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நிறுவன பெயரின் முதல் சில எழுத்துக்களை நிரப்பி 'கோ' பட்டனை கிளிக் செய்யவும்

Shriram Finance Ltd.-இன் இயக்குநர் அறிக்கை

Mar 31, 2023

Your Directors have pleasure in presenting their Forty-Fourth Annual Report and the Audited Statements of Accounts for the Financial Year ended March 31, 2023.

COMPOSITE SCHEME OF ARRANGEMENT AND AMALGAMATION

The Board of Directors in its meeting held on December 13, 2021 approved a Composite Scheme of Arrangement and Amalgamation (âScheme of Arrangement and Amalgamationâ), inter-alia, involving amalgamation of (i) Remaining undertaking of Shriram Capital Limited (SCL) after de-merger of a few undertakings from the said SCL with the Company and (ii) Shriram City Union Finance Limited (SCUF) with the Company, under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 (âthe Actâ). The Members of the Company and Secured Creditors and Unsecured Creditors of the Company in their respective meetings held on July 04, 2022 approved the Scheme of Arrangement and Amalgamation with overwhelming majority. The Honâble National Company Law Tribunal, Special Bench - II, Chennai vide its Common Order dated November 14, 2022 read with corrigendum dated November 17, 2022 to the Common Order sanctioned the Scheme of Arrangement and Amalgamation. The Appointed Date of the Scheme of Arrangement and Amalgamation is April 01, 2022.

In order to reflect the diversified business profile of the Company consequent upon coming into effect of the

Scheme of Arrangement and Amalgamation which has been expanded beyond financing of transportation vehicles, the name of the Company has been changed from âShriram Transport Finance Company Limitedâ to âShriram Finance Limitedâ with effect from November 30, 2022, pursuant to Clause 6.9 of the Scheme of Arrangement and Amalgamation and âCertificate of Incorporation pursuant to change of nameâ issued by the Registrar of Companies, Chennai.

Post coming into effect of the Scheme of Arrangement and Amalgamation, your Companyâs nature of business continues to offer retail suite of financial products to customers with focus on serving the financially underbanked and underserved customer segments in India. Your Companyâs asset-based product offerings now include: (i) financing pre-owned and new commercial vehicles, commercial passenger vehicles, construction equipment, multi-utility vehicles, tractors, two and three-wheelers and tractors & farm equipment to FirstTime Buyers (FTBs) and Small Road Transport Operators (SRTOs) (ii) financing to MSME customers typically consisting of self-employed professionals, wholesale and retail dealers, merchants, builders, small and medium scale manufacturing concerns and service providers; (iii) gold loans primarily to individuals who own gold jewellery, but do not have access to formal credit within a reasonable time or to whom credit may not be available at all to meet their short-term requirements; and (iv) personal loans to customer segments that do not have easy access to banks or other modes of financing for immediate short or medium-term funding requirements.

FINANCIAL HIGHLIGHTS

Upon coming into effect of the Scheme of Arrangement and Amalgamation and the Appointed Date being April 01, 2022, the financial performance figures contained in the financial statements for the year ended March 31, 2023 are not comparable with the financial performance figures for the previous year ended March 31, 2022.

(Rs. in crores)
Particulars	F.Y. 2022-23	F.Y. 2021-22
Profit Before Depreciation And Taxation	8,709.07	3,684.62
Less: Depreciation, amortisation and impairment	524.18	135.37
Profit Before Tax	8,184.89	3,549.25
Less: Provision for taxation	2,205.55	841.32
Profit After Tax	5,979.34	2,707.93

(Rs. in crores)
Particulars	F.Y. 2022-23	F.Y. 2021-22
Add: Balance brought forward from previous year	12,193.92	10,384.13
Balance available for appropriation	18,173.26	13,092.06
Appropriations
General reserve	(597.94)	(270.80)
Statutory reserve	(1,195.87)	(541.59)
Debenture redemption reserve	(111.85)	614.13
Dividend on equity shares of Rs.10/- each	(561.64)	(699.88)
Effects of Business Combination	(83.65)	-
Amount transferred from share option outstanding on account of forfeiture of share options	(0.90)	-
Balance carried to Balance Sheet	15,623.21	12,193.92

CREDIT RATING

The credit rating of the securities/ instruments/ loans, credit facilities and other borrowings of the Company as on March 31, 2023 was as follows:

Name of Rating Agency	Securities / Instruments/ Loans, Credit Facilities and other Borrowings	Ratings
CRISIL	Bank Loan Long Term	CRISIL AA /Stable
	Bank Loan Short Term	CRISIL A1
	Long Term Principal Protected Market Linked Debentures	CRISIL PPMLD AA /Stable
	Non-Convertible Debentures	CRISIL AA / Stable
	Subordinated Debt	CRISIL AA /Stable
	Commercial Paper	CRISIL A1
India Ratings & Research Private Limited	Non-Convertible Debentures	IND AA / Stable
	Dual Recourse Bond	IND AAA (CE)/Stable
	Subordinated Debt	IND AA /Stable
	Commercial Paper	IND A1
	Term deposits	IND AA / Stable
	Bank Loans	IND AA / Stable
	Principal protected market link debentures	IND PP-MLD AA /Stable
CARE	Non-Convertible Debentures	CARE AA /Stable
	Subordinated Debt	CARE AA / Stable
	Commercial Paper	CARE A1
ICRA	Fixed Deposit	[ICRA] AA (Stable)
	Non-Convertible Debentures	[ICRA] AA (Stable)

Name of Rating Agency	Securities / Instruments/ Loans, Credit Facilities and other Borrowings	Ratings
Standard & Poorâs Ratings	Long-Term Issuer Credit Rating	BB-/ Stable
	Short-Term Issuer Credit Rating	B
	U.S. Dollar Senior Secured Notes	BB-
	Offshore Rupee Denominated Bond (Masala Bonds)	BB-
Fitch Ratings	Long-Term Issuer Default Rating	BB/ Stable Outlook
	Short-Term Issuer Default Rating	B
	U. S. Dollar Senior secured Notes	BB
	Local Currency Long Term Issuer Default Rating	BB/ Stable Outlook
	Offshore Rupee Denominated Bond (Masala Bonds)	BB

DIVIDEND

Your Directors have declared interim dividend on the increased issued capital of the Company viz. 37,44,27,276 equity shares of face value of Rs.10/- each fully paid-up, resulting from issue of 17,43,44,710 new equity shares pursuant to the Scheme of Arrangement and Amalgamation to the eligible shareholders of the Amalgamating Companies viz. SCL and SCUF. The interim dividend was declared by the Board of Directors at its meeting held on December 24, 2022 @ Rs.15/- per equity share (i.e.150%) aggregating to Rs.5,616,409,140/- (gross) subject to deduction of tax at source as per the applicable rate(s) to the eligible shareholders for the Financial Year 2022-23. The interim dividend to the eligible shareholders was paid on January 13, 2023.

The Board of Directors in its meeting held on April 27, 2023 has recommended a final dividend of Rs.20/- per equity share of face value of Rs.10/- each fully paid up i.e. 200% for the Financial Year 2022-23, subject to approval by Members in the ensuing 44^th Annual General Meeting (44^th AGM) of the Company.

Thus, the total dividend (including interim dividend paid) for the Financial Year 2022-23, if approved by the members, shall be Rs.35/- per equity share (i.e.350%) as against the total dividend of i.e. Rs.20/- per equity share (i.e. 200%) for the Financial Year 2021-22.

As stipulated in Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, (âListing Regulationsâ) the Dividend Distribution Policy forms part of the Corporate Governance Report and is also available on the website of the Company at https://tinyurl.com/5f4km2pm

TRANSFER TO RESERVES

The amounts proposed to be transferred to General Reserve, Statutory Reserve and Debenture Redemption Reserve are mentioned in the Financial Highlights under the heading âAppropriationsâ.

CAPITAL ADEQUACY RATIO

Your Companyâs total Capital Adequacy Ratio (CAR), as on March 31, 2023 stood at 22.61% as compared to 22.97% as on March 31, 2022 of the aggregate risk weighted assets on balance sheet and risk adjusted value of the off-balance sheet items, which is well above the regulatory requirement of minimum 15%.

The Tier 1 ratio as on March 31, 2023 improved to 21.20% as against 20.70% as on March 31, 2022. Your Companyâs overall gearing (Debt/Tangible Net-worth) as on March 31, 2023 improved to 4.20x as against 4.67x as on March 31, 2022.

The Tier 2 ratio as on March 31, 2023 was 1.41% as against 2.27% as on March 31, 2022.

OPERATIONS AND COMPANYâS PERFORMANCE

For the Financial Year ended March 31, 2023, your Company earned Profit Before Tax of Rs.8,184.89 crores as against Rs.3,549.25 crores in the previous Financial Year ended March 31, 2022. The Profit After Tax for the Financial Year ended March 31, 2023 was Rs. 5,979.34 crores as against Rs. 2,707.93 crores in the previous Financial Year. The total income for the year under consideration was Rs. 29,802.89 crores and total expenditure was Rs. 21,618 crores. The detailed analysis of income and expenditure and financial ratios is made in the Management Discussion and Analysis Report forming part of the Annual Report.

Mobilisation of funds during the year under review from following sources/ instruments was as under:			(Rs. in crores)
Sr. No.	Particulars	F.Y. 2022-23	F.Y. 2021-22
1	Non-Convertible Debentures - Institutional	7,961.70	8,800.00
2	Term loan/cash credit from Banks	36,136.96	25,210.41
3	Term Loans from Financial Institutions/ Corporates	3,100.00	3,200.00
4	Commercial Papers	-	4,325.00
5	Fixed Deposits	16,360.88	11,273.18
6	Inter Corporate Deposits	24.61	99.43
7	External Commercial Borrowings (Loans)	5,424.68	187.35
8	U.S. Dollar Senior Secured Notes	1,233.00	3,512.86
9	Subordinated Debts	165.00	-

The total Assets Under Management stood at Rs. 185,682.86 crores. During the Financial Year 2022-23, the Company securitised its assets worth Rs. 16,965.25 crores (accounting for 9.14% of the total assets under management as on March 31, 2023). With securitisation, the Company ensures better borrowing profile, leading to lower interest liability owing to its lending to priority sector. The outstanding direct assigned portfolio stood at Rs. 2,344.44 crores as on March 31, 2023. The Company had 2,922 Branches and other offices across India as on March 31, 2023.

The Companyâs prudent liquidity management techniques and strategy of maintaining adequate liquidity buffer throughout the Financial Year 2022-23 not only ensured seamless lending for our business operations but also ensured meeting our liabilities on time, thereby further strengthening the trust and confidence reposed on us by our creditors, fixed deposit holders and security holders. This is evident from the success of our fund raising programme implemented during

the year under review from domestic as well as international market.

CAPITAL STRUCTURE Share Capital

Pursuant to the Scheme of Arrangement and Amalgamation coming into effect, the Authorised Share Capital of your Company has increased from Rs. 15,970,000,000 divided into 647,000,000 Equity Shares of face value of Rs.10/-each and 95,000,000 preference shares of Rs.100/- each to Rs.42,655,000,000 divided into 2,975,500,000 Equity Shares of face value of Rs.10/- each and 129,000,000 preference shares of Rs.100/- each.

The Board of Directors in its meeting held on December 12, 2022 allotted 17,43,44,710 Equity Shares of face value of Rs.10/- each to the shareholders of erstwhile SCUF and erstwhile SCL as per the following details:

Name of the transferor company	Number of Equity Shares held as on Record Date i.e. November 30, 2022	Share Exchange Ratio as per the Scheme of Arrangement and Amalgamation	Number of new Equity Shares of face value of Rs.10/- each of the Company, fully paid-up allotted
SCUF	4,46,65,546 (excluding 2,23,71,594 Equity Shares held by SCL in SCUF out of total 6,70,37,140 Equity Shares)	for every 100 equity shares of Rs.10/- each fully paid up of SCUF, 155 equity shares of Rs.10/- each fully paid up of the Company	6,92,31,596
SCL	107,44,13,131	for every 10,00,00,000 Equity Shares of Rs. l/- each fully paid up of SCL, 97,83,305 Equity Shares of Rs.10/-each fully paid up of the Company	10,51,13,114
TOTAL			17,43,44,710

Consequent to the above allotment of new Equity Shares and cancellation of 7,04,37,147 Equity Shares held by erstwhile SCL in the Company, the paid-up Share Capital of the Company stood increased from Rs.270,51,97,130/-(27,05,19,713 Equity Shares of Rs.10/- each fully paid-up) to Rs.374,42,72,760/- (37,44,27,276 Equity Shares of Rs.10/-each fully paid-up).

No Equity Shares were issued with differential rights as to dividend, voting or otherwise.

The Company has not resorted to any buy back of its Equity Shares during the year under review.

None of the Directors of the Company holds instruments convertible into Equity Shares of the Company.

No equity shares (including sweat equity shares) were issued to employees of the Company during the Financial Year 2022-23, under any scheme.

Shriram Finance Limited Employee Stock Option Scheme 2023 (No.1)

Consequent to amalgamation of erstwhile SCUF with the Company, all employees in the service of erstwhile SCUF were transferred to and became employees of the Company without interruption of their service and on the terms and conditions no less favourable than those on which they were engaged by erstwhile SCUF. The eligible employees of erstwhile SCUF were granted stock options under employee stock option plan of erstwhile SCUF titled Shriram City Union Finance Limited Employee Stock Option Scheme 2013 (SCUF ESOS 2013). As an integral part of the Scheme of Arrangement and Amalgamation and in order to continue the stock option benefits of the eligible employees of erstwhile SCUF, the Board of Directors of the Company in its meeting held on March 15, 2023 approved âShriram Finance Limited Employee Stock Option Scheme 2023 (No.1)â or âSFL ESOS 2023 (No.1)â created in lieu of SCUF ESOS 2013. The Nomination and Remuneration Committee of the Company in its meeting held on April 26, 2023 (i) granted 21,26,875 Fresh Options under SFL ESOS 2023 (No.1) to the eligible employees in lieu of 13,71,779 unvested and unexercised stock options under the SCUF ESOS 2013 and (ii) vested 20,82,059 Fresh Options out of 21,26,875 Fresh Options granted under SFL ESOS 2023 (No.1) to the eligible employees taking into account the share exchange ratio as provided for in the Scheme of Arrangement and Amalgamation to restore the value of the stock options post amalgamation of erstwhile SCUF with the Company in the

manner provided in terms of clause 3.35.17 of the Scheme of Arrangement and Amalgamation.

The SFL ESOS 2023 (No.1) is in line with the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (âSBEB & SE Regulationsâ). Disclosure pursuant to the provisions of Regulation 14 of the SBEB & SE Regulations as at March 31, 2023 is annexed as Annexure-I. The same is also hosted on the website of the Company at https://www.shriramfinance.in/investors/ financials.

Non-Convertible Debentures

During the year under review, the Company has raised Rs. 7,961.70 crores through issuance of privately placed Listed, Secured, Redeemable, Non-Convertible Debentures. The proceeds of the issue have been utilised for financing of commercial vehicles, small enterprise finance segment, two wheelers, gold, auto loans, personal loans, refinancing of existing debt and other general purposes of the Company.

