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Executive Financial

Location:
Kolkata, West Bengal, India
Posted:
September 05, 2019

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L&T Finance Limited (erstwhile Family Credit Limited) Annual Report 2017-18 1

Board’s Report

Dear Members,

The Directors of your Company have pleasure in

presenting the Twenty Fifth Annual Report together with the Audited Financial Statements for the Financial Year (“FY”) ended March 31, 2018.

FINANCIAL HIGHLIGHTS

The summary of the Company’s financial performance for FY 2017-18 as compared to the previous FY 2016-17 is given below:

(` in Lakh)

Particulars For the

year ended

March 31,

2018

For the

year ended

March 31,

2017

Total Income 5,24,568.84 4,14,497.54

Less: Total Expenses 4,81,115.37 4,11,655.80

Profit before tax/

(Loss)

43,453.47 2,841.74

Less: Provision for tax 14,461.31 1,237.57

Profit after tax/(Loss) 28,992.16 1,604.17

Profit for the period

carried to the balance

sheet

28,992.16 1,604.17

Add: Balance brought

forward from previous

year (Deficit)/Surplus

(25,742.80) (10,136.12)

Less: Transferred to

Special Reserve u/s 45-IC

of RBI Act, 1934

5,798.43 320.83

Dividend paid (Including

dividend distribution tax)

- 16,890.02

Less: Transfer to

Debenture Redemption

Reserve

2,309.66 -

Less: Transfer to reserve

u/s 36(1)(viii) of Income

tax Act, 1961

1,475.45 -

Less: Unamortised write

down on Investment

250.12 -

Surplus/ (deficit) in

the Statement of

Profit and Loss

(6,584.30) (25,742.80)

APPROPRIATIONS

During the year under review, the Company has

transferred ` 24.29 Lakh to General Reserve from

Debenture Redemption Reserve. Your Company

proposes to transfer ` 5,798.43 Lakh (previous year:

` 320.83 Lakh) to Special Reserve created under Section 45-IC of the Reserve Bank of India Act, 1934 and

` 1,475.45 Lakh (previous year: Nil) to Special Reserve created under Section 36(1) (viii) of Income tax Act, 1961.

INFORMATION ON THE STATE OF AFFAIRS OF THE

COMPANY

PERFORMANCE OF BUSINESSES

Farm Equipment Finance

This includes loans in respect of products such as farm equipment i.e. tractor and harvester. These products are intended for the farmers and hence the repayment of these loans is timed in line with the harvest seasons. The market has grown to ever highest levels of 7.12 Lakh units with a growth of 22% on the previous year. The Company has built on the gains that we initiated in the second half of last financial year on the back of improved collections which has helped drive business growth. The Company is currently the 2nd largest financier in this industry and enjoy strong relationships with all the leading OEMs.

Two Wheeler Finance

The two wheeler finance portfolio includes loans made in respect of two wheelers. It is one of the core businesses of the Company. The Company has grown its market

share through effective implementation of straight through processing through digital application which has helped reduce the turn around time drastically. This has helped in creating a very attractive customer and dealer position and thereby gaining market share in this business.

Microfinance

Microfinance business includes loans made to women in rural areas under the joint liability group model. During this year, the Company started with the overhang of demonetization which has increased the delinquencies in the market. The first half of this year was spent on strengthening the collections model which has helped reduce the absolute debtor exposure from the end

of the previous year. Apart from this, the Company has expanded in untapped well performing areas of

its existing states and entering into well performing 2 L&T Finance Limited (erstwhile Family Credit Limited) Annual Report 2017-18 geographies like Bihar, Assam & Tripura. This has helped the Company in maintaining the high growth trajectory while improving the book performance.

FINANCIAL PERFORMANCE OF THE COMPANY

The Company has achieved enhanced business

performance during the year under review, in comparison with the year ended March 31, 2017, in spite of the challenging economic environment and slowdown

in several sector. The performance of the Company is summarised as follows:

• Disbursement increased from ` 31,77,085 Lakh in

FY 2016-17 to ` 49,85,882 Lakh in FY 2017-18.

• Momentum in overall disbursement growth

with focus on high yield products led to revenue

growth with income from operations growing

from ` 4,08,205.22 Lakh in the year ended

March 31, 2017 to ` 4,99,744.95 Lakh during the

year under review. Total income has also grown

from ` 4,14,497.54 Lakh to ` 5,24,568.84 Lakh in

the same period.

