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IIFL Wealth Management Ltd.

BSE: 542772 Sector: Financials
NSE: IIFLWAM ISIN Code: INE466L01020
BSE 00:00 | 24 Apr IIFL Wealth Management Ltd
NSE 05:30 | 01 Jan IIFL Wealth Management Ltd
OPEN 910.10
PREVIOUS CLOSE 946.65
VOLUME 80
52-Week high 1658.55
52-Week low 710.00
P/E 55.33
Mkt Cap.(Rs cr) 7,791
Buy Price 885.00
Buy Qty 10.00
Sell Price 895.15
Sell Qty 1.00
OPEN 910.10
CLOSE 946.65
VOLUME 80
52-Week high 1658.55
52-Week low 710.00
P/E 55.33
Mkt Cap.(Rs cr) 7,791
Buy Price 885.00
Buy Qty 10.00
Sell Price 895.15
Sell Qty 1.00

IIFL Wealth Management Ltd. (IIFLWAM) - Director Report


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Company director report

To the Members of IIFL Wealth Management Limited

Your Directors have pleasure in presenting the Twelfth Annual Report of IIFL WealthManagement Limited ("the Company") together with the Audited FinancialStatements for the year ended March 31 2019.

1. FINANCIAL RESULTS - THE HIGHLIGHTS OF THE FINANCIAL RESULTS FOR THE YEAR UNDERREVIEW ARE AS UNDER:

STANDALONE FINANCIAL RESULTS -

(Rs. in million)
PARTICULARS 2018 - 2019 2017 - 2018
Gross Total Income 5932.10 7187.78
Less: Expenditure 3959.75 5109.18
Profit /(Loss) Before Taxation 1972.35 2078.60
Less: Taxation - Current 479.03 508.37
- Deferred (24.51) (12.85)
Net Profit / (Loss) After Tax 1517.83 1583.08
Other Comprehensive Income (1.97) (13.09)
Total comprehensive income for the year(Comprising profit and other comprehensive income for the year) 1515.86 1569.99

CONSOLIDATED FINANCIAL RESULTS -

(Rs. in million)
PARTICULARS 2018 - 2019 2017 - 2018
Gross Total Income 15771.88 17148.10
Less: Expenditure 10392.57 12247.34
Profit /(Loss) Before Taxation 5379.31 4900.76
Less: Taxation - Current 1642.20 1134.04
- Deferred (8.36) (34.97)
Net Profit / (Loss) After Tax 3745.47 3801.69
Other Comprehensive Income 98.10 6.71
Total comprehensive income for the year(Comprising profit and other comprehensive income for the year) 3843.57 3808.40

2. REVIEW OF BUSINESS AND OPERATIONS:

Total Wealth Client Assets grew by 17.22% YoY and the Company now manages around RS.130000 Crore in Client assets.

The Asset management business manages over RS. 20772.56 crore of Assets whichcomprises of RS. 15661.39 Crore in AIF Assets Rs. 3624.82 crore in PMS assets and RS.1486.35 crore in Mutual Fund Assets.

Amidst volatile market conditions IIFL Wealth Finance Limited closed the FY 18-19 loanbook of over INR 4800 crore; while average loan assets increased by 5% EOP loan assetsdeclined by 28% over the previous year. The book is diverse with healthy flows from LoanAgainst Shares IPO financing and to a very small extent margin funding and Loan AgainstProperty.

3. MACROECONOMIC OVERVIEW:

Equity:

2019 the year of lower growth and interest rates: The year 2019 is expected tobe a year of slowing growth low inflation weakening commodity prices and steep declinein interest rates. Credit markets are clearly pointing towards worsening macro environmentand higher odds of recession. The difference between the yield on three-month Treasurybills and the benchmark 10-year bond which has turned negative or "inverted"before almost every US recession over the past 50 years widened to a level last seenbefore 2008 crisis. About $15 trillion of government bonds worldwide or 25% of themarket now trade at negative yields. This number has nearly tripled since October 2018.In Germany 30-year government bond went negative for the first time ever recently.Central banks across the board are likely to surprise markets with the extent of interestrate cuts. While aggressive rate cuts in emerging markets make a case for stronger dollarUS Fed too may eventually increase the pace of easing to keep dollar under check. Ongoingdelays to trade talks may also lead to lower trade volumes and GDP growth