Subordinated Debts

During the year under review, the Company has raised Rs. 165.00 crores through issuance of subordinated, unsecured, rated, listed, privately placed, redeemable Non-convertible Debentures in the form of subordinated debt for inclusion as Tier II Capital.

External Commercial Borrowings (Senior Secured Notes & Loans)

Commitment towards socio-economic advancement is at the core of the Companyâs business. Your Company is primarily engaged in providing financial assistance to FTBs and SRTOs by offering affordable finance on pre-owned commercial vehicles who typically do not qualify for financial assistance from organised sources due to the lack of stable income. Your Company also provides financial services for the underbanked and under-served individuals, communities and micro, small and medium enterprises (MSMEs) that struggle to access conventional financial services in India. Considering the additional financing avenue, the Company had updated the Social Finance Framework in December 2022 for issuance of Social Bonds and/or availing Loans to finance or refinance a portfolio of new and/or existing Eligible Social Projects to promote sustainability. In the past the Company availed loans from various international agencies including Asian Development Bank (ADB), US Development Finance Corporation (DFC), MUFG International Financial Corporation, Proparco, OeEB etc. The Companyâs Social Finance Framework meets the criteria and guidelines

for the allocation of proceeds of the Social Bonds as per International Capital Market Association (âICMAâ) Social Bond Principles 2021 (âSBPâ) and Social Loan Principles 2021 (âSLPâ). More details in this regard are available in the ESG Report forming part of the Annual Report. The Social Finance Framework is available on the Companyâs website at: https://tinyurl.com/ycxjjh8f

During the year, the Company availed Loans of USD 675 Million under the Companyâs Social Finance framework.

On March 29, 2023, the Company issued USD 150,000,000 Senior Secured Floating Rate Notes due 2026 (Social Bonds) equivalent to Rs.12,326,445,000/- under the USD 3,500,000,000 Global Medium Term Note Programme through updated Offering Circular dated March 23, 2023 to the eligible investors outside United States under Regulation S of the U.S. Securities Act, 1933. The said Social Bonds are listed on the India International Exchange (IFSC) Limited (âIndia INXâ).

The proceeds of Loans and Senior Secured Notes issued have been utilised by the Company to finance investments in Eligible Social Projects in accordance with International Capital Market Association Social Bond Principles 2021 and Social Loan Principles 2021 as permitted by the ECB Guidelines.

All External Commercial Borrowings are fully hedged to mitigate risk of exchange rate volatility.

FIXED DEPOSITS

The mobilisation of funds of the Company is broad-based through diversified sources. The fixed deposits mobilisation during the Financial Year ended March 31, 2023 continues to be encouraging on account of popularity of the Companyâs Fixed Deposit Schemes due to its long track record of offering better return and safety of investment and giving good services to fixed deposit holders.

During the Financial Year ended March 31, 2023, the Companyâs fund mobilisation from fixed deposits was higher at Rs. 16,360.88 crores as against Rs.11,273.18 crores in the Financial Year ended March 31, 2022. As on March 31, 2023, there were 9,275 fixed deposits aggregating to Rs.134.21 crores that have matured but remained unclaimed. There were no deposits, which were claimed but not paid by the Company. The unclaimed deposits have since reduced to 6,424 deposits amounting to Rs.74.67 crores. Appropriate steps are being taken continuously to obtain the depositorsâ

instructions so as to ensure renewal/ repayment of the matured deposits in time.

In accordance with the Master Direction - Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016, the Company has created a floating charge on the statutory liquid assets comprising of investment in government securities (face value) to the extent of Rs.5,346.44 crores in favour of trustees on behalf of the public deposit holders of the Company.

DIRECTORS AND KEY MANAGERIAL PERSONNEL Appointment of Directors

The Board of Directors based on the recommendation of the Nomination and Remuneration Committee and in terms of Article 21 of the Articles of Association of the Company and Section 161(1) of the Act in its meeting held on December 04, 2022 appointed Mr. Jugal Kishore Mohapatra (DIN 03190289) and Mrs. Maya S. Sinha (DIN 03056226) as Additional Directors of the Company, in the category of Non-executive Independent Directors, not liable to retirement by rotation, for a term of 3 (three) consecutive years and 2 (two) consecutive years respectively with effect from December 04, 2022, subject to approval of Members of the Company. On February 21, 2023, the Members of the Company passed the Special Resolutions through Postal Ballot for the appointment of Mr. Jugal Kishore Mohapatra (DIN 03190289) and Mrs. Maya S. Sinha (DIN 03056226) as Independent Directors of the Company.

Mr. Y. S. Chakravarti, was Managing Director & CEO of erstwhile SCUF. He also held directorship of the Company in the capacity of non-executive, non-independent director from December 13, 2021. The Board of Directors in its meeting held on December 04, 2022 appointed Mr. Y. S. Chakravarti (DIN 00052308) as Managing Director & CEO of the Company from December 05, 2022, subject to approval of the Members of the Company. On February 21, 2023, the Members of the Company passed the Ordinary Resolution through Postal Ballot for the appointment of Mr. Y. S. Chakravarti (DIN 00052308) as Managing Director & CEO of the Company and payment of remuneration to him w.e.f. December 05, 2022.

Change in designation of Director

The Board of Directors in its meeting held on December 04, 2022 re-designated Mr. Umesh Revankar (DIN 00141189) as Executive Vice Chairman of the Company. On February 21, 2023, the Members of the Company passed the Ordinary Resolutions through Postal Ballot for re-designation of

Mr. Umesh Revankar (DIN 00141189) as Executive Vice Chairman of the Company and for restructuring and revision of remuneration of Mr. Umesh Revankar w.e.f. December 05, 2022.

Cessation of Directors

Mr. S. Lakshminarayanan (DIN 02808698), Independent Director and Chairman of the Board and Mrs. Kishori Udeshi (DIN 01344073), Independent Director resigned from directorship of the Company with effect from commencement of business hours on December 05, 2022. Mr. S. Lakshminarayanan was associated with the Company as director for more than 13 years from September 22, 2009, out of which he was Chairman of the Board for about 8 years. Mrs. Kishori Udeshi held directorship of the Company for more than 10 years from October 30, 2012. The Company and senior management was immensely benefited from their mature advice and guidance. The Board had expressed its sincere gratitude and placed on record its appreciation of their significant contribution during their tenure as Directors of the Company.

Retirement of director by rotation

Mr. D. V. Ravi (DIN 00171603), non-executive, nonindependent director of the Company will retire by rotation at the ensuing 44^th AGM and being eligible, offers himself for re-appointment. The Board of Directors in its meeting held on April 27, 2023 based on the recommendation of Nomination and Remuneration Committee recommended to the Members re-appointment of Mr. D. V. Ravi as a director of the Company retiring by rotation.

Mr. D. V. Ravi is the Vice Chairman and Managing Director of Shriram Capital Private Limited (formerly known as Shriram Financial Ventures (Chennai) Private Limited), Promoter of the Company. He has been part of the Shriram Group since 1992 and has an extensive experience and expertise in the financial services and insurance domains and has gained expertise in Corporate Strategies, Building Teams and creating Synergy, Mergers & Acquisitions, Risk Management, Corporate Finance, Leadership development and Technology initiatives. Your Company continues to immensely benefit from his guidance in strategic matters and expert knowledge and advice. His profile is given in the Notice of the ensuing 44^th AGM forming part of the Annual Report.

The Nomination and Remuneration Committee and the Board of Directors recommends to the Members passing of the ordinary resolution for re-appointment of Mr. D. V. Ravi as a director retiring by rotation.

Declaration by Independent Directors

Pursuant to the provisions of Section 149 of the Act the independent directors have submitted declarations that each of them meets the criteria of independence as provided in Section 149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of the Listing Regulations. There has been no change in the circumstances affecting their status as independent directors of the Company.

Policies on appointment of Directors and Remuneration

The management of the Company is immensely benefitted from the guidance, support and mature advice from members of the Board of Directors who are also members of various committees. The Board consists of directors possessing diverse skill, rich experience to enhance quality of its performance. The Company has adopted a Policy on Board Diversity formulated by the Nomination and Remuneration Committee. The Companyâs Remuneration Policy is framed for remuneration of Directors (Executive and Non-Executive), Key Managerial Personnel and Senior Management Personnel in line with the requirement of the Section 178 of the Act, Regulation 19 read with Part D of Schedule II of the Listing Regulations and Scale Based Regulation framework issued by the Reseve Bank of India (âRBIâ) and as per the Guidelines on Compensation of Key Managerial Personnel and Senior Management in NBFCs issued by RBI. These Policies are available on the Companyâs website at the weblink: https://tinyurl.com/ycxf4rnj and https://tinyurl.com/45y352cc. The Company has formulated policy on Succession Planning for Directors and Key Managerial Personnel for continuity and smooth functioning of the Company.

Number of Meetings of the Board

10 (Ten) Board Meetings were held during the Financial Year 2022-23. The details of the Board and various Committee meetings are given in the Corporate Governance Report.

Performance evaluation at Board and Independent Directorsâ Meetings

The Board, the Committees of the Board and independent directors continuously strive for efficient functioning of Board and its Committees and better corporate governance practices. A formal performance evaluation was carried out at the meeting of the Board of Directors held on March 15, 2023 where the Board made an annual evaluation of its own performance, the performance of directors individually as

well as the evaluation of the working of its various Committees for the Financial Year 2022-23 on the basis of a structured questionnaire on performance criteria. The Board expressed its satisfaction with the evaluation process. The observations made during the evaluation process were noted and based on the outcome of the evaluation and feedback of the Directors, the Board and the management agreed on various action points to be implemented in subsequent meetings.

The evaluation process endorsed cohesiveness amongst directors, the openness of the management in sharing the information with the Board and placing various proposals for the Boardâs consideration and approval.

The Independent Directors met on March 16, 2023 without the presence of other directors or members of Management. All the Independent Directors were present at the meeting. In the meeting, the Independent Directors reviewed performance of Non-Independent Directors, the Board as a whole and the Chairman. They assessed the quality, quantity and timeliness of flow of information between the Management of the Company and the Board. The Minutes of the Independent Directorsâ meeting were placed before the Board Meeting held on April 27, 2023 and the same were noted by the Board. The Independent Directors expressed satisfaction over the performance and effectiveness of the Board, individual Non Independent Directors and the Chairman.

They also expressed satisfaction with regard to the flow of information between the Management of the Company and the Board. The Management took note of various suggestions made in the meeting of Independent Directors.

The Independent Directors played active role in Board as well as Committee Meetings in which they are members. The members of the Audit Committee without the presence of members of Management had a separate meeting with the Joint Statutory Auditors which covered Audit issues in general and the framework and the process of Internal Audit in specific. The members of the Audit Committee without the presence of members of Management also had a separate meeting with credit rating agencies.

KEY MANAGERIAL PERSONNEL

Mr. Vivek Achwal, Company Secretary & Compliance Officer retired from services of the Company upon attaining the age of superannuation with effect from the close of business hours on August 31, 2022.

The Board of Directors in its meeting held on July 28, 2022 placed on record its appreciation of his performance,

knowledge, skills and commitment demonstrated by him during his tenure as Company Secretary & Compliance Officer of the Company and appointed Mr. U Balasundararao as Company Secretary & Compliance Officer of the Company on the recommendation of the Nomination and Remuneration Committee with effect from September 01, 2022.

The Nomination and Remuneration Committee periodically reviews career growth plan of senior management personnel who possess ability to build teams and nurture leaderships for future growth plans of the Company. The Board of Directors at its meeting held on December 04, 2022, on the recommendation of Nomination and Remuneration Committee, appointed/designated Mr. R. Chandrasekar, Joint Managing Director & Chief Compliance Officer, Mr. G M Jilani, Joint Managing Director, Mr. K. Srinivas, Joint Managing Director and Mr. Aseem Gandhi, Executive Director as Key Managerial Personnel of the Company pursuant to Section 2(51) of the Act in addition to the existing Key Managerial Personnel.

DIRECTORSâ RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) and Section 134(5) of the Act the Directors confirm that, to the best of their knowledge and belief:

a) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) That such accounting policies as mentioned in note 1 to 7 to the Standalone financial statements and note 1 to 8 to the Consolidated financial statements have been selected and applied consistently and judgments and estimates have been made 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, 2023 and of the profit of the Company for the year ended on that date;

c) That proper and sufficient care has 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;

d) The annual accounts have been prepared on a going concern basis;

e) The Company had followed the internal financial controls laid down by the directors and that such internal financial controls are adequate and were

operating effectively; and

f) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

RBI GUIDELINES

The Company continues to comply with the Master Direction for Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 and all the applicable laws, regulations, guidelines, etc. prescribed by RBI from time to time.

The Company has been identified for categorisation as NBFC-Upper Layer under Scale Based Regulation (SBR), a Revised Regulatory Framework for NBFCs as per the list issued by RBI in its Press Release 2022-2023/975 dated September 30, 2022. In compliance with the requirement of Scale Based Regulatory Framework read with Notification dated April 11, 2022 for Compliance Function and Role of Chief Compliance Officer (CCO) - NBFCs, the Company has appointed Mr. R. Chandrasekar, Joint Managing Director as Chief Compliance Officer of the Company for a period of 3(three) years with effect from December 04, 2022.

The Board of Directors have framed various policies as applicable to the Company including Risk based internal audit policy. The Board periodically reviews the policies and approves amendments as and when necessary.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

Pursuant to Regulation 34(2)(f) of the Listing Regulations, the Business Responsibility and Sustainability Report is annexed and forms part of the Annual Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The CSR Committee comprises of following directors namely, Mr. Umesh Revankar - Chairman, Mr. Pradeep Kumar Panja and Mr. Y. S. Chakravarti. The CSR Report for the Financial Year 2022-23 is annexed to this report as Annexure-II. The details of the ongoing CSR projects/ programmes/ activities are included in the CSR Report/section. The CSR Policy is uploaded on the Companyâs website at the web link: https://tinyurl.com/8uypxf76

ANNUAL RETURN

In accordance with the provisions of Section 92(3) of the Act, Annual Return in Form No. MGT-7 of the Company is hosted on website of the Company at https://tinyurl.com/4e2upet9.

DISCLOSURES AS PER THE SECTION 134 OF THE COMPANIES ACT, 2013 READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014

Conservation of Energy, Technical Absorption and Foreign Exchange Earnings and Outgo

The information pursuant to Section 134(3)(m) of the Act read with Companies (Accounts) Rules, 2014 is as follows:

a. The Company continues its initiatives for conservation of energy, the details of which are given in Business Responsibility and Sustainability Report. The Companyâs business operations do not involve any activity for technology absorption.

b. The Company earned Foreign Exchange Earnings of Rs. 1.17 crores.

c. Outgo under Foreign Exchange - Rs. 109.21 crores. Loans, guarantee or investments in securities

The loan made, guarantee given or security provided in the ordinary course of business by a NBFC registered with RBI are exempt from the applicability of the provisions of Section 186 of the Act. As such, the particulars of loans and guarantee have not been disclosed in this Report.

During the year under review, the Company has invested surplus funds in various securities in the ordinary course of business. For details of the investments of the Company, refer to Note 13 of the financial statements.

