideally expected to be empty and will be known as NBFC -Top Layer (NBFC-TL).

As the SBR framework encompasses different facets of regulation of NBFCs covering capital requirements, governance standards, prudential regulation, etc., RBI first issued an integrated regulatory framework for NBFCs under SBR providing a holistic view of the SBRstructure,set of fresh regulations being introduced and respective timelines will be issued subsequently. These guidelines shall be effective from October01,2022.

According to these guidelines all MFCs fall under the category of Middle layer for the purpose of regulation and supervision. The compianyhasputinplaceall the necessary steps in this direction tocomply with the new Regulatory framework.

ASSET CLASSIFICATION AND PROVISIONING NORMS:

The RBI has come out with certain clarifications on Income Recognition, Asset Classifications and Provisioning norms with a view to have a uniformity across all the lending institutions including HFCs vide their notification dated November 12,2021. The company has been complying with these instructions meticulously.

PROSPECTS ANDDEVELOPMENTS:

There isa very huge market to be served, which needs an efficient last mile delivery of credit, thus creating enormous opportunity for all the financial institutions and HFCs in special. The Company continues to pursue the strategy of being multi-product and multilocation, thus giving the distinct edge from the risk nianagement and scalability perspective. The focus across the product is of catering to the lower and the middle income segment, which are the key driver of our economy.

HOUSING FINANCE:

The Company aims at sending the middle income and the lower income sector of the economy, especially in the semi urban and rural areas, y/hich are reckoned to be the key drivers of the sector In the coming decades. Full-fledged efforts are on to execute efficiently, as per the detail planning. Being aware of the challenges involved in serving this class of the society, a very cautious approach is adopted in building up volumes. Nevertheless, Company is quite confident of building substantial volumes in the near future. The Companys rural initiative will also start yielding results shortly. It is worth mentioning that despite the creditworthy customer class, ascertaining the titleof the propertyremainsachallengingjob.TheCompanyisactivelyinvolvedwithallthestakeholderstosmoothen the process and Is assertive in getting the right set of documents. We continue to endeavor relentlessly and are confident of creating a quality portfolio and add value to the ecosystem we work in.

DISTRIBUTION NETWORK:

Your company has been successful in continuous expansion of its branch network vrith a view to support Its disbursomont grov/th, deeper penetration in the states in which the Company operates and enhancing customer reach. During the Rnancial Year under review, theCompanyhasexpanded its branch nehvorkto5stateswith7branchesason March 31,2022. Your Company operates in the Udaipur, Mumbai, Pune, Akola, Indore, Chennai andSurat

HUMAN RESOURCEMANAGEMENTj

During the y^ar, the HR continued to timely on-board experienced resources across all locations* imparted functional and system training to develop productive resources for ail the functional teams. The Company also gave an opportunity to identify and develop the internal talent pool. Company hired professionals at senior positions as Functional Heads for heading the various Departments of the Company, having relevant industry experience and expertise to strengthen and grow the housing finance business of the Company.

Companys success depends largely upon the quality and competence of its Management team and key personnel. Attracting and retaining talented professionals is therefore a key element of the Compian/s strategy and a significant source of competitive advantage. The Company hasa diverse workforceof 83 employees as on March31,2022.

Human resource development Is considered vital for effective implementation of business plans. Constant endeavors are being made to offer professional growth opportunities and recognition, apart from impiarting training to the employees at all levels. Your Company has also provided the sales training to the new recruits to provide them better understanding of the Company and align them towards the working cultureof theCompany.

Trust with all the above qualities accompanied l^the determination to excel, this team forms aformidable second line of management atStarHFC.

Your Company will alwaysstrive to stoengthen this mostimportantresourcein its quest to have enabling humancapital.

CAPITALANP LIABILFTY MANAGEMENT:

The Company in tandem v/ith its philosophy of pursuing the mission of Excellence through Endeavors" will strive to maximize the shareholders value. TheCompany continues to pursue an efficient capital management policy, which aims at maximizing the return on capital employed and at the same time adhering to the prudential guidelines laid down fay NHB from time to time.

The Company by virtue of its performance over the years enjoys very good relationships vvilti many leading banks arxJ financial institutiorw. The Company could raise the required resources from various banks and financial institutions easily. We anticipate the same response from all our lending partners for the coming years too. The Company anticipates credit lines from fev/ more banks and financialinstitutions besides the existing ones.

During the year passed by when the whole sector was looked upon as a risky preposition the Company could not only manage to raise the required resources butalsoobtainedcredit linesfor the coming year.

Your Company continues to command the respect and the confidence of Bankers as their extended channel in their task of providing efficient delive of credit. The companyacknowledgestheconstructivesupportof theinvestorsand Banks.

