AAVAS FINANCIERS LIMITED (COMPANY)
Your Directors are pleased to present the Ninth Annual Report on the operational and business performance of the Company together with the Audited Financial Statements (standalone and consolidated) for the financial year ended March 31 2019.
The summarized financial performances for the financial year ended March 31 2019 are as under:
(? in crore)
|Particulars||For the Year ended March 31 2019||For the Year ended March 31 2018|
|A Total Income||710.97||494.44|
|- Total Expenditure before Depreciation & Amortization and provision||(434.66)||(351.92)|
|- Impairment on financial instruments||(8.90)||(2.59)|
|- Depreciation & Amortization||(9.72)||(5.63)|
|B Total Expenses||(453.28)||(360.14)|
|C Profit Before Tax (A-B)||257.69||134.31|
|D Less: Provision for Taxations (Net of Deferred Tax)||81.78||41.21|
|E Profit After Tax (C-D)||175.91||93.09|
|F Add: Other Comprehensive Income (Net of Tax)||0.23||0.07|
|G Total Comprehensive Income (E+F)||176.14||93.16|
|Transfer to Statutory Reserve||35.23||20.17|
Your Company posted Total Income (Total Interest Income and Other Income) of ?710.97 crore and Total Comprehensive Income of ?176.14 crore for the financial year ended March 31 2019 as against ?494.44 crore and ?93.16 crore respectively for the previous financial year.
IND AS IMPLEMENTATION
Your Company has adopted Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act 2013 (the Act) read with the Companies (Indian Accounting Standards) Rules 2015 from April 01 2018 and the effective date of such transition is April 01 2017. Such transition has been carried out from the erstwhile accounting standards notified under the Act read with relevant rules issued thereunder and guidelines issued by National Housing Bank (NHB) (collectively referred to as `the Previous GAAP'). Accordingly the impact of transition has been recorded in the opening reserves as at April 01 2017 and the corresponding financial figures presented in this Report have been restated/reclassified.
Your Directors have considered reinvesting the profits into the business of the Company in order to build a strong reserve base for the long-term growth aspects of the Company. Accordingly no dividend has been recommended for the financial year ended March 31 2019.
MODIFICATION IN ARTICLES OF ASSOCIATION
The Members of the Company vide Special Resolution passed at the Extraordinary General Meeting held on June 11 2018 have adopted new set of Articles of Association of the Company (Articles) in accordance to the provisions of the Act. Further the Members of the Company vide Special Resolution passed by means of Postal ballot concluded on December 30 2018 have also ratified the Articles of Association post listing of the Equity Shares of the Company.
INITIAL PUBLIC OFFERING
Your Company made its Initial Public Offer (IPO) of 19979503 Equity Shares of face value of ?10/- each for cash at a price of ?821 per Equity Share (including a share premium of ?811 per Equity Share). The offer comprised of fresh issue of 4384897 Equity Shares by your Company and Offer for Sale of 15594606 Equity Shares by Lake District Holdings Limited and Partners Group ESCL Limited (Promoters) by Kedaara Capital Alternative Investment Fund-Kedaara Capital AIF 1 (Existing Investor) by Partners Group Private Equity Master Fund LLC (Members of Promoter Group) by Mr. Sushil Kumar Agarwal Managing Director and CEO and Mr. Vivek Vig Non-Executive Nominee Director. The Equity Shares of your Company were successfully listed on the BSE Limited (BSE) and National Stock Exchange of India Limited (NSE) with effect from October 08 2018. The Annual Listing Fees for the financial year 2019-20 has been paid by your Company to both the Stock Exchanges.
Your Directors wish to place on record their gratitude for the trust faith and confidence reposed by the public institutions customers and business partners in the Company even during the challenging environment; thus making the IPO successful.
Your Directors also places on record their deep appreciation for the significant contribution and sincere efforts made in the IPO process by the Merchant Bankers all legal counsels to the offer Statutory Auditors of the Company Registrar to the Offer Advertising Agency Syndicate Members Monitoring Agency Bankers to the Offer NHB Registrar of Companies-Jaipur Stock Exchanges Management Team and Employees of the Company.
The Issued and paid-up Equity Share Capital of the Company as on March 31 2019 stood at ?781079010 (Rupees Seventy eight crore ten lakh seventy nine thousand ten) consisting of 78107901 (Seven crore eighty one lakh seven thousand nine hundred one) Equity Shares of ?10/- each as compared to ?691728346 (Rupees Sixty nine crore seventeen lakh twenty eight thousand three hundred and forty six) consisting of 69950891 (Six crore ninety nine lakh fifty thousand eight hundred ninety one) Equity Shares of ?10/- each in previous year.
During the financial year under review the Paid-up Equity Share Capital of the Company has been increased on account of the following:
Conversion of 720094 partly paid Equity Shares into the fully paid Equity Shares of face value of ?10/- each consequent upon receipt of balance call money of ?6 per share.
Conversion of 432500 partly paid Equity Shares into the fully paid Equity Shares of face value of ?10/- each consequent upon receipt of balance call money of ?8 per share.
Conversion of 800000 convertible share warrants into fully paid Equity Shares of face value of ?10/- each.
Issuance and allotment of 2972113 Equity Shares pursuant to the exercise of stock options by the eligible employees of the Company under ESOP plans of the Company.
Issuance and allotment of 4384897 Equity Shares of ?10/- each by way of issue of fresh Equity Shares through IPO .
REVIEW OF OPERATIONS
Your Company is registered as a Housing Finance Company with NHB to carry out the housing finance activities in India.
In order to build a high-quality loan book your Company endeavors to adopt superior underwriting practices backed by robust monitoring and recovery mechanisms. Your Company is always committed towards improving efficiency in all its processes and service levels for its customers.
Your Company's main thrust continues to be the affordable housing segment with its focus on catering to the aspirations of low and middle-income Indian families who dream to own their homes. Your Company has been conducting its business as a housing finance institution enabling credit access to the low and middle income self-employed customers in semi-urban and rural areas in India. The majority of your Company's customers have limited access to formal banking credit facilities.
The operating and financial performance of your Company has been covered in detail in the Management Discussion and Analysis report (MDA) which forms part of this Annual Report.