• Gross portfolio assets recorded growth from

` 29,24,445.12 Lakh as at March 31, 2017 to

` 39,14,560.74 Lakh as at March 31, 2018.

• Profit before Tax grew from ` 2,841.74 Lakh in

FY 2016-17 to ` 43,453.47 Lakh in FY 2017-18.

• Profit after Tax grew from ` 1,604.17 Lakh in

FY 2016-17 to ` 28,992.16 Lakh.

• Net worth of the Company as on

March 31, 2018 was ` 8,56,389.80 Lakh vis-à-vis

` 6,87,938.89 Lakh as on March 31, 2017.

MATERIAL CHANGES AND COMMITMENTS

There were no material changes and commitments

affecting the financial position of the Company which occurred between the end of the financial year to which these financial statements relate and the date of this Report.

DIVIDEND

The Directors have considered it financially prudent in the long-term interest of the Company to reinvest the profits into the business of the Company to build a strong reserve base and growth, accordingly no dividend has been been recommended for the year ended

March 31, 2018.

CREDIT RATING

During the year under review, CARE Ratings Limited

(“CARE”) and ICRA Limited (“ICRA”) reviewed the

ratings on various debt instruments of the Company. Furthermore, new rating was assigned by India Ratings and Research Private Limited (“India Ratings”) to the non-convertible debentures (“NCDs”) of the Company. CARE has upgraded the long-term rating to “CARE

AAA” (Triple A by CARE) from “CARE AA+” (Double

A Plus by CARE) on the outstanding rated issues of Secured Redeemable NCDs, Secured NCDs (Public

Issue), Unsecured Redeemable NCDs (Subordinated

Debt) and long-term bank borrowings. The said

rating agency, has also upgraded the rating on the Unsecured NCDs issued by the Company, in the nature of perpetual debt, to “CARE AA+” (Double A plus by CARE) from “CARE AA” (Double A). All these ratings carry a “Stable” outlook as on March 31, 2018. The outlook on these ratings were revised to “Positive” from “Stable” in October 2017 and subsequent to the upgrade in long-term ratings, in February 2018 the outlook was again revised to “Stable” from “Positive”. Furthermore, in December 2017, CARE assigned a

rating of “CARE PP-MLD AA+; Positive” (PP-MLD

Double A Plus; Outlook: Positive) to the Principal Protected Market-linked Debenture, the rating was

subsequently upgraded in February 2018 to “CARE PP- MLD AAA; Stable” (PP-MLD Triple A; Outlook: Stable). CARE has also reaffirmed the rating assigned to the commercial papers issued by the Company at “CARE

A1+” (A One Plus by CARE).

ICRA has reaffirmed its ratings on the rated Secured Redeemable NCDs, Secured NCDs (Public Issue) and

Unsecured Redeemable NCDs (Subordinated Debt) at

“ICRA AA+” (Double A Plus by ICRA). The ratings on the unsecured NCDs, in the nature of perpetual debt, has also been reaffirmed at “ICRA AA” (Double A by ICRA). All these ratings carry a “Stable“ outlook. During the year, ICRA has also assigned rating to the commercial papers issued by the Company at “ICRA A1+” (A One

Plus by ICRA). In January 2018, India Ratings assigned a rating of “IND AAA/Stable” (Triple A; Outlook: Stable by India Ratings) to the NCD issues of the Company.

The instruments/bank facilities with long term ratings of AAA are considered to have highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk.

L&T Finance Limited (erstwhile Family Credit Limited) Annual Report 2017-18 3 The instruments/bank facilities with long term ratings of AA+/AA are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.

The instruments with short term ratings of A1+ are considered to have very strong degree of safety

regarding timely payment of financial obligations. Such instruments carry lowest credit risk.

RESOURCES

During the year under review, the Company met

its funding requirements through issue of NCDs,

Commercial Papers (“CPs”), Inter Corporate Deposits

(“ICDs”) and borrowings from bank.

During the year under review, the net borrowings

have increased from ` 5,23,504.01 Lakh as at

March 31, 2017 to ` 6,86,732.14 Lakh as at

March 31, 2018.

The aggregate debt outstanding as on March 31, 2018 was ` 34,69,702.40 Lakh.