RESOURCEMOBILISATION:

Your Compan/s borrowing policy is under the control of the Board. The Ck>mpany has vide special resolution passed by means of special Resolution on 21st September, 2019. under Section 180(l)(c) of the Companies Act, 2013, authorized the Board of Directors to borrow money upon such terms and conditior^ as the Board may think fit in excess of aggregate of paid up ^are capital, free reserves, security premium of the Company up to an amount of Rs. 500 crore and the total arrjounrt so borrowed shall be within the limits as prescribed undertheHousing Finance Companies (NHB) Directions, 2010.

Your Company continued to use a variety of funding sources to optimize funding costs, protect interest margins and maintain a diverse furvding p>ortfolio which further strengthened its funding stability and liquidity needs. Your Company continued to keep tight control over the cost of borrowings through ncgotiatior^ with lenders arvd thu^ raised resources at competitive rates from its lenders while ensuring proper asset liability match.

Your Company continued to diversify its funding sources by exploring the Debt Capital Market through private placement of Secured NCDs to Multilateral/Development Financial Institutions, NHB Refinance, NHB SRF (fecial Refinance Facility Assistance) ,NHB‘s LIFT (Liquidity infusionscheme).

(%BTICyi-Aa?0iU.flANS,fiMARANTEK.0J5^

Details of Loans, Guaranteesand Investments covered under the provisionsof Section 186 of the Companies Act, 2013, apart from the loans made, guaranteegiven or security provided by theCompanyinthe ordinary course of business are given in the Notes to accounts forming part of the Audited Rnanciai Statements for the year ended March3l 2022 APOPnONANPALTERAnONlNMEMORANDUMANPARnCLEOFASSOCIATION;

Company has made Alteratic^ in the provisions of the Memorandum of Association of the company by way of char>ge in Name of Company and Change in Registered office in accordance with the provisions of Companies Act, 2013 vide passirvg Special Resolution (respectively) passed at Extra Ordinary General Meeting (EGM) heldon 30th April, 2021.

NON-PERFORMING ASSETS AND PROVISIONS FORCONTINGENCY;

TheGrossNPAofyourCompanyason March31.2022was Rs. 311.46 Lakhs;2.99% (previous year288.18 Lakhs; 3.05%). The Net NPA as on March 31,2022 was Rs.248.17Lakhs;240%(fxevious year270.04 Lakhs; 2.86%). The regulatory and compliancereporting, 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 BankingRnanaal Company-Housing Finance Com pany(Reserve Bank) Directions,2021 Your Company has made adequate pro/ision for the assets on which installments are overdue for more than 90 days and on other assets^ as required. For details on the impairment provisioning, pleaserefertoannexureno.9 of disclosures required by RBI/NHB to the financial statements. By way of prudence and abundant caution. Company has provided additional provision over and above the NHB guidelines as on March 31,2022.

TheCompany has maintained cumulative NPA provision of Rs 63.29 Lakhs against the required provision of Rs63.29 Lakhs (Previous year Rs 18.13 Lakhs). Further for standard assets Company carriesprovision of Rs. 114.17 Lakhs (Previousyear Rs. 152.71 Lakhs).

DETAI13 REI^TINGJ^O DEPpSITS

T>ic Company has been granted registration by the National Housing Bank, New Delhi as a non-deposit taking Housing Finance Company. Being so, the Company has neither accepted in the past nor hasany future plans to accept any public deposits^ by whatever name called.

GQVERNMENTPOLICIES FOR THE HOUSINGFINANCE COMPANIES

The master directions issued by the RBI on 17 February 2021 are expected to bring in greater discipline by way of detailed regulatory requirements which will bring about more transparency and compliance inthe housing financesector.

The central banks mandate regarding a liquidity buffer with respect to liquidity coverage ratio (LCR) is expected to enhance HFCs resilienceto potential disruptions to liquidity. This willbe on account of MFCs maintainingsufficienthigh-quality liquid assets to mitigate any acute liquidity stressscenarios lasting 30 days.

The RBIs master directions on HFCs detailed the purview of housing finance to indude financing for purchase/ constructiory reconstruction/repairsand rervovation of housirvg dwelling units. Withthis> the RBI brought companies engaged in construction finance also under the ambit of these directions thereby increasing the scope of its supervision ar>d enhancing the transparency across the construction value chain.

The regulations pertaining to HFCs were with the ertant N6FC regulations. The RBI maintained the flexibility of the HFCs with respect to risk weights, as NBFCs generally have lesser flexibility for risk weights, which are broadly classified into 0%, 20% arni 100%. As the flexibility has been continued, the HFCs would not require additional capital to service the same Loan Book and can maintain the current levelSy subject of course to minimum capital requirements.

As the larger HFCs already meet the above guidelines, they are unlikely to face significant challenges when HFC regulationsare further harmonised with NBFCs going forward.

BSE COMPLIANCES:

TheCompanyhassubmrttedcompliancesasrequiredquarterly/hatfyearly/yearlyinaccordancewiththeprescribed guidelines.

INVESTORCOMPLAINTS AND COMPLIANCE:

During the year under review the Company receive total of 3 investor complaint during and all of which were disposed of and same was submiltedto BSE pursuant to SEBI (LODR) Regulatk>a2015.

