BOARD'S REPORT TO THE MEMBERS OF EDELWEISS FINANCIAL SERVICES LIMITED, The Directors hereby present their 21st Annual Report on the business, operations and state of affairs of the Company together with the audited financial statement for the year ended March 31, 2016: DIVIDEND During the year under review, interim dividends were paid twice - lst of RI per share and the 2nd of R0.25 per share on the face value of RI per share. The total outlay on account of interim dividends (including Dividend Distribution Tax) was R1054.58 million. ABRIDGED FINANCIAL STATEMENTS In terms of the provisions of Section 136 of the Companies Act, 2013, abridged financial statements as at March 31, 2016, and the Auditors' Report on the abridged Financial Statement forms part of the Annual Report. Full version of the Annual Report will be available on the Company's website: <http://edelweissfin.com/Home/AboutUs> AnnuaIReports.aspx and will also be made available to the members of the Company on request. INFORMATION ON THE STATE OF AFFAIRS OF THE COMPANY Information on the operational and financial performance, among others, is given in the Management Discussion & Analysis Report which is annexed to this Report and is in accordance with the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. SHARE CAPITAL During the year under review, 22,284,011 Equity Shares of RI each were allotted on exercise of the Options granted to the employees under various Employee Stock Option Schemes of the Company. Consequently, as at March 31, 2016, the paid-up share capital of the Company was R814 million divided into 814,036,630 equity shares of RI each. The disclosures with regard to the stock options as required under the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, are provided on the Company's website: <http://edelweissfin.com/Home/AboutUs/> AnnuaIReports.aspx. FINANCE Your Company continued to borrow funds inter alia by issuing Commercial Papers and Secured Non-Convertible Debentures on a private placement basis. The Company enjoys high credit rating from the Rating Agencies. The credit ratings reflect the Company's financial discipline and prudence. SUBSIDIARIES During the year ended March 31, 2016, the following companies became the subsidiaries of your Company: • Edelweiss General Insurance Company Limited • Edelweiss Holdings Limited • EFSL International Limited • Edelweiss Financial Services (UK) Limited • Edelweiss Tarim Urunleri Anonim Sirketi The performance and financial position of the subsidiaries and associates as required under the Companies Act, 2013 is provided in Annexure I to the Consolidated financial statement. The financial statements of the subsidiary companies will be placed on the website of the Company, www.edelweissfin.com Any member interested in obtaining a copy of financial statement of the subsidiaries may write to the Company Secretary, at the Registered Office of the Company. Particulars of loans given, investments made, guarantees given and securities provided are disclosed in the financial statements. RELATED PARTY TRANSACTIONS All the Related Party Transactions entered by the Company are on arm's length basis and in the ordinary course of business. All the Related Party Transactions as required under AS-18 are reported in the Notes to the financial statement. In accordance with the provisions of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Company has formulated the Related Party Transactions Policy (the Policy). The Policy is uploaded on the Company's website at the link: <http://edelweissfin.eom/portals/0/documents/> miscellaneous/ RelatedPartyTransationsPolicy.pdf. DIRECTORS AND KEY MANAGERIAL PERSONNEL i. Independent Directors During the year under review, Mr. Narendra Jhaveri resigned as a Director of the Company with effect from May 20, 2015. The Board places on record its sincere appreciation for the services rendered by Mr. Jhaveri during his tenure as a Director of the Company. In accordance with the provisions of Section 149 of the Companies Act, 2013, the Independent Directors have given a declaration that they meet the criteria of independence as provided in the said Section and in terms of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. ii. Retirement by Rotation of the Directors Mr. Himanshu Kaji retires by rotation at the fortheoming Annual General Meeting and, being eligible, offers himselffor re-appointment. iii. Key Managerial Personnel There was no change in the KMPs during the year under review. The KMPs of the Company are also the KMPs of the subsidiaries and some draw remuneration from there also. NUMBER OF BOARD MEETINGS HELD During the year ended March 31, 2016, the Board met five times. The details of the Board meetings and the attendance of the Directors at the meetings are provided in the Corporate Governance Report, which forms part of this Annual Report. REMUNERATION POLICY The Company has framed a Remuneration Policy pursuant to Section 178 of the Companies Act, 2013 and the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. The Policy is provided in Annexure II to this Report. EVALUATION OF THE PERFORMANCE OF THE BOARD The Board has formulated an Evaluation Policy (the Policy) for evaluating the performance of the Board, its Committees, Chairman, Managing Director, Executive Directors, Independent Directors and Non-executive Directors. Based on the same, the performance was evaluated for the financial year ended March 31, 2016. A meeting of the Independent Directors was held during the year under review. The Policy inter alia provides the criteria for performance evaluation such as Board effectiveness, quality of discussion, contribution at the meetings, business acumen, strategie thinking, time commitment, relationship with the stakeholders, corporate governance practices, contribution of the Committees to the Board in discharging its functions, etc. INTERNAL FINANCIAL CONTROLS The Company has in place adequate internai financial control with reference to financial statement. DIRECTORS RESPONSIBILITY STATEMENT Pursuant to Section 134 of the Companies Act, 2013 (the Act), the Board of Directors confirm that: i. In the preparation of the annual accounts, the applicable accounting standards have been followed 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 as at March 31, 2016 and of the profit of the Company for the financial year ended on that date iii. Proper and sufficient care had been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities iv. The annual accounts