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Directors Report of Ujjivan Financial Services Ltd.

Mar 31, 2023

Your Directors are pleased to present the 19th Annual Report of Ujjivan Financial Services Limited together with the audited financial statements for the financial year ended March 31, 2023.

1. FiNANCiAL RESULTS

The Directors'' submit the Annual Report of Ujjivan Financial Services Limited (the "Company" or "Ujjivan") together with the audited financial statements for the financial year (FY) ended March 31, 2023.

(Rs. in Crores)

Particulars

Standalone*

Consolidated*

FY 2022-23

FY 2021-22

FY 2022-23

FY 2021-22

Operating Income

119

-

4,421

2,995

Other Income

8

7

257

97

Total income

127

7

4,679

3,092

Less: Operational Expenses

Personnel Expenses

1

1

930

822

Administrative & CSR Expenses

3

3

662

502

Finance Charges

-

-

1,493

1,071

Depreciation

0

0

163

155

Impairment Losses on Financial Instruments

-

-

(99)

846

Total Operational Expenses

3

4

3,148

3,396

Profit/(Loss) Before Tax

124

3

1,531

(304)

Less: Income tax

16

1

308

1

Less: Deferred tax

0

0

83

(74)

Profit/(Loss) After Tax

108

2

1,140

(231)

* as per Indian Accounting Standards (ind-AS)

2. DiViDEND

In accordance with the Dividend Distribution Policy of the Company, the Company with the approval of its directors through their resolution passed on March 10, 2023 has declared and paid an interim dividend of '' 5 (50%) per equity share which translates to a Dividend Payout ratio of 56% for the FY 2022-23. The interim dividend amount of '' 61 Crores was distributed to the shareholders on March 28, 2023. The Dividend Distribution policy of the Company is available on the Company''s website and can be accessed from the link https://www.uiiivan. com/assets/web pdfs/239/original/4.Dividend Distribution Policy 09022023.pdf

3. TRANSFER TO RESERVES

The Company transferred '' 22 Crores to Statutory Reserves. Transfer of 20% of the Profit after Tax to the statutory reserves is in accordance with the provisions of section 45 - IC Reserve Bank of India Act, 1934.

4. CREDiT RATiNG

The Company has zero debt; hence no rating has been obtained from any rating agencies during the year.

5. CAPiTAL REQUiREMENTS

Adjusted Net Worth of a CIC-ND-SI shall at no point of time be less than 30% of its aggregate risk weighted assets on balance sheet and risk adjusted value of off-balance sheet items as on the date of the last audited balance sheet as at the end of the financial year as per RBI CIC Master Directions.

The Company as of March 31, 2023 is in compliance with the below capital requirements and all other mandatory ratios as required under RBI CIC Master Directions:

Ratios

RBI Requirement

Actuals (%)

Adjusted Networth (ANW)

>30% of RWA

188.87%

Investment ratio

>90% of Net Assets

97.65%

Equity Investment Ratio

>60% of Net assets

110.27%

Leverage Ratio

<2.5 Times

0.00063

6. corporate governance and management DiScuSSiON AND Analysis REPORT

In accordance with SEBI LODR Regulations, Management Discussion and Analysis Report and Corporate Governance Report together with the

Certificate thereon From the Independent Practicing Company Secretary is provided separately and Forms part of this Directors'' Report.

7. EXTRACT OF ANNUAL RETURN

The Annual Return of the Company as on March 31, 2023 in Form MGT - 7 in accordance with Section 92(3) of the Act read with the Companies (Management and Administration) Rules, 2014, is available on the website of our Company at https://www.uiiivan. com/annual-return.

8. NO. OF MEETiNGS OF THE BOARD DURiNG THE FY 2022-23

During the Financial Year 2022-23, our Board has met 9 (nine) times and the meetings of our Board of Directors were held on April 18, 2022, May 19, 2022, June 23, 2022, August 04, 2022, October 14, 2022, November 11, 2022, February 09, 2023. March 10, 2023 and March 17, 2023. For further details, please refer to the Corporate Governance Report, which forms part of this report.

9. DiRECTORS RESiGNATiON / APPOiNTMENT /

REAPPOiNTMENTS / retiring director

(a) Re-appointment of director retiring by rotation

As per the provisions of the Companies Act, 2013, Mr. Narayan Anand (DIN: 02110727) retires by rotation at the ensuing 19th AGM and being eligible, seeks his re-appointment. The Board recommends his reappointment. Please refer item no. 2 of the 19th AGM Notice for further details.

10. DiREcTORS'' RESPONSIBIUTY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors of the Company confirms and state that:

(i) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as 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;

(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in

(iv) accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

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

(vi) they have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

(vii) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, audit of internal financial controls and the reviews performed by management and the audit committee of the board, the board is of the opinion that the Company''s internal financial controls were adequate and effective during the FY 2022-23.

11. declaration by independent directors

The Company has received necessary declarations of independence from each of its Independent Directors under section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independent director envisaged in section 149 (6) of the Companies Act, 2013.

All Independent Directors have submitted the declaration of Independence, as required pursuant to Section 149(7) of the Act and including the added criteria prescribed under SEBI LODR Regulations, stating that they meet the criteria of Independence as provided in section 149(6) of the Companies Act, 2013 and they are not disqualified from continuing as Independent Directors of our Company.

In the opinion of the Board, all the Independent Directors meet the criteria with regards to integrity, expertise and experience as required under applicable laws.

The UFSL has also received from its directors a statement that they have complied with the Code of Conduct for Directors and Senior Management of the UFSL.

12. NOMINATION AND REMuNERATION POLIOY

The Company pursuant to the provisions of Section 178 of the Companies Act, 2013 has formulated

and adopted a nomination and remuneration policy which is disclosed on our website at the below link-https://www.uiiivan.com/mandatorv-policies

13. STATUTORY AUDiTORS

The Company had appointed Varma & Varma, Chartered Accountants (FRN - 004532S) as the Statutory Auditors of the Company for a term of 3 (three) consecutive financial years from 2021- 22 to 2023-24 with the approval of the shareholders in the 17 th Annual General Meeting held on September 29, 2021.

14. EXPLANATiONS OR COMMENTS BY THE BOARD ON EvERY QUALIFICATION, RESERvATION OR ADVERSE REMARK OR DiSCLAiMER MADE -

(i) Statutory Auditor''s Report

There are no disqualifications, reservations, adverse remarks or disclaimers in the auditor''s report for the FY 2022-23.

(ii) By the company secretary in practice in his secretarial audit report;Secretarial Auditor

Mr. K. Jayachandran, Practicing Company Secretary (ACS No. 11309 and Certificate of Practice No. 4031) was appointed as the Secretarial Auditor of the Company to conduct secretarial audit of the Company for the year ended March 31,2023 as required under Section 204 of the Companies Act, 2013 and the Rules made thereunder. The secretarial audit report for FY 2022-23 is appended as "Annexure 1" to the Board''s Report.

As required under regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate secretarial audit report for the year ended March 31,2023 given by the Secretarial Auditor Mr. K. Jayachandran, in the format as prescribed by SEBI in this regard is appended as "Annexure 2"

The Secretarial Audit Report does not contain any qualification, reservation or adverse remark made by the Secretarial Auditor.

Further, Mr. K. Jayachandran, Practicing Company Secretary (ACS No. 11309 and Certificate of Practice No. 4031) has through his certificate dated May 18, 2023 has certified that none of the directors on the Board of the

Company have been debarred or disqualified from being appointed or continuing as director of companies by the Board / Ministry of Corporate Affairs or any such statutory authority. The said certificate is appended as "Annexure 3" to the Board''s Report and should also form a part of the Corporate Governance Report of the Board as required under the SEBI Listing Regulations.

15. COMPLIANCE WITH SECRETARIAL STANDARDS

The Company has complied with the provisions of Secretarial Standards specified by the Institute of Company Secretaries of India and notified by the Ministry of Corporate Affairs under Section 118(10) of the Companies Act, 2013.

16. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

During the FY 2022-23, the Company has not given any loans and guarantees to any-body corporate and has not made any investment under Section 186.

17. TRANSACTION WITH RELATED PARTIES

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

There were no contracts or arrangements or transactions entered into during the year ended March 31,2023, which were not at arm''s length basis. Your Directors draw attention of the members to Note 26 to the standalone Financial Statements which sets out other related party disclosures.

All Related Party Transactions as required under Accounting Standards AS-18 are reported in Note 26 - Notes to Accounts of the Standalone financial statements of the Company.

18. THE STATE OF THE COMPANY''S AFFAIRS

The Company is registered with RBI as a Non Deposit taking Systemically Important Core Investment Company (NBFC-ND-SI-CIC). The Company is in compliance with the conditions of the Master Direction - Core Investment Companies (Reserve Bank) Directions, 2016 as amended. Prior to its conversion to a Core Investment Company, the Company was one of the largest microfinance institutions in the country. The conversion was done based on the stipulation of the Reserve Bank of India

while approving the Company to set up the small finance bank business.

The Company is the promoter of ''Ujjivan Small Finance Bank Limited'' (hereinafter referred to as "USFB/Bank") and being a CIC the Company has its investments primarily in USFB. The Company as on March 31, 2023 holds 73.67% equity in USFB and holds preference shares of '' 200 Crores.

19. MATERIAL CHANGES AND COMMiTMENTS, iF ANY, AFFECTING THE FINANCIAL POSITION

of the company which have occurred between the end of the financial year OF THE company TO WHicH THE FINANciAL STATEMENTS RELATE AND THE DATE OF THE REPORT;

Proposed Reverse Merger

Pursuant to the Guidelines for licensing of "Small Finance Banks" in the private sector issued by RBI on November 27, 2014 ("SFB Licensing Guidelines"), Ujjivan Financial Services Limited (UFSL) (Promoter of the Bank) was required to reduce its shareholding in the Bank to 40% of the paid-up Equity Share capital of the Bank within a period of five years from the date of commencement of business operations by the Ujjivan Small Finance Bank Limited'' (hereinafter referred to as "USFB/Bank") i.e. by January 31, 2022 and thereafter required to reduce its shareholding in the Bank to 30% and 26% of its paid-up Equity Share capital within a period of 10 years and 12 years, respectively, from the date of commencement of the business operations.

RBI vide its letter dated July 09, 2021 permitted the Bank to apply for the amalgamation of holding company with small finance bank, in terms of provisions of Master Direction on Amalgamation of Private Sector Banks, Directions, 2016 dated April 21, 2016, Three (3) months prior to completing five years from the date of commencement of business of small finance bank.

Further, recommendations of the Internal Working Group to Review Extant Ownership Guidelines and Corporate Structure for Indian Private Sector Banks, dated October 20, 2020 and November 20, 2020 that, no intermediate sub-targets between five to 15 years may be required and that promoters may submit a dilution schedule which may be examined

and approved by the RBI, were accepted by RBI without any modification vide its circular dated November 26, 2021.

Accordingly, the Bank has already initiated necessary steps for the reverse merger of Ujjivan Financial Services Limited with the Bank in accordance with applicable laws and guidelines. Merger of the Promoter entity with the Bank will suffice the requirement of promoter shareholding dilution.

The Bank submitted an application to SEBI on November 01, 2021 seeking their approval / exemption on the following:

• To relax three-year minimum promoter lock in requirements in the Bank under Regulation 16(1)(a) of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 to the extent required to implement the Scheme of Amalgamation.

• For adopting proposed scheme of amalgamation as a method to achieve minimum public shareholding (MPS) by the Bank.

Subsequently, SEBI, vide its letter dated December 02, 2021 acceded to relax the three-year minimum promoter lock-in requirements in the Bank to the extent required to implement the Scheme soon after receiving final NCLT approval. However, SEBI advised the Bank to ensure compliance with MPS as prescribed by SEBI Circulars dated November 30, 2015 and February 22, 2018 and then proceed with the filing of the scheme documents with the exchanges.

Therefore, in order to achieve the aforesaid MPS, the Bank on September 15, 2022 allotted 22,61,90,476 equity shares by way of Qualified Institutions Placement (QIP), resultantly the promoter shareholding was brought down from 83.32% to 73.67%.

Basis the achievement of MPS the Bank''s Board on October 14, 2022, considered and approved a Scheme of Amalgamation ("Scheme") between UFSL and the Bank and their respective shareholders and creditors under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 and the rules made thereunder. The following table highlights the progress made in the Reverse Merger process during the financial year:

Sr

Process

Date

1.

Approval of the Scheme of Amalgamation by the Board of Directors of USFB and UFSL

October 14, 2022

2.

Filing of the Scheme and applications with the Stock Exchanges

October 19, 2022

3.

Filing of the Scheme with the RBI for its No-Objection Certificate

October 19, 2022

4.

Receipt of No-Objection Certificate from RBI by Ujjivan Small Finance Bank Limited

February 01, 2023

5.

Receipt of No-Observation Letters from the Stock Exchanges

March 09, 2023

6.

Filing of Joint Application with the Hon''ble National Company Law Tribunal (NCLT), Bengaluru Bench

March 29, 2023

The Company now awaits the directions / orders from the Hon''ble NCLT on the next course of action including holding of meetings of various stakeholders.

20. THE CONSERVATiON OF ENERGY, TECHNOLOGY ABSORPTiON, FOREiGN EXCHANGE EARNiNGS AND OuTGO, iN The MANNER AS PREScRiBED iN RULE 8(3) OF THE COMPANiES (ACCOUNTS) RuLES, 2014

Conservation of energy and technology absorption

Since the Company does not own any manufacturing facility, the particulars relating to conservation of energy and technology absorption are not applicable.

The Foreign Exchange earnings and outgo

There was no Foreign Exchange inflow and outflow during the year.

21. development AND implementation OF RiSK MANAGEMENT POLicY

The Company is a non-operating holding Company and its main objects are to carry on the business of making investments in group company(ies) in the form of securities and providing guarantees etc. and to carry on financial activities, whether in India or outside, in the nature of investment in bank deposits, money market instruments (including money market mutual funds and liquid mutual funds), government securities, and to carry on such other activities as may be permitted and prescribed by the relevant statutory authorities for core investment companies from time to time.

Since USFB is a listed entity, the Company can only have a distant oversight on the risk management practices adopted by USFB. The Company expects that the risk management committee of USFB adopts the best risk practices, reviews its risk management framework and verifies adherence to various risk parameters and compliances in the best possible way.

The Company has a duly constituted Risk Management Committee of the Board and has in

place its risk management policy which highlights the functions, implementation and the role of the committee and the board. Please refer the Corporate Governance section for the composition and terms of reference of the Risk Management Committee.

22. cORPORATE SOciAL RESPONSiBiLiTY

The Corporate Social Responsibility (CSR) programs were started by the Company in the year 2010 much before it was made mandatory under the Companies Act, 2013.

During, the year, the Company identified a beneficiary named ''Chinchpada Christian Hospital situated at Chinchpada P.O., Navapur Taluk, Nandurbar District, Maharashtra - 425417, a registered charitable organisation.

The Company granted a sum of '' 5 Lakhs towards medical assistance for poor patients, which was predominantly utilised towards their surgery cost. Please refer the “Annexure 4" on Corporate Social Responsibility in the annual report for a detailed write up on the CSR activities of the Company during the year.

A brief outline of the company''s CSR policy is disclosed on our website at the below link https://www.uiiivan.com/mandatorv-policies

23. BOARD EVALUATION

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 Companies Act, 2013 and the corporate governance requirements as prescribed by Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015 ("SEBI Listing Regulations") and SEBI guidance note on Board Evaluation.

Performance evaluation criteria for Board, Committees of the Board and Directors were adopted by the Nomination Committee of the Board at its meeting held on March 17, 2023. Evaluation formats and criteria of evaluation duly incorporated the criteria and other parameters as suggested by SEBI vide their guidance note on evaluation through their circular dated January 05, 2017.

The Board was evaluated comprehensively inter alia on the structure of the Board, competency, experience and qualifications of directors, diversity in board, regularity of the board meetings, effectiveness of board processes, independence of Board, information sharing and overall functioning of the Board.

The performance of the board was evaluated by the board after seeking inputs from all the directors on each of the above parameters of evaluation and the performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the above parameters of evaluation.

The Board committees were evaluated inter alia on the basis of their mandate, composition, attendance, functioning and independence.

independent Directors'' Evaluation of Nonindependent Directors

In a separate meeting of independent directors held on March 17, 2023, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non-executive directors. The Independent Directors also assessed the quality, quantity and timeliness of flow of information between the Company management and the Board.

Performance of independent directors was evaluated by the entire board, excluding the independent director being evaluated and was satisfied that each of the independent director fulfills the independence criteria as specified in SEBI regulations and that they are independent of the management.

24. DETAiLS AS REQUiRED UNDER RULE 8 OF THE COMPANiES (ACCOUNTS) RULES, 2014(i) The financial summary or highlights;

('' in Crores)

Particulars

Standalone*

consolidated*

FY 2022-23

FY 2021-22

FY 2022-23

FY 2021-22

Operating Income

119

-

4,421

2,995

Other Income

8

7

257

97

Total income

127

7

4,679

3,092

Less: Operational Expenses

Personnel Expenses

1

1

930

822

Administrative & CSR Expenses

3

3

662

502

Finance Charges

-

-

1,493

1,071

Depreciation

0

0

163

155

Impairment Losses on Financial Instruments

-

-

(99)

846

Total Operational Expenses

3

4

3,148

3,396

Profit/(Loss) Before Tax

124

3

1,531

(304)

Less: Income tax

16

1

308

1

Less: Deferred tax

0

0

83

(74)

Profit/(Loss) After Tax

108

2

1,140

(231)

* as per Indian Accounting Standards (ind-AS)

(ii) Highlights of performance of subsidiaries, associates and joint venture companies and their contribution to the overall performance of the company during the period

''Ujjivan Small Finance Bank Limited'' ("USFB") is a material listed subsidiary of the Company and is a small finance bank licensed by the RBI in terms of Section 22 of the Banking Regulation Act, 1949. USFB was incorporated on July 04, 2016 and commenced its operations as a small finance bank w.e.f. February 01, 2017. The Company as on March 31, 2023 holds 73.67% equity in USFB.

Pursuant to the provisions of section 129(3) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014, a statement containing salient features of the financial statements of the Company''s subsidiaries in Form AOC-1 is annexed as “Annexure 5" to this report.

Key business and financial performance highlights of the material listed subsidiary ''ujjivan small Finance Bank Limited'' (usFB) (in i-GAAP):

• Gross advances at '' 24,085 Crores as on March 31, 2023 as against '' 18,162 Crores as on March 31, 2022; growth of 33% Y-o-Y

• Disbursement during FY 2022-23 was '' 20,037 Crores as against '' 14,113 Crores during FY 2021-22; growth of 42%

• Total deposit of '' 25,538 as on March 31, 2023 as against '' 18,292 as on March 31, 2022; growth of 40%

• CASA increased by 35% from '' 4,993 Crores in March 2022 to 6,744 Crores in March 2023

• 76.9 Lakh customers in March 2023 as against 64.8 Lakh customers in March 2022

• 42.5 Lakh borrowers in March 2023 as against 37.9 Lakh borrowers in March 2022

• CRAR of 25.8% in March 2023 as against 19.0% in March 2022

• Number of branches increased to 629 in March 2023 as against 575 in March 2022. Number of ATMs increased from 492 to 517 during FY 2022-23

• Total income increased to '' 4,754 Crores in March 2023 from '' 3,173 Crores in March 2022; an increase of 50%

• Net interest income grew to '' 2,698 Crores in March 2023 from '' 1,774 Crores in March 2022; an increase of 52%

• Profit after Tax (PAT) for FY 2022-23 is '' 1,100 Crores as against '' (415) Crores in FY 2021-22

• Return on Asset (ROA) for FY 2022-23 is 3.9% as against (1.9%) in FY 2021-22

• Return on Equity (ROE) for FY 2022-23 is 31.4% as against (13.8%) in FY 2021-22

• GNPA at 2.6% in March 2023 as against 7.1% in March 2022

• NNPA at 0.04% in March 2023 as against 0.6% in March 2022

• Cost to income ratio decreased to 54.8% in FY 2022-23 from 70.1% in FY 2021-22

• Cost of fund declined marginally to 6.5% in March 2023 from 6.3% in March 2022, due to rise in interest rates

• 18 th IBA Technology Conference, Expo & Awards - Payment and small finance bank category:-

o Best IT Risk Management

o Special Prize - Best AI&ML Adoption Bank

o Special Prize - Best Fintech Collaboration

• India Fraud Risk Management Summit & Awards 2023: Best Transaction Fraud Monitoring and Decisioning

• IBSi Global FinTech Innovation Awards 2022: Best Risk Management Implementation Category:- Best Project Implementation Most Impactful project

USFB - Key Ratios as on March 31, 2023

('' in Crores)

Particulars

FY 2022-23

Average Yield - across segment

18.4%

Cost of Funds (CoF)

6.5%

Net Interest Margin (NIM)

9.5%

Return on Assets (ROA)

3.9%

Return on Equity (RoE)

31.4%

Cost to income

54.8%

Capital Adequacy (CRAR)

25.8%

NNPA

0.04%

LCR

180%

The Company currently carries on financial activity business in the nature of investments in bank deposits or other permissible securities and investment in shares of subsidiary and derives its value primarily from its investments in the Bank. The Bank contributes 99.78% of the consolidated total income of the Group.