During the year under review, the Company has

alloted 15,90,90,905 (Fifteen Crore Ninety Lakh Ninety Thousand Nine Hundred and Five) equity shares of ` 10 each at a premium of ` 78 per share (total consideration of ` 88 per share) aggregating to ` 1399,99,99,640

(Rupees One Thousand Three Hundred and Ninety

Nine Crore Ninety Nine Lakh Ninety Nine Thousand

Six Hundred and Forty Only) to L&T Finance Holdings Limited, the holding company, on a rights basis.

SHARE CAPITAL

During the year under review, pursuant to the allotment of the equity shares, the paid-up share capital of the Company was increased from ` 1440,04,72,940

(Rupees One Thousand Four Hundred and Forty Crore

Four Lakh Seventy Two Thousand Nine Hundred Forty

Only), divided into 144,00,47,294 equity shares of ` 10 each to ` 1599,13,81,990 (Rupees One Thousand Five Hundred and Ninety Nine Crore Thirteen Lakh Eighty One Thousand Nine Hundred and Ninety Only), divided into 159,91,38,199 equity shares of ` 10 each.

FIXED DEPOSITS

The Company being a non-deposit taking Non Banking Financial Company (“NBFC”) has not accepted any

deposits from the public during the year under review. DIRECTORS

The composition of the Board is in accordance with the provisions of Section 149 of the Companies Act, 2013 (“the Act”) with an appropriate combination of Non-Executive Directors and Independent Directors. Mr. Y. M. Deosthalee, Non-Executive Director and

Chairperson of the Company resigned from the

Board with effect from May 31, 2017, consequent

to his resignation from L&T Financial Services Group. Mr. Pavninder Singh, Non-Executive Director of the Company resigned from the Board of Directors with

effect from July 14, 2017.

The Board places on record its appreciation of the valuable services rendered by the aforesaid Directors during their tenure as the Directors of the Company. During the year under review, the Company appointed Mr. Ashish Kotecha as the Non-Executive Director

in accordance with provisions of Sections 152 and

161 of the Act, not liable to retire by rotation and Mr. Desh Raj Dogra as an Independent Director in

accordance with provisions of Sections 149, 152 and 161 of the Act with effect from July 14, 2017 and

July 24, 2017 respectively, pursuant to the approval of members at the Twenty Fourth Annual General Meeting held on August 22, 2017.

Further, Mr. Dinanath Dubhashi was appointed as the Chairperson of the Board and the Company with effect from July 24, 2017.

As on the date of this Report, the Board comprises the following Directors:

Name of Director Designation

Mr. Dinanath Dubhashi Non-Executive Director &

Chairperson

Mr. P. V. Bhide Independent Director

Mr. Mannil Venugopalan Independent Director

Dr. (Mrs.) Rajani R. Gupte Independent Director

Mr. Desh Raj Dogra Independent Director

Mr. Prabhakar B Non-Executive Director

Mr. Ashish Kotecha Non-Executive Director

Section 152 of the Act provides that unless the Articles of Association provide for the retirement of all directors 4 L&T Finance Limited (erstwhile Family Credit Limited) Annual Report 2017-18 at every annual general meeting, not less than two-third of the total number of directors of a public company

(excluding Independent Directors) shall be persons whose period of office is liable to determination

by retirement of directors by rotation. Accordingly, Mr. Dinanath Dubhashi, Non-Executive Director will retire by rotation at the ensuing Annual General Meeting

(“AGM”) and being eligible, has offered himself for re- appointment.

Terms and conditions of appointment of Independent Directors are available on the website of the Company viz. https://www.ltfs.com.

DECLARATION BY INDEPENDENT DIRECTORS

All the Independent Directors have submitted the

declaration of independence, as required pursuant to the provisions of Section 149(7) of the Act, stating that they meet the criteria of independence as provided in Section 149(6) of the Act and are not disqualified from continuing as Independent Directors.

FIT AND PROPER CRITERIA & CODE OF CONDUCT

All the Directors meet the fit and proper criteria stipulated by the Reserve Bank of India (“RBI”). All the Directors of the Company have affirmed compliance with the Code of Conduct of the Company.

KEY MANAGERIAL PERSONNEL (“KMPs”)

There was no change in the KMPs of the Company

during the year under review. As at March 31, 2018, the Company had the following KMPs:

1) Mr. Sunil Prabhune – Manager

2) Mr. Amol Joshi – Head-Accounts (discharging

functions of the Chief Financial Officer)

3) Mr. Amit Bhandari – Company Secretary

COMPANY’S POLICY ON DIRECTORS’ APPOINTMENT

AND REMUNERATION FOR DIRECTORS, KEY

MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

A) Background

Section 178 of the Act requires the Nomination and Remuneration Committee (“NRC”) of the Company

to formulate a Policy relating to the remuneration for the Directors, Senior Management / KMPs and

other employees of the Company and recommend

the same for approval of the Board.