India - dimming macro indicators bottoming capex and earnings:

Indian markets reversed the election supported gains in May and has since been weighedon by increasing signs of slowdown lagging indicators and the unmet expectations from thebudget presented last month. Weak macros and tight liquidity conditions are taking a tollon India corporate earnings. It's a known fact now that the economic growth has falteredin India as both the drivers of growth consumption & investment are slowing down. Wehave seen weakness in consumer demand and that is visible in the weak earnings growthacross segments such as auto & auto-ancillaries FMCG Consumer Durables CapitalGoods. The slump in the auto sector which accounts for nearly half of India'smanufacturing output has been a major factor behind the slide in economic growth to ave-year low earlier this year. Last and not the least the aggravation of all sectors isborne by the banking sector which had to battle through liquidity crisis and sti ingdemand amid lost con dence and crisis in the NBFC space. Demand slowdown across sectors isalso because the household savings rate has been declining on the back of low incomegrowth.

The Budget and India: The government's approach to adopt a prudent fiscal approachdoes deserve some credit. There were some notable positives with tax cuts for smallbusinesses and a further injection of funds into state flowned banks as well. Howeverannouncements such as super rich tax surcharge (incl FPIs) tax on buybacks likelyreduction in free oat of listed stocks and lack of stimulus have hurt investor sentiments.Post budget we have seen around $ 2.5 bn of FII out flows one of the steepest in recentyears. The intention to increase the minimum public shareholding (from 25% to 35%) couldlead to around $ 50 bn of fresh supply of equity. In the long term the policy could havea far-reaching impact on India's representation in offshore indices and higher resultingflows. We expect the government to gradually implement few of these decisions to helpequities maintain its appeal as a long-term asset class.

Outlook: Currently corporate profitability to GDP is at its lowest levels(~2-2.2%) and offers a large scope for recovery. On the other hand monetary policycontinues to be in the easing mode with continued rate cuts and large infusion ofliquidity which should aid improvement in earnings. Indian economy is still expected to bethe fastest growing major economy in the world (~7%).In the trade war period India is theonly Asian economy with a positive change in share of exports. Equity valuations seems tobe pricing in the near-term concerns and offer good risk-reward over a long-term horizon.India's Bond Yield-Earnings Yield (BY-EY) gap has dropped sharply to levels last seenduring demonetization (Dec' 2016) and market lows in Aug 2013. Historically equitiesdeliver good returns for the next two years from such levels.Market cap to GDP is ~76%lower than long term averages (78% for the last 12 years). We believe that it is extremelydif cult to time the exact bottom of the market and the current valuations are starting toget reasonable. Investors should start investing in equity in staggered manner over thenext 6 - 12 months.

Fixed Income:

Debt markets have witnessed heightened volatility in the recent months. The recent bondrally of ~100 bps over the past 10 weeks is one of the best rallies across the globe. Mostof this was on the accounts of better fiscal prudence benign core inflation steady GDPgrowth expectations range bound crude and surplus liquidity in the banking system whichwould keep OMOs at the back stage.

Post the rate cut in bi-monthly policy meet of RBI on Aug 7 2019 amid low inflationand slowing growth further rate actions looks to be more data dependent. The RBIsoftening stance is accommodative of more rate cuts but the urgency and pace of the cutsshall depend on domestic as well as global economic data. Developments surrounding thegovernment's planned sovereign bond issue will also be closely tracked as the discussionon the same is yet to start. As the monsoon seems to be correcting its course andmitigating initial de cits market participants will closely watch it from rural demandperspective.

