You are here » Home » Companies » Company Overview » Equitas Holdings Ltd

Equitas Holdings Ltd.

BSE: 539844 Sector: Financials
NSE: EQUITAS ISIN Code: INE988K01017
BSE 00:00 | 24 Apr Equitas Holdings Ltd
NSE 05:30 | 01 Jan Equitas Holdings Ltd
OPEN 54.65
PREVIOUS CLOSE 56.05
VOLUME 4426803
52-Week high 143.55
52-Week low 32.75
P/E 231.82
Mkt Cap.(Rs cr) 1,743
Buy Price 51.00
Buy Qty 71.00
Sell Price 51.05
Sell Qty 500.00
OPEN 54.65
CLOSE 56.05
VOLUME 4426803
52-Week high 143.55
52-Week low 32.75
P/E 231.82
Mkt Cap.(Rs cr) 1,743
Buy Price 51.00
Buy Qty 71.00
Sell Price 51.05
Sell Qty 500.00

Equitas Holdings Ltd. (EQUITAS) - Director Report


Notice: Undefined variable: pattern in /usr2/unibs/application/modules/live-market/views/scripts/company/annual-report.php on line 72

Company director report

To

The Members

Equitas Holdings Limited

Your Directors have pleasure in presenting the Twelfth Annual Reporttogether with the audited accounts of the Company on a Consolidated and Standalone basisfor the Financial Year ended March 31 2019 (FY 2018-19).

Financial Results*

The summary of Company‘s financial performance both on aConsolidated and Standalone basis for FY 2018-19 compared to the previous year FY 2017-18is given below:

( र in lakh)
Particulars Consolidated Standalone
2018-19 2017-18 2018-19 2017-18
Total Revenue 235853 177968 2252 2005
Less: Total Expenditure 208722 176078 980 619
Profit before taxation 27131 1890 1272 1386
Provision for taxation 9474 525 339 329
Profit after taxation[A] 17657 1365 933 1057
Other Comprehensive Income [B] 40 255 1 2
Total comprehensive Income for the year net of tax [A+B] 17697 1620 934 1058
Transfer to Statutory Reserve 5451 904 187 109

* In accordance with the press release dated January 18 2016 issued byMinistry of Corporate Affairs (MCA) Ind-AS is applicable to the Company with effect fromFinancial Year 2018-19. Accordingly the standalone and consolidated financial statementsof the Company for FY 2018-19 along with comparative numbers as on March 31 2018 havebeen prepared under Ind-AS framework.

Dividend

The Directors do not recommend any dividend for the year.

Transfer to Reserves

Your Company has transferred a sum of ` 187 lakh to Statutory Reserveas required under the Reserve Bank of India Act 1934.

Capital Adequacy

The Capital Adequacy Ratio of the Company stands at 96.84% as of March31 2019 as against the minimum capital adequacy requirements of 30% stipulated by RBI.

Material Changes and Commitments

There were no material changes and commitments affecting the financialposition of the Company which occurred between the end of the Financial Year to whichthese Financial Statements relate to and the date of this Report.

Share Capital

The Company during the year has issued in aggregate 1031522 EquityShares to its employees and the employees of its Subsidiaries under the Equitas EmployeesStock Option Scheme 2015.

Pursuant to the aforesaid issue and allotment of Equity Shares thepaid-up share capital of the Company stood at र 3414614980 as at March 31 2019 ascompared to र 3404299760 as at March 31 2018.

Investment in Subsidiaries

During the year under review there was no fresh infusion of capital inthe Company's Subsidiaries Equitas Small Finance Bank Limited and EquitasTechnologies Private Limited.

The State of Company's affairs

The Company continues to be categorised as a Non-Banking FinancialInstitution - Non-Deposit taking-Systemically Important Core Investment Company(CIC-ND-SI) under the RBI Regulations.

Statutory Disclaimer

The Company is having a valid Certificate of Registration datedSeptember 1 2016 issued by the RBI under Section 45-IA of the Reserve Bank of India Act1934. However RBI does not accept any responsibility or guarantee about the presentposition as to the financial soundness of the Company or for the correctness of any of thestatements or representations made or opinions expressed by the Company and for dischargeof any liability by the Company.