(iii) The change in the nature of business, if any;

There is no change in the nature of the business of the Company during the FY 2022-23. The Company continues to be a Non Deposit taking Systemically Important Core Investment Company (NBFC-ND-SI-CIC).

(iv) The details of directors or key managerial personnel who were appointed or have resigned during the year;

Sr.

Name

Designation

din /pan

Date of Appointment/ change/ cessation

Reason

1.

Mr. Radhakrishnan Ravi

CEO & CFO

ADSPR7011F

April 19, 2022

Appointment

(v) The names of companies which have become or ceased to be its Subsidiaries, joint ventures or associate companies during the year;

None

(vi) Deposits from public

During the year, the Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

However, the subsidiary of the Company ''Ujjivan Small Finance Bank Limited'' which is a Small Finance Bank has outstanding deposits of '' 25,538 Crores as on March 31,2023.

(vii) The details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future;

None

(viii) The details in respect of adequacy of internal financial controls (iFc) with reference to the Financial Statements

In respect of internal financial control, the Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, the safeguarding of its assets, the timely prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

Further, the management regularly reviews the control for any possible changes and takes appropriate actions.

25. TRANSFER TO INvESTOR EDUCATION AND PRoTEcTioN FuND:

As required under Section 124 of the Act, there were no amounts were transferred during the Financial Year 2022-23, to the Investor Education and Protection Fund established by the Central Government.

26. DETAILS OF LOANS FROM DIRECTORS AND THEIR RELATIves:

During the financial the Company has not taken any loans from the Directors and their relatives of the Company.

27. CHANGE IN THE SHAREHOLDING OF THE coMPANY:

During the financial year there were no changes in the share Capital of the Company.

28. DETAILS IN RESPECT OF FRAUDS REPORTED BY THE Auditors uNDER section 143(12) oF THE coMPANIES AcT 2013:

There have been no frauds reported by the auditors pursuant to Section 143 (12) of the Companies Act, 2013.

29. ESOP RELATED & OTHER DISCLOSURES(i) Details of equity shares with differential rights

The Company has not issued any equity shares with differential rights during the year

(ii) Details of sweat equity shares issued

The Company has not issued any sweat equity shares during the year

(iii) Details of employee stock option scheme

The Company has established Employee Stock Option Plan (ESOP) For compensation to its employees, being ESOP 2006, ESOP 2007, ESOP 2008, ESOP 2010, MD-ESOP 2010 and ESOP 2015.

As on March 31, 2023, only ESOP 2015 scheme is active.

ESOP 2015

The ESOP 2015 pool comprises of 65,79,899 options which includes the original pool of 47,82,129 options and 17,97,770 options added from the lapsed options of ESOP 2006, ESOP 2007, ESOP 2008 and ESOP 2010 with the approval of the shareholders at their meetings held on November 03, 2015 and June 27, 2018.

As on March 31, 2023, out of the 55,15,880 options granted, 8,28,182 options has been exercised, 39,14,746 options are lapsed, 7,72,952 vested options are unexercised and there is no option left to be vested. The Board (including its authorised committee) has been authorised by the shareholders to include the lapsed / cancelled options under its ESOP 2010 and ESOP 2015 back to the pool of ESOP 2015 and that the Board is hereby authorised to grant such added back options to its eligible employees (which includes the employees of its subsidiary).

The vesting period for the options granted under ESOP 2015 is for a period of three years as under:

Tranche

Year of Grant

Options

Granted

Year 1

Year 2

Year 3

ESOP 2015 (Tranche 1)

2015

1,469,800

34%

33%

33%

ESOP 2015 (Tranche 2)*

2016

1,696,850

33%

33%

34%

ESOP 2015 (Tranche 3)

2018

2,337,670

34%

33%

33%

ESOP 2015 (Tranche 4)

2018

11,560

34%

33%

33%

Total

5,515,880

* Post IPO, options were granted subsequent to the ratification of the shareholders

No options were granted by the Company during the FY 2022-23.

The ESOP 2015 is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (SEBI ESOP Regulations), the Companies Act, 2013, and is implemented in accordance with guidance notes issued by ICAI and the relevant accounting standards.

Revisions in the ESOP Schemes during the Year

None;

ESOP Schemes compliance Status

The ESOP 2015 is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (SEBI ESOP Regulations) and the Companies Act, 2013. The Company has received a certificate from the Secretarial Auditors of the Company certifying that ESOP 2015 Scheme of the Company is being implemented in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and is in accordance with the resolutions

passed by the Members of the Company at a general meeting. The certificate enclosed as Annexure 6

The ESOP Schemes are implemented in accordance with guidance notes issued by ICAI and the relevant accounting standards.

The weighted average fair value of the share options granted during the financial year ended March 31, 2023 and March 31, 2022 is Nil. Options were priced using Black and Scholes Model. Vested ESOPs can be exercised within three years from their corresponding dates of vesting. Vested ESOPs can be exercised between the dates of vesting and on or before option expiry dates. The term of the option is assumed to be the sum of a) duration till vesting; and b) the midpoint of the remaining exercise period from date of vesting, in absence of historical exercise pattern. While the Company has been listed since 2016, the period of listing up to the Grant Dates is not commensurate with the expected term of the granted ESOPs. Accordingly, volatility of comparable companies has been considered for the purposes of valuation.

ESOP arrangement with subsidiary

With effect From February 01, 2017, the business undertaking of the Company was transferred to USFB and all the employees of the Company except few identified personnel have been transferred to USFB as part of the transfer of the business undertaking. This has resulted in the transfer of options from the employees of the Company to the employees of USFB. As per Ind AS 102 Share-based Payment, stock options have to be fair valued on the grant date and expense has to be recognised over the vesting period. Pursuant to management decision, Impact of Ind AS 102 on account of

options granted to the employees of subsidiary is treated as deemed investment in subsidiary in the Company''s books.

Administration of ESOP Schemes

The Governance, Nomination and Remuneration Committee of the Board administer the Employee Stock Option Schemes, formulated by the Company from time to time.

Mandatory ESOP Disclosures

Disclosures as required under Section 62 of the Companies Act, 2013 (to be read with Rule 12 of the Companies (Share Capital and Debenture) Rules, 2014, and SEBI ESOP Regulations:

Sr.

Particulars

March 31, 2023

1.

Number of options granted and outstanding at the beginning of the year (A)

16,80,888

2.

Number of options granted during the year (B)

Nil

3.

Number of options vested during the year

Nil

4.

Number of options exercised during the year

Nil

5.

Number of shares arising as a result of exercise of options (C)

Nil

6.

Money realised during the year by exercise of options (in '')

Nil

7.

Number of options Forfeited/Expired during the year (D)

907,936

8.

The exercise price of the outstanding options (in '')

385.05

9.

Number of options granted and in force at the end of year = (A) (B)-(C)-(D)

772,952

10.

Weighted average of remaining contractual life (years) at the year end

0.37

11.

Variation of terms of the options

None

* Please refer to note 25 of the standalone financials for further details on ESOP data

options Granted to Key managerial Personnel (KMP) during the year

No option was granted to any of the KMP or to any other employee of the Company or its subsidiary (USFB) during the year.

However, USFB on January 27, 2023 has granted its stock options to below KMP of the Company to be vested in 4 years i.e. 20% each in in first 2 years and 30% each in next 2 years.

employee

Designation

Options

Exercise

Name

granted

Price (in

'')

Shashidhara S

Company

Secretary

27221

27.5

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

- None

Identified employees who were granted options 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

- None

30. ViGiL MECHANISM

The Company in compliance with Section 177 of the Companies Act, 2013 has a duly constituted Audit Committee of the Board. The composition of the Audit Committee is as under:

Sr.

No.

Directors

Designation

1.

Mr. Sunil Vinayak Patel

Chairman

(Independent

Director)

Independent Director Independent Director Non-Independent, Non-Executive

2.

Mr. K.R. Ramamoorthy

3.

Ms. Mona Kachhwaha

4.

Mr. Samit Ghosh

Please refer to the Section on Corporate Governance for further details on the Board Committees.

Further in compliance to Section 177 of the Companies Act, 2013 and Regulation 22 of SEBI Listing Regulations, the Company has established a Whistle Blower policy / Vigil Mechanism for the directors and employees to report genuine concerns or grievances about unethical behavior, actual or suspected fraud or violation of the company''s Code of Conduct or Ethics Policy. The Company has a vigil mechanism process wherein the employees are free to report violations of laws, rules, regulations or unethical conduct to the whistle and ethics officer of the Company. Further, this policy also specifically enables the employees of the Company and those of its subsidiary to report instances of any leak of unpublished price sensitive information by the employees of the Company and its subsidiary to any outsider which is not for legitimate business purposes. This is to ensure the compliance of SEBI (Prohibition of Insider Trading) Regulations, 2015 and Code of Conduct for Prevention of Insider Trading of the Company.

Name and Address of the Whistle and Ethics Officer

Mr. Shashidhara S - Company Secretary and Compliance Officer

Ujjivan Financial Services Limited

Grape Garden, No. 27, 3rd A Cross, 18th Main, 6th

Block, Bangalore - 560095, Karnataka

Email- [email protected]

Protected Disclosure against the Whistle and Ethics

Officer in the absence of the Managing Director

should be addressed to the Chairman of the

Company and the Protected Disclosure against the

Chairman of the Company should be addressed to

the Chairman of the Audit Committee.

Name and Address of the Chairman of the Company:

Mr. Samit Ghosh

Ujjivan Financial Services Limited

Grape Garden, No. 27, 3rd A Cross, 18th Main, 6th

Block, Bangalore - 560095, Karnataka

Email: [email protected]

name and Address of the chairman (Audit

committee):

mr. sunil vinayak Patel

G-1, Avant Garde 193, 6th Main Road, Defence Colony, Indiranagar, Bengaluru 560038, Karnataka Email: [email protected]

The confidentiality of those reporting violations is maintained and they are not subiected to any discriminatory practice

The whistle blower policy of the Company is disclosed on our website at the below link-https://www.uiiivan.com/mandatory-policies

A statement showing the name of every employee of the company other than disclosed above, who

a. if employed throughout the financial year, was in receipt of remuneration for that year which, in the aggregate, was not less than one Crore and two Lakhs rupees;

- None

b. if employed for a part of the financial year, was in receipt of remuneration for any part of that year, at a rate which, in the aggregate, was not less than eight Lakhs and fifty thousand rupees per month;

- None

c. if employed throughout the financial year or part thereof, was in receipt of remuneration in that year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the company.

- None

32. BUSiNESS RESPONSiBiLiTY SUSTAiNABiLiTY REPORTiNG ("BRSR")

The Board of the Company in its meeting held on May 18, 2023 has approved the Business Responsibility Sustainability Report ("BRSR") of the Company as stipulated under Regulation 34 (as amended) of SEBI Listing Regulations which mandates that top 1000 listed companies based on market capitalisation as on March 31 should include its BRSR in its Annual Report. The Company is ranked 615 in the list as on March 31, 2023.

A copy of the BRSR is appended as "Annexure 7" and has also been hosted on the website of the Company at www.ujjivan.com and can be accessed from the link below https://www.uiiivan.com/mandatorv-policies

Compliance of Sexual Harassment of Women at Workplace (Prevention, Prohibition and redressal) Act, 2013

The Company has only 2 employees as on March 31, 2023 and the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 is not applicable.

Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

a. Number of complaints filed during the year : Nil

b. Number of complaint dismissed during the year : Nil

c. Number of complaint pending as on end of the financial year: Nil

Other disclosures

• The Company is not required to maintain cost records as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013.

• 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: Not Applicable

• There are no applications 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.

Green initiatives

Electronic copies of the Annual Report for the FY 2022-23 and the Notice of the 19th AGM are being sent to all the members whose email addresses are registered with the Company / Depository Participants. As per the relaxation given by SEBI on account of Covid situation, physical copies of the Annual Report are not being sent to members who have not registered their email address with their depositories.

Acknowledgement

Your Directors wishes to gratefully acknowledge the assistance and guidance received from the RBI, ROC, Investors, Banks, Auditors, Lawyers, Accountants, Vendors, Partner NGOs, Institutions and Foundations and Government Authorities and all our well-wishers. The Board also wishes to place on record their warm appreciation for the creative and dedicated efforts of staff at all levels.


Mar 31, 2022

Your Directors are pleased to present the 18th Annual Report of Ujjivan Financial Services Limited together with the audited financial statements for the financial year ended March 31, 2022.

1. Financial Results

The Directors'' submit the Annual Report of Ujjivan Financial Services Limited (the "Company" or "Ujjivan") together with the audited financial statements for the financial year (FY) ended March 31, 2022.

('' in Crores)

Standalone*

Consolidated*

FY 2021-22

FY 2020-21

FY 2021-22

FY 2020-21

Operating Income

-

-

2995.16

3,065.98

Other Income

6.74

8.44

97.02

115.01

Total Income

6.74

8.44

3092.18

3,180.99

Less: Operational Expenses

Personnel Expenses

1.12

2.25

821.89

759.10

Administrative & CSR Expenses

2.61

2.30

501.90

285.18

Finance Charges

-

-

1071.08

1,120.95

Depreciation

0.01

0.01

155.07

169.90

Impairment Losses on Financial Instruments

-

-

846.20

1,165.19

Total Operational Expenses

3.74

4.56

3396.15

3,500.32

ProFit/(Loss) Before Tax

3.01

3.88

(303.97)

(319.33)

Less: Income tax

0.85

0.94

0.84

171.95

Less: Deferred tax

0.01

0.01

74.31

(252.17)

Profit/(Loss) After Tax

2.17

2.93

(230.50)

(239.11)

* as per Indian Accounting Standards (Ind-AS)

statutory reserves is in accordance with the provisions of section 45 - IC Reserve Bank of India Act, 1934.


2. Dividend

The Directors have not recommended any dividend for the FY 2021-22.

The Company, on a standalone basis, has no operation of its own and it is pertinent to note that the investments of the Company are primarily in the shares of its material listed subsidiary ''Ujjivan Small Finance Bank Limited'' wherein it holds 83.32% equity shares and preference shares of Rs. 200 crores and therefore dividend income constitutes a significant part of the total income of the Company. The Company has not received any dividend from its subsidiary during the year which has impacted its income and profitability. In view of inadequate profits of the Company, the Board has not recommended any dividend for the FY 2021-22.

The Dividend Distribution policy of the Company is available on the Company''s website and can be accessed from the link https://www.ujjivan.com/pdf/policy/ Ujjivan_Dividend_Distribution_Policy.pdf

3. Transfer to reserves

The Company transferred Rs. 44 lacs to Statutory Reserves. Transfer of 20% of the Profit after Tax to the

4. Credit Rating

The Company has zero debt; hence no rating has been obtained from any rating agencies during the year.

5. Capital Requirements

Adjusted Net Worth of a CIC-ND-SI shall at no point of time be less than 30% of its aggregate risk weighted assets on balance sheet and risk adjusted value of off-balance sheet items as on the date of the last audited balance sheet as at the end of the financial year as per RBI CIC Master Directions.

The Company as of March 31, 2022 is in compliance with the below capital requirements and all other mandatory ratios as required under RBI CIC Master Directions:

Ratios

RBI Requirement

Actuals (%)

Adjusted Networth (ANW)

>30% of RWA

147.69%

Investment ratio

>90% of Net Assets

105.60%

Equity Investment Ratio

>60% of Net assets

107.39%

Leverage Ratio

<2.5 Times

0.05%

6. Corporate Governance and Management Discussion and Analysis Report

In accordance with SEBI LODR Regulations, Management Discussion and Analysis Report and Corporate Governance Report together with the Certificate thereon from the Independent Practicing Company Secretary is provided separately and forms part of this Directors'' Report.

7. Extract of Annual Return

The Annual Return of the Company as on March 31, 2022 in Form MGT - 7 in accordance with Section 92(3) of the Act read with the Companies (Management and Administration) Rules, 2014, is available on the website of our Company at www.ujjivan.com.

8. No. of Meetings of the Board during the FY 2021-22

During the Financial Year 2021-22, our Board has met 9 (nine) times and the meetings of our Board of Directors were held on May 28, 2021, July 20, 2021, August 12, 2021, September 09, 2021, October 30, 2021, November 13,

2021, December 16, 2021, February 11, 2022 and March 31,

2022. For further details, please refer to the Corporate Governance Report, which forms part of this report.

9. Directors Resignation / Appointment / Reappointments / Retiring Director

(a) Retirement of Independent Director on completion of tenure

Mr. Abhijit Sen (DIN: 00002593) was appointed as an Independent Director by the shareholders for a term of 5 years commencing from September 13, 2016 to September 12, 2021 in accordance with the provisions of the Companies Act, 2013. He has communicated his inability to be considered to be appointed for a second term on completion of his tenure due to other commitments. He ceased to be a Director on completion of his tenure on September 12, 2021.

(b) Resignation of Mr. Rajesh Jogi from the position of NonExecutive Director

Mr. Rajesh Jogi (DIN: 03341036) resigned from the Board of the Company effective from August 22, 2021 to be eligible to qualify as an Independent Director in "Ujjivan Small Finance Bank Limited" (USFB) since the common director between the Holding Company and USFB cannot be termed as Independent Director in the Bank on account of restrictions imposed by the Reserve Bank of India.

(c) Appointment and Resignation of Mr. Ittira Davis from the position of Non-Executive Director effective

Mr. Ittira Davis (DIN: 06442816) got appointed as the NonExecutive Director w.e.f. November 01, 2021 with the approval of the shareholders and the RBI. However, he

resigned from the Board effective from January 13, 2022 to take charge as the MD & CEO of USFB.

(d) Appointment of Mr. Renzo Christopher Viegas as NonExecutive Director

On the recommendation of the Nomination and Remuneration Committee, the Board has appointed Mr. Renzo Christopher Viegas (DIN: 07560087) as an additional director (non-executive, independent category) with effect from December 17, 2021 for a term of 3 (years). The proposal for his appointment is being placed for consideration of shareholders of the Company at the ensuing 18th AGM. Mr. Renzo Christopher Viegas is eligible for appointment and in respect of whom the Company has received a notice in writing from him proposing his candidature for the office of Director of the Company. The Board recommends the shareholders to approve his appointment. Please refer item 3 of the 18th AGM notice for further details.

(e) Re-appointment of director retiring by rotation

As per the provisions of the Companies Act, 2013, Mr. Samit Ghosh (DIN: 00185369) retires by rotation at the ensuing 18th AGM and being eligible, seeks his re-appointment. The Board recommends his re-appointment. Please refer item no. 2 of the 18th AGM Notice for further details.

10. Directors'' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors of the Company confirms and state that:

(i) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as 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;

(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in

(iv) accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

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

(vi) they have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

(vii) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, audit of internal financial controls and the reviews performed by management and the audit committee of the board, the board is of the opinion that the Company''s internal financial controls were adequate and effective during the FY 2021-22.

11. Declaration by Independent Directors

The Company has received necessary declarations of independence from each of its Independent Directors under section 149(7) of the Companies Act, 2013, that he/ she meets the criteria of independent director envisaged in section 149 (6) of the Companies Act, 2013.

All Independent Directors have submitted the declaration of Independence, as required pursuant to Section 149(7) of the Act and including the added criteria prescribed under SEBI LODR Regulations, stating that they meet the criteria of Independence as provided in section 149(6) of the Companies Act, 2013 and they are not disqualified from continuing as Independent Directors of our Company.

