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Directors Report of Aavas Financiers Ltd.
Mar 31, 2025
DECLARATION BY INDEPENDENT DIRECTOR
In accordance with the provisions of the Section 149(6) of the
Act and Regulation 16(1)(b) & 25 of SEBI (LODR) Regulations,
2015, the Company has received declarations from all the
Independent Directors of the Company confirming that they
meet the criteria of independence for Independent Directors.
The Board affirms that the Independent Directors fulfill the
aforesaid criteria and possess requisite integrity, qualifications,
proficiency, experience, expertise and are independent of
the management.
The names of all the Independent Directors of the Company
have been included in the Independent Directorâs databank
maintained by Indian Institute of Corporate Affairs (âIICAâ). None
of the Directors have any pecuniary relationship or transactions
with the Company.
CERTIFICATE OF NON- DISQUALIFICATION OF
DIRECTORS
The Board of Directors hereby affirms that none of its members
are disqualified from being appointed as Directors in accordance
with the provisions of Section 164 of the Act. Further, no Director
has been debarred from holding the office of Directors by virtue
of any SEBI order or any other such authority. None of the
Directors of the Company are related to each other.
In support of the above, a certificate from a Company Secretary
in practice has been obtained 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
Company by SEBI / MCA or any such statutory authority. The
same forms part of this Annual Report as âAnnexure-1â.
DISCLOSURE UNDER SECTION 197(14) OF THE
COMPANIES ACT, 2013
The Managing Director and CEO of the Company has not
received any commission from its Subsidiary Company.
BOARD MEETINGS
The Company ensures compliance with Corporate Governance
best practices by convening a minimum of 4 (Four) Board
meetings annually, with 1 (One) meeting held in each quarter.
The schedule for these meetings is determined well in advance,
following due consultation and concurrence of all Directors.
Decisions requiring immediate attention and matters of urgency,
approved via circular resolutions, are subsequently presented to
and duly noted at the next scheduled Board meeting to ensure
transparency and accountability in governance.
During the Financial Year under review, the Board convened
and conducted 7 (seven) meetings. The attendance details of
individual Directors at these meetings are comprehensively
documented in the Corporate Governance Report and therefore
are not reiterated here to prevent redundancy in reporting.
PERFORMANCE EVALUATION OF THE BOARD, ITS
COMMITTEES AND INDIVIDUAL DIRECTORS
The Board of Directors plays a crucial role in propelling success
of the Company and Board Evaluation is the essential process
that allows the Board to recognize and tackle challenges related
to Corporate Governance, thereby increasing the overall value
of the organization. A thorough and effective Board Evaluation
plays a crucial role in enhancing performance at both the
organizational board level and individual level.
In accordance with the criteria set forth in the Act and the SEBI
(LODR) Regulations 2015, the Board of Directors has conducted
an annual assessment of its performance, along with that of its
Committees and Individual Directors. The Board, in consultation
with its Nomination and Remuneration Committee, has
formulated a framework containing, inter-alia, the criteria for
performance evaluation of the entire Board of the Company, its
Committees and Individual Directors, including Independent
Directors, which is in compliance with the applicable provisions
of the Act and the SEBI (LODR) Regulations, 2015.
Further, the Board oversees, evaluates, and revises the
framework in collaboration with the Nomination and
Remuneration Committee, as necessary and in response to new
compliance obligations.
The Board Evaluation process is carried out through a web based
platform called âGovevaâ, which streamlines the process, boosts
operational efficiency and automates report generation.
The comprehensive evaluation process for the Board, its
Committees, and individual Directors, including Independent
Directors, is outlined in the Corporate Governance Report,
which is the part of this Report.
SEPERATE INDEPENDENT DIRECTORSâ MEETINGS
During the Financial Year under review, a seperate meeting of
Independent Directors was convened on March 05, 2025 in
strict adherence to regulatory requirements. This meeting was
held without the participation of Non-Independent Directors
or members of the Companyâs Management, thereby ensuring
an environment conducive to independent deliberation
and oversight.
The Independent Directors, in the course of this meeting,
reviewed and discussed various matters arising from
Committee meetings and Board deliberations. Their discussions
encompassed, inter alia, the assessment of the quality,
adequacy, and timelines of information flow between the
Companyâs Management and the Board, ensuring that the Board
is equipped with all necessary data and insights to effectively
discharge its fiduciary and governance responsibilities.
FAMILIARIZATION PROGRAMME FOR INDEPENDENT
DIRECTORS
In our dedication to uphold strong governance practices,
your Company has in place a system of conducting the
familiarization programmes for Independent Directors in view of
adherence with the expected obligations and responsibilities of
Independent Directors as prescribed under the Regulation 25(7)
of the SEBI (LODR) Regulations, 2015. As per the Programme,
Independent Directors are acquainted with their roles, rights,
responsibilities, and the nature and business model of the
Company upon their induction.
The Programme is designed to provide a conceptual framework
aligned with contemporary expectations, mandating that
Independent Directors comply with a code of ethics and integrity
to fulfil their responsibilities in a professional and trustworthy
manner, thereby fostering confidence within the investment
community. The objective of this program is to educate
Independent Directors about their rights and obligations, as
well as to familiarize them with the regulatory landscape and
the business model under which the Company operates.
The induction and continuous training programs empower the
Board, including Independent Directors to make well-informed
and deliberate decisions that align with the best interests of the
Companyâs stakeholders.
The specifics of the Familiarization Programme have been
hosted on the Companyâs website and can be accessed at
https://www.aavas.in/codes-and-policies.
POLICY ON DIRECTORâS APPOINTMENT, REMUNERATION
& OTHER DETAILS
In pursuit of building a capable and visionary leadership team,
the Company has laid down a comprehensive Nomination and
Remuneration Policy for the selection, compensation and,
governance of its Directors, Key Managerial Personnel (âKMPâ),
and Senior Managerial Personnel(âSMPâ). This Policy emphasizes
ethical conduct, professional merit, and organizational fit,
ensuring that individuals appointed to critical roles bring
value through their competence and insight. The policy also
promotes transparency in the nomination process, reinforcing
the Companyâs commitment to responsible leadership.
The Policy has been formulated in accordance with the Section
178 of the Act, provisions of Regulation 19 of SEBI (LODR)
Regulations, 2015 and Guidelines on Compensation of Key
Managerial Personnel and Senior Management in NBFCs issued
by RBI vide circular dated RBI/2022-23/36 DOR.GOV.REC.
No.29/18.10.002/2022-23 on April 29, 2022 (âRBI Guidelinesâ),
as amended from time to time.
The Policy is available on the website of the Company and can
be accessed at https://www.aavas.in/codes-and-policies and
all the details of remuneration paid to the Directors is mentioned
in Annual Return in form MGT-7, available on Companyâs
website and can be accessed at https://www.aavas.in/investor-
relations/annual-reports.
BOARD COMMITTEES
In accordance with statutory requirements, the Company has following 9 (Nine) Board level Committees, these Committees
have been constituted to ensure effective oversight, strategic decision-making, and regulatory compliance, in alignment with the
provisions of applicable laws and statutes:
|
Sr. No. |
Committee Name |
Brief Purpose |
|
1 |
Audit Committee (âACâ) |
Oversees the Company''s financial reporting and internal controls. |
|
2 |
Nomination & Remuneration Committee |
Responsible for identifying and nominating new Board members, KMPs & SMPs and |
|
3 |
Stakeholders Relationship Committee (âSRCâ) |
Ensuring good corporate governance and maintaining a positive relationship with |
|
4 |
Corporate Social Responsibility & Environment |
Integrate economic and social objectives, contributing to sustainable growth and a |
|
5 |
Risk Management Committee (âRMCâ) |
Assesses and manages Company''s risks. |
|
6 |
Asset Liability Management Committee |
To oversee the management of assets and liabilities to achieve profitability and |
|
7 |
Information Technology (âITâ) Strategy |
To ensure that IT investments and projects support the organizationâs objectives, |
|
8 |
Customer Service & Grievance Redressal |
Handles customer grievances and service improvements. |
|
9 |
Executive Committee (âECâ) |
Responsible for taking decision related to borrowing, Investments, operational & |
During the Financial Year under review, the Board accepted all recommendations made by the above Committees.
The details with respect to the composition, terms of reference,
number of Meetings held, Committees as on March 31,2025 are
given in the Report on Corporate Governance, which forms part
of this Annual Report as âAnnexure-2â.
EMPLOYEE STOCK OPTION PLAN
Employee Stock Option Plan serve as a strategic instrument
to attract, retain and reward talented employees. Beyond
fostering motivation and encouraging long-term commitment,
It align employees interest with the Companyâs objectives,
thereby enhancing a sense of belonging and driving sustained
organizational success.
EQUITY STOCK OPTION PLAN (ESOP) 2016-I (e)
During the Financial Year under review, the Company made
grant aggregating to 89,500 options on October 15, 2024 under
ESOP-2016-I (e).
PERFORMANCE STOCK OPTION PLAN (âPSOP-2023â)
During the Financial Year under review, the Company made grant
aggregating to 1,22,139 options on October 15, 2024, 5,256
options on October 18, 2024 and 23,904 options on December
12, 2024 under the PSOP-2023.
PERFORMANCE STOCK OPTION PLAN (âPSOP-2024â)
The Company believes that equity-based compensation
schemes/plans are an effective tool to reward the talent
working with the Company for delivering long-term sustainable
performance and creation of stakeholder value. With a view
to drive long term performance, retain talent and attract new
talent, the Company formulated and implemented âAavas
Financiers Limited - Performance Stock Option Plan- 2024â
(âPSOP-2024â) as a key component in its reward structure to
the eligible employees of the Company. The PSOP-2024 was
approved by the Shareholders in Annual General Meeting held
on August 07, 2024.
During the Financial Year under review, the Company made
grant aggregating to 4,00,000 options on January 30, 2025 under
the PSOP 2024.
Following are the existing ESOP and PSOP plans of the Company:
|
Sr. No. |
Particulars |
ESOP 2016-I |
ESOP-2019 |
ESOP-2020 |
ESOP-2021 |
ESOP-2022 |
PSOP-2023 |
PSOP-2024 |
|
1. |
Date of Shareholdersâ approval |
The Plan was Shareholders |
The Plan was Shareholders |
The Plan was Shareholders |
The Plan was Shareholders |
The Plan was Shareholders |
The plan was Shareholders |
The plan was Shareholders |
|
2 |
Authorization |
The Schemes empowers the Board and Nomination & Remuneration Committee to execute the Scheme. |
||||||
|
3 |
Variation |
During the Financial Year under review, there have been no changes in the Schemes |
||||||
It is confirmed that all the ESOP & PSOP Schemes of the
Company are in compliance with the provisions of SEBI (Share
Based Employee Benefits and Sweat Equity) Regulations, 2021
(âSEBI SBEB and Sweat Equity Regulationsâ) as amended from
time to time.
The Nomination & Remuneration Committee administers and
monitors the ESOP & PSOP Schemes in compliance with the
Act, SEBI SBEB and Sweat Equity Regulations, 2021 and SEBI
(LODR) Regulations, 2015.
The Secretarial Auditors of the Company has given a Certificate,
confirming that the above ESOP & PSOP Schemes have been
implemented in accordance with the SEBI SBEB and Sweat
Equity Regulations, 2021 as amended from time to time. Such
ESOP & PSOP Schemes will be available for the inspection of
the Members of the Company.
The applicable disclosures as stipulated under Regulation 14 of
SEBI SBEB and Sweat Equity Regulations, 2021, with regard to
ESOP & PSOP Plan of the Company are available on the website
of the Company at https://www.aavas.in/investor-relations/
annual-reports.
AUDIT & AUDITORS
Statutory Auditors and Auditorsâ Report
In terms of provisions of Section 139 of the Act, read with
the Companies (Audit and Auditors) Rules, 2014 and
RBI Guidelines for appointment of Statutory Auditor(s),
M/s. M S K A & Associates Chartered Accountants (Firm
Registration No. 105047W) and M/s. Borkar & Muzumdar,
Chartered Accountants (Firm Registration No. 101569W) were
appointed as the Joint Statutory Auditors of the Company by the
members of the Company for a period of 3 (Three) consecutive
years in the 14th AGM held on August 07, 2024 effective from the
conclusion of 14th AGM until the conclusion of 17th AGM.
The Audit Report given by the Joint Statutory Auditors on the
financial statements of the Company is part of this Annual
Report. There has been no qualification, reservation, adverse
remark or disclaimer given by the Auditors in their Report.
The Audit Committee and the Board of Directors also took note
of the eligibility certificate received from both the audit firms
that they are not disqualified and are eligible to hold the office as
Auditors of the Company. Further, during the year under review,
the Auditors have not reported any fraud under Section 143(12)
of the Companies Act, 2013.
Secretarial Auditors and Secretarial Audit Report
M/s. Chandrasekaran Associates, Company Secretaries (Firm
Registration No. P1988DE002500), have carried out Secretarial
Audit of the Company for the Financial Year 2024-25 in
accordance with the provisions of Section 204 of the Act read
with the rules made thereunder.
In accordance with provisions of Sub-section (1) of Section 204
of the Act, the Secretarial Audit Report in form MR-3, is furnished
as ''Annexure-3'', which forms part of this Annual Report.
The Report of Secretarial Auditors is self-explanatory and there
has been no observations or qualifications or adverse remarks
in their Report.
Furthermore, M/s. Chandrasekaran Associates, Company
Secretaries has issued an Annual Secretarial Compliance
Report for the Financial Year 2024-2025 in compliance with
Regulation 24A of SEBI (LODR) Regulation, 2015 which forms
part of this report as âAnnexure-4â and is also submitted to the
Stock Exchanges. There are no observations, or qualifications
or adverse remarks in their Report.
Pursuant to the amendments made in SEBI Regulations
i.e., SEBI (Listing Obligations & Disclosure Requirements)
(Third Amendment) Regulations, 2024 and pursuant to SEBI
Circular No. SEBI/HO/CFD/CFD-PoD-2/CIR/P/2024/185 dated
December 31, 2024, the Company shall appoint Secretarial
Auditor for a term of 5 years (the earlier term served shall not
be considered for this term) with recommendation of Board and
Shareholders approval in its Annual General Meeting.
Consequently, in accordance with, Section 204 of the Act,
the Board of Directors, has recommended the appointment
of M/s. Chandrasekaran Associates, (Firm Registration No.
P1988DE002500) Company Secretaries as Secretarial Auditors
of the Company for a period of 5 (Five) consecutive Years
effective from FY 2025-26 upto FY 2029-30, to the Shareholders
of the Company for their approval.
The Company has obtained consent and eligibility certificate
from the above audit firm under applicable rules and laws that
they are not disqualified and are eligible to hold the office as
Secretarial Auditors of the Company, if appointed.
INFORMATION SYSTEM AUDIT (âIS AUDITâ)
The landscape around information systems has been
changing, therefore an IS audit focuses on the governance and
management aspects of technology and cybersecurity as much
as it does on specific focus areas of the audit.
The Company has in place an IS Audit Policy which is cognizant
of business imperatives and is aligned with the aspirations of the
organization, including being agile and innovative and adopting
technologies at a rapid pace. Our Head of Internal Audit (âHIAâ)
is accountable to the Audit Committee and Management in
providing assurance on the adequacy and effectiveness of
the Companyâs risk management, control, and governance of
information system processes used for controlling its activities
and managing its significant risks and also report material frauds
and their investigations and corrective actions.
INTERNAL AUDIT & INTERNAL FINANCIAL CONTROL
AND ITS ADEQUACY
The Company has in place Risk Based Internal Audit Framework
("RBIA") in compliance with directive issued by Reserve Bank
of India. The Company has developed an in-house audit team
and appointed HIA to oversee the audit of functional areas
and operations.
The Internal Audit department is headed by the HIA who reports
directly to the Audit Committee of the Board. The primary
responsibility of the HIA is to effectively manage the Internal
Audit department and to ensure that it adds value to the entity
and its strategic objectives by strengthening risk controls,
enhancing operational efficiencies, and ensuring governance
compliance. The RBIA framework effectively ensures that
internal audit coverage is commensurate with the nature of
complexity of business operations on an ongoing basis. It
encompasses coverage of business and support functions,
technology and regulatory aspects as well as branch audits.
HIA ensures compliance with the internal audit principles
and standards and the independence of the Internal Audit
department, its audit staff and evaluating its performance
against key performance indicators.
The Audit Committee performs periodic reviews and evaluates
adequacy and effectiveness of the Companyâs internal
control environment, ensuring the timely implementation of
audit recommendations to enhance operational integrity and
regulatory compliance.
The Companyâs internal financial control is a process designed
to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements
in accordance with generally accepted accounting principles.
The Companyâs internal financial control framework includes
those policies and procedures aimed at:
⢠Ensuring the maintenance of accurate financial records;
⢠Providing reasonable assurance that financial transactions
are recorded appropriately for the preparation of
financial statements;
⢠Establishing mechanisms for the timely prevention and
detection of unauthorized acquisition, use or disposal
of Company assets that may have a material impact on
financial statements.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY
REGULATORS
There were no significant or material orders passed by the
regulators or courts or tribunals against the Company during
the Financial Year 2024-2025.
MATERIAL CHANGES/EVENTS AND COMMITMENTS, IF
ANY
During the year following material changes/events have
occurred:
Material Event: Share Purchase Agreement and Open
Offer
During the year under review, your Company entered into
separate share sale agreements (collectively, âSPAsâ) with
Aquilo House Pte. Ltd. (âPurchaserâ) and each of Lake District
Holdings Limited, Partners Group ESCL Limited and Partners
Group Private Equity (Master Fund), LLC, who were members of
the promoter/ promoter group of the Company till June 30, 2025
(collectively, âSellersâ). Pursuant to the SPAs, the Purchaser
agreed to acquire in aggregate 2,09,49,112 equity shares of
the Company from the Sellers constituting 26.47% of the paid-
up share capital of the Company and control of the Company
subject to the terms and conditions set out in the SPAs.
The Purchaser is a Company incorporated under the laws of
Singapore and belonging to the CVC Network. The CVC Network
is a global alternative investment manager focused on private
equity, credit, secondaries and infrastructure, consisting of CVC
Capital Partners PLC (a public limited Company whose shares
are listed and admitted to trading on the Euronext Amsterdam
Stock Exchange) and each of its subsidiaries, from time to
time. The execution of the SPAs triggered an obligation of the
Purchaser to make an open offer to the public shareholders of
the Company in accordance with the Securities and Exchange
Board of India (Substantial Acquisition of Shares and Takeovers)
Regulations, 2011. The Purchaser acquired 1,78,08,116 equity
shares of the Company aggregating to 22.50% of paid-up share
capital of the Company pursuant to the open offer from the
public shareholders.
In accordance with the terms of the SPAs, on June 30, 2025 (the
âClosing Dateâ), Purchaser has acquired 2,09,49,112 equity
shares constituting 26.47% of the paid-up share capital of
the Company and on and from the Closing Date (i) Purchaser
has acquired control of the Company and is categorized as a
âpromoterâ of the Company; and (ii) the erstwhile promoters
and members of the promoter group of the Company hold NIL
shares of the Company and have ceased to be in control of the
Company, and stand reclassified as public shareholders of the
Company with effect from June 30, 2025.
Currently, Purchaser holds 3,87,57,228 equity shares of the
company, representing 48.96 % of the paid-up share capital of
the Company.
Further, there are no material changes and commitments
affecting the financial positions of the Company, which have
occurred after March 31,2025, till the date of this report.
MAINTENANCE OF COST RECORDS
The Company being an NBFC-HFC is not required to maintain
cost records as per sub-section (1) of Section 148 of the
Companies Act 2013.
INFORMATION TECHNOLOGY
Your Company has always been at the forefront of technology
innovations and effectively leveraging technology to enhance
efficiency of the teams, managing risks, optimizing cost and
provide superior experience to our customers.
The Company is working towards building a robust and scalable
technology architecture in line with the charted transformation
roadmap to make the Company future ready. Your Company has
made a significant progress on this roadmap by successfully
completing transformation of all key business applications.
The Company has already adopted a modern and innovative
cloud-native application stack for loan origination and customer
service using Salesforce and Mulesoft platforms which provide
360-degree visibility for the entire customer life cycle.
The Company has adopted ORACLE Fusion ERP System for
accounting and financial reporting.
During Financial Year, the Company has successfully completed
the migration of Loan Management System to ORACLE Flexcube
Core Banking Application and also automated the Treasury
Operations using Beacon Treasury Management System.
By utilising multiple India stack based fintech integrations and
advance analytics capabilities, we have significantly optimised
our processes to bring in efficiency and agility at all levels. The
Company has created a technology stack to integrate with
digital platforms and our digital partnerships with Central Govtâs
Common Service Centres (CSC), Rajasthan Govtâs eMitra Kiosks
and India Post Payment Bank are testament to the Companyâs
commitment to become a partner in the last mile financial
inclusion mission. The Company is actively looking forward to
build and scale such partnerships in future.
The Company has upgraded the information security systems
with modern and robust security solutions in all major domains
including - data centre, endpoints, applications, network,
etc. The Company performs continuous training / awareness
programs for our teams and customers on emerging cyber
threats and defence strategies. The Company performs periodic
assessments of security, process controls and business
continuity readiness through various layers of internal teams,
service providers and auditors.
HUMAN RESOURCE - A CULTURE OF COMMITMENT,
CONSISTENCY AND COMPASSION
Your Company has always been committed to nurturing a
supportive, inclusive and dynamic workplace where each
team member feels valued and motivated. Our comprehensive
HR initiatives are designed to enhance employee well-being,
cultivate professional growth, and build a strong sense of
community. By investing in our people, we not only drive
individual success and well-being, but also propel our
organisation towards greater achievements. Its vision of being
a leader and a role model in a broad based and integrated
financial services business and a culture that is purpose driven
gives meaning to our people. As we reflect on the past Financial
Year, 2025, it is evident that our success is intrinsically linked to
the quality and competence of our human capital.
Your Company has continued to built upon the strong
foundation established in previous years by implementing
strategic initiatives designed to enhance the well-being, foster
career growth and advance professional development of our
employees. Among these initiatives, we have placed a particular
emphasis on promoting the holistic well-being of our female
staff and strengthening the leadership capabilities of our senior
management team.
Recognizing the importance of a performance-driven culture,
the Company introduced a performance-based equity scheme
to instill a sense of ownership and accountability while
incentivizing excellence. This initiative reflects our dedication
to align individual contributions with organizational success,
ensuring that employees are rewarded for their commitment
and achievements.
Furthermore, we continue to invest in leadership development
programs, mentorship opportunities, and skill enhancement
initiatives to empower our workforce and equip them with the
tools necessary to excel in an evolving business landscape.
As of March 31,2025, our permanent employees count stood
at 7,233, reflecting our growth and unwavering commitment to
fostering a conducive and performance-driven organizational
environment. In the future, your Company is committed to foster
an improved workplace that nurtures professional development
and operational excellence. Together, we will persist in our
pursuit of excellence, promote sustainable growth and create
lasting value for all our stakeholders.
RISK MANAGEMENT FRAMEWORK
Effective risk management is a crucial aspect of the Companyâs
operations due to the inherent nature of its business.
Acknowledging this, a series of internal policies have been
established to strengthen the resilience of business operations.
Your Company priorities risk management by establishing
a specialized sub-committee of executives, along with the
Risk Management Committee of the Board, to supervise the
process. This not only adheres to Regulation 21 of the SEBI
(LODR) Regulations, 2015, but also guarantees conformity
with RBI guidelines. The establishment of such a committee
fosters a strong risk culture and governance framework within
the organization, thereby enhancing its overall sustainability
and success.
The Risk Management Committee convenes at least biannually,
and additionally as required by the Board or Chairperson,
to maintain continuous oversight of the Companyâs risk
environment. By implementing suitable methodologies,
processes and systems, the Committee is instrumental in
monitoring and assessing the risks related to the business.
Furthermore, the supervision of the Risk Management
Policyâs execution and the evaluation of the adequacy of risk
management systems demonstrate a proactive stance towards
risk management within the Company.
The Company has established comprehensive Risk
Management Policies, which include Risk Management
Policy, an IT Risk Management Policy, and an Internal Capital
Adequacy Assessment Processes (âICAAPâ) policy, along with
an Early Warning Signal (âEWSâ) framework that adheres to
RBI guidelines.
Identifying and monitoring significant risks such as Credit Risk,
ALM Risk, Concentration Risk, Interest Rate Risk, Reputation
Risk, Cybersecurity Risk, Fraud Risk, Business Risk, Exposure
Risk, Competition Risk and Regulatory Risk are essential for
preserving the Companyâs stability and resilience. These risks
are reported to the Risk Management Committee quarterly,
ensuring transparency and proactive risk management.
Additionally, the application of institutional intelligence
in underwriting methodology, carried out by a skilled and
experienced team, including Chartered Accountants, signifies
a strong approach to risk assessment within the Company.
Moreover, the presence of dedicated vendors and professionally
qualified in-house teams to manage legal, technical and
operational risks further strengthens the Companyâs risk
management capabilities.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
In any organization, a secure and confidential channel for
reporting concerns related to ethical conduct is essential for
maintaining accountability and integrity. Such a mechanism
empowers individuals to raise issues without fear, fostering
a culture of transparency and trust within the organization.
Accordingly, your Company has in place a Whistle Blower Policy
encompassing vigil mechanism pursuant to the requirements of
Section 177(9) and (10) of the Act and Regulation 22 of the SEBI
(LODR) Regulations, 2015, to report to the management genuine
concerns or grievances about unethical behavior, actual or
suspected fraud or violation of the Companyâs Code of Conduct.
With the core aim to achieve the highest standards of ethical,
moral and legal conduct of business operations and to nurture
these standards, the Company encourages its employees who
have concerns about suspected misconduct to come forward
and express their concerns without fear of punishment or
unfair treatment.
The mechanism provides a secure channel to the employees
and Directors for adequate safeguards against victimization
of employees and Directors who use such mechanism and
makes provision for direct access to the Chairperson of the
Audit Committee in exceptional cases, ensuring transparency
and accountability in addressing whistleblower concerns. There
are no restrictions for accessing the Audit Committee for any of
the Companyâs employees.
In order to safeguard the fairness of the process, the identity
of the Whistle Blower is kept confidential to prevent any
discriminatory actions against him/her.
The whistle blower policy is placed on the website of the
Company and can be accessed at https://www.aavas.in/codes-
and-policies.
DISCLOSURES UNDER SEXUAL HARASSMENT OF
WOMEN AT WORKPLACE (PREVENTION, PROHIBITION
& REDRESSAL) ACT, 2013
Your Company is committed to foster a safe, respectful and
inclusive workplace where every individual is empowered
to work without fear, bias or harassment including sexual
harassment. Primarily, we ensure a safe and equitable working
environment for women and aim to ensure that every employee
is treated with dignity and respect as sexual harassment at
workplace is an extension of violence in everyday life and it
is both discriminatory and exploitative, adversely impacting a
womenâs right to life and livelihood.
Pursuant to the provisions of the Sexual Harassment of Women
at Workplace (Prevention, Prohibition and Redressal) Act, 2013
(âthe POSH Actâ) and the rules made thereunder, the Company
has formulated and implemented a Policy for prevention of
sexual harassment against women and redressal of complaints
thereto and has also constituted Internal Complaints Committee
(âICCâ) under the POSH Act.
ICC has been set up to redress complaints received regarding
sexual harassment. All employees are covered under this policy.
The details of complaints received and disposed during the
Financial Year are provided in Corporate Governance Report
forming part of this Annual report.
MATERNITY BENEFITS PROVIDED BY THE COMPANY
UNDER MATERNITY BENEFIT ACT, 1961
The Company places strong emphasis on creating a supportive,
inclusive and equitable workplace for its women employees. As
part of this commitment, the Company have been in compliance
with the all applicable provisions of Maternity Benefit Act, 1961,
during the financial year under review.
Accordingly, the Company has in place a well-defined Leave
Policy, which explicitly outlines the provisions related to
maternity leave and associated benefits. All eligible women
have been extended the statutory benefits prescribed under
the Act, including paid maternity leaves, continuity of salary
and service during the leave period, and post maternity support.
Recognizing the importance of employee welfare, the Company
remains dedicated to ensuring a safe and empowering work
environment for its women employees in accordance with the
applicable laws.
CODE OF CONDUCT FOR PREVENTION OF INSIDER
TRADING IN COMPANYâS SECURITIES
The Company has, formulated and adopted code of conduct for
prevention of Insider Trading in compliance with the Securities
and Exchange Board of India (Prohibition of Insider Trading)
Regulations, 2015 (âthe PIT Regulationsâ).
The Code of Conduct for Prevention of Insider Trading was
formulated to regulate, monitor and ensure reporting of trading
by Designated Persons and their immediate relatives designated
on the basis of their functional role in the Company towards
achieving compliance with the Regulations and is designed to
maintain the highest ethical standards of trading in Securities of
the Company by persons to whom it is applicable. The provisions
of the Code are designed to prohibit identified Designated
Persons from trading in the Companyâs Securities while in
possession of Unpublished Price Sensitive Information (âUPSIâ).
The Code lays down guidelines for procedures to be followed
and disclosures to be made while dealing with Securities of
the Company and cautions them against the consequences
of violations.
In order to protect the interest of the stakeholders at large,
Mr. Saurabh Sharma, Company Secretary and Compliance
Officer of the Company, is authorized to act as Compliance
Officer under the Code, with the responsibility to oversee
adherence to Insider Trading Regulations and related
governance principles.
Furthermore, in accordance with regulations 3 (5) and (6) of SEBI
(PIT) Regulation 2015, the Company has maintained a Structural
Digital Database (âSDDâ), wherein details of persons with
whom UPSI is shared on need-to-know basis and for legitimate
business purposes is maintained with time stamping and audit
trails to ensure non-tampering of the database. It ensures proper
record-keeping and monitoring of access to UPSI. This database
serves as an essential tool for regulatory compliance, preventing
unauthorized dissemination and ensuring transparency in the
management of sensitive financial information.
The SDD is maintained internally by the Company and is
not outsourced in accordance with the provisions of the
PIT Regulations.
PARTICULARS OF HOLDING/JOINT VENTURE/
SUBSIDIARY/ASSOCIATE COMPANIES
Pursuant to the share sale agreements with Aquilo House Pte.
Ltd. (âPurchaserâ) and each of, Lake District Holdings Limited,
Partners Group ESCL Limited and Partners Group Private Equity
(Master Fund), LLC, who were members of the promoter/
promoter group of the Company till June 30, 2025 and pursuant
to power conferred to purchaser in terms of Article 16 of the
Article of Association of the Company, the Aquilo House Pte. Ltd
has become the Holding Company in terms of Section 2(87)(i)
of the Companies Act,2013 i.e. by controlling the composition
of the Board of Directors w.e.f. June 30, 2025.
Further, your Company does not have any Joint Ventures or
Associate Company as on the date of this report.
Subsidiary Company: Completion of Voluntary
Liquidation
Your Company had an unlisted wholly owned subsidiary named
âAavas Finserv Limitedâ which has been voluntarily dissolved
following the order passed by the Honâble National Company
Law Tribunal ("NCLT") on January 28, 2025.
Therefore, your Company is no longer required to prepare
Consolidated Financial Statements and Statement containing
salient features of Financial Statement of the Subsidiary
pursuant to the Provisions of Section 129(3) of the Act.
Further, pursuant to Section 129(3) of the Act read with the
Companies (Accounts) Rules, 2014, a statement containing
salient features of Financial Statement of the Subsidiary or
Associate Companies or Joint Ventures in the prescribed format
AOC-1, is furnished as ''Annexure-6'', which forms part of this
Annual Report.
In accordance with Section 136 (1) of the Act, the Annual Report
of your Company containing inter alia, Financial Statements has
been placed on our website at https://www.aavas.in/investor-
relations/annual-reports.
INVESTOR RELATIONS
Fostering trust through open and timely communication is
fundamental in building strong and enduring relationships with
the investment community. The Company remains committed
to keep stakeholders well informed about its financial health,
strategic initiatives and long-term objectives through consistent
and transparent engagement. It is using technology wisely to
sustain performance today and also leverages it for future
growth. Your Company is always looking ahead and takes on a
holistic perspective of the operating landscape.
To strengthen engagement and trust, the Company has
established a specialized investor relation team, which helps
the Company to communicate with its investors through
Information session on Financial Results for institutional
investors and analysts via telephone conference, meetings with
investors/analysts and discussions between Fund Managers
and Management.
Investor relation team participate in investor relations
conferences each quarter to foster better relationships with
investors. Presentations given by Company to fund managers,
analysts, and investors are posted on the Company website
and are also transmitted to stock exchanges. Each quarter, the
audio recordings of these meetings, along with their transcripts,
are posted on the website at https://www.aavas.in/investor-
relations/investor-intimation.
PARTICULAR OF EMPLOYEE REMUNERATION AND
RELATED DISCLOSURES
In compliance with Section 197(12) of the Act and Rule
5(1) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, disclosures regarding the
remuneration of Directors and employees have been made.
Additionally, as stipulated by Rule 5(2) of the aforementioned
rules, the names and other details of the top ten employees in
terms of remuneration have been included as âAnnexure-8â to
this Report.
CORPORATE SOCIAL RESPONSIBILITY ("CSR")
Your Company, being a responsible corporate citizen, is
dedicated to enhancing societal welfare by incorporating social
and environmental considerations into its business practices,
engaging in philanthropic efforts, and delivering positive social
value and wealth to its stakeholders. In line with the Companyâs
Corporate Social Responsibility ("CSR") initiatives, it has
launched various projects focused on Education and Holistic
Development, Environmental Sustainability, Healthcare and
Wellness, Community and Rural Development, Womenâs
Empowerment, and Strategies for Reducing Inequalities, all
aimed at improving the quality of life in diverse communities,
particularly among marginalized groups.
The CSR policy of the Company relates to the activities to be
undertaken by the Company, which is in accordance with the
provisions of CSR under Section 135 of the Act read with the
Companies (Corporate Social Responsibility Policy) Rules, 2014
and Schedule VII of the Act.
The CSR Policy is hosted on Companyâs website and can be
accessed at: https://www.aavas.in/codes-and-policies and the
Annual Report on CSR activities is furnished as âAnnexure-9â
which forms part of this Annual Report.
PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS
AND OUTGO
In terms of Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, the particulars of energy
conservation, technology absorption and foreign exchange earnings and outgo is provided as under:
|
A) Conservation of energy |
|
|
The Steps taken / impact on |
The Company has adopted various initiatives to enhance energy efficiency and sustainability. These |
|
The Steps taken by the Company for |
As the nature of business of the Company is providing housing finance, the only key waste products are paper, plastic and e-waste. Initiatives to reduce paper, plastic, and e-waste include: ⢠The Company has taken specific targets in order to reduce the waste and has educated employees ⢠The Company has launched the "Go Green Initiativeâ to minimize paper usage in loan processing ⢠The Company has started monitoring its operations with a focus on waste management, particularly ⢠The Company has recycled e-waste through certified e-waste handler. Green Housing Program: ⢠In partnership with the International Finance Corporation (IFC), a member of the World Bank Group ⢠The Company provides loans for financing of Self-Built Green homes which are 20% more efficient than |
|
The Capital investment on energy |
In view of the nature of the activities carried on by your Company, there is no capital investment on energy |
|
B) Technology absorption |
|
|
The efforts made towards technology |
Financial Year 2024-25 has been a landmark year for the Company in the journey of technology and digital The new loan management system went live in August 2024 and has been fully stabilized during this year. We have augmented the digital customer service channels with extensive features and capabilities. The Company has adopted best-in-class Information Security Solutions, and all critical systems are |
|
Particular |
Remarks |
|
The benefits derived like product |
Maintained almost 100% uptime for all critical systems. Customer loan App adoption has increased to 74%. 73% of customer service requests are served through Omnichannel Experience to customers and to customer service team by integrating all physical and âCustomer 360-degree Viewâ giving complete visibility of customer insights to service team on a single 53% Account Aggregator adoption on files sanctioned during the year. Almost 100% of the property locations are geo-tagged. Further, 100% of the Technical, Legal and Risk Almost 100% of vendor payments are now being processed digitally through our Oracle ERP module, and Fully Integrated Enterprise Architecture with 350 APIs live connecting internal systems and external Significantly reduced paper consumption from the loan process through digital processes. |
|
In case of imported technology a). the details of technology imported |
i. Salesforce (for LOS and CRM) ii. Oracle Fusion system (for Financial System and reporting) iii. ORACLE Flexcube (for LMS) iv. Mulesoft (for Integration of systems) |
|
b). the year of import |
2022-23 |
|
c). whether the technology has been |
Implemented |
|
d). if not fully absorbed, areas where |
NA |
|
The expenditure incurred on Research |
NA |
|
(C) Foreign exchange earnings and |
During the Financial Year under review, your Company had no foreign exchange earnings and the aggregate |
ENVIRONMENT HEALTH AND SAFETY (âEHSâ)
PROTECTION
The Company is committed to maintain high environmental and
social standards across its operations. It continues to enhance
its investment decision-making processes and procedures to
align with applicable Indian environmental and social legislation,
as well as relevant international standards, including the IFC
Performance Standards, particularly in relation to its housing
finance and MSME Business segments.