During the financial year under review your Company has delivered yet another year of resilient performance which is reflected in the following Company's financial snapshot:-
Income & Profits
Total Income grew by 43.79% to ?710.97 crore for the financial year ended March 31 2019 as compared to ?494.44 crore for the previous financial year. Profit Before Tax (PBT) was 91.87% higher at ?257.69 crore as compared to ?134.31 crore for the previous financial year. The Total Comprehensive Income for the financial year 2018-19 has increased by 89.06% from ?93.16 crore in the previous financial year to ?176.14 crore in the current financial year.
During the financial year under review your Company sanctioned housing loans for ?2710.82 crore as compared to ?2216.98 crore in the previous financial year with an annual growth of 22.28%. The cumulative loan sanctions since inception of your Company stood at ?8612.20 crore as at March 31 2019. Your Company has granted no loan against the Collateral of Gold Jewellery.
During the financial year under review your Company disbursed housing loans for ?2672.35 crore as compared to ?2051.16 crore in the previous financial year and recorded a growth of 30.28% in disbursements. The cumulative loan disbursement since inception as at March 31 2019 was ?8167.52 crore.
Assets under Management (AUM)
The AUM of your Company stood at ?5941.61 crore (including assignment of ?1357.46 crore) as at March 31 2019 as against ?4073.02 crore in the previous financial year with a growth of 45.88%.
As of March 31 2019 the average loan sanctioned was ?8.59 lakh and Average tenure was 180.63 months in the AUM (on origination basis).
Your Company has experienced trained and exclusive team for catering the product and to focus on Economically Weaker Sections (EWS) and Low Income Group (LIG) segments. This customer segment have a prime aspiration of owning their own houses. Your Company has signed MOU's with Local Government authorities of various State Governments for the Credit Linked Subsidy Scheme (CLSS) under the Pradhan Mantri Awas Yojana for EWS LIG and Middle Income Group (MIG) segments.
During the financial year under review your Company has been an active contributor to the same and has benefited Customers by providing CLSS Subsidy of Rs. 36.56 crore through 1907 loan accounts and credited the subsidy to the respective customers' loan accounts.
Since the inception of the scheme your Company has received CLSS subsidy of ?42.90 crore in respect of 2342 beneficiaries and same has been passed on to the customers.
The majority of the claims submitted are in respect of the EWS and LIG customers.
Your Company is in adherence to the provision of Ind AS with respect to computation of Non-Performing Assets (NPAs). Your Company's assets have been classified based on expected performance. Exposure at Default (EAD) is the total amount outstanding including accrued interest as on the reporting date. Further Interest income on NPAs which was not accrued earlier is now recognized as part of Ind AS adjustment if the security is adequate and the present value of realization of the security is greater than the outstanding loan dues.
Using a pro-active collection and recovery management system supported by analytical decision making your Company was able to contain its gross NPAs at ?22.27 crore (0.47% of the loan assets) as at March 31 2019. Your Company reviews the delinquency and loan portfolio on regular basis.
Your Company conforms to a defined policy with procedures to address delinquencies and collections. As a result Gross NPA and net NPA as at March 31 2019 were 0.47% and 0.37% respectively (against 0.46% and 0.39% respectively in the previous financial year). Further the information on the Business overview and outlook and state of the affairs of your Company have been discussed in detail in the MDA which forms part of this Annual Report.
CAPITAL ADEQUACY RATIO
As required under NHB Directions 2010 your Company is presently required to maintain a minimum capital adequacy of 12% on a stand-alone basis.
Further the NHB vide its note dated March 04 2019 has proposed certain amendments which includes to raise the capital adequacy ratio for HFCs from 12% to 15% by March 2022.The capital adequacy ratio of HFCs is to be increased from 12% to 13% by March 2020 14% by March 2021 and 15% by March 2022 as per the said proposal.
Your Company's Capital Adequacy Ratio as at March 31 2019 was 67.77% (previous financial year 61.55%) which is far above the minimum required level of 12% as well as the proposed level of 15%.
During the period under review your Company has neither invited nor accepted nor renewed any fixed deposits from public within the meaning of Chapter V of the Act read with the Companies (Acceptance of Deposits) Rules 2014.
CREDIT RATING UPGRADES
During the financial year under review your Company's Long-Term Credit rating was upgraded by CARE Ratings Limited to the CARE AA- with a stable outlook from CARE A+ with a positive outlook reflecting Company's financial strength and growth outlook. Further ICRA has upgraded the rating outlook of your Company from ICRA A+/Stable to ICRA A+/ Positive.
India's renowned rating agencies have assigned ratings to your Company the details of the same are mentioned below:-
|Rating Agency||Rating Type||Nature of Borrowing||External Credit Rating|
|CARE||Long Term Rating||Long Term Banking Facilities and Instrument -Subordinated Debt||CARE AA- / Stable|
|Short Term Rating||Commercial Paper||CARE A1+|
|ICRA||Long Term Rating||Long Term Banking Facilities and Non-Convertible Debentures||ICRA A+ / Positive|
|Short Term Rating||Commercial Paper||ICRA A1+|
|CRISIL||Long Term Rating||Long Term Banking Facilities||CRISIL A+/ Stable|
The ratings continue to reflect your Company's healthy earning profile adequate capitalization strong net worth base and steady improvement in its scale of operations. The assigned ratings are a positive reflection of Company's leadership position in affordable housing segment its experienced management team and strong brand equity in the regional markets where it has presence. The rating also derives strength from comfortable liquidity and resource profile and adequate risk management & control systems put in place by the Company as well as good growth opportunities in the affordable housing segment.
Your Company has received following ISO certifications for its key customer facing departments and workflow process from TUV Nord India reflecting the superior customer experience.
ISO 9001:2015 for Lending process; e-disbursements and client servicing including Grievance Redressal Mechanism and;
ISO 10002:2014 for customer satisfaction and complaint handling process.
Your Company's overall borrowing is guided by a policy duly approved by the Board of Directors. Your Company has vide special resolution passed on May 30 2018 under Section 180 (1) (c) of the Act authorized the Board of Directors to borrow money upon such terms and conditions as the Board may think fit in excess of the aggregate of paid up share capital and free reserves of the Company up to an amount of ?7000 crore and the total amount so borrowed shall remain within the limits as prescribed by NHB.
Your Company manages its borrowing structure through prudent Asset-Liability Management and takes various measures which include diversification of the funding sources tenure optimization structured interest rates and prudent borrowing timing to maintain its borrowing cost at optimum level.