TRANSFEROF AMOUNTS TOINVESTOREPUCATIONANPPROTECnONFUNP

Your Company did not haveany funds tying unpaid or unclaimed for a period of seven years. Therefore, therevverer>ofundsv/hich were required to be transferred to Investor Education and Protection Fund for the year under review.

DETAILS OF MATERIAL CHANGES FROM THEENDOFFINANCIALYEARTILLTHEOATE OF REPORT:

No MaterialChangeshav^ taken place from the end of the financialyeartill the dateofthisreport.

SUBSIDiARY.JOINTVENTURESAND ASSOCIATE COMPANIES;

The Company does not have any subsidiary Company or Joint Company or Associate Company.

PARinCULARS OF EMPLOYEES:

In terms of Section 197of the Act read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules, 20H the disclosures with respect to the remuneration of Directors, Key Managerial Personrtel and Employees of the Company have been provided in "Annexure VIM" to this Boards Report. Further, statement containing details of employees as required in terms of Sectiwi 197 of the Act read with Rule 5(2) and Rule 5(3) of the Companies(Appointmentand Remuneration of Managerial Personnel) Rules, 2014, is available for inspection at the Registered Office of the Company during working hours for a period of 21 days before the date of the ensuing Annual General Meeting. A copy of the statement may be <^tair>ed by shareholders by writing to the Company Secretary atthe Registered &CorporateOfficeof the Company or at compliance(g)starhfl.com

PARTICULARS OF CONSERVATION OF ENERGY. TECHNOLOGY ABSORPTION. FOREIGN EXCHANGE EARNING AND OUTGO:

In accordance with the provision of sec 134(3) (m) of the Act read v/ith Rule 8 of the Companles(Accounts) Rules 2014 the requisite information relating to yourCompany are as under:- A Conservation of energy;

The Company does notfell under any of the industries covered by the Companies (Disclosure of particulars of Directors) Rules, 1988,

B. Technotogyabsorption:

Your company has implemented a next generation, core housing virtual solution, with the purpose of aligning itself with the fast growing technology evolution and leveraging operational capabilities, while reducing the time taken for whole loan process.

With inter-connection of differentbranches with the head office inasafe,secure and reliable360 cloud platform.

• For the aforesaid purpose, your company has signed-up with Jaguar Software India & IXL( Mobility Solutions) in 2019-2020 and customized itwith the practical needs to areaof operation of company, which results In following benefits

• Digitization of documents

• Centralization of all branches with corporate/registered office

• Speed-upthe loan process

• Single-Click Report Generation

• lnter-departmentalsolution( robust the collaboration)

• Androld/iOsappbasedsystemforfield staff tosubmitinitialdocumentsandverificationremarks

• Saving cost in logistics, handling, printing,and mitigating risk of physical movements.

• Improvesthequalityofcreditanalysis.

• Secured andSafecloud based system withendtoendencryption.

• Predefined roleswlthmaker-checker concept with final approval authority to Managing director/Authorized Personnel

• Keeping of Digital trails which can keep the whole loan process details in one dick and useful during audit(s) and tracing purpose.

• Simplification of work flow, with regular MIS.

JaguarSoftware India asaservice provider/software ver>dor will provideapplicable upgrades arxJ latest security protocols.

The NH8 had notified Information technology framework (guidelines) for Housing Rnance companies (MFCs) vide its Notification No. NHB/ND/DRS and policy drcular no. 90/2017- 2018 dated June 15,2018 to enhance safety, security, efficiency in process leading to benefitforHFCsandtheir customer. Yourcompany Is in compliancevriththeaforesaid guidelines.

Your company and its software vendor conducts its IT audit through external agencies at regular intervals. The scope of IT audit is to identify the areas of risk, check vulnerabilities & cyber security etc at periodic intervals. The external agencies suggestions and recommendations are reported to the Audit Committee& implemented wherever feasible.

C Foreign Exchange Earnings and Outgo:

Your company does not haveany foreign exchange earningsand outgo during the year under review.

INSURANCE:

Your Company has insured its various properties and facilities against the risk of fire, theft and other perils, etc and has also obtained Directors and Officers Liability Insurance Policy, which covers the Companys Directors and Officers (employees in managerial or supervisory position) against the risk of financial loss including the expenses piertaining to defense cost and legal representation expenses arising intherwrmalcourseof business

RISK M ANAOmiENT FRAMEW

With the challenging macroeconomic conditions and uncertainties, there are heightened risks faced by the Company which can be inherent or market-related risks. There has been a continuous focus on identifying, measuring and mitigating risks by the Company. As a housing finance company, the Company is exposed to various risks like creditrisk, market rlsk(interest rate and currencyrisk), liquidity risk and operational risk (technology, employee, transaction and reputation risk). A k^ risk in the competifve home loans, and mortgage-backed funding in general, is losing customers that transfer out their loans for small gains in interest rates, this represents a Significant loss of opportunity to the Company given the long-term nature of mortgage loans. To identify and mitigate all these risks, the Company has aneffectve Risk Management ControlFrameworkthat has been developed compassingall the aboveareas.