The Company ensures a healthy and safe working environment
for all its employees, adhering to best practices in workplace
safety and employee well-being. In line with its commitment
to continuous improvement, the Company regularly evaluates
and upgrades its EHS practices to proactively address emerging
risks, ensure compliance, and foster a culture of safety and
sustainability across all levels.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY
REPORTING
In accordance with Regulation 34(2)(f) of the SEBI (LODR)
Regulations, 2015, the top 1,000 listed companies based
on market capitalization are required to include a Business
Responsibility and Sustainability Report (BRSR) in their Annual
Reports. This report outlines the Companyâs initiatives from an
Environmental, Social and Governance (âESGâ) perspective.
Following SEBI Circular SEBI/HO/CFD/PoD2/CIR/P/0155 dated
November 11,2024, the top 250 listed entities are required to
disclose ESG information under the BRSR Core framework as
part of their Annual Reports.
As one of the top 500 listed entities, and in alignment with its
commitment to strong corporate governance, the Company has
voluntarily adopted and submitted the BRSR Core Framework
for the Financial Year 2024-25, in addition to publishing the
standard Annual BRSR as per regulatory guidelines. This
framework helps reinforce ESG principles throughout the
Companyâs operations, guiding efforts towards responsible
product development, operational efficiency, employee
empowerment, and environmental stewardship in line with the
expectations outlined in the BRSR.
The Company remains focused on strengthening its ESG
performance year over year, continually enhancing its
disclosures, systems, and practices to create meaningful
impact and align with evolving stakeholder expectations.
The Business Responsibility and Sustainability Report in
updated format describing the initiatives taken by the Company
from an environmental, social and governance perspective
along with Limited Assurance Statement from an Independent
Auditor forms part of this Annual Report as âAnnexure-11â.
ANNUAL RETURN
The Annual Return has been prepared in form MGT-7 as on March
31,2025 in compliance with the provisions of Section 134(3) and
Section 92(3) of the Act, read with Rule 12(1) of the Companies
(Management and Administration) Rules, 2014. The same is
placed on the website of the Company and can be accessed at
https://www.aavas.in/investor-relations/annual-reports.
ADDITIONAL DISCLOSURES UNDER COMPANIES
(ACCOUNTS) RULES, 2014
(a) The details of application made or any proceeding pending
under the Insolvency and Bankruptcy Code, 2016 (31 of
2016) during the year along with their status as at the end
of the Financial Year:
The Company has not filled any application under the
Insolvency and Bankruptcy Code, 2016 (31 of 2016)
during the Financial Year under review. Hence there are no
proceedings pending with respect to the above. Therefore,
it is not applicable to the Company.
(b) The details of difference between amount of the valuation
done at the time of one-time settlement and the valuation
done while taking loan from the Banks or Financial
Institutions along with the reasons thereto:
During the Financial Year under review, the Company has
not made any settlement with its Bankers or Financial
Institutions from which it has availed any term loan.
PARTICULARS OF LOANS, GUARANTEES OR
INVESTMENTS
Since the Company is an HFC, it is exempted from disclosing
information regarding particulars of loans extended, guarantees
given, and security provided in the ordinary course of business
under the provisions of Section 186(11) of the Act.
Nevertheless, the notes to the Financial Statements of the
Company state the details of loans, guarantees, and investments
CONTRACTS OR ARRANGEMENTS WITH RELATED
ARTIES
four Company has an explicit âPolicy on Materiality of
delated Party Transactions and dealing with Related Party
rransactionsâ to ensure that all related party transactions are
an an armâs length basis and in the ordinary course of business
n adherence of the provisions of Section 188 of the Act and
ules made thereunder and the SEBI (LODR) Regulations,
>015. Accordingly, all related party transactions entered during
financial Year 2024-25 were on an armâs length basis and in the
ordinary course of business under the Act and were not material
jnder the SEBI (LODR) Regulations, 2015.
\ll related party transactions entered into during the Financial
/ear, were presented to both the Audit Committee and the
Board. The Audit Committee has granted omnibus approval for
elated party transactions as per the provisions of the Act and
he SEBI (LODR) Regulations, 2015. Further, in compliance with
he Section 134(3)(h) of the Act, a thorough disclosure has been
nade in Form AOC-2 as âAnnexure-7â which forms part of this
nnual Report.
\dditionally, in compliance with the SEBI and RBI Master
Directions, the ''Policy on Materiality of Related Party
rransactions and dealing with Related Party Transactions'' is
riven in âAnnexure-10â which forms part of this Annual Report
and is available for viewing on the Companyâs website at https://
www.aavas.in/codes-and-policies.
NTERNAL GUIDELINES ON CORPORATE GOVERNANCE
Corporate Governance forms the cornerstone of responsible and
athical business conduct, ensuring transparency, accountability
and long term value creation for all the stakeholders of the
Company. Your Company has been committed to uphold
he greatest standards of corporate governance by adhering
o its fundamental values, which include putting the needs
af the customer first, being transparent, acting fairly, being
accountable, and acting with integrity and equity in all of
ts dealings.
he Companyâs Corporate Governance framework ensures that
t makes timely and appropriate disclosures and shares factual
and accurate information to its stakeholders so as to make an
nformed decision.
rhe Company has approved and adopted the Internal Guidelines
an Corporate Governance. The Internal Guidelines on Corporate
Covernance has been framed in accordance with the Act, SEBI
LODR) Regulations, 2015, RBI Master Directions, 2021 and
ther applicable rules and regulations.
rhe Internal Guidelines on Corporate Governance of the
Company is available on the website of the Company and can
ae accessed at https://www.aavas.in/codes-and-policies.
For and on behalf of the Board of Directors
AAVAS FINANCIERS LIMITED
Sachinderpalsingh Jitendrasingh Bhinder Nikhil Omprakash Gahrotra
Managing Director and CEO Additional Non-Executive Director
(DIN: 08697657) (DIN: 01277756)
Date: August 12, 2025
Place:Mumbai
Registered and Corporate Office:
201-202, 2nd Floor, Southend Square,
Mansarovar Industrial Area, Jaipur 302020, Rajasthan, India
CIN: L65922RJ2011PLC034297
E-mail: [email protected] | Website: www.aavas.in
DIRECTORSâ RESPONSIBILITY STATEMENT
In compliance with the provisions of Section 134(3)(c) and
134(5), of the Act and based on the information provided by
the Management, the Board of Directors hereby gives the
following statement:
(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 had prepared the annual accounts on a going
concern basis;
(e) 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; and
(f) t he Directors had devised proper systems to ensure
compliance with the provisions of all applicable laws and
that such systems were adequate and operating effectively.
BUSINESS OVERVIEW & FUTURE OUTLOOK
A comprehensive evaluation of the business and its future
prospects is included in the Management Discussion and
Analysis section of the Annual Report.
ACKNOWLEDGEMENTS AND APPRECIATION
Behind every milestone achieved lies the collective effort of
many, as we reflect on the past years, the Board of Directors is
proud to recognize collective efforts of all stakeholders of the
Company, that have enabled the Company to move forward with
purpose and resilience.
We extend our heartfelt appreciation for all the support and
trust received from the Stakeholders of the Company, including
the Reserve Bank of India, National Housing Bank, Ministry of
Corporate Affairs, Securities and Exchange Board of India,
Insurance Regulatory and Development Authority of India, Stock
Exchanges i.e. BSE and NSE, and other regulatory authorities.
The Board also acknowledges the support and cooperation
from Bankers, Lenders, Financial Institutions, Members, Credit
Rating Agencies, National Securities Depository Limited, Central
Depository Services (India) Limited, National Stock Exchange
International Financial Service Centre Limited, and Customers
of the Company for their continued trust and support.
The Directors wish to express their deep appreciation to
Kedaara Capital and Partners Group for their invaluable
support which proved instrumental in driving the Companyâs
growth and success. Further, the Board is also thankful to
the resigning directors for their enduring commitment and
meaningful Contributions.
We also take this opportunity to warmly welcome our new
Promoter, Aquilo House Pte. Ltd., belonging to CVC network,
whose induction marks a significant milestone in the Company''s
growth journey. We look forward to a strong and fruitful
partnership, leveraging their expertise and vision to drive
sustained progress and long-term value creation.
Additionally, the Board records its sincere appreciation for the
commitment demonstrated by all executives, officers, staff, and
the Senior Management team of the Company, for contributing
to the excellent performance of the Company during the
Financial Year.
The Board wishes to express its gratitude to all the Shareholders
for their invaluable support.
Mar 31, 2024
The Board of Directors of your Company (âThe Boardâ) takes great pleasure in presenting before you the 14th Annual Report on the Operational and Financial performance of Aavas Financiers Limited (âthe Companyâ or âAavasâ) along with the Audited Standalone and Consolidated Financial Statements for the Financial Year ended March 31, 2024.
As a prominent affordable Housing Finance Company in India, your Company serves the requirements of customers within the low and middle-income segments, particularly in semi-urban and rural areas, focusing on underserved and unreached markets.
Aavas primarily offers Home Loans, Home Construction Loans, Loan against Property, Home Improvement Loans and MSME Business Loans. Pursuant to Scale Based Regulation issued by Reserve Bank of India (âRBIâ), vide circular dated October 22, 2021 as amended from time to time, your Company falls under the category of Middle Layer Non-Banking Financial Company (âNBFC-MLâ).
During the Financial Year under review, your Company has demonstrated substantial growth and maintained consistent performance.
The Standalone financial performance for the Financial Year ended March 31, 2024 and a comparison with the previous year is summarized below:
|
(Rs. in Crore) |
|||
|
Particulars |
For the Year ended March 31, 2024 |
For the Year ended March 31, 2023 |
|
|
A |
Total Income |
2,020.30 |
1,610.15 |
|
Less: |
|||
|
Total Expenditure before Depreciation & Amortization and provision Impairment on financial instruments |
(1,33,3.71) (24.47) |
(1,020.01) (12.42) |
|
|
Depreciation & Amortization |
(32.03) |
(23.72) |
|
|
B |
Total Expenses |
(1,395.35) |
(1,061.15) |
|
C |
Profit Before Tax (A-B) |
624.45 |
548.99 |
|
D..... |
Less: Provision for Taxations (Net of Deferred Tax) |
(133.76) |
(113.92) |
|
E |
Profit After Tax (C-D) |
490.69 |
430.07 |
|
F |
Add: Other Comprehensive Income (Net of Tax) |
0.15 |
(1.79) |
|
G |
Total Comprehensive Income (E F) |
490.85 |
428.28 |
|
Transfer to Statutory Reserve |
93.17 |
35.66 |
|
The Standalone and the Consolidated Financial Statements for the Financial Year ended March 31, 2024, forming part of this Annual Report, have been prepared in accordance with Ind AS notified under Section 133 of the Companies Act, 2013 (âthe Actâ) and other relevant provisions of the Act.
¦ Total income for the Financial Year 2023-24 increased to H2,020.30 crore as compared to HI,610.15 crore in the previous year.
¦ During the year, the Company has earned a Profit Before Tax of H624.45 crore as compared to H548.99 crore in the previous year and the Profit After Tax during the year was H490.69 crore as compared to H430.07 crore in the previous year, recording an increase of 14%.
¦ The Assets under Management (AUM) of your Company stood at H17,312.65 crore (including assignment of H3,722.72 crore) as at March 31, 2024 as against H14,166.66 crore (including assignment of H2,757.23 crore) in the previous Financial Year, with a growth of 22%.
Furthermore, during Financial Year under review, there was no alterations/changes in the core operations or activities or nature of business of the Company.
The Board, recognizing the capital-intensive nature of the Company, has deemed it prudent to retain earnings for the Financial Year under review to reinvest in the business. This strategic decision is anticipated to drive further growth and enhance shareholders value. Consequently, no dividend has been recommended for the Financial Year ended March 31, 2024.
In terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, (âSEBI LODR Regulations, 2015â) and Master Direction - Non-Banking Financial Company - Housing Finance Company (Reserve
Bank) Directions, 2021 (âRBI Master Directionsâ) the Board of Directors of the Company formulated and adopted the Dividend Distribution Policy. The Policy is available on the website of the Company at link https://www.aavas.in/img/ pdf/dividend-distribution-policy.pdf. and forms part of this Report as âAnnexure-5â.
SHARE CAPITAL/ CAPITAL STRUCTURE AND DEBENTURES
Authorized Capital
There was no change in the Authorized Capital of the Company during the Financial Year under review. The Authorized Capital of the Company is H85,00,00,000/-(Rupees eighty five crore only) divided into 8,50,00,000 (Eight crore fifty lakh) Equity Shares of H10/-(Rupees ten only) each.
Issued, Subscribed & Paid up Capital
The issued, subscribed and paid up Capital of the Company as on March 31, 2024 stood at H79,13,97,050 (Rupees seventy nine crore thirteen lakh ninety seven thousand and fifty only) consisting of 7,91,39,705 (Seven crore ninety one lakh thirty nine thousand seven hundred and five) Equity Shares of H10/- (Rupees ten only) each. During the Financial Year under review, the paid-up Equity Share Capital of the Company has increased on account of allotment of 82,831 Equity Shares of H10/- (Rupees ten only) each pursuant to the exercise of equity stock options by the eligible employees of the Company under Employee Stock Option Plans (ESOPs) of the Company.
The shares of the Company are actively traded on NSE and BSE and have not been suspended from trading.
|
Details of Secured Debt Securities as on March 31, 2024: |
(H in crore) |
||||
|
Sr. No |
ISIN |
Date of allotment |
Outstanding amount |
Listed/Unlisted |
Stock Exchange |
|
1 |
INF.216P07167 |
16 09 2019 |
34 5.00 |
Unlisted |
- |
|
2 |
INF.216P07175 |
30 03 2020 |
273.4 8 |
Unlisted |
- |
|
3 |
INF.216P07209 |
31 12 2020 |
35.00 |
||
|
4 |
INE216P07217 |
26-11-2021 |
99.00 |
Listed |
BSE Limited |
|
5 |
INE216P07225 |
25-03-2022 |
60.00 |
||
|
6 |
INE216P07233 |
20-07-2023 |
135.00 |
||
TRANSFER TO SPECIAL RESERVE (UNDER SECTION 29C OF THE NATIONAL HOUSING BANK (âNHBâ) ACT, 1987)
Your Company has transferred H98.17 crore, i.e., 20% of the net profits to Statutory Reserves during the Financial Year under review as required under the provisions of Section 29C of the NHB Act, 1987.
In the domain of housing finance activities within the vibrant landscape of India, your esteemed Company stands stable, its mission is to be deeply entrenched in meeting the rapidly growing demands for housing loans. With unwavering dedication, we have charted a path of continuous expansion, covering diverse regions with strategic foresight. As of March 31, 2024, our footprint extended gracefully across 13 states, embracing 367 branches that serve as beacons of financial empowerment.
In contrast to many others in our industry who focus on big cities, we have chosen a different route with a meaningful goal. We serve in the sub-urban and rural areas of India, where people with lower to middle incomes aspire to own homes the most. In these areas, surrounded by green fields and growing communities, we feel a strong sense of purpose to help people improve their lives by owning homes.
Our mission is simple: To empower and upgrade the lives of low and middle-income customers by providing them accessible home loans and setting pioneering benchmarks in unserved and underserved markets.
The details with respect to operating and financial performance of your Company has been covered in the
Management Discussion and Analysis Report (MDAR), which forms part of this Annual Report.
Through out the Financial Year under review, your Company demonstrated a strong and resilient performance, as evidenced by the following financial summary:
Income & Profits
Total Income grew by 25% to H2020.30 crore for the Financial Year ended March 31, 2024 as compared to H1,610.15 crore for the previous Financial Year. Profit Before Tax (PBT) was 14% higher at H624.45 crore as compared to H548.99 crore for the previous Financial Year.
Profit after Tax (PAT) was 14% higher at H490.69 crore as compared to H430.07 crore for the previous Financial Year.
Sanctions
During the Financial Year under review, your Company has sanctioned housing loans for H5,670.66 crore as compared to H5,168.83 crore in the previous Financial Year, with an annual growth of 10%. The cumulative loan sanctions since the inception of your Company stood at H29,060.72 crore as at March 31, 2024. Your Company has not granted any loan against the collateral of Gold Jewellery and loan against Shares.
Disbursements
During the Financial Year under review, your Company disbursed housing loans for H5,582.23 crore as compared to H5,024.54 crore in the previous Financial Year registering an annual growth of 11%. The cumulative loan disbursement since inception as at March 31, 2024 was H27,963.78 crore.
Assets under Management (AUM)
The AUM of your Company stood at T17,312.65 crore (including assignment of T3,722.72 crore) as at March 31, 2024 as against T14,166.66 crore (including assignment of T2,757.23 crore) in the previous Financial Year, with a growth of 22%. As of March 31, 2024, the average size of loan sanctioned was T9.3 lakh and average tenure was 198.1 months in the AUM (on origination basis).
Strong Capital and Liquidity Position
The Companyâs total Capital Adequacy stood at 43.98% (previous Financial Year 46.96%) which is far above the minimum required level of 15% as per the provisions of the RBI Master Directions showing strong position of the Company.
The Companyâs Liquidity Coverage Ratio (LCR) stood comfortably at 106.14% as of March 31, 2024, against a regulatory requirement of 70%.
Non-Performing Assets (NPA)
Your Company is in adherence to the provisions of Indian Accounting Standards (âInd ASâ) with respect to the computation of Stage-3 Assets (NPA). Your Companyâs 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. Using a pro-active collection and recovery management system powered by analytics and technology, the GNPA and NNPA as of March 31, 2024 stood at 0.94% and 0.67% respectively (against 0.92% and 0.68% respectively in the previous Financial Year).
During the Financial Year under review, the Company has sustained the long-term bank facility credit ratings of AA; Stable, which has been reaffirmed by both CARE Ratings and ICRA Limited. Outlook on both ratings is Stable. The Companyâs short term bank and Commercial Paper facility rated as A1 has been reaffirmed, by CRISIL.
For more details on credit ratings, kindly refer Corporate Governance Report forming part of this report or visit to website of the Company at link https://www.aavas.in/ investor-relations/credit-rating.
REGULATORY & STATUTORY COMPLIANCES
T he Company has complied with all the guidelines, circulars, notifications and directions issued by our Regulators which includes but not limited to RBI, NHB, MCA, SEBI, IRDAI, BSE and NSE from time to time. The Company also places before the Board of Directors at regular intervals all such circulars and notifications to keep the Board informed and report on actions initiated on the same. The Company also complies with the provisions of the Companies Act, 2013, Secretarial Standards issued by Institute of Company Secretaries of India (âICSIâ) and as notified by Ministry of Corporate Affairs, Master Direction - NonBanking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021 (âRBI Master Directionsâ), SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (âSEBI LODR Regulations, 2015â), SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021, Income Tax Act 1961 and all other applicable statutory requirements.
Scale Based Regulation (SBR): A Revised Regulatory Framework for NBFCs
The Reserve Bank of India in 2021 issued Scale Based Regulation (SBR) a revised regulatory framework for NBFCâs which is applicable to your Company being a NBFC HFC-category falling under middle layer.
With respect to above, the RBI has issued various circulars/ guidelines which were required to be implemented in the Financial Year 2023-24 i.e. Guidelines for appointment of Chief Compliance Officer, Guidelines on Compensation of Key Managerial Personnel and Senior Management, which were duly implemented by the Company including formation of policies, implementing procedures and to review their outcome on periodic basis.
Further, the RBI had issued Master Direction on Information Technology Governance, Risk, Controls and Assurance Practices dated November 07, 2023 effective from April 01, 2024. The Company has duly implemented and adopted the directions ensuring its compliance.
As a Non-deposit taking (NBFC-HFC) Housing Finance Company, your Company has not solicited, accepted or renewed any fixed deposits from the public, as defined in Chapter V of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014. Therefore, the disclosure in terms of RBI Master Directions is not required.
¦ Recognized as the Best BFSI Brand 2024 at The Economic Times Best Brands Conclave - ET Edge.
¦ Silver Award for Excellence in BRSR - MID Cap (Service Sector) at 3rd ICAI Sustainability Reporting Awards 2022-23.
¦ ASSOCHAM-âExcellence in Self-built Green Housing Initiativeâ Award.
Your Company has in place a borrowing policy framework to cater its borrowings needs. The objective of the policy is to diversify the liability portfolio of the Company and to reduce risk of overdependence on any particular lender and instrument. The Company has diverse set of lenders/ investors that includes Public Sector Bank, Private Sector Bank, National Housing Bank, recognized Multilateral Institution and other financial institutions.
Your Company has vide Special Resolution passed on July 19, 2023, under Section 180 (1) (c) of the Companies Act, 2013, 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 H23,000 crore (Rupees twenty three thousand crore only) and the total amount so borrowed shall remain within the limits as prescribed by RBI.
The Weighted Average Borrowing Cost as at March 31, 2024 was 8.07% (including Securitization/Assignment) as against 7.61% as at the end of the previous Financial Year. As at March 31, 2024, your Companyâs sources of funding were primarily in the form of Long Term Loans from Banks and Financial Institutions (47%), followed by Securitization/Direct assignment (24%), NHB Refinance (20%), Debt capital market (9%).
Your Company has a comfortable liquidity position as on March 31, 2024 with H1,797.82 crore (including FDâs). Further, the Liquidity Coverage Ratio (âLCRâ) for the Financial Year ended March 31, 2024 was 106.14% as against the regulatory requirement of 70%.
Term Loans from Banks and Financial Institutions
The Company, during the Financial Year, received aggregate fresh loan sanctions amounting to H2,825 crore and has availed loans aggregating to H3,275.49 crore. The outstanding term loan from Banks and Financial Institutions as at March 31, 2024 were H7,317.01 crore (excluding PTC & CC) with an average tenure of 9.65 years.
Securitization/Assignment of Loan Portfolio
Your Company has actively tapped Securitization/Direct Assignment market, which has enabled it to create liquidity, diversify liability profile and minimizing asset liability mismatches.
During the year under review, your Company received purchase consideration of H1,242.96 crore from assets assigned under transfer of loan portfolio transactions and raised H390.16 crore through Securitization of loan receivables.
The transfer of loan portfolio transactions were carried out in line with RBI guidelines and these assets were derecognized in the books of the Company.
Refinance from National Housing Bank (NHB)
Your Company has received fresh sanction of refinance assistance of T1,000 crore under the NHB refinance scheme. Your Company availed funds of T1,032 crore under various Refinance Schemes such as for Affordable Housing Fund, Regular Refinance Scheme and Special Refinance Facility.
Total outstanding refinance as at March 31, 2024 stood at T3,041.58 crore.
Refinance from SIDBI
During the year under review, your Company received aggregate fresh loan sanction amounting to T300 crore and has availed loans aggregating to T50 crore. The outstanding refinance from SIDBI as on March 31, 2024 stood at T49.9 crore with an average tenure of 7 years.
Non-Convertible Debentures (NCDs)
Your Company has raised long term funding through issuance of debt securities not only to the domestic Financial institution (FI) but also to Multilateral/ Development Financial Institutions (DFI) and Scheduled Commercial Bank (SCB) in India. During the year under review, your Company has raised H150 crore through issuance of debt securities and as on March 31, 2024, the Companyâs outstanding NCDs stood at H945 crore [FI - 10 % ; DFI - 66 % and SCB- 24 %] as compared to H1,017 crore [FI - 12 % ; DFI - 67 % and SCB- 21 %] as on March 31, 2023.
Your Company has not issued any Commercial Paper & Short Term Instrument during the Financial Year 202324 and as on March 31, 2024, the Companyâs Commercial Paper outstanding is NIL.
Rupee Denominated External Commercial Borrowing
As on March 31, 2024, the outstanding balance of Rupee Denominated External Commercial Bond stood at H458.19 crore (including outstanding balance of social masala bond of H358.38 crore).
Further, the interest on Non-Convertible Debentures and Masala Bonds issued on private placement basis were paid by the Company on their respective due dates and there was no instance of interest amount not claimed by the investors or not paid by the Company.
Your Company, being listed HFC is exempted from the requirement of creating Debenture Redemption Reserve (DRR) on privately placed debentures. Therefore, your Company has not created DRR. Further the requirement to invest or deposit a sum of not less than 15% of the amount of debentures which are maturing during the Financial Year ending on March 31 of the next year as provided under Rule 18 of the Companies (Share Capital and Debentures) Rules, 2014 has been done away for listed Companies vide notification of Ministry of Corporate Affairs (âMCAâ) dated June 05, 2020.
One time explanation for fund raising by Large Corporate
The Company lends loans with average tenure of 15 years at origination and after considering prepayment average tenure of loans comes to around 8 years. Given the rating of the Company at AA/Stable, majority of investor in Debt Capital Markets are willing to invest only up to 3 years only. Since other source of funding are comparatively larger tenure with competitive price which helped us in managing our ALM, the 25% requirement of borrowing through debt securities could not be achieved. However, Company is keen to raise long term funds through Debt Securities.
Further, in compliance with SEBI circular SEBI/HO/ DDHS/DDHS-RACPOD1 /P/CIR/2023/172 dated October 19, 2023, in the event if the Company is identified as a Large Corporate for Financial Year 2025, the requirement of mandatory qualified borrowing will be endeavor to be met in a contiguous block of three years that is FY 2025, FY 2026 and FY 2027.
DISCLOSURE UNDER CHAPTER XI-GUIDELINES ON PRIVATE PLACEMENT OF NON-CONVERTIBLE DEBENTURES (NCDS) OF RBI MASTER DIRECTIONS
(i) The total number of NCDs 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: Nil
(ii) The total amount in respect of such debentures remaining unclaimed or unpaid beyond the date referred to in Paragraph (i) as aforesaid: Nil
Further, the Company has in place policy for claiming unclaimed interest, dividend and redemption amount on NCS pursuant to SEBI circular dated November 08, 2023 and is available on the website of the Company at https:// www.aavas.in/codes-and-policies.
TRUSTEE TO SECURITIES HOLDERS
In compliance to the requirements of Securities and Exchange Board of India (Issue and Listing of NonConvertible Securities) Regulation 2021, the Company has appointed IDBI Trusteeship Services Limited as Debenture Trustee to protect the interest of the debenture holders of the Company.
The details of Debenture Trustee are available on the Companyâs website at https://www.aavas.in/details-of-debenture-trustee-rta-and-grievance. Further the details of Debenture Trustee is also provided at corporate information of this Annual Report.
BRANCH BUILD-UP
A branch is a regional component of a broader Company, each branch is working towards unified goal of ensuring business thrives. The Company by expansion of new branches increase profits and reach new customers, which enhances Companyâs operating domain across India. As on March 31, 2024, Company is operating in 13 states, with a network of 367 branches , consisting of Rajasthan, Maharashtra, Gujarat, Madhya Pradesh, Haryana, Uttar Pradesh, Chhattisgarh, Delhi, Punjab, Uttarakhand, Himachal Pradesh, Karnataka and Odisha. The Company added 21 new branches during the FY 2023-24.
Your Company has its Registered Office in Jaipur, Raj asthan and its branch network as on March 31, 2024 vis-a-vis the previous Financial Year is detailed hereunder:
|
State |
Branches (As on March 31, 2024) |
Branches (As on March 31, 2023) |
|
Rajasthan |
108 |
102 |
|
Madhya Pradesh |
51 |
49 |
|
Maharashtra |
49 |
48 |
|
Gujarat |
4 5 |
44 |
|
Uttar Pradesh |
32 |
27 |
|
Karnataka |
26 |
24 |
|
Haryana |
18 |
17 |
|
Uttarakhand |
9 |
9 |
|
Chhattisgarh |
9 |
9 |
|
Odisha |
6 |
6 |
|
Delhi |
5 |
4 |
|
Himachal Pradesh |
4 |
4 |
|
Punjab |
5 |
3 |
|
Total number of branches |
367 |
346 |
BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
Your Companyâs Board of Directors has put integrity at the forefront of all the decisions, which is the foundation of our governance.
The Board of Directors of the Company is a panel of Members having diverse set of abilities, demonstrated experience, personal integrity ethics and Governance
expertise. In addition to skills, directors possess certain qualities that make them effective leaders and stewards of the organization.
In accordance with Section 149 of the Companies Act, 2013, Regulation 17 of SEBI LODR Regulations, 2015 and Scale Based Regulation issued by RBI as amended from time to time, your Company has optimum mix of Executive, Non-Executive and Independent Directors.
The Board of Directors of the Company plays a crucial role in overseeing how the management serves the short and long-term interests of stakeholders. This belief is reflected in Aavas governance practices, under which the Company strives to maintain an effective, informed and independent Board.
The Members of the Companyâs Board of Directors are eminent persons of proven competence and integrity. NonExecutive Directors, including Independent Directors, play a critical role in imparting value to the Board processes by bringing an independent judgment in the areas of strategy, performance, resource management, financial reporting and the overall standard of Companyâs conducts etc.
The Board of Directors have identified Technical skills, Industry experience, competencies, special knowledge and practical experience, as required in the context of the NBFCs and Housing Finance Company''s to function effectively and efficiently e.g. Accounting & Finance, Legal & Compliance, Strategic Development & Execution and Governance Board Role.
The Board of the Company comprises of 9 (Nine) Directors, comprising 3 (Three) Independent Directors (including 2 (Two) Women Directors), 5 (Five) Non-Executive Nominee Directors and 1 (One) Executive Director-Managing Director & Chief Executive Officer as on March 31, 2024, who build strong foundation in business principles and leadership.
|
The Composition of Board of Directors of the Company is as follows: |
||
|
Name of the Director |
Designation |
DIN |
|
Mr. Sandeep Tandon |
Chairperson and Independent Director |
00054553 |
|
Mr. Sachinderpalsingh .Jitendrasingh Blunder Mrs. Kalpana Kaushik Mazumdar Mrs. Soumya Rajan |
Managing Director and Chief Executive Officer Independent Director Independent Director |
08697657 01874130 03579199 |
|
Mr. Ramachandra Kasargod Kamath |
Non-Executive Nominee Director |
01715073 |
|
Mr. Vivek Vig |
Non-Executive Nominee Director |
01117418 |
|
Mr. Nishant Sharma |
Promoter Nominee Director |
03117012 |
|
Mr. Manas Tandon |
Promoter Nominee Director |
05254602 |
|
Mr. Kartikeya Dhruv Kaji* |
Promoter Nominee Director |
07641723 |
|
Mr. Rahul Mehta** |
Promoter Nominee Director |
09485275 |
|
*Mr. Kartikeya Dhruv Kaji resigned from the Board of the Company w.e.f May 21, 2024. **Mr. Rahul Mehta was appointed as a Non-Executive, Additional Director (Promoter Nominee Director on behalf of Lake District Holdings Limited) by the Board w.e.f May 21, 2024. Pursuant to the provisions of Section 2(51) and 203 of the Act, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended from time to time the following are the Key Managerial Personnel of the Company: |
||
|
Name |
Designation |
|
|
Mr. Sachinderpalsingh Jitendrasingh Bhinder |
Managing Director and Chief Executive Officer |
|
|
Mr. Ghanshyam Rawat |
President and Chief Financial Officer |
|
|
Mr. Ashutosh Atre |
President and Chief Risk Officer* |
|
|
Mr. Sharad Pathak |
Company Secretary and Chief Compliance Officer** |
|
|
*re-appointed as Chief Risk Officer for a period of 5 years w.e.f. August 01, 2023. **appointed as Chief Compliance Officer for a period of 3 years w.e.f. October 01, 2023 pursuant to RBI Notification No. DoS.CO.PPG. SEC.01/11.01.005/2022-23 dated April 11, 2022 on Compliance Function and Role of Chief Compliance Officer (CCO). APPOINTMENT & RESIGNATION OF DIRECTORS AND KMP During the year under review and upto the date of this report, the following changes took place in the composition of the Board: |
||
|
Appointment/ Reappointments Appointment: During the Financial Year under review, the shareholders at its 13th AGM held on July 19, 2023, approved the appointment of Mr. Sachinderpalsingh Jitendrasingh Bhinder (DIN: 08697657) as Director and as Managing Director and CEO of the Company with effect from May 03, 2023. |
||
|
Proposed Appointment: ⢠The Board of Directors in its meeting held on April 25, 2024 on the Recommendation of NRC Committee has proposed to the Shareholders for Re-appointment of Mrs. Soumya Rajan (DIN: 03579199) as an Independent Director of the Company for a second term of 5 years w.e.f. August 29, 2024. ⢠The Board of Directors on the basis of recommendation of the NRC Committee through its resolution passed by way of circulation on May 21, 2024 has appointed Mr. Rahul Mehta (DIN: 09485275) as a Non-Executive Additional Director (Promoter Nominee Director on behalf of Lake District Holdings Limited) of the Company. Appropriate resolutions seeking Shareholders approval for above appointments forms part of the Notice convening the 14th Annual General Meeting of your Company. |
|
|
Resignation or Retirement |
⢠Mr. Sushil Kumar Agarwal resigned from the post of Managing Director of the Company w.e.f. May 03, 2023. ⢠Mr. Kartikeya Dhruv Kaji resigned from the post of Promoter Nominee Director of the Company w.e.f. May 21, 2024. |
|
Directors Retiring by Rotation |
Pursuant to the provisions of Section 152 of the Act, Mr. Kartikeya Dhruv Kaji, Promoter Nominee Director and Mr. Vivek Vig, Non Executive Nominee Director of the Company, retired and being eligible, were re-appointed with the approval of Members at the 13th AGM held on July 19, 2023. Further, in accordance with the provisions of the Act, Mr. Manas Tandon, Promoter Nominee Director and Mr. Nishant Sharma, Promoter Nominee Director of the Company are liable to retire by rotation at the ensuing 14th AGM of the Company. They are eligible and have offered themselves for re-appointment. Appropriate resolutions seeking Shareholders approval for above appointments forms part of the Notice convening the 14th Annual General Meeting of your Company. |
|
Appointments/ Resignations of the Key Managerial Personnel (KMP) |
During the year under review, no KMP were appointed or resigned except MD whose details are covered above. |
DECLARATION BY INDEPENDENT DIRECTOR
Independent Directors are expected to play a significant role at the Board level and are the change agents of corporate governance. In accordance with the provisions of the Section 149(6) of the Act and Regulation 16(l)(b) & 25 of SEBI LODR Regulations, 2015, the Independent Directors have confirmed that they satisfy the criteria prescribed for Independent Directors.
