Your directors have pleasure in presenting the forty fifth annual
report together with the audited accounts of the company for the year ended 31 March,
2023.
FINANCIAL RESULTS
Particulars |
2022-23 |
2021-22 |
Gross Income: |
12,977.98 |
10,138.77 |
Profit Before Tax (PBT) |
3,599.69 |
2,890.94 |
Profit After Tax (PAT) |
2,666.20 |
2,146.71 |
Total Comprehensive income |
2,700.01 |
2,267.95 |
Appropriation: |
|
|
Transfer to statutory and other reserves |
1,540.00 |
1,430.00 |
Dividend Equity |
164.36 |
164.14 |
SHARE CAPITAL
During the year, there was an increase in paid up capital by Rs.
0.20 crores, consequent to allotment of shares upon exercise of stock options by employees
under the company's employee stock option scheme.
OPERATIONS
Indian economy has moved on after its encounter with the COVID-19
pandemic, staging a full recovery in FY 22 ahead of many developing nations and positioned
itself to ascend to pre-pandemic growth path in FY 23. Yet in the current year,
India also faced the challenge of reigning in inflation that the European strife
accentuated. RBI raised policy rates cumulatively by 250 bps during the financial year.
Despite high inflation and high interest rates, release of pent-up demand was reflected in
the housing market as demand for housing loans picked up. Sales of commercial vehicles
have come close to pre-pandemic levels of over a million units in FY 23 due to improved
fleet utilizations and passenger vehicles registering highest ever sales with nearly 3.9
million units sold in FY 23.
Your company has achieved its highest ever disbursals, collections and
profitability in FY 23. The disbursements for FY 23 grew by 87% to Rs. 66,532 crores.
Disbursements in Vehicle
Finance (VF) business grew by 56% in FY 23 to Rs. 39,699 crores.
Disbursements in Loan against property (LAP) business grew by 68% to Rs. 9,299 crores in
FY 23. Disbursements in Home Loans (HL) stood at Rs. 3,830 crores in FY 23, which is a
growth of 102% Year on Year (YoY). Disbursements in Small and Medium Enterprises (SME)
stood at Rs. 6,388 crores in FY 23 which is a growth of 232% YoY. Disbursements in
Consumer and Small Enterprise Loans (CSEL) and Secured Business & Personal Loans
(SBPL) launched last year stood at Rs. 6,865 crores and at Rs. 451 crores respectively in
FY 23.
The business AUM of the company stood at Rs. 1,06,498 crores which is a
growth of 38% YOY.
The profit before tax of the company for the year FY 23 is Rs.
3,599.69 crores as against Rs. 2,890.94 crores for FY 22, which is a growth of 24% YoY.
The company continued to hold a strong liquidity position with Rs.
5,042 crores as cash balance as at end of 31 March, 2023 (including Rs. 1,542 crore in
Government securities and Rs. 1,536 crore invested in T-bill shown under investments),
with a total liquidity position of Rs. 9,119 crores (including undrawn sanctioned lines).
The Asset Liability Management (ALM) is comfortable with no negative cumulative mismatches
across all time buckets.
OUTLOOK
GDP for the country is projected to grow at 6.5% during FY 24 supported
by solid domestic demand and pick up in capital investment. The company will look to scale
up through new product segments (CSEL, SME and SBPL) as well as improving efficiencies in
existing segments (VF, LAP and HL). The company's strong sales and collections set-up
combined with digital initiatives and branch reach will also support in improving
efficiencies.
DIVIDEND
Dividend distribution policy
The company has formulated a dividend distribution policy in compliance
with regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015 (Listing Regulations), a copy of which is available on the website of the company.
(weblink: https://cholamandalam.com/files/dividend_distribution_policy)
Payment of dividend
The company paid an interim dividend on the equity shares at the rate
of 65% (Rs. 1.30 per equity share) as approved by the Board on 31 January, 2023 for the
year ended 31 March, 2023.