Neither there is any provision in law to keep nor does the Companykeep any part of the deposits with RBI and by issuing a Certificate of Registration to theCompany RBI neither accepts any responsibility nor guarantees the payment of deposits toany depositor or any person who has lent any sum to the Company.

Fixed Deposits

The Company has not accepted any deposits from the public sinceinception.

Subsidiary Companies

The Company conducts its business through the following twoSubsidiaries:

Sl. No. Name of the Subsidiary Activities
1 Equitas Small Finance Bank Limited (ESFBL) ESFBL is engaged in Banking business. Its various activities are outlined in the Management Discussion and Analysis Report which forms part of this Report.
2 Equitas Technologies Private Limited (ETPL) ETPL is engaged in freight facilitation business under the brand name of ‘Wowtruck'. The Company provides a common platform for transporters and customers to connect online and carry out transactions on real time basis.

As required under Regulations 16(1) (c) & 46 of Securities ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015 [SEBIListing Regulations] the Board of Directors had approved the Policy for determiningMaterial Subsidiaries ("Policy"). The details of the Policy are available on thewebsite of the Company https://www.equitas.in/pdf/EHL_Policy_Materiality.pdf.

Listing of shares of ESFBL

In accordance with the terms and conditions of the grant of SmallFinance Bank (SFB) licence ESFBL is required to list its shares within three years ofcommencement of business i.e. on or before September 4 2019. Also the Company as thepromoter of ESFBL is required to maintain a minimum stake of 40% (forty percent) in ESFBLfor a period of 5 (five) years from the date of commencement of business of the bank(i.e. until September 04 2021).

In order to comply with the aforesaid terms and conditions in a mannerthat is in the best interests of all stakeholders of ESFBL and the Company the Board ofDirectors of ESFBL and the Company in their respective Meetings held on January 31 2019and February 1 2019 approved a Scheme of Arrangement between the Company ESFBL and therespective shareholders. The Scheme contemplates

a) issue and allotment by ESFBL of 892062982 (Eighty Nine CroreTwenty Lakh Sixty Two Thousand Nine Hundred and Eighty Two only) fully paid-up paid-upequity shares for no cash consideration to the shareholders of the Company as of theRecord Date in the manner set out in the Scheme and

b) the consequent reduction by ESFBL of securities premium account therevenue and other reserves and the surplus in profit and loss account by an amount equalto the face value of the shares of ESFBL issued under the "Scheme"

The Scheme if implemented after necessary approvals from StockExchanges SEBI RBI shareholders and National Company Law Tribunal would result inreduction of stake of the Company in ESFBL to 53% with the remaining 47% held by publicshareholders. Post giving effect to the Scheme ESFBL seeks to list its shares by availingexemption from SEBI under Rule 19(7) of Securities Contracts Regulations Rules 1957.

The Scheme has been filed with SEBI through Stock Exchanges and RBI fortheir approval post which approvals would be sought from shareholders and NCLT.

Performance and Financial Position of Subsidiaries

As required under Section 129 of the Companies Act 2013 read with Rule5 of Companies (Accounts) Rules 2014 a statement containing salient features offinancial statements of each of the Subsidiaries has been appended to the financialstatements.

Consolidated Financial Statements

The Consolidated Financial Statements which have been prepared inaccordance with the Act and the relevant Accounting Standards form part of this AnnualReport.

Management Discussion and Analysis Report

In accordance with the SEBI Listing Regulations the ManagementDiscussion and Analysis Report highlighting the business-wise details state of affairsforms part of this Report.

Corporate Governance Report

A report on Corporate Governance containing the details as requiredunder the SEBI Listing Regulations forms part of this Report.

The Executive Director & CEO and the Chief Financial Officer havesubmitted a certificate to the Board regarding the financial statements and other mattersas required under Regulation 17(8) of SEBI Listing Regulations.