The Company has a Risk Management Committee (RMC) in placed that comprises its directors and members of its senior

management team, who have rich industry experience across domains. The RMC metmultipletimesdunngthe year and kept an active watch on the emergent risks the Company was exposed to. The Companys Chief Risk Officer (CRO) oversees the process of identification, measurementandmitigaton of risks. The CROreportsdirectfy to the Board and meetsthemmultipletimes, and at least once in a quarter, to discuss the risks faced by tho Company and policies to mitigate them.

!n compliance with the clause 51 of Chapter IX- Corporate Governance of Non-Banking Financial Company -Housing Finance Company (Reserve Bank) Directions, 2021, Mr. B.S. Kachhawaha is desigr^ated as Chief Risk Officer (CRO) of the Company who has direct reporting to MD of the Company.

During the Rnancial Year under review, the Risk Management Committee reviewed the risks associated with the business of your Company, undertook its rootcause analysis and n>onrtoredthe efficacy of the measures taken to mitigate the san>e.

ASSET UABIUTY MANAGEMENT COMMITTEE <ALCO):

The Asset Liability Management Committee (ALCO) lays down policies and quantitative limits that involve assessment of various types of risks and shifts in assets and liabilities to manage such risks. ALCO ensures that the liquidity and interstate risksare contained within the limits laid down by the Board. The Com panyhasduly implemented the NHBs Asset Liability Management Guidelines. VIGILMECHANISNVWHISTLEBLOWER POLICY:

Pursuant to the provisions of Section ?77 (9) & (10) of the Companies Act, 2013 read with Rule 7 of Companies (Meetings of Board and its Powers) Rules, 2014 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has in place a Whistle Blov/er Policy, which provides for a framework to promote a resp>onsible and secure whistle blower. It protects DirectorV employees wishing to raise a concern about serious irregularities within the Company. It provides for a vigil mechanism to chanr>elize reporting of such instances/ complaint^ grievances to ensure proper governance. The Audit Committee oversees the vigil mechanism. No employee has been denied access to the Chairperson of Audit Committee. The whistle blower policy is placed on the website of the Company arwi can be accessed at w^vw.sta rhfl.com

CODES ANDSTANDARDS

Your Company has formulated various policies and codes in compliance with provisions of Directions and Guidelines issued by the National Housing Bank, Companies Act 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and to erasure high ethical standards in the overall furvrtioning of the organizatiorv The said policies arxJ codes are periodically reviewed by the Board of Directors. The key polices and codes as approved by the Board of Directors and the respective compliance there undoraredetailod herein below:

(a) KnowYourCustomer& Anti Money Laundering Measure Policy

Your Company has approved Know Your Customer & Anti Money Laundering Measure Policy (KYC & AML Policy) in placed and adheres to the said Policy. The said Policy is in line with the National Housing Bank guidelines. The Company has also adhered to the compliance requirement in terms of the said policy lelating to the monitoring and reportir>g of cash/ suspicious transactiorts. The Company furnishes to Rnancial Intelligence Unit (FlU), India, in the electronic medium, information of all cash transactions of the value of more than Rupees Ten Lakhs or its equivalent in foreign currency and suspicious transactiorvs whether or not made in cash, in terms of the said Policy. The followir^g policy is placed on the vvebsite of the Company and can be accessed at wwwstarhfl-com

(b) Fair Practice Code

Your Company has in placed a Fair Practice Code (FPC), which includes guidelines on appropriate staff conduct when dealing with the customers and on the organizations policies vis-a-visclient protection. TheFPC captures the SfHht of the National Housing Bank guidelines on fair practices for Housing Finarvee Companies. During the year under reviev/, FPC v/as modified by the Board and the grievance redressal mechanism within the Company was further strengthened. The following policy is placed on the websiteof theCompany and can be accessed at wwW;Staillfl-fifiCD

(c) Policy on Disclosure of material eventsand information

During the year under review, your Company has adopted the Policy on Disclosure of Material Events and Information, in accordance with Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 to determine the events arvd information which are material in nature and are required to be disclosed to the Stock Exchanges. The [x>licy is placed on the website of the Company and can be accessed at www.s1arhf l-OTm

(d) Code of Conduct for Board Membersand theseolor management

Your Company has in placed Code of Conduct for the Board of Directors and the Senior Management Personnel to set forth the guiding principles on which the Company and its Board and Senior Management Personnel shall operate and conduct themselves with multitudinous stakeholders, government and regulatory agencies, media and anyone else with whom it is connected. A declaration by the Chief Rnancial Officer and Managing Director, with regard to the Compllarvce with the said code, forms part of this Annual Report The following policy is placed on the website of the Company and can be accessed at \yvw^starbfl .Cpm

(e) Insider Trading Pracd<?!S

Your Company has formulated and adopted a Code for Prevention of Insider Trading Practices in accordance with the model code of conduct as prescribed under the Securities and Ej(change Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2018, as amended. The code lays down guidelines, which includes procedures to be followed and disclosures to be n%ade while dealing in the shares of the Company. The code is applicable to the promoters, directors, senior designated employees and their dependent and the said persons are restricted from dealing (n the securities of the Companyduring therestricted trading periodsnotified by theCompany, from time to time.