Contracts or Arrangements with Related Parties

All the related party transactions were entered into in the ordinary course of business on an armâs length basis. Hence, no disclosure in Form AOC-2 is necessary and the same does not form part of this report. For details of the transactions with related party entered into in the ordinary course of business on an armâs length basis, refer to Note 50 to the financial statements.

as approved by the Board is uploaded on the Companyâs website at the web link: https://tinyurl.com/zuwy4knp

There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. None of the Directors has any pecuniary relationship or transaction vis-a-vis the Company save and except the payment of sitting fees and commission paid to the Independent Directors, remuneration to Directors apart from transactions in the ordinary course of business and on armâs length basis at par with any member of general public. The Company did not advance any loans to any of its Directors. The details of the transactions with Related Parties are provided in the Note 50 to the Financial Statements.

Whistle Blower Policy/ Vigil Mechanism

The Companyâs Whistle Blower policy provides a mechanism under which an employee/director of the Company may report unethical behaviour, suspected or actual fraud, violation of code of conduct and personnel policies of the Company. The Vigil Mechanism ensures standards of professionalism, honesty, integrity and ethical behaviour. The Whistle Blower Policy/Vigil Mechanism is uploaded on the Companyâs website: https://tinyurl.com/hrtapv3s

Financial summary/highlights

Income for the Financial Year 2022-23 increased by 54.63% to Rs.29,802.89 crores as compared to Rs.19,274.23 crores in the previous Financial Year 2021-22;

Income from operations for the Financial Year 2022-23 was Rs.29,772.16 crores as compared to Rs.19,255.17 crores in the previous Financial Year 2021-22, a growth of 54.62%;

Profit before tax for the Financial Year 2022-23 was Rs.8,184.89 crores as compared to Rs.3,549.25 crores in the previous Financial Year 2021-22;

Profit after tax for the Financial Year 2022-23 was Rs.5,979.34 crores as compared to Rs.2,707.93 crores in the previous Financial Year 2021-22.

The overall disbursement during Financial Year 2022-23 stood at Rs.1,11,848.44 crores as compared to Rs. 61,808.60 crores in the previous Financial Year 2021-22.

Our interest income increased by 53.42% from Rs.18,646.26 crores for the year ended March 31, 2022 to Rs. 28,607.36 crores for the year ended March 31, 2023.

Finance costs increased by 28.88 % from Rs.9,734.31 crores for the year ended March 31, 2022 to Rs.12,545.76 crores for

the year ended March 31, 2023.

Other expenses increased from Rs.905.61 crores for the year ended March 31, 2022 to Rs.1,579.17 crores for the year ended March 31, 2023.

Our fees and commission expenses for the financial year 2022-23 was Rs.303.61 crores as compared to Rs.91.74 crores in FY 2021-22.

Risk Management and Internal Financial Control System

The Companyâs Risk Management Policy deals with identification, mitigation and management of risks across the organisation. This has been dealt with the Management Discussion and Analysis annexed to the Annual Report.

The Companyâs well-defined organisational structure, documented policy guidelines, defined authority matrix and internal financial controls ensure operational effectiveness, reliability of financial data and compliance with applicable laws, regulations and Companyâs policies.

The financial control framework includes internal controls, delegation of authority procedures, segregation of duties, system access controls and document filing and storage procedures. The Internal Auditor ensures the continued effectiveness of the Companyâs internal control system. The Audit Committee reviews internal financial control reports prepared by the internal auditor. The Company has framed risk based internal audit policy as part of its oversight function. The objective of risk based internal audit review is to identify the key activities and controls in the business processes, review effectiveness of business processes and controls, assess the operating effectiveness of internal controls and provide recommendations for business process and internal control improvement.

Composition of Audit Committee

The Audit Committee comprises of the following Independent Directors namely, Mr. S. Sridhar - Chairman, Mr. Pradeep Kumar Panja and Mrs. Maya S. Sinha.

Others

â¢ There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and companyâs operations in future. For other orders, please refer to Note 49 of the financial statement containing details of the contingent liabilities.

â¢ There was no fraud reported by the Statutory Auditors and the Secretarial Auditors of the Company under the Section 143(12) of the Act to the Audit Committee.

â¢ Your Company adopted ISO 27001 standards, practices its processes and upgrades its implementation on regular basis to maintain the information security as per the market trend. The Company is prepared to face emerging cyber threats such as Zero-day attacks, remote access threats and targeted threats. Your company has established disaster recovery centers and various security controls in place to mitigate risks, also safeguard the Company against security breaches and technological lapses located in different seismic zones, periodic upgrading of servers and data storage, adopting new technology for data management. On regular basis different type of system audits is conducted by the external and internal auditors. Board represented strategy committee governs the security policies and its implementation as per the Companyâs corporate governance process.

â¢ The Company has a policy for prevention of Sexual Harassment for Women at Workplace. An Internal Complaints Committee has been constituted in line with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (âPOSHâ). During the year under review, there were no cases filed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. On February 01, 2023, the Company had arranged an online orientation programme, for its Internal Committee Members under POSH Act, at PAN India Level, in order to make them proficient to discharge their duties. The training was attended by all the Internal Committee Members at PAN India. The Company has in place a Module on âPREVENTION OF SEXUAL HARASSMENT IN WORKPLACE (POSH) in - MyCoach E-Learning Platform, for sensitising the employees with the provisions under the POSH.

â¢ Disclosure regarding details relating to deposits covered under Chapter V of the Act is not applicable since our Company is a Non-Banking Financial Company regulated by RBI. The Company accepts deposits as per the Master Direction - Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016.

â¢ The Company has obtained a certificate from the statutory auditor certifying that the Company has complied with the requirements of the Regulation 9

of the Master Direction - Foreign Investment in India with regard to downstream investments.

â¢ The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings, General Meetings and Dividend.

â¢ The Company, in the capacity of Financial Creditor, has not filed any applications with National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016 during the Financial Year 2022-23 for recovery of outstanding loans against any customer being Corporate Debtor.

â¢ The details of difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof -Not Applicable

â¢ The provision of Section 148 of the Act relating to maintenance of cost records and cost audit are not applicable to the Company.

â¢ The Company has not defaulted in repayment of loans from banks and financial institutions. There were no delays or defaults in payment of interest/principal of any of its debt securities.

â¢ The equity shares of the Company were not suspended from trading during the year on account of corporate actions or otherwise.

â¢ Disclosures pursuant to RBI Master Directions, unless provided in the Directorsâ Report and Corporate Governance Report, form part of the notes to the standalone financial statements.

CONSOLIDATED FINANCIAL STATEMENTS

Consequent to the Scheme coming into effect, Shriram Housing Finance Limited, unlisted subsidiary of erstwhile SCUF became a subsidiary of the Company. Shriram Housing Finance Limited CIN - U65929TN2010PLC078004 (âSHFLâ) is a housing finance company registered with the National Housing Bank and regulated by RBI (Registration Number- 08.0094.11). The equity shares of SHFL are not listed on any stock exchange, but has its debt securities listed on BSE Limited. The primary operation of SHFL is providing loans for the purchase or construction of residential space and loans against property.

SHFL is not a material subsidiary within the meaning of the Listing Regulations. The Companyâs policy for determination of material subsidiary, as adopted by the Board of

Directors, in conformity with Regulation 16 of the Listing Regulations, can be accessed on the Companyâs website at https://tinyurl.com/tkn8vhbu

Provision of Regulation 24 of the Listing Regulations relating to subsidiary companies, to the extent applicable, have been duly complied with.

Mr. Y. S. Chakravarti, Managing Director & CEO of the Company is a Non-Executive, Non-Independent Director on the Board of SHFL.

SHFL has 131 branches as on March 31, 2023 across India. SHFL has 35,575 customers with loans in its portfolio as on March 31, 2023. The total employee strength of SHFL as on March 31, 2023 was 1,748. The CAGR of loan disbursement of SHFL over last five years was around 40% with total disbursement during the year being Rs.4,146 crores. The total borrowings of SHFL as on March 31, 2023 was Rs.6,296.06 crores out of which Rs.1,252.42 crores was by way of issuance of NCDs and the balance amount of Rs.5,043.64 crores was through borrowings from Banks, National Housing Bank, Financial Institutions and securitisation through banks & financial institutions.

Pursuant to Section 129 of the Act read with Rule 5 to the Companies (Accounts) Rules, 2014, the statement containing salient features of the financial statement of subsidiary and associate company in Form AOC-1 forms part of the Annual Report. The consolidated financial statements forming part of this Annual Report are prepared in compliance with the applicable Indian Accounting Standards and Listing Regulations. Pursuant to the provisions of Section 136 of the Act, the financial statements of the Company and its subsidiary (SHFL) are placed on the Companyâs website at https://www.shriramfinance.in/investors/financials.

The annual report and the annual accounts of SHFL shall be made available to the Members of the Company seeking such information. The annual accounts shall also be kept for inspection by the Members at the Registered Office of the Company and of SHFL. The Company shall furnish hard copy of details of accounts of SHFL to any shareholder on demand.

During the Financial Year 2022-23, there was no other entity which became or ceased to be subsidiary, joint venture or associate company of the Company.

PARTICULARS OF EMPLOYEES AND REMUNERATION

Disclosures required under the provisions of Section 197(12) ofthe Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, containing, inter-alia, the ratio of remuneration of directors to median remuneration of employees, percentage increase in the median remuneration, are annexed to this Report as Annexure-III.

Statement containing the particulars of top ten employees and the employees drawing remuneration in excess of limits prescribed under Section 197(12) of the Act read with Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is an annexure forming part of this Report. In terms of the proviso to Section 136(1) of the Act, the Report and Accounts are being sent to the Members excluding the aforesaid annexure. The said statement is available for inspection with the Company. Any Member interested in obtaining a copy of the same may write to the Company Secretary at [email protected]

The Managing Director & CEO of the Company as per the terms of his appointment, does not draw any commission or remuneration from SHFL, subsidiary company. Hence, no disclosure as required under section 197(14) of the Act has been made.

AUDITORS

In compliance with the RBI Guidelines on appointment of statutory auditor(s) by Non-Banking Financial Company (âNBFCâ) vide Circular RBI/2021-22/25 Ref. No. DoS. CD.ARG/SEC.01/08.91.001/2021-22 dated April 27, 2021 (âRBI Guidelinesâ) and pursuant to Section 139(8)(i) of the Act, the Members of the Company appointed M/s. Sundaram & Srinivasan Chartered Accountants, Chennai (ICAI Firm Registration No. 004207S) and KKC & Associates LLP, Mumbai (ICAI Firm Registration No. 105146W/ W-100621) as the Joint Statutory Auditors of the Company at the 43^rdAnnual General Meeting held on Thursday, June 23, 2022 to hold office from conclusion of 43^rd Annual General Meeting till the conclusion of 45^th Annual General Meeting of the Company to conduct the audit of accounts of the Company for the financial year ending March 31, 2023 and March 31, 2024 on such remuneration plus out of pocket expenses, if any, as may be mutually agreed upon between the Board of Directors of the Company and the said Joint Statutory Auditors. The Joint Statutory Auditors holds a valid peer review certificate as prescribed under Listing Regulations.

The Auditorsâ Report to the Members for the year under review is unmodified, i.e. it does not contain any qualification, reservation or adverse remark or disclaimer.

In terms of the RBI Master Directions - Non-Banking Financial Companies Auditorsâ Report (Reserve Bank) Directions, 2016, Joint Statutory Auditors have also submitted an additional report dated April 27, 2023, for the Financial Year 2022-23 which has been filed with RBI. There were no comments or adverse remarks in the said report as well.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 24A of the Listing Regulations, the Secretarial Audit Report in Form MR-3 for the Financial Year 2022-23 issued by SPNP & Associates, Practicing Company Secretaries (Peer Review No.: 1913/2022) is annexed to this report as Annexure-IV. The report does not contain any qualification, reservation or adverse remark.

CORPORATE GOVERNANCE

Pursuant to Schedule V of the Listing Regulations the following Reports/ Certificates form part of the Annual Report:

â¢ the Report on Corporate Governance;

â¢ the Certificate duly signed by the Managing Director & CEO and the Joint Managing Director & Chief Financial Officer on the Financial Statements of the Company for the year ended March 31, 2023 as submitted to the Board of Directors at its meeting held on April 27, 2023;

â¢ the declaration by the Managing Director & CEO regarding compliance by the Board members and senior management personnel with the Companyâs Code of Conduct; and

â¢ the Management Discussion & Analysis Report

The Auditorsâ Certificate on Corporate Governance is annexed to this report as Annexure-V.

ACKNOWLEDGEMENT

The Board of Directors would like to place on record their gratitude for the guidance and co-operation extended by RBI and the other regulatory authorities. The Board of Directors also thank the Shareholders, Secured Creditors and Unsecured Creditors for having approved the Scheme of Arrangement and Amalgamation with overwhelming majority. The Board takes this opportunity to express its sincere appreciation for the excellent patronage received from the Banks and Financial Institutions and for the continued enthusiasm, total commitment, dedicated efforts of the executives and employees of the Company at all levels. We are also deeply grateful for the continued confidence and faith reposed on us by all the Stakeholders including Shareholders, Depositors, Debenture holders and Debt holders.

For and on behalf of the Board of Directors Jugal Kishore Mohapatra

New Delhi Chairman

April 27, 2023 (DIN 03190289)

Mar 31, 2022

Your Directors have pleasure in presenting their Forty-Third Annual Report and the Audited Statements of Accounts for the financial year ended March 31, 2022.