In the opinion of the Board the Independent Directors fulfill the aforesaid criteria and possess requisite integrity, qualifications, proficiency, experience, expertise and are independent of the management.
The names of all the Independent Directors of the Company have been included in the Independent Directorâs databank maintained by Indian Institute of Corporate Affairs (âIICAâ). The Company has obtained declaration of independence from all the Independent Directors of the Company. None of the Directors have any pecuniary relationship or transactions with the Company.
CERTIFICATE OF NON- DISQUALIFICATION OF DIRECTORS
All the Directors 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. None of the Directors of the Company are related to each other.
Your Company has 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 Securities Exchange Board of India (âSEBIâ)/Ministry of Corporate Affairs (âMCAâ) or any such statutory authority. The same forms part of this Annual Report as âAnnexure-1â.
DISCLOSURE UNDER SECTION 197(14) OF THE COMPANIES ACT, 2013
The Managing Director and CEO of the Company has not received any commission from its subsidiary Company.
The Company holds at least four Board Meetings in a year, one in each quarter and the dates of the Board Meetings are finalized well in advance after seeking concurrence of all the Directors. All the decisions and urgent matters approved by way of circular resolutions are placed and noted at the subsequent Board Meeting.
During the Financial Year under review, 5 (five) Board Meetings were conveyed and held. All other details of the meetings attended by each Director are detailed in Corporate Governance Report and hence, not repeated here to avoid duplication in the report.
PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS
Board Evaluation is a key means by which board can recognize and correct corporate governance problems and add real value to their organizations. A properly conducted Board Evaluation can contribute significantly to performance improvements on organizational board and individual member level.
The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and individual Directors pursuant to the provisions of the Act and SEBI (LODR) Regulations, 2015 and as per the criteria defined in the said act and regulations.
Pursuant to applicable provisions of the Act and the SEBI (LODR) Regulations, 2015, the Board, in consultation with its Nomination and Remuneration Committee, has formulated a framework containing, inter-alia, the criteria for performance evaluation of the entire Board of the Company, its Committees and individual Directors, including Independent Directors. The framework is monitored,
reviewed and updated by the Board, in consultation with the Nomination and Remuneration Committee, based on need and new compliance requirements.
The evaluation process is carried out through a platform called âGovevaâ which is a web based platform, to ease the process of Board Evaluation, to increase the efficiency and to automate report generation.
The details of evaluation process of the Board, its Committees and individual Directors, including Independent Directors have been provided under the Corporate Governance Report, which forms part of this Report.
SEPARATE INDEPENDENT DIRECTORSâ MEETINGS
During the Financial Year under review, a separate meeting of Independent Directors was held on March 26, 2024 without the attendance of Non-Independent Directors and the Management of the Company. The Independent Directors inter alia overlooks and discuss the issues arising out of the Committee Meetings and Board discussion including the quality, quantity and timely flow of information between the Company Management and the Board that is necessary for the Board to efficiently perform its obligations.
FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS
Familiarization Programme has been designed considering the specific needs of contemporary Corporate Governance and the expected obligations of Independent Directors in view of the onerous responsibility as prescribed under the Regulation 25(7) of the SEBI LODR Regulations, 2015.
The Program also aims to offer a conceptual framework based upon current expectations, which require the Independent Directors to adhere to a code and standard of ethics and integrity for fulfillment of their responsibilities in a professional and faithful manner to promote confidence of the investment community. Purpose of this program is to enlighten the Independent Directors with their Rights and Obligations and aware them about the regulatory environment and the business model in which Company is running its operations.
The Board is also periodically updated on the various changes, if any, in the regulations governing the conduct of Non-Executive Directors including Independent Directors.
The details of the Familiarization Programme has been hosted on the website of the Company and can be accessed through following link: https://www.aavas.in/img/pdf/ det ails - of-f am iliarizat ion-programme-imp art ed-to -independent-directors.pdf.
POLICY ON DIRECTORâS APPOINTMENT, REMUNERATION & OTHER DETAILS
With an ambition to become one of the preferred financiers and to outperform its competitors and to remain in front in delivering best financial solutions, the Company has in place Policy on Nominations and Remuneration for Directors, Key Managerial Personnel and Senior Management Personnel to align the aspirations of human resources consistent with the goals of the Company.
T he Policy on Nominations and Remuneration for Directors, Key Managerial Personnel and Senior Management Personnel of the Company is in line with the Section 178 of the Act, provisions of Regulation 19 of SEBI (LODR) Regulations, 2015 and Guidelines on Compensation of Key Managerial Personnel and Senior Management in NBFCs issued by Reserve Bank of India (RBI) vide circular dated RBI/2022-23/36 DOR.GOV.REC.No.29/18.10.002/2022-23 on April 29, 2022 ("RBI Guidelinesâ), as amended from time to time.
The Policy is available on the website of the Company and can be accessed at https://www.aavas.in/codes-and-policies and all the details of remuneration paid to the Directors is mentioned in Annual Return in form MGT-7, available on Companyâs website and can be accessed at https://www.aavas.in/investor-relations/annual-reports.
The Company has the following Nine (9) 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 (AC)
2. Nomination & Remuneration Committee (NRC)
3. Stakeholders Relationship Committee (SRC)
4. Corporate Social Responsibility & Environment Social Governance Committee (CSR & ESG)
5. Risk Management Committee (RMC)
6. Asset Liability Management Committee (ALCO)
7. Information Technology (IT) Strategy Committee
8. Customer Service & Grievance Redressal Committee (CS&GR)
9. Executive Committee (EC)
During the Financial Year under review, the Board accepted all recommendations made by the above Committees.
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 Annual Report as âAnnexure-2â.
EMPLOYEE STOCK OPTION PLAN (ESOP)
Employee Stock Options act as a tool for attracting and retaining high-quality employees. Although motivation, employee retention and awarding hard work are the key benefits, which ESOP brings to Company, there are several other significant advantages too. It also provides employees with a sense of belonging because it gives them a real stake in their firm''s growth trajectory.
ESOP 2016
Pursuant to the approval accorded by the Shareholders on February 23, 2017 the Company has approved and adopted Employee Stock Option Plan for Employees-2016 (âESOP-2016-Iâ).
During the Financial Year under review, the Company made grant aggregating to 4,500 options on February 01, 2024 under ESOP-2016-I (d).
Performance Stock Option Plan (PSOP-2023)
The Company believes that equity based compensation schemes/plans are an effective tool to reward the talent working with the Company for delivering long-term sustainable performance and creation of stakeholder value. With a view to drive long term performance, retain talent and attract new talent, the Company formulated and implemented âAavas Financiers Limited - Performance Stock Option Plan- 2023â (âPSOP-2023â) as a key component in its reward structure to the eligible employees of the Company. The PSOP-2023 was approved by the Shareholders through postal ballot on November 06, 2023.
During the Financial Year under review, the Company made grant aggregating to 71,044 options on December 12, 2023 under the PSOP-2023.
It is confirmed that all the ESOP Schemes/plan of the Company are in compliance with the provisions of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (âSEBI SBEB and Sweat Equity Regulationsâ) as amended from time to time.
The Nomination & Remuneration Committee administers and monitors the ESOP Schemes/plan in compliance with the Act, SEBI SBEB and Sweat Equity Regulations and SEBI (LODR) Regulations, 2015.
The Secretarial Auditors of the Company has given a Certificate, confirming that the above ESOP Schemes/ plan have been implemented in accordance with the SEBI SBEB and Sweat Equity Regulations as amended from time to time and will be available for the inspection of the Members of the Company.
The applicable disclosures as stipulated under Regulation 14 of SEBI (Share Based Employee Benefits) Regulations, 2014 with regard to Employees Stock Option Plan of the Company are available on the website of the Company at https://www.aavas.in/investor-relations/annual-reports.
Statutory Auditors and Auditorsâ Report
In terms of provisions of Section 139 of the Companies Act 2013, read with the Companies (Audit and Auditors) Rules, 2014, M/s Walker Chandiok & Co LLP, Chartered Accountants (Firmâs Registration No. 001076N/N500013) were appointed as Statutory Auditors of the Company for a period of 3 (three) consecutive years and their existing term
shall come to an end till the conclusion of the ensuing 14th Annual General Meeting (AGM) of the Company. The Audit Committee and the Board of Directors of the Company placed on record its appreciation for the services rendered by M/s Walker Chandiok & Co LLP, Chartered Accountants as the Statutory Auditors.
The Audit Report given by the Statutory Auditors on the financial statements of the Company is part of this Integrated Annual Report. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report. Further, during the year under review, the Auditors have not reported any fraud under Section 143(12) of the Companies Act, 2013.
Pursuant to the Reserve Bank of India Circular RBI/2021-22/25Ref.No.DoS.CO.ARG/SEC.01/08.91.001/2021-22 dated April 27, 2021, Guidelines for Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs), (âRBI Guidelinesâ) the Company having assets size of H15,000 Crore and above, as at the end of previous year the statutory audit should be conducted under joint audit of a minimum of two audit firms.
With respect to above, as the Company have crossed the threshold of H15,000 Crore asset size as at March 31, 2024, accordingly the Statutory Audit of the Company shall be conducted under joint audit of a minimum of two audit firms.
Pursuant to section 139 of the Act, read with the Companies (Audit and Auditors) Rules, 2014, RBI Guidelines for appointment of Statutory Auditor(s), the Board of Directors
based on the recommendation of Audit Committee, has recommended, the appointment of M/s. M S K A & Associates Chartered Accountants (FRN: 105047W) and M/s. Borkar & Muzumdar, Chartered Accountants (FRN: 101569W) as the Joint Statutory Auditors of the Company for a period of 3 (three) years effective from the conclusion of 14th AGM until the conclusion of 17th AGM subject to approval of the Shareholders of the Company at the ensuing AGM.
The Company has received consent and eligibility certificates from the above audit firms under applicable rules and laws that they are not disqualified and are eligible to hold the office as Auditors of the Company, if appointed.
Secretarial Auditors and Secretarial Audit Report
M/s. Chandrasekaran Associates, Practicing Company Secretaries (Firm Registration No. P1988DE002500), have carried out Secretarial Audit of the Company for the Financial Year 2023-24.
The Secretarial Audit Report forms part of this Integrated Annual Report attached as âAnnexure-3â and the remarks therein were noted by the Board and do not call for any further comments.
Furthermore, M/s. Chandrasekaran Associates, Practicing Company Secretaries has issued an Annual Secretarial Compliance Report for the Financial Year 2023-2024 in Compliance with Regulation 24A of SEBI (LODR) Regulation, 2015 which forms part of this report as âAnnexure-4â and is also submitted to Stock Exchanges.
In terms of Section 204 of the Act, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Audit Committee recommended and the Board has re-appointed M/s Chandrasekaran Associates, Practicing Company Secretaries as the Secretarial Auditors of the Company to conduct Secretarial Audit for the Financial Year 2024-25.
INFORMATION SYSTEM AUDIT (IS AUDIT)
The landscape around information systems has been changing, therefore an IS audit focus on the governance and management aspects of technology and cybersecurity as much as it does on specific focus areas of the audit.
The Company has in place an Information Systems Audit Policy which is cognizant of business imperatives and align with the aspirations of the organization, including being agile and innovative and adopting technologies at a rapid pace. Our Head of Internal Audit (HIA) is accountable to the Audit Committee and Management in providing assurance on the adequacy and effectiveness of the Companyâs risk management, control and governance of information system processes used for controlling its activities and
managing its significant risks and also report material frauds and their investigations and corrective actions.
INTERNAL AUDIT & INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY
The Reserve Bank of India has stipulated that all deposit taking and non-deposit taking NBFC-HFCs are mandated to have a Risk Based Internal Audit Framework in place by June 30, 2022. The Company being a Non-deposit taking NBFC-HFC, the circular of RBIA becomes applicable accordingly, the Company has put in place RBIA framework within the timeline and has developed an in-house team and appointed a Head of Internal Audit (HIA) to conduct audit of functional areas and operations of the Company.
The Internal Audit department is headed by the HIA who reports directly to the Audit Committee of the Board. The primary responsibility of the HIA is to effectively manage the Internal Audit department and to ensure that it adds value to the entity and its objectives. The RBIA framework effectively ensures that internal audit coverage is commensurate with the nature of complexity of business operations on an ongoing basis. HIA ensures compliance with the internal audit principles and standards and the independence of the Internal Audit department, its audit staff and its performance against key performance indicators.
The Audit Committee reviews and evaluates adequacy and effectiveness of the Companyâs internal control environment and monitors the implementation of audit recommendations.
The Companyâs internal financial control is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. The Companyâs internal financial control includes those policies and procedures that pertains to maintenance of records, provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Companyâs assets that could have a material effect on the financial statements.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS
There were no significant or material orders passed by the regulators or courts or tribunals against the Company during the Financial Year 2023-2024.
However, BSE Limited (BSE) vide their e-mail dated November 30, 2023 have levied fine of H10,000 excluding
GST on the Company for the delayed compliance with Regulation 60(2) of SEBI (LODR) Regulations, 2015 i.e. Delay in submission of the intimation of Record Date and there is no material impact on the financials, operations or other activities of the Company due to imposition of such fine and the Company has duly paid the fine to BSE.
MATERIAL CHANGES/ EVENTS AND COMMITMENTS, IF ANY
There are no material changes and commitments affecting the financial position of the Company, which have occurred after March 31, 2024 till the date of this report except as mentioned below:
Aavas Finserv Limited, wholly owned subsidiary (âsubsidiaryâ) of the Company had initiated the voluntary liquidation and accordingly the control of subsidiary has been transferred to official liquidator. As on the date of this report the status of subsidiary is âunder the process of voluntary liquidationâ.
Further, there has been no change in the nature of business of your Company.
The Company being a NBFC-HFC is not required to maintain cost records as per sub-section (1) of Section 148 of the Companies Act 2013.
Your Company has always been at the forefront of Technology adoption, and effectively leveraging technology solutions to enhance productivity of the teams and provide superior experience to our customers.
The Company is in the process of building a robust and scalable technology architecture as per the charted transformation roadmap to make the Company future ready. Your Company has made significant progress in this roadmap.
T he Company has already adopted a modern and innovative cloud based application stack for loan origination and customer service using Salesforce and Mulesoft platforms which provide 360-degree visibility for the entire customer life cycle. The financial systems have been upgraded to ORACLE Fusion ERP Applications. Further, the Loan Management System is also in the process of upgradation with ORACLE Flexcube Core banking application and the project is in a very advance stage of completion.
By utilising multiple India stack based fintech integrations and advance analytics capabilities, we have significantly
optimised our processes to bring in efficiency and agility at all levels.
The Company has upgraded the information security systems with modern and robust security solutions in the areas of endpoint security, cloud security and data leakage prevention solution. The Company will continue to build resilience by adopting latest technology tools, solutions, policies and procedures in line with evolving regulations and market trend.
Your Company has always believed its employees as its greatest asset and in pursuit of excellence, we continue to uphold our commitment to nurture and empower them. As we reflect on the past Financial Year, 2023, it is evident that our success is intrinsically linked to the quality and competence of our human capital.
Building upon the foundation laid in the preceding years, Aavas introduced strategic initiatives aimed at enhancing the well-being and professional growth of our employees. Notably among these initiatives are our efforts to support holistic well-being of our female employees and development of senior leadership team. During last Financial Year the Company has also come up with performance-based equity scheme to foster the culture of performance and ownership.
The Company continues to invest in a technology-driven HR department workflow and leverage the same to create seamless employee experience. These initiatives, along with our ongoing efforts to strengthen a progressive HR culture, underscore our commitment to provide a conducive and performance driven organisational environment for employee enrichment. The Companyâs permanent employee count stood at 6,075 as of March 31, 2024.
Looking ahead, your Company remain steadfast to create a better workplace and explore innovative ways to further elevate employee engagement at Aavas. Together, we will continue to strive for excellence, drive sustainable growth, and create value for all stakeholders.
Your Company takes risk management seriously by having a dedicated sub-committee of executives and Risk Management Committee of the Board to oversee it. This not only aligns with Regulation 21 of SEBI (LODR) Regulations, 2015 but also ensures compliance with RBI guidelines. Having such a committee helps establish a robust risk culture and governance framework within the company,
ultimately contributing to its overall sustainability and success.
The Risk Management Committee meets, at least twice a year and as needed by the Board or Chairperson. This ensures ongoing oversight of the Company''s risk landscape. By ensuring appropriate methodologies, processes and systems are in place, the Committee plays a crucial role in monitoring and evaluating risks associated with the business. Additionally, overseeing the implementation of the risk management policy and evaluating the adequacy of risk management systems reflects a proactive approach to risk management within the Company.
T he Company has comprehensive risk management policies in place, including a Board-approved Risk Management Policy, IT Risk Management Policy and an Internal Capital Adequacy Assessment Processes (ICAAP) policy, aligned with RBI guidelines.
The identification and monitoring of key risks such as Credit Risk, ALM Risk, Concentration Risk, Interest Rate Risk, Reputation Risk, Cybersecurity Risk, Fraud Risk, Business Risk, Exposure Risk, Competition Risk and Regulatory Risk are crucial for maintaining the Company''s stability and resilience. These risks are reported to the Risk Management Committee on a quarterly basis ensuring transparency and proactive risk management.
Moreover, the utilization of institutional intelligence for underwriting methodology, executed by a qualified and experienced team, including Chartered Accountants, reflects a robust approach to risk assessment in the Company. Additionally, having dedicated vendors and professionally qualified in-house teams to address legal, technical, and operational risks further enhances the Company''s risk management capabilities.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
Pursuant to the provisions of Section 177(9) and (10) of the Act and Regulation 22 of the SEBI LODR, Regulations, 2015 the Company has formulated a Whistle Blower Policy for vigil mechanism of Directors and employees to report to the management genuine concerns or grievances about unethical behavior, actual or suspected fraud or violation of the Companyâs Code of Conduct. The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. To maintain these standards, the Company encourages its employees who have concerns about suspected misconduct to come forward and express their concerns without fear of punishment or unfair treatment. The mechanism provides a channel to the employees and Directors for adequate safeguards against victimization of employees and Directors who use such mechanism and makes provision
for direct access to the Chairperson of the Audit Committee in exceptional cases. The identity of the Whistle Blower is kept confidential so that he/she shall not be subjected to any discriminatory practice. None of the personnel of the Company has been denied access to the Audit Committee. The whistle blower policy is placed on the website of the Company and can be accessed at https://www.aavas.in/ img/pdf/Whistle-Blower-Policy.pdf.
DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
Sexual Harassment at workplace is an extension of violence in everyday life and is discriminatory and exploitative, as it affects womenâs right to life and livelihood. Your Company is committed to prevent and deter the commission of acts of sexual harassment against women at workplace. The Company promotes and recognizes the right of women to protect 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). In terms of these commitments and the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (âthe POSH Actâ) and the rules made thereunder, the Company has formulated and implemented a Policy for prevention of sexual harassment against women and redressal of complaints thereto and has also constituted Internal Complaints Committee (ICC) under the POSH Act. ICC has been set up to redress complaints received regarding sexual harassment. All employees are covered under this policy. During the year, the Company conducted 326 workshops for employees creating awareness about POSH Act.
The details of complaints received and disposed during the Financial Year are provided in Corporate Governance Report forming part of this Annual report.
CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING IN COMPANYâS SECURITIES
The Company has instituted a mechanism to avoid Insider Trading and abusive self-dealing in the securities of the Company. In accordance with the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (SEBI PIT Regulations), the Company endeavors to preserve the confidentiality and prevent misuse of unpublished price sensitive information (UPSI). The Company has formulated Code of Conduct-Prevention of Insider Trading Policy with an objective to prevent misuse of any UPSI and prohibit any insider trading activity, in order to protect the interest of the Shareholders at large. Mr. Sharad Pathak, Company Secretary and Chief Compliance Officer
of the Company is authorized to act as Compliance Officer under the Code.
Further the Company has maintained a Structural Digital Database (SDD) pursuant to provisions of regulations 3 (5) and (6) of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015.
PARTICULARS OF HOLDING/SUBSIDIARY/ ASSOCIATE COMPANIES
Your Company do not have any Holding Company or Joint Ventures.
Lake District Holdings Limited holds substantial interest in the Company.
Your Company has one unlisted wholly owned subsidiary named âAavas Finserv Limitedâ which is under Voluntary Liquidation as on March 31, 2024.
In pursuance of Provisions of Section 129(3) of the Act, Company has prepared Consolidated Financial Statements of the Company, which forms part of this Annual Report. Further, a Statement containing salient features of Financial Statement 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 âAnnexure-6â 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 at https://www.aavas.in/ investor-relations/annual-reports. Further, the Financial Statements of the subsidiary have also been placed on our website at: https://www.aavas.in/investor-relations/ financial-subsidiary.
Your Company always proactively engaged in strengthening investors trust through fully embracing innovations and it is using technology wisely to sustain performance today, but also leverages it for future growth. Your Company is always looking ahead and take on a holistic perspective of the operating landscape.
Your Company has deeply embraced new digital technologies (mobile applications, artificial intelligence (AI), Concept of Accounts Aggregator) to accelerate the launch of services to accelerate growth for better investor engagement and to increase their trust towards Companyâs operations.
In connection with the above, your Company has dedicated investor relation team, which helps the Company to communicate with its investors through Information
session on Financial Results for institutional investors and analysts via telephone conference, meetings with investors/ analysts and discussions between Fund Managers and Management. Investor relation team participate in investor relations conferences each quarter in an effort to foster better relationships with investors. Presentations given by investors to fund managers, analysts and investors are posted on the Company website and are also transmitted to stock exchanges. Each quarter, the audio and video recordings of these meetings, along with their transcripts, are posted on the website at https://www.aavas.in/ investor-relations/investor-intimation. Investor relation conferences are a great way to interact with investors and foster better relationships.
PARTICULAR OF EMPLOYEE REMUNERATION AND RELATED DISCLOSURES
Disclosures with respect to the remuneration of Directors and employees as required under Section 197(12) of the Act and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (Rules) and in accordance with the provisions of Rule 5(2) of the above mentioned rules, the names and particulars of the top ten employees in terms of remuneration drawn have been appended as an âAnnexure 8â to this Report.
In terms of the provisions of Section 136(1) of the Act, the Directorsâ Report including the said annexure is being sent to all Shareholders of the Company.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company is committed to integrate social and environmental concerns in their business operations and believes that, it is our moral responsibility to give back to the community, participate in philanthropic causes, and provide positive social value and wealth to stakeholders.
As a part of Companyâs initiatives towards CSR, the Company has undertaken projects in the areas of Rural & Community Development, Promoting Education, Healthcare, Eradicating hunger, conservation, protection and amelioration of environment from over exploitation of resources.
The CSR policy of the Company relates to the activities to be undertaken by the Company, which is in accordance with the provisions of CSR under Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 and Schedule VII of the Act.
The CSR Policy is hosted on Companyâs website and can be accessed at: https://www.aavas.in/codes-and-policies and the annual report on CSR activities is furnished at âAnnexure-9â which is attached to this report.
PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars of energy conservation, technology absorption and foreign exchange earnings and outgo in terms of Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 is as follows:
|
Particular |
Remarks |
|
A) Conservation of energy |
|
|
The Steps taken / impact on conservation of energy |
The Company has implemented several measures to promote energy efficiency and sustainability. These include equipping all branches with energy-saving IT equipment, power-saving lamps and high-end copier machines. In addition, the Company is committed in minimizing its greenhouse gas (GHG) emissions by setting its GHG emission targets. The Corporate Office of the Company has been certified LEED Gold, which is a prestigious green building certification, indicating its commitment to sustainable practices. While the nature of the Company''s business involves limited resource consumption at the corporate level, the Company is dedicated to becoming technically robust and moderating resource consumption. One major initiative in this regard is the ''Gati'' project, which aims to eliminate physical documentation until a loan is sanctioned in the system. |
|
The Steps taken by the Company for utilizing alternate sources of energy |
As the nature of business of the Company is providing housing finance, the only key waste products are paper, plastic and e-waste. It is a practice adopted by the Company to engage certified e-waste handlers for disposal of e-waste. The Company spent H218.05 lakh from its total CSR budget for the FY 2023-24 towards initiatives focused on raising awareness and education on climate change, plantation, renewable energy, and green housing. These initiatives aim to promote sustainability and address environmental challenges. Green Housing Program: The Company, in partnership with the International Finance Corporation (IFC), has developed a unique idea called Green Homes. As part of the Green Affordable Housing Program, the Company provides loans for the construction of environment-friendly homes and supports its customers in building homes that are both sustainable and affordable. The Company has implemented various initiative to reduce Paper, Plastic and E-waste which includes: ¦ The Company educate its employees through internal mailer for not using Single use plastics. ¦ Go Green Initiative: The Company also launched âGo Green Initiativeâ which represents a significant stride towards leveraging cutting-edge technology to minimize paper usage within the loan processing workflow. |
|
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. |
|
Particular |
Remarks |
|
B) Technology absorption |
|
|
The efforts made towards |
FY 2023-24 has been a year of significant transformation for the Company. We have |
|
technology absorption |
successfully transitioned the entire Loan origination journey and customer service processes to Salesforce cloud platform, enabling scalability and speed. Massive training and change management drives were run to make the adoption happen at the grass root level. |
|
Successfully implemented ORACLE Fusion ERP application to transform the finance and procurement functions with strong reporting, controls and compliances. |
|
|
We have augmented the digital customer service channels with new features and capabilities including GenAI chatbots. |
|
|
The end point security system has been upgraded to a leading managed detection and response platform with 24/7 monitoring. We have adopted cloud applications and services, implemented a robust secure internet gateway and also upgraded the data leakage prevention system. |
|
|
The benefits derived like |
Customer loan app adoption has increased from 62% to 71%, and more than 99% of |
|
product improvement, |
service requests coming on the app are self-serviced. |
|
cost reduction, product development or import substitution |
37% increase in Customer service through digital channels with a significant contribution from service bots. |
|
Almost 100% of the property locations are geo-tagged. Further, 100% of the Technical, Legal and Risk Assessment Processes have been digitized including the vendors. |
|
|
We have successfully processed more than 1.6 lakhs loan application in the new Loan origination system ("LOS") in the first full year of its launch. We have integrated account aggregator system with our LOS. |
|
|
Almost 100% of vendor payments are now being processed digitally through our Oracle ERP module and also all transactions are now being automatically reconciled through the ORACLE ARCS system. |
|
|
In case of imported technology (imported during the last three years reckoned from the beginning of the Financial Year) |
|
|
a). the details of |
i. Salesforce (for LOS and CRM) |
|
technology imported |
ii. Oracle Fusion system (for Financial System and reporting) iii. ORACLE Flexcube (for LMS) iv. Mulesoft (for Integration of systems) |
|
b). the year of import |
2022-23 |
|
c). whether the |
Under implementation |
|
technology has been fully absorbed |
|
|
d). if not fully absorbed, |
NA |
|
areas where absorption has not taken place, and the reasons thereof |
|
Particular |
Remarks |
|
The expenditure incurred on Research and Development |
NA |
|
(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 H4,372.62 Lakhs. The aforesaid details are shown in the Note No. 39 of notes to the accounts, forming part of the Standalone Financial Statements. The Members are requested to refer to this Note. |
ENVIRONMENT HEALTH AND SAFETY (EHS) PROTECTION
Your Company is committed to high Environmental and Social (ES) Standards in its business and will continue to develop its investment decision-making processes and procedures so as to reflect the requirements of Indian ES legislation, as well as relevant international standards (specifically IFC Performance Standards) as applicable to our housing finance and MSME business lines. The Company always ensures that healthy and safe working environment is provided to all employees of the Company.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORTING
As per Regulation 34(2)(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the top 1000 listed entities based on market capitalization, shall attach a Business Responsibility and Sustainability Report (âBRSRâ) with the Annual report describing the initiatives taken by the listed entity from an environmental, social and governance perspective.
Pursuant to the SEBI Circular SEBI/HO/CFD/CFD-SEC-2/P/CIR/2023/122 dated July 12, 2023 related to BRSR Core -Framework for assurance, the top 150 listed entities (by market capitalization) shall make disclosures as per the updated BRSR format, as part of their Annual Report.
However, being a top 500 listed entity and adhering to good Corporate Governance the Company has voluntarily submitted Business Responsibility and Sustainability Report (BRSR) Core for the Financial Year 2023-24, in addition to publishing Annual BRSR as per the latest Regulation.
This framework guides us to reinforce principles of ESG in all aspects of the Companyâs business and focus its efforts on responsible products, improving efficiency, people power and environmental consciousness aligned with the expectations stated in the Business Responsibility and Sustainability Report (BRSR).
During the Year under review, recognizing the significance of ESG (Environmental, Social, and Governance), the Company designated CSR Committee to oversee the
implementation of the Principles and Policies of Business Responsibility and Sustainability Report and reconstituted its CSR Committee as the CSR & ESG Committee. The Company has developed ESG Policy & set ESG targets to align with the growing importance of ESG, showcasing its dedication to sustainability, risk management, and longterm value creation for stakeholders.
The Business Responsibility and Sustainability Report in updated format describing the initiatives taken by the Company from an environmental, social and governance perspective along with Limited Assurance Statement from an Independent Auditor forms part of this Annual Report as âAnnexure-11â.
Pursuant to the provisions of Section 134(3) and Section 92(3) of the Act, read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014 the Annual Return in form MGT-7 as on March 31, 2024 is available on the website of the Company and can be accessed at https:// www.aavas.in/investor-relations/annual-reports.
ADDITIONAL DISCLOSURES UNDER COMPANIES (ACCOUNTS) RULES, 2014
a. The details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the Financial Year:
During the Financial Year under review, the Company neither filed any application nor had any proceedings pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016), therefore, it is not applicable to the Company.
b. The details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereto:
During the Financial Year under review, it is not applicable to the Company.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Since the Company is an HFC, 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.
However, the details of loans, guarantees, and investments made as required under the provisions of Section 186 of the Act and the rules made thereunder are set out in the Notes to the Standalone Financial Statements of the Company.
CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
In accordance with the provisions of Section 188 of the Act and rules made thereunder, all related party transactions entered during Financial Year 2023-24 were on an armâs length basis and in the ordinary course of business under the Act and were not material under the SEBI LODR Regulations, 2015 the details of which are included in the notes forming part of the Financial Statements.
T he details as required to be provided under Section 134(3) (h) of the Act are disclosed in Form AOC-2 as âAnnexure-7â which forms part of this Report.
A list of all related party transactions is placed before the Audit Committee as well as the Board. The Audit Committee has granted omnibus approval for related party transactions as per the provisions of the Act and the SEBI LODR Regulations, 2015.
Further, as required by SEBI and RBI Master Directions, âPolicy on transactions with Related Partiesâ is given as âAnnexure-10â to this Report and can be accessed on the website of the Company at https://www.aavas.in/img/pdf/ Policy-on-Materiality-of-related-party-transactions-and-on-dealing-with-related-party-transactions.pdf.
INTERNAL GUIDELINES ON CORPORATE GOVERNANCE
Your Company is committed towards achieving the highest standards of Corporate Governance right from its establishment by staying true to its core values of Customer first, transparency, fairness in action, accountability, integrity and equity in all its engagements. The Companyâs Corporate Governance framework ensures that it makes timely and appropriate disclosures and shares factual and accurate information to its stakeholders so as to make an informed decision.
The Company has approved and adopted the Internal Guidelines on Corporate Governance. The Internal Guidelines on Corporate Governance has been framed in accordance with the Act, SEBI (LODR) Regulations, 2015, RBI Master Directions, 2021 and other applicable rules and regulations.
The guideline is available on the website of the Company and can be accessed at https://www.aavas.in/img/pdf/ internal-guidelines-on-corporate-governance.pdf.
DIRECTORSâ 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 had prepared the annual accounts on a going concern basis;
e) 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; and
f) 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.
BUSINESS OVERVIEW & FUTURE OUTLOOK
A detailed business review & future outlook of the Company is appended in the Management Discussion and Analysis Section of the Annual Report.
ACKNOWLEDGEMENTS AND APPRECIATION
The Board of Directors extends their gratitude for the valuable guidance and support received from all stakeholders of the Company, including the Reserve Bank of India, National Housing Bank, Ministry of Corporate Affairs, Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India, Stock Exchanges i.e BSE and NSE, and other regulatory authorities. They also acknowledge the support of bankers, lenders, financial institutions, members, credit rating agencies, National Securities Depository Limited, Central
Depository Services (India) Limited, NSE IFSC Limited and customers of the Company for their continued trust and support.
The Directors wish to express their appreciation to Kedaara Capital and Partners Group for their invaluable and ongoing support and guidance.
Additionally, the Directors commend the commitment demonstrated by all executives, officers, staff and the Senior Management team of the Company, which contributed to the excellent performance of the Company during the Financial Year.
Mar 31, 2023
The Board of Directors (âthe Boardâ) have pleasure in presenting the 13th Annual Report on the operational and financial performance of Aavas Financiers Limited (âthe Companyâ or âAavasâ) along with the Audited Standalone and Consolidated Financial Statements for the Financial Year ended March 31, 2023.
Your Company has witnessed growth and consistent performance during the Financial Year under review. Your Company is a leading affordable Housing Finance Company in India. The Company caters to the needs of customers belonging to low and middle income segment in semi-urban and rural areas and primarily in the un-served and un-reached markets.
The standalone financial performance for the Financial Year ended March 31, 2023 and a comparison with the previous year is summarized below:
|
(Hin crore) |
|||
|
Particulars |
For the Year ended |
For the Year ended |
|
|
March 31, 2023 |
March 31, 2022 |
||
|
A |
Total Income |
1,610.15 |
1,305.56 |
|
Less: |
|||
|
- Total Expenditure before Depreciation & Amortization and provision |
(1,020.01) |
(804.34) |
|
|
- Impairment on financial instruments |
(12.42) |
(22.61) |
|
|
- Depreciation & Amortization |
(28.72) |
(23.76) |
|
|
B |
Total Expenses |
(1,061.15) |
(850.70) |
|
C |
Profit Before Tax (A-B) |
548.99 |
454.86 |
|
D |
Less: Provision for Taxations (Net of Deferred Tax) |
(118.92) |
(98.06) |
|
E |
Profit After Tax (C-D) |
430.07 |
356.80 |
|
F |
Add: Other Comprehensive Income (Net of Tax) |
(1.79) |
0.71 |
|
G |
Total Comprehensive Income (E F) |
428.28 |
357.51 |
|
Transfer to Statutory Reserve |
85.66 |
71.50 |
|
Your Company has made a positive impact on the lives of countless customers in its 12 years of journey by providing housing finance to the customers and enabling them to own a home. Our distribution has been further strengthened to 346 branches across 13 States.
The key financial performance indicators for the Financial Year are as follows:
⢠Total Income for the Financial Year 2022-23 increased to H1,610.15 crore vis-a-vis H1,305.56 crore for the Financial Year 2021-22.
⢠Profit Before Tax for the Financial Year 2022-23 increased to H548.99 crore vis-a-vis H454.86 crore for the Financial Year 2021-22.
⢠Profit After Tax for the Financial Year 2022-23 increased to H430.07 crore vis-a-vis H356.80 crore for the Financial Year 2021-22.
⢠The Assets Under Management (AUM) as at March 31, 2023 amounted to H14,166.66 crore vis-a-vis H11,350.21 crore in the previous year; a year-on-year growth of 25%.
Further, during the Financial Year under review, there was no
change in nature of business of the Company.
AAVAS 3.0 Building a Lasting Institution
Your Company started its journey as Au Housing Finance Private Limited in 2011 as a subsidiary of Au Financiers India Limited (now AU small Finance Bank). It was the first phase of the Companyâs journey where the proof of concept of affordable housing model was being tested (Aavas 1.0). Your Company was renamed as Aavas Financiers Limited in 2017 and since evolved into a standalone business under the ownership of Kedaara Capital and Partners Group with a professional management team and experienced Board that subsequently went public in 2018 (Aavas 2.0). Your Company is now continuing its evolution and has embarked on the journey to become Indiaâs most trusted affordable housing finance player led by people and technology and emerge victorious in a highly competitive market, while maintaining the entrepreneurial spirit. The aim is to leverage technology, digital and analytics to drive growth and operating leverage. The Companyâs investments in technology is expected to help the business deliver sustainable quality growth and superior customer experience (Aavas 3.0).