In the opinion of the Board, all the Independent Directors meet the criteria with regards to integrity, expertise and experience as required under applicable laws.

The UFSL has also received from its directors a statement that they have complied with the Code of Conduct for Directors and Senior Management of the UFSL.

12. Nomination and Remuneration Policy

The Company pursuant to the provisions of Section 178 of the Companies Act, 2013 has formulated and adopted a nomination and remuneration policy which is disclosed on our website at the below link- https://www.ujjivan.com/ mandatory-policies

13. Statutory Auditors

The Reserve Bank of India (RBI) through its Circular No.DoS.CO.ARG/ SEC.01/08.91. 001/2021-22 dated April 27, 2021 has restricted audit firms from undertaking audit of maximum 8 (eight) NBFCs in a financial year and accordingly M/s. MSKA & Associates, Chartered Accountants (FRN: 105047W) tendered their resignation from their position as statutory auditors of the Company stating that they have reached the aforesaid maximum

limit. Pursuant to the aforesaid resignation of MSKA, the Company had appointed Varma & Varma, Chartered Accountants (FRN - 004532S) as the Statutory Auditors of the Company for a term of 3 (three) consecutive financial years from 2021- 22 to 2023-24 with the approval of the shareholders in the 17th Annual General Meeting held on September 29, 2021.

14. Explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made -

(i) Statutory Auditor''s Report

There are no disqualifications, reservations, adverse remarks or disclaimers in the auditor''s report for the FY 2021-22.

(ii) By the Company Secretary in practice in his secretarial audit report;

Secreta rial Auditor

Mr. K. Jayachandran, Practicing Company Secretary (ACS No. 11309 and Certificate of Practice No. 4031) was appointed as the Secretarial Auditor of the Company to conduct secretarial audit of the Company for the year ended March 31, 2022 as required under Section 204 of the Companies Act, 2013 and the Rules made thereunder. The secretarial audit report for FY 2021-22 is appended as “Annexure 1" to the Board''s Report.

As required under regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate secretarial audit report for the year ended March 31, 2022 given by the Secretarial Auditor Mr. K. Jayachandran, in the format as prescribed by SEBI in this regard is appended as "Annexure 2"

The Secretarial Audit Report does not contain any qualification, reservation or adverse remark made by the Secretarial Auditor.

Further, Mr. K. Jayachandran, Practicing Company Secretary (ACS No. 11309 and Certificate of Practice No. 4031) has through his certificate dated May 19, 2022 has certified that none of the directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as director of companies by the Board / Ministry of Corporate Affairs or any such statutory authority. The said certificate is appended as “Annexure 3" to the Board''s Report and should also form a part of the Corporate Governance Report of the Board as required under the SEBI Listing Regulations.

15. Compliance with Secretarial Standards

The Company has complied with the provisions of Secretarial Standards specified by the Institute of Company Secretaries of India and notified by the Ministry of Corporate Affairs under Section 118(10) of the Companies Act, 2013.

16. Particulars of loans, guarantees or investments under Section 186

During the FY 2021-22, the Company has not given any loans and guarantees to any-body corporate and has not made any investment under Section 186.

17. Transaction with related parties

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

There were no contracts or arrangements or transactions entered into during the year ended March 31, 2022, which were not at arm''s length basis.

Your Directors draw attention of the members to Note 25 to the Financial Statements which sets out other related party disclosures.

All Related Party Transactions as required under Accounting Standards AS-18 are reported in Note 25 -Notes to Accounts of the Standalone financial statements of the Company.

18. The state of the Company''s affairs

The Company is registered with RBI as a Non Deposit taking Systemically Important Core Investment Company (NBFC-ND-SI-CIC). The Company is in compliance with the conditions of the Master Direction - Core Investment Companies (Reserve Bank) Directions, 2016 as amended. Prior to its conversion to a Core Investment Company, the Company was one of the largest microfinance institutions in the country. The conversion was done based on the stipulation of the Reserve Bank of India while approving the Company to set up the small finance bank business.

The Company is the promoter of ''Ujjivan Small Finance Bank Limited'' (hereinafter referred to as "USFB/Bank") and being a CIC the Company has its investments primarily in USFB. The Company as on March 31,2022 holds 83.32% equity in USFB and holds preference shares of Rs. 200 crores.

19. Material changes and commitments, if any, affecting the financial position of the company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report;

Proposed Reverse Merger In terms of the RBI In-Principle Approval, RBI Final Approval and Guidelines for licensing of "Small Finance Banks" in the private sector issued by RBI on November 27, 2014 ("SFB Licensing Guidelines"), the Bank was required to list its equity shares on the Stock Exchange within 3 (Three) years from the date of commencement

of business, i.e., by January 31,2020. Bank''s equity shares got listed on Stock Exchanges on December 12, 2019 well within the prescribed timeline in accordance with SFB Licensing Guidelines.

Further, pursuant to the SFB Licensing Guidelines, Promoter of the Bank was required to reduce its shareholding in the Bank to 40% of the paid-up Equity Share capital of the Bank within a period of five years from the date of commencement of business operations by the Bank i.e. by January 31, 2022 and thereafter required to reduce its shareholding in the Bank to 30% and 26% of its paid-up Equity Share capital within a period of 10 years and 12 years, respectively, from the date of commencement of the business operations.

However, RBI vide its letter dated July 09, 2021 permitted the Bank to apply for the amalgamation of holding company with small finance bank, in terms of provisions of Master Direction on Amalgamation of Private Sector Banks, Directions, 2016 dated April 21, 2016, Three (3) months prior to completing five years from the date of commencement of business of small finance bank.

Accordingly, the Bank has initiated necessary steps for the reverse merger of Ujjivan Financial Services Limited with the Bank in accordance with applicable laws and guidelines. Merger of the Promoter entity with the Bank will suffice the requirement of promoter shareholding dilution.

Therefore, the Board of the Bank at its meeting held on October 30, 2021 considered and approved a Scheme of Amalgamation ("Scheme") between Ujjivan Financial Services Limited (UFSL, the promoter of the Bank) and the Bank and their respective shareholders and creditors under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 and the rules made thereunder.

Accordingly, the Bank submitted an application to SEBI on November 01, 2021 seeking their approval / exemption on the following:

To relax three-year minimum promoter lock in requirements in the Bank under Regulation 16(1)(a) of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 to the extent required to implement the Scheme of Amalgamation.

For adopting proposed scheme of amalgamation as a method to achieve minimum public shareholding (MPS) by the Bank.

Subsequently, SEBI, vide its letter dated December 02, 2021 acceded to relax the three-year minimum promoter lock-in requirements in the Bank to the extent required to implement the Scheme soon after receiving final NCLT approval. However, SEBI advised the Bank to ensure

compliance with MPS as prescribed by SEBI Circulars dated November 30, 2015 and February 22, 2018 and then proceed with the filing of the scheme documents with the exchanges.

During the period internal working group of the RBI, pursuant to the Recommendations of the Internal Working Group to Review Extant Ownership Guidelines and Corporate Structure for Indian Private Sector Banks dated October 20, 2020 and November 20, 2020, had recommended that no intermediate sub-targets between five to 15 years may be required and that promoters may submit a dilution schedule which may be examined and approved by the RBI. The progress in achieving the agreed milestones must be periodically reported by the banks and shall monitored by the RBI. ("Dilution Requirement")

Pursuant to the circular issued by the RBI dated November 26, 2021 ("November 26 Circular"), the RBI inter alia accepted the recommendation on the Dilution Requirement without any modification subject to submission of a dilution schedule with the RBI. However, the proposed recommendations have not been notified as yet by the RBI by way of a separate notification.

However, to ensure that the MPS compliance is met well before the due date i.e. by December 11, 2022 (within 3 years of listing of the Bank), the Board at its Meeting on February 05, 2022 evaluated various methods to achieve the MPS by reducing UFSL''s holding in the Bank from present 83.32% to 75% or lower. After deliberations, the Board of the Bank approved the option to carry out a Qualified Institutions Placement ("QIP") in terms of the SEBI ICDR Regulations to the extent necessary to achieve the MPS norms, provided the total issue proceeds shall not exceed Rs. 600 crores.

The Bank has obtained an approval from its Shareholders for the aforesaid QIP through a postal ballot and the Bank is in the process of undertaking its QIP.

20. The conservation of energy, technology absorption, foreign exchange earnings and outgo, in the manner as prescribed in Rule 8(3) of the Companies (Accounts) Rules,

2014

Conservation of energy and technology absorption

Since the Company does not own any manufacturing facility, the particulars relating to conservation of energy and technology absorption are not applicable.

The Foreign Exchange earnings and outgo

There was no Foreign Exchange inflow and outflow during the year.


21. Development and implementation of risk management policy

The Company is a non-operating holding Company and its main objects are to carry on the business of making investments in group company(ies) in the form of securities and providing guarantees etc. and to carry on financial activities, whether in India or outside, in the nature of investment in bank deposits, money market instruments (including money market mutual funds and liquid mutual funds), government securities, and to carry on such other activities as may be permitted and prescribed by the relevant statutory authorities for core investment companies from time to time.

Since USFB is a listed entity, the Company can only have a distant oversight on the risk management practices adopted by USFB. The Company expects that the risk management committee of USFB adopts the best risk practices, reviews its risk management framework and verifies adherence to various risk parameters and compliances in the best possible way.

The Company has a duly constituted Risk Management Committee of the Board and has in place its risk management policy which highlights the functions, implementation and the role of the committee and the board. Please refer the Corporate Governance section for the composition and terms of reference of the Risk Management Committee.

22. Corporate Social Responsibility

The Corporate Social Responsibility (CSR) programs were started by the Company in the year 2010 much before it was made mandatory under the Companies Act, 2013.

During the year, the Company has continued its partnership with Parinaam Foundation and the Company has granted Rs. 3.31 lacs to Parinaam Foundation towards their Academic Adoption Program. Please refer the separate section on Corporate Social Responsibility in the annual report for a detailed write up on the CSR activities of the Company during the year.

A brief outline of the company''s CSR policy is disclosed on our website at the below link https://www.ujjivan.com/ mandatory-policies

The initiatives undertaken by the Company on CSR activities are set out in “Annexure 4" of the Board''s Report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which forms part of the Board''s Report.

23. Board Evaluation

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 Companies Act, 2013 and the corporate governance requirements as prescribed by Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015 ("SEBI Listing Regulations") and SEBI guidance note on Board Evaluation.

Performance evaluation criteria for Board, Committees of the Board and Directors were adopted by the Nomination Committee of the Board at its meeting held on March 31, 2022. Evaluation formats and criteria of evaluation duly incorporated the criteria and other parameters as suggested by SEBI vide their guidance note on evaluation through their circular dated January 05, 2017.

The Board was evaluated comprehensively inter alia on the structure of the Board, competency, experience and qualifications of directors, diversity in board, regularity of the board meetings, effectiveness of board processes, independence of Board, information sharing and overall functioning of the Board.

The performance of the board was evaluated by the board after seeking inputs from all the directors on each of the

above parameters of evaluation and the performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the above parameters of evaluation.

The Board committees were evaluated inter alia on the basis of their mandate, composition, attendance, functioning and independence.

Independent Directors'' Evaluation of Non-Independent Directors

In a separate meeting of independent directors held on March 31, 2022, performance of non-independent directors, performance of the board as a whole and performance of the chairman was evaluated, taking into account the views of executive directors and nonexecutive directors. The Independent Directors also assessed the quality, quantity and timeliness of flow of information between the Company management and the Board.

Performance of independent directors was evaluated by the entire board, excluding the independent director being evaluated and was satisfied that each of the independent director fulfills the independence criteria as specified in SEBI regulations and that they are independent of the management.

24. Details as required under Rule 8 of the Companies (Accounts) Rules, 2014 (i) The financial summary or highlights;

('' in Crores)

Part,culars

Standalone*

Consolidated*

FY 2021-22

FY 2020-21

FY 2021-22

FY 2020-21

Operating Income

-

-

2995.16

3,065.98

Other Income

6.74

8.44

97.02

115.01

Total Income

6.74

8.44

3092.18

3,180.99

Less: Operational Expenses

Personnel Expenses

1.12

2.25

821.89

759.10

Administrative & CSR Expenses

2.61

2.30

501.90

285.18

Finance Charges

-

-

1071.08

1,120.95

Depreciation

0.01

0.01

155.07

169.90

Impairment Losses on Financial Instruments

-

-

846.20

1,165.19

Total Operational Expenses

3.74

4.56

3396.15

3,500.32

Profit/(Loss) Before Tax

3.01

3.88

(303.97)

(319.33)

Less: Income tax

0.85

0.94

0.84

171.95

Less: Deferred tax

0.01

0.01

74.31

(252.17)

Profit/(Loss) After Tax

2.17

2.93

(230.50)

(239.11)

* as per Indian Accounting Standards (Ind-AS)

(iv) The details of directors or key managerial personnel who were appointed or have resigned during the year;

¦ Sr.

No.

Same

Designation

DIN /PAS

Date of Appointment/ Change/ Cessation

Reason

1

Ms. Carol Kripanayana Furtado

CEO

AADPF4769J

August 13, 2021

Appointment

2

Mr. Rajesh Kumar Jogi

Independent Director

03341036

August 22, 2021

Cessation

3

Ms. Carol Kripanayana Furtado

CEO

AADPF4769J

August 25, 2021

Cessation

4

Mr. Abhijit Sen

Non-Executive, Independent

00002593

September 12, 2021

Cessation

5

Mr. Sanjeev Barnwal

CEO

AHUPB6433D September 10, 2021

Appointment

6

Mr. Ittira Davis

Non-Executive Director

06442816

November 1, 2021

Appointment

7

Mr. Barun Kumar Agarwal

CFO

AIUPA9828Q

November 15, 2021

Cessation

8

Mr. Renzo Christopher Viegas

Non-Executive, Independent

07560087

December 17, 2022

Appointment

9

Mr. Ittira Davis

Non-Executive Director

06442816

January 13, 2022

Cessation

10

Mr. Sanjeev Barnwal

CEO & CS

AHUPB6433D

February 14, 2022

Cessation

11

Mr. Shashidhara S

CS

BOXPS7477B

February 15, 2022

Appointment

(v) the names of companies which have become or ceased to be its Subsidiaries, joint ventures or associate companies during the year;

None

(vi) Deposits from public

During the year, the Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

However, the subsidiary of the Company ''Ujjivan Small Finance Bank Limited'' which is a Small Finance Bank has outstanding deposits of Rs. 18,162 crores as on March 31, 2022.

(vii) The details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future;

None

(viii) The details in respect of adequacy of internal financial controls (IFC) with reference to the Financial Statements

In respect of internal financial control, the Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, the safeguarding of its assets, the timely prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

Further, the management regularly reviews the control for any possible changes and takes appropriate actions.

(ii) highlights of performance of subsidiaries, associates and joint venture companies and their contribution to the overall performance of the company during the period

''Ujjiva n Small Finance Bank Limited'' ("USFB") is a material listed subsidiary of the Company and is a small finance bank licensed by the RBI in terms of Section 22 of the Banking Regulation Act, 1949. USFB was incorporated on July 04, 2016 and commenced its operations as a small finance bank w.e.f. February 01, 2017. The Company as on March 31, 2022 holds 83.32% equity in USFB.

Pursuant to the provisions of section 129(3) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014, a statement containing salient features of the financial statements of the Company''s subsidiaries in Form AOC-1 is annexed as “Annexure 5" to this report.

Key business and financial performance highlights of the material listed subsidiary ''Ujjivan Small Finance Bank Limited'' (USFB) (in I-GAAP):

• Gross advances at ? 18,162 crore as on March 31, 2022 as against ? 15,140 crore as on March 31, 2021; growth of 20% Y-o-Y

• Disbursement during FY 2021-22 was ? 14,113 crore as against ? 8,397 crore during FY 2020-21; growth of 68%

• Total deposit of ? 18,292 as on March 31, 2022 as against ? 13,136 crore as on March 31, 2021; growth of 39%; retail deposits grew 59% during the year from ? 6,242 crore in March 2021 to ? 9,921 crore in March 2022

• CASA increased by 85% from ? 2,699 crore in March

2021 to 4,993 crore in March 2022

• 64.8 lakh customers in March 2022 as against 59.2 lakh customers in March 2021

• 37.9 lakh borrowers in March 2022 as against 40.1 lakh in March 2021

• CRAR of 19.0% in March 2022 as against 26.4% in March 2021

• Number of branches remained unchanged at 575 in March 2022 when compared to previous year and number of ATMs increased from 491 to 492 during FY 2021-22

• Total income increased to ? 3,126 crore in March 2022 from ? 3,108 crore in March 2021; an increase of .6%

• Net interest income grew to ? 1,744 crore in March

2022 from ? 1,729 in March 2021; an increase of .9%

• Profit after Tax (PAT) declined to ? (415) crore in March 2021 from ? 8 crore in March 2021 primarily due to significant increase in provisions and contingencies;

• Return on Asset (ROA) for FY 2021-22 is (1.89%) as against 0.04% in FY 2020-21

• Return on Equity (ROE) for FY 2021-22 is (13.8%) as against 0.3% in FY 2020-21

• GNPA at 7.3% in March 2022 as against 7.1% in March 2021

• NNPA at 0.6% in March 2022 as against 2.9% in March 2021

• Cost to income ratio increased to 72% in FY 2021-22 from 61% in FY 2020-21

• Cost of fund improved to 6.3% in March 2022 from 7.3% in March 2021

• IBA - Banking Technology Award 2021 Best IT Risk & Cyber Security Initiatives (amongst SFB / Payments Bank)

• DSCI Excellence Awards 2021: Winner Best Security Practices in NBFCs & Small Financial Institutions

• Great Place To Work® Institute: Ranked 11th among ''India''s Best Companies to Work For 2021. Certified by GPTW for 12th consecutive year

• BFSI Excellence Awards 2021 Best Omni channel Campaign Management

• IDEX Legal award 2021 Litigation Department of the Year

USFB - Key Ratios as on March 31, 2022

Particulars

FY 21-22

Average Yield - across segment

16.6%

Cost of Funds (CoF)

6.3%

Net Interest Margin (NIM)

8.8%

Return on Assets (ROA)

(1.9)%

Return on Equity (RoE)

(13.8)%

Cost to income

72.0%

Capital Adequacy (CRAR)

19.0%

NNPA

0.6

LCR

152%

The Company currently carries on financial activity business in the nature of investments in bank deposits or other permissible securities and investment in shares of subsidiary and derives its value primarily from its investments in the Bank. The Bank contributes 99.78% of the consolidated total income of the Company.

(iii) The change in the nature of business, if any;

There is no change in the nature of the business of the Company during the FY 2021-22. The Company continues to be a Non Deposit taking Systemically Important Core Investment Company (NBFC-ND-SI-CIC).

25. ESOP related & other disclosures

(i) Details of equity shares with differential rights

The Company has not issued any equity shares with differential rights during the year

(ii) Details of sweat equity shares issued

The Company has not issued any sweat equity shares during the year

(iii) Details of employee stock option scheme

The Company has established Employee Stock Option Plan (ESOP) for compensation to its employees, being ESOP 2006, ESOP 2007, ESOP 2008, ESOP 2010, MD-ESOP 2010 and ESOP 2015.

As on March 31, 2022, only ESOP 2015 scheme is active. ESOP 2015

The ESOP 2015 pool comprises of 65,79,899 options which includes the original pool of 47,82,129 options and 17,97,770 options added from the lapsed options of ESOP 2006, ESOP 2007, ESOP 2008 and ESOP 2010 with the approval of the shareholders at their meetings held on November 03, 2015 and June 27, 2018.

As on March 31,2022, out of the 55,15,880 options granted, 8,28,182 options has been exercised, 30,06,810 options are lapsed, 16,80,888 vested options are unexercised and there is no option left to be vested. The Board (including its authorized committee) has been authorized by the shareholders to include the lapsed / cancelled options under its ESOP 2010 and ESOP 2015 back to the pool of ESOP 2015 and that the Board is hereby authorized to grant such added back options to its eligible employees (which includes the employees of its subsidiary).

The vesting period for the options granted under ESOP 2015 is for a period of three years as under:

Tranche

Year of Grant

Options Granted

Year 1

Year 2

Year 3

ESOP 2015 (Tranche 1)

2015

14,69,800

34%

33%

33%

ESOP 2015 (Tranche 2)*

2016

16,96,850

33%

33%

34%

ESOP 2015 (Tranche 3)

2018

23,37,670

34%

33%

33%

ESOP 2015 (Tranche 4)

2018

11,560

34%

33%

33%

Total

55,15,880

* Post IPO, options were granted subsequent to the ratification of the shareholders

Sr.