RBI is committed to maintain liquidity in the market currently we are in a hugesurplus of about INR 90000 Cr. Liquidity surplus situation is expected to remain the samein near future. With the budgeted capital infusion for PSU Banks partial credit guaranteeto PSBs for NBFCs creating INR 1.34 Lakh crores of incremental capital for banks to lendto NBFCs stable credit growth of 12-14% and some visible risk aversion in lending banksmay remain healthy in at least the short run. The healthy spread of ~130-140 bps beingoffered by quality AAA rated credit over similar maturity G-secs appears to be a goodopportunity for returns. Subsequent yield compression which may extend from AAA/PSU tolower rated debt instruments may fuel another leg of gains from fixed income. In thisscenario of changing market conditions we continue our view of positioning at thefront-end of the curve with a defensive outlook as rate trajectory is likely to bevolatile.

Future business outlook:

The focus of the year has been on strategy and transformation. The firm worked withBoston Consulting Group (BCG) and McKinsey and Co. for defining a clear strategic growthpath for the next 10 years in the AMC and the Wealth businesses. On the AMC side thevision is to be the premier investment provider for Alternates in India especially on theunlisted and listed equity space special private debt and selective real estate assetclasses.

On the Wealth Management front the path is to transform to a steadier and predictableincome stream from train/fee income with minimum reliance on upfront/transactional incomeand the firm will determinedly move to that model over the next few years. We acquiredWealth Advisors India Pvt Ltd a premier Chennai based advisory firm with majority oftrail/fee income as a step in the right direction.

The business closed with assets of Rs. 167745.56 Crore and 300+ sales staff.

The analytics platform of the Company got enhanced with the addition of Altiore andCaliber technology platforms. Altiore provides latest analytics for client portfoliosincluding their held away assets; Caliber strengthens our control on our core transactionand reporting system by removing vendor dependency and delinquency. The firm also engagedwith Nihilent Tech in Pune to build a data warehouse and MIS dashboard system for accuratereal time information to management to enable agile decision making .

With a closing loan book of over Rs. 4798.29 Crore the NBFC subsidiary continues toenable our HNI clients to invest in our Wealth ideas with help of leverage if they sodesire.

IIFL Holdings and its subsidiaries decided to reorganize their corporate structurethrough a composite scheme of arrangement resulting in three separate entities; eachproposed to be listed on stock exchanges in India i.e. one for each branch of thebusiness currently being undertaken by IIFL Holdings i.e. 1. Loans and Mortgages; 2.Wealth and Asset Management; and 3. Capital Markets. The draft Information Memorandumalong with the listing application have been filed with the National Stock Exchange ofIndia Limited ("NSE") and the BSE Limited ("BSE") on July 6 2019 postreceipt of the approval of the National Company Law Tribunal Mumbai Bench("NCLT") on the NCLT order for the implementation of the composite scheme ofarrangement.

4. DIVIDEND:

During the period under review your Company has declared an interim dividend of Rs.5/- each on October 31 2018 and January 29 2019per equity share with face value Rs.2/-each involving a total outlay of Rs. 847906100/- (including dividend distributiontax). Your Directors recommend that said interim dividend be considered as nal dividend onEquity shares of the Company.

5. SHARE CAPITAL:

During the financial year 2018-19 the Authorised Share Capital of the Company wasaltered and increased from Rs 170000000 to Rs. 200000000 divided into 100000000shares of Rs. 2/- each.

During the year your Company allotted 278361 equity shares arising out of theexercise of Employee Stock Options and 4489500 preferential allotment(s). Post allotmentof equity shares the paid-up share capital of the Company has increased from Rs.159506926 to Rs. 169042648/- (divided into 84521324 equity shares of Rs.2/-each).

6. TRANSFER TO RESERVES:

During the FY 2018-19 the Company has not transferred any amount to General Reserve.

7. DEPOSITS:

During the period under review your Company has not accepted/ renewed any depositwithin the meaning of Section 73 of the Companies Act 2013 read with applicable rulesthereto.

8. DETAILS OF SUBSIDIARIES:

In accordance with Section 129(3) of the Companies Act 2013 the consolidatedfinancial statements of the Company and all its subsidiaries which form part of theAnnual Report have been prepared and are available on the website of the Company. You mayrefer to the Annexure to the consolidated financial statements of the Company whichcontains the statement containing the salient features of the financial statement of thesubsidiaries in the prescribed format AOC-1.