The Company continues to build Indiaâs most trusted affordable housing finance business with proactive investments in people, processes and positions. The Companyâs investments in futuristic technologies and analytics is expected to help the business deliver sustainable growth and enriched customer outcomes.
Aavas 3.0 is driven by a combination of organic growth and desire to attain scale. Aavas has established competence in customer acquisition and performance and going ahead, intends to deepen market penetration by entering diverse markets and segments.
Considering the capital intensive nature of the Company, your Directors felt it prudent to retain the earnings for the Financial Year under review to be ploughed back in business, which shall result in further augmentation of the Companyâs growth and Shareholdersâ wealth. Accordingly, no dividend has been recommended for the Financial Year ended March 31, 2023.
In terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, (âSEBI LODR Regulationsâ) and Master Direction - Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021 (âRBI Master Directionsâ) the Board of Directors of the Company (the âBoardâ) formulated and adopted the Dividend Distribution Policy (âPolicyâ). The Policy is available on the website of the Company at https://www.aavas.in/img/pdf/ dividend-distribution-policy.pdf and forms part of this Report as âAnnexure-5â.
CAPITAL STRUCTURE Authorized Capital:
There was no change in the Authorized Capital of the Company during the Financial Year under review. The Authorized Capital of the Company is H85,00,00,000/- (Rupees eighty five crore only) divided into 8,50,00,000 (Eight crore fifty lakh) Equity Shares of H10/-(Rupees ten only) each.
Issued, Subscribed & Paid up Capital:
The issued, subscribed and paid up Capital of the Company as on March 31, 2023 stood at H79,05,68,740 (Rupees seventy nine crore five lakh sixty eight thousand seven hundred and forty only) consisting of 7,90,56,874 (Seven crore ninety lakh fifty six thousand eight hundred and seventy four) Equity Shares of H10/- (Rupees ten only) each.
During the Financial Year under review, the paid-up Equity Share Capital of the Company has been increased on account of issuance and allotment of 1,20,423 Equity Shares of H10/-(Rupees ten only) each pursuant to the exercise of stock options by the eligible employees of the Company under Employee Stock Option Plans (ESOPs) of the Company.
SPECIAL RESERVE (UNDER SECTION 29C OF THE NHB ACT, 1987)
Your Company has transferred H85.66 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.
Your Company is engaged in carrying out the business of housing finance activities in India. The Companyâs lending operations remained strong with the growing demand for housing loans. Your Company adopted contiguous on-ground expansion across regions; as of March 31, 2023, the Company conducted operations through 346 branches in 13 states.
The Company chose to serve the growing needs of housing finance customers in the low and middle income segments of sub-urban and rural India, going contrary to the industryâs preference to serve the customers in the metro cities and urban regions of the country.
The details with respect to operating and financial performance of your Company has been covered in the Management Discussion and Analysis Report (MDAR), which forms part of this Annual Report.
During the Financial Year under review, your Company delivered a resilient performance, which is reflected in the following financial snapshot.
Total Income grew by 23% to H1,610.15 crore for the Financial Year ended March 31, 2023 as compared to H1,305.56 crore for the previous Financial Year. Profit Before Tax (PBT) was 21% higher at H548.99 crore as compared to H454.86 crore for the previous Financial Year.
Profit After Tax (PAT) was 21% higher at H430.07 crore as compared to H356.80 crore for the previous Financial Year.
During the Financial Year under review, your Company has sanctioned housing loans for H5,168.83 crore as compared to H3,762.09 crore in the previous Financial Year with an annual growth of 37%. The cumulative loan sanctions since inception of your Company stood at H23,390.06 crore as at March 31, 2023. Your Company has not granted any loan against the collateral of Gold Jewellery.
During the Financial Year under review, your Company disbursed housing loans for H5,024.54 crore as compared to H3,602.24 crore in the previous Financial Year registering an annual growth of 39%. The cumulative loan disbursement since inception as at March 31, 2023 was H22,381.55 crore.
The AUM of your Company stood at H14,166.66 crore (including assignment of H2,757.23 crore) as at March 31, 2023 as against H11,350.21 crore (including assignment of H2,343.78 crore) in the previous Financial Year, with a growth of 25%.
As of March 31, 2023, the average size of loan sanctioned was H8.90 lakh and average tenure was 198.2 months in the AUM (on origination basis).
Pradhan Mantri Awas Yojna (PMAY) Scheme
The Company has received subsidy under PMAY-CLSS worth H284.57 crore towards 13,518 beneficiaries during the Financial Year and the same has been credited to the respective customersâ loan accounts.
Your Company is in adherence to the provisions of Indian Accounting Standards (âInd ASâ) with respect to computation of Stage-3 Assets (NPA). Your Companyâs 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. Using a pro-active collection and recovery management system supported by analytical decision making and consistent engagement with
the customers during the period, the GNPA and NNPA as at March 31, 2023 were 0.92% and 0.68% respectively (against
0.99% and 0.77% respectively in the previous Financial Year).
Your Companyâs Capital Adequacy Ratio as at March 31, 2023 was 46.96% (previous Financial Year 51.93%) which is far above the minimum required level of 15% as per the provisions of the RBI Master Directions showing strong position of the Company.
The Credit Rating represent the highest degree of safety regarding timely servicing of financial obligations.
Your Companyâs financial prudence is reflected in the strong credit rating assigned by rating agencies. The ratings also derive strength from adequate risk management and control systems put in place by the Company, pristine asset quality and strong corporate governance.
An upgrade in the credit rating signifies a significant improvement in the creditworthiness of the Company. Considering the steady growth, strong profitability and robust balance sheet, rating agencies upgraded the credit rating of the Company. During the Financial Year under review, the long-term credit rating of the Company has been upgraded from AA-/Positive to AA/Stable by both CARE Ratings and ICRA Limited. Outlook on both ratings is Stable. The Shortterm credit rating is reaffirmed to A1 by ICRA, CARE and India Ratings.
For more details on credit ratings, kindly refer Corporate Governance Report forming part of this report.
REGULATORY & STATUTORY COMPLIANCES
A crucial element in business and corporate management is compliance of applicable statutory provisions and adherence of a business to regulations and laws. Keeping that in view the Company has complied with all the guidelines, circular, notification and directions issued by RBI and NHB from time to time. The Company also places before the Board of Directors at regular intervals all such circulars and notifications to keep the Board informed and report on actions initiated on the same. The Company also complies with the provisions of the Companies Act, 2013 including the Secretarial Standards issued by ICSI, SEBI LODR Regulations, SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021, Income Tax Act 1961, and all other applicable statutory requirements.
Scale Based Regulation (SBR): A Revised Regulatory Framework for NBFCs
The Reserve Bank of India in 2021 issued Scale Based Regulation (SBR) a revised regulatory framework for NBFCâs which is applicable to your Company being a NBFC HFC-category falling under middle layer.
The SBR framework encompasses different facets of regulation of NBFCs covering capital requirements, governance standards, prudential regulation, etc., the RBI decided to first issue an integrated regulatory framework for NBFCs under SBR providing a holistic view of the SBR structure and set of fresh regulations being introduced in respective timelines.
With respect to above, the RBI has issued various circulars/ guidelines in the Financial Year 2021-22 and 2022-23, which were duly implemented by the Company including formation of policies, implementing procedures and to review their outcome on periodic basis.
Your Company being a non-deposit taking Housing Finance 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. Therefore, the disclosure in terms of RBI Master Directions is not required.
⢠Felicitated by Honâble Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman for Best NBFC for the year 2020-21 in FE Indiaâs Best Banks Awards.
⢠Felicitated with the Economic Times Best BFSI Brands 2023.
⢠Pioneer in Self Built Green Housing-80 EDGE Certified Green Homes by Sintali, UK based certifier.
⢠Head Office of the Company certified with LEED Gold Certification.
Your Company has in place a borrowing policy framework to cater its borrowings needs. The objective of the policy is to diversify the liability portfolio of the Company and to reduce risk of overdependence on any particular lenders and instrument. The Company has diverse set of lenders/investors that includes public sector bank, private sector bank, National Housing Bank and other financial institutions.
Your Company has vide Special Resolution passed on July 21, 2022, under Section 180 (1) (c) of the Companies Act, 2013, 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 H17,000 crore (Rupees seventeen thousand crore only) and the total amount so borrowed shall remain within the limits as prescribed by RBI.
The Weighted Average Borrowing Cost as at March 31, 2023 was 7.61% (including Securitization/ Assignment) as against 6.88% as at the end of the previous Financial Year. As at March 31, 2023, your Companyâs sources of funding were primarily in the form of Long Term Loans from Banks and Financial Institutions (45%), followed by Securitization/Direct assignment (22%), NHB Refinance (20.8%), Debt capital market (12.2%).
Your Company has a comfortable liquidity position as on March 31, 2023 with Rs. 1381.6 crore (including FDâs). Further, the Liquidity Coverage Ratio (âLCRâ) for the Financial Year ended March 31, 2023 was 212.16% as against the regulatory requirement of 60%.
Term Loans from Banks and Financial Institutions
The Company, during the Financial Year, received aggregate fresh loan sanctions amounting to H3,200 crore and has availed loans aggregating to H2,765 crore. The outstanding term loans from Banks and Financial Institutions as at March 31, 2023 were H5,627.34 crore (excluding PTC and CC) with average tenure of 9.23 years.
Securitization/Assignment of Loan Portfolio
Your Company has actively tapped Securitization/Direct Assignment market, which has enabled it to create liquidity, diversify liability profile and minimizing asset liability mismatches.
During the Financial Year under review, your Company received purchase consideration of H954 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 were 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 fresh sanction of refinance assistance of H900 crore under the NHB refinance scheme. Your Company availed funds of H1,044 crore under various Refinance Schemes such as for Affordable Housing Fund,
Regular Refinance Scheme and Special Refinance Facility. Total outstanding refinance at the end of the current Financial Year stood at H2,603 crore.
Non-Convertible Debentures (NCDs)
Details of Non-convertible debentures are as following:
I. Multilateral/Development Financial Institutions
As on March 31, 2023, the Companyâs outstanding NCDs stood at H683.14 crore as compared to H878.9 crore as on March 31, 2022.
II. Domestic Financial Institutions
As on March 31, 2023, the Companyâs outstanding NCDs from Domestic Financial Institutions stood at H123.9 crore (including subordinate debt of H24.9 crore) as compared to H123.9 crore (including subordinate debt of H 24.9 crore) as on March 31, 2022.
III. Banks
As on March 31, 2023, the Companyâs outstanding NCDs from Banks stood at H209.8 crore (including subordinate debt of H74.9 crore) as compared to H249.8 crore (including subordinate debt of H74.9 crore) as on March 31, 2022.
Your Company has not issued any Commercial Paper & Short Term Instrument during the Financial Year 202223 and as on March 31, 2023, the Companyâs Commercial Paper outstanding is NIL.
Further, the Company has not issued any NCD during the Financial Year 2022-23.
Rupee Denominated External Commercial Borrowing
As on March 31, 2023 the outstanding balance of Rupee Denominated External Commercial Bond stood at H507.5 crore (including outstanding balance of social masala bond of H357.9 crore).
Further, the interest on Non-Convertible Debentures and Masala Bonds issued on private placement basis were paid by the Company on their respective due dates and there was no instance of interest amount not claimed by the investors or not paid by the Company.
Your Company, being listed HFC, is exempted from the requirement of creating Debenture Redemption Reserve (DRR) on privately placed debentures. Therefore, your Company has not created DRR. Further the requirement to invest or deposit a sum of not less than 15% of the amount of debentures which are maturing during the Financial Year ending on March 31 of the next year as provided under Rule 18 of the Companies (Share Capital and Debentures) Rules, 2014 has been done away for listed companies vide notification of Ministry of Corporate Affairs (âMCAâ) dated June 05, 2020.
DISCLOSURE UNDER CHAPTER XI-GUIDELINES ON PRIVATE PLACEMENT OF NON-CONVERTIBLE DEBENTURES (NCDs) OF RBI MASTER DIRECTIONS:
(i) The total number of NCDs 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: Nil
(ii) The total amount in respect of such debentures remaining unclaimed or unpaid beyond the date referred to in Paragraph (i) as aforesaid: Nil
DEBENTURE TRUSTEE
The Company has appointed IDBI Trusteeship Services Limited as the Debenture Trustee for the benefit of the debenture holders. The details of Debenture Trustee are available on the Companyâs website i.e. https://www.aavas.in/ details-of-debenture-trustee-rta-and-grievance.
BRANCH EXPANSION
The Company reinforced its go-to-market by setting up branches across India. The Company engaged in contiguous on ground expansion across regions. As of March 31, 2023, the Company conducted operations through 346 branches covering 13 states, comprising Rajasthan, Maharashtra, Gujarat, Madhya Pradesh, Haryana, Uttar Pradesh, Chhattisgarh, Delhi, Punjab, Uttarakhand, Himachal Pradesh, Karnataka and Odisha. The Company added 32 branches in Financial Year 2022-23.
Your Company has its Registered Office in Jaipur, Rajasthan and its branch network as on March 31, 2023 vis-a-vis the previous Financial Year is detailed hereunder:
|
State |
Branches |
Branches |
|
(As on March |
(As on March |
|
|
31, 2023) |
31, 2022) |
|
|
Rajasthan |
102 |
99 |
|
Maharashtra |
48 |
45 |
|
Madhya Pradesh |
49 |
45 |
|
Gujarat |
44 |
42 |
|
Uttar Pradesh |
27 |
24 |
|
Haryana |
17 |
17 |
|
Karnataka |
24 |
11 |
|
Uttarakhand |
9 |
9 |
|
Chhattisgarh |
9 |
8 |
|
Delhi |
4 |
4 |
|
Himachal Pradesh |
4 |
4 |
|
Odisha |
6 |
4 |
|
Punjab |
3 |
2 |
|
Total number of branches |
346 |
314 |
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The composition of the Board is in accordance with Section 149 of the Act and Regulation 17 of SEBI LODR Regulations with an appropriate combination of Executive, Non-Executive and Independent Directors.
The Board of Directors of the Company plays a crucial role in overseeing how the management serves the short and long-term interests of stakeholders. This belief is reflected in Aavas governance practices, under which the Company strives to maintain an effective, informed and independent Board.
The Members of the Companyâs Board of Directors are eminent persons of proven competence and integrity. Non-Executive Directors, including Independent Directors, play a critical role in imparting value to the Board processes by bringing an independent judgment in the areas of strategy, performance, resource management, financial reporting, the overall standard of Companyâs conducts etc.
The Board of the Company comprises of 9 (Nine) Directors, consisting of 3 (Three) Independent Directors (including 2 (Two) Women Directors), 5 (Five) Non-Executive Nominee Directors and 1 (One) Executive Director-Managing Director as on March 31, 2023 who bring in a wide range of skills and experience to the Board.
The composition of Board of the Company is as under:
|
Name of the Director |
Designation |
DIN |
|
Mr. Sandeep Tandon |
Chairperson and Independent Director |
00054553 |
|
Mr. Sushil Kumar Agarwal* |
Managing Director |
03154532 |
|
Mr. Sachinderpalsingh Jitendrasingh Bhinder** |
Managing Director and CEO |
08697657 |
|
Mrs. Kalpana Iyer |
Independent Director |
01874130 |
|
Mrs. Soumya Rajan |
Independent Director |
03579199 |
|
Mr. Ramachandra Kasargod Kamath |
Non-Executive Nominee Director |
01715073 |
|
Mr. Vivek Vig |
Non-Executive Nominee Director |
01117418 |
|
Mr. Nishant Sharma |
Promoter Nominee Director |
03117012 |
|
Mr. Manas Tandon |
Promoter Nominee Director |
05254602 |
|
Mr. Kartikeya Dhruv Kaji |
Promoter Nominee Director |
07641723 |
âResigned w.e.f. May 03, 2023
** appointed as CEO w.e.f February 02, 2023 and Managing Director w.e.f. May 03, 2023 (MD and CEO).
The Independent Directors have confirmed that they satisfy the criteria prescribed for Independent Directors as stipulated in the provisions of the Section 149(6) of the Act and Regulation 16(1)(b) & 25 of SEBI LODR Regulations. The names of all the Independent Directors of the Company have been included in the Independent Directorâs databank maintained by Indian Institute of Corporate Affairs (âIICAâ). The Company has obtained declaration of independence from all the Independent Directors of the Company. 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 Companies Act, 2013 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 Securities Exchange Board of India (âSEBIâ)/Ministry of Corporate Affairs (âMCAâ) or any such statutory authority. The same forms part of this Annual Report as âAnnexure-1â.
DISCLOSURE UNDER SECTION 197(14) OF THE ACT
The Managing Director and CEO of the Company has not received any commission from the Companyâs subsidiary company.
There were 4 (four) Board meetings held during the Financial Year 2022-23. The particulars of the meetings held and attendance of the Directors in the meetings are detailed in the Corporate Governance Report, which is annexed as an integral part of this Report.
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.
The Board Evaluation is the most effective way to ensure that the Board understands its duties and to adopt effective corporate governance practices. The Board of Directors has carried out an annual evaluation of its own performance, Board Committees, and individual Directors pursuant to the provisions of the Act and SEBI LODR Regulations and as per the criteria defined in the said act and regulations.
The above criteria are broadly based on the Guidance Note on Board Evaluation issued by the SEBI on January 5, 2017, requirements of Section 178 read with Clause VII of Schedule IV of the Act and SEBI LODR Regulations.
The evaluation process is carried out through a platform called âGovevaâ which is a web based platform, to ease the process of board evaluation, to increase the efficiency and to automate report generation.
The Board and the Nomination and Remuneration Committee reviewed the performance of individual Directors on the basis of criteria such as the contribution of the individual Director to the Board and Committee meetings, leadership scale, performance, value creation, governance & compliance.
MEETING OF INDEPENDENT DIRECTORS
During the Financial Year under review, a separate Meeting of the Independent Directors was held on March 29, 2023 without the attendance of Non-Independent Directors and the Management of the Company. The Independent Director had discussed and reviewed the performance of the NonIndependent Directors and the Board as a whole, and also assessed 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.
FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS
Pursuant to Regulation 25(7) of SEBI LODR Regulations, Schedule IV to the Companies Act, 2013 (hereinafter referred as âApplicable lawsâ), the Company conducts familiarization programme for the Independent Directors, to familiarize the Independent Directors with their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc., through various programmes.
The Board is also periodically briefed on the various changes, if any, in the regulations governing the conduct of Non -Executive Directors including independent directors.
The details of the familiarization programmes have been hosted on the website of the Company and can be accessed through following link: https://www.aavas.in/img/pdf/details-of-familiarization-programme-imparted-to-independent-directors.pdf.
POLICY ON DIRECTORâS APPOINTMENT, REMUNERATION & OTHER DETAILS
The Company has in place a âPolicy on Nomination & Remuneration for Directors, Key Managerial Personnel (KMP) and Senior Managementâ, 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 their evaluation and includes other matters, as prescribed
under the provisions of Section 178 of the Companies Act, 2013 and Regulation 19 of SEBI LODR Regulations. Further, the Compensation policy of the Company is in line with the compensation guidelines issued by the Reserve Bank of India (RBI) pursuant to Scale Based Regulations.
The Remuneration paid to the Directors is in line with the Remuneration Policy of the Company. Details of Remuneration paid to all the Directors during the Financial Year 2022-23 is more particularly defined in Annual Return in form âMGT-7â as available on the website of the Company and can be accessed at https://www.aavas.in/investor-relations/annual-reports.
The Remuneration Policy is placed on the website of the Company and can be accessed at https://www.aavas.in/codes-and-policies.
The Company has the following Nine (9) 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 (AC)
2. Nomination & Remuneration Committee (NRC)
3. Stakeholders Relationship Committee (SRC)
4. Corporate Social Responsibility Committee (CSR)
5. Risk Management Committee (RMC)
6. Asset Liability Management Committee (ALCO)
7. Information Technology (IT) Strategy Committee
8. Customer Service & Grievance Redressal Committee (CS&GR)
9. Executive Committee (EC)
During the Financial Year under review, all 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 as âAnnexure-2â.
EMPLOYEE STOCK OPTION (ESOP) SCHEMES
Employee Stock Options have been recognised as an effective instrument to attract talent and align the interest of employees with that of the Company, providing an opportunity to the employees to share in the growth of the Company and to create long term wealth in the hands of employees, thereby acting as a retention tool.
ESOP 2016
Pursuant to the approval accorded by the Shareholders on February 23, 2017 the Company has approved and adopted
Employee Stock Option Plan for Employees-2016 (âESOP-2016-Iâ).
During the Financial Year under review, the company made grant aggregating to 1,25,000 options on March 30, 2023 under ESOP-2016-I.
During the Financial Year under review, âEquity Stock Option Plan for Employees 2022â (âESOP-2022â) has been approved
by Members in the 12th AGM of the Company held on July 21, 2022.
The ESOP-2022 empowers the Board and Nomination & Remuneration Committee to execute the scheme.
During the Financial Year under review, there have been no changes in the scheme.
All the ESOP plans of the Company are in compliance with the provisions of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (âSEBI SBEB and Sweat Equity Regulationsâ) as amended from time to time.
The Nomination & Remuneration Committee monitors the ESOP Schemes in compliance with the Act, SEBI SBEB and Sweat Equity Regulations and SEBI LODR Regulations.
A Certificate from Secretarial Auditors of the Company, confirming that the above ESOP Schemes have been implemented in accordance with the SEBI SBEB and Sweat Equity Regulations as amended from time to time and are as per the resolutions passed by the Members of the Company will be available for the inspection of the Members of the Company.
Disclosure on various plans, details of options granted, shares allotted upon exercise, etc. as required under SEBI SBEB and Sweat Equity Regulations and Companies (Share Capital and Debentures) Rules, 2014 is available on the Companyâs website at https://www.aavas.in/investor-relations/annual-reports.
AUDITORSStatutory Auditors and Auditorsâ Report
As per Section 139 of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, the Members of the Company approved the appointment of M/s Walker Chandiok & Co LLP, Chartered Accountants (Firmâs Registration No. 001076N/N500013) as the Statutory Auditors of the Company for a period of 3 (three) consecutive years to hold office with effect from December 02, 2021 until the conclusion of the 14th AGM of the Company to be held in the calendar year 2024. The Company has received certificate from the said auditors that they are not disqualified and are eligible to hold the office as Auditors of the Company.
The Statutory Auditors have not made any adverse comments or given any qualification, reservation or adverse remarks or disclaimer in their Audit Reports on the Financial Statements both standalone and consolidated for the Financial Year 202223 and the Reports are self-explanatory. The said Auditorsâ
Reports for the Financial Year ended March 31, 2023 on the Financial Statements of the Company forms part of this Annual Report.
Further, the Statutory 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. Chandrasekaran Associates, Practicing Company Secretaries (Firm Registration No: P1988DE002500) were appointed as Secretarial Auditors to conduct the Secretarial Audit of the Company for the Financial Year 2022-23. The Report of Secretarial Auditors in form MR-3 for the Financial Year 2022-23 is annexed to this Report as âAnnexure-3â.
The Report of Secretarial Auditors is self-explanatory and there were no observations or qualifications or adverse remarks in their Report.
In addition to the above and pursuant to regulation 24A of SEBI LODR Regulations, a report on Annual Secretarial Compliance issued by M/s. Chandrasekaran Associates, Practicing Company Secretaries for the Financial Year 202223 has been submitted with the Stock Exchanges and forms part of this report as âAnnexure-4â. There are no observations, or qualifications or adverse remarks in the report.
Information System Audit (IS Audit)
The objective of IS Audit is to provide an insight on the effectiveness of controls that are in place to ensure confidentiality, integrity and availability of System Application and Entityâs IT infrastructure. IS Audit identify risks and methods to mitigate risk arising out of System Application and IT infrastructure such as server architecture, local and wide area networks, physical and information security, telecommunications etc.
INTERNAL AUDIT & INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY
The Reserve Bank of India has stipulated that all deposit taking and non-deposit taking HFCs are mandated to have a RBIA framework in place by June 30, 2022. The Company being a Non-Deposit taking HFC, the circular of RBIA becomes applicable accordingly, the Company has put in place RBIA framework within the timeline and has developed an in house team and appointed a Head of Internal Audit (HIA) to conduct audit of functional areas and operations of the Company.
The Internal Audit department is headed by the HIA who reports directly to the Audit Committee of the Board. The
primary responsibility of the HIA is to effectively manage the Internal Audit department and to ensure that it adds value to the entity and its objectives. HIA ensures compliance with the internal audit principles and standards and the entityâs independence of the Internal Audit department, its audit staff and its performance against key performance indicators, annually to the Audit Committee and the Board.
The Audit Committee reviews and evaluates adequacy and effectiveness of the Companyâs internal control environment and monitors the implementation of audit recommendations.
The Companyâs internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Companyâs internal financial control over financial reporting includes those policies and procedures that pertains to maintenance of records, provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Companyâs assets that could have a material effect on the financial statements.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS
During the year under review, there were no significant or material orders passed by the regulators or courts or tribunals against the Company nor any fine/penalty levied on the Company.
MATERIAL CHANGES/EVENTS AND COMMITMENTS, IF ANY
There are no material changes and commitments affecting the financial position of the Company, which have occurred after March 31, 2023 till the date of this report.
However, after the closure of the Financial Year 2022-23 and before the approval of this report, Mr. Sushil Kumar Agarwal resigned from the post of Managing Director w.e.f. May 03, 2023 and Mr. Sachinderpalsingh Jitendrasingh Bhinder has been appointed as the Managing Director and CEO of the Company w.e.f. May 03, 2023.
There has been no change in the nature of business of your Company.
The Company being a HFC is not required to maintain cost records as per sub-section (1) of Section 148 of the Act.
The Company has always been at the forefront in the housing finance industry in using technology to provide productivity tools to employees and field associates and to provide an integrated journey to customers for a smooth loan disbursal
experience.
In the recent past, the Company charted out a roadmap for technology led business transformation to make the Company ready for the next 10-year growth journey based on the following 3 pillars - enable sustainable growth with operating leverage, enhance technology capabilities and create a superior customer experience. Your Company has made significant progress along with the defined roadmap.
The Company wants to build a modern, innovative, and future-ready digital ecosystem to provide a 360-degree view from transaction origination to reporting. Technology is at the heart of the business transformation which is being driven at Aavas. Loan Origination System has been upgraded with Salesforce and Loan Management and Financial systems are being upgraded with ORACLE Flexcube Core banking and ORACLE Fusion ERP Applications. Using these platforms, the entire customer journeys on web/app platforms have been reimagined to create a best-in-class platform for loan disbursements. Using multiple fintech integrations, processing of the loan applications has been speeded up and cloud-based data and analytical infrastructure provide insights for further optimizations.
The Company has implemented robust cybersecurity measures and by working with IS Audit has complied with all regulations, external and internal audits and continues to monitor and update policies to remain compliant with evolving regulatory requirements.
The Company has always believed that its employees are its most valued resource and has always ensured their all-round development. Your Companyâs success depends largely upon the quality and competence of its human capital. Attracting and retaining talented professionals is therefore a key element of the Companyâs strategy and a significant source of competitive advantage. The Company invested in a technology-driven HR department workflow, supported by a well renowned HRMS software called People Strong.
Human Capital represents an aggregate statement of the competencies, knowledge and experience of the employees. Aavas provides a work culture that encourages creativity; it has a diverse workforce, which ensures integrated and sustainable growth.
The Companyâs HR culture is rooted in its ability to subvert age-old norms in a bid to enhance competitiveness. The Company always takes decisions in alignment with the
professional and personal goals of employees, achieving an ideal work-life balance and enhancing pride in association. The Companyâs permanent employee count stood at 6,034 as of March 31, 2023.
RISK MANAGEMENT FRAMEWORK
Your Company has in place a Board constituted Risk Management Committee as per the Regulation 21 of SEBI LODR Regulations and in compliance with the RBI regulations and guidelines as amended from time to time which assists the Board to establish a risk culture and risk governance framework in the Company. The details of the Committee and its terms of reference are set out in the Corporate Governance Report forming part of this Report.
The Risk Management Committee meets at least twice in the year and at such other times as the Board or Chairperson of the Committee shall require. The Committee ensure that appropriate methodology, processes and systems are in place to monitor and evaluate risks associated with the business of the Company and monitor and oversee implementation of the risk management policy, including evaluating the adequacy of risk management systems.
The Company has in place a Board approved Risk Management Policy and a Policy on Internal Capital Adequacy Assessment Process (ICAAP) pursuant to guidelines issued by RBI.
The key risks that Company is exposed to in the course of its business are Credit Risk, ALM Risk, Concentration Risk, Interest Rate Risk, Legal Risk, Reputation Risk, Technical Risk, Cybersecurity Risk, Fraud Risk, Regulatory Risk. These are measured and reported to the Risk Management Committee on a quarterly basis.
The Company has developed an institutional intelligence for underwriting methodology which is executed by qualified and experienced team hosting majority of Chartered Accountants. Legal, technical and operations risks have vendors as well as professionally qualified in-house team.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
Pursuant to Section 177(9) and (10) of the Companies Act, 2013, and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 the Company has formulated a Whistle Blower Policy for vigil mechanism of Directors and employees to report to the management about unethical behavior, fraud or violation of Companyâs Code of Conduct. The mechanism provides for adequate safeguards against victimization of employees and Directors who use such mechanism and makes provision for direct access to the chairperson of the Audit Committee in exceptional cases. None of the personnel of the Company has been denied access to the Audit Committee. The whistle blower policy is placed on the website of the Company and can be accessed at https://www. aavas.in/img/pdf/Whistle-Blower-Policy.pdf.
DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
The Company has in place a policy for prevention of sexual harassment in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act). The Company has complied with the provisions relating to constitution of Internal Complaints Committee (ICC) under the POSH Act. ICC has been set up to redress complaints received regarding sexual harassment. All employees are covered under this policy. During the year, the Company conducted workshops for employees creating awareness about POSH Act.
The details of complaints received and disposed during the Financial Year are provided in Corporate Governance Report forming part of this report.
CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING IN COMPANYâS SECURITIES
In accordance with the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 as amended from time to time, the Company has complied and formulated a Code of Conduct for Prevention of Insider Trading Policy, which prohibits trading in shares of the Company by insiders while in possession of unpublished price sensitive information in relation to the Company. 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.
Further the Company has maintained a Structural Digital Database (SDD) pursuant to provisions of regulations 3 (5) and (6) of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015.
PARTICULARS OF HOLDING/SUBSIDIARY/ ASSOCIATE COMPANIES
Your Company doesnât have any Holding Company or Joint Ventures.
The Shareholder having the substantial interest in the Company is Lake District Holdings Limited.
As on March 31, 2023, your Company has one unlisted wholly owned subsidiary named âAavas Finserv Limitedâ. 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 Statement 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 âAnnexure-6â 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 at https://www.aavas.in/investor-relations/annual-reports. Further, the Financial Statements of the subsidiary have also been placed on our website at https:// www.aavas.in/investor-relations/financial-subsidiary.
Your Company always believes in leading from the front with emerging best practices in Investor Relations and building a relationship of mutual understanding and trust.
The Company communicates with its investors through meetings with analysts and discussions between Fund Managers and Management. The Company also participates at investor conferences from time to time. All interactions with institutional investors, fund managers and analysts are based on generally available information that is accessible to the public on a non-discriminatory basis. The presentations made to analysts and fund managers are placed on the Companyâs website and are also submitted to Stock Exchanges. The transcripts of such meetings as well as the audio/video recordings are uploaded on the website.
Quarterly and Annual Earnings calls are scheduled through structured conference calls/weblinks to keep various stakeholders informed about the past performance and outlook of the industry, especially those having a bearing on the Company.
The investor relation section on Companyâs website at www. aavas.in contains all important public domain information including Financial Results, various policies framed/approved by the Board, presentations made to the analysts and institutional investors, schedule and transcripts of earnings call with investors, matters concerning the shareholders, details of the contact persons, etc.
PARTICULAR OF EMPLOYEE REMUNERATION
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 âAnnexure-8â to the Directorsâ Report.
In accordance with the provisions of Rule 5(2) of the abovementioned rules, the names and particulars of the top ten employees in terms of remuneration drawn are set out in the âAnnexure-8â to this report. In terms of the provisions of Section 136(1) of the Act, the Directorsâ Report including the said annexure is being sent to all Shareholders of the Company.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Companyâs initiatives in society are focused on the realisation of the twin goals of Stakeholdersâ Value Enhancement and societal value creation in a mutually reinforcing and synergistic manner. The Company is mindful of the needs of the communities and strives to make a positive difference in the society. Your Companyâs commitment to the society is sincere and longstanding.
The Vision of Company is to enhance value creation in the society and in the community in which it operates, through its services, conduct and CSR initiatives, to promote sustained growth for the society and community, in fulfillment of its role as a socially responsible corporate, with environmental concern.
The Annual Report on CSR Activities, is annexed as âAnnexure-9â to this report.
ENVIRONMENT HEALTH AND SAFETY (EHS) PROTECTION
Your Company is committed to high Environmental and Social (ES) Standards in its business and will continue to develop its investment decision making processes and procedures so as to reflect the requirements of Indian ES legislation, as well as relevant international standards (specifically IFC Performance Standards) as applicable to our housing finance and MSME business lines. The Company always ensures that healthy and safe working environment is provided to all employees of the Company.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORTING
As per Regulation 34(2)(f) of SEBI LODR Regulations, the top 1000 (one thousand) listed entities based on market capitalization, shall attach a Business Responsibility Report with the Annual report describing the initiatives taken by the listed entity from an environmental, social and governance perspective. Provided that the requirement of submitting a Business Responsibility Report shall be discontinued after the Financial Year 2021-22 and with effect from the Financial Year 2022-23, the top one thousand listed entities based on
market capitalization shall submit a Business Responsibility and Sustainability Report.
Your Company, being a top thousand listed entity as per Market Capitalization and adhering to good Corporate Governance and for the amelioration of the society in which it operates the Business Responsibility and Sustainability Report (BRSR) describing the initiatives taken by the Company from an environmental, social and governance perspective, forms part of this Annual Report as âAnnexure-11â.
Pursuant to the provisions of Section 134(3) and Section 92(3) of the Act, read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014 the Annual Return in form MGT-7 as on March 31, 2023 is available on the website of the Company and can be accessed at https://www.aavas.in/ investor-relations/annual-reports.
ADDITIONAL DISCLOSURES UNDER COMPANIES (ACCOUNTS) RULES, 2014
a. The details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the Financial Year:
During the Financial Year under review, the Company made neither any application nor any proceeding is pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016), therefore, it is not applicable to the Company.
b. The details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof.
During the Financial Year under review, it is not applicable to the Company.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Since the Company is an HFC, 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.
However, the details of loans, guarantees, and investments made as required under the provisions of Section 186 of the Act and the rules made thereunder are set out in the Notes to the Standalone Financial Statements of the Company.
CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
In accordance with the provisions of Section 188 of the Act and rules made thereunder, all related party transactions entered during Financial Year 2022-23 were on armâs length basis and in the ordinary course of business under the Act and were not material under the SEBI Listing Regulations, the details of which are included in the notes forming part of the Financial Statements.
The details as required to be provided under Section 134(3)(h) of the Act are disclosed in Form AOC-2 as âAnnexure-7â which forms part of this Report.