Particulars

March 31,2022

6.

Money realized during the year by exercise of options (in Rs.)

32,35,506

7.

Number of options Forfeited/Expired during the year (D)

9,11,946

8.

The exercise price of the outstanding options (in Rs.)

146.35, 417.15 & 385.05

9.

Number of options granted and in force at the end of year = (A) (B)-(C)-(D)

16,80,888

10.

Weighted average of remaining contractual life (years) at the year end

0.92

11.

Variation of terms of the options

None

* Please refer to note 24 of the standalone financials for further details on ESOP data

Mandatory ESOP Disclosures

Disclosures as required under Section 62 of the Companies Act, 2013 (to be read with Rule 12 of the Companies (Share Capital and Debenture) Rules, 2014, and SEBI ESOP Regulations:

Sr. Particulars

March 31,2022

1. Number of options granted and outstanding at the beginning of the year

(A)

26,14,942

2. Number of options granted during the year

(B)

Nil

3. Number of options vested during the year

5,30,301

4. Number of options exercised during the year

22,108

5. Number of shares arising as a result of exercise of options

(C)

22,108

Options Granted to Key Managerial Personnel (KMP) during the year

No option was granted to any of the KMP or to any other employee of the Company or its subsidiary (USFB) during the year.

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

- None

Identified employees who were granted options 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

- None

26. Vigil Mechanism

The Company in compliance with Section 177 of the Companies Act, 2013 has a duly constituted Audit Committee of the Board. The composition of the Audit Committee is as under:

SNro..

Directors

Designation

1.

Mr. Sunil Vinayak Patel

Chairman (Independent Director)

2.

Mr. K.R. Ramamoorthy

Independent Director

3.

Ms. Mona Kachhwaha

Independent Director

4.

Mr. Samit Ghosh

Non-Independent, NonExecutive

No options were granted by the Company during the FY 2021-22.

The ESOP 2015 is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (SEBI ESOP Regulations), the Companies Act, 2013, and is implemented in accordance with guidance notes issued by ICAI and the relevant accounting standards.

Revisions in the ESOP Schemes during the Year

None;

ESOP Schemes Compliance Status

The ESOP 2015 is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (SEBI ESOP Regulations) and the Companies Act, 2013. The Company has received a certificate from the Secretarial Auditors of the Company certifying that ESOP 2015 Scheme of the Company is being implemented in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and is in accordance with the resolutions passed by the Members of the Company at a general meeting. The Certificate being enclosed as "Annexure 6".

The ESOP Schemes are implemented in accordance with guidance notes issued by ICAI and the relevant accounting standards.

The weighted average fair value of the share options granted during the financial year ended March 31, 2022 and March 31, 2021 is Nil. Options were priced using Black

and Scholes Model. Vested ESOPs can be exercised within three years from their corresponding dates of vesting. Vested ESOPs can be exercised between the dates of vesting and on or before option expiry dates. The term of the option is assumed to be the sum of a) duration till vesting; and b) the midpoint of the remaining exercise period from date of vesting, in absence of historical exercise pattern. While the Company has been listed since 2016, the period of listing up to the Grant Dates is not commensurate with the expected term of the granted ESOPs. Accordingly, volatility of comparable companies has been considered for the purposes of valuation.

ESOP arrangement with subsidiary

With effect from February 1, 2017, the business undertaking of the Company was transferred to USFB and all the employees of the Company except few identified personnel have been transferred to USFB as part of the transfer of the business undertaking. This has resulted in the transfer of options from the employees of the Company to the employees of USFB. As per Ind AS 102 Share-based Payment, stock options have to be fair valued on the grant date and expense has to be recognised over the vesting period. Pursuant to management decision, Impact of Ind AS 102 on account of options granted to the employees of subsidiary is treated as deemed investment in subsidiary in the Company''s books.

Administration of ESOP Schemes

The Governance, Nomination and Remuneration Committee of the Board administer the Employee Stock Option Schemes, formulated by the Company from time to time.

Please refer to the Section on Corporate Governance for further details on the Board Committees.

Further in compliance to Section 177 of the Companies Act, 2013 and Regulation 22 of SEBI Listing Regulations, the Company has established a Whistle Blower policy / Vigil Mechanism for the directors and employees to report genuine concerns or grievances about unethical behavior, actual or suspected fraud or violation of the company''s Code of Conduct or Ethics Policy. The Company has a vigil mechanism process wherein the employees are free to report violations of laws, rules, regulations or unethical conduct to the whistle and ethics officer of the Company. Further, this policy also specifically enables the employees of the Company and those of its subsidiary to report instances of any leak of unpublished price sensitive information by the employees of the Company and its subsidiary to any outsider which is not for legitimate business purposes. This is to ensure the compliance of SEBI (Prohibition of Insider Trading) Regulations, 2015

and Code of Conduct for Prevention of Insider Trading of the Company.

Name and Address of the Whistle and Ethics Officer Mr. Shashidhara S - Company Secretary and Compliance Officer

Ujjivan Financial Services Limited

Grape Garden, No. 27, 3rd A Cross, 18th Main, 6th Block,

Bangalore - 560095, Karnataka

Email- [email protected]

Protected Disclosure against the Whistle and Ethics Officer in the absence of the MD & CEO should be addressed to the Chairman of the Company and the Protected Disclosure against the Chairman of the Company should be addressed to the Chairman of the Audit Committee.

Name and Address of the Chairman of the Company: Mr. Samit Ghosh

Ujjivan Financial Services Limited

Grape Garden, No. 27, 3rd A Cross, 18th Main, 6th Block,

Bangalore - 560095, Karnataka

Email: [email protected]

Name and Address of the Chairman (Audit Committee): Mr. Sunil Vinayak Patel

G-1, Avant Garde 193, 6th Main Road, Defence Colony, Indiranagar, Bengaluru 560038, Karnataka Email: [email protected]

The confidentiality of those reporting violations is maintained and they are not subjected to any discriminatory practice

The whistle blower policy of the Company is disclosed on our website at the below link- https://www.ujjivan.com/ mandatory-policies

27. Remuneration details of Directors, KMPs, employees

Sr.

Particulars

Disclosures

1.

The ratio of the remuneration of each Whole time director to the median remuneration of the employees of the company for the financial year

Not applicable since the Company doesn’t have a whole time director

2.

The percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company

Kmp % increase in

remuneration

Secretary or Manager, if any, in the financial year

Mr. Sanjeev Barnwal - CS (Until Feb 14, 2022) 16.50%*

Mr. Barun Agarwal - CFO (Until Nov 15, 2021) 10.20%*

Mr. Shashidhara S (w.e.f. Feb 15, 2022) 12.60%

3.

The percentage increase in the median remuneration of employees in the financial year;

12.6% increase in the median remuneration of employees in the FY 2021-22.

4.

The number of permanent employees on the rolls of company as on March 31, 2022

2

5.

Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration

The average increase in the salaries of employees (other than managerial personnel) was 12.6% and the average increase in the managerial remuneration during the last financial year was 13.30%.

6.

Affirmation that the remuneration is as per the remuneration policy of the company

Yes

A statement showing the name of every employee of the company other than disclosed above, who

a. if employed throughout the financial year, was in receipt of remuneration For that year which, in the aggregate, was not less than one crore and two lakh rupees;

- None

b. if employed for a part of the financial year, was in receipt of remuneration for any part of that year, at a rate which, in the aggregate, was not less than eight lakh and fifty thousand rupees per month;

- None

c. if employed throughout the financial year or part thereof, was in receipt of remuneration in that year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the company.

- None

Information as per Rule 5(2) of Chapter XIII, the Companies (Appointment and Remuneration of

Managerial Personnel) Rules, 2014

The names of the top ten employees in terms of remuneration drawn:

The Company during the year ended March 31,2022 had only the following employees:

Sr.

Particulars

Shashidhara S.

Aakash Jaiswal

i.

Designation

Company Secretary and Compliance Officer (wef Feb 15, 2022)

Assistant Manager -Investor Relations

ii.

Remuneration received

14,07,523

12,92,544

iii.

nature of employment, whether contractual or otherwise;

Permanent

Permanent

iv.

qualifications and experience of the employee

CS, LLB, M.Com 13 years’ experience

MBA (Finance)

4 years’ experience

v

date of commencement of employment

November 01, 2017

May 20, 2019

Sr.

Particulars

Shashidhara S.

Aakash Jaiswal

vi.

the age of such employee

37

31

vii.

the last employment held by such employee before joining the company

GMR Ose Hungund Hospet Highways Private Limited

State Bank of India

viii.

the percentage of equity shares held by the employee in the company

Nil

Nil

ix.

whether any such employee is a relative of any director or manager of the company

No

No

28. Business Responsibility Reporting

The Board of the Company in its meeting held on May 19, 2022 has approved the Business Responsibility Report ("BRR") of the Company as stipulated under Regulation 34 (as amended) of SEBI Listing Regulations which mandates that top 1000 listed companies based on market capitalization as on March 31 should include its BRR in its Annual Report. The Company is ranked 869 in the list as on March 31,2022.

A copy of the BRR is appended as “Annexure 7" and has also been hosted on the website of the Company at www.ujjivan.com and can be accessed from the link below https://www.ujjivan.com/mandatory-policies

Compliance of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has only 2 employees as on March 31, 2022 and the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 is not applicable.

Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

a. Number of complaints filed during the year : Nil

b. Number of complaint dismissed during the year : Nil

c. Number of complaint pending as on end of the financial year : Nil

Other disclosures

• The Company is not required to maintain cost records as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013.

• 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: Not Applicable

• There are no applications 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.

Green Initiatives

Electronic copies of the Annual Report for the FY 2021-22 and the Notice of the 18th AGM are being sent to all the members whose email addresses are registered with the Company / Depository Participants. As per the relaxation given by SEBI on account of Covid situation, physical copies of the Annual Report are not being sent to members who have not registered their email address with their depositories.

ACKNOWLEDGEMENT

Your Directors wishes to gratefully acknowledge the assistance and guidance received from the RBI, ROC, Investors, Banks, Auditors, Lawyers, Accountants, Vendors, Partner NGOs, Institutions and Foundations and Government Authorities and all our well-wishers. The Board also wishes to place on record their warm appreciation for the creative and dedicated efforts of staff at all levels.

For and on behalf of the Board of Directors

Samit Ghosh Sunil Vinayak Patel

Chairperson Independent Director (Audit Committee Chairman)

DIN:00185369 DIN:00050837

Date: May 19, 2022 Place: Bangalore


Mar 31, 2018

To the Members,

Overview

The Company was originally incorporated as Ujjivan Financial Services Private Limited on December 28, 2004 at Bengaluru, Karnataka, India as a private limited company under the Companies Act, 1956. Pursuant to a certificate issued by the Reserve Bank of India (“RBI”) on October 31, 2005, the Company was permitted to commence operations as a non-banking financial company (“NBFC”) under section 45 IA of the Reserve Bank of India Act, 1934. Since financial year 2008-09, the Company has been classified as a systemically important non-deposit accepting NBFC. Pursuant to the RBI introduction of a new category of NBFC-Micro Finance Institution vide its circular BI/201314/49 DNBS.(PD)CC.No. 347 /03.10.38/2013-14 dated July 01, 2013, the Company was granted NBFC-Microfinance Institution (“NBFC-MFI”) status by the RBI on September 5, 2013. Subsequently, the Company was converted into a public limited company pursuant to a special resolution passed by its Shareholders at the extraordinary general meeting (“EGM”) held on November 3, 2015 and the name of the Company was changed to Ujjivan Financial Services Limited. A fresh certificate of incorporation consequent upon conversion to a public limited company was issued by the Registrar of Companies, Bangalore, Karnataka (“ROC”) on November 26, 2015. Subsequently, a fresh certificate of NBFC-MFI registration consequent upon the change of name of the Company was issued by the RBI on March 4, 2016.

The Company has converted from an NBFC-MFI to NBFC-Non Deposit taking Systematically Important Core Investment Company (NBFC-ND-SI-CIC) and received a fresh certificate of registration dated October 10, 2017 from the RBI; the conversion was done pursuant to the conditions prescribed by the RBI in their license letter dated November 11, 2016 for setting up a Small Finance Bank.

Ujjivan Small Finance Bank Limited’ (the wholly owned subsidiary of the Company) which commenced its small finance bank operations in February 2017 has been included in the Second Schedule to the Reserve Bank of India Act, 1934 vide Official Gazette Notification on August 25, 2017. This has granted the ‘Scheduled Bank’ status to ‘Ujjivan Small Finance Bank Limited’ from the date of the notification.

1. Financial Results

The Directors’ submit the Annual Report of Ujjivan Financial Services Limited (the “Company” or “Ujjivan”) alongwith the audited financial statements for the financial year (FY) ended March 31, 2018.

(Rs. in Crores)

Particulars

Standalone

Consolidated

FY 2017-18

FY 2016-17*

FY 2017-18

FY 2016-17

Operating Income

0.00

1,145.53

1,443.36

1,349.37

Other Income

7.74

42.00

138.34

48.25

Total Income

7.74

1,187.53

1,581.70

1,397.62

Less: Operational Expenses

Personnel Expenses

1.52

220.87

366.45

271.62

Administrative Expenses

3.21

134.85

246.32

173.80

Finance Charges

0.01

432.76

604.90

542.72

Depreciation

0.01

7.53

41.38

12.63

Provision For Doubtful Debts

0.00

70.68

310.81

75.12

Total Operational Expenses

4.75

866.68

1,569.86

1,075.89

Profit/(Loss) Before Tax

2.99

320.85

11.83

321.74

Less: Income tax

2.56

135.54

33.88

136.96

Less Deferred tax

0.004

(22.33)

(29.33)

(22.90)

Profit/(Loss) After Tax

0.42

207.64

7.28

207.67

* includes the numbers for both discontinued as well as continued operations.

2. Dividend

In accordance with the Dividend Distribution Policy adopted by the Board in its meeting held on April 27, 2017 and in continuation to the dividend payment track record of the Company, the directors are pleased to recommend for approval of the members a dividend of Rs. 0.50 per equity share for the FY 2017-18.

The Board has recommended the aforesaid dividend out of the accumulated profits earned by it in the previous financial years and transferred to free reserves and it is in accordance with the Companies (Declaration and Payment of Dividend) Rules, 2014.

The aforesaid dividend, if approved by the shareholders would involve a cash outflow of ~ Rs. 7.2 Crores (including dividend distribution tax).

3. Transfer to reserves

The Company transferred Rs. 8.38 lacs to Statutory Reserves. Transfer of 20% of the Profit after Tax to the statutory reserves in accordance with the provisions of section 45 - IC Reserve Bank of India Act, 1934.

4. Credit Rating

The Company has zero debt; hence no rating has been obtained from any rating agencies during the year.

5. Capital Requirements

Adjusted Net Worth of a CIC-ND-SI shall at no point of time be less than 30% of its aggregate risk weighted assets on balance sheet and risk adjusted value of off-balance sheet items as on the date of the last audited balance sheet as at the end of the financial year as per RBI CIC Master Directions.

The Company as of March 31, 2018 is in compliance with the capital requirements and all other mandatory ratios as required under RBI CIC Master Directions.

6. Corporate Governance and Management Discussion and Analysis Report

In accordance with SEBI LODR Regulations, Management Discussion and Analysis Report and Corporate Governance Report together with the Certificate thereon from the Independent Practicing Company Secretary is provided separately and forms part of this Directors’ Report.

7. Extract of Annual Return

In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the Annual Return in the prescribed format (MGT-9) is appended as “Annexure 1” to the Board’s Report.

8. Business Responsibility Reporting

The Board of the Company in its meeting held on May 10, 2018 has approved the Business Responsibility Report (“BRR”) of the Company as stipulated under Regulation 34 (as amended) of SEBI Listing Regulations which mandates that top 500 listed companies based on market capitalization as on March 31 should include its BRR in its Annual Report. The Company is ranked 391 in the list as on March 31, 2018.

As a green initiative, a copy of the BRR has been hosted on the website of the Company at www.ujjivan.com and can be accessed from the link below http://ujjivan.com/html/ujjivan policies.php

9. No. of Meetings of the Board during the FY 2017-18

During the Financial Year 2017-18, our Board has met 5 (five) times and the meetings of our Board of Directors were held on April 27, 2017, August 03, 2017, November 02, 2017, February 05, 2018 and March 28, 2018. For further details, please refer to the Corporate Governance Report, which forms part of this report.

10. Appointment / Reappointments

The Board accepted the resignation of Ms. Sudha Suresh from her position of Managing Director and Chief Executive Officer effective from June 30, 2018. Based on the recommendation of the Nomination and Remuneration Committee, the Board has appointed Mr. Ittira Davis (DIN: 06442816) as the Managing Director and Chief Executive Officer on the Board of the Company with effect from July 01, 2018 subject to the approval of the Reserve Bank of India and the Members of the Company. Please refer item no. 4 of the 14th AGM Notice for further details. Our application is pending with the Reserve Bank of India. The Board hereby recommends his appointment.

As per the provisions of the Companies Act, 2013, Mr. Jayanta Basu (DIN: 01268046) retires by rotation at the ensuing 14th AGM and being eligible, seeks his appointment. The Board recommends his appointment. Please refer the item no. 3 of the 14th AGM Notice for further details.

11. Directors’ Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors of the Company confirms and state that:

(i) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as 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;

(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

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

(v) they have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

(vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, audit of internal financial controls and the reviews performed by management and the risk management and audit committee of the board, the board is of the opinion that the Company’s internal financial controls were adequate and effective during the FY 2017-18.

12. Declaration by Independent Directors

The Company has received necessary declarations of independence from each of its Independent Directors under section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independent director envisaged in section 149 (6) of the Companies Act, 2013.

All Independent Directors have submitted the declaration of Independence, as required pursuant to Section 149(7) of the Act, stating that they meet the criteria of Independence as provided in section 149(6) of the Companies Act, 2013 and are not disqualified from continuing as Independent Directors.

13. Nomination and Remuneration Policy

The Company pursuant to the provisions of Section 178 of the Companies Act, 2013 has formulated and adopted a nomination and remuneration policy which is disclosed on our website at the below link - http://ujjivan.com/html/uiiivan policies.php

14. Statutory Auditors

M/s Price Waterhouse Chartered Accountants LLP (FRN: 012754N/N500016), were appointed at the 13th Annual General Meeting as the Statutory Auditors of the Company for five years till the conclusion of the 18th Annual General Meeting of the Company. They have confirmed their eligibility for the FY 2018-19 under Section 141 of the Companies Act, 2013 and the Rules framed thereunder. The Companies Amendment Act, 2017 has omitted the requirement of ratification of the appointment of statutory auditors at every annual general meeting; the relevant amendment made effective on May 07, 2018. Hence the ratification of appointment of Statutory Auditors at the ensuing 14th AGM is not required.

15. Explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made -

(i) Statutory Auditor’s Report

There are no disqualifications, reservations, adverse remarks or disclaimers in the auditor’s report

(ii) By the Company Secretary in practice in his secretarial audit report; Secretarial Auditor

Mr. K. Jayachandran, Practicing Company Secretary (ACS No. 11309 and Certificate of Practice No. 4031) was appointed as the Secretarial Auditor of the Company to conduct secretarial audit of the Company for the Financial Year 2017-18 as required under Section 204 of the Companies Act, 2013 and the Rules made thereunder. The secretarial audit report for FY 2017-18 is appended as “Annexure 2” to the Board’s Report.

The Secretarial Audit Report does not contain any qualification, reservation or adverse remark made by the Secretarial Auditor.

16. Particulars of loans, guarantees or investments under Section 186

The Company has not given any loans and guarantees to any-body corporate and has not made any investment under Section 186.

17. Transaction with related parties

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

There were no contracts or arrangements or transactions entered into during the year ended March 31, 2018, which were not at arm’s length basis.

Your Directors draw attention of the members to Note 19.3 to the Financial Statements which sets out other related party disclosures.

All Related Party Transactions as required under Accounting Standards AS-18 are reported in Note 19.3 -Notes to Accounts of the Standalone financial statements of the Company.