During the year under review the Company incorporated a wholly flowned subsidiarynamely IIFL Wealth Securities IFSC Limited on June 22 2018. The Company acquired twocompanies named Altiore Advisors Private Limited and Wealth Advisors (India) PrivateLimited on November 05 2018 and November 22 2018 respectively.

During the year IIFL Private Wealth (Suisse) S.A. ceased to be the subsidiary of theCompany.

As at March 31 2019 your Company has seventeen (17) subsidiaries as listed below:

Domestic Subsidiaries:

i. IIFL Wealth Finance Limited

ii. IIFL Distribution Services Limited

iii. IIFL Asset Management Limited

iv. IIFL Investment Adviser and Trustee Services Limited

v. IIFL Alternate Asset Advisors Limited

vi. IIFL Trustee Limited

vii. IIFL Wealth Securities IFSC Limited

viii. IIFL Altiore Advisors Limited (formerly known as Altiore Advisors PrivateLimited)

ix. IIFL Wealth Advisors (India) Limited (formerly known as Wealth Advisors (India)Private Limited)

International Subsidiaries:

i. IIFL Asset Management (Mauritius) Limited

ii. IIFL Private Wealth Management (Dubai) Limited

iii. IIFL (Asia) Pte. Limited

iv. IIFL Private Wealth Hong Kong Limited**

v. IIFL Inc.

vi. IIFL Capital (Canada) Limited

vii. IIFL Capital Pte. Limited (step down subsidiary);

viii. IIFL Securities Pte. Limited (step down subsidiary)

**The company is in process of winding up.

The Annual Report which consists of the financial statements of your Company onstandalone basis as well as consolidated financial statements of the group for the yearended 31st March 2019 is being sent to all the members of your Company.

Web link of the Annual Report is sent to all members whose email IDs are registeredwith the Company/Depository Participant(s). For members who have not registered theiremail IDs physical copies of the Annual Report are sent. It does not contain AnnualReports of your Company's subsidiary companies. Your Company will make available theAnnual Report either in a hard or soft copy depending upon request by any member of yourCompany. These Annual Reports will be available on your Company's website viz. URL:www.iiflwealth.com and will also be available for inspection by any member at theRegistered Office of your Company during working hours.

9. CORPORATE GOVERNANCE:

Pursuant to Regulation 27 of the SEBI (Listing Obligations and Disclosure Requirements)

Regulations 2015 (SEBI LODR Regulations) a separate section entitled ‘Report onCorporate Governance' has been included in this Annual Report. The Report of CorporateGovernance also contains certain disclosures required under the Companies Act 2013.

10. ANNUAL RETURN:

Pursuant to Section 134(3)(a) and Section 92(3) of the Companies Act 2013 read withRule 12(1) of the Companies (Management and Administration) Rules 2014 the Annual Returnof the Company as on March 31 2019 once prepared shall be disclosed on your Company'swebsite www.iiflwealth.com. - An extract of the Annual Return as on March 31 2019 in FormMGT-9 is annexed as Annexure - IV to this Report.

11. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

a. Directors:

The Board consists of Mr. Karan Bhagat Mr. Yatin Shah being Executive Directors of theCompany Mr. Nilesh Vikamsey Ms. Geeta Mathur Dr. S. Narayan* being the IndependentDirectors of the Company Mr. Nirmal Jain Mr. R. Venkataraman being Non-ExecutiveDirectors of the Company and Mr. Sandeep Naik and Mr. Shantanu Rastogi being NomineeDirectors (nominated by General Atlantic Singapore Fund Pte Ltd) of the Company.

Mr. Nilesh Vikamsey Dr. S. Narayan* and Ms. Geeta Mathur have submitted theirdeclaration under section 149(6) of the Companies Act 2013 and are Independent Directorsof the Board.

Directors retiring by rotation

Mr. Sandeep Naik and Mr. Shantanu Rastogi retires by rotation at the Twelfth AnnualGeneral Meeting (AGM) of the Company and are eligible for reappointment.

Appointment / Re-appointment:

Mr. Nilesh Vikamsey has been appointed as a Chairman of the Board w.e.f. June 25 2019.