Corporate Social Responsibility

The Company has laid down a Corporate Social Responsibility Policywhich is disclosed on our website https://www. equitas.in/pdf/EHL-CSR-Policy.pd f. Inaccordance with the Policy the Company and its Subsidiary ESFBL contribute higher of 5%of its net profits or 2% of average net profits made during the preceding three financialyears to Equitas Development Initiatives Trust a Public Charitable Trust set up by theCompany for carrying out CSR activities on their behalf. The report on CSR is enclosed as Annexure– I.

Business Responsibility Report

Business Responsibility Report is attached and forms part of thisReport.

Board Meetings

During the year the Board of Directors of the Company met four times.The details of the Meetings are given in the Report on Corporate Governance. The maximuminterval between any two Meetings did not exceed 120 days as prescribed in the Act.

Composition of Audit Committee

The Company has constituted an Audit Committee in terms of therequirements of the Act and Regulation 18 of SEBI Listing Regulations. The composition ofthe same is disclosed in the Corporate Governance Report.

Board of Directors

As on the date of this Report the Company has five IndependentDirectors including a woman Director.

Directors & Key Managerial Personnel

Change in Directors

Mr Raghavan M S Independent Director had resigned from the Boardw.e.f. April 27 2018.

As required under Regulation 17(1A) of SEBI Listing Regulationsapproval of shareholders by way of special resolution is required for continuance ofappointment of Directors crossing the age of 75 years as on April 1 2019. Accordinglythe Company issued postal ballot notice seeking the approval of shareholders by way ofspecial resolution for continuance of three Independent Directors including Chairman– Mr Rangachary N Mr Yogesh Chand Nanda and Mr Rajaraman P V who satisfy theaforesaid age criterion. While resolutions seeking continuance of Directorship of MrRangachary N and Mr Rajaraman P V have been approved by shareholders as specialresolution resolution seeking continuance of directorship of Mr Yogesh Chand Nanda wasnot approved with requisite majority for a Special Resolution. Hence Mr Yogesh ChandNanda has ceased to be an Independent Director of the Company effective March 28 2019.

Your Directors place on record their appreciation for the valuableadvice and guidance rendered by Mr Raghavan M S and Mr Yogesh Chand Nanda during theirtenure as Directors of the Company and as Members of respective Board Committees.

Ms Jayshree Ashwinkumar Vyas Independent Director was appointed witheffect from November 12 2014 for a period of five years. Her term expires on November 112019. Your Directors recommend her re-appointment for the approval of shareholders for aperiod of five years with effect from November 12 2019 as her continued association asan Independent Director and as a Member of various Committees of the Board would immenselybenefit the Company.

The Company has familiarised the Independent Directors of the Companytheir roles and responsibilities in the Company nature of industry in which the Companyoperates business model of the Company etc. The details of familiarisation programmeimparted to Independent Directors are available on the website of the Companyhttps://www.equitas. in/pdf/Familiarisation-Programme-for- Independent-Directors.pdf.

The terms and conditions of appointment of Independent Directors arealso available on the website of the Company https://www.equitas.in/pdf/EHL-ID-Appt-TermsnConditions.pdf.

Section 152 of the Act provides that two-thirds of the total numbers ofDirectors are liable to retire by rotation out of which one-third shall retire from officeat every AGM. In terms of Section 149(13) the provisions of retirement of Directors byrotation shall not be applicable to Independent Directors and an Independent Directorshall not be included in the total number of Directors liable to retire by rotation.

Accordingly Mr Bhaskar S Executive Director & Chief ExecutiveOfficer the only non-Independent Director retires by rotation this year and beingeligible offers himself for re-appointment. The Board recommends his re-appointment asDirector of the Company liable to retire by rotation. Appropriate resolution in thisregard is being placed for approval of the shareholders at the ensuing Annual GeneralMeeting.

Declaration from Independent Directors

The Board has received declarations from the Independent Directors asrequired under Section 149(7) of the Act and Regulation 16(1)(b) of SEBI ListingRegulations and the Board is satisfied that the Independent Directors meet the criteria ofindependence as mentioned in the Act and Regulations therein.