During the financial year under review your Company continued to diversify its funding sources by exploring the Debt Capital Market through private placement of Secured Non-Convertible Debentures; Issuance of Rupee denominated masala bond via ECB Route to mutilates NHB Refinance Securitization/Direct assignment and banking products like Priority Sector/Non-Priority Sector Term loans Cash Credit Facilities and Working Capital Demand loans. Your Company has also further diversified its borrowing by adding 2 (Two) new lenders/Financial Partners.
The weighted average borrowing cost as at March 31 2019 was 8.74% (including Securitization/ Assignment) as against 8.63% in the previous financial year. As at March 31 2019 your Company's sources of funding were primarily from banks and financial institutions (42.22%) followed by Securitization/Direct assignment (28.03%) NHB Refinance (18.57%) Masala Bond issued to Multilaterals (6.83%) Non-Convertible Debentures issued to Domestic Financial Institutions (2.28%) and Subordinated Debts (2.07%).
Term Loans from Banks and Financial Institutions
During the financial Year under review your Company received fresh sanctions from banks amounting to ?630 crore and has availed loans aggregating to ?645 crore. The outstanding term loans from Banks and Financial Institutions as at March 31 2019 were ?2041 crore. Average Tenure of term loan raised during the financial year under review is 9.23 years.
Securitization/Assignment of Loan Portfolio
Your Company has actively tapped Securitization/Direct Assignment market which has enabled it to create liquidity reduce the cost of funds and minimizing asset liability mismatches. During the financial year under review your Company has received purchase consideration of ?680.16 crore from assets assigned in pool buyout transactions.
The pool buyout transactions were carried out in line with RBI guidelines on Securitization of Standard Assets and securitized assets have been de-recognized in the books of the Company.
Refinance from National Housing Bank (NHB)
NHB continued to extend its support to your Company through refinance assistance and during the financial year under review your Company has received sanction of fresh refinance assistance of ?400 crore in addition to the approval of undrawn limit of ?100 crore pertaining to FY 2017-18 under the NHB refinance scheme to Housing Finance Companies. Your Company availed funds from NHB under the Refinance Scheme for Special Urban Low-Income Housing Urban Housing Fund Affordable Housing Fund and Regular Refinance Scheme and outstanding at the end of the current financial year stood at ?897.21 crore (previous year ?365.10 crore).
Your Company has availed funds of ?231.70 crore under subsidized scheme of NHB (Affordable Housing Fund and Urban Housing Fund) and reduced the effective rate of interest for the eligible customers to 8.36% being fixed for next 7 years.
Masala Bond issued to Multilaterals
During the financial Year under review your Company has issued rupee denominated Masala Bond of ?200 crore in the nature of senior subordinated debt to CDC Group PLC (CDC) the United Kingdom's Development Finance Institution. This is your Company's maiden Masala Bond issue and can be listed on London Stock Exchange or any other international stock exchanges in future. Your Company is fourth HFC to issue Masala Bond.
As on March 31 2019 your Company's outstanding balance of Masala Bond issued to Multilaterals stood at ?198.40 crore.
Non-Convertible Debentures (NCDs) issued to Domestic Financial Institutions
During the financial year under review your Company has raised ?10 crore through the issue of Rated Secured Redeemable Non-Convertible Debentures on private placement basis to Domestic Financial Institutions. Your Company has redeemed Secured NCD's amounting to ?150 crore before their maturity and ?10 crore on maturity during the financial year under review.
As on March 31 2019 the Company's outstanding NCDs stood at ?238.65 crore as compared to ?388.20 crore as on March 31 2018. Your Company's Debentures are listed on Wholesale Debt Market segment of BSE Limited. As on March 31 2019 the Company's outstanding subordinated debt in the form of NCDs stood at ?99.58 crore as compared to ?99.48 crore as on March 31 2018. During the financial year under review the interest on Non-Convertible Debentures issued on private placement basis were paid by the Company on their respective due dates and there were no instances of interest amount not claimed by the investors or not paid by the Company. Your Company being Housing Finance Company (HFC) is exempted from the requirement of creating Debenture Redemption Reserve (DRR) on privately placed debentures. Therefore DRR has not been created by your Company.
The security details of the aforesaid borrowings of the Company are mentioned in Note No. 11 12 and 13 of the Notes to accounts forming part of the audited (standalone) financial statements for the financial year ended March 31 2019.
Disclosure under Housing Finance Companies issuance of Non-Convertible Debentures on private placement basis (NHB) directions 2014:
(i) The total number of non-convertible debentures which have not been claimed by the investors or not paid by the Company after the date on which the Non Convertible Debentures became due for redemption:
(ii) The total amount in respect of such Debentures remaining unclaimed or unpaid beyond the date of such Debentures become due for redemption:
Commercial Paper (CP)
Your Company has not issued any Commercial Paper & Short-Term Instrument during the financial year 2018-19.
Debenture Trust Agreement(s) were executed in favour of IDBI Trusteeship Services Limited and Catalyst Trusteeship Limited for NCDs issued by the Company on private placement basis.
Your Company has been successful in continuous expansion of its Branch network with a view to support its disbursement growth deeper penetration in the states in which Company operates and enhancing customer reach. During the financial year under review the Company has expanded its Branch network to 10 states through 210 Branches as of March 31 2019 and plans to scale up its operation to newer geographies in FY 2019-20. Your Company now operates in the states of Rajasthan Maharashtra Gujarat Madhya Pradesh Haryana Delhi Chhattisgarh Uttar Pradesh Uttarakhand and Punjab.
Your Company has its registered office in Jaipur Rajasthan and its branch network as on March 31 2019 vis--vis the previous financial year is detailed hereunder:
|State||No. of Branches (As on March 31 2019)||No. of Branches (As on March 31 2018)|
|Total number of branches||210||165|
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Board of Directors of the Company comprises of Nine Directors consisting of three Independent Directors (including one Woman Director) five Non-Executive Nominee Directors and one Whole Time Director* and CEO as on March 31 2019 who bring in a wide range of skills and experience to the Board.