Your directors are pleased to recommend a final dividend of 35% ( Rs.
0.70 per equity share) on the equity shares of the company. With this, the total dividend
will be 100% (Rs. 2.00 per equity share) for the year ended 31 March, 2023.
TRANSFER TO RESERVES
The company transferred a sum of Rs. 540 crores to statutory reserve as
required under the Reserve Bank of India Act, 1934 and
Rs. 1,000 crores to general reserves.
FIXED DEPOSITS
The company is a non deposit taking NBFC. The company does not hold or
accept deposits as of the date of balance sheet.
RBI LICENSE
The company is an NBFC - Investment and Credit Company (NBFC-ICC).
During the year, the company has also obtained a license to carry on factoring business.
The company has been notified as an NBFC in Upper Layer (NBFC-UL) by the Reserve Bank of
India under the recently implemented Scale Based Regulatory Framework for NBFCs.
CAPITAL ADEQUACY
The company's capital adequacy ratio was at 17.13% as on 31
March, 2023 as against the statutory minimum capital adequacy ratio of 15% prescribed by
RBI. The Common Equity Tier 1 (CET1) capital was at 13.70% and Tier I capital was at
14.78% as against the statutory minimum requirement of 9% and 10% respectively. Tier II
capital was at 2.35% as on 31 March, 2023.
EMPLOYEE STOCK OPTION (ESOP) SCHEME
Pursuant to the approval accorded by the shareholders on
3 January, 2017 the nomination and remuneration committee had
formulated an employee stock option scheme 2016 (ESOP 2016).
During the year, the company made grants aggregating to 21,03,500
options to 242 employees. The total number of options issued as on 31 March, 2023 under
ESOP 2016 scheme is at 54,03,455.
The scheme is in compliance with Securities and Exchange Board of India
(Share Based Employee Benefits) Regulations, 2014 (SEBI (SBEB) Regulations) and the
Companies Act, 2013 (the Act).
The certificate from secretarial auditor M/s. R. Sridharan &
Associates, company secretaries confirming implementation of ESOP 2016 scheme in
accordance with the SEBI (SBEB) Regulations and shareholders resolutions has been obtained
and will be available for inspection of the shareholders at the ensuing annual general
meeting (AGM). The details of the scheme as on 31 March, 2023 are disclosed on the website
of the company. ( weblink : https://cholamandalam.com/files/esop_scheme_chola)
DIRECTORS
Re-appointment
Mr. M A M Arunachalam, director who retires by rotation at the ensuing
AGM and being eligible, has offered himself for reappointment and is recommended to the
shareholders for approval. Mr. N Ramesh Rajan and Mr. Rohan Verma, independent directors
complete their first term of 5 years on 29 October, 2023 and 28 March, 2024 respectively
and being eligible have offered themselves for re-appointment for a second term of 5 years
and are recommended to the shareholders for approval.
Retirement / Resignation
Mr. Ashok Kumar Barat, independent director retired from the board with
effect from the close of business hours of 30 October, 2022, upon completion of his
five-year term. Mr. Bharath Vasudevan, independent director resigned from the board with
effect from the close of business hours of 31 March, 2023 to comply with his new
employment terms. The disclosure relating to his resignation is available on the
Company's website at https://cholamandalam.
com/files/resignation_of_independent_director
ThecompanyhasreceivedconfirmationfromMr.BharathVasudevan that there are
no other material reasons for his resignation other than what has been stated in the
resignation letter.
The board places on record its deep appreciation for the guidance and
significant contributions made by Mr. Ashok Kumar Barat and Mr. Bharat Vasudevan during
their tenure on the Board and as members of various committees.
DECLARATION FROM INDEPENDENT DIRECTORS
All the independent directors (IDs) have submitted their declaration of
independence, as required pursuant to section 149(7) of the Act, confirming that they meet
the criteria of independence as provided in section 149(6) of the Act. In the opinion of
the board, the IDs fulfil the conditions specified in the Act and the rules made there
under for appointment as IDs including integrity, expertise and experience and confirm
that they are independent of the management. All the IDs of the company have registered
their names with the data bank of IDs and are in the process of completion of online
pro_ciency self-assessment test as per the timeline notified by the Ministry of Corporate
Affairs (MCA).