have been prepared on a going concern basis v. Internal financial controls have been laid down and the same are adequate and were operating effectively 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. AUDIT COMMITTEE The Audit Committee of the Board of Directors of the Company comprises of the following members who are Independent Directors: Mr. P. N. Venkatachalam - Chairman Mr. Berjis Desai Mr. Sanjiv Misra Mr. Sunil Mitra CORPORATE SOCIAL RESPONSIBILITY COMMITTEE In accordance with the provisions of Section 135 of the Companies Act, 2013 (the Act), the Board of Directors of the Company have constituted the Corporate Social Responsibility Committee (CSR Committee) comprising the following Directors as its members: Mr. Venkat Ramaswamy - Executive Director Mr. Himanshu Kaji - Executive Director Mr. Rujan Panjwani - Executive Director Mr. P. N. Venkatachalam - Independent Director The terms of reference of the CSR Committee include the matters specified in Section 135 of the Act. The CSR Policy of the Company is uploaded on the Company's website at the link: <http://edelweissfin.com/> portals/O/documents/miscellaneous/CSRPolicy.pdf. Further details in this regard are provided in the Annexure III to this report AUDITORS The members of the Company at the 19th Annual General Meeting of the Company held on July 25, 2014, had appointed B S R & Associates LLP, Chartered Accountants, as the Auditors of the Company till the conclusion of the 22nd Annual General Meeting of the Company to be held in the year 2017, subject to ratification of their appointment at every Annual General Meeting. A resolution for the ratification of the appointment of B S R & Associates LLP as Auditors is being placed for the approval of the members at the forthcoming Annual General Meeting. SECRETARIAL AUDIT The Board had appointed BNP & Associates, Practicing Company Secretaries, as the Secretarial Auditor, to conduct the secretarial audit for the financial year ended March 31, 2016. The Report of the Secretarial Auditor is provided as Annexure IV to this Report. SEXUAL HARASSMENT OF WOMEN AT WORKPLACE The Company has a Policy on prevention of Sexual Harassment at Workplace. During the year under review, a case was reported under the Policy, which was outstanding as at March 31, 2016. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS/OUTGO A. Conservation of energy i. The steps taken or impact on conservation of energy - The operations of your Company are not energy-intensive. However, adequate measures have been initiated for conservation of energy ii. The steps taken by the Company for utilising alternate sources of energy-though the operations of the Company are not energy intensive, the Company shall explore alternative source of energy, as and when the necessity arises iii. The capital investment on energy conservation equipments - Nil B. Technology absorption i. The efforts made towards technology absorption -The minimum technology required for the business has been absorbed ii. The benefits derived like product improvement, cost reduction, product development or import substitution - Not Applicable iii. In case of imported technology (imported during the last three years reckoned from the beginning of the financial year) - Not Applicable (a) The details of technology imported (b) The year of import (c) Whether the technology has been fully absorbed (d) If not fully absorbed, areas where absorption has not taken place, and the reasons thereof iv. The expenditure incurred on Research and Development - Not Applicable C. Foreign exchange earnings and outgo Foreign exchange earnings and outgo (including dividend) during the year under review were Rs.174.60 million (previous year R128.26 million) and R39.47 million (previous year Rs.30.41 million) respectively. OTHERS DISCLOSURES No disclosure is required in respect of the details relating to the deposits covered under Chapter V of the Companies Act, 2013 as the company has not accepted any deposits. There were no significant or material order passed by any regulator or court or tribunal which would impact the status of the Company as a going concern and the operations in future. EXTRACT OF THE ANNUAL RETURN In accordance with the provisions of Section 92 of the Companies Act, 2013 and the Rules framed there under, the extract of the Annual Return in the prescribed Form MGT - 9 is provided in Annexure V to this report. RISK MANAGEMENT The Risk Management Committee of the Board of Directors of the Company has framed and implemented a Risk Management Policy. WHISTLE BLOWER POLICY/VIGIL MECHANISM The Company has a Whistle Blower Policy for the employee to report genuine concerns/grievances. The Policy is uploaded on Company's website at the link: <http://edelweissfin.eom/portals/0/documents/> miscellaneous/WhistleBlowerPolicy.pdf. The Policy provides for the adequate safeguards against the victimisation of the employees who use the vigil mechanism. The vigil mechanism is overseen by the Audit Committee. PARTICULARS OF EMPLOYEES The information required under Section 197 of the Companies Act, 2013 (the Act) and the Rules framed there under, forms part of this Annual Report. In terms of the provisions of Sections 136 & 197 of the Act, the Report and Accounts are being sent to the members of the Company excluding the aforesaid information. Any member interested in obtaining a copy of this information under Section 197 of the Act, may write to the Company Secretary, at the Registered Office of the Company. Disclosures as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in this Annual Report. CORPORATE GOVERNANCE Pursuant to the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Report on Corporate Governance together with the certificate issued by BNP & Associates, Practicing Company Secretaries, on compliance in this regard forms part of this Annual Report ACKNOWLEDGEMENTS The Board of Directors wish to acknowledge the continued support and co-operation extended by the Securities and Exchange Board of India, Reserve Bank of India, Stock Exchanges, Commodity Exchanges, Insurance Regulatory and Development Authority of India, Ministry of Corporate Affairs, other government authorities, Banks and other stakeholders. Your Directors would also like to take this opportunity to express their appreciation for the dedicated efforts of the employees of the Company. For and on behalf of the Board of Directors Edelweiss Financial Services Limited Rashesh Shah Chairman & CEO DIN No.: 00008322 Date : May 13, 2016 |