FINANCIAL HIGHLIGHTS

(Rs. in crores)
Particulars	2021-22	2020-21
Profit Before Depreciation And Taxation	3,684.62	3,415.37
Less: Depreciation, amortisation and impairment	135.37	137.36
Profit Before Tax	3,549.25	3,278.01
Less: Provision for taxation	841.32	790.75
Profit After Tax	2,707.93	2,487.26
Add: Balance brought forward from previous year	10,384.13	9,257.73
Balance available for appropriation	13,092.06	11,744.99
Appropriations
General reserve	(270.80)	(248.73)
Statutory reserve	(541.59)	(497.46)
Debenture redemption reserve	614.13	(311.00)
Dividend on equity shares of Rs.10/- each	(699.88)	(303.67)
Balance carried to Balance Sheet	12,193.92	10,384.13

CREDIT RATING

The credit rating of the securities/instruments/loans, credit facilities and other borrowings of the Company as on March 31, 2022 was as follows:

Name of Rating Agency	Securities / Instruments/ Loans, Credit Facilities and other Borrowings	Ratings
CRISIL	Bank Loan Long Term	CRISIL AA /Stable
	Bank Loan Short Term	CRISIL A1
	Long Term Principal Protected Market Linked Debentures	CRISIL PPMLD AA r/Stable
	Non-Convertible Debentures	CRISIL AA / Stable
	Subordinated Debt	CRISIL AA /Stable
	Commercial Paper	CRISIL A1
	Fixed Deposit	CRISIL FAAA/Stable
India Ratings & Research Private Limited	Non-Convertible Debentures	IND AA / Stable
	Dual Recourse Bond	IND AAA (CE)/Stable
	Principal Protected Market Linked Debentures (Dual Recourse)	IND PP-MLD AAA(CE)emrâ/ Stable
	Subordinated Debt	IND AA /Stable
	Commercial Paper	IND A1
CARE	Non-Convertible Debentures	CARE AA /Stable
	Subordinated Debt	CARE AA / Stable
	Commercial Paper	CARE A1
ICRA	Fixed Deposit	MAA with Stable outlook
Standard & Poorâs Ratings	Long-Term Issuer Credit Rating	BB-/ Stable
	Short-Term Issuer Credit Rating	B
	Senior Secured Notes	BB-
Fitch Ratings	Long-Term Issuer Default Rating	BB/ Stable Outlook
	Short-Term Issuer Default Rating	B
	Senior Secured Long Term Rating	BB
	Local Currency Long Term Issuer Default Rating	BB/ Stable Outlook

DIVIDEND

The Board of Directors approved payment of two interim dividends for the Financial Year 2021-22:- The first interim dividend of Rs. 8/- per equity share of Rs.10/- each on 268,783,613 equity shares of face value of Rs.10/- each fully paid-up aggregating to Rs. 2,150,268,904/- (gross) subject to deduction of tax at source as per the applicable rate(s) to the eligible shareholders for the Financial Year ended March 31, 2022, was declared on October 29, 2021 and the second interim dividend of Rs.12/- per equity share of face value of Rs.10/- each on 270,519,713 equity shares of face value of Rs.10/- each fully paid-up aggregating to Rs. 3,246,236,556 (gross) subject to deduction of tax at source as per the applicable rate(s) to the eligible shareholders for the Financial Year ended March 31, 2022 was declared on March 5, 2022. The first interim dividend and second interim dividend was paid to eligible Members on November 24, 2021 and March 24, 2022 respectively.

The Board of Directors have not recommended final dividend. Thus the total interim dividend aggregating to Rs. 20/-per share (i.e. 200 %) shall be the final dividend for the financial year 2021-22 as against the total dividend of Rs. 18/- per equity share of Rs. 10/- each fully paid-up (i.e. 180%) for the Financial Year 2020-21.

The Dividend Distribution Policy forms part of the Corporate Governance Report and is also available on the website of the Company at https://bit.ly/3PTulOP

TRANSFER TO RESERVES

The amounts proposed to be transferred to General Reserve, Statutory Reserve and Debenture Redemption Reserve are mentioned in the Financial Highlights under the heading âAppropriationsâ.

CAPITAL ADEQUACY RATIO

Your Companyâs total Capital Adequacy Ratio (CAR), as on March 31, 2022 stood at 22.97% as compared to 22.50% as on March 31, 2021 of the aggregate risk weighted assets on balance sheet and risk adjusted value of the off-balance sheet items, which is well above the regulatory minimum of 15%. The CAR has substantially improved as result of further strengthening of capital through successive issue of fresh Equity shares during the financial year 2021-22 at premium through Qualified Institutional Placement of shares to Qualified Institutional Buyers (QIP Issue) and Preferential Issue of shares to promoters. The details of the said issue of fresh capital are given under the title Share Capital.

The Tier 1 ratio as on March 31, 2022 improved to 20.70% as against 19.94% as on March 31, 2021. The companyâs overall gearing (Debt/Tangible Net Worth) as on March 31, 2022 improved to 4.75x as against 5.20x as on March 31, 2021.

The Tier 2 ratio as on March 31, 2022 was 2.27% as against 2.56% as on March 31, 2021.

SCHEME OF ARRANGEMENT

The Board of Directors of the Company in its meeting held on December 13, 2021 have approved a Composite Scheme of Arrangement and Amalgamation (âSchemeâ), inter-alia, involving amalgamation of Shriram Capital Limited (after de-merger of a few undertakings from the said Shriram Capital Limited) and Shriram City Union Finance Limited (SCUF) with the Company under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013. The said Scheme will be effective upon receipt of approval of shareholders, creditors, Honâble National Company Law

Tribunal, Reserve Bank of India and other regulatory and statutory approvals as applicable with an appointed date of April 01, 2022. Your Company has initiated process for seeking the approval to the Scheme from various regulatory statutory authorities. The Company has received Observation letters under Regulation 37 of Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ) from stock exchanges. The Company has filed the application to National Company Law Tribunal, Chennai seeking directions for convening meeting of shareholders, secured creditors and unsecured creditors. All updates in this regard shall be posted on website of the Company from time to time for information of stakeholders.

OPERATIONS AND COMPANYâS PERFORMANCE

Your Company earned higher Profit Before Tax of Rs. 3,549.25 crores for the Financial Year ended March 31, 2022 as against Rs. 3,278.01 crores in the previous Financial Year ended March 31, 2021 on account of efficient mobilization of funds, reducing cost of finance, improvement of collection efficiency and reduction in costs and overheads. The Profit After Tax for the Financial Year ended March 31, 2022 was Rs. 2,707.93 crores as against Rs. 2,487.26 crores in the previous Financial Year. The total income for the year under consideration was Rs. 19,274.23 crores and total expenditure was Rs. 15,724.98 crores. The detailed analysis of income and expenditure and financial ratios is made in the Management Discussions and Analysis Report forming part of this Report.

Mobilization of funds during the year under review from following sources/instruments was as under:

			(Rs. in crores)
Sr. No.	particulars	2021-22	2020-21
1	Non-Convertible Debentures - Institutional	8,800.00	5,133.30
2	Term Loans from Banks - Secured	25,210.41	17,650.36
3	Term Loans from Financial Institutions/ Corporates - Secured	3,200.00	3,550.00
4	Commercial Papers	4,325.00	200.00
5	Fixed Deposit	11,273.18	6,927.36
6	Inter Corporate Deposits	99.43	176.90
7	External Commercial Borrowings (Loan)	187.35	-
8	Social Bonds (U.S. Dollar Senior Secured Notes)	3,512.86	5,302.85
9	Cash Credit	-	4,197.50

The mobilization of funds of the Company through fixed deposits was substantially higher during the Financial Year ended March 31, 2022 on account of popularity of the Companyâs Fixed Deposit Schemes due to its long track record of offering better return and safety of investment and giving good services to fixed deposit holders.

The total Assets Under Management had increased to Rs. 127,040.86 crores from Rs. 117,242.82 crores due to continuous focus laid by the Company in financing of preowned commercial vehicles which are affordable as compared to new vehicles. During the Financial Year 2021-22, the Company securitized its assets worth Rs. 12,880.16 crores (accounting for 10.14 % of the total assets under management as on March 31, 2022) as against Rs. 13,082.18 crores during the Financial Year 2020-21. With securitisation, the Company ensures better borrowing profile, leading to lower interest liability owing to its lending to priority sector. The outstanding direct assigned portfolio stood at Rs. 1,341.83 crores as on March 31, 2022.

Your Companyâs relationship based business model enabled it to continue maintaining the leadership position in the pre-owned commercial vehicles financing segment. The Company had 1,854 Branch and other offices across India as on March 31, 2022.

The Companyâs prudent liquidity management techniques and strategy of maintaining adequate liquidity buffer throughout the Financial Year 2021-22 not only ensured seamless lending for our business operations but also ensured meeting our liabilities on time, thereby further strengthening the trust and confidence reposed on us by our creditors, fixed deposit holders and security holders. This is evident from the success of our fund raising program implemented during the year under review from domestic as well as international market.

ISSUE OF SECURITIES Share Capital

Qualified Institutional Placement (QIP Issue)

The Members in its 41^st Annual General Meeting held on August 19, 2020 accorded approval for the proposal of fund raising through issue of securities up to Rs. 2,500 crore to permitted investors through one or more permitted methods to strengthen the Companyâs capital base and balance sheet and to augment the long term resources for meeting funding requirements of its business activities, financing the future growth opportunities, general corporate purposes and other purposes including effectively facing challenges

of the uncertainties and disruptions caused by COVID-19 pandemic and had constituted the Securities Issuance Committee for this purpose.

The Securities Issuance Committee in its meeting held on June 7, 2021, approved issuance of equity shares under Qualified Institutional Placement (QIP) up to Rs. 2,000 crore The QIP Issue was opened on June 7, 2021 and closed on June 11, 2021. The QIP Issue of Rs. 2,000 crore was oversubscribed by more than 6.3 times.

On June 12, 2021, the Company allotted 13,986,000 Equity Shares of face value Rs.10 each to eligible qualified institutional buyers at the issue price of Rs. 1,430/- per Equity Share (including a premium of Rs. 1,420/- per Equity Share) at a discount of Rs. 3.32 per Equity Share i.e. 0.23% of the floor price of Rs. 1,433.32 per Equity Share, aggregating to Rs. 19,999,980,000/- under the QIP issue. The entire proceeds have been utilised as per the above mentioned objects of the QIP Issue.

preferential issue of shares and warrants

As a part of their continued commitment and in order to minimise the dilution impact of the QIP on the Promoterâs shareholding, Shriram Capital Limited, Promoter of the Company had expressed its desire to subscribe the further equity shares and warrants up to Rs. 500 crore through Preferential Issue. The Preferential Issue enabled the Company to further strengthen the Companyâs capital base and balance sheet and augmenting the long-term resources for meeting funding requirements of its business activities, financing the future growth opportunities, general corporate purposes.

The Board of Directors of the Company in its meeting held on June 7, 2021 considered the proposal of further fund raising and approved (i) issuance of 1,736,100 equity shares of face value of Rs. 10/- each of the Company (âEquity Shareâ), fully paid-up, at a price of Rs.1,440/- per Equity Share (including a premium of Rs.1,430/- per Equity Share), aggregating up to Rs. 2,499,984,000/- and (ii) 17,36,100 warrants, each convertible into, or exchangeable for 1 (one) fully paid-up Equity Share each at a price (including the warrant subscription price and the warrant exercise price) of Rs. 1,440/- each (âWarrantsâ) payable in cash, aggregating up to Rs. 2,499,984,000/- to Shriram Capital Limited, Promoters of the Company.

Pursuant to the special resolution, the Members in its Extraordinary General Meeting held on July 7, 2021 approved the said proposal for Preferential Issue of Equity Shares and Warrants.

On July 8, 2021, the Company received from Shriram Capital Limited, Promoter, the subscription money @ Rs. 1,440/- per Equity Share of face value of Rs. 10 each (including a premium of Rs. 1,430/- per Equity Share) for allotment of 17,36,100 Equity Shares fully paid-up and warrant subscription price @ Rs. 360/- per Warrant, being 25% of the Issue price of Rs. 1,440/- per warrant, for allotment of 17,36,100 Warrants convertible in to fully paid-up Equity Shares. On July 8, 2021 the Company allotted to the Promoter on Preferential basis 17,36,100 Equity Shares fully paid-up aggregating to Rs. 249,99,84,000 for consideration paid in cash and

17.36.100 warrants. Each such warrant of Rs. 1440 (including the warrant subscription price and the warrant exercise price) was convertible into, or exchangeable for 1 fully paid-up Equity Share of the Company having face value of Rs. 10/-each.

On November 24, 2021, Shriram Capital Limited paid the exercise price being the balance amount of 75% of Issue Price of the said Warrants i.e. at Rs. 1,080/- per Warrant, aggregating to Rs. 1,874,988,000/- and submitted the application for allotment of 17,36,100 fully paid-up shares of face value of Rs. 10/- each issued at premium of Rs. 1,430/-per share for conversion of the warrants into equity shares.

Accordingly on November 25, 2021, the Company allotted

1.736.100 fully paid-up Equity shares of face value of Rs. 10/- each to Shriram Capital Limited. The entire proceeds have been utilised as per the above mentioned objects of the Preferential Issue.

Consequent upon allotment of the Equity Shares pursuant to above mentioned QIP Issue and Preferential Issue of shares, the paid-up share capital of the Company stood increased to Rs. 270,51,97,130.

Cancellation of 6,141 equity shares of face value of Rs.10/-each not taken or agreed to be taken by any person from the Issued Share capital of the company

Pursuant to the ordinary resolution passed by the shareholders on March 6, 2022 through Postal Ballot, 6,141 Equity shares of face value of Rs. 10 each not taken/agreed to be taken by any person in the Rights Issue of the Company made in the year 1995 were cancelled from the Issued Share Capital of the Company. Accordingly, the Issued, Subscribed and Paid up Equity Share Capital of the Company stood at Rs. 2,705,197,130/- consisting of 270,519,713 fully paid-up

equity shares of face value of Rs.10/- each as on March 31, 2022.

None of the Directors of the Company holds instruments convertible into Equity Shares of the Company.

issue of Senior Secured Notes (Social Bonds)

Commitment towards socio-economic advancement is at the core of the Companyâs business. Your Company is primarily engaged in providing financial assistance to small road transport operators operating pre-owned/second hand commercial and passenger vehicles viz. goods carrying trucks, passenger taxis, etc. belonging to lower income group and vulnerable strata of the society who do not qualify for bank loans due to the lack of stable income. Considering the additional financing avenue of Social bonds, the Company had developed the Social Finance Framework in January 2020 for issuance of Social Bonds in the international market to finance or refinance a portfolio of new and/or existing Eligible Social Projects to promote sustainability. The Company was sanctioned loans by many international agencies including International Financial Corporation, Proparco, OeEB for the purpose of financing CNG and environment friendly vehicles. The Companyâs Social Finance Framework meets the criteria and guidelines for the allocation of proceeds of the Social Bonds as per International Capital Market Association (âICMAâ) Social Bond Principles 2018 (âSBPâ). More details in this regard are available in the ESG Report forming part of this Annual Report. The Social Finance Framework is available on the Companyâs website at: https://bit.ly/3M0rbFK

On January 4, 2022, the Company has upsized the existing Global Medium Term Note Programme from USD

3.000. 000.000 to USD 3,500,000,000 Global Medium Term Note Programme (âUpsized GMTN Programmeâ) through upsized and updated Offering Circular dated January 4, 2022 for issuance of bonds/notes in international markets by way of public/private issue, subject to market conditions.

On January 18, 2022, the Company issued USD 475,000,000 4.15 percent Senior Secured Notes due 2025 (Social Bonds) equivalent to Rs. 35,139,375,000/- under the USD

3.500.000. 000 Global Medium Term Note Programme to the Qualified Institutional Buyers (QIBs) under the Rule 144A of the U.S. Securities Act 1933 and to the eligible investors outside United States under Regulation S of the U.S. Securities Act 1933. The Social Bonds issue received good response from investors with oversubscription by more than 2.5 times.

The proceeds of Senior Secured Notes issued have been utilized by the Company to finance investments in Eligible Social Projects in accordance with International Capital Market Association Social Bond Principles 2018 as permitted by the ECB Guidelines.

The said Social Bonds are listed on the Singapore Exchange Securities Trading Limited, India International Exchange (IFSC) Limited (âIndia INXâ) and NSE IFSC Limited. All Senior Secured Notes/Social Bonds issued under the uSD

3,500,000,000 GMTN Programme are fully hedged to mitigate risk of exchange rate volatility.