A list of all related party transactions is placed before the Audit Committee as well as the Board. The Audit Committee has granted omnibus approval for related party transactions as per the provisions of the Act and the SEBI LODR Regulations.
Further as required by SEBI and RBI Master Directions, âPolicy on transactions with Related Partiesâ is given as âAnnexure-10â to this Report and can be accessed on the website of the Company at https://www.aavas.in/img/pdf/Policy-on-Materiality-of-related-party-transactions-and-on-dealing-with-related-party-transactions.pdf.
INTERNAL GUIDELINES ON CORPORATE GOVERNANCE
Your Company is committed towards achieving the highest standards of Corporate Governance right from its establishment by staying true to its core values of Customer first, transparency, fairness in action, accountability, integrity and equity in all its engagements. The Companyâs Corporate Governance framework ensures that it makes timely and appropriate disclosures and shares factual and accurate information to its stakeholders so as to make an informed decision.
The Company has approved and adopted the Internal Guidelines on Corporate Governance. The Internal Guidelines on Corporate Governance has been framed in accordance with The Companies Act, 2013, SEBI LODR Regulations, 2015 (SEBI LODR, Regulations), RBI Master Directions, 2021 and other applicable rules and regulations.
The guideline is available on the website of the Company and can be accessed at https://www.aavas.in/img/pdf/internal-guidelines-on-corporate-governance.pdf.
DIRECTORSâ 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 had 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.
ACKNOWLEDGEMENTS AND APPRECIATION
The Board of Directors place on record their gratitude for valuable guidance and the support to all Stakeholders of
the Company including the Reserve Bank of India, National Housing Bank, the Ministry of Corporate Affairs, Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India, Stock Exchanges and other Regulatory Authorities, Bankers, Lenders, Financial Institutions, Members, Credit Rating agencies, National Securities Depository Limited, Central Depository Services (India) Limited, NSE IFSC Limited and Customers of the Company for their continued support and trust.
Your Directors further take this opportunity to appreciate and convey their thanks to the Kedaara Capital and Partners Group for their invaluable and continued support and guidance.
Your Directors also wish to place on record their appreciation for the commitment displayed by all the executives, officers, staff and the Senior Management team of the Company, in recording an excellent performance by the Company during the Financial Year.
Mar 31, 2022
Your Directors are pleased to present the 12th Annual Report on the operational and financial performance of Aavas Financiers Limited ("the Company" or "Aavas") together with the Audited Standalone and Consolidated Financial Statements for the Financial Year ended March 31,2022.
During the Financial Year under review, your Company has delivered yet another year of resilient performance.
The standalone financial performance for the Financial Year ended March 31, 2022 and a comparison with the previous year is summarized below:
|
(H in crore) |
|||
|
Particulars |
For the Year ended March 31,2022 |
For the Year ended March 31,2021 |
|
|
A |
Total Income |
1,305.56 |
1,105.34 |
|
Less: |
|||
|
- Total Expenditure before Depreciation & Amortization and provision |
(804.34) |
(694.26) |
|
|
- Impairment on financial instruments |
(22.61) |
(37.14) |
|
|
- Depreciation & Amortization |
(23.76) |
(20.60) |
|
|
B |
Total Expenses |
(850.70) |
(752.01) |
|
C |
Profit Before Tax (A-B) |
454.86 |
353.33 |
|
D |
Less: Provision for Taxations (Net of Deferred Tax) |
(98.06) |
(63.83) |
|
E |
Profit After Tax (C-D) |
356.80 |
289.50 |
|
F |
Add: Other Comprehensive Income (Net of Tax) |
0.71 |
0.83 |
|
G |
Total Comprehensive Income (E F) |
357.51 |
290.33 |
|
Transfer to Statutory Reserve |
71.50 |
58.07 |
|
Your Company posted Total Income (Total Interest Income and Other Income) of H 1,305.56 crore and Total Comprehensive Income of H 357.51 crore for the Financial Year ended March 31, 2022, as against H 1,105.34 crore and H 290.33 crore respectively for the previous Financial Year.
Operations and business continuity
The resurgence of COVID cases in first quarter of FY 2021-22 led to increase in challenges due to restricted movement and the disrupted economic cycle. The situation gradually improved by the end of the first quarter because of lower restrictions and increased pace of vaccination. The Company protected
livelihoods through a policy of no retrenchment. It stipulated social distancing across the branches and permitted Employees to work from home. All the Employees of the Company are fully vaccinated. The Company opened 34 new branches even during the tough phase of COVID-19 and achieved milestones of crossing H 10,000 crore AUM during the FY 2021-22.
COVID-19 Regulatory Packages and Resolution Framework for COVID-19-related Stress
The RBI issued ''Resolution Framework for COVID-19-related Stress'' ("Resolution Framework - 2.0") dated May 05, 2021, June 04, 2021 and August 06, 2021 for granting relief to borrowers impacted by COVID-19, by providing the facility of rescheduling of payments and/or for conversion of outstanding
interest accrued or to be accrued into a separate credit facility, revisions in working capital sanctions, granting of moratorium etc. The Company has in place a ''Policy on Resolution Framework for loans of borrowers affected by COVID-19''.
The Board of Directors have considered to conserve the resources of the Company in order to build a strong reserve base for the long-term growth aspects of the Company and maintain a liquidity pool. Hence, the Board of Directors do not recommend any dividend for the Financial Year ended March 31,2022.
In terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, (''SEBI LODR Regulations'') and Master Direction - Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021 (RBI Master Directions) the Board of Directors of the Company (the ''Board'') formulated and adopted the Dividend Distribution Policy (''Policy''). The Policy is available on the website of the Company at https://www.aavas.in/dividend-distribution-policy and forms part of this Report as ''Annexure-5''.
CAPITAL STRUCTURE OF THE COMPANY
Authorized Capital:
There was no change in the Authorized Capital of the Company during the year under review. The Authorized Capital of the Company is H 85,00,00,000/- (Rupees Eighty Five crore Only) divided into H 8,50,00,000 (Eight crore fifty lakh) Equity Shares of H 10/- (Rupees Ten only) each.
Issued, Subscribed & Paid up Capital:
The issued, subscribed and paid up Capital of the Company as on March 31, 2022 stood at H 78,93,64,510 (Rupees Seventy eight crore ninety three lakh sixty four thousand five hundred and ten) consisting of 7,89,36,451 (Seven crore eighty nine lakh thirty six thousand four hundred and fifty one) Equity Shares of H 10/-each.
During the Financial Year under review, the paid-up Equity Share Capital of the Company has been increased on account of issuance and allotment of 4,31,900 Equity Shares of H 10/-each pursuant to the exercise of stock options by the eligible employees of the Company under Employee Stock Option Plans (ESOPs) of the Company.
SPECIAL RESERVE (U/S 29C OF THE NHB ACT, 1987)
Your Company has transferred H 71 .50 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.
REVIEW OF OPERATIONS
Your Company is registered as a Housing Finance Company (HFC) with National Housing Bank (NHB) to carry out the housing finance activities in India. The Company chose to serve the growing needs of housing finance customers in the low and middle income segments of sub-urban and rural India, going contrary to the industry''s preference to serve the customers in the metro cities and urban regions of the country. The majority of your Company''s customers have limited access to formal banking credit facilities. Aavas uses a unique appraisal methodology to assess these customers individually and delivers financing solutions.
The details with respect to operating and financial performance of your Company has been covered in the Management Discussion and Analysis report (MDA), which forms part of this Annual Report.
During the Financial Year under review, your Company delivered a resilient performance, which is reflected in the following financial snapshot.
Income & Profits
Total Income grew by 18% to H 1,305.56 crore for the Financial Year ended March 31,2022 as compared to H 1,105.34 crore for the previous Financial Year. Profit before Tax (PBT) was 28.73% higher at H 454.86 crore as compared to H 353.33 crore for the previous Financial Year.
The Total Comprehensive Income for the Financial Year 202122 increased by 23.14% from H 290.33 crore in the previous Financial Year to H 357.51 crore in the current Financial Year.
Sanctions
During the Financial Year under review, your Company has sanctioned housing loans for H 3,762.09 crore as compared to H 2,812.94 crore in the previous Financial Year with an annual growth of 33.74%. The cumulative loan sanctions since inception
of your Company stood at H 18,221.23 crore as at March 31, 2022. Your Company has not granted any loan against the collateral of Gold Jewellery.
Disbursements
During the Financial Year under review, your Company disbursed housing loans for H 3,602.24 crore as compared to H 2,656.85 crore in the previous Financial Year registering an annual growth of 35.58%.
The cumulative loan disbursement since inception as at March 31,2022 was H 17,357 crore.
Assets Under Management (AUM)
The AUM of your Company stood at H 11,350.21 crore (including assignment of H 2,343.78 crore) as at March 31,2022 as against H 9,454.29 crore (including assignment of H 2,004.68 crore) in the previous Financial Year, with a growth of 20.05%.
As of March 31,2022, the average size of loan sanctioned was H 8.64 lakh and average tenure was 178.33 months in the AUM (on origination basis).
Affordable Housing
The Company has received subsidy under PMAY of H 108.23 crore in respect of 4,923 beneficiaries and the same had been credited into the respective customer''s loan account.
Non-Performing Assets (NPA)
Your Company is in adherence to the provisions of Indian Accounting Standards ("Ind AS") with respect to computation of Stage-3 Assets (NPA). 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, in compliance with Ind AS accounting framework, interest earned on NPA''s is recognized net of expected losses, if the present realisable value of the security is greater than the outstanding loan dues.
Using a pro-active collection and recovery management system supported by analytical decision making and consistent engagement with the customers during the period, the GNPA and NNPA as at March 31,2022 were 0.99% and 0.76% respectively (against 0.98% and 0.71% respectively in the previous Financial Year).
Your Company''s Capital Adequacy Ratio as at March 31,2022 was 51.93% (previous Financial Year 54.38%) which is far above the minimum required level of 15% as per the provisions of the RBI Master Directions.
Your Company''s financial prudence is reflected in the strong credit rating ascribed by rating agencies.The ratings also derive strength from adequate risk management and control systems put in place by the Company, pristine asset quality and strong corporate governance.
During the Financial Year under review, the long-term credit ratings of the Company has been upgraded from ''AA-/Stable to AA-/Positive'' by both CARE Ratings and ICRA Limited.
Further, all the other credit ratings assigned to the Company have been reaffirmed by respective credit rating agencies. For more details please refer Corporate Governance Report forming part of this report.
REGULATORY & STATUTORY COMPLIANCES
The Company has complied with all the guidelines, circular, notification and directions issued by RBI and NHB from time to time. The Company also places before the Board of Directors at regular intervals all such circulars and notifications to keep the Board informed and report on actions initiated on the same.
The Company has also been following provisions of the Companies Act, 2013 including the Secretarial Standards issued by ICSI, SEBI LODR Regulations, 2015, SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021, Income Tax Act 1961, and other applicable statutory requirements.
There were no orders passed by any regulator/courts nor any fine/penalty levied on the Company during the year under review.
Scale Based Regulation (SBR): A Revised Regulatory Framework for NBFCs
The contribution of NBFCs towards supporting real economic activity and their role as a supplemental channel of credit intermediation alongside banks is well recognized. Over the years, the sector has undergone considerable evolution in terms
of size, complexity, and interconnectedness within the financial sector. Many entities have grown and become systemically significant and hence there is a need to align the regulatory framework for NBFCs keeping in view their changing risk profile.
The SBR framework encompasses different facets of regulation of NBFCs covering capital requirements, governance standards, prudential regulation, etc., the RBI decided to first issue an integrated regulatory framework for NBFCs under SBR providing a holistic view of the SBR structure, set of fresh regulations being introduced and respective timelines.
Regulatory structure for NBFCs comprises of four layers based on their size, activity, and perceived riskiness. Your Company being a Housing Finance Company falls under Middle layer category. Detailed circulars will be issued in due course by the RBI on different facets of regulation and it will be implemented as per the timelines.
During the Financial Year 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. Therefore, the disclosure in terms of RBI Master Directions is not required.
⢠Certified as "Great Place To Work" during the FY 2021-22.
⢠1st NBFC to list its Social Masala Bond of H 360 crore on NSE-IFSC.
⢠Head Office certified with LEED Silver Certification.
⢠Awarded with "FE-EY Best Bank 2020-21 Award" under NBFC category.
Your Company has in place a borrowing policy framework to cater its borrowings needs. The objective of this policy is to diversify the liability portfolio of the Company and to reduce risk of overdependence on any particular lenders and instrument.
Your Company has vide Special Resolution passed on August 10, 2021, 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 H 14,000 crore (Rupees Fourteen thousand crore only) and the total amount so borrowed shall remain within the limits as prescribed by RBI.
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 NCDs to Mutual Funds, Issuance of Masala Bonds, NHB Refinance, Securitization/ Direct Assignment and banking products like Priority Sector/Non-Priority Sector Term Loans, Cash Credit Facilities and Working Capital Demand Loans.
The Weighted Average Borrowing Cost as at March 31, 2022 was 6.88% (including Securitization/ Assignment) as against 7.40% as at the end of the previous Financial Year. As at March 31,2022, your Company''s sources of funding were primarily in the form of long Term Loans from Banks and Financial Institutions (37.8%), followed by Securitization/Direct assignment (22.8%), NHB Refinance (21.5%), Debt capital market (17.9%).
Term Loans from Banks and Financial Institutions
The Company, during the Financial Year, received aggregate fresh loan sanctions amounting to H 1,650 crore and has availed loans aggregating to H 1,635 crore. The outstanding term loans from Banks and Financial Institutions as at March 31,2022 were H 3,883.8 crore with average tenure of 9.15 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 received purchase consideration of H 778.37 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 were 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 fresh sanction of refinance assistance of H 750 crore under the NHB refinance scheme and
H 417 crore under Special Refinance Scheme. Your Company availed funds of H 1,416 crore under various Refinance Scheme such as for Affordable Housing Fund, Regular Refinance Scheme and Special refinance Facility. As of March 31, 2022 the total outstanding refinance stood at H 2,206.76 crore.
Non-Convertible Debentures (NCDs)
During the Financial Year under review, your Company diversified its borrowing by raising funds through NCDs from Mutual Funds, details of which are as following:
I. Multilateral/Development Financial Institutions
As on March 31,2022, the Company''s outstanding NCDs stood at H 878.86 crore as compared to H 911.38 crore as on March 31,2021.
II. Domestic Financial Institutions
As on March 31,2022, the Company''s outstanding NCDs from Domestic Financial Institutions stood at H 98.92 crore as compared to H 109.41 crore as on March 31,2021.
III. Banks
As on March 31,2022, the Company''s outstanding NCDs from Banks stood at H 174.86 crore as compared to H 244.9 crore as on March 31,2021.
As on March 31 , 2022, Your Company''s outstanding subordinated debt in the form of NCDs stood at H 99.83 crore as compared to H 99.74 crore as on March 31,2021.
Your Company has not issued any Commercial Paper & ShortTerm Instrument during the Financial Year 2021-22 and as on March 31,2022, the Company''s Commercial Paper outstanding is NIL.
Bonds issued to Multilateral/Development Financial Institutions
Masala Bond: As on March 31, 2022, your Company''s outstanding balance of Masala Bonds issued to Multilaterals stood at H 199.29 crore.
Social Masala Bond: During the Financial Year, Company has issued Social Masala Bond to British International Investment ("erstwhile known as CDC"), the United Kingdom''s Development Finance Institution amounting to H 360 crore under the External Commercial Borrowings Route which are listed on NSE-IFSC, Gift City. As on March 31, 2022 the outstanding balance of Social Masala bond stood at H 357.54 crore.
Further, the interest on Non-Convertible Debentures and Masala Bonds issued on private placement basis were paid by the Company on their respective due dates and there was no instance of interest amount not claimed by the investors or not paid by the Company.
Your Company, being listed HFC, is exempted from the requirement of creating Debenture Redemption Reserve (DRR) on privately placed debentures. Therefore, your Company has not created DRR. Further the requirement to invest or deposit a sum of not less than 15% of the amount of debentures which are maturing during the year, ending on March 31 of the next year as provided under Rule 18 of the Companies (Share Capital and Debentures) Rules, 2014 has been done away for listed Companies vide notification of Ministry of Corporate Affairs (''MCA'') dated June 05, 2020.
DISCLOSURE UNDER CHAPTER XI-GUIDELINES ON PRIVATE PLACEMENT OF NONCONVERTIBLE DEBENTURES (NCDS) OF RBI MASTER DIRECTIONS:
(i) The total number of NCDs 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: Nil
(ii) The total amount in respect of such debentures remaining unclaimed or unpaid beyond the date referred to in Paragraph (i) as aforesaid: Nil
DEBENTURE TRUSTEE
Debenture Trust Agreement(s) were executed in favour of IDBI Trusteeship Services Limited for NCDs issued by the Company on private placement basis.
DOWNSTREAM INVESTMENT REPORTING & COMPLIANCE
Your Company being a foreign owned and controlled Company has complied with the provisions of Foreign Exchange Management Act, 1999 (FEMA) read with Foreign Exchange Management (Non-debt Instruments) Rules, 2019 for the downstream investment made by it in any other Indian entity and the certificate from Statutory Auditor of the Company in respect to downstream investment compliance under FEMA has been obtained by the Company.
Your Company has been successful in continuous expansion of its branch network with a view to support its growth, deeper penetration in the states in which the Company operates and enhancing customer reach. During the Financial Year under review, the Company added 34 more branches and thereby expanded its branch network to 13 states with 314 branches as of March 31,2022. Your Company now operates in Rajasthan, Maharashtra, Gujarat, Madhya Pradesh, Haryana, Chhattisgarh, Delhi, Uttar Pradesh, Uttarakhand, Punjab and Himachal Pradesh, Odisha, Karnataka. Your Company has its Registered Office in Jaipur, Rajasthan, and its branch network as on March 31,2022 vis-a-vis the previous Financial Year is detailed hereunder:
|
State |
Branches (As on March 31,2022) |
Branches (As on March 31,2021) |
|
Rajasthan |
99 |
95 |
|
Maharashtra |
45 |
44 |
|
Madhya Pradesh |
45 |
40 |
|
Gujarat |
42 |
39 |
|
Uttar Pradesh |
24 |
21 |
|
Haryana |
17 |
15 |
|
Karnataka |
11 |
0 |
|
Uttarakhand |
9 |
9 |
|
Chhattisgarh |
8 |
7 |
|
Delhi |
4 |
4 |
|
Himachal Pradesh |
4 |
4 |
|
Odisha |
4 |
0 |
|
Punjab |
2 |
2 |
|
Total number of branches |
314 |
280 |
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Members of the Company''s Board of Directors are eminent persons of proven competence and integrity. Besides experience, strong financial acumen, strategic astuteness and leadership qualities, they have a significant degree of commitment towards the Company and devote adequate time to the meetings and preparation.
The Board of the Company comprises of 9 (Nine) Directors, consisting of 3 (Three) Independent Directors (including 2 (Two) Women Directors), 5 (Five) Non-Executive Nominee Directors and 1 (One) Executive Director-Managing Director and CEO as on March 31, 2022 who bring in a wide range of skills and experience to the Board.
The composition of Board of the Company as on March 31, 2022 is as under:
Name of the Director Designation DIN
Mr. Sandeep Tandon Chairperson and 00054553
Independent Director
Mr. Sushil Kumar Managing Director and 03154532
Agarwal CEO
Mrs. Kalpana Iyer Independent Director 01874130
Mrs. Soumya Rajan Independent Director 03579199
Mr. Ramachandra Non-Executive Nominee 01715073
Kasargod Kamath Director
Mr. Vivek Vig Non-Executive Nominee 01117418
Director
Mr. Nishant Sharma Promoter Nominee 03117012
Director
Mr. Manas Tandon Promoter Nominee 05254602
Director
Mr. Kartikeya Dhruv Kaji Promoter Nominee 07641723
Director
The Independent Directors have confirmed that they satisfy the criteria prescribed for Independent Directors as stipulated in the provisions of the Section 149(6) of the Act and Regulation 16(1)(b) & 25 of SEBI LODR Regulations. The names of all the Independent Directors of the Company have been included in the Independent Director''s databank maintained by Indian Institute of Corporate Affairs ("IICA"). Two (2) of the Independent Directors of the Company have cleared the exam conducted by IICA and one (1) Independent Director has been exempted from appearing for the test. The Company has obtained declaration of independence from all the Independent Directors of the Company. 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/MCA or any such statutory authority. The same forms part of this Annual Report as ''Annexure-1''.
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APPOINTMENT & RESIGNATION OF DIRECTORS AND KMP |
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Appointment/ Reappointments |
Resignation or Retirement |
Directors Retiring by Rotation |
Appointments/Resignations of the Key Managerial Personnel (KMP) |
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⢠During the Financial Year |
⢠During the Financial |
⢠Pursuant to the provisions of |
⢠Mr. Sushil Kumar Agarwal- |
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under review, the Board at |
Year under review, |
Section 1 52 of the Act, Mr. |
Managing Director and |
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its Meeting held on April |
none of the Directors of |
Nishant Sharma, Promoter |
Chief Executive Officer (MD |
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29, 2021 reappointed |
the Company resigned |
Nominee Director and Mr. |
& CEO), Mr. Ghanshyam |
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Mr. Sandeep Tandon, |
from the Board of the |
Vivek Vig, Nominee Director, |
Rawat- Chief Financial |
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Independent Director |
Company. |
of the Company, retired |
Officer and Mr. Sharad |
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of the Company as the |
and being eligible, were re- |
Pathak- Company Secretary |
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Chairperson of the Board |
appointed with the approval |
and Compliance Officer are |
|
|
with effect from conclusion |
of Members at the 11th AGM |
the KMP in terms of Section |
|
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of 11 th Annual General |
held on August 10, 2021. |
2(51) of the Act. |
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Meeting (''AGM'') of the Company held on August 10, 2021, who shall hold office up to the date of ensuing AGM. |
⢠Further, in accordance with the provisions of the Act, |
No KMP has been appointed or resigned from |
|
|
Mr. Ramachandra Kasargod Kamath, Nominee Director and Mr. Manas Tandon, |
the Company during the Financial Year under review. |
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⢠The Members of the |
Promoter Nominee Director |
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Company at 11th AGM |
of the Company are liable to |
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held on August 10, |
retire by rotation at the ensuing |
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2021 had approved |
12th AGM of the Company. |
||
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the re-appointment of |
They are eligible and have |
||
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Mrs. Kalpana Iyer as an |
offered themselves for re- |
||
|
Independent Director of the |
appointment. Resolutions for |
||
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Company not liable to retire |
their reappointment are being |
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by rotation, to hold office |
proposed at the 12th AGM and |
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for a second term of 5 (Five) |
their Profiles are included in |
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consecutive years effective |
the Annexure to Notice of the |
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from June 23, 2021 till June 22, 2026. |
12th AGM. |
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DISCLOSURE UNDER SECTION 197(14) OF THE ACT
The MD and CEO of the Company have not received any commission from the Company''s subsidiary company.
During the Financial Year 2021-22, 6 (Six) Board Meetings were convened through Video Conference facility. Further, for the composition of Committees along with details relating to Committee Meetings, Board Meetings held during the year and details of attendance of Committee Members and Directors in such Meetings please refer to Corporate Governance Report forming part of this Report.
The Notice and Agenda including all material information and minimum information required to be made available to the Board under Regulation 1 7 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.
The Board of Directors has carried out an annual evaluation of its own performance, board committees, and individual directors pursuant to the provisions of the Act and SEBI Listing Regulations and as per the criteria defined in the said act and regulations.
The above criteria are broadly 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 under RBI Master Directions 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 Board and the Nomination and Remuneration Committee reviewed the performance of individual directors on the basis of criteria such as the contribution of the individual director to the board and committee meetings, leadership scale, performance, value creation, governance & compliance.
MEETING OF INDEPENDENT DIRECTORS
During the Financial Year under review, a separate Meeting of the Independent Directors was held on November 01, 2021, without the attendance of Non-Independent Directors and the Management of the Company to review the performance of the Non-Independent Directors and the 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.
POLICY ON DIRECTOR''S APPOINTMENT, REMUNERATION & OTHER DETAILS
The Board on the recommendation of the Nomination & Remuneration Committee adopted a ''Policy on Nomination & Remuneration for Directors, Key Managerial Personnel (KMP) and Senior Management'', 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 their evaluation and includes other matters, as prescribed under the provisions of Section 178 of the Act and SEBI LODR Regulations.
The Remuneration paid to the Directors is in line with the Remuneration Policy of the Company. Details of Remuneration paid to all the Directors during the Financial Year 2021-22 is more particularly defined in Annual Return in form ''MGT-7'' as available on the website of the Company and can be accessed at https://www.aavas.in/investor-relations/annual-reports.
The Remuneration Policy can be accessed through the following link https://www.aavas.in/remuneration-policy
The Company has the following Nine (9) 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 & Remuneration Committee (NRC)
3. Stakeholders Relationship Committee (SRC)
4. Corporate Social Responsibility (CSR) Committee
5. Risk Management Committee (RMC)
6. Asset Liability Management Committee (ALCO)
7. IT Strategy Committee
8. Customer Service & Grievance Redressal (CS&GR) Committee
9. Executive Committee
During the Financial Year under review, all 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 as ''Annexure 2''.
EMPLOYEE STOCK OPTION (ESOP) SCHEMES ESOP-2021
During the Financial Year under review, ''Equity Stock Option Plan for Employees 2021'' ("ESOP-2021") has been approved by Members in the 11th AGM of the Company held on August
10. 2021.
The ESOP-2021 empowers the Board and Nomination & Remuneration Committee to execute the scheme.
During the Financial Year under review, there have been no changes in the scheme.
All the above stated ESOP plans are in compliance with the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014 (''SEBI SBEB Regulations'') as amended from time to time.
The Nomination & Remuneration Committee monitors the ESOP Schemes in compliance with the Act, SEBI SBEB Regulations and SEBI LODR Regulations.
A Certificate received from Secretarial Auditors of the Company, confirming that the above ESOP Schemes have been implemented in accordance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and are as per the resolutions passed by the Members of the Company will be available for the inspection of the Members of the Company.
Disclosures on various plans, details of options granted, shares allotted upon exercise, etc. as required under SEBI SBEB Regulations are available on the Company''s website at https://www.aavas.in/investor-relations/annual-reports
> Statutory Auditors
M/s S.R. Batliboi & Associates LLP, Chartered Accountants, (FRN: 101049W/E300004) were appointed as Statutory Auditors of the Company, in the 7th AGM held on July 26, 2017, for a period of 5 (Five) years to hold office upto 12th AGM of the Company to be held in Calendar Year 2022.
The Reserve Bank of India (RBI) on April 27, 2021 issued guidelines on appointment of Statutory Auditor (s) by Non Banking Company (NBFC) to be adopted from second half of the Financial Year 2021-22. As per the guidelines the Statutory audit firm is required to be rotated after completion of a period of 3 years.
With respect to the aforesaid circular, M/s. Walker Chandiok & Co LLP, Chartered Accountants(Firm''s Registration No. 001076N/N500013) were appointed as the Statutory Auditors of the Company for a period of 3 (three) consecutive years to hold office with effect from December 02, 2021 until the conclusion of the 14th AGM of the Company to be held in the calendar year 2024.
Further, they have also given their eligibility certificate for the FY 2022-23, in terms of aforesaid RBI circular to the effect that they are eligible to continue as Statutory Auditors of the Company.
> Auditors'' Report
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
both standalone and consolidated, for the Financial Year 2021-22 and the Report is self-explanatory. The said Auditors'' Reports for the Financial Year ended March 31, 2022 on the Financial Statements of the Company forms part of this Annual Report.
Further, the Statutory 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. Chandrasekaran Associates, Practicing Company Secretaries (Firm Registration No: P1 988DE002500) were appointed as Secretarial Auditors to conduct the Secretarial Audit of the Company for the Financial Year 2021-22. The Report of Secretarial Auditors in form MR-3 for the Financial Year 2021-22 is annexed to this Report as ''Annexure-4''.
The Report of Secretarial Auditors is self-explanatory and there were no observations or qualifications or adverse remarks in their Report.
In addition to the above and pursuant regulation 24A of SEBI LODR Regulations, a report on annual Secretarial Compliance issued by M/s. Chandrasekaran Associates, Practicing Company Secretaries for FY 2021 -22 has been submitted with the Stock Exchanges. There are no observations, reservations or qualifications in that report.
INTERNAL AUDIT & INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY
The Company has a robust internal audit programme, where the internal auditors, an independent firm of Chartered Accountants, conduct a risk based audit with a view to not only test adherence to policies and procedures but also to suggest improvements in processes and systems. Their audit program is agreed upon by the Audit Committee. Internal audit observations and recommendations are reported to the Audit Committee, which monitors the implementation of such recommendations.
The Company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company''s internal financial control over financial reporting includes those policies and procedures that:
1 . Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company
2. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and Directors of the Company.
3. Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company''s assets that could have a material effect on the financial statements.
RBI, through its circular dated 3 February 2021, has introduced risk based internal audit (RBIA) for NBFCs, by which applicable NBFCs shall put in place a RBIA framework by March 31,2022. Further RBI on June 11,2021 issued circular that the provision of RBIA shall be applicable on deposit taking and non-deposit taking HFC''s and HFC''s shall put in place a RBIA framework by June 30, 2022.
Being a Non-Deposit taking HFC, the circular of RBIA becomes applicable on the Company and Company is in process of implementing the same within the timeline provided in the circular.
MATERIAL CHANGES/EVENTS AND COMMITMENTS, IF ANY
There are no material changes and commitments affecting the financial position of the Company, which have occurred after March 31,2022 till the date of this report.
There has been no change in the nature of business of your Company.
The Company being a HFC is not required to maintain cost records as per sub-section (1) of Section 148 of the Act.
Technology is a key enabler of any business growth, and Company have in place a robust technology framework across the entire business value chain including sourcing, underwriting, disbursement, collection, customer service and Back office operations.
Your Company has created a significant digital presence in the recent years through Apps, Conversational Bots,Social Media, and AI backed contact center to enable a true Omnichannel customer experience. Our upgraded Customer App is one of the best rated in the industry, enabling customers to self-service most requirements at their comfort. The employees and associates in the field are enabled with productivity Apps which are closely integrated with digital systems, giving consistent user journeys. We have leveraged advanced analytics capabilities at various levels through data science backed algorithms and decisioning engines.
This year with the help of a leading consulting Company, Your Company has charted out a technology transformation roadmap program for the next 3 - 5 years to prepare the organization for the next 10 years journey. As part of this roadmap, we have initiated multiple projects. One of them is a major digital transformation to consolidate multiple applications in the loan origination and customer service front, leveraging a globally leading customer experience platform. This transformation will be a game changer as it will help create the next level of customer experience and operational efficiency across the organization.
Company has a focused cyber security and IT Governance practice complying to all regulatory guidelines and best practices which are regularly audited and certified by external experts.
Your Company conducts audit of its IT systems through external agencies at regular intervals. The external agencies'' suggestions and recommendations are reported to the IT Strategy Committee and Audit Committee and implemented wherever found feasible.
FAMILIARIZATION 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.
conservative approach towards liquidity and always preferred long term debts.
There are five principle risks in the Company''s business namely Credit risk, ALM risk, Market risk, Reputation risk and Regulatory risk. These are measured and reported to the Risk Management Committee on a quarterly basis.
Aavas has created a Risk framework around the business this includes underwriting, legal, valuation and operational risks and all the verticals are mutually exclusive and reporting structure does not get culminated at middle management level. Aavas has developed an institutional intelligence for underwriting methodology which is executed by qualified and experienced team hosting majority of Chartered Accountants. Legal, technical and operations risks have vendors as well as professionally qualified in-house team.
Aavas has acquired technology support for document verification, automated deal movement, data entry i.e. all activities which does not need manual intervention is automated.
In compliance with the clause 51 of Chapter IX- Corporate Governance of Non-Banking Financial Company -Housing Finance Company (Reserve Bank) Directions, 2021, the Company has designated Mr. Ashutosh Atre as Chief Risk Officer (CRO) of the Company who has direct reporting to MD & CEO of the Company. Further, in terms of the said circular, an independent meeting of the CRO with the Board without the presence of MD & CEO is organized on a quarterly basis.
In accordance with the above referred directions, 4 (Four) separate Meetings were held between Mr. Ashutosh Atre and the Board without the presence of MD and CEO of the Company.
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, which provides a platform to 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
The details of the familiarization programmes have been hosted on the website of the Company and can be accessed via the following link: https://www.aavas.in/familiarization-programme.
Your Company''s success depends largely upon the quality and competence of its human capital. Attracting and retaining talented professionals is therefore a key element of the Company''s strategy and a significant source of competitive advantage. The Company invested in a technology-driven HR department workflow, supported by a HR firm management company called People Strong.
The Company''s people possess multi-sectoral experience, technological experience and domain knowledge. The Company''s HR culture is rooted in its ability to subvert age-old norms in a bid to enhance competitiveness. The Company always takes decisions in alignment with the professional and personal goals of employees, achieving an ideal work-life balance and enhancing pride in association. Across all its business operations, your Company had 5,222 permanent employees as on March 31,2022.
Your Company provides induction training to all its new recruits to help them better understand the mission, vision and values of the Company and to help them align with its culture. The Company has been organizing regular in-house training programmes for all its employees besides also nominating employees to attend external training programmes across various specialized functions. The HR team always conduct various employee engagement activities to maintain healthy work life balance and to create positivity among employees.
With the efforts of Human Resource Team and work culture of the Company, your Company has been certified with "Great Place To Work".
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 risks faced by the Company are identified and assessed.
Your Company believes that our opportunity lies in risk. Since inception Company has philosophy to create its niche and build profitable business which reflects in the financials with consistency similarly on liquidity. Company has clarity on how to deal with the asset liability issue of typical housing finance business, kept very
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. Employees have been facilitated direct access to the Chairperson of Audit Committee, if needed. The whistle blower policy is placed on the website of the Company and can be accessed at https://www.aavas.in/vigil-mechanism-policy.
DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
Your Company has zero tolerance towards any action on the part of any of its employees, which may fall within the ambit of ''Sexual Harassment'' at workplace. The company has complied with the provisions related to constitution of Internal Complaints Committee.
The Internal Complaints Committee of the Company has not received any complaint of sexual harassment during the Financial Year under review and no complaint was pending as on March 31, 2022. The Annual report as required under section 21 of the act read with rules of Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 has been submitted to the respective authority.
CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING IN COMPANY''S SECURITIES
In compliance of the SEBI PIT Regulations, as amended from time to time, the Company has formulated a Code of Conduct-Prevention of Insider Trading Policy which prohibits trading in shares of the Company by insiders while in possession of unpublished price sensitive information in relation to the Company. 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.
PARTICULARS OF HOLDING/SUBSIDIARY/ ASSOCIATE COMPANIES
Your Company doesn''t have any Holding Company or Joint Ventures.
The Shareholder having the substantial interest in the Company is Lake District Holdings Limited.
As on March 31,2022, 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.
INVESTOR RELATIONS
Your Company is seen as a benchmark in its outreach to investors, its transparency and disclosures viz Periodic Earnings Calls, Annual Investors/Analysts meet, 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 stock 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.
PARTICULAR OF EMPLOYEE REMUNERATION
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-8'' to the Directors'' Report.
In accordance with the provisions of Rule 5(2) of the above-mentioned rules, the names and particulars of the top ten employees in terms of remuneration drawn are set out in the Annexure to this report. In terms of the provisions of Section 1 36(1 ) of the Act, the Directors'' Report including the said annexure is being sent to all Shareholders of the Company.
CORPORATE SOCIAL RESPONSIBILITY
The fundamental idea of Corporate Social Responsibility ''''is that business and society are inter- woven rather than distinct entities'''' and that business must therefore meet particular societal
expectations regarding their social, environmental, and economic activities. The Company is committed towards its works and its CSR policy by making a big and lasting difference, through sustainable measures, by actively contribute to the Social, Economic and Environmental development of the community in which we operate ensuring participation from the community and thereby create value for the nation.