(f) Code of Business Ethics (COBE)

Your Company has adopted a Code of Business Ethics (COBE) V/hich lays down the principles and standards that govern the activities of the Company and its employees to ensure and profTK>teethical behavror within the legal framework of the organization.

Your Company has in place a Policy on Prevention, Prohibition & Redressal of Sexual Harassment of Women at Workplace and an Internal Complaints Committee OCC) has been constituted there under. The Policys primary objective is to protect the women employees from sexual harassment at the place of work and also provides for punishment in case of false and maliciousrepresentations. During the year no com plaints werereceived in this regard.

(9) CiHDpiieJ)9JQSjb??L^)(Mandgen)entPQlIcy

Your Company is committed to manage its risk in a proactive manner and has adopted a structured and disciplined approach to risk management by developing and implementing risk marvagement framevrork. With a view to manage its risk effectively your Company has in place a Comprehensive Risk Management Policy vvhtch covers a formalized Risk Management Structure, alorvg vrith other aspects of risk management i.e. credit risk management, operational risk management, market risk management and enterprise risk management. The Risk Management Committee of the Board, on [periodic basis, oversees the risk managementsystems, processesand minimization proceduresof the Company.

(h) Corporate Social Responsibility (CSR) Policy

Your CompanyhasCorporateSocial Responsibility Policy (CSR Policy), as pertheprovisionsof the Companies (Corporate Social Responsibility Policy) Rules. 2014, as amended, which, inter-alia. lays down the guidelines and mechanism for undertaking socially useful projects for welfare and sustainable development of the community at large. As per the provisions of Section 135 of the Companies Act, 2013, the Company has constituted a Corporate Social Responsibility Committee. The Committee assists the Board infutfillingitsduty towards the community and society at large by identifying the activities and programmers that can be undertaken by the Company, in terms of the Companys CSR Policy. The composition of theCSR Committee arid its terms of reference are given in the Corporate Gowrnance Report forming part of this Annual Report Statutory disclosures witii respect to the CSR Committee and a report on CSR expenditures is mentioned in" Annexure III" annexed to this report.

(i) Remur>eration Policy

The Nomination and Remuneration Committee had laid down criteria for determining Directors Qualification, Attributes and Independence of a Director, remuneration of Directors, Key Managerial Per?sonnel and other employeesand criteriaf o r valuation of Directors, ChairpersOT, Norv-Executive Directorsand Board and the evaluation processof thesame. Thepolicy may be accessed on the Companys website atWNVw.starhfl.com

(j) Related Party Transactions Policy:

Your Company has in placed the Related Party Transaction Policy, intended to ensure requisite approval, reporting and disclosure of transactions between the Company and its related parties. The said policy also defines the materiality of related party transactions and lays down the procedures of dealing with related party transactions During the year under review, the Related Party Transaction Policy was amended to align the same with the requirements of Companies (Amendment) Act. 2015 and Securities and Exchange Board of India (Listng Obligations and Disclosure Requirements) Regulations, 2015. The followir>9 policy is placed on the websiteof the Company and canbeaccessedatWNVW.starhfl.com (k) FamtiiarizationProgrammeforindependentDirectors;

The objective of a familiarization programme is to ensure that the non-executve directors are updated on the business environment and overall operations of the Company. This enables the non-executive directors to make better informed decisions in the interest of the company and its stakeholders The following policy is placed on thevvebsite of the Company and can be accessed atvwAv.startifl.com

DiE?CTQ^ANDKEYJMAr^0ERIALP?B^J4MEL

The Board of Directors of the Company comprises of Five [5] directors of which one [1] is Executive Directors; One [1] is Chairman & Managing Director & Three [3] are Indepervdent & Non- E>?cutive Director including one woman director as on March 31,2022 who bhng in a wide range of skills and experience to the Board.

• Retirement of Director by rotation

In accordance with the provisions of Section 152 of the Companies Act, 2013 ar>d Articles of Association of the company, Mr. Kavish Jain, Executive Director of the Company is liable to retire by rotation, at the ensuring 17th Annual General Meetirvg of the company. He iseligibteandofferedhimselfforre-appointmentAresolutionforhisreappointmentisbeing proposed at the 17th Annual General Meeting and his Profile is included in the Notice.

Th? Bc^rd .of ptrectoTS of the Compao^are:- . Composition of the Board as on March 31,2022

DIN Name of Director Category of Directors
02041164 Mr. Ashish Jain Chairman & Managirvg Director
02041197 Mr. Kavish Jain Executive Director
02173432 Mr. Amrit Singh Rajpurohit Non Executive & Irvdependent Director
06964564 Mr. Amlendra Prasad Saxena Non Executive & Independent Director
07703994 Dr. Rekha Jain Non Executive & Independent Director

Based on the confirmations received norve of the Directors are disqualified for being appointed/re-appointed directors in terms of Section 164 the Companies Act, 2013.