18. The state of the Company’s affairs

The Company is registered with RBI as a NBFC-ND-SI-CIC and received a certificate of registration on October 10, 2017. The Company is in compliance with the conditions of the Master Direction - Core Investment Companies (Reserve Bank) Directions, 2016 as amended. Prior to its conversion to a Core Investment Company, the Company was one of the largest microfinance institutions in the country. The conversion was done based on the stipulation of the Reserve Bank of India.

19. Material changes and commitments, if any, affecting the financial position of the company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report;

None

20. The conservation of energy, technology absorption, foreign exchange earnings and outgo, in the manner as prescribed in Rule 8(3) of the Companies (Accounts) Rules, 2014 Conservation of energy and technology absorption

Since the Company does not own any manufacturing facility, the particulars relating to conservation of energy and technology absorption are not applicable.

The Foreign Exchange earnings and outgo

There was no Foreign Exchange inflow and outflow during the year.

21. Development and implementation of risk management policy

The Company is a non-operating holding Company and its main objects are to carry on the business of making investments in group company(ies) in the form of securities and providing guarantees etc. and to carry on financial activities, whether in India or outside, in the nature of investment in bank deposits, money market instruments (including money market mutual funds and liquid mutual funds), government securities, and to carry on such other activities as may be permitted and prescribed by the relevant statutory authorities for core investment companies from time to time.

As a Core Investment Company with a key investment in the bank which is our 100% subsidiary, The Company’s Board has an oversight function of USFB. We have entered into a Memorandum of Understanding (MoU) which includes sharing of information related to business and performance of SFB, with the Company and to its Board, to facilitate effective oversight and compliance with statutory and regulatory requirements under SEBI Listing Regulations. Thus a set of information including monthly and quarterly business and regulatory reports and returns, Board and committee meeting related minutes and other information is systematically shared by the bank and reviewed by the Board of the Company.

USFB has a Risk Management Committee in place which consists of well experienced Directors from diverse background who bring in the best risk practices to the organization and that the Committee of the bank reviews its risk management framework and verifies adherence to various risk parameters and compliances.

The Company is satisfied that its wholly owned subsidiary has a well-defined risk management strategy based on clear understanding of various risks, disciplined risk assessment and continuous monitoring.

The risk management Committee of the subsidiary approves and makes recommendations to its Board regarding all its risk-related responsibilities, including the review of major risk management and regulatory compliances.

The Audit Committee and the Board of the Company periodically reviews the risk management practices adopted by the Company and its subsidiary and evaluates its effectiveness.

The Company has in place an effective risk management policy which highlights the functions, implementation and the role of the committee and the board.

22. Corporate Social Responsibility

The Corporate Social Responsibility (CSR) programs were started by the Company in the year 2010 much before it was made mandatory under the Companies Act, 2013.

During the year, the Company has partnered with Parinaam Foundation and Piramal Foundation to undertake various community development programs, free healthcare and clean drinking water facility for and on behalf of the Company. Please refer the separate section on Corporate Social Responsibility in the annual report for a detailed write up on the CSR activities of the Company during the year.

A brief outline of the company’s CSR policy is disclosed on our website at the below link-http://ujjivan.com/html/ujjivan policies.php

The initiatives undertaken by the Company on CSR activities are out in “Annexure 3” of the Board’s Report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which forms part of the Board’s Report.

23. Board Evaluation

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 Companies Act, 2013 and the corporate governance requirements as prescribed by Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015 (“SEBI Listing Regulations”) and SEBI guidance note on Board Evaluation.

Performance evaluation criteria for Board, Committees of the Board and Directors were approved by the Nomination Committee of the Board at its meeting held on March 28, 2018. Evaluation formats and criteria of evaluation duly incorporated the criteria and other parameters as suggested by SEBI vide their guidance note on evaluation through their circular dated January 05, 2017.

The Board was evaluated comprehensively on the following broad categories:

- Structure of the Board - Competency, Experience and Qualifications of directors, Diversity in Board under various parameters, Appointment Process

- Meetings of the Board - Regularity of meetings and adequacy, discussions and recording of dissent, if any.

- Recording of minutes, dissemination of information

- Functions of the Board - Role and responsibilities of the Board

- Strategy and performance evaluation

- Evaluation of Risks

- Grievance redressal for Investors

- Management of Conflict of interest

- Stakeholder value and responsibility

- Corporate culture and values

- Facilitation of independent directors

- Evaluation of performance of the management and feedback

- Independence of the management from the Board

- Access of the management to the Board and Board access to the management

- Secretarial support and fund availability for conducting its meeting effectively

- Succession planning

- Professional development

- Board Candor, Collegiality, Transparency and Board Education

- Ethics & Compliance

The performance of the board was evaluated by the board after seeking inputs from all the directors on each of the above parameters of evaluation and the performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the above parameters of evaluation.

Performance Evaluation of the Directors

The board and the nomination and remuneration committee reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the chairman was also evaluated on the key aspects of his role.

Evaluation of the Board Committees

The Board evaluated the performance of each of the Board Committees on the following broad categories:

- Mandate and composition

- Effectiveness of the Committee

- Structure of the Committee, its functioning and attendance

- Discussion, quality of agenda and action taken report

- Independence of the Committee from the Board

- Contribution of the Committees to the decisions taken by the Board

- Functioning of the committee in accordance with the terms of reference

The Board opined that the Board Committees’ composition, structure, processes and working procedures are well laid down and that the Board Committees members have adequate expertise drawn from diverse functions, industries and business and bring specific competencies relevant to the Company’s business and operations.

Independent Directors’ Evaluation of Non-Independent Directors

In a separate meeting of independent directors held on March 28, 2018, performance of non-independent directors, performance of the board as a whole and performance of the chairman was evaluated, taking into account the views of executive directors and non-executive directors. The Independent Directors also assessed the quality, quantity and timeliness of flow of information between the Company management and the Board.

Performance evaluation of independent directors was done by the entire board, excluding the independent director being evaluated.

24. Details as required under Rule 8 of the Companies (Accounts) Rules, 2014

(i) The financial summary or highlights: (Rs. in Crores)

Particulars

Standalone

Consolidated

FY 2017-18

FY 2016-17*

FY 2017-18

FY 2016-17

Operating Income

0.00

1,145.53

1,443.36

1,349.37

Other Income

7.74

42.00

138.34

48.25

Total Income

7.74

1,187.53

1,581.70

1,397.62

Less: Operational Expenses

Personnel Expenses

1.52

220.87

366.45

271.62

Administrative Expenses

3.21

134.85

246.32

173.80

Finance Charges

0.01

432.76

604.90

542.72

Depreciation

0.01

7.53

41.38

12.63

Provision For Doubtful Debts

0.00

70.68

310.81

75.12

Total Operational Expenses

4.75

866.68

1,569.86

1,075.89

Profit/(Loss) Before Tax

2.99

320.85

11.83

321.74

Less: Income tax

2.56

135.54

33.88

136.96

Less Deferred tax

0.004

(22.33)

(29.33)

(22.90)

Profit/(Loss) After Tax

0.42

207.64

7.28

207.67

* includes the numbers for both discontinued as well as continued operations.

- Strategic Highlights:

- Receipt of fresh certificate of registration on October 10, 2017 from the RBI for operating as a NBFC-Core Investment Company.

- The wholly owned subsidiary ‘Ujjivan Small Finance Bank’ was included in the Second Schedule to the Reserve Bank of India Act, 1934 vide Official Gazette Notification on August 25, 2017. This has granted the ‘Scheduled Bank’ status to ‘Ujjivan Small Finance Bank Limited’ from the date of the notification

- Key Performance Highlights of the Wholly owned subsidiary ‘Ujjivan Small Finance Bank Limited’

- Successfully emerged from shadows of demonetization and stabilized its business

- Stabilized portfolio quality and contained credit cost

- Mobilized institutional deposits to retire high cost legacy borrowings and reduced cost of funds

- Established systems and processes for seamless transition to banking with multi-channel network :

- 187 Banking Outlets ( including 47 URC); 25% URC compliance in Year 1

- 146 Biometric ATM’s

- 7011 handheld devices for account opening

- 64 Seat Phone Banking unit and well received internet banking and mobile banking application

- Expanded non MF Business- MSE and Housing

- Improved backend efficiencies and productivity

- Progressive improvement in business, profitability across quarters

- Closed the year with a net profit of Rs.7 Crores despite all challenges

USFB - Business and Operational Highlights

- PAT for the Bank for the financial year ending March 31, 2018 stands at Rs 6.87 crores

- Collection efficiency of new loans has improved to 99%

- Overall PAR down to 4% which was at 10.2% in March 2017

- Bank managed to repay 63% of the legacy borrowings

- Cost of funds of the Bank went down from 10.4% to 9%

- The Deposit business stood at Rs.3772.48 Crores spanning 883453 accounts at the end of March 2018

- CASA stood at Rs. 138.64 Crores, of which 10659 staff savings/salary accounts constituted Rs.28.06 Crores

- Time Deposits stood at Rs.1457.53 Crores of which institutional deposits stood at Rs.1178.85 Crores, while Recurring deposits stood at Rs.10.06 Crores

- Certificate of Deposits stood at Rs.2166.25 Crores

- Operating Expense at 41.18% of total expense.

- The Bank has a Long Term Credit Rating of A and a short term rating of A1

Profitability: Pre-tax profits - Rs. 8.85 Crores and post- tax profits - Rs. 6.87 Crores for the period ended March 31, 2018.

Key Ratios: (Comparative ratios are annualized)

Particulars

March 31, 2018

March 31, 2017

Interest income as a percentage to working funds

17.13%

15.13%

Non-interest income as a percentage to working funds

1.32%

0.95%

Operating profit as a percentage to working funds

3.74%

0.38%

Business (deposits plus gross advances) per employee (Rs.)

79,36,620

59,14,099

Profit per employee

6411

34

- Financial Performance: Consolidated PAT of Rs. 7.28 Crores in FY 2017-18 as against Rs.207.67 Crores in the FY 2016-17; this reduced profit was on account of credit costs of Rs. 310.8 Crores in the FY 2017-18.

- Profitability: (Rs. in Crores)

Particulars (FY 2017-18)

Standalone

Consolidated

Pre-Tax Profits (PBT)

2.99

11.83

Profit after Tax (PAT)

0.42

7.28

(ii) highlights of performance of subsidiaries, associates and joint venture companies and their contribution to the overall performance of the company during the period ‘Ujjivan Small Finance Bank Limited’ (“USFB”) is a wholly owned material subsidiary of the Company. USFB was incorporated on July 04, 2016 and commenced its operations as a small finance bank w.e.f. February 01, 2017.

The highlights of the financial performance of USFB are as under:

(Rs. in Crores)

Particulars

Standalone

FY 2017-18

FY 2016-17

Operating Income

1,466.65

212.71

Other Income

112.70

13.39

Total Income

1,579.35

226.10

Less: Operational Expenses

Personnel Expenses

364.93

50.74

Administrative Expenses

244.10

55.57

Finance Charges

609.33

109.36

Depreciation

41.37

5.10

Provision For Doubtful Debts

310.77

4.44

Total Operational Expenses

1,570.50

225.21

Profit/(Loss) Before Tax

8.85

0.89

Less: Income tax

31.32

1.42

Less Deferred tax

(29.34)

(0.57)

Profit/(Loss) After Tax

6.87

0.04

uSFB - Financial Highlights

- PAT for the Bank for the financial year ending March 31, 2018 stands at Rs 6.87 crores

- Collection efficiency of new loans has improved to 99%

- Overall PAR down to 4% which was at 10.2% in March 2017

- NNPA down to 0.7% from 3.1% in March 2017

- Bank managed to repay 63% of the legacy borrowings

- Cost of funds of the Bank went down from 10.6% to 9%

- The Deposit business stood at Rs.3772.48 Crores spanning 883453 accounts at the end of March 2018

- CASA stood at Rs. 138.64 Crores, of which 10659 staff savings/salary accounts constituted Rs.28.06 Crores

- Time Deposits stood at Rs.1457.53 Crores of which institutional deposits stood at Rs.1178.85 Crores, while Recurring deposits stood at Rs.10.06 Crores

- Certificate of Deposits stood at Rs.2166.25 Crores

- Operating expense ratio at 41.18%

- The Bank has a Long Term Credit Rating of A and a short term rating of A1

Please also refer to the full standalone financials of the USFB which is separately included in this annual report.

(iii) The change in the nature of business, if any;

The Company has converted from an NBFC-MFI to NBFC-Non Deposit taking Systematically Important Core Investment Company (NBFC-ND-SI-CIC) and received a fresh certificate of registration dated October 10, 2017 from the RBI; the conversion was done pursuant to the conditions prescribed by the RBI in their license letter dated November 11, 2016 for setting up a Small Finance Bank.

Ujjivan Small Finance Bank Limited’ (the wholly owned subsidiary of the Company) which commenced its small finance bank operations in February 2017 has been included in the Second Schedule to the Reserve Bank of India Act, 1934 vide Official Gazette Notification on August 25, 2017. This has granted the ‘Scheduled Bank’ status to ‘Ujjivan Small Finance Bank Limited’ from the date of the notification.

(iv) The details of directors or key managerial personnel who were appointed or have resigned during the year;

Sr. No.

Name

Designation

DIN

Date of Appoint-ment/Change/ Cessation

Reason

1

Mr. Venkatesh Natarajan

Non-Executive Director

02453219

February 05, 2018

Resignation

2

Mr. Hiren Shah

CFO (KMP)

N.A.

October 09, 2017

Resignation

3

Mr. Deepak Khetan

CFO (KMP)

N.A.

March 29, 2018

Appointment

(v) the names of companies which have become or ceased to be its Subsidiaries, joint ventures or associate companies during the year;

None

(vi) Deposits from public

During the year, the Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

However, the subsidiary of the Company ‘Ujjivan Small Finance Bank Limited’ which is a Small Finance Bank has outstanding deposits of Rs. 3,772 Crores as on March 31, 2018.

(vii) The details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operations in future;

None

(viii) The details in respect of adequacy of internal financial controls (IFC) with reference to the Financial Statements

In respect of internal financial control, the Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, the safeguarding of its assets, the timely prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information. Further, the management regularly reviews the control for any possible changes and takes appropriate actions.

25. Other disclosures

(i) Details of equity shares with differential rights

The Company has not issued any equity shares with differential rights during the year

(ii) Details of sweat equity shares issued

The Company has not issued any sweat equity shares during the year

(iii) Details of employee stock option scheme

The Company has established Employee Stock Option Plan (ESOP) for compensation to its employees, being ESOP 2006, ESOP 2007, ESOP 2008, ESOP 2010, MD-ESOP 2010 and ESOP 2015.

ESOP 2006

The Company pursuant to resolutions passed by the Board and Shareholders on March 29, 2006 and May 12, 2006, respectively, adopted the ESOP 2006. The ESOP 2006 was for a total of 64,000 Equity Shares for all the eligible employees of the Company. In accordance with the ESOP 2006, each option on exercise would be eligible for one Equity Share on payment of exercise price. As on March 31, 2018, out of the 64,000 options granted, 28,629 options has been exercised and 35,371 options were lapsed.

ESOP 2007

Pursuant to resolutions passed by the Board and Shareholders on June 9, 2007 and July 21, 2007, respectively, the Company instituted the ESOP 2007. The ESOP 2007 was for a total of 189,440 Equity Shares for all the eligible employees of the Company. In accordance with the ESOP 2007, each option on exercise would be eligible for one Equity Share on payment of exercise price. As on March 31, 2018, out of the 189,400 options granted, 138,660 options has been exercised, 44,500 options lapsed and 6,280 valid options are left to be exercised.

ESOP 2008

Pursuant to resolutions passed by the Board and Shareholders on July 23, 2008 and August 18, 2008, respectively the Company approved the ESOP 2008. The ESOP 2008 was for a total of 396,680 Equity Shares for all the eligible employees of the Company. In accordance with the ESOP 2008, each option on exercise would be eligible for one Equity Share on payment of exercise price. As on March 31, 2018, out of the 396,680 options granted, 2,34,170 options has been exercised, 1,54,130 options lapsed and 8,380 valid options are left to be exercised.

ESOP 2010 and MD-ESOP 2010

Pursuant to resolution passed by the Board and Shareholder resolutions dated May 17, 2010 and July 12, 2010, respectively, the Company approved the ESOP 2010 and MD ESOP 2010 and granted 3,384,300 options under ESOP 2010 and 871,060 options under MD-ESOP 2010. Further, pursuant to the Shareholders resolution dated July 12, 2010 the exercise period under the ESOP 2006, ESOP 2007 and ESOP 2008 was aligned with the exercise period time frame mentioned in ESOP 2010.

Pursuant to sub-division of the face value of the equity shares from face value of Rs. 100 each to Rs. 10 each on October 12, 2010 and in accordance with ESOP 2010, maximum number of shares available for being granted under ESOP 2010 stood modified and the cumulative face value prior to sub-division remained unchanged. Pursuant to resolution passed by the Board on August 12, 2011, additional grants were approved under the MD-ESOP 2010 amounting to 378,112. Accordingly, the total options granted under MD-ESOP 2010 were increased to 1,249,172 options.

In accordance with the ESOP 2010 and MD-ESOP 2010, each option on exercise would be eligible for one Equity Share on payment of exercise price.

Thereafter, pursuant to resolution passed by the Board and Shareholders on August 8, 2012 and September 12, 2012, respectively, the Company approved creation of a pool of 1,243,233 options under the ESOP 2010 for the Financial Year 2011-12.

As on March 31, 2018, out of the 3,384,300 options granted under ESOP-2010, 14,91,181 options has been exercised, 15,63,769 options lapsed and 3,29,350 valid options are left to be exercised.

As on March 31, 2018, out of the 1,249,172 options granted under MD-ESOP 2010, 809,172 options were exercised during the year and no option is left to be exercised.

ESOP 2015

The Company, pursuant to resolutions passed by the Board and the Shareholders, dated September 29, 2015 and November 3, 2015, respectively has adopted ESOP 2015. The total employee stock option pool available under ESOP 2015 is 5,561,188 options.

In accordance with the ESOP 2015, each option on exercise would be eligible for one Equity Share on payment of the exercise price.

In compliance with Regulation 12 of Securities and Exchange Board Of India (Share Based Employee Benefits) Regulations, 2014 (SEBI ESOP Regulations), the Company got its ESOP Scheme 2015 ratified by its shareholders subsequent to the IPO in their AGM held on August 10, 2016. Subsequent to the ratification, the Company granted 1,696,850 options to its employees under the ESOP 2015 on September 14, 2016.

As on March 31, 2018, the Company has granted 3,166,650 options under the ESOP 2015 (including 1,696,850 options granted to eligible employees during the FY 2016-17 on September 14, 2016). No options were granted during the FY 2017-18.

Further, as on March 31, 2018 out of the 3,166,650 granted options under ESOP 2015, 2,97,796 vested options has been exercised, 4,55,388 options has lapsed, 10,27,237 options are vested and 13,86,229 options are yet to be vested.

The vesting period for the options granted under ESOP 2015 is for a period of three years as under:

year

Options Granted

year 1

year 2

year 3

ESOP 2015 (Tranche 1)

1,469,800

34%

33%

33%

ESOP 2015 (Tranche 2)

1,696,850

33%

33%

34%

Total

3,166,650

The ESOP 2015 is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (SEBI ESOP Regulations), the Companies Act, 2013, and is implemented in accordance with guidance notes issued by ICAI and the relevant accounting standards.

Revisions in the ESOP Schemes during the Year

None

ESOP Schemes Compliance Status

ESOP 2006, ESOP 2007, ESOP 2008, ESOP 2010 and MD-ESOP 2010 were adopted prior to the commencement of the Companies Act, 2013.

The ESOP 2015 is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (SEBI ESOP Regulations) and the Companies Act, 2013. The company has received a certificate from the Statutory Auditors of the Company certifying that ESOP 2015 Scheme of the Company is being implemented in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and is in accordance with the resolutions passed by the Members of the Company at a general meeting.

The ESOP Schemes are implemented in accordance with guidance notes issued by ICAI and the relevant accounting standards.

The guidance note issued by the Institute of Chartered Accountants of India requires the disclosure of pro forma net results and Earnings Per Share (EPS) both basic & diluted, had the Company adopted the fair value method amortising the stock compensation expense thereon over the vesting period, such expense for the year ended March 31, 2018 amounts to Rs 8,02,35,588/- and the basic and diluted EPS would have been revised to Rs (0.63).