In line with the provisions of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules 2014, Aavas Foundation- a Public Charitable Trust settled by the Company for the purpose of carrying its CSR Activities has undertaken various CSR projects in the area of Skill Development,
Women Empowerment, Rural Development, Reducing inequalities faced by socially and economically backward groups, Healthcare & Wellness, Environment conservation and Ecological balance, promoting education which are in accordance with the Schedule VII of the Act and CSR Policy of the Company.
The Company will continue its engagement with stakeholders including NGOs, professional bodies/ forums and the Government and would take up such CSR activities in line with the Government''s intent, to maximize the support to societies affected due to COVID-19 pandemic.
The Annual Report on CSR Activities, is annexed as ''Annexure-9'' to this report.
PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars of energy conservation, technology absorption and foreign exchange earnings and outgo is provided as under in terms of Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014:
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Particular Remarks |
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A. |
Conservation of energy |
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The Steps taken / impact on conservation of energy |
As the nature of business of the Company is providing housing finance, at a corporate level, consumption of resources is limited to running the operations. The Company, however, extensively monitors energy consumption and waste generation as a part of its sustainability roadmap. The Company''s web portal as well as Mobile App facilitates online application of home loans to save time, energy, and resources in disbursal process. Company have started the process of preparing baseline of its energy consumption and carbon emissions. Once the baseline is ready, we will work towards preparation of energy-based reduction targets for near future, to reduce our carbon footprints. |
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The Steps taken by the Company for utilizing alternate sources of energy |
Your Company has taken various steps towards climate action and sustainable use of natural resources. Under Green Affordable Housing Program, the Company has in partnership with International Finance Corporation, a member of the World Bank Group, conducted research on the feasibility for affordable ''green homes'' in India, to tap into the potential of housing activity help in environmental amelioration. Under this study, the Company developed a definition of ''green home'' and conducted survey of 500 individual households to understand current perceptions and attitudes as well as willingness to pay for green features. The Company has also started full-fledged awareness campaign for suppliers, building contractors, masons, as well as individual households who wish to construct a new home in the near future, to educate the community about the meaning and benefits of green homes. |
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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. |
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Particular Remarks |
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B. |
Technology absorption |
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|
the efforts made towards technology absorption |
The Company recognize that a remarkable customer experience is critical to the sustained growth of our business, with this objective we have taken several steps during the year to enhance customer experience by leveraging digital capabilities such as upgrading our customer app and website, launching an AI driven conversational BOTs and other digital communication systems. As of now over 70% of customer service happen through digital channels and 80% of them are self-serviced without human intervention which is more than double of the previous year. Similarly 80% of our initial money deposits and 60% of our part disbursal process happen digitally. This year we have also initiated a major technology transformation journey to take our customer and employee experience to the next level and this program will be rolled out through 2022-23. |
|
|
the benefits derived like product improvement, cost reduction, product development or import substitution |
Company consistently monitor cost-to-income ratio, leveraging economies-of-scale, increasing manpower productivity with growing disbursements through the enhanced use of information technology and analytical systems, resulting in quicker loan turnaround time and reducing transaction costs. |
|
|
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 |
NA |
|
|
b). the year of import |
NA |
|
|
c). whether the technology has been fully absorbed |
NA |
|
|
d). if not fully absorbed, areas where absorption has not taken place, and the reasons thereof |
NA |
|
|
the expenditure incurred on Research and Development |
Company performed R&D on many new technology subjects such as Cloud, data, digital and several other areas and have now setup a dedicated technology transformation team within the company to drive innovation and transformation programs. |
|
|
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 H 2,234.75 Lakhs. The aforesaid details are shown in the Note No. 38 of notes to the accounts, forming part of the Standalone Financial Statements. The Members are requested to refer to this Note. |
ENVIRONMENT HEALTH AND SAFETY (EHS) PROTECTION
Your Company is committed to high Environmental and Social (ES) Standards in its business and will continue to develop its investment decision making processes and procedures so as to reflect the requirements of Indian ES legislation, as well as relevant international standards (specifically IFC Performance Standards) as applicable to our housing finance and MSME business lines. The Company always ensures that healthy and safe working environment is provided to all employees of the Company.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORTING
As per Regulation 34(2)(f) of SEBI LODR Regulation, the top one thousand listed entities based on market capitalization, shall attach a Business Responsibility Report with the Annual report describing the initiatives taken by the listed entity from an environmental, social and governance perspective. Provided that the requirement of submitting a business responsibility report shall be discontinued after the Financial Year 2021-22 and with effect from the Financial Year 2022-23, the top one thousand listed entities based on market capitalization shall submit a business responsibility and sustainability report.
However even during the Financial Year 2021-22, the top one thousand listed entities may voluntarily submit a business responsibility and sustainability report in place of the mandatory business responsibility report.
Hence your Company, being a top thousand listed entity and adhering to good Corporate Governance and for the amelioration of the society in which it operates has voluntarily submitted Business Responsibility and Sustainability Report (BRSR) describing the initiatives taken by the Company from an environmental, social and governance perspective, as ''Annexure-11''.
EXTRACTS OF ANNUAL RETURN
Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Act, read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014 the Annual Return in form MGT-7 as at March 31, 2022 is available on the website of the Company and can be accessed at https://www.aavas.in/investor-relations/annual-reports
ADDITIONAL DISCLOSURES UNDER COMPANIES (ACCOUNTS) RULES, 2014
a. The details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the Financial Year:
During the Financial Year under review, the Company made neither any application nor any Proceeding is pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016), therefore, it is not applicable to the Company.
b. The details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof.
During the Financial Year under review, it is not applicable to the Company.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Since the Company is an HFC, 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.
However, the details of loans, guarantees, and investments made as required under the provisions of Section 186 of the Act and the rules made thereunder are set out in the Notes to the Standalone Financial Statements of the Company.
CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
In accordance with the provisions of Section 188 of the Act and rules made thereunder, all related party transactions entered during FY 21-22 were on an arm''s length basis and in the ordinary course of business under the Act and were not material under the SEBI Listing Regulations, the details of which are included in the notes forming part of the financial statements.
The details as required to be provided under Section 134(3)(h) of the Act are disclosed in Form AOC-2 as ''Annexure-7'' which forms part of this Report.
A list of all related party transactions is placed before the Audit Committee as well as the Board. The Audit Committee has granted omnibus approval for related party transactions as per the provisions of the Act and the Listing Regulations. Disclosures relating to related party transactions are filed with the stock exchanges on a half-yearly basis.
Further as required by SEBI and RBI Master Directions, ''Policy on transactions with Related Parties'' is given as ''Annexure-10'' 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 clause 55 of chapter IX-Corporate Governance of RBI Master Directions, which inter-alia, defines the legal, contractual and social responsibilities of the Company towards its various stakeholders and lays down the Corporate Governance practices of the Company.
The said policy is available on the website of the Company and can be accessed at https://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 had 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.
ACKNOWLEDGEMENT AND APPRECIATION
Your Board of Directors take this opportunity to express their appreciation to all stakeholders of the Company including the RBI, NHB, the Ministry of Corporate Affairs, Securities and Exchange Board of India, Stock Exchanges and other Regulatory Authorities, Bankers, Lenders, Financial Institutions, Members, Credit Rating agencies, National Securities Depository Limited, Central Depository Services (India) Limited, NSE IFSC Limited and Customers of the Company for their continued support and trust.
Your Directors further take this opportunity to appreciate and convey their thanks to the Kedaara Capital and Partners Group for their invaluable and continued support and guidance.
Your Directors also wish to place on record their appreciation for the commitment displayed by all the executives, officers, staff and the Senior Management team of the Company, 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 Promoter Nominee Director
(DIN: 03154532) (DIN: 05254602)
Date: May 05, 2022 Date: May 05, 2022
Place: Jaipur Place: Zug, Switzerland
Registered and Corporate Office:
201-202, 2nd Floor, South End Square,
Mansarover Industrial Area, Jaipur 302 020, Rajasthan, India
CIN: L65922RJ2011PLC034297
Tel: 91 141-4659239 Fax: 91 14 1661 8861
E-mail: [email protected] | Website: www.aavas.in
Mar 31, 2021
Your Directors are pleased to present the Eleventh 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, 2021.
The summarized standalone financial performance for the Financial Year ended March 31, 2021 are as under:
|
(H in crore) |
|||
|
Particulars |
For the Year ended |
For the Year ended |
|
|
March 31, 2021 |
March 31, 2020 |
||
|
A |
Total Income |
1,105.34 |
903.09 |
|
Less: |
|||
|
Total Expenditure before Depreciation & Amortization and provision |
(694.26) |
(566.14) |
|
|
Impairment on financial instruments |
(37.14) |
(15.34) |
|
|
Depreciation & Amortization |
(20.60) |
(19.56) |
|
|
B |
Total Expenses |
(752.01) |
(601.04) |
|
C |
Profit Before Tax (A-B) |
353.33 |
302.05 |
|
D |
Less: Provision for Taxations (Net of Deferred Tax) |
(63.83) |
(52.93) |
|
E |
Profit After Tax (C-D) |
289.50 |
249.12 |
|
F |
Add: Other Comprehensive Income (Net of Tax) |
0.83 |
(0.05) |
|
G |
Total Comprehensive Income (E F) |
290.33 |
249.07 |
|
Transfer to Statutory Reserve |
58.07 |
49.81 |
|
Your Company posted Total Income (Total Interest Income and Other Income) of H1,105.34 crore and total Comprehensive Income of H290.33 crore for the Financial Year ended March 31, 2021, as against H903 09 crore and H249.07 crore respectively for the previous Financial Year.
10 YEARS OF A GLORIOUS JOURNEY
On February 22, 2021, your Company completed 10 years of establishment. Since inception, the Company focused on catering to the housing needs of low-and-middle income self-employed and salaried customers in semi-urban and rural areas. Through these 10 years, your Company fulfilled the dreams of lakhs of customers.
Major events and milestones of this journey are as follows:
|
Calendar Year |
Details |
|
2011 |
Incorporated as âAu Housing Finance Private Limitedâ, a wholly owned subsidiary of AU Small Finance Bank Limited (formerly, Au Financiers (India) Limited) (âAU Bankâ) |
|
Registered with National Housing Bank (âNHBâ) as a âhousing finance institution without accepting public depositsâ and started business operations from Rajasthan |
|
|
2012 |
Received first rating âBBB /Stableâ from CRISIL for long term bank facilities |
|
2013 |
Converted into a public limited company |
|
Received its first refinancing assistance from NHB |
|
|
Expanded operations to states of Maharashtra, Gujarat and Madhya Pradesh |
|
|
2014 |
Issued first Non-Convertible Debentures (âNCDsâ) to raise debt |
|
Expanded its operations to Delhi NCR |
|
|
2015 |
Entered into its first Assignment/ Securitisation transaction of retail loans |
|
Identified as a âfinancial institutionâ under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (âSARFAESIâ) |
|
|
Manpower strength crossed the mark of 1000 |
|
|
Asset under Management (âAUMâ) crossed the mark of H1,000 crore and active loan accounts grown to 17,000 |
|
|
2016 |
AU Bank divested its majority stake in the Company to âKedaara Capitalâ and âPartners Groupâ. |
|
Received the ASSOCHAM Excellence Award for being the âBest Housing Finance Companyâ in the affordable housing segment |
|
|
Received its first subsidy from NHB under âCredit Linked Subsidy Scheme - Pradhan Mantri Awas Yojanaâ (CLSS-PMAY) |
|
|
AUM crossed the mark of H2,000 crore |
|
|
2017 |
Name changed to âAavas Financiers Limitedâ from âAu Housing Finance Limitedâ |
|
Manpower strength crossed the mark of 3000 |
|
|
Branch network crossed the mark of 100 |
|
|
AUM crossed the mark of H3,000 crore |
|
|
2018 |
Launched Initial Public Offer (IPO) and listed its shares on stock exchanges |
|
Upgradation of long term rating to A by rating agencies |
|
|
Expanded its presence in 10 states and branch network crossed the mark of 200 |
|
|
Active loan accounts grown to 50,000 |
|
|
AUM crossed the mark of H5,000 crore |
|
|
2019 |
Active loan accounts grown to 75,000 |
|
AUM crossed the mark of H7,000 crore |
|
|
Upgradation of CARE rating to âCARE AA-/Stableâ for long term facilities |
|
|
2020 |
AUM crossed the mark of H8,000 crore |
|
Manpower strength crossed the mark of 5000 |
|
|
Multilateral/Development Financial Institutions such as Asian Development Bank (âADBâ), International Finance Corporation (IFC) and CDC Group PLC extended credit lines to the Company |
|
|
Mr. Ghanshyam Rawat, Chief Financial Officer was awarded with the best âCA-CFOâ of the Year under the category of âEmerging Corporate (BFSI)â by ICAI |
|
|
Active loan accounts grown to 1,00,000 |
|
|
Expanded its branch network to 11 states with 280 branches |
|
|
2021 |
AUM crossed the mark of H9,400 crore |
|
Active loan accounts grown to 1,25,000 |
|
|
Mr. Sushil Kumar Agarwal, Managing Director & CEO was conferred with the prestigious EY (Ernst and Young) Entrepreneur of the Year Award in the Financial Services category |
|
|
Upgradation of ICRA rating to âICRA AA-/Stableâ for long term facilities |
With a decade of history in business, the Company experienced multiple business cycles. In each instance in the past such as demonetization, liquidity tightness and implementation of Goods and Service Tax (âGSTâ) law, the Company not only demonstrated agility in responding to those challenges but also converted them into opportunities and grew its business.
In the current pandemic situation also, your Company remained confident to emerge stronger. The Companyâs expanding presence across un-served and underserved geographies will be instrumental in driving the growth. Your Directors express their gratitude to the Customers, Regulators, Employees, Lenders, Shareholders and other Stakeholders for their continued support in achieving this milestone.
COVID-19 - A GLOBAL PANDEMIC AND THE COMPANYâS APPROACH
The year 2020-21 was challenging. The COVID-19 pandemic had a significant impact on lives, livelihoods and the businesses. In compliance with the lockdown order announced by the Government and local authorities from time to time, certain branches temporarily remained closed and business operations were managed remotely to the extent possible as per Business Continuity Plan of the Company.
We summarise here below the impact of COVID-19 on the business of your Company and the Companyâs approach.
Operations and business continuity
The challenges increased due to restricted movement and the disrupted economic cycle. The situation gradually improved from the end of the first quarter as the restrictions were lifted in a phased manner. As the second wave of the pandemic unfolded in April 2021, your Company focused on protecting the health and safety of employees and customers, while ensuring minimum business disruption.
The Company believed that going digital is the future, not only for business growth but also for product and service differentiation. During the Financial Year under review, your Company focused on digital offerings, made its processes and decision-making through data analytics for faster customer service, paperwork reduction, improved turnaround time and better risk management.
COVID-19 - Regulatory Packages and Resolution Framework for COVID-19-related Stress
The Reserve Bank of India (RBI) issued âCOVID-19 -Regulatory Packagesâ dated March 27, 2020, April 17, 2020 and May 23, 2020 to mitigate the impact of COVID-19 pandemic on the financial services sector. Under stipulated guidelines, the Company implemented a âPolicy on Deferment of PEMI/ EMI (COVID-19)â and offered moratorium on the payment of installments and/or interest, as applicable, falling due between March 01, 2020 and August 31, 2020 to all eligible borrowers of the Company.
The RBI issued âResolution Framework for COVID-19 related Stressâ dated August 06, 2020 for granting relief to borrowers impacted by COVID-19, by providing the facility of rescheduling of loans and/or for conversion of outstanding interest into a separate credit facility. The Company framed and implemented a âPolicy on Resolution Framework for loans of borrowers affected by COVID-19â.
Order of Supreme Court of India on declaring accounts as Non-Performing Asset (NPA)
The matter of declaring defaulting accounts as NPAs (not declared as NPAs till August 31, 2020 as per RBI guidelines) was kept on hold by the Honâble Supreme Court of India vide orders dated September 03, 2020 and September 28, 2020. Accordingly, the Company did not classify any account covered under the said orders as NPA. Thereafter the Honâble Supreme Court of India in Small Scale Industrial Manufactures Association (Regd.) vs Union of India and others vide a judgment dated March 23, 2021 (âJudgementâ) directed that the interim order granted on September 03, 2020 stands vacated. In this regard, RBI vide its circular dated April 07, 2021 issued instructions in accordance to which your Company resumed recognizing overdue accounts as NPA as per regulatory guidelines.
Scheme for Grant of ex-gratia payment
To provide relief to the borrowers in difficulty due to COVID-19, the Central Government on October 23, 2020, approved to provide ex-gratia payment of difference between compound interest and simple interest by way of relief for the period from March 01, 2020 to August 31, 2020 to borrowers in specified loan categories. In accordance with the above, the Company implemented the âPolicy on Scheme for Grant of Ex-gratia Paymentâ to extend the benefit to eligible borrowers of the Company.
Further in conformity with the judgment, the RBI vide its circular dated April 07, 2021, advised all lending institutions to refund/adjust the âinterest on interestâ charged to all the borrowers during the moratorium period, i.e. March 1, 2020 to August 31, 2020. In accordance with the above, the Company implemented the âPolicy on refund/adjust the Interest on interestâ to extend the benefit to all the borrowers of the Company.
Your Directors have considered reinvesting the profits in the business of the Company in order to build a strong base for the long-term growth of the Company and maintain a liquidity cushion due to ongoing COVID-19 pandemic. Accordingly, no dividend has been recommended for the Financial Year ended March 31, 2021.
Your Company has formulated Dividend Distribution Policy in accordance with Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations,
2015 (âSEBI LODR Regulationsâ) for bringing transparency in the matter of declaration of dividend and to protect the interest of investors. The Dividend Distribution Policy is available on the website of the Company at https://www.aavas.in/ dividend-distribution-policy and forms part of this Report as âAnnexure-5â.
The issued and paid-up Equity Share Capital of the Company as on March 31, 2021 stood at H78,50,45,510 (Rupees Seventy eight crore fifty lakh forty five thousand five hundred and ten) consisting of 7,85,04,551 (Seven crore eighty five lakh four thousand five hundred and fifty one) Equity Shares of H10/-each as compared to H78,32,26,610 (Rupees Seventy eight crore thirty two lakh twenty six thousand six hundred and ten) consisting of 7,83,22,661 (Seven crore eighty three lakh twenty two thousand six hundred and sixty one) Equity Shares of H10/- each in the previous year.
During the Financial Year under review, the paid-up Equity Share Capital of the Company has been increased on account of issuance and allotment of 1,81,890 Equity Shares of H10/-each pursuant to the exercise of stock options by the eligible employees of the Company under Employee Stock Option Plans (ESOPs) of the Company.
SPECIAL RESERVE (U/S 29C OF THE NHB ACT, 1987)
Your Company transferred H58.07 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.
Your Company is registered as a Housing Finance Company (HFC) with NHB to carry out the housing finance activities in India.
To build a quality loan book, your Company endeavors to adopt superior underwriting practices backed by robust monitoring and recovery mechanism. Your Company is committed towards improving efficiency in all its processes and service levels for its customers.
Your Companyâs 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 facilitating credit access to the low and middle-income self-employed customers in semi-urban and rural areas in India. The majority of your Companyâs 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 delivered a resilient performance, which is reflected in the following financial snapshot:
Income & Profits
Total Income grew by 22% to H1,105.34 crore for the Financial Year ended March 31, 2021 as compared to H90309 crore for the previous Financial Year. Profit Before Tax (PBT) was 17% higher at H353 33 crore as compared to H302.05 crore for the previous Financial Year.
The Total Comprehensive Income for the Financial Year 2020-21 increased by 17% from H249.07 crore in the previous Financial Year to H290.33 crore in the current Financial Year.
Sanctions
During the Financial Year under review, your Company sanctioned housing loans for H2,812.94 crore as compared to H3,034.00 crore in the previous Financial Year registering a de-growth of 7% due to subdued disbursements in the first half of the Financial Year. The cumulative loan sanctions since inception of your Company stood at H14,45914 crore as at March 31, 2021. Your Company has not granted any loan against the collateral of Gold Jewellery.
Disbursements
During the Financial Year under review, your Company disbursed housing loans for H2,656.85 crore as compared to H2,930.39 crore in the previous Financial Year and recorded a de-growth of 9% in disbursements.
The cumulative loan disbursement since inception as at March 31, 2021 was H13,754.76 crore.
Assets Under Management (AUM)
The AUM of your Company stood at H9,454.29 crore (including assignment of H2,004.68 crore) as at March 31, 2021 as against H7,796.09 crore (including assignment of H1,739.64 crore) in the previous Financial Year, with a growth of 21%. As of March 31, 2021, the average size of loan sanctioned was H8.49 lakh and average tenure was 184.53 months in the AUM (on origination basis).
Affordable Housing
Over the last Financial Year, your Company developed an experienced, trained and exclusive team for catering to the PMAY (Urban) product focusing on Economically Weaker Sections (âEWSâ) and Low Income Group (âLIGâ) segments and Mid Income Group (MIG) 1 and 2.
Your Company signed a Memorandum of Understanding (âMOUâ) with various State Governments for the CLSS under the PMAY for EWS, LIG and MIG segments.
Since the inception of the Scheme, your Company received CLSS subsidy of H152.17 crore with respect to 7576 beneficiaries and the same was passed on to customers.
Non-Performing Assets (NPA)
Your Company is in adherence to the provisions of Indian Accounting Standards (âInd ASâ) with respect to computation of Stage-3 Assets (NPA). Your Companyâs 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, in compliance with Ind AS accounting framework, interest earned on NPAâs is recognized net of expected losses, if the present realisable value of the security is greater than the outstanding loan dues.
Using a pro-active collection strategy, consistent engagement with the customers during the lockdown and recovery management system supported by analytical decision making, your Company was able to contain its gross NPAs at H7391 crore (0.98% of the loan assets) as at March 31, 2021. Your Company reviews the delinquency and loan portfolio on regular basis.
Your Company conforms to a defined policy with proper procedures to address delinquencies and collections. As a result, Gross NPA and Net NPA as at March 31, 2021 were 0.98% and 0.71% respectively (against 0.46% and 0.34% respectively in the previous Financial Year).
Further, the business overview, outlook, and state of affairs of your Company have been discussed in detail in the MDA, which forms a part of this Annual Report.
PRUDENTIAL NORMS FOR THE HFCs ISSUED BY RBI
The Finance Act, 2019 (the âFinance Actâ), passed by the Parliament and which has received the assent of the President of India, has introduced various amendments to legislations. Amongst others, the Finance Act includes amendments to the NHB Act, 1987 which has transferred the regulation authority over the housing finance sector from NHB to RBI. The Amendments to the NHB Act have come into force with effect from August 9, 2019. RBI on June 17, 2020, issued a draft for review of extant regulatory framework for HFCs and had invited comments from the stakeholders on the same. After considering the inputs received, the RBI, on October 22, 2020 issued the revised Regulatory Framework for HFCs (âRBI Regulationsâ).
Subsequently, RBI issued the Master Direction - Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021 on February 17, 2021 (âRBI Master Directionsâ). The Directions broadly accumulate the regulatory requirements, from the Regulations notified on October 22,
2020, erstwhile Master Circular for Housing Finance Companies (NHB) Directions, 2010 and other applicable circulars on HFCs.
Your Company continues to comply with the guidelines issued by RBI 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 Master Direction - Monitoring of Frauds in NBFCs (Reserve Bank) Directions, 2016 issued by RBI.
The recognition of income and impairment on financial instruments (Expected Credit Loss) has been made in the books as per the Ind AS.
No significant or adverse remarks have been made by the NHB and RBI with respect to any regulatory compliance and inspection of the Company carried out during the Financial Year. Further, RBI and NHB have not levied any penalty on the Company during the Financial Year.
As per the provisions of the clause 6.1 of Chapter IV- Capital of RBI Master Directions, your Company was required to maintain a minimum capital adequacy of 14% on a standalone basis on March 31, 2021.
Your Companyâs Capital Adequacy Ratio as at March 31, 2021 was 54.38% (previous Financial Year 55.86%) which is far above the minimum required level of 14%.
During the Financial Year under review, ICRA Limited has upgraded the long-term ratings of the Company from âICRA A /Positive to ICRA AA-/Stableâ.
Despite lot of challenges and headwinds faced during the COVID-19 pandemic, upgradation of existing credit ratings from ICRA Limited is a positive reflection of the Companyâs comfortable liquidity and resource profile and its leadership position in affordable housing segment, its experienced management team and strong brand equity in the regional markets where it has presence. The ratings also derive strength from adequate risk management and control systems put in place by the Company, asset quality as well as good growth opportunities in the affordable housing segment.
Further, all the other credit ratings assigned to the Company have been reaffirmed by respective credit rating agencies. 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, Non-Convertible Debentures (âNCDsâ) and Instrument-Subordinated Debt |
âCARE AA- / Stableâ |
|
Short Term Rating |
Commercial Paper |
âCARE A1 â |
|
|
ICRA |
Long Term Rating |
Long Term Banking Facilities and Non-Convertible Debentures (âNCDsâ) |
âICRA AA- /Stableâ |
|
Short Term Rating |
Commercial Paper |
âICRA A1 â |
|
|
India Ratings |
Short Term Rating |
Commercial Paper |
âIND A1 â |
Regulatory & Statutory Compliances
During the Financial Year under review, the RBI and NHB have issued various notifications, circulars and guidelines to Housing Finance Companies.
The circulars and the notifications issued by RBI and NHB were also placed before the Board of Directors at regular intervals to update the Board Members and report on actions initiated on the same, and your Company has adhered to all the Circulars, Notifications and Guidelines issued by RBI and 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 Companies Act, 2013 (âthe Actâ) including the Secretarial Standards, SEBI LODR Regulations and other applicable statutory requirements.
During the Financial Year, no penalty was imposed on the Company by any regulator/ supervisor/ enforcement authority.
During the Financial Year 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. Therefore, the disclosure in terms of RBI Master Directions is not required.
⢠Mr. Sushil Kumar Agarwal, Managing Director & CEO of the Company was conferred with the prestigious EY (Ernst and Young) Entrepreneur of the Year Award in the
Financial Services category. The award ceremony held
virtually on March 25, 2021 where it celebrated âThe Unstoppablesâ winners who stand for extraordinary stories of a strong mission and purpose backed with continuous innovation in their respective category.
⢠Your Company continued to enjoy following ISO certifications for its key customer facing departments and workflow processes 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.
RESOURCE MOBILIZATION
Your Companyâs overall borrowing is guided by a policy duly approved by the Board of Directors. Your Company has vide Special Resolution passed on July 22, 2020, 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 H12,500 crore and the total amount so borrowed shall remain within the limits as prescribed by RBI.
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 timing of borrowing 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 NCDs to Mutual Funds and Banks, NHB Refinance, Securitization/ Direct assignment and banking products like Priority Sector/ Non-Priority Sector Term Loans, Cash Credit Facilities and Working Capital Demand Loans.
The weighted average borrowing cost as at March 31, 2021 was 7.40% (including Securitization/ Assignment) as against
8.44% as at the end of the previous Financial Year. As at March 31, 2021, your Companyâs sources of funding were primarily in the form of long Term Loans from Banks and Financial Institutions (34.1%), followed by Securitization/Direct assignment (24.3%), NHB Refinance (22.7%), NCDs issued to Multilateral/ Development Financial Institutions (11.0%), NCDs issued to Banks and Domestic Financial Institutions (4.3%), Masala Bonds issued to Multilateral Institutions (2.4%) and Subordinated Debts (1.2%).
Term Loans from Banks and Financial Institutions
The Company, during the Financial Year, received aggregate fresh loan sanctions amounting to H1550 crore and has availed loans aggregating to H840 crore. The outstanding term loans from Banks and Financial Institutions as at March 31, 2021 were H2818.98 crore with average tenure of 912 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 received purchase consideration of H549.59 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 were 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 fresh sanction of refinance assistance of H850 crore under the NHB refinance scheme and H366 crore under Special Refinance Scheme. Your Company availed funds of H1161 crore under various Refinance Scheme such as for Affordable Housing Fund, Regular Refinance Scheme and Special refinance Facility. Total outstanding refinance at the end of the current Financial Year stood at H1872.39 crore (previous year H951.29 crore).
Non-Convertible Debentures (NCDs)
During the Financial Year under review, your Company diversified its borrowing by raising funds through NCDs from banks. During the previous Financial Year, the Companyâs funding through NCDs were as following:
I. Multilateral/Development Financial Institutions
As on March 31, 2021, the Companyâs outstanding NCDs stood at H91138 crore as compared to H90986 crore as on March 31, 2020.
II. Domestic Financial Institutions
As on March 31, 2021, the Companyâs outstanding NCDs from Domestic Financial Institutions stood at H109.41
crore as compared to H5992 crore as on March 31, 2020. Your Companyâs Debentures are listed on Wholesale Debt Market segment of the BSE Ltd.
III. Banks
During the Financial Year under review, your Company issued Rated, Secured, Listed and Redeemable NCDâs to Kotak Mahindra Bank and Central Bank of India.
As on March 31, 2021, the Companyâs outstanding NCDs from Banks stood at H244.9 crore as compared to H Nil as on March 31, 2020. Your Companyâs Debentures are listed on Wholesale Debt Market segment of the BSE Ltd.
As on March 31, 2021, Your Companyâs outstanding
subordinated debt in the form of NCDs stood at H 9974 crore as compared to H 99.66 crore as on March 31, 2020.
Your Company has not issued any Commercial Paper & ShortTerm Instrument during the Financial Year 2020-21 and as on March 31, 2021, the Companyâs Commercial Paper outstanding is NIL.
Masala Bonds issued to Multilateral/Development Financial Institutions
As on March 31, 2021, your Companyâs outstanding balance of Masala Bonds issued to Multilaterals stood at H 198.97 crore.
During the Financial Year under review, the interest on NonConvertible Debentures and Masala Bonds issued on private placement basis were paid by the Company on their respective due dates and there was no instance of interest amount not claimed by the investors or not paid by the Company.
Your Company, being listed HFC, is exempted from the requirement of creating Debenture Redemption Reserve (DRR) on privately placed debentures. Therefore, your Company has not created DRR. Further the requirement to invest or deposit a sum of not less than 15% of the amount of debentures which are maturing during the year, ending on March 31 of the next year as provided under Rule 18 of the Companies (Share Capital and Debentures) Rules, 2014 has been done away for listed Companies vide notification of Ministry of Corporate Affairs (âMCAâ) dated June 05, 2020.
Disclosure under Chapter XI-Guidelines on Private Placement of Non-Convertible Debentures (NCDs) of RBI Master Directions:
(i) The total number of NCDs 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: Nil
(ii) The total amount in respect of such debentures remaining unclaimed or unpaid beyond the date referred to in Paragraph (i) as aforesaid: Nil
Debenture Trustees
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 growth, deeper penetration in the states in which the Company operates and
enhancing customer reach. During the Financial Year under review, the Company added 30 more branches and thereby expanded its branch network to 11 states with 280 branches as of March 31, 2021. Your Company now operates in Rajasthan, Maharashtra, Gujarat, Madhya Pradesh, Haryana, Chhattisgarh, Delhi, Uttar Pradesh, Uttarakhand, Punjab and Himachal Pradesh. Your Company has its Registered Office in Jaipur, Rajasthan, and its branch network as on March 31, 2021 vis-avis the previous Financial Year is detailed hereunder:
|
State |
Branches (As on March 31, 2021) |
Branches (As on March 31, 2020) |
|
Rajasthan |
95 |
88 |
|
Maharashtra |
44 |
42 |
|
Gujarat |
39 |
37 |
|
Madhya Pradesh |
40 |
36 |
|
Haryana |
15 |
14 |
|
Chhattisgarh |
7 |
5 |
|
Delhi |
4 |
4 |
|
Uttar Pradesh |
21 |
15 |
|
Uttarakhand |
9 |
8 |
|
Punjab |
2 |
1 |
|
Himachal Pradesh |
4 |
- |
|
Total number of branches |
280 |
250 |
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Board of the Company comprises nine Directors, consisting of three Independent Directors (including two Women Directors), five Non-Executive Nominee Directors and a Managing Director and CEO as on March 31, 2021 who bring in a wide range of skills and experience to the Board.
|
The Board of Directors of the Company comprises: |
||
|
Name of the Director |
Designation |
DIN |
|
Mr. Sandeep Tandon |
Chairperson and Independent Director |
00054553 |
|
Mr. Sushil Kumar Agarwal |
Managing Director and CEO |
03154532 |
|
Mrs. Kalpana Iyer |
Independent Director |
01874130 |
|
Mrs. Soumya Rajan |
Independent Director |
03579199 |
|
Mr. Ramchandra Kasargod Kamath |
Non-Executive Nominee Director |
01715073 |
|
Mr. Vivek Vig |
Non-Executive Nominee Director |
01117418 |
|
Mr. Nishant Sharma |
Promoter Nominee Director |
03117012 |
|
Mr. Manas Tandon |
Promoter Nominee Director |
05254602 |
|
Mr. Kartikeya Dhruv Kaji |
Promoter Nominee Director |
07641723 |
The Independent Directors have confirmed that they satisfy the criteria prescribed for Independent Directors as stipulated in the provisions of the Section 149(6) of the Act and Regulation 16(1)(b) & 25 of SEBI LODR Regulations. The names of all the Independent Directors of the Company have been included in the Independent Directorâs databank maintained by Indian Institute of Corporate Affairs (âIICAâ). The Company has obtained declaration of independence from all the Independent Directors of the Company. 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/MCA or any such statutory authority. The same forms part of this Annual Report as âAnnexure-1â.
Appointment & Resignation of Directors Appointments
During the Financial Year under review, the Board at its Meeting held on May 14, 2020 reappointed Mr. Sandeep Tandon, Independent Director of the Company as Chairperson of the Board with effect from conclusion of Tenth Annual General Meeting (âAGMâ) of the Company held on July 22,
2020, who shall hold office up to the date of ensuing AGM.
The Members of the Company at 10th AGM held on July 22, 2020 had approved the appointment of Mrs. Soumya Rajan as an Independent Director of the Company not liable to retire by rotation, to hold office for a term of 5 (five) consecutive years effective from August 29, 2019 till August 28, 2024.
Reappointments
The Board at its Meeting held on April 29, 2021, on the basis of recommendation of Nomination & Remuneration Committee, reappointed Mrs. Kalpana Iyer as an Independent Director of the Company not liable to retire by rotation, to hold office for a second term of 5 consecutive years effective from June 23,
2021. Her reappointment is being proposed at the ensuing AGM of the Company. Mrs. Iyer presently serving as Chairperson of Audit Committee and Member of CSR Committee. Your Board believes that it would be in the beneficial interest of the Company to continue to avail her services as an Independent Director viewing her vast experience and contribution to the Company. Her reappointment as an Independent Director of the Company is placed before the Shareholders for consideration and approval.
Resignation or Retirement
During the Financial Year under review, none of the Directors of the Company resigned from the Board of the Company.
Directors Retiring by Rotation
Pursuant to the provisions of Section 152 of the Act, Mr. Kartikeya Dhruv Kaji and Mr. Manas Tandon, Promoter Nominee Directors of the Company, retired and being eligible, were re-appointed with the approval of Members at the 10th AGM held on July 22, 2020.
Further, in accordance with the provisions of the Act, Mr. Nishant Sharma, Promoter Nominee Director and Mr. Vivek Vig, Nominee Director of the Company are liable to retire by rotation at the ensuing 11th AGM of the Company. They are eligible and have offered themselves for re-appointment. Resolutions for their reappointment are being proposed at the 11th AGM and their Profiles are included in the Notice of the 11th AGM.