During the year following changes took place In the Board of Directors / KMP of Company;

S. No. Name of Directors/ KMP Designation Appointment/ Resignation Date of change
1 Mr. NirmalKunvsr Jain Non- Executive Director Resignation 31.12,2021

After the closer of the f irvancial year following changes took place in the KMP:

- Mr. Paritosh Kothari resigned as a Company Secretary and Compliance Officer of the company with effect from 1st June 2022.

- Mr. Shreyas Mehtra appointed as a Company Secretary and Compliance Officer of the company with effect from 1st June 2022.

• Reappointment of Independent director

TheCompany has Re-appointed Mr Amlendra Prasad Saxena (DIN: 06964564) as an Independent Director of the company for a term of Five years in Annual General Meeting held on September29,2021.

• Declaration from independent Directors on Annual Basis:

.TheCompany hasreceived necessary declaration from each Independent Director of the Company UnderSection 149(7) of the Companies Act. 2013 that theindependentDirectorsof theCompany meet with the criteria of their Independence as laid down in Section 149(6) and the provisions of Regulation 16(l)(b) of the Securities and Exchange Board of India (Listing Obligations and

Disclosure Requirements) Regulations, 2015.

Based on the confirmations received, none of the Directors are disqualified for being appointed/re-appointed as directors in termsof Section 164 theCompanles Act, 2013

• StockOption

During the year Employee Stock Option Scheme2021(ESOP) for the employeeof theCompany approved vide passing Special resolution in Extra OrdinaryGeneral Meeting of themembersof thecompany held on April30.2021

FORMAL EVALUATION OF THE PERFORMANCE OF THE BOARD COMMITTEE OF THE BOARD AND INDIVIDUAL DIRECTOR;

The provisions of the Companies Act, 2013 mandates formal annual evaluation of the Board of Directory, its committees and individual Directors. Schedule IV of the Companies Act, 2013 also requires the performance evaluation of Chairman & Managing Director and Non-Executive Directorsand Board as a whole to be carried out at a separate meeting by the Companys Independent Directors. It also states that performanceevaluation of Independent Directors shall be done by theentire Board excluding the Director being evaluated. The provisions of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations. 2015, also require that the Board shall monitor and review the Board Evaluation Framework. Theannual petformanceevaluati<^of the Boardasa whole, all Directors as well as the evaluation of the Board Committees including Audit Committee, Nomination & Remuneration Committee, Risk Management Committee, StakeholdersRelationship Committee, and Corporate Social Responsibility Committee of the Board of Directors of the Company, was carried out.

MEETINGS

• Board

Your Company holds at least four Board meetings in a year, one in each quarter, inter-alia, to review the iinancial results and also holdsadditional Board Meetings to address its specific requirements, as and when required. All the decisions and urgent matters approved by way of circular resolutions are placed and numbered and noted at the subsequent Board meeting. Annual calendar of meetings of the Board are finalized well before the beginnir?g of the financial year after seeking concurrence of all the Directors.

During the financial year 2021-22, Frfteen (15) Board Meetings were held are as follows.

S. no. Date of Meeting
1 07042021
2 21.04.2021
3 22.05.2021
4 02.06.2021
5 18.06.2021
6 10.072021
7 05.08.2021
8 31.08.2021
9 05.10.2021
10 18.10.2021
T1 29.10.2021
12 18.11.2021
13 06.01.2022
14 18.01.2022
15 26.02.2022

The intervening gap between the Meetings was within the period prescribed under the Companies Act 2013 and the Securities and Exchange Board of India (Ustif>g Obligation and Disclosure Requirements) Regulations, 2015. The details of the Boardcomposition, its meetings held during the year along with the attendance of the respective Directors there at are set out in the Corporate Goverrvance Report forming pat t of this Annual Report.

The Companys Independent Directors meet at least once in every financial year without the presence of Executive Directors or management personnel. The Independent Directors of the Company met once during the year on March 30,2022 to review the performance of Non-Independent Directors and the Board as a whole, review the performance of the Chairman of the Company and access the quality, quantityandtimelinessofflowof information between thecompanymanagementand the Board.

• Shareholders Meeting

During thefinancialyear202I-22,ExtraOrdif^ryGerieralMeetingwas held as follows.