Administration of ESOP Schemes

The Governance, Nomination and Remuneration Committee of the Board administer the Employee Stock Option Schemes, formulated by the Company from time to time.

Mandatory ESOP Disclosures

Disclosures as required under Section 62 of the Companies Act, 2013 (to be read with Rule 12 of the Companies (Share Capital and Debenture) Rules, 2014, and SEBI ESOP Regulations:

Sr.

Particulars

March 31, 2018

1.

Number of options granted and outstanding at the beginning of the year (A)

44,73,626

2.

Number of options granted during the year (B)

Nil

3.

Number of options vested during the year

9,21,914

4.

Number of options exercised during the year

14,84,709

5.

Number of shares arising as a result of exercise of options (C)

14,84,709

6.

Money realized during the year by exercise of options (in Rs.)

9,52,31,052

7.

Number of options Forfeited/Expired during the year (D)

2,29,931

8.

The exercise price of the options (in Rs.)

10, 12.5, 28, 40, 47 & 146.35

9.

Number of options granted and in force at the end of year = (A) (B)-(C)-(D)

27,58,986

10.

Weighted average of remaining contractual life (years) at the year end

1.74

11.

Variation of terms of the options

None

No option was granted to any of the Key Managerial Personnel or to any other employee of the Company or its subsidiary during the year.

The Board has approved the cancellation of options which are lapsed and valid under existing ESOP Schemes 2006, 2007, 2008, 2010 and 2015 and for adding back the cancelled options to the ESOP 2015 Pool. Please refer to item no. 5 of the AGM notice wherein the approval of the shareholders is being sought. Further, the Board has also sought for approval from the shareholders for the grant of stock options to the employees (present and future) of the wholly owned subsidiary ‘Ujjivan Small Finance Bank Limited’ under ESOP Scheme 2015. Please refer item no. 6 of the AGM Notice for further details.

26. Vigil Mechanism

The Company in compliance with Section 177 of the Companies Act, 2013 has a duly constituted Audit Committee of the Board. The composition of the Audit Committee is as under:

Sr. No.

Directors

Designation

1.

Mr. K.R. Ramamoorthy

Chairman (Independent Director)

2.

Mr. Abhijit Sen

Independent Director

3.

Mr. Jayanta Basu

Non-Independent, Non-Executive

Please refer to the Section on Corporate Governance for further details on the Board Committees.

Further in compliance to Section 177 of the Companies Act, 2013 and Regulation 22 of SEBI Listing Regulations, the Company has established a Whistle Blower policy / Vigil Mechanism for the directors and employees to report genuine concerns or grievances about unethical behavior, actual or suspected fraud or violation of the company’s Code of Conduct or Ethics Policy. The Company has a vigil mechanism process wherein the employees are free to report violations of laws, rules, regulations or unethical conduct to the whistle and ethics officer of the Company.

Name and Address of the Whistle and Ethics Officer Mr. Sanjeev Barnwal - Company Secretary and Compliance Officer (w.e.f. April 27, 2017)

Ujjivan Financial Services Limited

Grape Garden, No. 27, 3rd A Cross, 18th Main, 6th Block, Bangalore - 560095, Karnataka Email- [email protected]

Protected Disclosure against the Whistle and Ethics Officer should be addressed to the MD & CEO of the Company and the Protected Disclosure against the MD & CEO of the Company should be addressed to the Chairman of the Audit Committee.

Name and Address of MD & CEO of the Company: Ms. Sudha Suresh

Ujjivan Financial Services Limited

Grape Garden, No. 27, 3rd A Cross, 18th Main, 6th Block,

Bangalore - 560095 Karnataka

Email: [email protected]

Name and Address of the Chairman (Audit Committee): Mr. K. R. Ramamoorthy

D - 302, Mantri Gardens,

Jayanagar, 1st Block,

Bangalore - 560011,

Karnataka

Email: [email protected]

The confidentiality of those reporting violations is maintained and they are not subjected to any discriminatory practice

The whistle blower policy of the Company is disclosed on our website at the below link-http://uiiivan.com/html/uiiivan policies.php

27. Remuneration details of Directors, KMPs, employees

Sr.

Particulars

Disclosures

1.

The ratio of the remuneration of each Whole time director to the median remuneration of the employees of the company for the financial year

MD & CEO: 2.95x

2.

The percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year

KMP

% increase in remuneration

Ms. Sudha Suresh

Nil

(Since she got appointed as the MD & CEO effective February 01, 2017 at an increased remuneration of 25%; hence during the year no increment was given)

Mr. Sanjeev Barnwal -CS

15%

Mr. Hiren Shah - CFO

(resigned October 09, 2017)

15%

Mr. Deepak Khetan -CFO

(appointed as the CFO w.e.f. March 29, 2018)

Nil

3.

The percentage increase in the median remuneration of employees in the financial year;

14% increase in the median remuneration of employees in the FY 2017-18.

4.

The number of permanent employees on the rolls of company as on March 31, 2018

5

5.

Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration

The average increase in the salaries of employees was 10% and the average increase in the managerial remuneration during the last financial year was also 10%

6.

Affirmation that the remuneration is as per the remuneration policy of the company

Yes

A statement showing the name of every employee of the company, who

a. if employed throughout the financial year, was in receipt of remuneration for that year which, in the aggregate, was not less than one crore and two lakh rupees;

- None

b. if employed for a part of the financial year, was in receipt of remuneration for any part of that year, at a rate which, in the aggregate, was not less than eight lakh and fifty thousand rupees per month;

- None

c. if employed throughout the financial year or part thereof, was in receipt of remuneration in that year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the company.

- None

Information as per Rule 5(2) of Chapter XIII, the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 The names of the top ten employees in terms of remuneration drawn:

The Company as on March 31, 2018 had only the following 5 (five) employees:

Sr.

Particulars

Sudha Suresh

Sanjeev Barnwal

Deepak Khetan (Mar 14-Mar 31, 2018)

Shashidhara S. (Nov 1 - Mar 31, 2018)

Sushant Vanmali (Aug 7 - Mar 31, 2018)

i.

Designation

MD & CEO

Company Secretary and Compliance Officer

Chief Financial Officer

Assistant Company Secretary

Assistant Manager -Investor Relations

ii.

Remuneration received

89,44,398*

39,48,222*

2,21,110

3,73,195

4,95,451

iii.

nature of employment, whether contractual or otherwise;

Permanent

Permanent

Permanent

Permanent

Permanent

iv.

qualifications and experience of the employee

CA, CS & CWA 21 years’ experience

CS, LLB, Diploma in Business Management 14 years’ experience

PGDBM (Finance) 11 years’ experience

CS

PGDM (Finance) 2 years’ experience

v.

date of commencement of employment

November 03, 2008

August 12, 2014

March 14, 2018

November 01, 2017

August 07, 2017

vi.

the age of such employee

53

36

34

33

25

vii.

the last employment held by such employee before joining the company

Skyline Construction & Housing Private Limited

SMC Capitals Limited

Welspun Corp Limited

GMR Ose Hungund Hospet Highways Private Limited

Janalakshmi Financial Services Limited

viii.

the percentage of equity shares held by the employee in the company

0.02%

Nil

Nil

Nil

Nil

ix.

whether any such employee is a relative of any director or manager of the company and if so, name of such director or manager

No

No

No

No

No

* including perquisite by way of exercise of vested equity options

Compliance of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has only 5 employees as on March 31, 2018 and the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 is not applicable. However, the Company has a prevention of sexual harassment policy in place. The Directors further state that during the year under review, there was no case filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Green Initiatives

Electronic copies of the Annual Report for the FY 2017-18 and the Notice of the 14th AGM are being sent to all the members whose email addresses are registered with the Company / Depository Participants. For members who have not registered their email address, physical copies are sent in the permitted mode.

ACKNOWLEDGEMENT

Your Directors wishes to gratefully acknowledge the assistance and guidance received from the RBI, ROC, Investors, Banks, Auditors, Lawyers, Accountants, Vendors, Partner NGOs, Institutions and Foundations and Government Authorities and all our well-wishers. The Board also wishes to place on record their warm appreciation for the creative and dedicated efforts of staff at all levels.

For and on behalf of the Board of Directors

K.R. Ramamoorthy Sudha Suresh

Chairperson Managing Director & Chief Executive Officer

DIN:00058467 DIN: 06480567

Date: May 10, 2018

Place: Bangalore


Mar 31, 2017

Overview

The Company was originally incorporated as Ujjivan Financial Services Private Limited on December 28, 2004 at Bengaluru, Karnataka, India as a private limited company under the Companies Act, 1956. Pursuant to a certificate issued by the Reserve Bank of India ("RBI") on October 31, 2005, the Company was permitted to commence operations as a non-banking financial company ("NBFC") under section 45 IA of the Reserve Bank of India Act, 1934. Since financial year 2008-09, the Company has been classified as a systemically important non-deposit accepting NBFC. Pursuant to the RBI introduction of a new category of NBFC-Micro Finance Institution vide its circular BI/2013-14/49 DNBS.(PD)CC.No. 347 /03.10.38/2013-14 dated July 01, 2013, the Company was granted NBFC-Microfinance Institution ("NBFC-MFI") status by the RBI on September 5, 2013. Subsequently, the Company was converted into a public limited company pursuant to a special resolution passed by its Shareholders at the extraordinary general meeting ("EGM") held on November 3, 2015 and the name of the Company was changed to Ujjivan Financial Services Limited. A fresh certificate of incorporation consequent upon conversion to a public limited company was issued by the Registrar of Companies, Bangalore, Karnataka ("ROC") on November 26, 2015. Subsequently, a fresh certificate of NBFC-MFI registration consequent upon the change of name of the Company was issued by the RBI on March 4, 2016.

On October 7, 2015, the Company was one amongst 10 companies in India, out of a total of 72 applicants, to receive in-principle approval from the RBI to set up a small finance bank ("SFB").

The Company completed its maiden Initial Public Offering (IPO) and its equity shares were listed in NSE and BSE on May 10, 2016.

In accordance with the terms as mentioned in the application submitted to the RBI and in compliance to the terms and conditions on which the RBI has granted an in-principle approval to the Company to set up a SFB, the Company incorporated ''Ujjivan Small Finance Bank Limited'' ("USFB") on July 04, 2016 as a wholly owned subsidiary of the Company.

The Company had submitted an application to the Reserve Bank of India on August 18, 2016 for grant of banking license in terms of Section 22 of the Banking Regulation Act, 1949 to USFB. Pursuant to the application submitted, the Reserve Bank of India has issued to the subsidiary of the Company i.e. ''Ujjivan Small Finance Bank Limited'', the License No. MUM 123 dated November 11, 2016 to carry on Small Finance Bank business in India subject to the terms and conditions as mentioned in its letter dated November 11, 2016.

The Company based on the approval of the Board in their meeting held on July 29, 2016 and Shareholders'' approval on September 13, 2016 through a postal ballot has executed an agreement to transfer its business undertaking ("BTA") to USFB. The Company executed the BTA with USFB on January 12, 2017 followed by an addendum agreement to the BTA on February 09, 2017 which included the purchase price and mode of discharge of consideration by USFB to the Company. Pursuant to the execution of the BTA, the Company has transferred its business undertaking as a going concern by way of a slump sale to USFB on February 01, 2017 for a lump sum consideration. This was in line with the restructuring plan submitted by the Company to the RBI and as disclosed by the Company in its prospectus dated May 03, 2016.

Pursuant to the compliance of all the terms and conditions on which the license was granted, ''Ujjivan Small Finance Bank Limited'' commenced its operations as a Small Finance Bank with effect from February 1, 2017.

The Company has made an application to the RBI for getting itself registered as a NBFC-Core Investment Company ("CIC") for which the RBI approval is awaited. The Company on receipt of the CIC registration from RBI will surrender its NBFC-MFI registration to the RBI.

1. Financial Results

The director''s submit annual report of Ujjivan Financial Services Limited (the "Company" or "Ujjivan") along with the audited financial statements for the financial year (FY) ended March 31, 2017.

(Rs. in Crore)

Particulars

Standalone

Consolidated

FY 2016-17*

FY 2015-16

FY 2016-17

Operating Income

1,145.53

1,007.25

1,349.37

Other Income

42.00

20.36

48.25

Total Income

1,187.53

1,027.61

1,397.62

Less: Operational Expenses

Personnel Expenses

220.87

196.65

271.62

Administrative Expenses

134.85

102.17

173.80

Finance Charges

432.76

423.50

542.72

Depreciation

7.53

8.02

12.63

Provision For Doubtful Debts

70.68

25.27

75.12

Total Operational Expenses

866.68

755.62

1,075.89

Profit/(Loss) Before Tax

320.85

271.99

321.74

Less: Income tax

135.54

103.57

136.96

Less Deferred tax

(22.33)

(8.80)

(22.90)

Profit/(Loss) After Tax

207.64

177.22

207.67

* includes the numbers for both discontinued as well as continued operations.

2. IPO

The Company came out with its Initial public offer (IPO) of 42,023,609 equity shares of face value of Rs. 10 each for cash at a price of Rs. 210 per equity share (including a share premium of Rs. 200 per equity share) aggregating to Rs. 882.50 Crore comprising a fresh issue of 17,055,277 equity shares aggregating to Rs. 358.16 Crore by the company ("fresh issue") and an offer for sale of 24,968,332 equity shares aggregating to Rs. 524.34 Crore by 8 selling shareholders.

The Company''s equity shares got listed on NSE and BSE on May 10, 2016.

The objects of the IPO inter alia was to augment the capital base of the Company and to meet the future capital requirements of the Company arising out of growth of the Company''s assets, primarily the Company''s loans and advances and other investments. Further, the Company intended to reduce its foreign shareholding in accordance with the requirements of the RBI in-principle approval to set up the SFB.

There has been no deviation in the utilization of the IPO proceeds by the Company.

3. Dividend

In accordance with the Dividend Distribution Policy adopted by the Board in its meeting held on April 27, 2017 and in continuation to the dividend payment track record of the Company, the directors are pleased to recommend for approval of the members a dividend of Rs. 0.80 per equity share for the FY 2016-17. The dividend on equity shares, if approved by the shareholders would involve a cash outflow of ~ Rs. 11.5 Crore (including dividend distribution tax).

4. Transfer to reserves

The Company transferred Rs. 41.5 Crore to Statutory Reserves. Transfer of 20% of the Profit after Tax to the statutory reserves in accordance with the provisions of section 45 - IC Reserve Bank of India Act, 1934.

5. Credit Rating

CRISIL has assigned the Company a grading of mfR1 (the highest grading for MFI) on October 29, 2016. CARE has assigned a rating of ''CARE A '' (Single A Pius) to the long term facilities of the Company in November 2016 for its Long Term Bank Facilities of Rs. 4,500 Crore and has assigned a rating of ''CARE A '' for its NCDs* of Rs. 825 Crore.

* The Company has transferred all its NCDs to USFB through novation in the month of February 2017. Also, all the debt portfolio of the Company comprising of borrowings from banks/ financial institutions etc were transferred to USFB on February 01, 2017

6. Capital Adequacy

The Capital Adequacy Ratio of the Company was 113.76% as of March 31, 2017 as against the minimum capital adequacy requirements of 15% by RBI.

7. Corporate Governance and Management Discussion and Analysis Report

In accordance with SEBI LODR Regulations, Management Discussion and Analysis Report and Corporate Governance Report together with the Certificate thereon from the Independent Practicing Company Secretary is provided separately and forms part of this Directors'' Report.

8. Extract of Annual Return

In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the Annuai Return in the prescribed format (MGT-9) is appended as "Annexure 1" to the Board''s Report.

9. Business Responsibility Reporting

The Board of the Company in its meeting held on April 27, 2017 has approved the Business Responsibility Report ("BRR") of the Company as stipulated under Regulation 34 (as amended) of SEBI Listing Regulations which mandates that top 500 listed companies based on market capitalization as on March 31 should include its BRR in its Annual Report. The Company is ranked 308 in the list.

Please refer the section ''Business Responsibility Report'' of the Annual Report.

A copy of the BRR has also been hosted on the website of the Company at www.uiiivan.com and can be accessed from the link below http://ujjivan.com/html/ujjivan_policies.php

10. No. of Meetings of the Board during the FY 2016-17

During the Financial Year 2016-17, our Board has met 12 (twelve) times and the meetings of our Board of Directors were held on April 13, 2016, May 03, 2016, May 25, 2016, July 05, 2016, July 29, 2016, November 09, 2016, December 08, 2016, January 10, 2017, January 19, 2017, February 06, 2017, February 10, 2017 and March 27, 2017. For further details, please refer to the Corporate Governance Report, which forms part of this report.

11. Reappointments

As per the provisions of the Companies Act, 2013, Mr. Amit Gupta retires by rotation at the ensuing 13th AGM and being eligible, seeks his appointment. The Board recommends his appointment. Please refer the 13th AGM Notice for further details.

12. Directors'' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors of the Company confirms and state that:

(i) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as 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;

(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

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

(v) they have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

(vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, audit of internal financial controls and the reviews performed by management and the risk management and audit committee of the board, the board is of the opinion that the Company''s internal financial controls were adequate and effective during the FY 2016-17.

13. Declaration by Independent Directors

The Company has received necessary declarations of independence from each of its Independent Directors under section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independent director envisaged in section 149 (6) of the Companies Act, 2013.

All Independent Directors have submitted the declaration of Independence, as required pursuant to Section 149(7) of the Act, stating that they meet the criteria of Independence as provided in section 149(6) of the Companies Act, 2013 and are not disqualified from continuing as Independent Directors.

14. Nomination and Remuneration Policy

The Company pursuant to the provisions of Section 178 of the Companies Act, 2013 has formulated and adopted a nomination and remuneration policy which is disclosed on our website at the below link- http://uiiivan.com/html/uiiivan policies.php

15. Statutory Auditors

M/s Deloitte Haskins & Sells, (Firm Reg. No. 008072S), Chartered Accountants, who were appointed as Statutory Auditors of the Company for two years till the conclusion of the ensuing the 13th Annual General Meeting will complete their tenure of 13 years (maximum continuous tenure for a statutory auditor permissible under the Companies Act, 2013 including the extension of 3 years subsequent to the commencement of provisions of Section 139 of the Act) with the Company on the conclusion of the 13th AGM.

Considering the above, the Board based on the recommendation of the Audit Committee in its meeting held on April 27, 2017, subject to the approval of the shareholders has appointed M/s Price Waterhouse Chartered Accountants LLP (FRN: 012754N/N500016) as the Statutory Auditors of the Company for a period of 5 (five) years commencing from the conclusion of the ensuing 13th AGM till the conclusion of 18th AGM of the Company. The Company has received written consent(s) and certificate(s) of eligibility in accordance with Sections 139, 141 and other applicable provisions of the Act and Rules issued there under (including any statutory modification(s) or re-enactment(s) for the time being in force), from M/s Price Waterhouse Chartered Accountants LLP. Further, they have confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India (ICAI) as required under SEBI LODR Regulations.

16. Explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made -

(i) By the auditor in his report;

Statutory Auditor

M/s Deloitte Haskins & Sells, (Firm Reg. No. 008072S), Chartered Accountants, were appointed as Statutory Auditors of the Company for 2 years till the conclusion of the 13th Annual General Meeting to be held for the FY 2016-17. The shareholders in the 12th AGM held on August 10, 2016 have ratified their appointment as Statutory Auditors of the Company till the conclusion of the ensuing 13th AGM of the Company.

Auditor''s report

There are no disqualifications, reservations, adverse remarks or disclaimers in the auditor''s report

(ii) By the Company Secretary in practice in his secretarial audit report;

Secretarial Auditor

Mr. K. Jayachandran, Practicing Company Secretary (ACS No. 1 1309 and Certificate of Practice No. 4031) was appointed as the Secretarial Auditor of the Company to conduct secretarial audit of the Company for the Financial Year 2016-17 as required under Section 204 of the Companies Act, 2013 and the Rules made there under. The secretarial audit report for FY 2016-17 is appended as "Annexure 2" to the Board''s Report.

The Secretarial Audit Report does not contain any qualification, reservation or adverse remark made by the Secretarial Auditor.

17. Particulars of loans, guarantees or investments under Section 186

The Company has not given any loans and guarantees to any-body corporate. The Company has made the following investment in ''USFB'' as per the details below:

Sr. No.

Date of Investment

Mode of Investment

Amount (Rs. in Crore)

1.