KEY MANAGERIAL PERSONNEL
Pursuant to the provisions of section 203 of the Act read with the
rules made there under, the following employees are the whole time key managerial
personnel of the company during FY 23: a) Mr. Ravindra Kumar Kundu, Executive Director b)
Mr. D. Arulselvan, Chief Financial Officer and c) Ms. P. Sujatha, Company Secretary
DIRECTORS' RESPONSIBILITY STATEMENT
The directors' responsibility statement as required under section
134(5) of the Act, reporting the compliance with accounting standards, is attached and
forms part of the board's report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
There are no significant and material orders passed by the regulators
or courts or tribunals which would impact the going concern status of the company and its
future operations.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF
THE COMPANY
There are no significant material changes and commitments affecting the
financial position of the company that occurred between the end of financial year and the
date of this report.
MANAGEMENT DISCUSSION AND ANALYSIS
Themanagementdiscussionandanalysisreport(MDA),highlighting the
business-wise details are attached and forms part of this report. MDA also contains the
details of the risk management framework of the company including the development and
implementation of risk management policy and the key risks faced by the company.
CORPORATE GOVERNANCE REPORT
A report on corporate governance as per the Listing Regulations is
attached and forms part of this report. The report also contains the details as required
to be provided on the composition and category of directors, number of meetings of the
board, composition of the various committees, annual board evaluation, remuneration
policy, criteria for board nomination and senior management appointment, whistle blower
policy / vigil mechanism, disclosure of relationships between directors inter-se, state of
company's affairs, etc. The executive director and the chief financial officer have
submitted a compliance certificate to the board regarding the financial statements and
other matters as required under regulation 17(8) of the Listing Regulations.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
The company being in top 1000 listed entities based on market
capitalization, in terms of Regulation 34(2)(f) of SEBI Listing Regulations read with SEBI
circular dated May 10, 2021, a business responsibility and sustainability report is
attached and forms part of this report.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements have been prepared in accordance
with the Act and the relevant accounting standards and forms part of this annual report.
AUDITORS
M/s. Price Waterhouse LLP, and M/s. Sundaram & Srinivasan,
chartered accountants are the joint statutory auditors of the company. They were appointed
as joint statutory auditors at the 43rd AGM held on 30 July, 2021 for a
period of three years commencing from the conclusion of 43rd AGM till the
conclusion of 46th AGM. The statutory audit report is attached with financial
statements and forms part of this report and does not contain any qualification,
reservation or adverse remarks.
SECRETARIAL AUDIT
Pursuant to the provisions of the Act and the rules framed there under,
M/s. R. Sridharan & Associates, company secretaries had undertaken a secretarial audit
of the company for FY 23. The secretarial audit report is attached and forms part of this
report and does not contain any qualification, reservation, or adverse remarks.
COST RECORD AND COST AUDIT
Maintenance of cost records and requirements of cost audit as
prescribed under the provisions of section 148(1) of the Act is not applicable for the
business activities carried out by the company.
ANNUAL RETURN
In accordance with sections 134(3)(a) and 92(3) of the Act, the annual
return in form MGT-7 is placed on the website of the company and is available on the
weblink: https://cholamandalam.com/files/annual-return-fy-2022-2023.
CORPORATE SOCIAL RESPONSIBILITY
The Murugappa group is known for its tradition of philanthropy and
community service. The group's philosophy is to reach out to the community by
establishing service-oriented philanthropic institutions in the field of education and
healthcare as the core focus areas. The company upholds the group's tradition by
earmarking a part of its income for carrying out its social responsibilities.
The company has been carrying out corporate social responsibility (CSR)
activities for many years even before it was mandated under the Act. The company has in
place a CSR policy. The policy along with composition of CSR committee and projects
approved by the board are available on the website of the company. (Weblink: https://cholamandalam.com/files/csr_policy).
