2. Dividend
The Directors do not recommend any dividend for the year.
3. Capital Adequacy
The Capital Adequacy Ratio of the Company stands at 99.78% as of March 31, 2022 as against the minimum capital adequacy requirements of 30% stipulated by RBI.
4. Material Changes and Commitments
There have been no material changes and commitments between the end of FY 2021-22 and the date of this report, affecting the financial position of the Company.
5. Share Capital
During the year, there was no capital infusion and as on March 31, 2022, total paid up share capital stood at ' 341,79,01,150 comprising of 34,17,90,115 equity shares of '10 each.
6. Investment in Subsidiaries
During the year under review, the Company had infused a capital of ' 100 lakh in its Subsidiary,
9. Fixed Deposits
The Company has not accepted any deposits from the public since inception.
10. Subsidiary Companies
The Company conducts its business through the following two subsidiaries:
|
Sl.
No.
|
Name of the Subsidiary
|
Activities
|
|
1
|
Equitas Small Finance Bank Limited (ESFBL)
|
ESFBL is engaged in Banking business. Its various activities are outlined in the Management Discussion and Analysis Report, which forms part of this Report.
|
|
2
|
Equitas Technologies Private Limited (ETPL)
|
ETPL is engaged in freight facilitation business under the brand name of 'Wowtruck'. The Company provides a common platform for transporters and customers to connect online and carry out transactions on real time basis.
|
As required under Regulations 16(1) (c) & 46 of Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 [SEBI Listing Regulations], the Board of Directors had approved the Policy for determining Material Subsidiaries ("Policy"). The details of the Policy are available on the website of the Company https://www.equitas.in/pdf/EHL_ Policy_Materiality.pdf.
11. Corporate Social Responsibility
The Company has laid down a Corporate Social Responsibility Policy, which is disclosed on our website https://www.equitas.in/pdf/EHL-CSR-Policy. pdf. In accordance with the Policy, the Company and its Subsidiary, ESFBL contribute higher of 5% of its previous year net profits as against the prescribed 2% of average net profits made during the preceding three financial years to Equitas Development Initiatives Trust (EDIT) and Equitas Healthcare Foundation (EHF), registered public charitable trust(s) for carrying out CSR activities on its behalf. A report on CSR activities is enclosed as Annexure - I.
12. Scheme of amalgamation between Equitas Holdings Limited and Equitas Small Finance Bank Limited
The Board of Directors of Equitas Small Finance Bank Limited (ESFBL) and Equitas Holdings Limited (EHL) at their respective Meetings held on July 26, 2021 approved a Scheme of Amalgamation between EHL, ESFBL and their respective shareholders, contemplating amalgamation of EHL with ESFBL under applicable provisions of the Companies Act 2013. The Scheme was designed to achieve the RBI licensing requirement of dilution of promoter shareholding in the Bank and minimum public
Your Directors have pleasure in presenting the Fifteenth Annual Report together with the audited accounts of the Company both on a Consolidated and Standalone basis for the Financial Year ended March 31, 2022 (FY 2021-22).
|
1. Financial Results (' in lakhs)
Particulars
|
Consolidated
|
Standalone
|
|
2021-22
|
2020-21
|
2021-22
|
2020-21
|
|
Total Revenue
|
4,04,490
|
3,82,069
|
1,922
|
17,773
|
|
Less: Total Expenditure
|
3,69,455
|
3,16,460
|
1,905
|
829
|
|
Profit before taxation and exceptional item
|
35,035
|
65,609
|
17
|
16,944
|
|
Exceptional item
|
6,119
|
-
|
6,119
|
-
|
|
Profit before taxation
|
28,916
|
65,609
|
(6,102)
|
16,944
|
|
Tax expenses
|
8,585
|
14,230
|
(176)
|
2,249
|
|
Profit after taxation[A]
|
20,331
|
51,379
|
(5,926)*
|
14,695
|
|
Other Comprehensive Income [B]
|
(231)
|
400
|
(2)
|
1
|
|
Total comprehensive Income for the year, net of tax [A B]
|
20,100
|
51,779
|
(5,928)
|
14,696
|
|
Transfer to Statutory Reserve
|
7,018
|
12,545
|
Nil
|
2,939
|
|
Transfer to Special Reserve
|
968
|
742
|
Nil
|
Nil
|
|
Transfer to Investment Fluctuation Reserve
|
125
|
198
|
Nil
|
Nil
|
|
Transfer to capital Reserve
|
106
|
1,761
|
Nil
|
Nil
|
|
*Refer note 14 of the notes to accounts of standalone financial statements
|
|
|
|
Equitas Technologies Private Limited by subscribing to its equity shares on a rights basis.