The Board of Directors of the Company are:-
|Name of the Director||Designation||DIN|
|Mr.Krishan Kant Rathi||Chairperson and Independent Director||00040094|
|Mr. Sushil Kumar Agarwal||Managing Director and CEO*||03154532|
|Mrs. Kalpana Iyer||Independent Director||01874130|
|Mr. Sandeep Tandon||Independent Director||00054553|
|Mr. Ramachandra Kasargod Kamath||Non-Executive Nominee Director||01715073|
|Mr. Vivek Vig||Non-Executive Nominee Director||01117418|
|Mr. Nishant Sharma||Non-Executive Nominee Director||03117012|
|Mr. Manas Tandon||Non-Executive Nominee Director||05254602|
|Mr. Kartikeya Dhruv Kaji||Non-Executive Nominee Director||07641723|
* Subject to the approval of Members of the Company Board of Directors of the Company at their meeting held on May 03 2019 has approved the change in designation of Mr. Sushil Kumar Agarwal to Managing Director and Chief Executive Officer (MD and CEO) of the Company from Whole Time Director and Chief Executive Officer (WTD and CEO) with effect from May 03 2019 till the expiry of his current term i.e. upto January 09 2024.
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 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 (SEBI LODR Regulations). None of the Directors have any pecuniary relationship or transactions with the Company. None of the Directors of the Company are related to each other and have confirmed that they are not disqualified from being appointed as Directors in terms of section 164 of the Act and are not debarred from holding the office of director by virtue of any SEBI order or any other such authority. Your Company has also obtained a certificate from a Company Secretary in practice confirming that none of the Directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as Directors of companies by SEBI/Ministry of Corporate Affairs or any such statutory authority. The same forms part of this Annual Report as Annexure-1 to the Directors Report.
Appointment & Resignation of Directors
During the financial year under review the Board at its meeting held on June 08 2018 appointed Mr. Krishan Kant Rathi Independent Director of the Company as Chairperson of the Board with effect from June 08 2018 who shall hold office up to the date of ensuing AGM as Chairperson of the Board.
During the financial year under review Mr. Sushil Kumar Agarwal has been reappointed as Whole Time Director and Chief Executive Officer of the Company for a period of five years with effect from January 10 2019 by the Members of the Company vide a postal ballot concluded on December 30 2018.
Change in Designation
Subject to the approval of Members of the Company Board of Directors of the Company in their meeting held on May 03 2019 has approved to change designation of Mr. Sushil Kumar Agarwal to Managing Director and Chief Executive Officer (MD and CEO) of the Company from Whole Time Director and Chief Executive Officer (WTD and CEO) with effect from May 03 2019 till the expiry of his current term i.e. upto January 09 2024. During the year no Director of the Company has resigned from the Board of the Company.
Directors Retiring by Rotation
In accordance with the provisions of the Act Mr. Ramachandra Kasargod Kamath and Mr. Vivek Vig Non-Executive Nominee Directors of the Company are liable to retire by rotation at the ensuing 9th Annual General Meeting of the Company. They are eligible and have offered themselves for re-appointment. Resolutions for their reappointment are being proposed at the 9th Annual General Meeting and their Profiles are included in the Notice of the 9th Annual General Meeting.
Appointments/Resignations of the Key Managerial Personnel
Mr. Sushil Kumar Agarwal- Managing Director and CEO Mr. Ghanshyam Rawat- Chief Financial Officer and Mr. Sharad Pathak - Company Secretary and Compliance Officer are the Key Managerial Personnel in terms of section 2(51) of the Act.
Further Subject to the approval of the Members of the Company Board of Directors of the Company at their meeting held on May 03 2019 has approved the change in the designation of Mr. Sushil Kumar Agarwal to Managing Director and Chief Executive Officer (MD and CEO) of the Company from Whole Time Director and Chief Executive Officer (WTD and CEO) with effect from May 03 2019 till the expiry of his current term i.e. upto January 09 2024. Apart from above none of the Key Managerial Personnel of the Company has been appointed or resigned from the Company during the financial year under review.
Number of Board Meetings held during the Financial Year
During the financial year 2018-19 10 (Ten) Board Meetings were convened and held. The details related to Board Meetings are appended in Corporate Governance Report forming part of this Report. The intervening gap between the Board Meetings was within the period prescribed under the Act and SEBI LODR Regulations. The notice and agenda including all material information and minimum information required to be made available to the Board under Regulation 17 read with Schedule II Part-A of the SEBI LODR Regulations were circulated to all Directors well within the prescribed time before the Meeting or placed at the Meeting.
Performance Evaluation of the Board
Your Company is following the most effective way to ensure that Board Members understand their duties and adopt good governance practices. In furtherance to this the Directors of your Company commit to act in good faith to promote the objects of the Company for the benefit of its employees the Stakeholders including Shareholders the community and for the protection of environment.
Your Company has designed a mechanism as per the provisions of the Act SEBI LODR Regulations and Housing Finance Companies-Corporate Governance (National Housing Bank) Directions 2016 for the Evaluations of performance of Board Committees of Board & Individual Directors.
The above mechanism is based on the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 5 2017.
Further your Company is adhering to the Fit and Proper Criteria as laid down by NHB and also has in place a Board approved Policy for ascertaining the same at the time of appointment of Directors and on a continuing basis. The Nomination & Remuneration Committee carried out the evaluation of every Director's performance and the Board additionally carried out an evaluation of its own performance Statutory Board Committees namely Audit Committee Nomination & Remuneration Committee Corporate Social Responsibility Committee Stakeholders Relationship Committee and Risk Management Committee and all the Individual Directors without the presence of the Director being evaluated. During the financial year under review separate Meeting of the Independent Directors was held on January 30 2019 without the attendance of Non- Independent Directors and the Management of the Company to review the performance of the Non- Independent Directors and Board as a whole after assessing the quality quantity and timeliness of flow of information between the management and the Board which is necessary for the Board to effectively and reasonably perform its duties. Major aspects of Board evaluation included who is to be evaluated process of evaluation including laying down of objectives and criteria to be adopted for evaluation of different persons feedback to the persons being evaluated and action plan based on the results. The manner in which the evaluation has been carried out has been explained in the Report on Corporate Governance forming part of this Report asAnnexure-2. As required under the SEBI LODR Regulations a certificate from Mr. Manoj Maheshwari Practicing Company Secretary (Membership No. FCS 3355) certifying that the Company has complied with the conditions of Corporate Governance as stipulated by SEBI LODR Regulations has been obtained. The said certificate forms part of the Directors Report as Annexure-3. Company's Policy on Director's Appointment Remuneration & Evaluation
The Board on the recommendation of the Nomination & Remuneration Committee adopted a Policy on Nominations & Remuneration for Directors Key Managerial Executives Senior Management and Other Employees which inter-alia lays down the criteria for identifying the persons who are qualified to be appointed as Directors and/or Senior Management Personnel of the Company along with the criteria for determination of remuneration of Directors KMPs Senior Management and other employees and their evaluation and includes other matters as prescribed under the provisions of Section 178 of the Act and SEBI LODR Regulations. The Policy on Nominations & Remuneration for Directors Key Managerial Executives Senior Management and Other Employees `Remuneration Policy' of the Company are placed on the website of the Company. The Remuneration paid to the Directors is in line with the Remuneration Policy of the Company. The Nomination & Remuneration Policy can be accessed through the following link https://www.aavas.in/ remuneration-policy.