Day/ Date/TIme Location Details of Ordir^ary/Special Resolution passed
April. 30,2021 at Through Video conferencing at the Ordinary Resolution:
11.00 a.m. Registered office of the Company at AKME -To increase in Authorized Share Capital of the Company
Business Centre (ABC), 4-5 Subefty Centre Special Resolution
Savina Circle, Opp. Krishi Upaz Mandi Udaipur, Rj313002 - Change in the name of the Company from Akme Star Housing Finance Limited to Star Housing Rnance Limited
- Shifting of Registered Office of the Company from State of Rajasthan to State of Maharashtra
- Approval of the Akme Employee Stock Option Plan 2021 (AKMEESOPSCHEME2021)
October 29.2021 Through Video Conferencing At the Special Resolution
at 11.00 a.m. Registered office of the Company at AKME Business Centre (ABC), 4-5 Subcity Centre Savina Circle, Opp. Krishi Upaz Mandi UdaipurRj 313002 - To approve the issuance of 10,30,730 (Ten Lakhs Thirty Thousand Seven Hundred arvj Thirty) Equity Shares of Face value INR- 10/ - each (Equity Share) at a price of INR 89/- (induding premium of INR 79/-per Equity Share) for a total consideration of Rs. 9,1734,970 (Rupees Nine Crore Seventeen Lakh Thirty Four Thousand Nine Hundred and Seventy)

Audit CommitteeAQttt^fioaplCommittees

Your Company has a duly constituted Audit Committee as per the provisions of Section i77 of Companies Act 2013 and provisions of Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Board of Directors has constituted four other committees namely -

• Nomination and Remuneration Committee,

• StakeholdersRelationship Committee,

• RiskManagementCommittee,

• CorporateSocial Responsibility Committee

This enables the Board to deal w:th pacific areas/activities that need a closer reviev/ and to have an appropriate structure to assist In thedischargeof thelrresponsibllities.

The Audit Committee and crfr?er Board Committees meet at regular intervals and ensure to perform the duties and functions as entrusted upon them by the Board.

Thedetails of theAudit Committee and other Board Committeesare also set out in the CorporateGoverna nee Report forming part of this Annual Report.

CONTRACTS ORARRANGEMENTWITH RELATED PARTY TRANSACTIONS

In accordance with theprovisionsof Section 188 of the Actand rules made thereunder, the transactionsentered with related parties are in the ordinary course of business and on an arms length pricing basis, the details with respect to the related party transactions are mentioned in the notes to the audited financial statements.

Durirtg the financial year under review, your company has not entered into material contract, arrangement or transaction with related party, as defined under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Related Parly Trar?actk>n Policy of the Company.

Form AOC-2 as per the Related Pat ty Transactior^ is attached as "Annexure r to this Report and forms a part of it. The Related Party Transaction Policy as approved by the Board of Diiectors is available on the vvebsite of the Company which can be accessed at wvvw.starhfl.com

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATOR OR COURT ORTRIBUNALS

During the year r>o significant or material order was passed by the Regulators or Couits or Tribunals and the Company has complied •Mth the order and Compliances of Companies Act 2013.

USTING WITH STOCK EXCHANGE:

Your Company confirms that it has paid the annual listing fees for the relevant period to Bombay Stock Ew:hange vrhere the Companyssharesare listed.

CHANJ^EJNfMTU^

There has been nochangein the nature of business of the Company during the year under review.

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

SECRETARIAL STANDARDS

During the year under reviev/, the Company has complied with the applicable secretarial standards issued by the Institute of Company Secretaries of India.

AUDITORS AND AUDITORS REPORT

1. Statutory Auditors

M/s. Nyati Mundra & Co., Chartered Accountants (Rrm Registration No.008153C) were appointed as Statutory Auditors of the Comp3nyforatermofS(five)consecutive years, at the Annual General Meeting held on September 29, 2021. They have confirmed their eligibility and qualifications required under the Act for holding office as Statutory Auditors of the Company. The Notes on financial statement referred to in the Auditors Report are self-explanatory and do not call for any further comments. The AuditorsReport doesnot contain any qualification, reservation, adverseremarkor disclaimer. No fraudhave been reported by the Audrtorsof the Com panyintermsof Section 143(12) of theCompanies Act 20X3.

SECRETARIAL AUDITOR & SECRETARIAL AUDIT REPORT

2. Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 and Pursuant to Reg. 24A of Securities Exchange Board of India (Listing Obligation&Disclosure Requirement) (Amervdments) Regulations, 2018, the Boardof Directors of the Company had appointed Mr.RonakJhutha\vatProprietorofM/sRonakJhuthawat&Co..PracticingCompanySecretaf?es.Udaipur, to undertake the Secretarial Audit of theCompanyforthefinancialyear 2021-22. The Secretarial Audit Reportforthe financial year ended March 31,2022, is annexed as "Annexure H" to this report.

The said report does not contain any qualification, reservation or adverse remark, however, contains certain observations of t h e Secretarial Auditor which areself-explanatory.andthusdonotcallforanyfurther comments.

INTERNAL AUDIT & INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

3. Internal auditor

Your Company has appointed CA Sandesh Deorukhkar, Chartered Accountants as an Internal Auditor of the Company, >vho reports to the Audit Committee and to the Board of Directors of the Company. The Internal Auditor conducts comprehensive audit of furKtional areas and operations of the Company to exam inetheadequacy of and compliance with policies, procedures, statutoryandregulatoryrequirements.SignificarYtauditobservationsandfolk>wupacik>nsthereonarereportedto the Audit Committee.TheAudltCommitteereviev/sadequacyandeffectivenessof theCompanysinternalcontrolenvironment and

monitorstheimptementation of audrt recommendations.