7. Core Investment Company
The Company continues to be categorised as a NonBanking Financial Institution - Non-Deposit taking-Systemically Important Core Investment Company (CIC-ND-SI) under the RBI Regulations.
8. Statutory Disclaimer
The Company is having a valid Certificate of Registration dated September 1, 2016 issued by the RBI under Section 45-IA of the Reserve Bank of India Act, 1934. However, RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the Company or for the correctness of any of the statements or representations made or opinions expressed by the Company and for discharge of any liability by the Company.
Neither there is any provision in law to keep, nor does the Company keep any part of the deposits with RBI and by issuing a Certificate of Registration to the Company, RBI neither accepts any responsibility nor guarantees the payment of deposits to any depositor or any person who has lent any sum to the Company.
shareholding (MPS) requirements prescribed by SEBI Regulations, in a manner that is in the best interests of and without being prejudicial to EHL, ESFBL, their respective shareholders or any other stakeholders.
Subsequently, ESFBL achieved the MPS through a Qualified Institutions Placement (QIP) of its shares, in February 2022, after obtaining the necessary approvals. QIP comprised of issue of 10,26,31,087 equity shares of '10/- each at premium of '43.59 per share, aggregating to a fund raise of ' 550 crores. As a result of this QIP, the public shareholding in the Bank increased from 18.70% to 25.37%, thereby complying with the Minimum Public Shareholding (MPS) requirements prescribed by SEBI Regulations.
Consequently, the aforesaid Scheme was revised to include the change in capital structure arising from QIP as well as the necessary change in objects of the Scheme. The Scheme, so revised was approved by the Boards of EHL and ESFBL in their respective Meetings held on March 21, 2022. The Scheme was filed with the Stock Exchanges and RBI for necessary approvals/ sanctions. The RBI vide its letter dated May 6, 2022 has granted its NOC to the Scheme while other approvals are awaited.
Upon coming into effect of this Scheme and in consideration of the amalgamation of EHL with ESFBL, ESFBL, without any further application, act or deed, shall issue and allot to each of the equity shareholders of EHL as on the Record Date defined in the Scheme, 231 equity Shares of ' 10/- each credited as fully paid up of ESFBL, in respect of every 100 Equity Shares of ' 10/- each fully paid up held by them in EHL.
In this connection, one of the conditions advised by RBI vide their letter dated May 6, 2022, while conveying "no objection" to the proposal for amalgamation of the Company with ESFBL, was the divestment of shareholding of 100% paid up share capital of ETPL prior to the scheme of amalgamation taking effect.
Subsequently, the Board in its Meeting held on May 16, 2022 had accorded its acceptance to the Letter of Intent received by the Company from a prospective buyer, Goldstone Technologies Limited ("GTL") for purchase of 100% equity shares of the Company's Subsidiary, Equitas Technologies Private Limited ("ETPL") for an aggregate consideration of ' 8,00,00,000/- which would translate into ' 7,96,93,975/- for 2,50,00,000 equity shares held by the Company in ETPL.
13. Performance and Financial Position of Subsidiaries
As required under Section 129 of the Act read with Rule 5 of Companies (Accounts) Rules, 2014, a statement containing salient features of financial statements of each of the Subsidiaries has been appended to the financial statements.
14. Consolidated Financial Statements
The Consolidated Financial Statements which have been prepared in accordance with the Companies Act, 2013 ("the Act") and the relevant Accounting Standards form part of this Annual Report.
15. Management Discussion and Analysis Report
In accordance with the SEBI Listing Regulations, the Management Discussion and Analysis Report highlighting the business-wise details forms part of this Report.
16. Corporate Governance Report
A report on Corporate Governance containing the details as required under the SEBI Listing Regulations forms part of this Report.
The Executive Director & CEO and the Chief Financial Officer have submitted a certificate to the Board regarding the financial statements and other matters as required under Regulation 17(8) of SEBI Listing Regulations.