FIXED DEPOSITS

During the Financial Year ended March 31, 2022, the Company mobilised substantially higher funds through fixed deposits of Rs. 11,273.18 crores as against Rs. 6,927.36 crores in the Financial Year ended March 31, 2021. As on March 31, 2022, there were 8,060 fixed deposits aggregating to Rs. 111.07 crores that have matured but remained unclaimed. The unclaimed deposits have since reduced to 4,534 deposits amounting to Rs. 52.06 crores. Appropriate steps are being taken continuously to obtain the depositorsâ instructions so as to ensure renewal/ repayment of the matured deposits in time. There were no deposits, which were claimed but not paid by the Company.

DIRECTORS Appointment of Directors

On the recommendation of the Nomination and Remuneration Committee, the Board of Directors in its meeting held on December 13, 2021 appointed, subject to approval of Members, the following person as directors:

1. Mr. Y. S. Chakravarti (DIN 00052308) as an Additional Director of the Company and

2. Mr. Parag Sharma (DIN 02916744) as an Additional Director and also as Whole-Time Director designated as Joint Managing Director and Chief Financial Officer of the Company with effect from December 13, 2021. His tenure of Whole-Time Directorship will be for a period of five years up to December 12, 2026.

Mr. Y. S. Chakravarti and Mr. Parag Sharma will hold office of Additional Director upto the date of the ensuing 43rd Annual General Meeting (AGM) pursuant to Section 152 of the Companies Act, 2013. The Company has received the notice pursuant to Section 160 of the Act signifying their intention to propose candidatures of Mr. Y. S. Chakravarti

and Mr. Parag Sharma for their appointment as directors of the Company in the AGM.

Retirement of director by rotation

Mr. Ignatius Michael Viljoen (DIN 08452443), non-executive non-independent director of the Company will retire by rotation at the ensuing AGM and being eligible, offers himself for re-appointment. The Nomination and Remuneration Committee in its meeting held on April 19, 2022 has recommended to the Board of Directors and Members, reappointment of Mr. Ignatius Michael Viljoen as director of the company retiring by rotation. Ignatius Michael Viljoen is a Head of Credit-Sanlam Pan Africa Portfolio Management, South Africa and is responsible for a range of credit risk and credit portfolio management aspects across the various entities owned by the Sanlam Group outside of the Republic of South Africa. His profile is given in the Notice of the ensuing AGM, forming part of this Annual Report.

All the above appointments/re-appointments by the Board of Directors are based on the recommendation of the Nomination and Remuneration Committee. The resolutions for aforementioned appointment/re-appointments and for payment of remuneration to Mr. Parag Sharma, WholeTime Director designated as Joint Managing Director and Chief Financial Officer of the Company together with requisite disclosures are set out in the Notice of the AGM. The Board recommends the resolutions for appointment / re-appointment of aforementioned directors contained in the Notice of AGM for approval of Members.

Declaration by Independent Directors

Pursuant to the provisions of Section 149 of the Companies Act, 2013 (âthe Actâ), the independent directors have submitted declarations that each of them meet the criteria of independence as provided in Section 149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of the SEBI Listing Regulations. There has been no change in the circumstances affecting their status as independent directors of the Company.

Policies on appointment of Directors and Remuneration

Committee. The Companyâs Remuneration Policy has laid down a framework for remuneration of Directors (Executive and Non-Executive), Key Managerial Personnel and Senior Management Personnel. These Policies are available on the Companyâs website at the weblink: https://bit.ly/3N1u1vI and https://bit.ly/3NMh3lB. The Company has formulated policy on Succession Planning for Directors and Key Managerial Personnel for continuity and smooth functioning of the Company.

Number of Meetings of the Board

10 (Ten) Board Meetings were held during the financial year. The details of the Board and various Committee meetings are given in the Corporate Governance Report.

Performance evaluation at Board and Independent Directorsâ Meetings

The Board, the Committees of the Board and independent directors continuously strive for efficient functioning of Board and its committees and better corporate governance practices. A formal performance evaluation was carried out at the meeting of the Board of Directors held on April 28, 2022 where the Board made an annual evaluation of its own performance, the performance of directors individually as well as the evaluation of the working of its various Committees for the Financial Year 2021-22 on the basis of a structured questionnaire on performance criteria. The Board expressed its satisfaction with the evaluation process. The observations made during the evaluation process were noted and based on the outcome of the evaluation and feedback of the Directors, the Board and the management agreed on various action points to be implemented in subsequent meetings.

The Independent Directors met on March 17, 2022 without the presence of other directors or members of Management. All the Independent Directors were present at the meeting. In the meeting, the independent directors reviewed performance of Non-Independent Directors, the Board as a whole and Chairman. They assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board. The minutes of the Independent Directorsâ meeting were placed before the Board Meeting held on April 28, 2022 and the same were noted by the Board. The Independent Directors expressed satisfaction over the

performance and effectiveness of the Board, individual Non Independent Directors and the Chairman.

They also expressed satisfaction with regard to the flow of information between the company management and the Board. The Management took note of various suggestions made in the meeting of Independent Directors.

The Independent Directors played active role in Board as well as committee meetings in which they are members. In addition to quarterly meetings held for review of unaudited financial results of the Company, the Audit Committee held additional meetings requiring detailed discussions and deliberations including for review of policies, approval of annual budget and special matters such as recommending to the Board the Composite Scheme of Arrangement and Amalgamation. The members of the Audit Committee also had separate meeting with the Joint Statutory Auditors which covered Audit issues in general and the framework and the process of Internal Audit in specific.

KEY MANAGERIAL PERSONNEL

The Nomination and Remuneration Committee periodically reviews career growth plan of senior management personnel who possess ability to build teams and nurture leaderships for future growth plans of the Company. As a part of the career planning of the core team of employees and for smooth succession planning the Board of Directors at its meeting held on October 29, 2021, on recommendation of Nomination and Remuneration Committee have promoted Mr. Parag Sharma, Mr. S. Sunder, Mr. P. Sridharan, Mr. Sudarshan Holla and Mr. Nilesh Odedara as Joint Managing Directors and designated them as Key Managerial Personnel. Mr. U. Balasundara Rao, Chief Information Officer and Mr. Hardeep Singh Tur, Chief Risk Officer have also been designated as Key Managerial Personnel.

directorsâ responsibility statement

Pursuant to the provisions of Section 134(3)(c) and Section 134(5) of the Companies Act, 2013, the Directors confirm that, to the best of their knowledge and belief:

a) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) That such accounting policies as mentioned in note 1 to 7 to the financial statements have been selected and applied consistently, and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company

c) That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) The annual accounts have been prepared on a going concern basis.

e) The Company had followed the internal financial controls laid down by the directors and that such internal financial controls are adequate and were operating effectively.

f) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

RBI GUIDELINES

The Company continues to comply with all the requirements prescribed by the Reserve Bank of India (RBI) from time to time. The Company appointed Internal Ombudsman and Principal Nodal Officer as per the relevant notifications of RBI to carry out duties and discharge functions as laid down in the said notifications.

BUSINESS RESPONSIBILITY REPORT

Pursuant to Regulation 34(2)(f) of the Listing Regulations, the Business Responsibility Report is annexed and forms part of the Annual Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The CSR Report for the Financial Year 2021-22 is annexed to this report as Annexure-I. The composition of CSR Committee and the details of the ongoing CSR projects/ programs/activities are included in the CSR report/section. The CSR Policy is uploaded on the Companyâs website at the web link: https://bit.ly/3wnTqHg.

ANNUAL RETURN

In accordance with the provisions of Section 92(3) of the Act, Annual Return of the Company is hosted on website of the

Company at https://www.stfc.in/investors/annual-reports/

DISCLOSURES AS PER THE SECTION 134 OF THE COMPANIES AcT, 2013 Read wITH RULE 8 Of The cOMPANIES (ACCOUNTS) RULES, 2014

Conservation of Energy, Technical Absorption and Foreign Exchange Earnings and Outgo

The information pursuant to Section 134(3)(m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 is as follows:

a. The Company continues its initiatives for conservation of energy, the details of which are given in ESG report. The Companyâs business operations do not involve any activity or technology absorption.

b. The Company did not earn any Foreign Exchange Earnings.

c. Outgo under Foreign Exchange - Rs. 36.63 crores.

Loans, guarantee or investments in securities

The loan made, guarantee given or security provided in the ordinary course of business by a NBFC registered with Reserve Bank of India are exempt from the applicability of provisions of Section 186 of the Act. As such, the particulars of loans and guarantee have not been disclosed in this Report.

During the year under review the Company has invested surplus funds in various securities in the ordinary course of business. For details of the investments of the Company refer to Note 13 of the financial statements.

Contracts or Arrangements with Related Parties

All the related party transactions were entered in ordinary course of business on an armâs length basis. Hence, no disclosure in Form AOC-2 are necessary and the same does not form part of this report. For details of the transactions with related party entered in ordinary course of business on an armâs length basis, refer to the Note 50 to the financial statements.

As required under the Master Direction - Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016, the policy on materiality of related party transactions and dealing with related party transactions as approved by the Board is uploaded on the Companyâs website at the web link: https://bit.ly/3vfdL1c.

There are no materially significant related party transactions made by the Company with Promoters, Directors, Key

Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company save and except the payment of sitting fees and commission paid to Independent Directors.

Whistle Blower Policy/ Vigil Mechanism

Financial summary/highlights

Income for the financial year 2021-22 increased by 10.54 % to Rs. 19,274.23 crores as compared to Rs. 17,436.40 crores in 2020-21;

Income from operations for the financial year 2021-22 was Rs.19,255.17 crores as compared to Rs. 17,420.45 crores in 2020-21, a growth of 10.53 %;

Profit before tax for the financial year 2021-22 was Rs. 3,549.25 crores as compared to Rs. 3,278.01 crores in 202021;

Profit after tax for the financial year 2021-22 was Rs. 2,707.93 crores as compared to Rs. 2,487.26 crores in 2020-21.

The overall disbursement during financial year 2021-22 stood at Rs. 60,073.44 crores as compared to Rs. 35,027.51 crores in the previous financial year 2020-21.

Our interest income increased by 8.86 % from Rs.17,128.14 crores for the year ended March 31, 2021 to Rs.18,646.26 crores for the year ended March 31, 2022.

Finance costs increased by 7.51% from Rs. 9,054.26 crores for the year ended March 31, 2021 to Rs. 9,734.31 crores for the year ended March 31, 2022.

Other expenses increased from Rs. 863.23 crores for the year ended March 31, 2021 to Rs. 905.61 crores for the year ended March 31, 2022.

Our fees and commission for the financial year 2021-22 was Rs.100.08 crores as compared to Rs. 115.86 crores in 2020-21.

Risk management and Internal financial control System

The Companyâs Risk Management Policy deals with identification, mitigation and management of risks across the organization. This has been dealt with the Management Discussion and Analysis annexed to the Annual Report.

The Companyâs well-defined organizational structure, documented policy guidelines, defined authority matrix and internal financial controls ensure operational effectiveness, reliability of financial data and compliance with applicable laws, regulations and Companyâs policies.

The financial control framework includes internal controls, delegation of authority procedures, segregation of duties, system access controls, and document filing and storage procedures. The Internal Auditor ensures the continued effectiveness of the Companyâs internal control system. The Audit Committee reviews internal financial control reports prepared by the internal auditor. The Company has framed risk based internal audit policy as part of its oversight function. The objective of risk based internal audit review is to identify the key activities and controls in the business processes, review effectiveness of business processes and controls, assess the operating effectiveness of internal controls and provide recommendations for business process and internal control improvement.

composition of Audit committee

The Audit Committee comprised of following directors namely, Mr. S. Sridhar - Chairman, Mrs. Kishori Udeshi, Mr. Pradeep Kumar Panja, Mr. S. Lakshminarayanan and Mr. Y. S. Chakravarti.

others

â¢ There were no material changes and commitments, affecting the financial position of the Company which has occurred between the end of the financial year of the Company and the date of the Directorsâ report. The impact of pandemic has been dealt with in the Management Discussion and Analysis annexed to the Annual Report.

â¢ No equity shares were issued with differential rights as to dividend, voting or otherwise.

â¢ No equity shares (including sweat equity shares) were issued to employees of your company, under any scheme.

â¢ The Company has not resorted to any buy back of its equity shares during the year under review.

â¢ There was no change in the nature of business of the Company.

â¢ There was no fraud reported by the Auditors of the Company under the Section 143(12) of the Act to the Audit Committee.

â¢ Your company adopted ISO 27001 standards, practices its processes and upgrades its implementation on regular basis to maintain the information security as per the market trend. The Company is prepared to face emerging cyber threats such as Zero-day attacks, remote access threats and targeted threats. Your company has established disaster recovery centres and various security controls in place to mitigate risks, also safeguard the Company against security breaches and technological lapses located in different seismic zones, periodic upgrading of servers and data storage, adopting new technology for data management. On regular basis different type of system audits are conducted by the external and internal auditors. Board represented IT strategy committee governs the security policies and its implementation as per the company corporate governance process.

â¢ The Company has a policy for prevention of Sexual Harassment for Women at Workplace. An Internal Complaints Committee has been constituted in line with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (âPOSHâ). During the year under review, there were no cases filed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. On March 30, 2022, the Company had arranged Online Orientation Programme, for its Internal Committee Members under POSH Act, at PAN India Level, in order to make them proficient to discharge their duties. The Training was attended by all the Internal Committee Members at PAN India. The Company also added Module on âPREVENTION OF SEXUAL HARASSMENT IN WORKPLACE (POSH) in -MyCoach E-Learning Platform, for sensitising the employees with the provisions under the POSH.

â¢ Disclosure regarding details relating to deposits covered under Chapter V of the Act is not applicable since our company is a Non-Banking Financial Company regulated by Reserve Bank of India. The Company accepts deposits as per Master Direction - non-banking financial companies acceptance of public deposits (Reserve Bank) Directions, 2016.

â¢ The Company has obtained a certificate from the statutory auditor certifying that the Company has complied with the requirements of the Regulation 9 of the Master Direction - Foreign Investment in India with regard to downstream investments.

â¢ The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings, Annual General Meetings and Dividend.

â¢ The Company, in the capacity of Financial Creditor, has not filed any applications with National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016 during the financial year 2021-22 for recovery of outstanding loans against any customer being Corporate Debtor.

CONSOLIDATED FINANCIAL STATEMENTS

There was no entity which became or ceased to be subsidiary, joint venture or associate company of the Company during the financial year ended March 31, 2022.

containing salient features of the financial statement of associate company in Form AOC 1 forms part of this Annual Report. The consolidated financial statements forming part of this Annual Report are prepared in compliance with the applicable Indian Accounting Standards and Listing Regulations. Pursuant to the provisions of Section 136 of the Act, this Annual Report is available on the website of the Company https://www.stfc.in/investors/annual-reports/.

PARTICULARS OF EMPLOYEES

The Company has not employed any individual whose remuneration falls within the purview of the limits prescribed under the provisions of Section 197 of the Act, read with Rule 5(2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

The Disclosure required as under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to this report as Annexure-II.