Details of Remuneration paid to all the Directors during the financial year 2018-19 is more particularly defined in extract of Annual Return in form MGT-9 attached to this report as Annexure-9.
COMMITTEES OF THE BOARD
The Company has the following Ten (10) Board level Committees which have been constituted in compliance with the requirements of the business and relevant provisions of applicable laws and statutes:
1. Audit Committee
2. Nomination and Remuneration Committee
3. Stakeholders Relationship Committee
4. Corporate Social Responsibility (CSR) Committee
5. Risk Management Committee
6. Asset Liability Management Committee (ALCO)
7. IT Strategy Committee
8. Executive Committee
9. Customer Service & Grievance Redressal (CS&GR) Committee
10. IPO Committee During the financial year under review recommendations made by above Committees were accepted by the Board.
The details with respect to the composition terms of reference number of Meetings held etc. of these Committees are given in the Report on Corporate Governance which forms part of this Report.
PRUDENTIAL NORMS FOR THE HOUSING FINANCE COMPANY
Your Company continues to comply with the guidelines issued by NHB from time to time including but not limited to accounting guidelines prudential norms for asset classification income recognition provisioning capital adequacy concentration of credit/investments credit rating Know Your Customer (KYC) guidelines Anti Money Laundering (AML) standards fair practices code Asset Liability Management (ALM) system Most Important Terms & Conditions (MITC) Grievance Redressal Mechanism recovery of dues real estate and capital market exposures norms. Further your Company has taken steps for effective management of operational risk including technology risk as outlined in the Information Technology framework for HFCs. Your Company has also put a reporting system in place for recording frauds as stipulated in guidelines dated February 5 2019 issued by NHB.
The recognition of Income and Impairment on financial instruments (Expected Credit Loss) has been made in the books as per the Ind AS.
Your Company's Capital Adequacy Ratio stood at 67.77% as against the minimum requirement of 12%. NHB has not passed any significant or adverse remarks against the Company in their inspection carried out during the financial year. Further it has not levied any penalty on the Company during the financial year.
Regulatory & Statutory Compliances
During the financial year under review the NHB has issued various Notifications Circulars and Guidelines to Housing Finance Companies.
The Circulars and the Notifications issued by NHB were also placed before the Board of Directors at regular intervals to update the Board members on compliance of the same and your Company has adhered to all the Circulars Notifications and Guidelines issued by NHB from time to time.
The Government of India has set up the Central Registry of Securitization Asset Reconstruction and Security Interest of India (CERSAI) under Section 21 of the SARFAESI Act 2002 to have a central database of all mortgages created by lending institutions. The object of this registry is to compile and maintain data relating to all transactions secured by mortgages. Accordingly your Company is registered with CERSAI and has been submitting data in respect of its loans.
Your Company is also in compliance with the provisions of the Act including the Secretarial Standards SEBI LODR Regulations and other applicable statutory requirements.
EMPLOYEE STOCK OPTION PLANS-2016 (ESOP-2016)
Your Company has instituted Stock Option Plans to attract and retain reward and motivate the Management team Directors and Employees of the Company.
The Members of the Company have by passing the special resolution at their Meeting held on February 23 2017 approved three plans (Collectively called ESOP-2016) as following:
1. EQUITY STOCK OPTION PLAN FOR EMPLOYEES 2016 (ESOP 2016-I)
2. EQUITY STOCK OPTION PLAN FOR MANAGEMENT TEAM 2016 (ESOP 2016-II)
3. EQUITY STOCK OPTION PLAN FOR DIRECTORS 2016 (ESOP 2016-III) These three plans empower the Board and Nomination & Remuneration Committee to execute the said ESOP- 2016.
Pursuant to the resolution passed by the Members on June 11 2018 the Equity Stock Option Plan for Directors 2016 (ESOP 2016-III) was amended in order to enable early/accelerated vesting of stock options under the said plan. Further pursuant to requirements of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations 2014 (SEBI SBEB Regulations) read with SEBI LODR Regulations the Members of the Company ratified the ESOP-2016 subsequent to the IPO of the Company. All the above stated ESOP plans are in compliance with the SEBI SBEB Regulations. The Nomination & Remuneration Committee monitors the Plans in compliance with the Act SEBI SBEB Regulations and SEBI LODR Regulations. The Company shall place a certificate received from its Auditors confirming that the above Plans have been implemented in accordance with the SEBI SBEB Regulations and is as per the resolutions passed by the Members of the Company. at the ensuing AGM for the inspection of the Members of the Company. The disclosures as required under the SEBI SBEB Regulations have been placed on the website of the Company at https://www.aavas.in/investor-relations/ annual-reports.
SPECIAL RESERVE (U/S 29C OF THE NATIONAL HOUSING BANK ACT 1987)
Your Company has transferred ?35.23 crore i.e. 20 % of net profits to Statutory Reserves during the financial year under review as required under the provisions of section 29C of The NHB Act 1987 read with section 36 (1) (viii) of Income Tax Act 1961.
M/s S.R. Batliboi & Associates LLP Chartered Accountants (Firm Registration No: 101049W/E300004) Statutory Auditors of the Company were appointed by the Members of the Company in the 7th Annual General Meeting (AGM) of the Company held on July 26 2017 to hold office as Statutory Auditors from conclusion of the 7th AGM to the conclusion of 12th AGM of the Company. As per the provisions of the NHB Notification No. NHB. HFC.CG-DIR.1/MD&CEO/2016 partner of the audit firm needs to be rotated in every three year.