17. Business Responsibility Report
Business Responsibility Report is attached and forms part of this Report.
18. Board Meetings
During FY 2021-22, the Board of Directors of the Company met eight times. The details of the Meetings are given in the Report on Corporate Governance. The maximum interval between any two Meetings did not exceed 120 days, as prescribed in the Act.
19. Composition of Audit Committee
The Company has constituted an Audit Committee in terms of the requirements of the Act and Regulation 18 of SEBI Listing Regulations. The composition of the same is disclosed in the Corporate Governance Report.
20. Directors & Key Managerial Personnel
As on the date of this Report, the Company has Eight Directors out of which five are Independent Directors including a Women Independent Director. There were no changes in the Board of Directors of the Company during the year.
20.1 The Company has familiarised the Independent Directors of the Company on their roles and responsibilities, nature of industry in which the Company operates, business model of the Company, etc. The details of the familiarisation programme imparted to Independent Directors are available on the website of the Company https://www.equitas.in/ pdf/Familiarisation-Programme-for-Independent-Directors.pdf.
The terms and conditions of appointment of Independent Directors are also available on the website of the Company https://www.equitas.in/ pdf/EHL-ID-Appt-TermsnConditions.pdf.
20.2 Section 152 of the Act provides that two-thirds of the total number of Directors are liable to retire by rotation out of which one-third shall retire from office at every AGM. In terms of Section 149(13), the provisions of retirement of Directors by rotation shall not be applicable to Independent Directors and an Independent Director shall not be included in the total number of Directors liable to retire by rotation.
The Company has three Directors, viz., Mr Rangachary N, Mr Bhaskar S and Mr John Alex, liable to retire by rotation. As per the criteria stipulated under Section 152 of the Act for retirement by rotation, Mr Rangachary shall retire in the ensuing AGM of the Company and being eligible for re-appointment, offer himself for re-appointment. The Board recommends his re-appointment and the same is being placed for approval of the shareholders at the ensuing Annual General Meeting.
20.3 There were no changes in KMPs during the year.
As at March 31, 2022, the Company had the following KMPs:
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Sl.
No.
|
Name of the KMP
|
Designation
|
|
1
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Mr John Alex
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Executive Director & Chief Executive Officer (ED & CEO)
|
|
2
|
Ms Srimathy R
|
Chief Financial Officer (CFO)
|
|
3
|
Ms Deepti R
|
Company Secretary (CS)
|
20.4 Mr John Alex was appointed as Whole-time Director designated as Executive Director & Chief Executive Officer (ED & CEO) for a period of 3 years with effect from November 08, 2019. Pursuant to recommendation of Nomination, Remuneration & Governance Committee and subject to approval of shareholders, the Board in its Meeting held on May 28, 2022 has approved the re-appointment of Mr John Alex as Whole-time Director of the Company to be designated as ED & CEO, with effect from November 08, 2022 for a period of three years.
21. Declaration from Independent Directors
The Board has received declarations from the Independent Directors as required under Section 149(7) of the Act and Regulation 16(1)(b) of SEBI Listing Regulations and the Board is satisfied that the Independent Directors meet the criteria of independence as mentioned therein.
22. Evaluation of Board Performance
The performance of the Chairman, the Board, Audit Committee (ACB), Nomination, Remuneration & Governance Committee (NRGC), Corporate Social
Responsibility Committee (CSR), Stakeholders' Relationship Committee (SRC) and that of individual Directors for the Year 2021-22 were evaluated on the basis of criteria approved by the Board. Some of the performance indicators, based on which the independent directors are evaluated include contribution to setting strategy and policy directions, concern for stakeholders, approach to issues placed before the Board, exercising of own judgement and voicing opinion freely.
All Directors were provided the criteria for evaluation which were duly filled in and sent to the Secretary to NRGC. The feedback was then collated and shared in confidence with the Chairman of NRGC.
The Chairman of NRGC discussed the same with the other Members of the Committee. Later at the Board Meeting, the Chairman of NRGC shared the feedback with the Chairman of the Board and the other Directors.