Appointments/Resignations of the Key Managerial Personnel (KMP)
Mr. Sushil Kumar Agarwal- MD and CEO, Mr. Ghanshyam Rawat- Chief Financial Officer and Mr. Sharad Pathak-Company Secretary and Compliance Officer are the KMP in terms of Section 2(51) of the Act.
No KMP has been appointed or resigned from the Company during the Financial Year under review.
Disclosure under Section 197(14) of the Act
The MD and CEO of the Company has not received any commission from the Companyâs holding or subsidiary company.
Number of Board Meetings held during the Financial Year
During the Financial Year 2020-21, 4 (Four) Board Meetings were convened and held through Video Conference facility. By taking precautionary measures against COVID-19, MCA has allowed holding Meetings through Video Conferencing. MCA issued circulars to extend the time period for conducting Board Meetings through Video Conference /Other Audio-Visual Means for approving financial statements, Boardâs Report, Prospectus and other restricted agenda items by its notifications dated March 18, 2020, June 23, 2020, September 28, 2020 and December 30, 2020 respectively. MCA as a onetime relaxation extended the gap between two consecutive meetings of the Board to 180 days instead of 120 days as required under the Act, but your Company standing by its philosophy, complied with all the earlier provisions and the Board Meetings were scheduled with a gap, not exceeding 120 days between any two Meetings during the year under review. The details related to the Board Meetings are appended in Corporate Governance Report forming part of this Report.
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 defined the manner of evaluation as per the provisions of the Act, SEBI LODR Regulations for the Evaluation of performance of the Board, Committees of Board & Individual Directors.
The âPolicy on Nominations & Remuneration for Directors, Key Managerial Executives, Senior Management and Other Employeesâ (âRemuneration Policyâ) of the Company is placed on the website of the Company.
The Remuneration paid to the Directors is in line with the Remuneration Policy of the Company. Details of Remuneration paid to all the Directors during the Financial Year 2020-21 is more particularly defined in Annual Return in form âMGT-7â as available on the website of the Company and can be accessed at https://www.aavas.in/investor-relations/annual-reports.
The Nomination & Remuneration Policy can be accessed through the following link https://www.aavas.in/remuneration-policy.
COMMITTEES OF THE BOARD
The Company has the following Nine (9) 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 & Remuneration Committee (NRC)
3. Stakeholders Relationship Committee (SRC)
4. Corporate Social Responsibility (CSR) Committee
5. Risk Management Committee (RMC)
6. Asset Liability Management Committee (ALCO)
7. IT Strategy Committee
8. Executive Committee
9. Customer Service & Grievance Redressal (CS&GR) Committee
During the Financial Year under review, all 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.
EMPLOYEE STOCK OPTION (ESOP) SCHEMES ESOP-2020
During the Financial Year under review, âEquity Stock Option Plan for Employees 2020â (âESOP-2020â) has been approved by Members in the 10th AGM of the Company held on July 22, 2020.
The ESOP-2020 empowers the Board and Nomination & Remuneration Committee to execute the scheme.
During the Financial Year under review, there have been no changes in the scheme.
The above manner is based on the Guidance Note on Board Evaluation issued by SEBI on January 05, 2017.
Further, your Company is adhering to the Fit and Proper Criteria as laid down under RBI Master Directions 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 Board carried out the evaluation of Directors performance and its own performance and Statutory Board Committees namely, Audit Committee, Nomination & Remuneration Committee, Corporate Social Responsibility (âCSRâ) Committee, Stakeholders Relationship Committee and Risk Management Committee and all the Independent Directors without the presence of the Director being evaluated. The Board expressed its satisfaction on performance evaluation.
During the Financial Year under review, a separate Meeting of the Independent Directors was held on October 16, 2020, without the attendance of Non-Independent Directors and the Management of the Company to review the performance of the Non-Independent Directors and the 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 as âAnnexure-2â. As required under the SEBI LODR Regulations, a certificate from Mr. Manoj Maheshwari, Practicing Company Secretary (Membership No. FCS 3355), partner of M/s V. M. & Associates, Company Secretaries, certifying that the Company has complied with the provisions of Corporate Governance as stipulated by SEBI LODR Regulations has been obtained. The said certificate forms part of the Directorsâ Report as âAnnexure-3â.
Companyâs Policy on Directorâs Appointment, Remuneration & Evaluation
The Board on the recommendation of the Nomination & Remuneration Committee adopted a âPolicy on Nominations & Remuneration for Directors, Key Managerial Executives, Senior Management and Other Employeesâ, 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.
|
Other ESOP Schemes |
|||||
|
Sl. No. |
Particulars |
Equity Stock Option Plan for Employees 2016 |
Equity Stock Option Plan for Management Team 2016 |
Equity Stock Option Plan for Directors 2016 |
ESOP 2019 |
|
A |
Date of Shareholdersâ approval |
The Schemes was approved by the Shareholders of the Company by a Special Resolution passed on February 22, 2017. |
The scheme was approved by the Shareholders of the Company by a Special Resolution passed on August 01, 2019. |
||
|
B |
Authorization |
The schemes empowers the Board and Nomination & Remuneration Committee to execute the scheme. |
|||
|
C |
Variation (if any) |
During the Financial Year under review, there have been no changes in the schemes. |
|||
All the above stated ESOP plans are in compliance with the provisions of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (âSEBI SBEB Regulationsâ).
The Nomination & Remuneration Committee monitors the ESOP Schemes in compliance with the Act, SEBI SBEB Regulations and SEBI LODR Regulations. The Company shall make available at the ensuing AGM a certificate received from its Auditors confirming that the above ESOP Schemes have been implemented in accordance with the SEBI SBEB Regulations and are as per the Resolutions passed by the Members of the Company for the inspection of the Members of the Company by electronic means. 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.
Statutory Auditors
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 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 to be held in the Calendar Year 2022.
The RBI on April 27, 2021 issued the fresh guidelines for appointment of Statutory Auditors. The provisions of guidelines states that Statutory Audit firm is required to be rotated after completion of a period of 3 years. The guidelines have to be adopted from the second half of Financial Year 2021-22 onwards. Since M/s S.R. Batliboi & Associates LLP, Chartered Accountants has completed the specified time period as the Statutory Auditors, the Company would have to appoint new audit firm for conducting the Statutory Audit for a continuous period of three years from Financial Year 2021-22. The Company is in the process of identifying suitable audit firms and the requisite approval of the Members will be sought at a future date. Meanwhile, the existing Statutory Audit firm will continue to act as Statutory Auditors of the Company as per
Auditorsâ Report
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 the Financial Year 2020-21 and the Report is self-explanatory.
Further, the Statutory 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, Company Secretaries (Firm Registration No: P1984RJ039200) were appointed as Secretarial Auditors to conduct the Secretarial Audit of the Company for the Financial Year 2020-21. The Report of Secretarial Auditors for the Financial Year 2020-21 is annexed to this Report as âAnnexure-4â.
The Report of Secretarial Auditors is self-explanatory and there were no observations or qualifications or adverse remarks in their Report.
Further, the Secretarial Auditors have not reported any fraud in terms of Section 143(12) of the Act.
The Board of Directors of the Company at its meeting held on April 29, 2021, appointed M/s. Chandrasekaran Associates, Practicing Company Secretaries as Secretarial Auditors of the Company for the Financial Year 2021-22.
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.
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 at periodic intervals.
The Audit Committee reviews and evaluates adequacy and effectiveness of the Companyâs internal control environment and monitors the implementation of audit recommendations.
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 Companyâs 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 are no material changes and commitments affecting the financial position of the Company, which have occurred after March 31, 2021 till the date of this report.
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 Companyâs operations in future.
Being an HFC, the Company is not required to maintain cost records as per sub-section (1) of Section 148 of the Act.
Technology is a key enabler and backbone of the Companyâs business operations. Your Company has created robust technology framework for seamlessly conducting all its business operations across sourcing, underwriting, disbursement, collections, and customer service functions. âCustomer Firstâ has been the theme for Financial Year 2020-21, as a part of which, the Company has taken several initiatives to deliver greater customer experience by leveraging multiple digital channels and it has helped service our customers uninterruptedly even during multiple lockdowns.
Employees of the Company are equipped with technology systems to service customers without location constraints. Multi-lingual call center teams of the Company are able to operate remotely and service customers from wherever they are.
Your Company worked in connecting with existing Customers, Employees and business partners by involving them to refer business leads under various referral programs. It leveraged the power of technology with a seamless flow of information across frontline digital systems and backend operational systems to make this possible. This led to a swifter conversion of leads to loans and resulted in gradual increase in volume of lead flow and disbursements through such emerging channels.
Your Company strongly believes that technology will continue to be a key business enabler going forward and it would like to leverage new-age technologies to the best possible level.
The RBI has mandated the applicability of Master Direction - Information Technology Framework for the NBFC Sector dated June 08, 2017 on HFCs 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 agenciesâ suggestions and recommendations are reported to the IT Strategy Committee and Audit Committee and implemented wherever found feasible.
FAMILIARIZATION 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 via the following link: https://www.aavas.in/familiarization-programme.
Your Companyâs success depends largely upon the quality and competence of its human capital. Attracting and retaining talented professionals is therefore a key element of the Companyâs strategy and a significant source of competitive advantage.
Your Company has a team of dedicated individuals and qualified professionals like Chartered Accountants, Management Professionals, Company Secretaries, Lawyers, Engineers and
Software Developers having academic qualifications from various premier institutions and relevant industry experience to strengthen and grow the business of the Company. Across all its business operations, your Company had a workforce of 4336 permanent employees as on March 31, 2021.
Your Company provides induction training to all its new recruits to help them better understand the mission, vision and values of the Company and to help them align with its culture. The Company has been organizing regular in-house training programmes for all its employees besides also nominating employees to attend external training programmes across various specialied functions. Further, the Company sponsors its employees to pursue professional courses from reputed institutes such as Indian Institutes of Management to ensure career enrichment and personal development.
The outbreak of COVID-19 pandemic resulted in lot of fear, insecurity and desperation across the world. During these tough times, the Company prioritized safety and wellbeing of its employees. In strict adherence to the local guidelines, the Company incorporated a culture of social distancing across all its branches and allowed employees to work from home. The Company also engaged doctors, who were readily available on-call for employees seeking medical advice. The Company offered cashless medical facilities and assistance in cases where any employee or family member tested COVID positive, including treatment at home, hospitalization, plasma arrangement and medicines. While a lot of work was being done virtually, the Company also made sincere efforts to keep in touch with employees and inquire about their wellbeing with the help of HR Connect and COVID-awareness webinars.
During the Financial Year under review, your Company implemented COVID-19 relief policies for its employees. In case any employee contracts COVID-19, the policy provides for reimbursement of COVID-19 testing expenses and financial assistance for medical treatment. In case of an eventuality of death of an employee due to COVID-19, the policy provides for Ex-gratia payment of monthly support to the family of deceased employees up to 24 months, compassionate employment to Spouse or Adult Child (18 Years & above) of deceased employee on merit and early vesting of ESOPs. In addition, all the Companyâs employees are covered under Group Term Life Insurance Plan, which provides an adequate safeguard to family of deceased employees
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 risks faced by the Company are identified and assessed. Your Company has set up a policy framework for
ensuring better management of various risk associated with the business. The principle business risks (assessed function-wise) are credit risk, concentration risk, market risk, asset-liability management risk, liquidity risk and reputation risk. These are measured and reported to the Risk Management Committee on a quarterly basis.
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 customerâs business place and residence, in house technical and legal verification, conservative loan to value parameters, and insurance coverage. 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.
In compliance with the clause 51 of Chapter IX- Corporate Governance of Non-Banking Financial Company -Housing Finance Company (Reserve Bank) Directions, 2021, Mr. Ashutosh Atre is designated as Chief Risk Officer (CRO) of the Company who has direct reporting to MD & CEO of the Company.
In accordance with the above referred directions, 4 (Four) separate Meetings were held between Mr. Atre and the Board without the presence of MD and CEO of the Company.
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, which provides a platform to 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. Employees have been facilitated direct access to the Chairperson of Audit Committee, if need be. The whistle blower policy is placed on the website of the Company and can be accessed at https:// www.aavas.in/vigil-mechanism-policy.
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 employees, which may fall within the ambit of âSexual Harassmentâ at workplace. Your Company recognizes and promotes the right of women to get 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 Complaints 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 of during the Financial Year 2020-21:
No. of complaints received: Nil
No. of complaints disposed of: Nil
CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING IN COMPANYâS SECURITIES
Your Company has formulated Code of Conduct for Prevention of Insider Trading in Companyâs Securities (âCodeâ) 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.
PARTICULARS OF HOLDING/SUBSIDIARY/ ASSOCIATE COMPANIES
Your Company doesnât have any holding company.
The Shareholder having the substantial interest in the Company is Lake District Holdings Limited.
As on March 31, 2021, your Company has one unlisted wholly owned subsidiary named âAAVAS FINSERV LIMITEDâ. 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 âAnnexure-6â 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.
INVESTOR RELATIONS
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 Investors/Analysts Day, Individual Meetings, Videoconferences, 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 Companyâs website under the Investors section. Your Company also intimates stock 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.
EMPLOYEE REMUNERATION
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 âAnnexure-7â to the Directorsâ Report.
In accordance with the provisions of Rule 5(2) of the above-mentioned rules, the names and particulars of the top ten employees in terms of remuneration drawn are set out in the Annexure to this report. In terms of the provisions of Section 136(1) of the Act, the Directorsâ Report including the said annexure is being sent to all Shareholders of the Company.
CSR INITIATIVE
In line with the provisions of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules 2014, Aavas Foundation- a Public Charitable Trust settled by the Company for the purpose of carrying its CSR Activities has undertaken various CSR projects in the area of health care, 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.
The national and local impact of the COVID-19 crisis was highly heterogeneous, with significant implications for crisis management and policy responses not only at the company
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:
The Company took a major leap in terms of technology integrations in customer service, which resulted in automation of partial disbursement flow and enabled the customers to request their next disbursal tranche while sitting in the comfort of their homes. It has real time connection with the Bharat Bill Payment System (BBPS) and customers of the Company can now pay their dues digitally through various UPI Payment Apps in India.
As the Company took steps forward in Digitization, it is proud to state that more than 25% of our customer service requests are addressed via various digital channels and a significant volume of loan enquiries are flowing through digital channels, given the nature of customer segment that we are serving.
The Company amalgamated technology with advanced analytics, having launched a variety of machine-learning and AI-powered tools from early days to assess risks and probability of defaults. Its enterprise data and analytics platforms give real time view of the business and enable to track productivity at every level. It has adopted a highly advanced technology governance standards and cyber security framework as per industry best practices.
(ii) the benefits derived like product improvement, cost reduction, product development or import substitution: The Company consistently monitored its cost-to-income ratio, leveraging economies-of-scale, increasing manpower productivity with growing disbursements through the enhanced use of information technology systems, resulting in quicker loan turnaround time and reducing transaction costs.
(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.
level but also at community level. The Company being a responsible Corporate has supported the community since lockdown. It focuses its CSR efforts on such areas where it could provide maximum benefits to adversely affected groups. During the previous Financial Year, it worked with Government Medical department towards arranging and supplying oxygen concentrators, PPE kits, sanitizers and masks and gloves to corona warriors, supplying cooked food to impacted community, starting awareness programs and producing more than 80,000 cotton masks for distribution in the community, with the help of women residing in rural areas, in order to support their livelihood. The Company devoted its best efforts to support migrant workers and others who suffered the most during lockdown.
The Company shall continue its engagement with stakeholders including NGOs, professional bodies/ forums and the Government and would take up such CSR activities in line with the Governmentâs intent, to maximize the support to societies affected due to COVID-19 pandemic.
The Annual Report on CSR Activities, which forms part of the Directorsâ Report, is annexed as âAnnexure-8â 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 do not require intensive consumption of electricity. However, your Company is taking necessary steps 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 Equipments and power saving lamps, LEDs that have been installed in branches 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:
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 H1,829.26 lakh. The aforesaid details are shown in the Note No. 39 of notes to the accounts, forming part of the Standalone Financial Statements. The Members are requested to refer to this Note.
BUSINESS RESPONSIBILITY REPORTING
As required under Regulation 34(2)(f) of SEBI LODR Regulations, Business Responsibility Report describing the initiatives taken by the Company from an environmental, social and governance perspective, forms part of this Annual Report as âAnnexure-10â.
Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Act, read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014. The Annual Return in form MGT-7 as at March 31, 2021 is available on the website of the Company and can be accessed at https://www. aavas.in/investor-relations/annual-reports.
ADDITIONAL DISCLOSURES UNDER COMPANIES (ACCOUNTS) RULES, 2014
a. The details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the Financial Year:
During the Financial Year under review, the Company has made neither any application nor any proceeding is pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016), therefore, it is not applicable to the Company.
b. The details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof.
During the Financial Year under review, it is not applicable to the Company.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Since the Company is an HFC, 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 armâs 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 not entered into any arrangements, 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 is not applicable to the Company.
Further as required by RBI Master Directions, âPolicy on transactions with Related Partiesâ is given as âAnnexure-9â 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 clause 55 of chapter IX-Corporate Governance of RBI Master Directions, which inter-alia, defines the legal, contractual and social responsibilities of the Company towards its various stakeholders and lays down the Corporate Governance practices of the Company.
The said policy is available on the website of the Company and can be accessed at https://www.aavas.in/internal-guidelines-on-corporate-governance.
DIRECTORSâ 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.
Your Directors would like to acknowledge the role of all its Stakeholders viz., Shareholders, Debenture holders, Bankers, s Lenders, Borrowers, Debenture Trustees and all others for the s continued support, confidence and faith they have reposed in the Company amidst the ongoing COVID-19 pandemic.
Your Directors further take this opportunity to appreciate and convey their thanks to 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
RBI, NHB, SEBI, MCA, Insurance Regulatory and Development
Authority of India (IRDAI), Registrar of Companies-Rajasthan, s
l BSE, National Stock Exchange of India Limited, National Securities Depository Limited and Central Depository Services (India) Limited.
Your Directors thank the Rating Agencies (ICRA, CARE and India Ratings & Research Ltd.), local /statutory authorities and s all others for their whole-hearted 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 executives, officers, staff and the Senior Management team of the Company, in recording an excellent performance by the Company during the Financial Year.
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 had 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 and RBI.
For and on behalf of the Board of Directors AAVAS FINANCIERS LIMITED
Sushil Kumar Agarwal Manas Tandon
Managing Director & CEO Promoter Nominee Director
(DIN: 03154532) (DIN: 05254602)
Date: April 29, 2021 Date: April 29, 2021
Place: Jaipur Place: Mumbai
Registered and Corporate Office:
201-202, 2nd Floor, South End Square,
Mansarover Industrial Area, Jaipur 302 020, Rajasthan, India
CIN: L65922RJ2011PLC034297
Tel: 91 14 1661 8800 Fax: 91 14 1661 8861
E-mail: [email protected] | Website: www.aavas.in
Mar 31, 2019
The 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.
FINANCIAL PERFORMANCE
The summarized financial performances for the financial year ended March 31, 2019 are as under:
(Rs. in crore)
|
Particulars |
For the Year ended March 31, 2019 |
For the Year ended March 31, 2018 |
|
|
A |
Total Income |
710.97 |
494.44 |
|
Less: |
|||
|
- 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 RS.710.97 crore and Total Comprehensive Income of RS.176.14 crore for the financial year ended March 31, 2019, as against RS.494.44 crore and RS.93.16 crore respectively for the previous financial year.
IND AS IMPLEMENTATION
Your Company has adopted Indian Accounting Standards (âInd ASâ) notified under Section 133 of the Companies Act, 2013 (âthe Actâ) 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 (âNHBâ) (collectively referred to as âthe Previous GAAPâ). 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.
DIVIDEND
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 (âArticlesâ) 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 (âIPOâ) of 1,99,79,503 Equity Shares of face value of RS.10/- each for cash at a price of RS.821 per Equity Share (including a share premium of RS.811 per Equity Share). The offer comprised of fresh issue of 43,84,897 Equity Shares by your Company and Offer for Sale of 1,55,94,606 Equity Shares by Lake District Holdings Limited and Partners Group ESCL Limited (âPromotersâ), by Kedaara Capital Alternative Investment Fund-Kedaara Capital AIF 1 (âExisting Investorâ), by Partners Group Private Equity Master Fund LLC (âMembers of Promoter Groupâ), 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 (âBSEâ) and National Stock Exchange of India Limited (âNSEâ) 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.
SHARE CAPITAL
The Issued and paid-up Equity Share Capital of the Company as on March 31, 2019 stood at RS.78,10,79,010 (Rupees Seventy eight crore ten lakh seventy nine thousand ten) consisting of 7,81,07,901 (Seven crore eighty one lakh seven thousand nine hundred one) Equity Shares of RS.10/- each as compared to RS.69,17,28,346 (Rupees Sixty nine crore seventeen lakh twenty eight thousand three hundred and forty six) consisting of 6,99,50,891 (Six crore ninety nine lakh fifty thousand eight hundred ninety one) Equity Shares of RS.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 7,20,094 partly paid Equity Shares into the fully paid Equity Shares of face value of RS.10/- each, consequent upon receipt of balance call money of RS.6 per share.
- Conversion of 4,32,500 partly paid Equity Shares into the fully paid Equity Shares of face value of RS.10/- each consequent upon receipt of balance call money of RS.8 per share.
- Conversion of 8,00,000 convertible share warrants into fully paid Equity Shares of face value of RS.10/- each.
- Issuance and allotment of 29,72,1 1 3 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 43,84,897 Equity Shares of RS.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 Companyâs 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 Companyâs 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 (âMDAâ) 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 Companyâs financial snapshot:-
Income & Profits
Total Income grew by 43.79% to RS.710.97 crore for the financial year ended March 31, 2019 as compared to RS.494.44 crore for the previous financial year. Profit Before Tax (PBT) was 91.87% higher at RS.257.69 crore as compared to RS.134.31 crore for the previous financial year.
The Total Comprehensive Income for the financial year 2018-19 has increased by 89.06% from RS.93.16 crore in the previous financial year to RS.176.14 crore in the current financial year.
Sanctions
During the financial year under review, your Company sanctioned housing loans for RS.2710.82 crore as compared to RS.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 RS.8612.20 crore as at March 31, 2019. Your Company has granted no loan against the Collateral of Gold Jewellery.
Disbursements
During the financial year under review, your Company disbursed housing loans for RS.2672.35 crore as compared to RS.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 RS.8167.52 crore.
Assets under Management (AUM)
The AUM of your Company stood at RS.5941.61 crore (including assignment of RS.1357.46 crore) as at March 31, 2019 as against RS.4073.02 crore in the previous financial year, with a growth of 45.88%.
As of March 31, 2019, the average loan sanctioned was RS.8.59 lakh and Average tenure was 180.63 months in the AUM (on origination basis).
Affordable Housing
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 MOUâs 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 througRs.1907 loan accounts and credited the subsidy to the respective customersâ loan accounts.
Since the inception of the scheme, your Company has received CLSS subsidy of RS.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.
Non-Performing Assets
Your Company is in adherence to the provision of Ind AS with respect to computation of Non-Performing Assets (âNPAsâ). Your Companyâs 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 RS.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 Companyâs 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%.
DEPOSITS
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 Companyâs 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 Companyâs financial strength and growth outlook.
Further ICRA has upgraded the rating outlook of your Company from âICRA A â/Stable to âICRA A â/ Positive.
Indiaâs 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 |
âCARE AA- / Stableâ |
|
Short Term Rating |
Commercial Paper |
âCAREA1 â |
|
|
ICRA |
Long Term Rating |
Long Term Banking Facilities and Non-Convertible Debentures |
âICRA A / Positiveâ |
|
Short Term Rating |
Commercial Paper |
âICRA A1 â |
|
|
CRISIL |
Long Term Rating |
Long Term Banking Facilities |
âCRISIL A / Stableâ |
The ratings continue to reflect your Companyâs 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 Companyâs 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.
ISO CERTIFICATIONS
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.
RESOURCE MOBILIZATION
Your Companyâs 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 RS.7,000 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 Companyâs 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 RS.630 crore and has availed loans aggregating to RS.645 crore. The outstanding term loans from Banks and Financial Institutions as at March 31, 2019 were RS.2,041 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 RS.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 RS.400 crore in addition to the approval of undrawn limit of RS.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 âSpecial Urban Low-Income Housingâ, âUrban Housing Fundâ, âAffordable Housing Fundâ and âRegular Refinance Schemeâ and outstanding at the end of the current financial year stood at RS.897.21 crore (previous year RS.365.10 crore).
Your Company has availed funds of RS.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 RS.200 crore in the nature of senior subordinated debt to CDC Group PLC (âCDCâ), the United Kingdomâs Development Finance Institution. This is your Companyâs 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 Companyâs outstanding balance of Masala Bond issued to Multilaterals stood at RS.198.40 crore.
Non-Convertible Debentures (âNCDsâ) issued to Domestic Financial Institutions
During the financial year under review, your Company has raised RS.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 NCDâs amounting to RS.150 crore before their maturity and RS.10 crore on maturity during the financial year under review.
As on March 31, 2019, the Companyâs outstanding NCDs stood at RS.238.65 crore as compared to RS.388.20 crore as on March 31, 2018. Your Companyâs Debentures are listed on Wholesale Debt Market segment of BSE Limited.
As on March 31, 2019, the Companyâs outstanding subordinated debt in the form of NCDs stood at RS.99.58 crore as compared to RS.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:
- Nil
(ii) The total amount in respect of such Debentures remaining unclaimed or unpaid beyond the date of such Debentures become due for redemption:
- Nil
Commercial Paper (CP)
Your Company has not issued any Commercial Paper & Short-Term Instrument during the financial year 2018-19.
Debenture Trustees
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.
BRANCH EXPANSION
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 througRs.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-a-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) |
|
Rajasthan |
78 |
72 |
|
Maharashtra |
38 |
33 |
|
Gujarat |
32 |
27 |
|
Madhya Pradesh |
32 |
24 |
|
Haryana |
11 |
3 |
|
Chhattisgarh |
5 |
3 |
|
Delhi |
2 |
2 |
|
Uttar Pradesh |
6 |
1 |
|
Uttarakhand |
5 |
- |
|
Punjab |
1 |
- |
|
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 (âMD and CEOâ) of the Company from Whole Time Director and Chief Executive Officer (âWTD and CEOâ), 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 (âSEBI LODR Regulationsâ). 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 âAnnexure-1â to the Directors Report.
Appointment & Resignation of Directors
Appointments
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.
Re-appointments
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 (âMD and CEOâ) of the Company from Whole Time Director and Chief Executive Officer (âWTD and CEOâ), 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 (âMD and CEOâ) of the Company from Whole Time Director and Chief Executive Officer (âWTD and CEOâ), 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 âHousing Finance Companies-Corporate Governance (National Housing Bank) Directions, 2016â 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 Directorâs 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 as âAnnexure-2â. 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 âAnnexure-3â.
Companyâs Policy on Directorâs Appointment, Remuneration & Evaluation
The Board on the recommendation of the Nomination & Remuneration Committee adopted a âPolicy on Nominations & Remuneration for Directors, Key Managerial Executives, Senior Management and Other Employeesâ, 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 âPolicy on Nominations & Remuneration for Directors, Key Managerial Executives, Senior Management and Other Employeesâ, âRemuneration Policyâ 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 âMGT-9â attached to this report as âAnnexure-9â.
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 Companyâs 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 âESOP-2016â) as following:
1. EQUITY STOCK OPTION PLAN FOR EMPLOYEES 2016 (âESOP 2016-Iâ)
2. EQUITY STOCK OPTION PLAN FOR MANAGEMENT TEAM 2016 (âESOP 2016-IIâ)
3. EQUITY STOCK OPTION PLAN FOR DIRECTORS 2016 (âESOP 2016-IIIâ)
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 (âESOP 2016-111â) 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 (âSEBI SBEB Regulationsâ) read with SEBI LODR Regulations, the Members of the Company ratified the âESOP-2016â 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 RS.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.
AUDITORS
Statutory Auditors
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.
Auditorâs Report
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 âAnnexure-4â.
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 âAavas Foundationâ 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 Companyâs 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 Companyâs 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 Directorâs 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 Companyâs 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.
INFORMATION TECHNOLOGY
Your Company has developed a fully equipped âCore Housing Finance Solutions Platformâ 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 (âGuidelinesâ) 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 Companyâs 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 Companyâs 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 Companyâs 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 customerâs 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 COMPANYâS SECURITIES
Your Company has formulated Code of Conduct for Prevention of Insider Trading in Companyâs Securities (âCodeâ) 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 âAnnexure-5â.
PARTICULARS OF HOLDING/SUBSIDIARY/ ASSOCIATE COMPANIES
Your Company doesnât 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 âAAVAS FINSERV LIMITEDâ, 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 âAnnexure-6â 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.
INVESTOR RELATIONS
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, Videoconferences, 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 Companyâs 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.
EMPLOYEE REMUNERATION
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 âAnnexure-7â to the Directorsâ 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 Directorsâ 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 protected].
CORPORATE SOCIAL RESPONSIBILITY INITIATIVE
In line with the provisions of Section 135 of the Act read 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 âAavas Foundationâ 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 âAnnexure-8â 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 doesnât 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 Equipmentâs 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 âCore Housing Finance Solutions Platformâ 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 RS.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 âAnnexure-9â.
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 âSexual Harassmentâ 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 armâs 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 âAnnexure-10â.
Further as required by NHB notification no. NHB.HFC. CG-DIR.1/MD&CEO/2016 dated February 9, 2017, âPolicy on transactions with Related Partiesâ is given as âAnnexure-11â 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.
DIRECTORSâ 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.
ACKNOWLEDGEMENTS
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 (âBSEâ) and National Stock Exchange of India Limited (âNSEâ), 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 whole hearted 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
Place: Jaipur
Mar 31, 2018
To,
The Shareholders,
AAVAS FINANCIERS LIMITED (âCOMPANYâ)
(Formerly Known as âAu Housing Finance Limitedâ)
The Directors are pleased to present the Eighth Annual Report on the operations of the Company together with the Audited Financial Statements (standalone and consolidated)for the year ended March 31, 2018.
FINANCIAL PERFORMANCE
The summarized financial performances for the year ended March 31, 2018 are as under:
(Rs. in Crores)
|
Particulars |
For the Year ended March 31, 2018 |
For the Year ended March 31, 2017 |
|
Total Income |
457.24 |
305.49 |
|
Less: Total Expenditure before Depreciation & Amortization and provision |
307.96 |
207.39 |
|
Less: Provisions & Write offs |
1.90 |
6.68 |
|
Less: Depreciation & Amortization |
5.63 |
2.77 |
|
Total Expenses |
315.49 |
216.84 |
|
Profit Before Tax |
141.75 |
88.65 |
|
Less: Provision for Taxations (Net of Deferred Tax) |
48.82 |
30.80 |
|
Profit After Tax |
92.93 |
57.85 |
|
Transfer to Statutory Reserve |
20.17 |
12.86 |
Company posted Total Income (Total Interest Income and Other Income) of RS.457.24 Crores and Net Profit of RS.92.93 Crores for the year ended March 31, 2018, as against RS.305.49 Crores and RS.57.85 Crores respectively in the previous year.
DIVIDEND
Your Directors have considered reinvesting the profits into the business of the Company to build a strong reserve base in the long-term interests and to support the growth of the business of the Company. Accordingly, no dividend has been recommended for year ended March 31, 2018.
SHARE CAPITAL
During the year under review, pursuant to the approval of the Members of the Company, the Authorized Share Capital of the Company was increased from RS.650,000,000/-(Rupees Sixty Five Crores) to RS.850,000,000/-(Rupees Eighty Five Crores).
The Paid-up Share Capital of the Company as on 31st March, 2018 stood at RS.691,728,346 (Sixty Nine Crore Seventeen Lakhs Twenty Eight Thousand Three Hundred Forty Six) consisting of 69,950,891 (Six Crore Ninety Nine Lakh Fifty Thousand Eight Hundred Ninety One) Equity Shares of RS.10/- each as compared to RS.581,635,818 (Fifty Eight Crore Sixteen Lakh Thirty Five Thousand Eight Hundred Eighteen) consisting of 58,739,657 (Five Crore Eighty Seven Lakh Thirty Nine Thousand Six Hundred Fifty Seven) Equity Shares of RS.10/- in previous year.
During the year under review, the Paid up equity share Capital of the Company has mainly increased due to the issuance and allotment of equity shares through the preferential basis, Right basis and upon exercise of Stock options to the existing as well as new shareholders of the Company.
During the Reported period, the Company has issued and allotted the fully and partly paid up equity shares and Convertible Share Warrants, the details of which are as below:-
1. EQUITY SHARES
Fully Paid up Equity Shares
- 264,662 (Two Lakh Sixty Four Thousand Six Hundred Sixty Two) Equity Shares of RS.10/- Per share aggregating to RS.86,809,136/- (Eight Crore Sixty Eight Lakh Nine Thousand one hundred Thirty Six) on Preferential issue Basis.
- 9,291,521 (Ninety Two Lakh Ninety One Thousand Five Hundred Twenty One) Equity Shares of RS.10/-Per share aggregating to RS.3,999,999,791/- (Three Hundred Ninety Nine Crore Ninety Nine Lakh Ninety Nine Thousand Seven Hundred Ninety one) on Rights Basis.
- 1,222,551 (Twelve Lakh Twenty Two Thousand Five Hundred Fifty One) Equity shares of RS.10/- per share aggregating to RS.263,154,103/- (Twenty Six Crore Thirty One Lakh Fifty Four Thousand One Hundred Three) pursuant to the Exercise of Stock Options.
Partly Paid up Equity Shares
During the Year under Review, Company has issued and allotted 432,500 (Four Lakh Thirty two thousand five Hundred) Equity Shares of RS.10/- per share aggregating to RS.28,372,000/- (Two Crore Eighty Three Lakhs Seventy Two Thousand) on preferential issue basis. Further the Company has received RS.2/- per share as application money.
Receipt of Call Money
During the Year under Review, Company has received RS.2/- per share aggregating to RS.31,000,047/- (Three Crore Ten Lakh Forty Seven) as 1st call Money in respect to the 720,094 (Seven Lakh twenty Thousand Ninety Four) Partly Paid up equity shares of RS.10/- each.
2. CONVERTIBLE SHARE WARRANTS
During the Year under Review, Company has issued and allotted 360,000 (Three Lakh Sixty Thousand) and 440,000 (Four Lakh Forty Thousand) Share warrants convertible into equity shares of RS.328/-and RS.430.50/-per share respectively. Further the Company has received RS.3/- per Convertible share warrant as warrant subscription money.
REVIEW OF OPERATIONS
AAVAS FINANCIERS LIMITED (âCompanyâ) is registered with National Housing Bank (âNHBâ) to carry on housing finance activities in India.
Your Company endeavors towards adopting the benchmark underwriting practices backed up by robust monitoring and recovery mechanisms. The Companyâs committed in its efforts towards improving efficiency and service level in its operations.
The Companyâs main thrust continues to be focused on the affordable Housing Segment, catering to the aspirations of low and mid income Indian Families who dreams to own a home.
Your Company would work on the philosophy of Housing Financial Institution enabling credit access to the low and middle income segment for purchasing the affordable housing units.
The operating and financial performance of your Company has been covered in the Management Discussion and Analysis report which forms part of this Annual Report.
During the year, your company has delivered yet another year of resilient performance through achieving the below business figures:-
Sanctions
During the year under review, the Company sanctioned housing loans for RS.2216.98 Cr as compared to RS.1494.00 Cr in the previous year with a growth of 48.39% over the previous year. The cumulative loan sanctions since inception of the Company stood at RS.5901.38 Cr as at March 31, 2018. The Company has granted no loan against the Collateral of Gold Jewellery.