Further, Section 134 of the Act stipulates that the Board‘s Report is required to include a statement on Company’s policy on directors’ appointment and

remuneration including criteria for determining

qualifications, positive attributes, independence of a director and remuneration for KMPs and other

employees.

The Board of Directors had, based on the

recommendation of the NRC of the Company,

approved the policy on Directors’ appointment and

remuneration for Directors, Senior Management,

KMPs and other employees.

B) Brief Framework of the Policy

The objective of this Policy is:

a) to determine inter-alia, qualifications, positive attributes and independence of a Director;

b) to guide on matters relating to appointment

and removal of Directors and Senior

Management;

c) to lay down criteria/evaluate performance of

the Directors; and

d) to guide on determination of remuneration

of the Directors, Senior Management/KMPs

and other employees.

C) Appointment of Director(s) - Criteria

identification

The NRC identifies and ascertains the integrity,

professional qualification, expertise and experience of the person, who is proposed to be appointed as a Director and appropriate recommendation is made

to the Board with respect to his/her appointment.

Appointment of Independent Directors is subject

to the provisions of Section 149 of the Act read

with Schedule IV and rules thereunder. The NRC

satisfies itself that the proposed person satisfies the criteria of independence as stipulated under

Section 149(6) of the Act, before their appointment as an Independent Director.

No person is eligible to be appointed as a Director, if he/she is subject to any disqualifications as

stipulated under the Act or any other law(s) for the time being in force.

The appointment of Managing Director and

Whole-Time Director is subject to the provisions of Sections 196, 197, 198 and 203 of the Act read with Schedule V and rules made thereunder. The NRC

ensures that a person does not occupy position as

L&T Finance Limited (erstwhile Family Credit Limited) Annual Report 2017-18 5 a Managing Director/Whole-Time Director beyond

the age of seventy years, unless the appointment

is approved by a Special Resolution passed by the

Company in general meeting. No re-appointment

is made earlier than one year before the expiry of term.

D) Evaluation criteria of Directors and Senior

Management/KMPs/employees

• Independent Directors / Non-Executive

Directors

The NRC carries out evaluation of

performance of Independent Directors/

Non-Executive Directors every year ending

March 31st on the basis of the following

criteria:

a) Membership & attendance –Committee

and Board Meetings

b) Contribution during such meeting

c) Active participation in strategic decision

making

d) Inputs to executive management on

matters of strategic importance

e) Such other matters as the NRC/Board

may determine from time to time

• Executive Directors

The NRC carries out evaluation of performance

of Executive Directors (“EDs”), if any, every

year ending March 31st. The evaluation is

on the basis of Key Performance Indicators

(“KPIs”), which are identified well in advance

for EDs and weights assigned for each

measure of performance keeping in view the

distinct roles of each ED. The identified KPI

for EDs are approved by the Board, pursuant

to recommendation of the NRC, if required.

• Senior Management/ KMPs/ employees

The HR Department carries out the evaluation

of the aforementioned persons every year

ending March 31st, with the Department

Head(s) concerned. KPIs are identified well

in advance at the commencement of the

financial year. Performance benchmarks are

set and evaluation of employees is done

by the respective reporting Manager(s)/

Management/ Department Head(s) to

determine whether the performance

benchmarks are achieved. The payment

of remuneration/annual increment to the

aforementioned persons is determined after

the satisfactory completion of evaluation

process.

The HR Department of the Company

is authorized to design the framework

for evaluating the Senior Management

Personnel/KMPs and employees. The

objective of carrying out the evaluation by

the Company is to identify and reward those

with exceptional performances during any

financial year. Training and Development

Orientation programs on a need basis are

provided to employees, whose performance

during any financial year does not meet the

benchmark criteria.

E) Criteria for Remuneration

The NRC, while determining the criteria for

remuneration for Directors, Senior Management/

KMPs and other employees ensures that:

a) the level and composition of remuneration

is reasonable and sufficient to attract, retain

and motivate Directors of the quality required

to run the Company successfully;

b) relationship of remuneration to performance

is clear and meets appropriate performance

benchmarks; and

c) remuneration to Directors, Senior

Management and KMPs involves a balance

between fixed and incentive pay reflecting

short and long-term performance objectives

appropriate to the working of the company

and its goals.