July 04, 2016

First Subscription of 50,000 Equity Shares of

Rs. 10/- each

0.05

2.

July 30, 2016

Subscribed the Rights Issue of 109,986,800

Equity Shares of Rs. 10/- each

109.99

3.

February 10, 2017

Allotment of Securities*

1,530.00

4.

March 31, 2017

Investment in Fixed Deposit

100.00

Total

1,740.04

*''USFB'' on February 10, 2017 has allotted the below securities to the Company in discharge of the consideration for the acquisition of the business undertaking of the Company by USFB.

Sr. No.

Securities Type

Number of Securities

Interest

Rate

Premium (In Rs.)

Amount (in Rs.)

1.

Equity Shares

1,330,000,000

N.A.

Nil

13,300,000,000

2.

11% Perpetual Non-Cumulative

Preference Shares

200,000,000

11% per annum

N.A.

2,000,000,000

Total

1,530,000,000

15,300,000,000

18. Transaction with related parties

The Company pursuant to the approval of the Audit Committee and the Board in their respective meetings held on July 29, 2016 and the approval of the Shareholders through a postal ballot on September 13, 2016 has transferred its business undertaking as a going concern by way of a slump sale to its wholly owned material subsidiary ''Ujjivan Small Finance Bank Limited'' on February 01, 2017 for a lump sum consideration of Rs. 1,530 Crore without values being assigned to individual assets and liabilities.

M/s GRSM & Associates, Chartered Accountants, carried out an exercise for identifying various components of assets and liabilities of the Company as on January 31, 2017 and through its Asset Allocation Report dated February 06, 2017 had a consensus with a value of Rs. 1530 Crore of the Company which includes the goodwill value of Rs. 16 Crore.

The valuation for the slump sale transaction was done by M/s GRSM & Associates, Chartered Accountants. through their report dated February 06, 2017. The fair value per equity share of USFB as on January 31, 2017 was Rs 10 per equity share while the fair value of 11% Perpetual Non-Cumulative Preference Shares was Rs 10 per preference share as on January 31, 2017.

Information on transaction with related parties pursuant Particulars of contracts or arrangements with related parties referred to in Section 188(1) in the prescribed form AOC -2 is appended as "Annexure 3" to the Board''s Report.

19. The state of the Company''s affairs

The Company is registered with RBI as a NBFC-MFI and was one of the largest microfinance institutions in the country before it transferred its business undertaking to Ujjivan Small Finance Bank Limited.

The Reserve Bank of India has stipulated in its final license that inter alia the Company (the promoting entity of USFB) shall be registered as a NBFC-Core Investment Company after the transfer of its business undertaking to USFB.

In compliance to the aforesaid condition, the Company subsequent to the transfer of its business undertaking to USFB on

February 01, 2017 has made an application to the RBI for getting itself registered as a Core Investment Company ("CIC") and to comply with the conditions of the Master Direction - Core Investment Companies (Reserve Bank) Directions, 2016.

The Company will surrender its NBFC-MFI registration to the RBI prior to the receipt of its CIC registration certificate from the RBI.

Note on Demonetisation

Background

On November 8, 2016 the Government demonetized the existing 500 and 1000 rupee notes, effectively taking over 80% of cash out of circulation. The new bills were in short supply leading to restrictions on cash withdrawal and creating a cash crunch for the ensuing months. This had significant impact on the microfinance sector which deals with a borrower base that predominantly earn their wages/incomes in cash.

Impact on the MFI Industry

The first impact has been on the collections for the MFI Industry which is dipped to 86% from its standard collection rate of around 99%. Consequently the collection discipline has been derailed resulting in higher Par & Provisions. As MFI''s were not allowed to collect the repayments through old notes and deposit the same in banks, this further impacted the collections. The RBI dispensation on classification of NPA (allowing a further 90 days over the 90 days overdue norm for classification as an NPA) has been misconstrued and deemed as repayment holidays, adding woes to the already affected situation. This has further been taken advantage of by Politicians in states of UP, Maharashtra, Uttarakhand, Karnataka .Since cash limits were common for financial institutions and retail, no cash disbursements were possible to a large section of MFI Borrowers, especially new borrowers, leading to a tremendous impact on business during the last two month

Impact on Ujjivan

Challenges faced: Demonetization led to a slow-down of business momentum in Q3 and Q4, political interference and rumors of loan waiver disturbed the credit discipline among our customers, affecting collections. Paucity of currency necessitated reduction in business volumes. New customer acquisition for both group lending and individual lending business was suspended during the period. The Company made cash disbursements to select repeat customers with good credit track record to smooth their cash flow. Our secured Housing business was affected due to a bearish real estate market. Challenges in income flow and property valuation & construction due to uncertainty also affected volumes. Business was suspended UP, NCR, select areas of Rajasthan. MSE business was affected due to suspension of business in UP, closure of markets in Delhi, TN, slowdown of customer sales and stocks in Gujarat, and non- disbursal of sanctioned cases due to deferral by customers. Key Challenges faced across regions are summarized below:

South:

- Local organizations interference in Karnataka

- Rumors of loan wave-off in most parts of North Karnataka

- Currency crunch in some parts of Kerala North

- Religious and Political interventions in most places in UP and Uttarakhand

- Minority concentrated area hit the most

- Small Businesses and Wage earners struggling to repay in Delhi, Punjab and Haryana East

- Political interference in Assam and Jharkhand

- Small businesses and Laborer impacted due to cash crunch in Bihar, Jharkhand and West Bengal

- Loan waiver rumors in few areas of West Bengal

Impact on portfolio quality

Our NPA levels saw a significant rise due to demonetization related over dues. Collections saw a dip and over dues increased in November and December. Please refer the table below:

Particulars

Ocf16

Nov''16

Dec''16

Jan''17

Feb''17

Mar''17

Cumulative Repayment Rate

99.8%

98.7%

97. 9%

97.3%

96.9%

96.7%

Monthly Repayment Rate

99.6%

90.7%

88.2%

87.2%

86.8%

88.5%

Total Delinquent Accounts

15,284

3,37,283

4,59,755

4,84,746

4,97,485

4,30,375

Incremental Over dues

1,322

3,20,824

2,33,319

1,11,167

87,502

26,782

Repayments were severely affected in 8 states - UP, UK, Karnataka, Maharashtra, New Delhi, Haryana, Rajasthan and Punjab in which the repayment rates fell to sub 90%

Estimated write offs and provisions in current year and hit to P&L

Incremental provisions were made in Q3 on account of demonetization, RBI dispensation on Asset Classification of over dues originating in Nov & Dec was considered in Q4 and provisions made accordingly. Excellent recovery efforts in Mar-17 led to lower provision on the account of over dues originated in Q4.

(Amount Rs. in Crore)

Credit Cost

Q1

Q2

Q3

Q4

FY2016-17

Credit Provisions

5.8

4.5

54.3

5.0

69.6

Write Off

0.4

2.4

0.5

2.2

5.5

Total Credit Cost

6.2

6.9

54.7

7.2

75.1

Over dues falling in November''16 and December''16 were named as "Special Mention Accounts (SMA) - Demonetization" and classified as standard asset for 90 additional days (Up to 180 days) as per RBI dispensation. Provisioning was made at 10% (Group loans) and for Individual loans at 20% across SMA-Demonetization over dues for affected states with < 90% collection efficiency. Existing standard asset provisioning norms of 0.65% on GL and 0.75% on IL for 180 days were adopted across non-affected states with >90% collection efficiency on Nov''16 and Dec''16 Incremental Overdue accounts.

Provisions were made on the monthly Incremental Over dues from Jan''17 onwards for the loan portfolio under the existing provision norms. No deviation from the existing policy. Cumulative Provisions as of March: Rs. 125 Crore on own assets.

Collections

Continuous improvement was observed in collection of demonetization dues for all states. Cumulative collections for demonetization related over dues originating in Nov 2016 stand at 97.7%.

Collection efficiency of severely affected states such as UK & UP have bounced back to 90% on November dues and 70% overall, a positive sign of progress. Collection efficiency is likely to improve gradually over the next few months since external interventions (especially in states where elections have concluded) have reduced & many customers have started making repayments with a lag of 2-4 months

Collateral Impact

Impact of Demonetization will spill over into the next financial year with increased credit costs. Ujjivan shall follow a cautious approach towards business in the stressed clusters to contain the credit quality for the first two quarters of the next year

Initiatives taken

- Communication to staff and customers: The Company has sensitized its staff on non-coercive collections and offered extended repayment time for customers, continuing a healthy relationship with them during such testing times. Ujjivan pamphlets were distributed to all customers and the Company offered continued service to good customers by providing them with repeat loans, largely in cash wherever possible, enabling them smoothen their cash flow

- Focus on Collections: The Collections Team focused on repayment collections across difficult areas, providing the much needed support to staff. The Company distributed a set of relevant documents with all Field staff to enable them to convince customers and family members about the false rumors and importance of repayment. Branch wise based Action plans were put in place, providing fulltime support for collections while mentoring of the branches. Pin Code wise enquiry was made for all the Over- due customers - to focus on collections with those regular in other MFI''s if any.

- Focus on Cashless collections: The Company encouraged its customers to use the cashless payment options such as Cheque, POS and NEFT

- The Company enlisted Police support to curb third party interventions

20. Material changes and commitments, if any, affecting the financial position of the company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report;

None

21. The conservation of energy, technology absorption, foreign exchange earnings and outgo, in the manner as prescribed in Rule 8(3) of the Companies (Accounts) Rules, 2014

Conservation of energy and technology absorption

Since the Company does not own any manufacturing facility, the particulars relating to conservation of energy and technology absorption are not applicable.

The Foreign Exchange earnings and outgo

There was no Foreign Exchange inflow and outflow during the year except dividend payout to the foreign shareholders for the dividend declared in the FY 2015-16.

22. Development and implementation of risk management policy

Ujjivan''s Risk Management Committee consists of well experienced Directors from diverse background who bring in the best risk practices to the organization. The Risk Management Committee, which meets at frequent intervals, comprises of four Directors including two Independent Directors.

The Committee reviews the risk management framework of the company and verifies adherence to various risk parameters and compliances. The Company''s risk management strategy is based on clear understanding of various risks, disciplined risk assessment and continuous monitoring. During the year, the risk management committee reviewed various risks which the organization is exposed to including credit risk, interest rate risk, liquidity risk, operational risk and regulatory compliance issues. It also met to review and discuss on the impact due to the extraordinary situation of demonetization on the collection efficiency across states. The risk Committee approves and makes recommendations to the Board regarding all its risk-related responsibilities, including the review of major risk management and regulatory compliances.

The Company has in place an effective risk management policy which highlights the functions, implementation and the role of the committee and the board.

23. Corporate Social Responsibility

The Corporate Social Responsibility (CSR) programs were started by the Company in the year 2010. During the year, Ujjivan CSR Team has mainly focused on the Government of India "Swachh Bharat Abhiyan".

A brief outline of the company''s CSR policy is disclosed on our website at the below link-http://uiiivan.com/html/uiiivan policies.php

The initiatives undertaken by the Company on CSR activities are out in "Annexure 4" of the Board''s Report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which forms part of the Board''s Report.

24. Board Evaluation

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 Companies Act, 2013 and the corporate governance requirements as prescribed by Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015 ("SEBI Listing Regulations") and SEBI guidance note on Board Evaluation.

Performance evaluation criteria for Board, Committees of the Board and Directors were approved by the Nomination Committee of the Board at its meeting held on March 27, 2017. Evaluation formats and criteria of evaluation duty incorporated the criteria and other parameters as suggested by SEBI vide their guidance note on evaluation through their circular dated January 05, 2017.

The Board was evaluated comprehensively on the following broad categories:

- Structure of the Board - Competency, Experience and Qualifications of directors, Diversity in Board under various parameters, Appointment Process

- Meetings of the Board - Regularity of meetings and adequacy, discussions and recording of dissent, if any.

- Recording of minutes, dissemination of information

- Functions of the Board - Role and responsibilities of the Board

- Strategy and performance evaluation

- Evaluation of Risks

- Grievance redressai for Investors

- Management of Conflict of interest

- Stakeholder value and responsibility

- Corporate culture and values

- Facilitation of independent directors

- Evaluation of performance of the management and feedback

- Independence of the management from the Board

- Access of the management to the Board and Board access to the management

- Secretarial support and fund availability for conducting its meeting effectively

- Succession planning

- Professional development

- Board Candor, Collegiality, Transparency and Board Education

- Ethics & Compliance

The performance of the board was evaluated by the board after seeking inputs from all the directors on each of the above parameters of evaluation and the performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the above parameters of evaluation.

Performance Evaluation of the Directors

The board and the nomination and remuneration committee reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the chairman was also evaluated on the key aspects of his role.

Evaluation of the Board Committees

The Board evaluated the performance of each of the Board Committees on the following broad categories:

- Mandate and composition

- Effectiveness of the Committee

- Structure of the Committee, its functioning and attendance

- Discussion, quality of agenda and action taken report

- Independence of the Committee from the Board

- Contribution of the Committees to the decisions taken by the Board

- Functioning of the committee in accordance with the terms of reference

The Board opined that the Board Committees'' composition, structure, processes and working procedures are well laid down and that the Board Committees members have adequate expertise drawn from diverse functions, industries and business and bring specific competencies relevant to the Company''s business and operations.

Independent Directors'' Evaluation of Non-Independent Directors

In a separate meeting of independent directors held on March 27, 2017, performance of non-independent directors, performance of the board as a whole and performance of the chairman was evaluated, taking into account the views of executive directors and non-executive directors. The Independent Directors also assessed the quality, quantity and timeliness of flow of information between the Company management and the Board.

Performance evaluation of independent directors was done by the entire board, excluding the independent director being evaluated.

25. Details as required under Rule 8 of the Companies (Accounts) Rules, 2014

(i) The financial summary or highlights:

(Amount Rs. in Crore)

Particulars

Standalone

Consolidated

FY 2016-17*

FY 2015-16

FY 2016-17

Operating Income

1,145.53

1,007.25

1,349.37

Other Income

42.00

20.36

48.25

Total Income

1,187.53

1,027.61

1,397.62

Less: Operational Expenses

Personnel Expenses

220.87

196.65

271.62

Administrative Expenses

134.85

102.17

173.80

Finance Charges

432.76

423.50

542.72

Depreciation

7.53

8.02

12.63

Provision For Doubtful Debts

70.68

25.27

75.12

Total Operational Expenses

866.68

755.62

1,075.89

Profit/(Loss) Before Tax

320.85

271.99

321.74

Less: Income tax

135.54

103.57

136.96

Less Deferred tax

(22.33)

(8.80)

(22.90)

Profit/(Loss) After Tax

207.64

177.22

207.67

* includes the numbers for both discontinued as well as continued operations.

- Strategic Highlights:

- Receipt of final license from the RBI to USFB to commence small finance bank business

- The Company transferred its business undertaking to USFB on February 01, 2017

- The wholly owned subsidiary commenced small finance bank operations on February 01, 2017

- Consolidated Asset Business Performance

- 18% growth in Business volumes, slowdown of momentum post demonetization in Q3 and Q4

- Lower NCA due to no new branches and suspension of NCA post demonetization

- 16% growth in MFI vertical : GL business grew by 15% while Unsecured IL grew by 21% over PY

- Swift scale up of MSE and Secured Housing vertical. New product variants launched in Housing while Unsecured MSE business was rolled out during the year

- GL Business: 84.9% of the portfolio, Unsecured IL: 13.3%, Housing: 1.5%, MSE: 0.3%

- Secured portfolio increased to Rs.117 Crore from Rs.27 Crore in March 2016; an increase of 333%

- Deposit Business Performance of USFB

- The Deposit business stood at Rs.206 Crore spanning 13,293 accounts at the end of March 2017

- CASA stood at Rs. 3.2 Crore, of which staff savings/salary accounts constituted Rs. 2.7 Crore

- Time Deposits stood at Rs. 3.3 Crore while Recurring deposits stood at Rs.1Lakh

- Institutional Deposits stood at Rs.199.8 Crore out of total deposits of Rs. 206 Crore

- CASA ratio stood at 1.5%, Credit to Deposit Ratio stood at 2846%

- Financial Performance: PAT of Rs. 207.64 Crore in FY 2016-17 as against Rs.177.2 Crore in FY 2015-16, an increase of 17%. USFB breaks even in the first two months of operations with a PAT of Rs. 3.4 Lakh

- Profitability: (Rs. in Crore)

Particulars (FY 2016-17)

Standalone

Consolidated

Pre-Tax Profits (PBT)

320.85

321.74

Profit after Tax (PAT)

207.64

207.67

- Efficiency:

- Fresh GL TAT- 8.1 days against 8.5 in March 2016

- Fresh IL TAT- 14.4 days against 12.2 in Mar 2016

- SHL: 23 days against 30 days in March 2016

- MSE: 13 days against 34 days in March 2016

(ii) highlights of performance of subsidiaries, associates and joint venture companies and their contribution to the overall performance of the company during the period

''Ujjivan Smaii Finance Bank Limited'' ("USFB") is a wholly owned material subsidiary of the Company. USFB was incorporated on July 04, 2016 and commenced its operations as a small finance bank w.e.f. February 01, 2017.

The highlights of the financial performance of USFB are as under:

(Rs. in Crore)

Particulars

FY 2016-17

Operating Income

212.71

Other Income

13.39

Total Income

226.10

Less: Operational Expenses

55.57

Personnel Expenses

50.74

Finance Charges

109.36

Depreciation

5.10

Provision For Doubtful Debts

4.44

Total Operational Expenses

225.21

Profit/(Loss) Before Tax

0.89

Less: Income tax

1.42

Less Deferred tax

(0.57)

Profit/(Loss) After Tax

0.04

Transfer to Statutory Reserve

0.01

Balance carried over to Balance Sheet

0.03

Key Ratios:

Particulars

March 31, 2017

Interest income as a percentage to working funds

2.52%

Non-interest income as a percentage to working funds

0.16%

Operating profit as a percentage to working funds

0.06%

Business (deposits plus gross advances) per employee (Rs.)

5,914,099

Profit per employee

34

- Business Highlights:

- Launch of Banking Operations on February 06 2017, 15 live branches were operational as of March 31, 2017. Deposit Business Performance

- The Deposit business stood at Rs.206.41 Crore spanning 13,293 accounts at the end of March 2017

- CASA stood at Rs. 3.23 Crore, of which staff savings/salary accounts constituted Rs. 2.7 Crore

- Time Deposits stood at Rs. 3.3 Crore including Recurring deposits of Rs. 0.01 Crore

- Institutional Deposits stood at Rs.199.8 Crore Financial Performance:

- USFB has achieved breakeven in the first two months of operations with a PAT of Rs. 0.04 Crore

- Higher cost to income ratio on account of transition, increased finance cost to meet regulatory compliances, one time write-off of goodwill has impacted the overall profitability of USFB

- Treasury income of Rs. 19.72 Crore in first two months of operations Credit Performance:

- Over all PAR at 10.2% in March 2017.

- GL overall PAR: 10.2%, Unsecured IL PAR: 11.3%

- GNPA (Par > 90 days) rose to 3.8% in March 2017 (0.28% with RBI dispensation)

Cost Efficiency: Cost to Income Ratio at 95.4%

Rating: USFB has received a credit rating of A

Profitability: Pre-tax profits - Rs. 0.89 Crore and post- tax profits - Rs. 0.04 Crore for the period ended March 31, 2017

Please refer the section ''Consolidated Financial Statements'' for further details on the contribution of USFB on the overall performance of the Company.

(iii) The change in the nature of business, if any:

The Company has floated a 100% subsidiary ''Ujjivan Small Finance Bank Limited'' ("USFB").

The RBI vide its letter dated November 11, 2016 granted the final license (license number Mum-123) to USFB to carry on the business of a small finance bank in India subject to the terms and conditions mentioned therein.

The RBI has in the said letter stipulated inter alia that the promoting entity of the small finance bank shall be registered as an NBFC-Core-Investment Company ("CIC") after the transfer of its business to USFB.

The Company pursuant to the approval of the Audit Committee, Board and the Shareholders has executed an agreement with USFB on January 12, 2017 pursuant to which the business undertaking of the Company has been transferred to USFB as a going concern on a slump sale basis. The agreement to transfer is in line with the Company''s restructuring plans submitted to the RBI and as disclosed by the Company in its prospectus dated May 03, 2016 filed with SEBI for its IPO.