AUDITORS

Reserve Bank of India (âRBIâ) issued guidelines on appointment of statutory auditor(s) by Non-Banking Financial Company (âNBFCâ) vide Circular RBI/2021-22 /25 Ref. No. DoS. CD.ARG/SEC.01/ 08.91.001/2021-22 dated April 27, 2021 (âRBI Guidelinesâ). Pursuant to RBI Guidelines, the Audit Firms completing tenure of three financial years in the NBFC were not eligible to continue to hold office as Statutory Auditors of the NBFC. Since the RBI Guidelines were being implemented for the first time for NBFCs from Financial Year 2021-22 and in order to ensure that there is no disruption, the RBI had given flexibility to NBFCs to appoint new Statutory Auditors in the second half of the financial year ending March 31, 2022.

In compliance with the aforesaid RBI Guidelines, the previous joint Statutory Auditors of the Company viz. M/s Haribhakti & Co. LLP, Chartered Accountants, Mumbai (ICAI Firm Registration No. 103523W/ W-100048) and M/s Pijush Gupta & Co. Chartered Accountants, Gurugram (ICAI Firm Registration No. 309015E) vide their respective letters dated August 3, 2021 had communicated to the Company their inability to continue to hold office as joint Statutory Auditors of the Company as they had already completed the tenure of four financial years as on the date of coming into effect the RBI Guidelines and had communicated their intention to resign as the joint Statutory Auditors of the Company on conclusion of Extra-Ordinary General Meeting (âEGMâ) held by the Company on September 15, 2022 in compliance

with the RBI Guidelines.

The Audit Committee and Board of Directors in their respective meetings held on August 3, 2021 took note of the said letters dated August 3, 2021 received from the previous joint Statutory Auditors and had passed resolutions to recommend to the Members of the Company for the approval of the appointment of M/s. Sundaram & Srinivasan, Chartered Accountants, Chennai (ICAI Firm Registration No. 004207S) (âM/s. Sundaram & Srinivasanâ) and M/s. Khimji Kunverji & Co LLP, Chartered Accountants, Mumbai (ICAI Firm Registration No. 105146W/ W-100621) (âM/s. Khimji Kunverji & Co LLPâ), as new joint Statutory Auditors of the Company for three consecutive financial years ending March 31, 2022, March 31, 2023 and March 31, 2024 in compliance with the RBI Guidelines:

Accordingly and pursuant to Section 139(8)(i) of the Act, the Members of the Company appointed M/s. Sundaram & Srinivasan and M/s. Khimji Kunverji & Co LLP, as Joint Statutory Auditors of the Company at the Extra-Ordinary General Meeting held on September 15, 2021 to hold office from the conclusion of the EGM till the conclusion of this 43rd Annual General Meeting of the Company to conduct the audit of accounts of the Company for the Financial Year 2021-22.

Vide their respective letters dated April 18, 2022 and April 22, 2022, M/s. Sundaram & Srinivasan and M/s. Khimji Kunverji & Co LLP have confirmed that they continue to be eligible for appointment as joint Statutory Auditors for the Financial Years 2022-23 and 2023-24. They have also confirmed that they hold a valid peer review certificate as prescribed under Listing Regulations.

The Audit Committee and the Board ofDirectors recommends to the Members appointment of M/s. Sundaram & Srinivasan and M/s. Khimji Kunverji & Co LLP to continue as joint Statutory Auditors of the Company for a further term of two years in compliance with RBI guidelines to hold office from conclusion of this 43rd Annual General Meeting till the conclusion of 44th Annual General Meeting of the Company to conduct the audit of accounts of the Company for the Financial Year 2022-23 (Second Term) and from conclusion of 44th Annual General Meeting of the Company till the conclusion of 45th Annual General Meeting of the Company to conduct the audit of accounts of the Company for the Financial Year 2023-24 (âThird Termâ). Approval of the Members is also being sought for fixation of remuneration of joint Statutory Auditors by Board of Directors of the

The Auditorsâ Report to the Members for the year under review does not contain any qualification, reservation or adverse remark.

SECRETARIAL AUDIT

Secretarial Audit Report pursuant to the provisions of Section 204 of the Companies Act, 2013 for the financial year 2021-22 issued by Mr. P. Sriram, Practicing Company Secretary (Certificate of Practice No.3310) (Membership No. FCS 4862) is annexed to this report as Annexure-III. The report does not contain any qualification, reservation or adverse remark.

CORPORATE GOVERNANCE

Pursuant to Schedule V of the Listing Regulations the following Reports/Certificates form part of the Annual Report:

â¢ the Report on Corporate Governance;

â¢ the Certificate duly signed by the Vice Chairman & Managing Director and the Joint Managing Director & Chief Financial Officer on the Financial Statements

of the Company for the year ended March 31, 2022 as submitted to the Board of Directors at their meeting held on April 28, 2022;

â¢ the declaration by the Vice Chairman & Managing Director regarding compliance by the Board members and senior management personnel with the Companyâs Code of Conduct; and

â¢ the Management Discussion & Analysis Report

The Auditorsâ Certificate on Corporate Governance is annexed to this report as Annexure-IV.

ACKNOWLEDGEMENT

The Board of Directors would like to place on record their gratitude for the guidance and co-operation extended by Reserve Bank of India and the other regulatory authorities. The Board takes this opportunity to express their sincere appreciation for the excellent patronage received from the Banks and Financial Institutions and for the continued enthusiasm, total commitment, dedicated efforts of the executives and employees of the Company at all levels. We are also deeply grateful for the continued confidence and faith reposed on us by all the Stakeholders including Shareholders, Depositors, Debenture holders and Debt holders.

For and on behalf of the Board of Directors

S. lakshminarayanan

Mumbai Chairman

April 28, 2022 (DIN: 02808698)

Mar 31, 2021

Your Directors have pleasure in presenting their Forty-Second Annual Report and the Audited Statements of Accounts for the financial year ended March 31, 2021.

FINANCIAL HIGHLIGHTS

(Rs. in crores)
Particulars	2020-21	2019-20
Profit Before Depreciation And Taxation	3,415.37	3,579.72
Less: Depreciation, amortization and impairment	137.36	141.05
profit Before tax	3,278.01	3,438.67
Less: Provision for taxation	790.75	936.83
profit after tax	2,487.26	2,501.84
Add: Balance brought forward from previous year	9,257.73	8,070.47
Balance available for appropriation	11,744.99	10,572.31
Appropriations
General reserve	248.73	250.19
Statutory reserve	497.46	500.38
Debenture redemption reserve	311.00	235.79
Dividend on equity shares of Rs.10/- each	303.67	272.26
Tax on dividend	-	55.96
Balance carried to Balance Sheet	10,384.13	9,257.73

CREDIT RATING

The COVID -19 pandemic adversely affected almost all sectors of Indian economy. This led to revision of the Companyâs Ratings to negative outlook/Credit Watch by the Rating Agencies which felt that the weak macroeconomic environment and post imposition of lockdown by the government, the Companyâs asset quality would be under pressure.

However, post the moratorium period and with the gradual reopening up of the economy, the monthly collection efficiency jumped to almost 95% in September 2020. This improvement was sustained with collection efficiency crossing 100% in December 2020. During the second half of the Financial Year 2020-21, the Company regained its Ratings due to its sustained earnings profile, improvement in asset quality closer to pre-pandemic level, improvement in month-on-month collection efficiencies, continued strong market position in the pre-owned vehicle finance segment, long track record in the vehicle financing business, understanding of the target customer segment and relationship based lending model.

The restructuring in the loan portfolio was at much lower level than initial estimate of 2.5%. The Gross Stage 3 metrics stood at 8.36% and 7.06% as of March 31, 2020 and March 31, 2021 respectively.

Despite business volumes dropping till the first half of fiscal 2021 and provision of Rs.2,591.48 crores towards Covid related provisioning from Q4FY20 till Q4FY21, the Companyâs earnings profile remains resilient. This comes on the back of the high yields on the portfolio given the focus of STFCL on pre-owned vehicle financing.

The Company demonstrated its ability to raise funds from diversified resources including Rights Issue of Equity shares, issuance of Senior Secured Notes in the international market under its USD 3 Billion GMTN Programme, issue of Redeemable Non-Convertible Debentures (NCDs) on private placement basis, despite the challenges of weak macroeconomic environment. This fund raising coupled with higher Collections enabled the Company to sustain good liquidity throughout the Financial Year 2020-21. The credit costs, however, had slightly increased to 2.48% in the Financial Year 2020-21 from 2.43% in the Financial Year 2019-20.

The credit rating positions of the Company was as under:
Name of Rating Agency	Instrument	Ratings as on March 31, 2021
CRISIL	Bank Loan Long Term	CRISIL AA /Stable
	Bank Loan Short Term	CRISIL A1
	Long Term Principal Protected Market Linked Debentures	CRISIL PP-MLD AA r/Stable
	Non-Convertible Debentures	CRISIL AA / Stable
	Subordinated Debt	CRISIL AA /Stable
	Short Term Debt	CRISIL A1
	Fixed Deposit	CRISIL FAAA /Stable
India Ratings & Research Private Limited	Non-Convertible Debentures	IND AA / Stable outlook
	Structured Non-Convertible Debentures	Provisional IND AAA (CE)/ Stable
	Dual Recourse Bond	IND AAA (CE)/ Stable
	Principal Protected Market Linked Debentures (Dual Recourse)	IND PP-MLD AAA(CE)emrâ/ Stable
	Subordinated Debt	IND AA /Stable outlook
	Commercial Paper	IND A1

Name of Rating Agency	Instrument	Ratings as on March 31, 2021
CARE	Non-Convertible Debentures	CARE AA /Stable
	Subordinated Debt	CARE AA / Stable
	Commercial Paper	CARE A1
ICRA	Fixed Deposit	MAA with Stable
ICRA	Non-Convertible Debentures	Provisional [ICRA] AAA (CE) (Stable)
Standard & Poorâs Ratings	Long-Term Issuer Credit Rating	BB -/ Stable
	Short-Term Issuer Credit Rating	B
	Senior Secured Notes	BB-
Fitch Ratings	Long-Term Issuer Default Rating	BB /Negative
	Short-Term Issuer Default Rating	B
	Senior secured Long Term Rating	BB
	Local Currency Long Term Issuer Default Rating	BB /Negative

DIVIDEND

The Board of Directors approved payment of two interim dividends for the Financial Year 2020-21:- The first interim dividend of Rs. 6/- per equity share of Rs.10/- each fully paid-up (60%) was declared on october 29, 2020 and the second interim dividend of Rs. 6/- per equity share of Rs.10/-each fully paid-up (60%) was declared on March 25, 2021. The first interim dividend and second interim dividend was paid to eligible members on November 26, 2020 and April 16, 2021 respectively. The total interim dividend involved a cash outflow of Rs.303.67 crores. The interim dividend was paid to members, subject to deduction of tax at source as per the applicable rate.

The Board of Directors has recommended a final dividend of Rs. 6/- per equity share of nominal face value of Rs.10/- each fully paid up i.e. 60 %, for the Financial Year 2020-21 subject to approval by members in the ensuing 42nd annual General meeting (42nd AGM) of the Company. With this the total dividend for the Financial Year 2020-21 will be Rs. 18/- per share (i.e. 180 %).

The Dividend Distribution Policy forms part of the Corporate Governance Report and is also available on the website of the Company at https://cdn.stfc.in/common/Dividend-Distribution-Policy.pdf .

TRANSFER TO RESERVES

The amounts proposed to be transferred to General Reserve, Statutory Reserve and Debenture Redemption Reserve are mentioned in the Financial Highlights under the heading appropriations!

CAPITAL ADEQUACY RATIO

Your Companyâs total Capital Adequacy Ratio (CAR), as of march 31, 2021, stood at 22.50% of the aggregate risk weighted assets on balance sheet and risk adjusted value of the off-balance sheet items, which is above the regulatory minimum of 15%. The Capital Adequacy Ratio has improved due to further strengthening of capital through Rights Issue of Equity shares in the month of August, 2020 called Tier 1 Capital.

The Tier 1 ratio as on March 31, 2021 improved to 19.94% as against 18.13% as on March 31, 2020. The companyâs overall gearing (Debt/Tangible Net-worth) as on march 31, 2021 improved to 5.20x as against 5.45x as on March 31, 2020.

The Tier 2 ratio as on March 31, 2021 was 2.56% as against 3.86% as on March 31, 2020.

OPERATIONS AND COMPANYâS PERFORMANCE

For the Financial Year ended March 31, 2021, your Company earned Profit Before Tax of Rs. 3,278.01 crores as against Rs.3,438.67 crores in the previous Financial Year and the Profit After Tax of Rs. 2,487.26 crores as against Rs. 2,501.84 crores in the previous Financial Year. The total income for the year under consideration was Rs. 17,436.40 crores and total expenditure was Rs. 14,158.39 crores.

Mobilization of funds from following sources/instruments was as under:

(Rs. in crores)
Sr. No.	Particulars	2020-21	2019-20
1	Non-Convertible Debentures - Institutional	5,133.30	2,960.30
2	Term Loans from Banks - Secured	17,650.36	19,121.64
3	Term Loans from Financial Institutions/ corporates - Secured	3,550.00	-
4	Commercial Papers	200.00	4,130.00
5	Fixed Deposit	6,927.36	4,226.21
6	Inter Corporate Deposits	176.90	207.40
7	Non-Convertible Debentures Public Issue- Secured	-	533.61
8	External Commercial Borrowings (Loan)	-	1,636.10
9	U.S. Dollar Senior Secured Notes	5,302.85	8,744.63
10	Cash Credit	4,197.50	784.00

The total Assets Under Management had increased to Rs. 117,242.82 crores from Rs. 109,749.24 crores. During the Financial Year 2020-21, the Company securitized its assets worth Rs. 13,622.00 crores (accounting for 11.62% of the total assets under management as on March 31, 2021) as against Rs. 16,581.13 crores during the Financial Year 2019-20. With securitisation, the Company ensures better borrowing profile, leading to lower interest liability owing to its lending to priority sector as per RBI. The outstanding direct assigned portfolio stood at Rs. 1,051.23 crores as on March 31, 2021.

The Company continued its focus on financing of pre-owned commercial vehicles. The relationship based business model enabled us to maintain the leadership position in the preowned commercial vehicles financing segment. For further market penetration, the Company opened 59 new Branches

and other offices. With this the total number of Branch and other offices across India has now increased to 1,817.

The Companyâs judicious liquidity management framework enabled maintaining adequate liquidity throughout the Financial Year 2020-21 to meet its liabilities, despite challenging pandemic conditions and offering moratoriums to its customers.

ISSUE OF SECURITIES Share Capital

In order to augment capital base, the Company offered through Rights Issue 2,61,78,777 Equity Shares of face value of Rs. 10 each to the Eligible Equity Shareholders on Record Date at Issue price of Rs. 570/- per share (including premium of Rs. 560/- per Equity share) aggregating to Rs. 1,492.19 crores (including share issue expenses of

Rs. 19.55 crores), in the ratio of 3 fully paid-up Rights Equity for every 26 Equity Shares held by the Eligible Equity Shareholders on Record Date.

The Companyâs rights Issue received good response from Foreign Portfolio Investors, Institutional and retail shareholders/investors and was oversubscribed by 1.65 times of the issue size. The Company received 24,081 applications for 4,31,87,941 shares aggregating to Rs. 2,461.71 crores against 2,61,78,777 shares offered in the Rights Issue. The Rights Issue which was opened on July 16, 2020 was closed on the notified date i.e. July 30, 2020. The Company has received approval from stock exchanges for listing on August 7, 2020 and trading of the Rights Equity shares on August 10, 2020.