Evaluation of Board Performance

The performance of the Chairman the Board Audit Committee (ACB)Nomination Remuneration & Governance Committee (NRGC) Corporate SocialResponsibility Committee (CSR) Stakeholders' Relationship Committee (SRC) and thatof individual Directors for the Year 2018-19 were evaluated on the basis of criteriaapproved by the Board. Some of the performance indicators based on which the independentdirectors are evaluated include contribution to setting strategy and policy directionsconcern for stakeholders approach to issues placed before the Board exercising of ownjudgement and voicing opinion freely.

All Directors were provided the criteria for evaluation which were dulyfilled in and sent to the Secretary to NRGC. The feedback was then collated and shared inconfidence with the Chairman of NRGC.

The Chairman of NRGC discussed the same with the other Members of theCommittee. Later at the Board Meeting the Chairman of NRGC shared the feedback with theChairman of the Board and the other Directors.

Policy on Directors' appointment & remuneration

Pursuant to the provisions of Section 178 of the Act the Company hasformulated and adopted Policy on selection of Directors and Remuneration Policy which aredisclosed on our website under Policies Section.https://www.equitas.in/pdf/EHLFit&ProperPolicy.pdf.https://www.equitas.in/pdf/EHLRemunerationPolicy.pdf

Directors' Responsibility Statement

The Board of Directors of the Company to the best of their knowledgeand belief confirm that:

1) in the preparation of the annual accounts the applicable accountingstandards have been followed along with proper explanation relating to materialdepartures if any;

2) they have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at March 31 2019 andof the profit of the Company for that period;

3) they have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;

4) they have prepared the annual accounts on a going concern basis;

5) they have laid down internal financial controls to be followed bythe Company and that such internal financial controls are adequate and operatingeffectively;

6) they have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

Key Managerial Personnel (KMP)

During the year under review Ms Deepti R was appointed as the CompanySecretary and Compliance Officer of the Company w.e.f. November 3 2018 in the place of MsJayashree S Iyer who had resigned w.e.f. close of office hours on November 2 2018. As atMarch 31 2019 the Company had the following Key Managerial Personnel (KMPs):

Sl. No. Name of the KMP Designation
1 Mr Bhaskar S Executive Director & Chief Executive Officer (ED & CEO)
2 Ms Srimathy R Chief Financial Officer (CFO)
3 Ms Deepti R Company Secretary (CS)

Overall remuneration

Details of all elements of remuneration paid to all the Directors aregiven in the Corporate Governance Report. The Independent Directors of the Company are notentitled to stock options.

Details of remuneration as required to be provided under Section 197 ofthe Act read with Rule 5 of Companies (Appointment and Qualification of ManagerialPersonnel) Rules 2014

(i) Ratio of Remuneration of Each Director with Median Employees Remuneration Name of the Director/Designation Ratio of remuneration to Median Remuneration of Employees
Mr Bhaskar S ED & CEO 9.22:1
Mr Rangachary N Chairman / Independent Director 0.64:1
Ms Jayshree Ashwinkumar Vyas Independent Director 0.32:1
Mr Nanda Y C Independent Director 0.32:1
Mr Raghavan M S Independent Director 0.02:1
Mr Rajaraman P V Independent Director 0.32:1
Mr Viswanatha Prasad S Independent Director 0.48:1

 

(ii) the percentage increase in remuneration of each Director Chief Financial Officer Chief Executive Officer Company Secretary or Manager if any in the financial year; Increase in remuneration of Independent Directors
In the previous year FY 2017-18 the Board had decided that Independent Directors would not draw any remuneration for FY2017-18. Hence comparison of remuneration of Directors for FY 2018-19 with that of FY 2017-18 is not feasible.
Increase in remuneration of KMP is as follows:
ED & CEO No increase
CFO 17%
CS There was a change in CS during the Financial Year. Hence comparison is not feasible.

 

(iii) the percentage increase in the median remuneration of employees in the financial year; 15%.
(iv) the number of permanent employees on the rolls of the Company as on March 31 2019 5 (five)
Details of remuneration of these employees as required under Rule 5 (2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are enclosed as Annexure - II
(v) average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial Remuneration. The average percentage increase in salaries of employees other than the managerial personnel in the last financial year was 12% There was no increase in the remuneration of managerial personnel viz.
Mr Bhaskar S ED & CEO.
(vi) affirmation that the remuneration is as per the remuneration policy of the Company. The remuneration is as per the Remuneration Policy of the Company.