The aforesaid transfer was done to ensure that USFB will undertake the small finance bank business and post transfer the Company registers itself as a CIC with DNBS, RBI Bangalore.

Subsequent to the execution of the agreement, the Company has transferred, conveyed, assigned and delivered all rights, title and interest in its Business Undertaking to USFB, and USFB has acquired the Business Undertaking of the Company. The Company has transferred its business undertaking to USFB as a going concern by way of a slump sale, as defined in Section 2(42C) of the Income Tax Act, 1961 for a lumpsum consideration of Rs. 1530 Crore.

The effective date of transfer of Company''s business undertaking to USFB and commencement of business as a small finance bank by USFB was February 01, 2017.

The Company as on March 31, 2017 is registered with RBI as a NBFC-MFI; however the application for its registration as a NBFC-Core Investment Company is in process and the final approval and registration from the RBI is awaited. Once the CIC registration is received, the Company will surrender its NBFC-MFI registration certificate and then will be regulated as a NBFC-CIC with its primary business of making investments in its group companies.

Further, all the employees of the Company except few identified personnel have been transferred to USFB as part of the transfer of the business undertaking.

Transfer of Listed Non-Convertible Debentures through Novation to USFB

The Company pursuant to the receipt of consents of the Debenture Trustees (IDBI Trusteeship Services Limited and Catalyst Trusteeship Limited) has transferred (novation of all rights and obligations of the Company) the below 9 (Nine) listed NCDs from the Company to USFB through novation.

Sr.

No

ISIN

Description of NCD

Maturity

date

Amount (in Rs.)

Debenture Trustee

1.

INE334L07076

Secured Redeemable

30-Jul-19

400,000,000

IDBI Trusteeship

2.

INE334L07100

Secured Redeemable

28-May-19

600,000,000

IDBI Trusteeship

3.

INE334L07134

Secured Redeemable

20-Mar-17

187,500,000

Catalyst Trusteeship *

4.

INE334L07126

Secured Redeemable

26-Dec-17

250,000,000

Catalyst Trusteeship *

5.

INE334L07142

Secured Redeemable

12-May-17

1,000,000,000

Catalyst Trusteeship *

6.

INE334L07167

Secured Redeemable

5-Aug-21

1,000,000,000

Catalyst Trusteeship *

7.

INE334L07159

Secured Redeemable

23-Jun-17

1,000,000,000

Catalyst Trusteeship *

8.

INE334L08017

Unsecured Redeemable

7-Oct-18

1,750,000,000

Catalyst Trusteeship *

9.

INE334L08025

Unsecured Redeemable

16-Nov-18

2,250,000,000

Catalyst Trusteeship *

Total

8,437,500,000

* Formerly known as GDA Trusteeship Limited

Post the novation of the aforesaid NCDs by the Company to USFB, all references to the Company''s payment obligations in the Debenture Documents shall be read as references to USFB to the extent legally applicable, and USFB is to be considered as the debtor in respect of the outstanding debt.

Further all the rights, obligations and liabilities of the Company in respect of the payment of the outstanding debt under the terms of the Debenture Documents has been assumed by USFB and any claims by the Debenture Trustee shall be made only against USFB and as per terms of the Debenture Documents.

The Company has received the approval from the BSE Limited for the novation of the above listed NCDs and the terms & conditions including description of security, date of allotment, date of maturity, coupon rate, and face value of the aforesaid NCDs remains intact and bears the same respective ISINs.

(iv) The details of directors or key managerial personnel who were appointed or have resigned during the year;

Sr.

No.

Name

Designation

DIN

Date of Appointment/ Change/ Cessation

Reason

1

Mr. Samit Ghosh

MD & CEO (KMP)

00185369

January 31, 2017

Resignation

2

Mr. Sunil Patel

Independent Director

00050837

January 31, 2017

Resignation

3

Mr. Nandlal Sarda

Independent Director

00147782

January 31, 2017

Resignation

4

Mr. Anadi Charan Sahu

Nominee Director

06696504

January 31, 2017

Resignation

5

Ms. Sudha Suresh

CFO (KMP)

N.A.

January 31, 2017

Resignation

6

Ms. Sudha Suresh

MD & CEO (KMP)

06480567

February 01, 2017

Appointment

7

Mr. Hiren Shah

CFO (KMP)

N.A.

February 01, 2017

Appointment

(v) the names of companies which have become or ceased to be its Subsidiaries, joint ventures or associate companies during the year;

The Company incorporated its wholly owned subsidiary ''Ujjivan Small Finance Bank Limited'' on July 04, 2016.

(vi) Deposits from public

During the year, the Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

However, the subsidiary of the Company viz ''Ujjivan Small Finance Bank Limited'' which is a Small Finance Bank and has been granted a license (license number MUM: 123) from the RBI to carry on small finance bank business in India, has mobilized a total deposit of Rs. 206 Crore as on March 31, 2017.

(vii) The details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future;

None

(viii) The details in respect of adequacy of internal financial controls (IFC) with reference to the Financial Statements

In respect of internal financial control, the Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, the safeguarding of its assets, the timely prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

Further, the management regularly reviews the control for any possible changes and takes appropriate actions.

26. Other disclosures

(i) Details of equity shares with differential rights

The Company has not issued any equity shares with differential rights during the year

(ii) Details of sweat equity shares issued

The Company has not issued any sweat equity shares during the year

(iii) Details of employee stock option scheme

The Company has established Employee Stock Option Plan (ESOP) for compensation to its employees, being ESOP 2006, ESOP 2007, ESOP 2008, ESOP 2010, MD-ESOP 2010 and ESOP 2015.

ESOP 2006

The Company pursuant to resolutions passed by the Board and Shareholders on March 29, 2006 and May 12, 2006, respectively, adopted the ESOP 2006. The ESOP 2006 was for a total of 64,000 Equity Shares for all the eligible employees of the Company. In accordance with the ESOP 2006, each option on exercise would be eligible for one Equity Share on payment of exercise price. As on March 31, 2017, out of the 64,000 options granted, 28,629 options has been exercised and 35,371 options were lapsed

ESOP 2007

Pursuant to resolutions passed by the Board and Shareholders on June 9, 2007 and July 21, 2007, respectively, the Company instituted the ESOP 2007. The ESOP 2007 was for a total of 189,440 Equity Shares for all the eligible employees of the Company. In accordance with the ESOP 2007, each option on exercise would be eligible for one Equity Share on payment of exercise price. As on March 31, 2017, out of the 189,400 options granted, 138,030 options has been exercised, 44,500 options lapsed and 6,910 valid options are left to be exercised.

ESOP 2008

Pursuant to resolutions passed by the Board and Shareholders on July 23, 2008 and August 18, 2008, respectively the Company approved the ESOP 2008. The ESOP 2008 was for a total of 396,680 Equity Shares for all the eligible employees of the Company. In accordance with the ESOP 2008, each option on exercise would be eligible for one Equity Share on payment of exercise price. As on March 31, 2017, out of the 396,680 options granted, 200,130 options has been exercised, 153,290 options lapsed and 43,260 valid options are left to be exercised.

ESOP 2010 and MD-ESOP 2010

Pursuant to resolution passed by the Board and Shareholder resolutions dated May 17, 2010 and July 12, 2010, respectively, the Company approved the ESOP 2010 and MD ESOP 2010 and granted 3,384,300 options under ESOP 2010 and 871,060 options under MD-ESOP 2010. Further, pursuant to the Shareholders resolution dated July 12, 2010 the exercise period under the ESOP 2006, ESOP 2007 and ESOP 2008 was aligned with the exercise period time frame mentioned in ESOP 2010.

Pursuant to sub-division of the face value of the equity shares from face value of Rs. 100 each to Rs. 10 each on October 12, 2010 and in accordance with ESOP 2010, maximum number of shares available for being granted under ESOP 2010 stood modified and the cumulative face value prior to sub-division remained unchanged.

Pursuant to resolution passed by the Board on August 12, 2011, additional grants were approved under the MD-ESOP 2010 amounting to 378,112. Accordingly, the total options granted under MD-ESOP 2010 were increased to 1,249,172 options.

In accordance with the ESOP 2010 and MD-ESOP 2010, each option on exercise would be eligible for one Equity Share on payment of exercise price.

Thereafter, pursuant to resolution passed by the Board and Shareholders on August 8, 2012 and September 12, 2012, respectively, the Company approved creation of a pool of 1,243,233 options under the ESOP 2010 for the Financial Year 2011-12.

As on March 31, 2017, out of the 3,384,300 options granted under ESOP-2010, 1,065,710 options has been exercised, 1,553,653 options lapsed and 764,937 valid options are left to be exercised.

As on March 31, 2017, out of the 1,249,172 options granted under MD-ESOP 2010, 440,000 options has been exercised and 809,172 valid options are left to be exercised.

As on March 31, 2017, the Company has granted 5,283,592 options under ESOP 2006, ESOP 2007, ESOP 2008, ESOP 2010 and MD-ESOP 2010.

ESOP 2015

The Company, pursuant to resolutions passed by the Board and the Shareholders, dated September 29, 2015 and November 3, 2015, respectively has adopted ESOP 2015. The total employee stock option pool available under ESOP 2015 is 5,561,188 options.

In accordance with the ESOP 2015, each option on exercise would be eligible for one Equity Share on payment of the exercise price.

In compliance with Regulation 12 of Securities and Exchange Board Of India (Share Based Employee Benefits) Regulations, 2014 (SEBI ESOP Regulations), the Company got its ESOP Scheme 2015 ratified by its shareholders subsequent to the IPO in their AGM held on August 10, 2016. Subsequent to the ratification, the Company granted 1,696,850 options to its employees under the ESOP 2015 on September 14, 2016.

As on March 31, 2017, the Company has granted 3,166,650 options under the ESOP 2015 (including 1,696,850 options granted to eligible employees during the FY 2016-17 on September 14, 2016). Further, as on March 31, 2017 out of the 3,166,650 granted options under ESOP 2015, 458,918 options are vested, out of which 9,329 vested options has lapsed, 82,400 vested options were exercised and 367,189 valid vested options were left to be exercised. Further, 236,413 unvested options has lapsed and 2,480,648 valid options are unvested. Overall, 2,847,837 vested and unvested options are valid as on March 31, 2017.

The vesting period for the options granted under ESOP 2015 is for a period of three years as under:

Year

Options Granted

Year 1

Year 2

Year 3

ESOP 2015 (Tranche 1)

1,469,800

34%

33%

33%

ESOP 2015 (Tranche 2)

1,696,850

33%

33%

34%

Total

3,166,650

The ESOP 2015 is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (SEBI ESOP Regulations), the Companies Act, 2013, and is implemented in accordance with guidance notes issued by ICAI and the relevant accounting standards.

Revisions in the ESOP Schemes during the Year

None

ESOP Schemes Compliance Status

ESOP 2006, ESOP 2007, ESOP 2008, ESOP 2010 and MD-ESOP 2010 were adopted prior to the commencement of the Companies Act, 2013.

The ESOP 2015 is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (SEBI ESOP Regulations) and the Companies Act, 2013.

The ESOP Schemes are implemented in accordance with guidance notes issued by ICAI and the relevant accounting standards.

"The guidance note issued by the Institute of Chartered Accountants of India requires the disclosure of pro forma net results and Earnings Per Share (EPS) both basic & diluted, had the Company adopted the fair value method amortizing the stock compensation expense thereon over the vesting period, the reported profit for the year ended March 31, 2017 would have been lower by Rs.1 19,550,825/-and the basic and diluted EPS would have been revised to Rs.16.73/-and Rs.16.11/- respectively."

Administration of ESOP Schemes

The Governance, Nomination and Remuneration Committee of the Board administer the Employee Stock Option Schemes, formulated by the Company from time to time.

Mandatory ESOP Disclosures

Disclosures as required under Section 62 of the Companies Act, 2013 (to be read with Rule 12 of the Companies (Share Capital and Debenture) Rules, 2014, and SEBI ESOP Regulations:

Sr.

No.

Particulars

March 31, 2017

1.

Number of options granted beginning of year (A)

4,264,392

2.

Number of options granted during the year (B)

1,696,850

3.

Number of options vested during the year

676,805

4.

Number of options exercised during the year

1,135,767

5.

Number of shares arising as a result of exercise of options (C)

1,135,767

6.

Money realized during the year by exercise of options (in Rs.)

56,248,163

7.

Number of options Forfeited/Expired during the year (D)

351,849

8.

The exercise price of the options (in Rs.)

10, 12.5, 28, 40, 47, 146.35 & 417.15

9.

Number of options granted and in force at the end of year = (A) (B)-(C)-(D)

4,473,626

10.

Number of valid vested options exercisable at the year end

1,992,978

11.

Weighted average of remaining contractual life (years) at the year end

1.05

12.

Variation of terms of the options

None

Consolidated Summary of all ESOP Schemes as on March 31, 2017

Particulars

ESOP

2006

ESOP

2007

ESOP

2008

ESOP

2010

MD-ESOP

2010

ESOP

2015

Total

Options Granted (A)

64,000

189,440

396,680

3,384,300

1,249,172

3,166,650

8,450,242

Options Un-Granted

-

-

-

-

-

2,394,538

2,394,538

Total Options Exercised (B)

28,629

138,030

200,130

1,065,710

440,000

82,400

1,954,899

Options Lapsed (C)

35,371

44,500

153,290

1,553,653

-

236,413

2,023,227

Options Still Unexercised (D) = (A)-(B)-(C)

-

6,910

43,260

766,447

809,172

2,847,837

4,473,626

Options Granted to Key Managerial Personnel during the year

Employee Name

Designation

Options Granted

Exercise Price (in Rs.)

Ms. Sudha Suresh

MD & CEO

(w.e.f. February 01, 2017; from April 01,

2016 till January 31, 2017 was the CFO)

13,710

417.15

Mr. Sanjeev Barnwal

Company Secretary and Compliance Officer

7,310

417.15

Mr. Hiren Shah

Chief Financial Officer

7,310

417.15

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

- None

Identified employees who were granted options 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.

- None

27. Appointment of Independent Directors

The Company with the approval of the shareholders through a postal ballot on September 13, 2016 has approved the change in categorization of Mr. Abhijit Sen (00002593) as the Independent Director of the Company and appointed him for a period of five consecutive years from September 13, 2016 to September 12, 2021, and whose office shall not be liable to retire by rotation.

He has been appointed on the terms and conditions as mentioned in his appointment letter; the extracts of the terms & conditions of the appointment of the independent directors has been placed on the website of the Company.

28. Vigil Mechanism

The Company in compliance with Section 177 of the Companies Act, 2013 and Regulation 22 of SEBI Listing Regulations has established a Whistle Blower policy / Vigil Mechanism for the directors and employees to report genuine concerns or grievances about unethical behavior, actual or suspected fraud or violation of the company''s Code of Conduct or Ethics Policy. The Company has a vigil mechanism process wherein the employees are free to report violations of laws, rules, regulations or unethical conduct to the whistle and ethics officer of the Company.

Name and Address of the Whistle and Ethics Officer

Mr. Sanjeev Barnwal - Company Secretary and Compliance Officer (w.e.f. April 27, 2017)

Ujjivan Financial Services Limited

Grape Garden, No. 27, 3rd A Cross, 18th Main, 6th Block, Bangalore - 560095, Karnataka Email- [email protected]

Protected Disclosure against the Whistle and Ethics Officer should be addressed to the CEO& MD of the Company and the Protected Disclosure against the CEO & MD of the Company should be addressed to the Chairman of the Audit Committee.

Name and Address of MD & CEO of the Company: (w.e.f. February 1, 2017)

Ms. Sudha Suresh

Ujjivan Financial Services Limited

Grape Garden, No. 27, 3rd A Cross, 18th Main, 6th Block, Bangalore - 560095, Karnataka

Email: [email protected]

Name and Address of the Chairman (Audit Committee):

Mr. K. R. Ramamoorthy

D - 302, Mantri Gardens, Jayanagar, 1st Block, Bangalore - 56001 1, Karnataka

Email: [email protected]

The confidentiality of those reporting violations is maintained and they are not subjected to any discriminatory practice The whistle blower policy of the Company is disclosed on our website - httD://umvan.com/html/umvan policies.php

29. Remuneration details of Directors, KMPs, employees

Sr. No.

Particulars

Disclosures

1.

The ratio of the remuneration of each Whole time director to the median remuneration of the employees of the company for the financial year

MD & CEO: 3.17x

2.

The percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year

KMP

% increase in remuneration

Mr. Samit Ghosh

(MD & CEO - April 01, 2016 till January 31, 2017) Resigned w.e.f. January 31, 2017 (close of business

hours)

26%

Ms. Sudha Suresh

CFO - April 01, 2016 till January 31, 2017)

MD & CEO - February 01, 2017 till March 31, 2017 (pending for shareholders ratification and approval)

Consolidated Salary increase during the FY 2016-17

24%

25%

55.3%

Mr. Hiren Shah - CFO

(appointed as a CFO w.e.f. February 01, 2017)

23.5%

Mr. Sanjeev Barnwai - CS

50.7%

3.

The percentage increase in the median remuneration of employees in the financial year;

18.4% increase in the median remuneration of employees in the FY 201617. However, all the employees of the Company except 4 (four) employees has been transferred to USFB w.e.f. February 01, 2017.

4.

The number of permanent employees on the rolls of company as on March 31, 2017

4

5.

Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration

The average increase in the salaries of employees was 18% and the average increase in the managerial remuneration was 31%

6.

Affirmation that the remuneration is as per the remuneration policy of the company

Yes

A statement showing the name of every employee of the company, who

a. if employed throughout the financial year, was in receipt of remuneration for that year which, in the aggregate, was not less than one crore and two lakh rupees;

- None

b. if employed for a part of the financial year, was in receipt of remuneration for any part of that year, at a rate which, in the aggregate, was not less than eight lakh and fifty thousand rupees per month;

- None

c. if employed throughout the financial year or part thereof, was in receipt of remuneration in that year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the company.

- None

Information as per Rule 5(2) of Chapter XIII, the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

The names of the top ten employees in terms of remuneration drawn:

The Company as on March 31, 2017 had only the following 4 (four) employees:

Sr.

No.

Particulars

Ms. Sudha Suresh

Mr. Sanjeev Barnwal

Mr. Hiren Shah

Ms. Mantasha Mizaj

1.

Designation

MD & CEO

Company Secretary and Compliance Officer

Chief Financial Officer

Assistant Manager -Investor Relations

2.

Remuneration received

8,202,497*

3,601,943*

3,311,395

769,801

3.

Nature of employment, whether contractual or otherwise;

Permanent

Permanent

Permanent

Permanent

4.

Qualifications and experience of the employee

CA, CS & CWA

20 years'' experience

CS, LLB, Diploma in Business Management

13 years'' experience

MBA

17 years'' experience

MBA

2 years'' experience

5.

Date of commencement of employment

November 03, 2008

August 12, 2014

August 17, 2015

May 19, 2015

6.

The age of such employee

53

36

37

24

7.

The last employment held by such employee before joining the company

Skyline Construction & Housing Private Limited

SMC Capitals Limited

Concept Public Relations India Limited

None

8.

The percentage of equity shares held by the employee in the company

0.02%

Nil

Nil

Nil

9.

Whether any such employee is a relative of any director or manager of the company and if so, name of such director or manager

No

No

No

No

* including perquisite by way of exercise of vested equity options

Compliance of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company is in compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and has a prevention of sexual harassment policy in place. The Directors further state that during the year under review, there was no case filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Green Initiatives

Electronic copies of the Annual Report for the FY 2016-17 and the Notice of the 13th AGM is being sent to all the members whose email addresses are registered with the Company / Depository Participants. For members who have not registered their email address, physical copies are sent in the permitted mode.

ACKNOWLEDGEMENT

Your Directors wishes to gratefully acknowledge the assistance and guidance received from the RBI, ROC, Investors, Banks, Auditors, Lawyers, Accountants, Suppliers, Partner NGOs, Institutions and Foundations, Police & Government Authorities, Advisors and all our well-wishers. The Board also wishes to place on record their warm appreciation for the creative and dedicated efforts of staff at all levels.

For and on behalf of the Board of Directors

K.R. Ramamoorthy Sudha Suresh

Chairperson Managing Director & Chief Executive Officer

DIN:00058467 DIN:06480567

Date: April 27, 2017

Place: Bangalore

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