Disbursements
During the year under review, Company disbursed housing loans for RS.2051.16 Cr as compared to RS.1391.60 Cr in the previous year and recorded a growth of 47.40% in disbursements.
The cumulative loan disbursement from inception stood at March 31, 2018 was RS.5495.17 Cr.
Affordable Housing
We have built an exclusive team for the product and trained the ground staff to focus on Low Income Households Customers of EWS and LIG segment. This segment has one prime aspiration of owning their own house and thereby creating an affordable environment for their family members to live in. We thrive to create an environment and provide proper financing schemes to these families of EWS/LIG segment residing across Semi Urban and Urban areas across most of the cities of India.
Your Company has signed the MOU with the Government of India for the Credit Linked Subsidy Scheme (CLSS) under the Pradhan Mantri Awas Yojana for EWS, LIG and MIG segments. Company has been an active contributor to the scheme and has disbursed RS.4.41 Cr during the year in respect of 256 loans and credited the subsidy to the respective customersâ loan accounts.
Since inception of the scheme, company has disbursed loans wherein customers are eligible for CLSS subsidy in respect of loan amount of RS.25.32 Cr of which company has received claim of RS.6.36 Cr in respect of 441 loans.
The majority of the claims submitted are in respect of the EWS and LIG customers.
Assets under Management (AUM)
During the year under review, the AUM stood at RS.4073.02 Cr (including assignment of RS.900.65 Cr) as against RS.2693.52 Cr in the previous year, with the growth of 51.22%.
As of 31st March, 2018, the average sanctioned amount of our AUM was RS.8.62 Lakhs and Average tenure was 168.94 Months (on origination basis).
Income & Profits
Total Income grew by 49.67% to RS.457.24 Cr for the year ended 31st March, 2018 as compared to RS.305.49 Cr for the previous year. Profit before Tax (PBT) was 59.90% higher at RS.141.75 Cr as compared to RS.88.65 Cr for the previous year.
The net profit after tax for the year has increased by 60.64% from RS.57.85 Cr in the previous year to RS.92.93 Cr in the current year.
The operating and financial performance of your Company has been covered in the Management Discussion and Analysis Report which forms part of this Annual Report.
Non-Performing Assets and Provisions for Contingency
Your Company adhered to the Prudential guidelines for NonPerforming Assets (NPAs)issued by National Housing Bank under the NHB Directions, 2010, as amended from time to time. The Company did not recognize income on such NPAs and further created provisions for contingencies on standard as well as non- performing housing loans in accordance with the National Housing Bank Directions. The Company has also made additional provisions to meet unforeseen contingencies.
During the year, NHB vide notification No. NHB.HFC. DIR.18/MD&CEO/ 2017 dated August 2, 2017 reduced the provisioning requirement on Standard Individual Housing Loans from 0.40% to 0.25%.
Using a pro-active collection and recovery management system supported by analytical decision making, your company was able to contain its gross Non-Performing Assets at RS.10.69 Cr (0.34% of the portfolio) as at 31st March, 2018. The Company reviews the delinquency and loan portfolio on regular basis.
The Company coupled a defined policy with procedures to address delinquencies and collections. As a result of which Gross NPA and net NPA as at 31st March, 2018 were 0.34% and 0.26% respectively (against 0.79% and 0.60% respectively in the previous year).
Further information on the Business overview and outlook and State of the affairs of the Company is discussed in detail in the Management Discussion & Analysis
CAPITAL ADEQUACY RATIO
As required under Housing Finance Companies (NHB) Directions, 2010, [NHB Directions, 2010] your Company is presently required to maintain a minimum capital adequacy of 12% on a stand-alone basis.
Companyâs Capital Adequacy Ratio as at 31st March, 2018 was 61.55% (previous year 46.72%) which is well above the minimum required level of 12% as prescribed.
DEPOSITS
During the period under review, your Company has neither invited nor accepted nor renewed any fixed deposits from public within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.
RESOURCE MOBILIZATION
Your Companyâs borrowing policy is under the control of the Board. The Company has vide special resolution passed on July 26, 2017, under Section 180 (1) (c) of the Companies Act, 2013, 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 RS.4500 Cr and the total amount so borrowed shall remain within the limits as prescribed by National Housing Bank.
Your Company manages its borrowing structure through prudent Asset-Liability Management and takes the various measures, which includes the diversification of funding sources, tenure optimization, structured interest rates and prudent borrowing timing to maintain its borrowing cost at optimum level.
During the year under review, company continued to diversify its funding sources by exploring the Debt Capital Market through private placement of Secured and Unsecured NonConvertible Debentures; Securitization/Direct assignment, fully hedged FCNR Loans and banking products like Priority Sector/Non-Priority Sector Term loans, Cash Credit Facilities and Working Capital Demand loans. The company has also further diversified by adding 8 (Eight) new lender/Financial Partners.
The weighted average borrowing cost as at March 31, 2018 was 8.65% as against 9.48% in the previous year. As at March 31, 2018, your Companyâs sources of funding were primarily from banks and financial institutions (49.87%), followed by securitization/direct assignment (25.63%),Non-convertible debentures (11.17%), Refinancing from NHB (10.46%), and subordinated debts (2.87%).
Term Loans from Banks and Financial Institutions
During the Year, Company received fresh sanctions from banks amounting to RS.910 Cr of which Company has availed loans aggregating to RS.753 Cr. The outstanding bank term loans as at March 31, 2018 were RS.1708 Cr. Average Tenure of Bank term loan raised during the period under review is 9.29 Years
Refinance from National Housing Bank (NHB)
NHB continued its support to your company through refinance and during the year under review, your Company received refinance sanction of RS.300 Cr (previous year RS.200 Cr) under the NHB refinance scheme to Housing Finance Companies. The company availed funds from NHB under the Refinance Scheme for âSpecial urban Low income Housingâ, âUrban Housing Fundâ and âRegular Refinance Schemeâ and outstanding at the end of the current year stood at RS.365.10 Cr (previous year RS.173.04 Cr).
Your company is one of the major participant to run the Pilot under âSpecial Urban Housing Refinance Scheme for Low Income Householdsâ launched by NHB with assistance from International Development Association (IDA) an Arm of World Bank aimed for extension of credit for housing to lower income segments having informal sources of income secured either by mortgageable title over the land / property or by alternative security.
Non-Convertible Debentures (âNCDsâ)
During the year under review, your Company has raised RS.130 Cr through the issue of Secured, Redeemable, NCDs and RS.100 Cr through the issue of Unsecured, Sub-ordinated Tier II, Redeemable, NCDs on private placement basis and policy of private placement of NCDs of the Company formulated as per the guidelines issued by National Housing Bank.
As on 31st March, 2018, the Companyâs outstanding balance of Debentures stood at RS.490 Cr as compared to RS.335 Cr as on 31st March, 2017. The Companyâs Debentures are listed on Wholesale Debt Market segment of BSE Limited.
In an environment where Market is experiencing an upward trend into cost of fund, we believe that we have been able to access cost-effective debt financing due to our stable credit history, strong financial performance and conservative risk management policies, resulted A rating with Stable outlook by ICRA, A rating with Positive outlook by CARE and A rating with Stable outlook by India Rating & Research.
During the financial year under review, the interest on NonConvertible Debentures issued on private placement basis were paid by the Company on their respective due dates and there were no instances of any interest amount which were not claimed by the investors or not paid by the Company after the date on which the same became due for payment.
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.
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 - Nil
(ii) The total amount in respect of such debentures remaining unclaimed or unpaid beyond the date of such debentures become due for redemption : Nil
Debenture Trustee
Debenture Trust Agreement(s) were executed in favour of IDBI Trusteeship Services Limited for NCDs issued on private placement basis. Following are details of IDBI TRUSTEESHIP SERVICES LIMITED.
IDBI TRUSTEESHIP SERVICES LIMITED
Regd. Office: Asian Building, Ground Floor, 17, R. Kamani Marg, Ballard Estate, Mumbai - 400 001. Tel: 91 22 4080 7015 / Fax: 91 22 6631 1776 Website: www.idbitrustee.co.in
Securitization/Assignment of Loan Portfolio
Your company has actively tapped Securitization/Direct Assignment market, which enables it to create liquidity, reduce the cost of funds and minimizing asset liability mismatches.
During the year under review, your Company securitized its loan portfolio of RS.593.51 Cr through pool buyout transactions
The Securitization transaction was 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.
Commercial Paper (CP)
During the year, your company has issued Commercial Paper amounting to RS.50 Cr. Companyâs Commercial papers are rated âICRA A1 â and âCARE A1 â indicating that instrument have very strong degree of safety regarding timely payment of financial obligations. As on 31st March 2018 Commercial Papers o/s is Nil.
ALTERATION IN OBJECT CLAUSE OF MEMORANDUM OF ASSOCIATION (âMOAâ)
During the year under review, your Company has altered its Object Clause of Memorandum of Association (MOA) as per the suggestions given by the National Housing Bank during its onsite Annual inspection.
Further the altered MOA is available at the registered office of the Company in the Business hours.
BRANCH EXPANSION
Your Company has been continuously successful in establishing its branch network with a view to support its Disbursement growth, enhancing customer base and Services. During the year under review, the Company has expanded its branch network to 165 branches as of 31st March, 2018 and plans to scale up its operation to newer geographies in 2018-19.
The company has nearly doubled the branch network within the short span of time and strengthened its business in the states of Rajasthan, Maharashtra, Gujarat, Madhya Pradesh, Haryana, Delhi, Chhattisgarh and Uttar Pradesh.
The Company has its registered office in Rajasthan and its branch network comparison with the previous year is detailed hereunder:
|
State |
No. of Branches |
No. of Branches |
|
(As on 31st March, 2017) |
(As on 31st March, 2018) |
|
|
Rajasthan |
41 |
72 |
|
Maharashtra |
18 |
33 |
|
Gujarat |
16 |
27 |
|
Madhya Pradesh |
16 |
24 |
|
Haryana |
01 |
03 |
|
Chhattisgarh |
- |
03 |
|
Delhi |
01 |
02 |
|
Uttar Pradesh |
01 |
01 |
|
Total number of branches |
94 |
165 |
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Board of Directors of the Company comprises of Nine Directors,consisting of three Independent Directors, five Nominee Directors and One Whole Time Director as on 31st March, 2018 who bring in a wide range of skills and experience to the board.
The Board of Directors of the Company are as follows:-
|
Name of the Director |
Designation |
DIN |
Category |
|
Mr.Krishan Kant Rathi |
Independent Director |
00040094 |
Independent Non-Executive |
|
Mrs. Kalpana Iyer |
Independent Director |
01874130 |
Independent Non-Executive |
|
Mr. Sandeep Tandon |
Independent Director |
00054553 |
Independent Non-Executive |
|
Mr. K R Kamath |
Nominee Director |
01715073 |
Non-Executive |
|
Mr. Vivek Vig |
Nominee Director |
01117418 |
Non-Executive |
|
Mr. Nishant Sharma |
Nominee Director |
03117012 |
Non-Executive |
|
Mr. Manas Tandon |
Nominee Director |
05254602 |
Non-Executive |
|
Mr. Sushil Kumar Agarwal |
Whole Time Director & CEO |
03154532 |
Executive |
|
Mr. Kartikeya Dhruv Kaji |
Nominee Director |
07641723 |
Non-Executive |
The Independent Directors have confirmed that they satisfy the criteria prescribed for an Independent Director as stipulated in the provisions of the Section 149(6) of the Companies Act, 2013. None of the Directors have any pecuniary relationships or transactions with the Company. None of the directors of the Company are related to each other and confirmed that they are not disqualified from being appointed as directors in terms of section 164 of the Companies Act, 2013.
Appointment & Resignation of Directors
During the Year under Review, two Directors have been appointed on the Board of the Company. As required under section 160 of the Companies Act, 2013, a Notice has been received from a member proposing the name of the Directors and all directors are appointed by the members of the Company.
Directors Appointed during the Year under Review are as follows:-
|
Name of the Director |
Date of appointment |
DIN |
Category |
|
Mr. Sandeep Tandon |
27-07-2017 |
00054553 |
Independent Director |
|
Mr.Kartikeya Dhruv Kaji* |
27-07-2017 |
07641723 |
Nominee Director |
*Mr.Kartikeya Dhruv Kaji-Nominee Director on Board representing Kedaara Capital Alternative Investment Fund - Kedaara Capital AIF 1 and Lake District Holdings Limited.
During the year, No Director of the Company has resigned from the Board of the Company.
Directors Retiring by Rotation
In terms of Section 152 of the Companies Act, 2013, Mr. Manas Tandon, Nominee Director was retired by rotation and was reappointed by the Members in the Previous Annual General Meeting of the Company held on 26th July, 2017.
Further, Mr. Nishant Sharma, Nominee Director being longest in the office shall retire at the ensuing Annual General Meeting and being eligible for re-appointment, offers himself for re-appointment.
Appointments/Resignations of the Key Managerial Personnel
Mr. Sushil Kumar Agarwal-Whole-Time Director & CEO; Mr. Ghanshyam Rawat- Chief Financial Officer and Mr. Sharad Pathak-Company Secretary are the Key Managerial Personnel in terms of section 2(51) of the Company.
During the year, No Key Managerial Personnel of the Company has been appointed and resigned from the Company.
Number of Board Meetings held during the Financial Year
During the financial year 2017-18, 6 (Six) Board Meetings were convened and held. The intervening gap between the Board Meetings was within the period prescribed under the Companies Act, 2013.The details related to Board Meeting are appended in Corporate Governance Report forming part of this Annual Report.
Performance Evaluation of the Board
Your Company is following the most effective way to ensure Board members to understand their duties and to adopt effective good governance practices. In furtherance to this the directors of a company shall act in good faith to promote the objects of the Company for the benefit of its employees, the shareholders, the community and for the protection of environment.
Your Company has designed a mechanism as per the provisions of the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âSEBI LODRâ)and âHousing Finance Companies - Corporate Governance (National Housing Bank) Directions, 2016â for the Evaluations of performance of Board, Committees of Board & Individual Directors.
Further your company is adhered towards the Fit and Proper Criteria which includes Board approved Fit and proper policy for ascertaining the Fit and Proper Criteria of the directors at the time of appointment and on a continuing basis.
The Nomination & Remuneration Committee carried out the evaluation of every Directorâs performance and the Board additionally carried out a formal evaluation of its own performance, Statutory Board Committees namely Audit Committee, Nomination & Remuneration Committee and Corporate Social Responsibility Committee and all the Individual Directors without the presence of the Director being evaluated.
During the year, Independent Directors of the Company also held separate meetings 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 Company management and the Board which is necessary for the Board to effectively and reasonably perform their duties.
Major aspects of board evaluation includes 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 Corporate Governance Report is annexed to this report as âAnnexure-1 â.
Companyâs Policy on Directors Appointment, Remuneration & Evaluation
The Board on the recommendation of the Nomination & Remuneration Committee of the Board adopted a âNomination & Remuneration Policyâ, 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 and other employees and their evaluation and includes other matters, as prescribed under the provisions of Section 178 of Companies Act, 2013.
TheâNomination & Remuneration Policyâof the Company is 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 www.aavas.in/remuneration-policy.
Details of Remuneration paid to the all Directors during the financial year 2017-18 is more particularly mentioned in extract of annual Return in form âMGT-9â.
PRUDENTIAL NORMS FOR THE HOUSING FINANCE COMPANY
Your Company continues to comply with the guidelines issued by NHB regarding accounting guidelines, prudential norms for asset classification, income recognition, provisioning, capital adequacy, concentration of credit/ investments, accounting standards credit rating, Know Your Customer(KYC) guidelines, Anti Money Laundering (AML) standards, fair practices code, Most Important Terms & Conditions (MITC), grievance redressal mechanism, recovery of dues real estate and capital market exposures norms
The recognition of income and provision for non-performing asset has been made in the books as per the Guidelines on Prudential Norms applicable as of 31st March, 2018.
Company Capital Adequacy Ratio stood at 61.55% as against the minimum requirement of 12%.
The National Housing Bank Act, 1987, empowers NHB to levy a penalty on Housing Finance Companies for contravention of the Act or any of its provisions. Your company has complied with the said provisions;
National Housing Bank (NHB) has not raised any stricture or direction in their inspection carried out during the year. NHB has not levied any penalty on Company during the year
Regulatory & Statutory Compliances
During the Year under review, the NHB has issued various Notifications, Circulars and Guidelines to Housing Finance Companies.
The Circulars and the Notifications issued by NHB are 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, Company is registered with CERSAI and has been submitting data in respect of its loans.
EMPLOYEE STOCK OPTION PLANS-2016 (ESOP-2016)
Your Company has instituted Stock Option Plans to attract and retain the personnel for positions of substantial responsibility and to provide additional incentive to the Management team, Directors and Employees of the Company.
During the year 2016-17 ,the Company has approved the three Stock option plans named as Equity Stock Option Plan for Employees 2016 (âESOP 2016-Iâ), Equity Stock Option Plan for Management Team 2016 (âESOP 2016-IIâ), and Equity Stock Option Plan for Directors 2016 (âESOP 2016-IIIâ) (hereinafter collectively referred to as âESOP-2016â) Employee Stock Option Plans-2016 (ESOP-2016) at its Extra Ordinary General Meeting held 23rd Feb, 2017,empowering the Board and Nomination & Remuneration Committee of the Board to execute the said ESOP- 2016.
The above referred ESOP-2016 was further amended by the members in their meeting held on 22nd February, 2018,considering to align ESOP-2016 in accordance with the provisions of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 âSEBI (SBEB) Regulations, 2014â, as amended from time to time, in order to support the Companyâs effort to proactively adopt the best corporate governance practices and transparency.
In addition, during the current year, the Company has granted 4,24,687 options under ESOP 2016-I. The options granted entitle the employees to purchase options at an exercise price of RS.328/- per option as determined by the Nomination and Remuneration Committee.
The Nomination & Remuneration Committee monitors the Plan in compliance with the Companies Act, 2013 and related laws.
The applicable disclosures for stock options ES0P-2016 as stipulated under the Rule 12 of the Companies (Share Capital and Debentures) Rules, 2014 as on March 31, 2018 are given below:
|
Particulars |
ESOP 2016 I (A) |
ESOP 2016 I (B) |
ESOP 2016 II |
ESOP 2016 III |
|
Scheme Name |
Equity stock option plan for Employees 2016 |
Equity stock option plan for Employees 2016 |
Equity stock option plan for Management Team 2016 |
Equity stock option plan for Directors 2016 |
|
No. of options approved |
1,647,901 |
1,647,901 |
3,445,610 |
719,084 |
|
Date of grant |
23-Feb-17 |
24-Jan-18 |
23-Feb-17 |
23-Feb-17 |
|
No. of options granted |
980,118 |
424,687 |
3,445,610 |
719,084 |
|
Exercise price per option (in H) |
215.25 |
328 |
215.25 |
215.25 |
|
Total No. of Options Vested |
154,608 |
0 |
3,445,610 |
71,908 |
|
Options Exercised During the Year |
0 |
0 |
1,222,551 |
- |
|
Total No. of Shares arising as a Result of Exercise of Option |
0 |
0 |
1,222,551 |
|
|
Options Lapsed* |
116,904 |
- |
- |
- |
|
Variation of Terms of Options |
The options approved under the equity stock option plan for Management team 2016 (ESOP 2016 II) originally has same fixed and conditional vesting schedule as the equity stock option plan for Directors 2016 (ESOP 2016 III). However, pursuant to the Board approval dated January 25, 2018, all options granted under this plan were vested with immediate effect with no further conditions attached to them. |
|||
|
Money Realized by Exercise of Options |
0 |
0 |
263,154,103 |
|
|
Total number of options in force; |
863,214 |
424,687 |
2,223,059 |
719,084 |
|
Exercise period |
Four Years from the date of each Vesting. |
|||
Note:-
1) During the year, Shareholders of the Company at their meeting held on 22nd February, 2018 has accorded their consent to amend the Equity Stock Option Plan For Employees 2016 (âESOP 2016-Iâ) in such a manner that share pool stands reduced by 3,60,000 un-granted options.
2) 116,904 options lapsed due to the resignation of the certain employees from the Company.
Employee wise details of options granted to:-1) Key Managerial Personnel:
i) Mr. Sushil Kumar Agarwal (Whole Time Director & CEO) :- 20,97,328
ii) Mr. Ghanshyam Rawat (Chief Financial Officer) :- 7,49,046
iii) Mr. Sharad Pathak (Company Secretary) :- 15,000
2) Any other employee who receives a grant of options in any one year of option amounting to five percent or more of options granted during that year:
i) Mr. Sushil Kumar Agarwal (Whole Time Director & CEO) :- 20,97,328
ii) Mr. Ghanshyam Rawat (Chief Financial Officer) :- 7,49,046
iii) Mr. Vivek Vig (Nominee Director) :- 5,99,236
3) Identified employees who were granted option, during any one year, equal to or exceeding one percent of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant;
i) Mr. Sushil Kumar Agarwal (Whole Time Director & CEO) :- 20,97,328
ii) Mr. Ghanshyam Rawat (Chief Financial Officer) :- 7,49,046
iii) Mr. Vivek Vig (Nominee Director) :- 5,99,236
SPECIAL RESERVE (U/S 29C OF THE NATIONAL HOUSING BANK ACT, 1987)
Your company has transferred RS.48.21 Crores i.e. 20 % of net profits amounting to Statutory reserves as required under the provisions of section 29C of The National Housing Bank Act, 1987 read with section 36 (1) (viii) of Income Tax Act, 1961.
CREDIT RATING
During the year under review, on account of strong leadership, Experienced management team, Robust Capitalization, Better asset quality & Collections, scaling up business, Improved margins, Strong asset liability management and mobilization of funds at Optimum cost, ratings of the Company has been increased.
CARE has upgraded the outlook of the Company from âICRA A â / Stable to âICRA A â / Positive
Further during the year under review ICRA has upgraded the long term rating of the Company from âICRA Aâ / Positive to âICRA A â / Stable
Indiaâs renowned rating Agencies have assigned ratings as per below:-
|
Rating Agency |
Rating Type |
External Credit Rating |
|
CARE |
Long Term Rating |
âCARE A (Positive)â |
|
Short Term Rating |
CARE A1 |
|
|
ICRA |
Long Term Rating |
âICRA A â / Stable |
|
Short Term Rating |
ICRA A1 |
|
|
India Ratings & Research (FITCH) |
Long Term Rating |
IND A |
|
CRISIL |
Long Term Rating |
âCRISIL A Stableâ |
The ratings continue to reflect Companyâs healthy earning profile, adequate capitalization, and steady improvement in its scale of operations. These rating strengths are partially offset by the susceptibility of the Companyâs asset quality to risks related to the limited seasoning in its loan portfolio.
The assigned ratings are a positive reflection of Company talented management team, the Companyâs leadership position in affordable housing segment and strong brand equity in its regional markets. The ratings also derive strength from Company comfortable financial risk profile, growth in scale of operations and efficient operational strengths.
AUDITORS
Statutory Auditors
M/s S. R. BATLIBOI & Associates LLP Chartered Accountants (Firm Registration No: 101049W/E300004) the Statutory Auditors of the Company were Re-appointed by the members in the seventh Annual General Meeting (AGM) of the Company held on 26th July, 2017 to hold office from conclusion of the seventh AGM to the Conclusion of the 12th AGM of the Company (subject to ratification of the appointment by the Members at every subsequent Annual General Meeting), in accordance with the provisions of the Companies Act, 2013.
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.
Further Based on the recommendation of the Audit Committee, the Board of Directors, at their meeting held on April 27, 2018, recommended the ratification of appointment of M/s S. R. BATLIBOI & Associates LLP Chartered Accountants (Firm Registration No: 101049W/E300004) as the Statutory Auditors of the Company and that the necessary resolution in this respect is being included in the notice of the Eighth (08th) Annual General Meeting for the approval of the Members of the Company. M/s S. R. BATLIBOI & Associates LLP furnished written consent and a confirmation to the effect that they are not disqualified to be appointed as the Statutory Auditors of the Company in terms of the provisions of Companies Act, 2013 and rules framed thereunder.
Auditors Report
The observation of the auditors, in their reports are self-explanatory and therefore, in the opinion of the Directors, do not call for further comments.
Secretarial Auditors and Secretarial Audit Report
In accordance with Section 204 of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, M/s V. M.& Associates, Practicing Company Secretaries were appointed as Secretarial Auditors to conduct the Secretarial Audit of the Company for the 2017-18. Company has provided all assistance and facilities to the Secretarial Auditor for conducting their audit. The Report of Secretarial Auditor for 2017-18 is annexed to this report as âAnnexure-2â.
The Report is self - explanatory there were no major observations or qualifications or adverse remarks in the Auditorâs Report except that expenses on CSR activities were below the prescribed limit, Thus in response to this Management has responded that shortfall in CSR funding is on account,that company considers social responsibility as an integral part of its business activities and endeavors to utilize allocable CSR budget for the benefit of society.
Thus the Company is in the process of gradually building and developing the CSR appraisal mechanism, for appraising CSR projects internally, as it intends to contribute towards genuine projects and partner with only reputed implementation agencies with proven track record.
INTERNAL AUDIT & INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY
Your Company has an Internal Audit Department supported by Internal Auditor who conducts comprehensive audit of functional areas and operations of the Company to examine the adequacy of and compliance with policies, procedures, statutory and regulatory requirements.
Significant audit observations and follow up actions thereon are reported to the Audit Committee. The Audit Committee reviews and evaluates adequacy and effectiveness of the Companyâs 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 of the Board 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 Companyâs 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 the Company which had occurred between the end of the financial year i.e. 31st March, 2018 and the date of the Directorâs report i.e. 27th April, 2018.
However, Company has incorporated the Company named âAAVAS FINSERV LIMITEDâ as wholly owned Subsidiary.
Aavas Finserv Limited was incorporated on 30th November, 2017 under the Companies Act, 2013 as a public limited company with the Registrar of Companies, Jaipur, Rajasthan having Corporate Identification Number U65929RJ2017PLC059623.Registered office is located at 203-205, 2nd Floor, Southend Square Mansarovar Industrial Area, Jaipur 302 020, India.
The authorized share capital of Aavas Finserv Limited is RS.45,000,000 divided into 4,500,000 equity shares of RS.10 each and its paid-up share capital is RS.45,000,000 divided into 4,500,000 equity shares of RS.10 each.
During the year, company has obtained the Certificate of registration dated December 8, 2017, issued to our company by the Insurance Regulatory Development Authority of India (IRDAI) to act as a corporate agent (Registration No.CA0537).
There has been no change in the nature of business of the 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 Companyâs operations in future.
INFORMATION TECHNOLOGY
Your Company has developed a fully equipped âcore housing finance solutions Platformâ which is a step towards aligning technology to the projected business growth.
All our branches of the 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.
Company carries out audit of its IT systems from external agency at regular intervals. The external agencyâs suggestions and recommendations are reported to Audit Committee and implemented where found necessary.
HUMAN RESOURCE DEVELOPMENT
The Companyâs 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 Companyâs strategy and a significant source of competitive advantage.
Across all its business operations, Company had a workforce of 1,862 people as on March 31, 2018.
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, Company has also provided the sales Training to the new recruits to have better understanding towards the Company and make them compatible towards the working culture of the Company.
The Company hired professionals at Senior positions/ Functional Heads representing the various Departments of the Company having relevant industry experience and qualification to strengthen and grow housing finance business. The Company recruited people from prestigious institutes like the Institute of Chartered Accountants of India (âICAIâ) and the Institute of Company Secretaries of India (âICSIâ)besides recruiting from other reputed Business Schools.
In pursuance of the Companyâs commitment to develop and retain the best available talent, the Company had been sponsoring in house training programmes on regular basis for its employees on lending operations, Underwriting & Due diligence, KYC & AML norms, Risk Management, Information Technology, recoveries, CLSS, PMAY and Grievance Redressal.
During the period under review, company has nominated their 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.
TRADEMARK
During the year under review, the Company has received the Trade Mark Registration certificate for the registration of the Trademark from the Trade Marks Registry, Government of India.
INSURANCE PROTECTION
Company has tied up with Kotak Mahindra Old Mutual Life Insurance Limited, HDFC Standard Life Insurance Company Limited & Bajaj Allianz Life Insurance Co. Ltd. for providing group credit life insurance of the Insured.
Company also tied up with Shriram General Insurance Company Limited and IFFCO Tokyo General Insurance for providing property insurance of the mortgaged property. âStandard Fire & Special Perils Policyâ which provide coverage against Fire, Flood, Earthquake and other perils mentioned in the policy on reinstatement basis.
RISK MANAGEMENT FRAMEWORK
The Company has in place a Board Constituted Credit and Risk Management Committee. Details of the Committee and its terms of reference are set out in the Corporate Governance Report forming part of this report.
Company has Board Approved Credit and Risk Management Policies wherein all material risks faced by the Company are identified and assessed. Company has set up a policy framework for ensuring better management of its asset & liability profile. Company has given due importance to prudent lending practices and put in place suitable measures for risk mitigation, which include, verification of credit history from credit information bureaus, personal verification of customerâs business and residence, in house technical and legal verification, conservative loan to value, and compulsory term cover for insurance. The Risk management framework of the Company seeks to minimize adverse impact of risks on our key business objectives and enables the Company to leverage market opportunities effectively.
During the year, the committee reviewed the risks associated with the business of the Company, its root causes and the efficacy of the measures taken to mitigate the same.
VIGIL MECHANISM CUM WHISTLE BLOWER POLICY
Your Company believes to conduct its affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behaviour. The Company is committed to developing a culture where it is safe for all 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 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 Audit Committee. The policy is placed on the website of the Company and can be accessed at www.aavas.in/vigil-mechanism-policy
PARTICULARS OF HOLDING/SUBSIDIARY/ASSOCIATE COMPANIES
Your Company is the Direct Subsidiary of Lake District Holdings Limited and Indirect Subsidiary of the Holding Company of Lake District Holdings Limited i.e. Kedaara Capital I Limited.
The Shareholders having the Substantial interest in the Company is Partners Group ESCL Limited.
As on 31st March, 2018 Your Company has incorporated the Company named âAAVAS FINSERV LIMITEDâ as wholly owned Subsidiary, the Company has not started any operations during the year.
Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, 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 Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, is annexed as Annexure-3 to this Report.
EMPLOYEE REMUNERATION
The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this report. In terms of Section 136 of the Companies Act, 2013 the same is open for inspection at the Registered Office of your company.
The ratio of the remuneration of each director to the median employeeâs remuneration and other details in terms of sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report as âAnnexure-4â.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVE
In line with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules 2014; the Company has undertaken the 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 Companies Act, 2013 and CSR Policy of the Company.
The Annual Report on CSR Activities, which forms part of the Directors Report, is annexed as âAnnexure - 5â to this report.
PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
In accordance with the provisions of the Sec 134 (3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 by 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 doesnât require intensive consumption of electricity. However, the 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:
Company has procured the Energy Saving Green IT Equipmentâs 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 Digitization.
(iii) The Capital investment on energy conservation equipment:
In view of the nature of the activities carried on by the Company, there is no capital investment on energy conservation equipment.
B) Technology absorption:
(i) the efforts made towards technology absorption: Nil
(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 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:
Further, Company does not have any Foreign Exchange Earnings and there was no outgo during the Financial Year ended 31st March 2018.
EXTRACTS OF ANNUAL RETURN
Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Companies Act 2013, read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014 the extracts of the Annual Return in form MGT-9 as at 31st March, 2018 forms part of this report as âAnnexure-6â.
DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT 2013 READ WITH RULES
The Company has zero tolerance towards any action on the part of any of its officials, which may fall under the ambit of âSexual Harassmentâ at workplace. Company promotes and recognizes 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 year under review.
The following is a summary of sexual harassment complaints received and disposed of during the year 2017-18:
No of complaints received: Nil No of complaints disposed of: Nil
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS U/S 186
Since the Company is a Housing Finance Company, the disclosure regarding particulars of loans given, guarantees given and security provided is exempted under the provisions of Section 186 (11) of the Companies Act, 2013.
CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
In accordance with the provisions of section 188 of the Companies Act, 2013 and rules made thereunder, the transactions entered with related parties are in the ordinary course of business and on an armâs length pricing basis, the details of which are included in the notes forming part of the financial statements.
During the year under Review, your Company had not entered into any Related Party Transactions covered within the purview of Section 188(1) of the Companies Act, 2013, accordingly, requirement of disclosure of Related Party Transactions in terms of Section 134(3)(h) of the Companies Act, 2013 in Form AOC - 2 is not applicable to the Company.
Further as required by NHB notification no. NHB.HFC.CG-DIR.1/MD&CEO/2016 dated February 9, 2017,a policy on Transactions with Related Parties is given as âAnnexure-7â to this report and can accessed on the website of the Company at www.aavas.in/policy-on-transactions-with-related-parties
SECRETARIAL STANDARDS
The Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards and that such systems are adequate and operating effectively.
INTERNAL GUIDELINES ON CORPORATE GOVERNANCE
During the year under review, your Company has formulated and adopted the Internal Guidelines on Corporate Governance in accordance with Housing Finance Companies - Corporate Governance (National Housing Bank) 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 on the website of the Company at www. aavas.in/investor-relations/internal-guidelines-on-corporate-governance.
DIRECTORâS RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013, 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 had been followed along with proper explanation relating to material departures.
(b) We have 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) We have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.
(d) We have prepared the annual accounts on a going concern basis.
(e) We have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively; and
(f) We have 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
A detailed business review is appended in the Management Discussion and Analysis Section of Annual Report.
ACKNOWLEDGEMENTS
The Directors would like to place on record their gratitude for the valuable guidance and support received from the National Housing Bank.
Your Directors would like to acknowledge the role of all its Stakeholders viz., Shareholder, Debenture holders, Bankers, Lenders, Borrowers, Debenture Trustees and all others for their continued support to the Company and the confidence and faith that they have always reposed in the Company.
Your Directors acknowledge and appreciate the guidance and support extended by all the Regulatory authorities including National Housing Bank (NHB), Securities Exchange Board of India (SEBI), Ministry of Corporate Affairs (MCA), Registrar of Companies, Rajasthan, the Bombay Stock Exchange, 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 whole-hearted support during the 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 and Corporate Social Responsibility Committees of the Board, executives, officers, staff and the Senior Management team, in performance of the Company during the year.
For and on behalf of the Board of Directors of
AAVAS FINANCIERS LIMITED
(Formerly known as âAu Housing Finance Limitedâ)
sd/- sd/-
Sushil Kumar Agarwal Manas Tandon
(Whole Time Director & CEO) (Nominee Director)
(DIN:03154532) (DIN: 05254602)
Date: April 27, 2018
Place: Jaipur
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Stock Market Outlook Today, 26 February 2026: Sensex, Nifty Likely to Trade Range-Bound as Investors Eye GDP -
Stock Market Outlook Today, Feb 24: Sensex, Nifty Likely to Trade With Positive Bias on Easing Trade Tensions -
Market! Trump Fuzzy After US Court's UNO Reverse: Will Sensex, Nifty See Fresh Bull After 15% Global Tariffs? -
3 Technical Breakout Stocks To Buy That Could Deliver Double-Digit Returns In 3-4 Weeks -
Dalal Street Bloodbath: Rs 6.7 Lakh Crore Wiped Out As Sensex Crashes 1200 Pts; Nifty Ends Below 25,500 -
Stock Market Outlook, 19 Feb 2026: Sensex, Nifty Likely to Trade with Upward Bias; PSU & Metal Stocks in Focus -
Stock Market Outlook Today: Sensex, Nifty Likely to Trade Firm with Positive Bias; Bank Nifty Show Strength -
Stock Market Outlook Today, 17 February: Sensex, Nifty Likely to Consolidate Higher; India AI Summit Triggers? -
Stock Market Outlook for Monday, February 16: Sensex, Nifty May Trade Cautiously Amid Consolidation Signals
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