PERFORMANCE EVALUATION

Pursuant to the provisions of the Act, the Board has carried out an annual evaluation of its own performance, performance of the directors individually, as well as the Committees of the Board.

Manner of Evaluation

The NRC and the Board have laid down the manner in which formal annual evaluation of the performance of the Board, its Committees and individual Directors has to be made.

6 L&T Finance Limited (erstwhile Family Credit Limited) Annual Report 2017-18 It includes circulation of evaluation forms separately for evaluation of the Board and its Committees, Independent Directors / Non-Executive Directors and the Chairperson of the Company.

The process of the annual performance evaluation

broadly comprises the following:

a. Board and Committee Evaluation:

• Evaluation of Board as a whole and the

Committees is done by the individual

directors/members, followed by submission

of collation to NRC and feedback to the

Board.

b. Independent / Non-Executive Directors

Evaluation:

• Evaluation done by Board Members excluding

the Director being evaluated is submitted to

the Chairperson of L&T Finance Holdings

Limited, the holding company and individual

feedback provided to each Director.

c. Chairperson Evaluation:

• Evaluation as done by the individual directors

is submitted to the Chairperson of NRC of

L&T Finance Holdings Limited, the holding

company and individual feedback provided

to the Chairperson.

CORPORATE GOVERNANCE

It has always been the Company’s endeavour to

excel through better Corporate Governance and fair and transparent practices. The report on Corporate Governance for FY 2017-18 is appended as

Annexure A to this Report.

In accordance with the master circular issued by RBI on “Non-Banking Financial Companies – Corporate

Governance (Reserve Bank) Directions, 2015”, the

Company has adopted the internal guidelines on

Corporate Governance.

STATUTORY AUDITORS

Pursuant to the provisions of Section 139(2) of the Act and the rules made thereunder, the Members at their Twenty Third Annual General Meeting (“AGM”) held on June 15, 2016 have appointed M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (ICAI Firm’s Registration Number 117366W/W-100018) as the Statutory Auditors of the Company, to hold office from the conclusion of Twenty Third AGM till the conclusion of the Twenty Eighth AGM of the Company subject to ratification

by Members at the forthcoming AGM. Thereafter,

ratification as may be necessitated by the Act and rules made thereunder as amended from time to time.

AUDITORS’ REPORT

The Auditors’ Report to the Members during the year under review does not contain any qualification. The Notes to the accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further clarifications under Section 134(3)(f) of the Act. SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration

of Managerial Personnel) Rules, 2014, the Company

had appointed Ms. Naina R. Desai, Practicing Company Secretary to undertake the secretarial audit of the Company for FY 2017-18.

The Secretarial Audit Report is appended as

Annexure B to this Report.

There are no adverse remarks / observations /

qualifications / reservations / disclaimers in the Secretarial Audit Report.

PARTICULARS OF EMPLOYEES

The information required pursuant to the provisions of Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of

Managerial Personnel) Rules, 2014 in respect of

employees of the Company, has been appended as

Annexure C to this report.

In terms of first proviso to Section 136 of the Act, the Report and Accounts are being sent to the Members

and others entitled thereto, excluding the information on employees’ particulars as required pursuant to Rule 5(2) and 5(3) of the Companies (Appointment and

Remuneration of Managerial Personnel) Rules, 2014. The said annexure is available for inspection by the Members at the registered office of the Company during business hours on working days of the Company upto the date of the ensuing AGM. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary at the registered office.

The Board of Directors affirms that the remuneration paid to employees of the Company is as per the Policy on Directors’ appointment and remuneration for Directors, KMPs and other employees and none of the employees listed in the said annexure are related to any Directors of the Company.

L&T Finance Limited (erstwhile Family Credit Limited) Annual Report 2017-18 7 CONSERVATION OF ENERGY AND TECHNOLOGY

ABSORPTION AND FOREIGN EXCHANGE EARNINGS

AND OUTGO

The Company being a NBFC, the particulars regarding conservation of energy and technology absorption as required to be disclosed pursuant to provisions of Rule 8(3) of the Companies (Accounts) Rules, 2014 have

not been considered significant enough to warrant

disclosure.

During the year under review, there were no foreign exchange earnings (previous year ` Nil). The expenditure in foreign currency for professional fees and software license fees was ` 188.52 Lakh (previous year

` 16.10 Lakh).