Theaudrtfunctionmaintainsitsindependenceand objectivity v/t>ilecarry;ng out assignments. Itevaluatesof^acontinuous basis, the adequacy and effectivenessof internal control mechanism. The function also proactively recommends improvement in (X)liciesandprocesses,suggestsstreamliningofcontrolsagainstvariousrisks. Your Company has laid down set of standards, processesandstructure, which enablesittoimplementinternal financial control across the Company and ensure that the same are adeq uate and operatirvg effectively.

DIRECTORS RESPONSIBILITY STATEMENT The Board of Directors state that;

• inthepreparationof theannualfinancialstatementsforthe yearendedMarch31,2022.theapplicableaccountingstandards read with the requirements set out under Schedule III to the Act have been followed and there were no material departures from the same;

• The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudentsoastogiveatrueandfairviewof thestateofaffairsof theCompanyason March 31,2022 and of the profit of theCompanyforthe year endedonthat date;

• TheDirectorshavetakenproperandsufficientcarehasforthemaintenanceofadequateaccountingrecordsin accordance with the provisionsof the Act for safeguarding the assetsof the Company and for preventing and detecting fraud andother irregularities;

• The Directors have prepared theannual accountson a going concern basis;

• The Directors have laid down interrvalfinancial controlstobe followed by theCompany and that the financial controlswere adequate and wereoperating effectively:

• The Directors have devised proper systems to ensure compliance with the provisior^ of all applicable laws and vvere adequate and operating effectively.

REPORT ON CORPORATE GOVERNANCE AND SHARE HOLDERS INFORMATION:

Your Company has taken adequate steps to adhere to all the stipulations laid down in the SEBI (Listing Obligatiorre and Disclosure Requirements)Regulations?20l5, Corporate Governance (National Housing Bank) Directions, 2016, RBI Directionsand toe Companies Act 2013 and Rules thereto, as amended from time to time. Pursuant to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, RBI/ NHB Directions and disclosures as required under The Companies Act 2013 and the Rules thereto, a separate Section titled ‘Report on Corporate Governanceforms part of this Annual Report.

The certificate by the Practicing Company Secretary confirming compliance with toe conditions of Corporate Governance as stipulated intheSEBI(LODR) Regulations, 2015 forms part of thisreport as "ANNEXUREV".

The said certificate for financial year 2021-22 does not containsany qualification,reservation or adverse remarks.

In terms of Section 136 of The Companies Act2013, the reports and accounts are being sent to the members arvd otoers entitled thereto.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Pursuant to Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, Managements Discussion and Analysis Report, for the year ur>dor review, is presented in as separate section forming partof this Annual Report ANNUAL RETURN

As required under Section 134(3)(a) of the Act, the Annual Return is available on the Companys website and can be accessed at VAW/.starhfl.com.

ENHANCING SHAREHOLDERS VALUE

Your Company believes toat Its Members are among its most important stakeholders. Accordingly, your Companys operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation. Your Company is also committedtocreatingvalueforitsotherstakeholdersbyensurirvgthatitscorporateactionspositivelyimpjactthesocio-economicand environmental dimereionsand contribute tosustainable growth and development.

OUTLOOK

• Focus on grovvth of Individual home loans segment.

• Making online loan application more effective arKl enhance its contribution towards the incremental business.

• Strengthening marketing offices opened during the last 3 years artd making them high growth centers.

• Togrowbusinessqualitativelybyconsolida13ngpositionandstrer>gtheningthecompetitivenessonservicedelivery.

• UnderstandingtheinherentriskstotJ>ebusinessand managing it effectively.

• Widespread marketstudiesassistirvgmodellir>goftoanproduct&to^itcustomer needs.

• Making use of information provided by marketing off ices about ground market corvditions.

ACKNOWLEDGEMENTS:

Your Board of Directors take this opportunity to express their appreciation to all stakeholders of the Company including the Reserve Bank of India. National Housing Bank, the Ministry of Corporate Affairs. Securities and Exchange Board of lr>dia, the Government of India. Stock Exchanges and other Regulatory Authorities, Bankers. Lenders. Rnancial Institutions. Members, Credit Rating agencies, Customers of the Company for their continued support and trust Your directors v/ould like to express deep appreciation for the commitment shown by the employeesin supporting theCompany in achieving continued robust performance onall fronts.

In closing, we would like to thank all the investors as well as the communities we operate in who have reposed their trust in us and supported us incur journey.

For and on behalf of the Board of Directors
Sd/- Sd/-
Ashish Jain KavfshJain
Chairman&Managing Director Director
DIN:02041164 DIN:02041197
Date:17.06.2022
Place: Mumbai