*The Board of Directors of the Company at its meeting held on June 25 2019 based onthe recommendation of the Nomination and Remuneration Committee (NRC) appointed Mr.Subbaraman Narayan (DIN: 00094081) as the Independent Director of the Company for a termof 5 years commencing from June 25 2019 to June 24 2024 subject to approval ofshareholders of the Company.

The Board of Directors of the Company at its meeting held on August 21 2019 based onthe recommendation of the Nomination and Remuneration Committee (NRC) and the results ofthe performance evaluation re-appointed:

a) Mr. Nilesh Vikamsey (DIN: 00031213) as an Independent Director for a second term of5 (five) years from August 25 2019 to August 24 2024

b) Mr. Karan Bhagat (DIN: 03247753) as Managing Director for a term of 5 (ve) yearsfrom July 27 2020 to July 26 2025;

c) Mr. Yatin Shah (DIN: 03231090) as Whole-time Director for a term of 5 (ve) yearsfrom July 27 2020 to July 26 2025;

subject to the approval of the shareholders of the Company.

Resignation / Cessation of Directors:

Mr. Amit Shah (DIN - 06765300) Non-Executive Director resigned from the Board of theCompany with effect from January 24 2019.

i. Meetings of the Board of Directors -

The Board met nine (9) times during the period under review to discuss and approvevarious matters including financials appointment of auditor declaration of interimdividend review of audit reports and other board businesses.

ii. Committees of the Board -

In accordance with the Companies Act 2013 the Board has constituted followingCommittees as per the applicable provision of the Companies Act 2013 and the SEBI(Listing Obligation and Disclosure Requirements) Regulations 2015.

(i) Audit Committee.

(ii) Nomination and RemunerationCommittee.

(iii) Corporate Social Responsibility Committee.

(iv) Stakeholders' Relationship Committee.

(v) Risk Management Committee.

(i) Audit Committee:

The Audit Committee comprises of Mr. Nilesh Vikamsey Ms. Geeta Mathur and Mr. ShantanuRastogi. Ms. Geeta Mathur is the Chairperson of the Committee. The role terms ofreference and powers of the Audit Committee are in conformity with the requirements of theCompanies Act 2013 the SEBI (LODR) Regulations 2015 and the internal policies. TheCommittee met 5 (ve) times during the year under review and discussed on financials auditissues and appointment of auditors. During the period under review all therecommendations of the Audit Committee were accepted by the Board of Directors of theCompany.

The details including the meetings role terms of reference etc. of the AuditCommittee are provided in the Corporate Governance Report.

(ii) Nomination and Remuneration Committee:

The Nomination and Remuneration Committee ("NRC") comprises of Mr. NileshVikamsey Ms. Geeta Mathur Mr. Nirmal Jain and Mr. Sandeep Naik. As per the provisions ofSection 178 of the Companies Act 2013 the NRC had formulated a nomination andremuneration policy. The sameis annexed as an Annexure I to this Report.

The details including the meetings role terms of reference etc. of the Nominationand Remuneration Committee are provided in the Corporate Governance Report.

(iii) Corporate Social Responsibility Committee:

The Corporate Social Responsibility Committee ("CSR Committee") comprises ofMr. Nilesh Vikamsey Independent Director Mr. Nirmal Jain Non-Executive Director Mr.Karan Bhagat Executive Director and Mr. Sandeep Naik Non-Executive Director. The CSRCommittee has approved CSR Policy of the Company. IIFL group has set- up India InfolineFoundation (referred as "IIFL Foundation") a Section 8 Company under theCompanies Act 2013 which acts as the principal arm to undertake CSR initiatives onbehalf of the IIFL Group.

The details of the CSR Committee are provided in the Corporate Governance Report.

(iv) Stakeholders' Relationship Committee

Stakeholders' Relationship Committee comprises of Mr. Venkataraman RajamaniNon-Executive Director Ms. Geeta Mathur Independent Director and Mr. Yatin ShahExecutive Director. The details including the meetings role terms of reference etc. ofthe Stakeholders' Relationship Committee are provided in the Corporate Governance Report.

(v) Risk Management Committee:

Risk Management Committee comprises of Mr. Venkataraman Rajamani Non-ExecutiveDirector Ms. Geeta Mathur Independent Director Mr. Karan Bhagat Executive DirectorMr. Shantanu Rastogi Non-Executive Director and Mr. Nilesh Vikamsey IndependentDirector.