Members are requested to note that the Ministry of Corporate Affairs vide notification dated May 7 2018 inter-alia notified an amendment to Section 139(1) of the Act whereby the requirement of placing appointment of the Statutory Auditors for ratification by the Members of the Company at every Annual General Meeting has been omitted. Accordingly the Board has not proposed any ratification for the appointment of Statutory Auditors in the forthcoming AGM. However the Board has noted the confirmation received from M/s S.R. Batliboi & Associates LLP Chartered Accountants to the effect that their appointment is in compliance of Sections 139 and 141 of Act and rules made thereunder.
The Statutory Auditors have not made any adverse comments or given any qualification reservation or adverse remarks or disclaimer in their Audit Report on the financial statements for FY 2018-19.
Further the Auditors have not reported any fraud in terms of Section 143(12) of the Act.
Secretarial Auditors and Secretarial Audit Report
In accordance with Section 204 of the Act and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 M/s V. M. & Associates Practicing Company Secretaries (Firm Registration No: P1984RJ039200) were appointed as Secretarial Auditors to conduct the Secretarial Audit of the Company for the FY 2018-19. Your Company has provided all assistance and information to the Secretarial Auditors for conducting their audit. The Report of Secretarial Auditors for the FY 2018-19 is annexed to this Report as Annexure-4. The Report of Secretarial Auditors is self-explanatory and there were no major observations or qualifications or adverse remarks in their Report except that expenditure on CSR activities were below the prescribed limit. The Management has responded saying that your Company is in the process of gradually building and developing the internal CSR appraisal mechanism for appraising CSR projects as it intends to contribute towards genuine projects and partner with only reputed implementation agencies with proven track record.
Further your Company has constituted a separate legal entity named as Aavas 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 Aavas Foundation to spend maximum available funds for CSR for promoting growth and equality responsive to relevant needs of communities in which your Company operates.
INTERNAL AUDIT & INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY
Your Company has an Internal Audit Department supported by Independent Internal Auditors who conduct comprehensive audit of functional areas and operations of the Company to examine the adequacy of compliance with policies procedures statutory and regulatory requirements. Significant audit observations and follow up actions thereon are reported to the Audit Committee of the Board. The Audit Committee reviews and evaluates adequacy and effectiveness of the Company's internal control environment and monitors the implementation of audit recommendations.
The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company its compliance with operating systems accounting procedures and policies at all locations of the Company. Significant Audit observations and corrective actions thereon are presented to the Audit Committee every quarter or at periodic intervals.
The Audit Committee and Board of Directors have approved a documented framework for the internal financial control to be followed by the Company and such policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business including adherence to Company's policies safeguarding of its assets prevention and detection of frauds and errors accuracy and completeness of the accounting records and timely preparation of reliable financial information and disclosures. The Audit Committee periodically reviews and evaluates the effectiveness of internal financial control system.
MATERIAL CHANGES/EVENTS AND COMMITMENTS IF ANY
There were no material changes and commitments affecting the financial position of your Company which had occurred between the end of the Financial Year i.e. March 31 2019 and the date of the Director's Report i.e. May 03 2019.
There has been no change in the nature of business of your Company.
No significant or material orders have been passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and / or the Company's operations in future.
MAINTENANCE OF COST RECORDS
Being a Housing Finance Company the Company is not required to maintain cost records as per provisions of the Act.
Your Company has developed a fully equipped Core Housing Finance Solutions Platform which is a step towards aligning technology to the projected business growth. All branches of your Company and the corporate office are linked through a centralized data-based platform that enriches data management strengthens service delivery and serves the customer(s) in an efficient manner which is an integral part of the control mechanism. New initiatives taken by your Company in Information Technology are as follows:-
a) Document Digitization
b) Device Location Tracking
c) Procurement of Energy Saving Green IT Equipment
d) Refilling Outsourced with High-end Copier Machine in High Print volume Branches to reduce the Carbon Footprint.
During the financial year under review the NHB had notified Information Technology Framework for HFCs (Guidelines) vide its notification no. NHB/ND/DRS/ Policy Circular No. 90/2017-18 dated June 15 2018 in order to enhance the safety security efficiency in processes leading to benefits for HFCs and their customers.
Your Company is in compliance with the aforesaid guidelines.
Your Company conducts audit of its IT systems through external agencies at regular intervals. The external agencies suggestions and recommendations are reported to the Audit Committee and implemented wherever found feasible.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
The Familiarization Programme of your Company aims to familiarize Independent Directors with the Housing industry scenario the Socio-economic environment in which your Company operates the business model the operational and financial performance of your Company to update the Independent Directors on a continuous basis on significant developments in the Industry or regulatory changes affecting your Company so as to enable them to take well informed decisions in a timely manner. The familiarization programme also seeks to update the Independent Directors on their roles responsibilities rights and duties under the Act and other relevant legislations.
The details of the familiarization programmes have been hosted on the website of the Company and can be accessed on the link: https://www.aavas.in/familiarization-programme.
HUMAN RESOURCE DEVELOPMENT
Your Company's 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 Company's strategy and a significant source of competitive advantage.
Across all its business operations your Company had a workforce of 2384 people on permanent role as on March 31 2019. Human resource development is considered vital for effective implementation of business plans. Constant endeavor is being made to offer professional growth opportunities and recognitions apart from imparting 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 culture of the Company. Your 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. Your Company has a team of dedicated individuals and qualified professionals like Chartered Accountants Company Secretaries Engineers and Software Developers having degrees from top technical institutions including IITs and MBAs from premier institutes like IIMs.
In pursuance of your Company's commitment to develop and retain the best available talent your Company has been organizing in house training programmes on regular basis for its employees covering various specialized functions viz lending operations Underwriting & Due diligence KYC & AML norms Risk Management Information Technology Recoveries CLSS PMAY Grievance Redressal and soft skills.
During the financial year under review your Company has nominated employees to attend the external training programmes conducted by NHB and other institutions on KYC-FPC Customer Service Legal Support for Recoveries NPA Management Grievance Registration & Information Database (GRIDS) Central Registry of Securitization Asset Reconstruction & Security Interest of India (CERSAI) PMAY Credit Linked Subsidy Scheme (CLSS) Loans-Credit Appraisal and Risk Management.