23. Policy on Directors' appointment & remuneration
Pursuant to the provisions of Section 178 of the Act, the Company has formulated and adopted Policy on selection of Directors and Remuneration Policy which are disclosed on our website, under Policies Section. https://www.equitas.in/pdf/ EHLFit&ProperPolicy.pdf. https://www.equitas.in/ pdf/EHLRemunerationPolicy.pdf
24. Directors' Responsibility Statement
The Board of Directors of the Company, to the best of their knowledge and belief, confirm 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) 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, 2022 and of the loss of the Company for that period;
3) they 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) they have prepared the annual accounts on a going concern basis;
5) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively;
6) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
25. Overall remuneration
Details of all elements of remuneration paid to all
the Directors are given in the Corporate Governance
Report. The Independent Directors of the Company
are not entitled to stock options.
None of the employees drew remuneration beyond the limits specified under Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
26. Whistle Blower Policy/Vigil Mechanism
The Company has devised a Vigil mechanism for Directors and employees through the adoption of Whistle Blower Policy, details whereof is available on the Company's website https://www.equitas.in/ pdf/EHL-Whistle-Blower-Policy.pdf.
27. Auditors
M/s T R Chadha & Co LLP, Chartered Accountants (TRC), having Registration Number (Firm Registration No: 006711N/ N500028) was appointed as Statutory Auditor of the Company for five years till the conclusion of the 18th Annual General Meeting (AGM) to be held in the year 2025.
TRC is also one of the Joint Statutory Central Auditors of the Company's Subsidiary, Equitas Small Finance Bank Limited (ESFBL). Pursuant to the Guidelines for Appointment of Statutory Central Auditors (SCAs)/ Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs) dated April 27, 2021 recently issued by Reserve Bank of India (the "RBI Guidelines"), the same audit firm cannot be the auditor of both the RBI Regulated entities in the group. In view of the same, TRC had expressed their inability to continue as Statutory Auditor of the Company, post submission of limited review report for the quarter and half year ended September 30, 2021.
Consequent to the above, the Company, had appointed M/s V. Sankar Aiyar & Co, Chartered Accountants ("VSA"), having Registration Number (Firm Registration No: 109208W) as Statutory Auditor of the Company to hold office till the conclusion of Fifteenth Annual General Meeting of the Company to be held in the year 2022, through postal ballot on December 31, 2021. As per RBI guidelines on appointment of statutory auditors dated April 27, 2021, Auditors shall hold office for a continuous period of three years, subject to the firms satisfying the eligibility norms each year. Since VSA has already been appointed until the conclusion of 15th AGM, they are eligible to continue for another two years. The Directors recommend
continuation of appointment of M/s V. Sankar Aiyar & Co, Chartered Accountants, as Statutory Auditors of the Company for a period of two years to hold office until the conclusion of 17th Annual General Meeting of the Company to be held in the year 2024.
The Company has received the written consent(s) and certificate(s) of eligibility in accordance with Sections 139, 141 and other applicable provisions of the Act and Rules issued thereunder, from M/s V. Sankar Aiyar & Co for their appointment in forthcoming AGM. 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).
Auditor's Report
There are no qualifications, reservations or adverse remarks made by the Statutory Auditor of the Company, M/s V. Sankar Aiyar & Co, Chartered Accountants, having Registration Number (Firm Registration No: 109208W) in their report on the financial statements for the FY 2021-22.
28. Details in respect of frauds, if any, reported by Auditors:
Pursuant to Section 143(12) of the Companies Act, 2013, the Statutory Auditor of the Company have not reported any instances of frauds committed in the Company by its officers or employees.
29. Secretarial Auditor
The Secretarial Audit Report of M/s B Ravi & Associates, Practising Company Secretaries for FY 2021-22 is enclosed as Annexure-III.
Your Company has complied with the applicable Secretarial Standards relating to 'Meetings of the Board of Directors' and 'General Meetings' during the year.
30. Explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by Statutory Auditors or Secretarial Auditors
There are no qualifications, reservations, adverse remarks or disclaimers made by the Statutory Auditors or Secretarial Auditors.
31. Information as per Section 134 (3) (q) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014
During the Financial Year, the Company had no activity relating to conservation of energy or technology absorption. Also, there were no foreign currency earnings or outgo.
32. Details of Employees Stock Option Scheme
Nomination, Remuneration & Governance Committee constituted by the Board of Directors of the Company, administers the Employee Stock Option Schemes, formulated by the Company, from time to time.