As per the provisions of the Act, the company is required to spend at
least 2% of the average net profits of the company made during the three immediately
preceding financial years. This amount aggregated to Rs. 43.43 crores and the company had
spent a marginally higher amount of Rs. 43.63 crores towards CSR activities during
FY 23, the details of which are annexed to and forms part of this report.
INTERNAL FINANCIAL CONTROLS
Internal control framework including clear delegation of authority and
standard operating procedures are established and laid out across all businesses and
functions. The framework is reviewed periodically at all levels. The risk and control
matrices are reviewed on a quarterly basis and control measures are tested and documented.
These measures have helped in ensuring the adequacy of internal financial controls
commensurate with the scale of operations of the company. The internal financial controls
with reference to the financial statements were tested and reported adequate.
RELATED PARTY TRANSACTIONS
The company has in place a policy on related party transactions as
approved by the board and the same is available on the website of the company (weblink:
https://cholamandalam.com/files/policy_on_ related_partyfitransactions).
All transactions with related parties that were entered into during the
financial year were in the ordinary course of business and were on an arm's length
basis. There were no materially significant transactions with promoters, directors, key
managerial personnel or other designated persons which may have a potential conflict with
the interest of the company at large. There were no contracts or arrangements entered into
with related parties during the year to be disclosed under sections 188(1) and 134(h) of
the Act in form AOC-2. All proposed transactions with related parties were placed before
the audit committee for prior approval at the beginning of the financial year/quarter.
Omnibus approval for transactions that cannot be foreseen or envisaged were obtained as
permitted under the applicable laws and the thresholds are periodically reviewed. The
transactions entered into pursuant to the approval so granted were placed before
the audit committee for its review on a quarterly basis.
INFORMATION AS PER SECTION 134(3)(m) OF THE ACT
During the year under review, the company had no major impact on
account of conservation of energy or technology absorption. Foreign currency expenditure /
remittances amounting to
Rs. 1,725.48 crores towards repayment of overseas borrowing and
interest, software license fees and other professional charges were incurred during the
year under review. The company does not have any foreign exchange earnings.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Being an NBFC, the disclosures regarding particulars of loans given,
guarantees given and security provided is exempted under the provisions of section 186(11)
of the Act. With regard to investments made by the company, the details of the same are
provided under Note 10 in standalone financial statements and Note 12 in consolidated
financial statements of the company for the year ended 31 March, 2023.
DISCLOSURE OF REMUNERATION
The disclosure with respect to remuneration as required under section
197 of the Act read with rule 5 of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 is attached and forms part of this report.
PARTICULARS OF EMPLOYEES
In accordance with section 136 of the Act, the financial statements are
being sent to the members and others entitled thereto. The statement prescribed under rule
5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 is available for inspection of the shareholders at the ensuing annual general
meeting (AGM). If any member is interested in obtaining a copy, such member may send an
e-mail to the company secretary in this regard.
COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETINGS
The company has complied with all the provisions of secretarial
standards issued by the Institute of Company Secretaries of India in respect of meetings
of the board of directors and general meetings held during the year.
INTERNAL COMPLAINTS COMMITTEE
The company has in place a policy for prevention of sexual harassment
in line with the requirements of the Sexual Harassment of Women at the Workplace
(Prevention, Prohibition and Redressal) Act, 2013 (POSH Act). The company has complied
with the provisions relating to constitution of internal complaints committee (ICC) under
the POSH Act. ICC has been set up to redress complaints received regarding sexual
harassment. All employees including contract workers, probationer, trainee, apprentice or
any person so employed at the workplace called by any other such name are covered under
this policy. During the year, the company conducted workshops for employees creating
awareness about POSH Act. During the calendar year ended 31 December, 2022 there were no
referrals received by ICC.