None of the employees drew remuneration beyond the limits specifiedunder Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules2014.

Whistle Blower Policy/Vigil Mechanism

The Company has devised a Vigil mechanism for Directors and employeesthrough the adoption of Whistle Blower Policy details whereof is available on theCompany's website https://www.equitas.in/pdf/EHL-Whistle- Blower-Policy.pdf.

Auditors

Statutory Auditors

S R Batliboi & Associates LLP Chartered Accountants (FRN:101049W/E300004) were appointed as Auditors of the Company for 5 years till theconclusion of the 15th Annual General Meeting (AGM) to be held in the year 2022. TheCompany had obtained approval of shareholders for ratification of appointment of Auditorsuntil the conclusion of twelfth Meeting in the AGM held on July 27 2018 last year.Pursuant to the MCA Circular dated May 7 2018 amending the Companies (Audit &Auditors) Rules 2014 the requirement of ratification of appointment of statutoryauditors in every Annual General Meeting has been done away with.

Details in respect of frauds if any reported by Auditors:

There have been no frauds reported during the Financial Year endedMarch 31 2019.

Secretarial Auditors

The Secretarial Audit Report of M/s B Ravi & Associates PractisingCompany Secretaries for FY 2018-19 is enclosed as Annexure–III.

Explanations or comments by the Board on every qualificationreservation or adverse remark or disclaimer made by Statutory Auditors or SecretarialAuditors –

There are no qualifications reservations adverse remarks ordisclaimers made by the Statutory Auditors or Secretarial Auditors.

Information as per Section 134 (3) (q) of the Act read with Rule 8 ofthe Companies (Accounts) Rules 2014

During the Financial Year the Company had no activity relating toconservation of energy or technology absorption. Also there were no foreign currencyearnings or outgo.

Details of Employee Stock Option Scheme (ESOS)

Nomination Remuneration & Governance Committee constituted by theBoard of Directors of the Company administers the ESOS formulated by the Company fromtime to time for the benefit of eligible employees of the Company and its Subsidiaries.

Information as required under Section 62 of the Act and Rule 12 of theCompanies (Share Capital and Debentures) Rules 2014 and SEBI (Share Based EmployeeBenefits) Regulations 2014 (SEBI Regulations):

Sl. No. Information required Particulars
1 Number of Options granted during the year 1692115
2 Number of Options vested during the year 3811686
3 Number of Options exercised during the year 1031522
4 Number of shares arising as a result of exercise of Options 1031522
5 Number of Options forfeited/ lapsed during the year 5997878
6 Exercise Price ( र) 151/140/113
7 Money realized by exercise of Options (in lakh) 584.79
8 Total number of Options outstanding 12644449
9 Option Granted but not vested 6323190
10 Options Vested but not exercised 6321259
11 Total number of Options available for grant 24623270
12 Variation of terms of options Nil

Employee-wise details of options granted to

1. Key Managerial Personnel - Nil

2. Any other employee who receives a grant of options in any one yearof options amounting to five percent or more of options granted during that year:

S. No. Name of the Employee Designation No. of Options granted Exercise Price (in `) % of Options granted
1 Ashish Nasa EVP & Head – Wealth Management & Relationship Banking Equitas Small Finance Bank Limited (ESFBL) 100000 151 6%
2 Bhadresh Bhalchandra Pathak President & Head – SME Banking (ESFBL) 300000 151 18%
3 Ramasubramanian K EVP – Corporate Banking (ESFBL) 100000 140 6%
4 Srinivasan Purohit EVP & Head- Compliance (ESFBL) 100000 140 6%
5 Kalyanaraman M EVP- Outreach banking (ESFBL) 100000 140 6%
6 Natarajan Muthusubramanian EVP & Head- Treasury (ESFBL) 100000 140 6%
7 Alok Gupta EVP & Chief Risk Officer (ESFBL) 100000 140 6%
8 Sathyananda Prabhu EVP & Head – Internal Audit (ESFBL) 100000 140 6%

3. Identified employees who were granted options during any one yearequal to or exceeding one percent of the issued capital (excluding outstanding warrantsand conversions) of the Company at the time of grant - Nil

Other details relating to Stock Options as required under SEBI (ShareBased Employee Benefits) Regulations 2014 are displayed on the Company's websitehttps://www.equitas. in/pdf/ESOSInformation.pdf.