The objective of the Risk Management Committee is to oversee the Risk managementgovernance structure define and review the framework for identification assessmentmonitoring mitigation and reporting of risk. The details including the role objectives/terms of reference of the Risk Management Committee are provided in the CorporateGovernance Report.

iii. Separate meeting of Independent

Directors:

In compliance with provisions of the Companies Act 2013 a separate meeting ofIndependent Directors was held on March 22 2019 inter alia to discuss the following:

a) to review the performance of non-independent directors and the Board as a whole;

b) review the performance of the Chairperson of the Company taking into account theviews of executive directors and non-executive directors;

c) assess the quality quantity and timeliness of flow of information between thecompany management and the Board that is necessary for the Board to effectively andreasonably perform their duties.

Upon conclusion of the meeting the Independent Directors expressed their satisfactionover the performance of the other Directors and Board as a whole. They also expressedtheir satisfaction over the quality quantity and flow of information between the Companymanagement and the Board/ Committees of the Board from time to time.

iv. Annual Evaluation of the Board-

Pursuant to the provisions of the Companies Act 2013 the Board has carried out theannual performance evaluation of its flown performance the Directors individually as wellas the evaluation of the working of its Committees.

v. Declaration by Independent

Directors

The Company has received necessary declaration from each independent director undersection 149(7) of the Companies Act 2013 that he/ she meets the criteria of independentlaid down in section 149(6) of the Companies Act 2013.

b. Key Managerial Personnel:

The following of cials of the Company continue to be the "Key ManagerialPersonnel" pursuant to the provisions of Section 203 of the Companies Act 2013 andthe applicable provisions of the SEBI (LODR) Regulations 2015:

Mr. Karan Bhagat Managing Director

Mr. Yatin Shah Whole Time Director

Mr. Mihir Nanavati Chief Financial Officer and

Mr. Ashutosh Naik Company Secretary and Compliance Officer.

12. CORPORATE SOCIAL RESPONSIBILITY (CSR):

During the financial year your Company deployed 2% of its average net profits(computed as per the relevant provisions of the Companies Act 2013) of the precedingthree years on CSR projects refer Annexure II for Annual Report on CSR activities annexedwith this report.

All CSR efforts have been directed towards identifying and undertaking projects thathold the potential to create long-term social impact to empower marginalized communitiesand enhance their quality of life. In alignment with this objective in FY18-19 theCompany undertook a number of projects in the core areas of woman empowerment sanitationensuring environmental sustainability healthcare and education.

To ensure that CSR projects undertaken are implemented and monitored in a systematicmanner during the year efforts were focused on establishing systems and processes forthe same. Going forward your Company seeks to broaden the scope of CSR projects andemploy more funds towards a larger number of projects.

The Annual Report on CSR activities by the Company is annexed as Annexure II.

13. PARTICULARS OF EMPLOYEES:

The information required pursuant to Section 197 of the Companies Act 2013 read withRule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 in respect of employees of the Company for the financial year 2018-19 is availablefor inspection at the registered office of the Company. Any shareholder interested inobtaining a copy of the said information may write to the Company Secretary at theregistered office of your Company.

Further Disclosures pursuant to Rule 5(1) of Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 is enclosed as an Annexure III

14. EMPLOYEE STOCK OPTION/ PURCHASE SCHEME:

The stock options granted to the employees of the Company and its subsidiariescurrently operate under the following Schemes:

IIFL Wealth Employee Stock Option Scheme 2012

IIFL Wealth Employee Stock Option Scheme 2015

The details of options granted vested exercised etc. are as follows:

A Options granted during the year 170028
B Exercise Price (per share) 2260 @ Rs. 19/-
2130 @ Rs. 16/-
110477 @ Rs. 282/-
131868 @ Rs. 339/-
31626 @ Rs. 417/-
C Options Vested during the year 922484
D Options Exercised during the year 278361
E Total no. of shares arising as result of exercise of Options 278361
F Options lapsed (Reallocable) 165368
G Variation in terms of Options NIL
H Money realised by exercise of Options (In Rs.) 89122828
I Total number of options in force 3491631