RISK MANAGEMENT FRAMEWORK
Your Company has in place a Board Constituted Risk Management Committee. The details of the Committee and its terms of reference are set out in the Corporate Governance Report forming part of this report.
Your Company has Board approved Risk Management Policy wherein all material risks faced by the Company are identified and assessed. Your Company has set up a policy framework for ensuring better management of its asset & liability profile. Your Company gives due importance to prudent lending practices and has put in place suitable measures for risk mitigation which include verification of credit history from credit information bureaus personal verification of customer's business and residence in house technical and legal verification conservative loan to value parameters and compulsory term cover for insurance. The Risk management framework of your Company seeks to minimize adverse impact of risks on the key business objectives and enables your Company to leverage market opportunities effectively.
During the financial year under review the Risk Management Committee reviewed the risks associated with the business of your Company undertook its root cause analysis and monitored the efficacy of the measures taken to mitigate the same.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
Your Company believes in conducting its affairs in a fair and transparent manner by adopting highest standards of professionalism honesty integrity and ethical behaviour. Your Company is committed to develop a culture where it is safe for all the Directors and employees to raise concerns about any wrongful conduct.
The Board of Directors has approved the vigil mechanism/ whistle blower policy of the Company which provides a framework to promote a responsible and secure whistle blowing. It protects Directors/ employees wishing to raise a concern about serious irregularities within the Company. It provides for a vigil mechanism to channelize reporting of such instances/ complaints/ 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 and can be accessed at https://www.aavas.in/vigil-mechanism-policy. During the financial year under review in accordance with the SEBI (Prohibition of Insider Trading) (Amendment) Regulations 2018 the scope of Vigil Mechanism/ Whistle Blower Policy was further extended by including the provision of reporting the instances of leakages of unpublished price sensitive information.
CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING IN COMPANY'S SECURITIES
Your Company has formulated Code of Conduct for Prevention of Insider Trading in Company's Securities (Code) in accordance with SEBI (Prohibition of Insider Trading) Regulations 2015 as amended. The objective of this Code is to protect the interest of Shareholders at large to prevent misuse of any price sensitive information and to prevent any insider trading activity by way of dealing in securities of the Company by its Designated Persons. Mr. Sharad Pathak Company Secretary and Compliance Officer of the Company is authorized to act as Compliance Officer under the Code.
During the financial year under review the code was amended in line with the SEBI (Prohibition of Insider Trading) (Amendment) Regulations 2019 and SEBI (Prohibition of Insider Trading) (Amendment) Regulations 2018.
DIVIDEND DISTRIBUTION POLICY
Your Company has formulated Dividend Policy in accordance with SEBI LODR Regulations for bringing transparency in the matter of declaration of dividend and to protect the interest of investors. The Dividend Policy is available on the website of the Company at https://www. aavas.in/dividend-distribution-policy and form part of this Report as Annexure-5.
PARTICULARS OF HOLDING/SUBSIDIARY/ ASSOCIATE COMPANIES
Your Company doesn't have any holding Company. The Shareholder having the Substantial interest in the Company is Lake District Holdings Limited.
As on March 31 2019 your Company has one unlisted wholly owned subsidiary named AAVAS FINSERV LIMITED the subsidiary Company has not started any business operations as on the date of this report. Pursuant to the provisions of Section 129(3) of the Act your Company has prepared Consolidated Financial Statements of the Company which forms part of this Annual Report. Further a Statement containing salient features of financial statements of the Subsidiary in the prescribed format AOC-1 pursuant to Section 129(3) of the Act read with the Companies (Accounts) Rules 2014 is annexed as Annexure-6 to this Report.
In accordance with Section 136 (1) of the Act the Annual Report of your Company containing inter alia Financial Statements including consolidated financial statements has been placed on our website: www.aavas.in. Further the financial statements of the subsidiary have also been placed on our website: www.aavas.in. The Company will make available physical copies of these documents upon written request by any Shareholder of the Company.
Your Company has an effective Investor Relations Program through which the Company continuously interacts with the investment community through various communication channels viz Periodic Earnings Calls Annual Investor/Analyst Day Individual Meetings Video-conferences Participation in conferences One on One interaction. Your Company ensures that critical information about the Company is made available to all its investors by uploading such information on the Company's website under the Investors section. Your Company also intimates exchanges regarding upcoming events like earnings calls declaration of quarterly & annual earnings with financial statements and other such matters having bearing on the share price of the Company.
The statement containing particulars of employees as required under Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 annexed as Annexure-7 to the Directors' Report. In accordance with the provisions of Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the names and particulars of the top ten employees in terms of remuneration drawn and of the aforesaid employees are set out in the Annexure to this report. In terms of the provisions of Section 136(1) of the Act read with the rule the Directors' Report is being sent to all Shareholders of the Company excluding the said annexure. Any Shareholder interested in obtaining a copy of the annexure may write to the Company at email@example.com.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVE
In line with the provisions of Section 135 of the Act read 76 with the Companies (Corporate Social Responsibility Policy) Rules 2014 your Company has undertaken various CSR projects in the area of health promoting gender equality empowering women Education promoting traffic rules Regulation and Road Safety Providing Safe Drinking Water and Promoting Sports which are in accordance with the Schedule VII of the Act and CSR Policy of the Company.
During the financial year under review your Company has constituted a separate legal entity named as Aavas Foundation to effectively Channelize CSR Funds to provide impetus on philanthropic initiatives of the Company. Your Company has planned to drive CSR initiatives directly as well as through the Aavas Foundation to spend maximum available funds for CSR for promoting growth and equality responsive to relevant needs of communities in which your Company operates. The Annual Report on CSR Activities which forms part of the Directors Report is annexed as Annexure-8 to this report.
PARTICULARS OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
In accordance with the provisions of Sec 134 (3) (m) of the Act read with Rule 8 of the Companies (Accounts) Rules 2014 the requisite information relating to your Company are as under:-
A) Conservation of energy:
(i) The Steps taken / impact on conservation of energy: The operations of the Company being financial services doesn't require intensive consumption of electricity. However your Company is taking every necessary step to reduce its consumption of energy.