Particulars of contracts or arrangements with related parties

All the Related Party Transactions that were entered into during thefinancial year were on an arm's length basis and were in the ordinary course ofbusiness.

Pursuant to Section 134(3)(h) read with Rule 8(2) of the Companies(Accounts) Rules 2014 there are no transactions to be reported under Section 188(1) ofthe Act in form AOC-2.

All Related Party Transactions as required under Indian AccountingStandard (Ind AS 24) are reported in Note 22 & 30 forming part of Financial Statementsof your Company.

The Company's Policy on dealing with Related Party Transactions isavailable on the Company's website:https://www.equitas.in/pdf/EHLPolicyonRelatedParty Transactions.pdf

Risk Management

The Company is a Core Investment Company (CIC) and its operations arelimited to being a CIC. The risks therefore relate to investments made in itssubsidiaries. The operations of each of the Subsidiaries the risks faced by them and therisk mitigation tools followed by them to manage these risks are reviewed periodically bythe Audit Committees and the Boards of the respective Subsidiaries. The same areconsidered by the Board of the Company as well. Details of the same are covered in theManagement Discussion and Analysis Report.

Internal Financial controls

The Company has clear delegation of authority and standard operatingprocedures. These are reviewed periodically by the Audit Committee of the Company. Thesemeasures help in ensuring adequacy of internal financial controls commensurate with thenature and scale of operations of the Company.

Loans/Guarantees /Investments

Details of loans guarantees and investments covered under Section 186of the Act are provided in Notes 7 9 & 30 forming part of Financial Statements.

Disclosure under the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013

The Company has in place a Policy on Prevention of Sexual Harassment inline with the requirements of The Sexual Harassment of Women at Workplace (PreventionProhibition & Redressal) Act 2013. Internal Complaints Committee has been set up toredress complaints received under the Policy. No complaint has been received by theCompany under this Policy so far.

Significant and Material Orders Passed by the Regulators or Courts

There have been no significant and material orders passed by Regulatorsor Courts or Tribunals impacting the going concern status and the future operations of theCompany. Further no penalties have been levied by RBI/any other Regulators on the Companyduring the year under review.

Extract of Annual Return

The extract of Annual Return in Form No. MGT-9 as required underSection 92(3) of the Act and prescribed in Rule 12 of the Companies (Management andAdministration) Rules 2014 is appended as Annexure – IV to this Report. TheAnnual Return in Form No. MGT-7 is available in the website of the Companyhttps://www.equitas.in/

Dividend Distribution Policy

The Dividend Distribution Policy of the Company is available on ourwebsite https://www.equitas.in/polices.php

Depository System

As the Members are aware the Company's equity shares are tradablein electronic form. As on March 31 2019 out of the Company's total equity paid-upshare capital comprising of 341461498 equity shares only 197897 Equity Shares werein physical form and the remaining shares were in electronic mode. In view of the numerousadvantages offered by the Depository System the Members holding shares in physical formare advised to avail themselves of the facility of dematerialization.

Acknowledgement

The Directors thank the investors and customers for reposing confidencein Equitas. The Directors similarly express gratitude for the assistance and co-operationextended by RBI SEBI Stock Exchanges Depositories and other statutory authorities. YourDirectors record with sincere appreciation the valuable contribution made by employees atall levels and look forward to their continued commitment to achieve further growth andtake up more challenges to achieve the Mission and Vision of the Organisation.

For and on behalf of the Board of Directors
Bhaskar S Rangachary N
ED & CEO Chairman
Chennai
May 10 2019