OTHER DISCLOSURES
There was no fraud reported by auditors of the company as given under
Section 143(12) of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules,
2014. During the year ended 31 March, 2023, the company had not made any application under
the Insolvency and Bankruptcy Code, 2016 ("the Code"). As at 31 March, 2023,
total number of applications filed and pending under the Code are 10 cases amounting to
Rs. 49.65 crores. No proceeding is pending against the company under
the Code. During the year, the company had not made any one-time settlement with banks or
financial institutions.
HIGHLIGHTS OF PERFORMANCE OF SUBSIDIARIES / ASSOCIATES AND JOINT
VENTURES
CHOLAMANDALAM SECURITIES LIMITED (CSEC)
In FY 23, CSEC focused on (i) emerging as an integrated financial
services player through Chola's trusted brand and deep-rooted reach across India by
leveraging the Chola ecosystem (ii) creating customer journeys and technology enabled
platforms for both sales assisted and direct to customer for onboarding, equity trading
and mutual fund transactions (iii) expanded presence across the 4 zones to leverage on
Chola ecosystem. CSEC achieved a gross income of Rs. 51.54 crores for the year ended 31
March, 2023 and made a PBT of Rs. 8.68 crores as against a PBT of Rs. 7.48 crores in the
previous year. The mutual fund AUM was at Rs. 791 crores. CSEC did not declare any
dividend during the year.
CHOLAMANDALAM HOME FINANCE LIMITED (CHFL)
CHFL recorded a gross income of Rs. 81.87 crores for the year ended
31 March, 2023 and made a profit before tax of Rs. 7.66 crores as
against profit of Rs. 9.19 crores in the previous year. CHFL did not declare any dividend
during the year. The company continues its focus on insurance corporate agency business.
WHITE DATA SYSTEMS INDIA PRIVATE LIMITED (WDSI)
WDSI recorded a gross income of Rs. 5.26 crores for the year ended 31
March, 2023 and made a loss of Rs. 5.41 crores as against a loss of Rs. 0.24 crores in the
previous year. WDSI did not declare any dividend during the year.
During the year, the company had entered into a Share Swap Agreement
with TVS Supply Chain Solutions Limited (TVSSCSL) for sale of 12,75,917 equity shares
constituting 30.87% of the equity shares held by the company in WDSI to TVSSCSL at a price
of _ 315.34 per share. As consideration for sale of WDSI shares, the company was issued
22,35,265 compulsory convertible preference shares of TVSSCSL with a face value of _ 1
each with a yield of 0.0001% at an issue price of _ 180 per share (with a conversion ratio
of 1:1 where each compulsorily convertible preference share will convert into one equity
share of _ 1 each of TVSSCSL) through preferential allotment via private placement. The
transaction was completed on 20 April, 2023 and consequently WDSI ceased to be an
associate of the company.
VISHVAKARMA PAYMENTS PRIVATE LIMITED (VPPL)
The company forms part of the consortium for retail payments
Vishvakarma Payments Private Limited (VPPL) that had applied for a New Umbrella Entity
(NUE) License for retail payments with Reserve Bank of India in the year March 2021. The
company holds 21% of equity share capital of VPPL. The application is pending for
approval.
PAYSWIFF TECHNOLOGIES PRIVATE LIMITED (PTPL)
PTPL recorded a gross consolidated income of Rs. 230.27 crores for the
year ended 31 March, 2023 and made a loss of Rs. 12.03 crores as against a loss of Rs.
42.51 crores in the previous year. The company made an additional investment of Rs. 6.81
crores during the year and holds 74.80% of the equity share capital of PTPL.
ACKNOWLEDGEMENT
The directors wish to thank the company's customers, vehicle
manufacturers, vehicle dealers, channel partners, banks, mutual funds, other lenders,
rating agencies and shareholders for their continued support. The directors also thank the
employees of the company for their contribution to the company's operations during
the year under review.
|
On behalf of the board |
Place : Chennai |
Vellayan Subbiah |
Date : 3 May, 2023 |
Chairman |