The Subscribed and Paid up Equity Share Capital of the Company stood at Rs.253.06 crores consisting of 253,061,513 fully paid-up equity shares of face value of Rs.10/- each as on March 31, 2021.

There was no convertible instrument outstanding as on March 31, 2021. None of the Directors of the Company holds instruments convertible into Equity Shares of the Company.

Issue of U.S. Dollar Senior Secured Notes (Social Bonds)

The Company updated USD 3 Billion Global Medium Term Note (GMTN) Programme on December 24, 2020.

On January 13, 2021, the Company issued

USD 500,000,000 4.40 percent Senior Secured Notes due 2024 (Social Bonds) under the USD 3 Billion GMTN Programme to the Qualified Institutional Buyers (QIBs) under the Rule 144A of the U.S. Securities Act 1933 and to the eligible investors outside United States under Regulation S of the U.S. Securities Act 1933.The Social Bonds got good response from investors with oversubscription of >2x.

Further on March 31, 2021, the Company issued USD 225,000,000 Senior Secured Notes (to be consolidated and form a single series with the USD 500,000,000 4.40 per cent Senior Secured Notes due 2024 issued on January 13, 2021) under the USD 3 Billion GMTN Programme.

The proceeds of Senior Secured Notes issued have been (in case of issuance of Social Bonds on January 13, 2021) / are being (in case of issuance of Social Bonds on March 31,2021) utilized by the Company to finance investments in Eligible Social Projects in accordance with International Capital Market Association Social Bond Principles 2018 as permitted

The said Social Bonds are listed on the Singapore Exchange Securities Trading Limited. All Senior Secured Notes/Social Bonds issued under the USD 3 Billion GMTN Programme are fully hedged and would not involve any foreign exchange risk to the Company.

FIXED DEpoSITS

As on March 31, 2021, there were 8,897 fixed deposits aggregating to Rs. 106.74 crores that have matured but remained unclaimed. There were no deposits, which were claimed but not paid by the Company. The unclaimed deposits have since reduced to 5,912 deposits amounting to Rs. 60.30 crores. Appropriate steps are being taken continuously to obtain the depositorsâ instructions so as to ensure renewal/ repayment of the matured deposits in time.

directors

Mr. Puneet Bhatia (DIN 00143973), non-executive nonindependent director ceased to be Director of the Company on expiry of his tenure on August 19, 2020 as the ordinary resolution for his re-appointment as director retiring by rotation was not passed by requisite majority in the last 41st Annual General Meeting held on 19th August, 2020. The Board of Directors have placed on record its appreciation of the invaluable services rendered by Mr. Puneet Bhatia.

Retirement of director by rotation

Mr. D. V. Ravi (DIN 00171603), non-executive nonindependent director of the Company will retire by rotation at the ensuing 42nd Annual General Meeting (AGM) and being eligible, offers himself for re-appointment. Mr. D. V. Ravi is Managing Director of Shriram Capital Limited, promoter of the Company. Mr. D. V. Ravi has wide experience in corporate strategy and services, corporate finance, information technology and process activities of the Shriram Group. His profile is given in the Notice of the 42nd Annual General Meeting, forming part of this Annual Report. The Nomination and Remuneration Committee and the Board of directors recommend to Members passing of the ordinary resolution for re-appointment of Mr. D. V. Ravi as director retiring by rotation.

Declaration by Independent Directors

with Rules framed thereunder and Regulation 16(1)(b) of the SEBI Listing regulations. There has been no change in the circumstances affecting their status as independent directors of the Company.

Policies on appointment of Directors and Remuneration

The management of the Company is immensely benefited from the guidance, support and mature advice from members of the Board of Directors who are also members of various committees. The Board consists of directors possessing diverse skill, rich experience to enhance quality of its performance. The Company has adopted a Policy on Board Diversity formulated by the Nomination and remuneration Committee. The Companyâs remuneration Policy has laid down a framework for remuneration of Directors (Executive and Non-Executive), Key Managerial Personnel and Senior Management Personnel. These Policies are available on the Companyâs website at the weblink: https://bit.ly/2QQvCg4 and https://bit.ly/3hREkWC. The Company has formulated policy on Succession Planning for Directors and Key Managerial Personnel for continuity and smooth functioning of the Company.

Number of Meetings of the Board

9 (Nine) Board Meetings were held during the Financial Year. The details of the Board and various Committee meetings are given in the Corporate Governance Report.

performance evaluation at Board and Independent Directorsâ Meetings

The Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its various Committees for the Financial Year 2020-21. The evaluation was conducted on the basis of a structured questionnaire which comprises performance criteria such as performance of duties and obligations, independence of judgement, level of engagement and participation, attendance of directors, their contribution in enhancing the Boardâs overall effectiveness, etc. The Board has expressed their satisfaction with the evaluation process. The observations made during the evaluation process were noted and based on the outcome of the evaluation and feedback of the Directors, the Board and the management agreed on various action points to be implemented in subsequent meetings.

The evaluation process endorsed cohesiveness amongst directors, smooth communication between the Board and

the management and the openness of the management in sharing the information with the Board and placing various proposals for the Boardâs consideration and approval.

The Independent Directors met on January 29, 2021 without the presence of other directors or members of Management. All the Independent Directors were present at the meeting. In the meeting, the independent directors reviewed performance of Non-Independent Directors, the Board as a whole and Chairman. They assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board. The minutes of the Independent Directorsâ meeting were placed before the Board Meeting held on March 25, 2021 and the same were noted by the Board.

The Independent Directors expressed satisfaction over the performance and effectiveness of the Board, individual NonIndependent Directors and the Chairman. Considering the unhealthy and stressful background of lockdown the performance of the Managing Director and Chief Financial Officer was found to be outstanding and exemplary in cutting costs, ensuring collections and team building. The Independent Directors also expressed improvement in the flow of information between the company management and the Board. The Management took note of various suggestions made in the meeting of Independent Directors, including IT and Cyber security systems, CSR projects, benchmarking of interest rates on fixed deposits etc.

The Independent Directors played active role in the committee meetings including Audit Committee. The Audit Committee which consists of four independent directors held separate meetings in addition to quarterly meetings to discuss related party transactions, review policies of the Company, approval of Budget for Financial Year 2021-22. The members of the Audit Committee also had separate meetings with joint statutory auditors and Rating Agencies in compliance with the applicable law and SEBI Circular.

KEY MANAGERIAL PERSONNEL

There was no change (appointment/resignation) in the Key Managerial Personnel namely, Managing Director, the Chief Financial officer and the Company Secretary of the Company during the financial year. Based on the recommendation of the Nomination and Remuneration Committee, the Board of Directors have elevated and re-designated Mr. Umesh Revankar as Vice Chairman and Managing Director with

effect from April 01, 2021. The Board of Directors also elevated and re-designated Mr. Parag Sharma, as Joint Managing Director and Chief Financial officer, not being part of Board of Directors, with effect from April 01, 2021.

ELEVATION OF SENIOR MANAGERIAL PERSONNEL

Based on recommendation of the Nomination and Remuneration Committee and approval of the Board of Directors, Mr. S. Sunder, Mr. P. Sridharan, Mr. Sudarshan Holla and Mr. Nilesh odedara have been elevated as Joint Managing Directors, not being part of Board of Directors, with effect from April 01, 2021.

DIRECTORSâ RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) and Section 134(5) of the Companies Act, 2013, the Directors confirm that, to the best of their knowledge and belief:

a) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

c) That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) The annual accounts have been prepared on a going concern basis.

e) The Company had followed the internal financial controls laid down by the directors and that such internal financial controls are adequate and were operating effectively.

f) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

RBI GUIDELINES

The Company continues to comply with all the requirements prescribed by the reserve Bank of India from time to time.

BUSINESS RESPONSIBILITY REPORT

Pursuant to regulation 34(2)(f) of the Listing regulations, the Business responsibility report is annexed and forms part of the annual report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The CSR Report for the Financial Year 2020-21 is annexed to this report as Annexure-I. The composition of CSR Committee and the details of the ongoing CSr projects/ programs/activities are included in the CSr report/section. The CSR Policy is uploaded on the Companyâs website at the web link: https://bit.ly/3wnTqHg.

annual return

In accordance with the provisions of Section 92(3) of the Act, annual return of the Company is hosted on website of the Company at https://bit.ly/2RMEkMZ

disclosures AS PER THE SECTION 134 OF THE COMPANIES ACT, 2013 READ wiTH RuLE 8 OF THE COMPANIES (ACCOuNTS) RuLES, 2014 Conservation of Energy, Technical Absorption and Foreign Exchange Earnings and Outgo

The information pursuant to Section 134(3)(m) of the Companies Act, 2013 read with Companies (Accounts) rules, 2014 is as follows:

a. The Company has no activity involving conservation of energy or technology absorption.

b. The Com pany does not have any Foreign Exchange Earnings.

c. Outgo under Foreign Exchange - Rs. 23.29 crores. Loans, guarantee or investments in securities

The loan made, guarantee given or security provided in the ordinary course of business by a NBFC registered with reserve Bank of India are exempt from the applicability of provisions of Section 186 of the Act. As such, the particulars of loans and guarantee have not been disclosed in this report.

Contracts or Arrangements with Related Parties

There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company save and except the payment of sitting fees and commission paid to Independent Directors.

Risk Management

The Companyâs Risk Management Policy deals with identification, mitigation and management of risks across the organization. The same has been dealt with the Management Discussion and Analysis annexed to the Annual Report.

Whistle Blower Policy/ Vigil Mechanism

Financial summary/highlights

Income for the Financial Year 2020-21 increased by 5.19% to

Rs.17,436.40 crores as compared to Rs.16,575.76 crores in the Financial Year 2019-20;

Income from operations for the Financial Year 2020-21 was Rs.17,420.45 crores as compared to Rs.16,555.49 crores in the Financial Year 2019-20, a growth of 5.22 %;

Profit before tax for the Financial Year 2020-21 was Rs.3,278.01 crores as compared to Rs.3,438.67 crores in the Financial Year 2019-20;

Profit after tax for the Financial Year 2020-21 was Rs.2,487.26 crores as compared to Rs.2,501.84 crores in 2019-20.

Our interest income increased by 5.29% from Rs.16,267.46 crores in the year ended March 31, 2020 to Rs. 17,128.14 crores in the year ended March 31, 2021.

Finance costs increased by 9.48% from Rs.8,270.26 crores in the year ended March 31, 2020 to Rs.9,054.26 crores in the year ended March 31, 2021.

other expenses increased from Rs.863.20 crores in the year ended March 31, 2020 to Rs. 863.23 Crores in the year ended March 31, 2021.

our fees and commission income decreased by 40.58 % from Rs. 194.97 crores in the year ended March 31, 2020 to Rs. 115.86 crores in the year ended March 31, 2021.

Internal Financial Control System

The Companyâs well-defined organizational structure, documented policy guidelines, defined authority matrix and internal financial controls ensure efficiency of operations, protection of resources and compliance with the applicable laws and regulations. Moreover, the Company continuously upgrades its systems and undertakes review of policies.

The internal financial control is supplemented by extensive internal audits, regular reviews by management and standard policies and guidelines to ensure reliability of financial and all other records to prepare financial statements and other data. The Audit Committee of the Board reviews internal audit reports given along with management comments. The Audit Committee also monitors the implemented suggestions.

Composition of Audit Committee

The Audit Committee comprised of following directors namely, Mr. S. Sridhar - Chairman, Mrs. Kishori Udeshi, Mr. Pradeep Kumar Panja and Mr. S. Lakshminarayanan.

Others

â¢ No equity shares were issued with differential rights as to dividend, voting or otherwise.

â¢ No equity shares (including sweat equity shares) were issued to employees of your company, under any scheme.

â¢ The Company has not resorted to any buy back of its equity shares during the year under review.

â¢ There was no change in the nature of business of the Company.

â¢ There was no fraud reported by the Auditors of the Company under the Section 143(12) of the Act to the Audit Committee.

â¢ Your company adopted ISO 27001 standards, practices its processes and upgrade its implementation on regular basis to maintain the information security as per the market trend. The Company is prepared to face emerging cyber threats such as Zero-day attacks, remote access threats and targeted threats. Your company has established disaster recovery centres and various security controls in place to mitigate risks, also safeguard the Company against security breaches

and technological lapses located in different seismic zones, periodic upgrading of servers and data storage, adopting new technology for data management. On regular basis different type of system audits is conducted by the external and internal auditors. Board represented strategy committee governs the security policies and its implementation as per the company corporate governance process.

â¢ The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings, Annual General Meetings and Dividend.

â¢ The Company, in the capacity of Financial Creditor, has not filed any applications with National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016 during the financial year 2020-21 for recovery of outstanding loans against any customer being Corporate Debtor.

CONSOLIDATED FINANCIAL STATEMENTS

There was no entity which became or ceased to be subsidiary, joint venture or associate company of the Company during the financial year ended March 31, 2021.

Shriram Automall India Limited (SAMIL), associate of the Company provides fee-based facilitation services for the sale of pre-owned commercial and passenger vehicles, agricultural and construction equipment, dealerâs stock of pre-owned two wheelers, etc. repossessed by banks and financing companies. SAMIL has 89 Automalls located across the Country. As per the unaudited financial statements of SAMIL for the year ended March 31, 2021, its total income from operations and Net Profit was Rs. 158.96 crores and Rs. 25.96 crores respectively, on consolidated basis. The said financial statements of SAMIL will be made available to Members on request. Pursuant to Section 129 of the Act read with Rule 5 to the Companies (Accounts) Rules, 2014, the statement containing salient features of the financial statement of associate company in Form AOC 1 forms part of this Annual Report. The consolidated financial statements forming part of this Annual Report are prepared in compliance with the applicable Indian Accounting Standards and Listing Regulations. Pursuant to the provisions of Section 136 of the Act, this Annual Report is available on the website of the Company https://www.stfc.in/investors/annual-reports/.

PARTICULARS OF EMPLOYEES

The Disclosure required as under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to this report as Annexure-II.

AuDITORS

They have also confirmed that they hold a valid peer review certificate as prescribed under Listing Regulations. The Company seeks approval of Members every year at the Annual General Meeting for payment of remuneration (exclusive of certification fee, goods and services tax and reimbursement of out of pocket expenses) to the Joint Statutory Auditors for the financial year based on recommendation of the Audit Committee and approval of the Board of Directors pursuant to Section 142 and other applicable provisions of the Act.

Reserve Bank ofIndia (RBI) issued guidelines on appointment of statutory auditor (s) by Non-Banking Financial Company (NBFC) vide Circular RBI/2021-22/25 Ref. No. DoS. CD.ARG/SEC.01/08.91.001/2021-22 dated April 27, 2021 (âCircularâ/âGuidelinesâ). RBI has given flexibility to NonBanking Financial Companies (NBFCs) to adopt these Guidelines from H2 (second half) of the Financial Year 202122 in order to ensure that there is no disruption. Accordingly, the NBFCs shall appoint Statutory Auditors for a continuous period of three years from Financial Year 2021-22.