J Employee wise details of options granted to:

- Key Managerial Personnel Name Options
Mihir Nanavati Chief Financial Officer None
Ashutosh Naik Company Secretary None
Karan Bhagat Managing Director None
Yatin Shah Whole-time Director None
- any other employee who receives a grant in any one year of option amounting to 5% or more of option granted during that year Name Options
Pramod Kumar A 95590
Abhay Amrite 37633
Vivek Banka 15051
Srikumar R 9623
- identi ed employees who were granted option during any one year equal to or exceeding 1% of the issued capital (excluding warrants and conversions) of the company at the time of grant Name Options
- -

The disclosure requirements under the Securities and Exchange Board of India (ShareBased Employee Benefits) Regulations 2014 for the aforesaid ESOP Schemes in respect ofthe year ended March 31 2019 are disclosed on the Company's website www.iiflwealth.com

15. RISK MANAGEMENT POLICY AND INTERNAL CONTROL ADEQUACY:

The Company has in place a mechanism to identify assess monitor and mitigate variousrisks to key business objectives. Major risks identified by the businesses and functionsare systematically addressed through mitigating actions on a continuous basis. These arediscussed at the meetings of the Audit Committee and the Board of Directors of theCompany.

The Company has in place adequate internal controls with reference to financialstatements and operations and the same are operating effectively. The Internal Auditorstested the design and effectiveness of the key controls and no material weaknesses wereobserved in their examination. Further Statutory Auditors verified the Design andImplementation (D&I) of controls and testing of operating effectiveness of controlsfor material class of transactions account balances and disclosures and have con firmedthat they do not have any significant or material observations in relation of deficienciesin design and controls.

16. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALSIMPACTING THE GOING CONCERN STATUS OF THE COMPANY AND THE COMPANY'S FUTURE OPERATIONS:

There are no significant and material orders passed by the Regulators or Courts orTribunals which would impact the going concern status and the Company's future operations.

17. AUDITORS:

At the Annual General Meeting held on July 27 2015 M/s. Deloitte Haskins & SellsLLP Chartered Accountants (Firm Registration No. 117366W/W-100018) were appointed asStatutory Auditors of the Company to hold office till the conclusion of the Annual GeneralMeeting to be held in the year 2020.

18. FEMA COMPLIANCE:

With reference to Circular No.D/o IPP F. No. 5(1)/2017-FC-1 dated August 28 2017("FDI Policy") relating to Foreign Direct Investment Policy the Companycomplied with FDI Policy and various circulars issued by Reserve Bank of India from timeto time.

19. COMMENTS ON AUDITORS' REPORT:

There are no qualifications reservations or observations by the Statutory Auditors intheir report for the financial year ended March 31 2019. The Statutory Auditors have notreported any incident of fraud under Section 143 (12) of the Companies Act 2013 to theAudit Committee of the Company in the year under review.

20. SECRETARIAL AUDIT:

During the year under review the Secretarial Audit was conducted by M/s.Mehta &Mehta Practicing Company Secretaries. The report of the Secretarial Audit is annexedherewith as Annexure - V. There are no qualifications reservations or observationsin the Secretarial Audit report.

21. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186:

The details of loans guarantees or investments made are provided in the standalonefinancial statement (Please refer Note No. 7 and 8).

22. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

All related party transactions that were entered during the financial year were inordinary course of the business of the Company except the transaction stated in the FormAOC-2 annexed as Annexure VI pursuant to Section 134(3)(h) read with Rule 8(2) ofthe Companies (Accounts) Rules 2014 to be reported under Section 188(1) of the CompaniesAct 2013. However all the related party transactions were on arms' length basis. Nocontract/ arrangement has been entered by the Company with its promoters directors keymanagerial personnel or other persons which may have a potential conflict with theinterest of the Company. The transactions with related party are disclosed by wayof notes to accounts vide note no. 33 in the standalone financial results of the Companyfor the financial year ended March 31 2019.

The Company's policy on dealing with the Related Party Transactions is available on theCompany's website: www.iiflwealth.com.

23. ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The information on energy conservation technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 is appended below:

Conservation of energy:

The Company is engaged in providing financial services and as such its operations donot account for substantial energy consumption. However the Company is taking allpossible measures to conserve energy. Several environment friendly measures were adoptedby the Company such as:

• Installation of capacitors to save power

• Installed Thin Film Transistor (TFT) monitors that saves power

• Light Emitting Diode (LED) lights

• Automatic power shutdown of idle monitors

• Creating environmental awareness by way of distributing the information inelectronic form

• Minimizing air-conditioning usage

• Shutting off all the lights when not in use and

• Education and awareness programs for employees.

The management frequently puts circulars on corporate intranet IWIN for the employeeseducating them on ways and means to conserve the electricity and other natural resourcesand ensures strict compliance of the same.

Technology absorption and innovation:

The management understands the importance of technology in the business segments itoperates and lays utmost emphasis on system development and use of best technologyavailable in the industry. The management keeps itself abreast of technologicaladvancements in the industry and ensures continued and sustained efforts towardsabsorption of technology adaptation as well as development of the same to meet thebusiness needs and objectives.

The management invested considerable resources in deploying the latest technologies inthe areas of wide area networking using MPLS video communications VoIP automateddialers and other customer relationship management (CRM) tools and software. The Companyalso made significant strides in using cloud technology for customer-facing serversproviding rapid and inexpensive ramp-up or down of capacity in line with businessrequirements.

The management is aware of increasing threats in the Information Security domain andhas taken several steps to ensure that the Company is safe guarded against hackingattacks data leakage and security breaches. IT and certain business processes have beenre-certified for ISO 27001 systems for practicing industry standard securityimplementations and processes. The management has invested resources in implementingcontrols and continuously monitoring violations if any.

Research and Development (R & D): The Company is engaged in distribution ofvarious financial products and advising clients on wealth management through mutual fundand alternative investment fund platform which entails internal research of investmentproducts sectors and markets.

24. DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION& REDRESSAL) ACT 2013:

Your Company is committed to provide a work environment that ensures every womanemployee is treated with dignity and respect and afforded equitable treatment. YourCompany is also committed to promote a work environment that is conducive to theprofessional growth of its women employees and encourages equality of opportunity. YourCompany will not tolerate any form of sexual harassment and is committed to take allnecessary steps to ensure that its women employees are not subjected to any form ofharassment.

Your Directors further state that your Company has formulated and adopted a‘Policy for Prevention / Prohibition / Redressal of Sexual Harassment of Women at theWorkplace' and that there were no cases filed pursuant to the Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013.

25. DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 134(5) of the Companies Act 2013 it ishereby con firmed that:

a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit and loss of the Company for that period;

c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

d) the directors had prepared the annual accounts on a going concern basis;

e) the directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and

f) the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

26. ANNEXURE(S) FORMING PART OF THIS REPORT

OF DIRECTORS:

The Annexure(s) referred to in this Report and other information which are required tobe disclosed are annexed herewith and form a part of this Report of the Directors:

Nomination and Remuneration Policy of the Company as Annexure I.

Annual Report on Corporate Social Responsibility (CSR) activities for the financialyear 2018-19 Annexure - II.

Disclosures pursuant to Rule 5(1) of Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 as an Annexure III.

Extract of Annual Return under Section 134(3)(a) of the Companies Act 2013 read withRule 12 (1) of Companies (Management & Administration) Rules 2014. Annexure IV

Secretarial Audit Report for the financial year ended March 31 2019 and Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirement) Regulations 2015 AnnexureV;

Form AOC-2 for disclosure of material related party transactions as an Annexure VI

ACKNOWLEDGEMENTS

Your Directors would like to place on record their gratitude for the valuable guidanceand support received from regulatory agencies. Your Directors acknowledge the support ofthe members and also wish to place on record their appreciation of employees for theircommendable efforts teamwork and professionalism.

For and on behalf of the Board of Directors

Karan Bhagat Venkatraman Rajamani
Managing Director Director
DIN: 03247753 DIN: 00011919
Date: August 21 2019
Place: Mumbai