(ii) The Steps taken by the Company for utilizing alternate sources of energy: Your Company has procured the Energy Saving Green IT Equipment's and power saving lamps LEDs that have been installed in branches so far as a measure for conservation of energy. Your Company has installed High-end Copier Machine in High Print volume in Branches to reduce the Carbon Footprint.
As a part of Save Green efforts a lot of paper work at branches and the registered office has been reduced by suitable leveraging of technology and promoting digitization.
(iii) The Capital investment on energy conservation equipment: In view of the nature of the activities carried on by your Company there is no capital investment on energy conservation equipment.
B) Technology absorption:
(i) the efforts made towards technology absorption: Your Company has developed a fully equipped Core Housing Finance Solutions Platform which is a step towards aligning technology to the projected business growth.
(ii) the benefits derived like product improvement cost reduction product development or import substitution: Nil
(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year)
a) the details of technology imported: N.A.
b) the year of import: N.A.
c) whether the technology has been fully absorbed: N.A.
d) if not fully absorbed areas where absorption has not taken place and the reasons thereof: N.A.
(iv) the expenditure incurred on Research and Development: N.A.
C) Foreign exchange earnings and Outgo:
During the financial year under review your Company had no foreign exchange earnings and the aggregate of the foreign exchange outgo during the financial year under review was ?608.86 lakh. The aforesaid details are shown in the Note No. 38 of notes to the accounts forming part of the Standalone Financial Statements. Members are requested to refer to these Notes.
BUSINESS RESPONSIBILITY REPORTING
As required under Regulation 34(2)(f) of SEBI LODR Regulations Business Responsibility Report describing the initiatives taken by Company from an environmental social and governance perspective forms part of this Annual report and is annexed to this report.
EXTRACTS OF ANNUAL RETURN
Pursuant to sub-section 3(a) of Section 134 and subsection (3) of Section 92 of the Act read with Rule 12(1) of the Companies (Management and Administration) Rules 2014 the extract of the Annual Return in form MGT-9 as at March 31 2019 forms part of this report as Annexure-9.
DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION & REDRESSAL) ACT 2013 READ WITH RULES
Your Company has zero tolerance towards any action on the part of any of its officials which may fall under the ambit of `Sexual Harassment' at workplace. Your Company recognizes and promotes the right of women to protection from Sexual Harassment and the right to work with dignity as enshrined under the Constitution of India and the Convention on the Elimination of all forms of Discrimination against Women (CEDAW).
Pursuant to the requirements of Section 22 of Sexual Harassment of Women at Workplace (Prevention Prohibition & Redressal) Act 2013 read with Rules there under the Internal Complaint Committee of the Company has not received any complaint of Sexual Harassment during the financial year under review.
The following is a summary of Sexual Harassment complaints received and disposed off during the year 2018-19:
No. of complaints received: Nil
No. of complaints disposed of: Nil
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Since the Company is a Housing Finance Company the disclosure regarding particulars of loans given guarantees given and security provided in the ordinary course of business is exempted under the provisions of Section 186 (11) of the Act.
CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
In accordance with the provisions of section 188 of the Act and rules made thereunder the transactions entered with related parties are in the ordinary course of business and on an arm's length pricing basis the details of which are included in the notes forming part of the Financial Statements.
During the financial year under review your Company had entered into an arrangement with Aavas Finserv Limited Wholly owned unlisted subsidiary of the Company which constitutes Related Party Transactions covered within the purview of Section 188(1) of the Act accordingly requirement of disclosure of Related Party Transactions in terms of Section 134(3)(h) of the Act is provided in Form AOC-2 as Annexure-10.
Further as required by NHB notification no. NHB.HFC. CG-DIR.1/MD&CEO/2016 dated February 9 2017 Policy on transactions with Related Parties is given as Annexure-11 to this report and can be accessed on the website of the Company at https://www.aavas.in/policy-on-transactions-with-related-parties.
INTERNAL GUIDELINES ON CORPORATE GOVERNANCE
During the financial year under review your Company adhered to the Internal Guidelines on Corporate Governance adopted in accordance with Housing Finance Companies-Corporate Governance (NHB) Directions 2016 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 can be accessed at https://www.aavas.in/internal-guidelines-on-corporate-governance.
DIRECTORS' RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 134(3)(c) read with Section 134(5) of the Act and based on the information provided by the Management the Board of Directors report that:
a) in the preparation of the annual accounts the applicable accounting standards have been followed along with proper explanation relating to material departures.
b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent to give a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the profit and loss of the Company for that period.
c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities.
d) the Directors have prepared the annual accounts on a going concern basis.
e) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively; and
f) 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.
BUSINESS OVERVIEW & FUTURE OUTLOOK
A detailed business review & future outlook of the Company is appended in the Management Discussion and Analysis Section of Annual Report.
Your Directors would like to place on record their gratitude for the valuable guidance and support received from the NHB.
Your Directors would like to acknowledge the role of all its Stakeholders viz. Shareholders Debenture holders Bankers Lenders Borrowers Debenture Trustees and all others for the continued support confidence and faith they have always reposed in the Company.
Your Directors further take this opportunity to appreciate and thank the Kedaara Capital and Partners Group for their invaluable and continued support and guidance.
Your Directors acknowledge and appreciate the guidance and support extended by all the Regulatory authorities including NHB Securities Exchange Board of India (SEBI) Ministry of Corporate Affairs (MCA) Registrar of Companies-Jaipur BSE Limited (BSE) and National Stock Exchange of India Limited (NSE) NSDL and CDSL. Your Directors thank the Rating Agencies (ICRA CARE CRISIL and India Ratings & Research Ltd. [Fitch group]) local /statutory authorities and all others for their wholehearted support during the financial year and look forward to their continued support in the years ahead.
Your Directors also wish to place on record their appreciation for the commitment displayed by all the Members of the Audit Nomination & Remuneration Corporate Social Responsibility Committees Stakeholders Relationship Committee Risk Management Committee and other Committees of the Board executives officers staff and the Senior Management team in recording an excellent performance by the Company during the financial year.
|For and on behalf of the Board of Directors|
|AAVAS FINANCIERS LIMITED|
|Sushil Kumar Agarwal||Manas Tandon|
|Managing Director & CEO||Nominee Director|
|(DIN: 03154532)||(DIN: 05254602)|
|Date: May 03 2019|