DISCLOSURE RELATING TO HOLDING, SUBSIDIARY,

JOINT VENTURE AND ASSOCIATE COMPANIES

The Company is a wholly-owned subsidiary of

L&T Finance Holdings Limited. It has no subsidiary and joint venture company. The Company holds 26% of

equity shares of Grameen Capital India Private Limited and 28.29% of equity shares of L&T Infra Debt Fund Limited, which are the associate companies.

As required under Rule 5 and Rule 8(1) of the Companies

(Accounts) Rules, 2014, a report on the performance, financial position and contribution of associates of the Company has been appended as Annexure D to this

Report

DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors, based on the representations received from the operational management, confirm in pursuance of provisions of Section 134(5) of the Act, that:

1. in the preparation of the annual accounts, the

applicable accounting standards have been

followed along with proper explanation relating to material departures, if any;

2. the Directors 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,

2018 and of the profit of the Company for that

period;

3. the Directors have taken proper and sufficient

care for the maintenance of adequate accounting

records in accordance with the provisions of the

Act for safeguarding the assets of the Company

and for preventing and detecting fraud and other

irregularities;

4. the Directors have prepared the annual accounts on a going concern basis;

5. the Directors have laid down internal financial controls to be followed by the Company and that

such internal financial controls are adequate and

operating effectively; and

6. the Directors have devised proper systems to ensure compliance with the provisions of all applicable

laws including Secretarial Standards and that such systems were adequate and operating effectively.

INTERNAL CONTROL SYSTEMS AND THEIR

ADEQUACY

The Company has an internal control system,

commensurate with the size, scale and complexity of its operations. Testing of such systems forms a part of review by the Internal Audit (“IA”) function. The scope and authority of the IA function is defined in the IA Charter.

The IA function of L&T Financial Services Group monitors and evaluates the efficacy and adequacy of the internal control systems in the Company and its compliance with operating systems, accounting procedures and policies of the Company. Based on the report of IA function, process owners undertake corrective action, if any, in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee from time to time.

BOARD MEETINGS

The details of the Board Meetings held by the Company during FY 2017-18 are disclosed in the Corporate

Governance Report appended to this Report.

The Agenda for the Meetings were circulated to the Directors well in advance. The Minutes of the Meetings of the Board of Directors were circulated amongst the Members of the Board for their perusal.

COMPOSITION OF THE AUDIT COMMITTEE

The Company has constituted an Audit Committee in

terms of the requirements of the Act and RBI directions. The details of the same are disclosed in the Corporate Governance Report.

CORPORATE SOCIAL RESPONSIBILITY

In accordance with the requirements of the provisions of Section 135 of the Act, the Company has constituted 8 L&T Finance Limited (erstwhile Family Credit Limited) Annual Report 2017-18 a Corporate Social Responsibility (“CSR”) Committee. The composition and terms of reference of the CSR

Committee is provided in the Corporate Governance

Report. The Company has also formulated a

CSR Policy which is available on the website

viz.https://www.ltfs.com.

An annual report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 has been appended as Annexure E to this Report.

VIGIL MECHANISM

Pursuant to Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 read with Section 177(9) of the Act, the Company has adopted a Vigil Mechanism Framework (“Framework”), under which the Whistle

Blower Investigation Committee (“the Committee”)

has been set up. The objective of the Framework is to establish a redressal forum, which addresses all concerns raised on questionable practices and through which the Directors and employees can raise actual or suspected violations.

The Head of Internal Audit of L&T Financial Services Group acts as an Ombudsman. The role of Ombudsman

is to review the grievance at the initial stage and in case the grievance is material, the same is forwarded to the Committee, for investigation. After investigation, the complaint with Investigation Report is forwarded to the Audit Committee/Managing Director/Whole-Time

Director as the case may be. At the Audit Committee, brief update is presented to the Members for

their review. The Committee takes necessary actions of maintaining confidentiality within the organization on matters brought to its attention.

The mechanism framed by the Company is in compliance with requirement of the Act and available on the website viz. https://www.ltfs.com.

PARTICULARS OF LOAN GIVEN, INVESTMENT MADE

OR GUARANTEE OR SECURITY PROVIDED BY THE

COMPANY

Details of loans, guarantees and investments are given in the notes to the Financial Statements, as applicable. PARTICULARS OF CONTRACTS OR ARRANGEMENTS

WITH RELATED PARTIES

The Board of Directors has approved a policy on

transactions with related parties (“



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