Information as required under Section 62 of the Act and Rule 12 of the Companies (Share Capital and Debentures) Rules, 2014 and SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (SEBI Regulations):
|
Sl.
No.
|
Information required
|
Particulars
|
|
1
|
Number of Options granted during the year
|
-
|
|
2
|
Number of Options vested during the year
|
4,599
|
|
3
|
Number of Options exercised during the year
|
-
|
|
4
|
Number of shares arising as a result of exercise of Options
|
-
|
|
5
|
Number of Options forfeited/ lapsed during the year
|
58,444
|
|
6
|
Exercise Price (?)
|
-
|
|
7
|
Money realized by exercise of Options (?)
|
-
|
|
8
|
Total number of Options outstanding
|
51,976
|
|
9
|
Option Granted but not vested
|
-
|
|
10
|
Options Vested but not exercised
|
51,976
|
|
11
|
Total number of Options available for grant
|
3,68,89,190
|
|
12
|
Variation of terms of options
|
Nil
|
Note: Refer Note 48 to the Standalone Financial Statements and Note 59 to the Consolidated Financial Statements.
Employee-wise details of options granted to
1. Key Managerial Personnel - Nil
2. 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: - Nil
3. 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 - Nil
Other details relating to Stock Options as required under SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 are displayed on the Company's website https://www.equitas.in.
33. Particulars of contracts or arrangements with related parties
All the Related Party Transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business.
Pursuant to Section 134(3)(h) 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.
All Related Party Transactions as required under Indian Accounting Standard (Ind AS-24) are reported in Note 39 forming part of Financial Statements.
The Company's Policy on dealing with Related Party Transactions is available on the Company's website
https://www.equitas.in/pdfEHLPolicyonRelated
PartyTransactions.pdf
34. Risk Management
The Company is a Core Investment Company (CIC) and its operations are limited to being a CIC. The risks therefore primarily relate to investments made in its subsidiaries. The operations of each of the subsidiaries, the risks faced by them and the risk mitigation tools followed by them to manage these risks are reviewed periodically by the Risk Management Committees/Audit Committees and the Boards of the respective subsidiaries. The same are considered by the Risk Management Committee and Board of the Company, as well. Details of the same are covered in the Management Discussion and Analysis Report.
35. Internal Financial controls
The Company has clear delegation of authority and standard operating procedures. These are reviewed periodically by the Audit Committee of the Company. These measures help in ensuring adequacy of internal financial controls commensurate with the nature and scale of operations of the Company.
36. Loans/Guarantees /Investments
Details of loans, guarantees and investments covered under Section 186 of the Act are provided in Note 8 and 9 forming part of Financial Statements.
37. Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
The Company has in place a Policy on Prevention of Sexual Harassment in accordance with The Sexual
Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee has been set up to redress complaints received under the Policy. No complaint has been received by the Company under this Policy so far.
38. Significant and Material Orders Passed by the Regulators or Courts
There have been no significant and material orders passed by Regulators or Courts or Tribunals impacting the going concern status and the future operations of the Company. Further, no penalties have been levied by RBI/any other Regulators on the Company during the year under review.
39. Annual Return
The Annual Return (MGT-7) as required under the Act is available at the website of the Company, https://www.equitas.in
40. Dividend Distribution Policy
The Dividend Distribution Policy of the Company is available on our website https://www.equitas.in/ polices.php
41. Depository System
As the Members are aware, the Company's Equity Shares are tradable in electronic form. As on March 31, 2022, out of the Company's total equity paid-up share capital comprising of 34,17,90,115 Equity Shares, only 97,723 equity shares were in physical form and the remaining shares were in electronic form. In view of the numerous advantages offered by the Depository System, the Members holding shares in physical form are advised to avail themselves of the facility of dematerialization.
Acknowledgement
The Directors thank the investors and customers for reposing confidence in Equitas. The Directors gratefully acknowledge the guidance and support extended by RBI, SEBI, Stock Exchanges, Depositories and other statutory authorities. Your Directors place on record their sincere thanks to its valued constituents for their support and patronage. The Board also expresses its deep sense of appreciation to the employees at all levels for their unstinted commitment to the growth of Equitas.
For and on behalf of the Board of Directors
John Alex Rangachary N
ED & CEO Chairman
May 28, 2022 Chennai Bengaluru
|