The current Joint Statutory Auditors of the Company have conducted audit of the accounts of the Company for four consecutive financial years ending March 31,2021. In order to give time to NBFCs for smooth transition, Finance Industry Development Council (FIDC), a representative body of asset and loan financing NBFCs, has made request to RBI that the Circular be made applicable to NBFCs from April 1, 2022 i.e. from Financial Year 2022-23.

In the event RBI accedes to the request of FIDC, it is proposed that the current Joint Statutory Auditors of the Company will continue to hold their office till such period as may be permitted by the law. In that event, it is proposed that they shall be paid the remuneration for conducting audit of Companyâs accounts for the full financial year ending March 31, 2022. Otherwise, it is proposed that the Joint Auditors shall be paid remuneration as may be fixed by the Board of Directors of the Company depending upon scope of their work on pro-rata basis for holding the office of Joint Statutory Auditors for part of the Financial year 2021- 22 as mentioned in the resolution at Item Nos.5 and 6 of the Notice of ensuing 42nd Annual General Meeting. The Audit Committee and the Board of Directors have recommended passing of these resolutions by the Members.

The Auditorsâ Report to the members for the year under review does not contain any qualification, reservation or adverse remark.

SECRETARIAL AUDIT

Secretarial Audit Report pursuant to the provisions of Section 204 of the Companies Act, 2013 for the financial year 2020-21 issued by Mr. P. Sriram, Practicing Company Secretary (Certificate of Practice No.3310) (Membership No. FCS 4862) is annexed to this report as Annexure-III. The report does not contain any qualification, reservation or adverse remark.

CORPORATE GOVERNANCE

Pursuant to Schedule V of the SEBI Regulations the following Reports/Certificates form part of the Annual Report:

â¢ the Report on Corporate Governance;

â¢ the Certificate duly signed by the Vice Chairman & Managing Director and the Joint Managing Director & Chief Financial Officer on the Financial Statements of the Company for the year ended March 31, 2021 as submitted to the Board of Directors at their meeting held on April 29, 2021;

â¢ the declaration by the Vice Chairman & Managing Director regarding compliance by the Board members and senior management personnel with the Companyâs Code of Conduct; and

â¢ the Management Discussion & Analysis Report

The Auditorsâ Certificate on Corporate Governance is annexed to this report as Annexure-IV

ACKNOWLEDGEMENT

The Board of Directors would like to place on record their gratitude for the guidance and cooperation extended by Reserve Bank of India and the other regulatory authorities. The Board takes this opportunity to express their sincere appreciation for the excellent patronage received from the Banks and Financial Institutions and for the continued enthusiasm, total commitment, dedicated efforts of the executives and employees of the Company at all levels. We are also deeply grateful for the continued confidence and faith reposed on us by all the Stakeholders including Shareholders, Depositors, Debenture holders and Debt holders.

For and on behalf of the Board of Directors

S. Lakshminarayanan

New Delhi Chairman

April 29, 2021 (DIN: 02808698)

Mar 31, 2019

To the Members,

The Directors have pleasure in presenting their Fortieth Annual Report and the Audited Statements of Accounts for the financial year ended March 31, 2019.

FINANCIAL HIGHLIGHTS

Your Company has adopted Indian Accounting Standards (âInd ASâ) notified under section 133 of the Companies Act 2013 (âthe Actâ) read with the Companies (Indian Accounting Standards) Rules, 2015 from April 01, 2018 and the effective date of such transition is April 01, 2017. Such transition has been carried out from the erstwhile Accounting Standards notified under the Act, read with relevant rules issued thereunder and guidelines issued by the Reserve Bank of India (âRBIâ). The financial statements have been prepared in accordance with the format prescribed for a Non-Banking Financial Company (NBFC) in compliance of the Companies (Indian Accounting Standards) Rules, 2015, in Division III of Notification No. GSR 1022 (E) dated October 11, 2018, issued by the Ministry of Corporate Affairs, Government of India. The financial results along with the comparatives have been prepared in accordance with the recognition and measurement principles stated Ind AS.

(Rs. in lacs)

Particulars	2018-19	2017-18
Profit Before Depreciation And Taxation	382,124.77	383,793.63
Less: Depreciation, amortisation and impairment	4,297.27	3,613.40
Profit Before Tax	377,827.50	380,180.23
Less: Tax expense	121,428.83	134,126.21
Profit for the year	256,398.67	246,054.02
Add: Balance brought forward from previous year	682,981.38	523,027.40
Balance available for appropriation	939,380.05	769,081.42
Appropriations
General reserve	25,700.00	15,700.00
Statutory reserve	51,400.00	31,400.00
Debenture redemption reserve	25,147.25	9,206.55
Dividend on equity shares of Rs. 10/- each	24,957.10	24,957.10
Tax on dividend	5,130.01	4,836.39
Balance carried to Balance Sheet	807,045.69	682,981.38

DIVIDEND

Your Directors at their meeting held on October 25, 2018 declared interim dividend of Rs. 5.00/- per equity share (i.e. 50%) for the financial year 2018-19. The interim dividend was paid on November 16, 2018 and involved a cash outflow of Rs. 13,675.97 lacs including tax on dividend.

Your Directors have recommended higher final dividend of Rs. 7/- per equity share (i.e. 70%) for the financial year 2018-19 as against final dividend of Rs. 6/- per equity share (i.e.60%) for the financial year 2017-18. The final dividend distribution will involve in a cash outflow of Rs. 19,146.34 lacs including tax on dividend.

Thus, the total dividend (including interim dividend paid) for the financial year 2018-19 shall be Rs.12/- per equity share (i.e. 120%) aggregating to Rs. 32,822.31 lacs including tax on dividend as against Rs. 11/- per equity share (i.e. 110%) aggregating to Rs. 29,820.39 lacs including tax on dividend for the financial year 2017-18. The Dividend Distribution Policy forms part of the Corporate Governance Report and is also available on the website of the Company at https://www.stfc.in/pdf/Dividend-Distribution-Policy-2017. pdf.

TRANSFER TO RESERVES

The amounts proposed to be transferred to General Reserve, Statutory Reserve and Debenture Redemption Reserve are mentioned in the Financial Highlights under the heading âAppropriations.

CAPITAL ADEQUACY RATIO

Your Companyâs total Capital Adequacy Ratio (CAR), as of March 31, 2019, stood at 20.27% of the aggregate risk weighted assets on balance sheet and risk adjusted value of the off-balance sheet items, which is above the regulatory minimum of 15%.

CREDIT RATING

The credit rating enjoyed by the Company as on March 31, 2019 is as follows:

Credit Rating Agency	Instrument	Ratings
CRISIL	Bank Loan Long Term	CRISIL AA /Stable
	Bank Loan Short Term	CRISIL A1
	Non-Convertible Debentures	CRISIL AA /Stable
	Subordinate Debt	CRISIL AA /Stable
	Short Term Debt	CRISIL A1
	Fixed Deposit	CRISIL FAAA/Stable
India Ratings & Research Private Limited	Non-Convertible Debentures	IND AA /Stable outlook
	Subordinated Debt	IND AA /Stable outlook
	Commercial Paper	IND A1
CARE	Non-Convertible Debentures	CARE AA /Stable
	Subordinated Debt	CARE AA /Stable
	Commercial Paper	CARE A1
ICRA	Fixed Deposit	MAA with Stable
Standard & Poorâs Ratings	Long-Term Issuer Credit Rating	BB /Stable
	Short-Term Issuer Credit Rating	B
	Offshore Rupee Denominated Bond (Masala Bond)	BB
	U.S. Dollar Senior Secured Notes	BB
Fitch Ratings	Long-Term Issuer Default Rating	BB /Stable Outlook
	Short-Term Issuer Default Rating	B
	Offshore Rupee Denominated Bond (Masala Bond)	BB
	U.S. Dollar Senior Secured Notes	BB

OPERATIONS & COMPANYâS PERFORMANCE

For the financial year ended March 31, 2019, your Company earned Profit Before Tax of Rs. 377,827.50 lacs as against Rs. 380,180.23 lacs in the previous financial year and the Profit After Tax of Rs. 256,398.67 lacs as against Rs. 246,054.02 lacs in the previous financial year. The total Income for the year under consideration was Rs. 1,554,570.12 lacs and total expenditure was Rs. 1,176,742.62 lacs.

Mobilization of funds from following sources/instruments was as under:

(Rs. in lacs)

Sr. No.	Particulars	2018-19	2017-18
1	Non-Convertible Debentures - Institutional - Secured	91,500.00	973,340.00
2	Subordinated Debts - Institutional	236,000.00	142,900.00
3	Term Loans from Banks - Secured	1,350,730.00	2,140,325.00
4	Term Loans from Financial Institutions/ corporates - Secured	156,900.00	185,000.00
5	Commercial Papers	2,482,000.00	1,401,900.00
6	Fixed Deposit	495,609.67	302,106.45
7	Masala Bonds	-	116,000.00
8	Inter Corporate Deposits	5,000.00	18,770.00
9	Non-Convertible Debentures Institution- Unsecured	50,000.00	-
10	Non-Convertible Debentures Public Issue- Secured	479,262.94	-
11	External Commercial Borrowings (Loan)	240,233.00	-
12	U.S. Dollar Senior Secured Notes	284,990.00	-

The total Assets Under Management had increased from Rs. 9,625,298.47 lacs to Rs. 10,448,228.38 lacs. During 2018-19, the Company securitised its assets worth Rs. 1,512,305.83 lacs(accounting for 14.47% of the total assets under management as on March 31, 2019) as against Rs. 1,246,716.07 lacs during 2017-18. With securitisation, the Company ensures better borrowing profile, leading to lower interest liability owing to its lending to priority sector as per RBI. The outstanding securitised assets portfolio stood at Rs. 1,939,755.62 lacs as on March 31, 2019.

The Company continued its focus on financing of pre-owned commercial vehicles. Our relationship based business model enabled us to maintain the leadership position in the preowned commercial vehicles financing segment. For further market penetration, the Company opened 332 new Branches and other offices. With this the total number of Branch and other offices across India has now increased to 1,545.

ISSUE OF SECURITIES

Share Capital

The paid up Equity Share Capital of the Company stood at Rs. 22,688.27 lacs (226,882,736 shares of Rs. 10/- each) as on March 31, 2019. There was no change in the paid up Equity Share Capital in the Financial Year 2018-19.

An ordinary resolution is proposed in the Notice of the ensuing 40th Annual General Meeting for cancellation of 48,000 forfeited shares from Issued and Subscribed Share Capital of the Company as set out item 5 of the Notice of the ensuing 40th Annual General Meeting of the Company.

Public Issue of Non-convertible Debentures

During the year under review, the Company through Shelf Prospectus dated June 22, 2018 offered 5,00,00,000 Secured Redeemable Non-Convertible Debentures (NCDs) of face value of Rs. 1,000 each to the Public for an amount aggregating upto Rs. 5,00,000 lacs pursuant to the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 as amended. The Company under the Shelf Prospectus and three Tranche Prospectuses issued and allotted 4,79,26,294 NCDs aggregating to Rs. 479,262.94 lacs. Utilisation of funds raised were as per the objects of the Public Issue of NCDs. The said NCDs are listed on the National Stock Exchange of India Limited and BSE Limited.

Issue of U.S. Dollar Senior Secured Notes

The Company had established INR 50,000 Million Medium Term Note Programme (MTN Programme) in the financial year 2017-18 for issue of rupee denominated bonds (Masala bonds) with an objective of diversifying the borrowing portfolio of the Company and to open new market/avenue for borrowing. The Company had raised Rs. 116,000 lacs under the MTN Programme.

During the year 2018-19, the Company issued 5.70 percent Senior Secured Notes Due 2022 aggregating to USD 400 Million under the MTN Programme. The issue of Senior Secured Notes evinced encouraging response from high quality real money investors from the international market including institutional investors from Singapore, Hongkong and London. The order book for initial price guidance was in excess of USD 1 billion with oversubscription of -2.5x. The funds raised through the issue of Senior Secured Notes have been utilized for onward lending and other activities as permitted by the ECB Directions.

Having regard to the opportunities and appetite for the bonds of the reputed Indian companies in the international market, the Company updated, up sized and converted the MTN Programme into USD 2 billion Global Medium Term Note

Programme (GMTN Programme). On April 24, 2019, the Company issued 5.950 percent Senior Secured Notes due 2022 aggregating to USD 500 Million to the Qualified Institutional Buyers (QIBs) under the Rule 144A of the U.S. Securities Act 1933 and to the eligible investors outside United States under Regulation S of the U.S. Securities Act 1933. The said Senior Secured Notes are listed on the Singapore Exchange Securities Trading Limited. All Senior Secured Notes issued under the above programmes are fully hedged and would not involve any foreign exchange risk to the Company.

FIXED DEPOSITS

As on March 31, 2019, there were 14,223 fixed deposits aggregating to Rs. 17,339.65 lacs that have matured but remained unclaimed. There were no deposits, which were claimed but not paid by the Company. The unclaimed deposits have since reduced to 9,764 deposits amounting to Rs. 10,342.04 lacs. Appropriate steps are being taken continuously to obtain the depositorsâ instructions so as to ensure renewal/ repayment of the matured deposits in time.

DIRECTORS Cessation of Directorships

Due to other work commitments, Mr. Amitabh Chaudhry (DIN 00531120), independent director and Mr. Gerrit Lodewyk Van Heerde (DIN 06870337), Non-Executive Non-Independent Director of the Company resigned from the directorship of the Company with effect from October 26, 2018 and May 9, 2019 respectively. The tenure of Mr. S.M. Bafna (DIN 00162546), independent director of the company expired on March 31, 2019. He had expressed his willingness not to seek reappointment as an independent director of the Company. The Board of Directors have placed on record its appreciation of the invaluable services rendered by the said directors.

Appointment of Directors

The Board of Directors appointed (i) Mr. Pradeep Kumar Panja (DIN 03614568) as an Additional Director in the category of independent director of the Company with effect from October 25, 2018 for a period of five consecutive years up to October 24, 2023 and (ii) Mr. Ignatius Michael Viljoen as a Director of the Company in the category of non-executive non-independent director in a casual vacancy caused by the resignation of Mr. Gerrit Lodewyk Van Heerde (DIN 06870337), non-executive non-independent director of the Company, subject to approval of members at the ensuing 40^th Annual General Meeting (AGM).

Re-appointment of Directors

Mrs. Kishori Udeshi (DIN 01344073), independent director of the Company was re-appointed for a second term of five years commencing from April 1, 2019 to March 31, 2024 by the members of the Company by way of passing of Special Resolution through Postal Ballot on December 05, 2018.

The Board of Directors re-appointed (i) Mr. S. Lakshminarayanan (DIN 02808698) and Mr. S. Sridhar (DIN 00004272) as independent directors of the Company for a second term of five years with effect from January 24, 2020 and October 20, 2019 respectively and (ii) Mr. Umesh Revankar (DIN 00141189) as Managing Director & CEO of the Company for a further period of five years with effect from October 26, 2019, subject to approval of members at the ensuing 40^th AGM.

Retirement of director by rotation

Mr. D. V Ravi (DIN 00171603), non-executive non- independent director of the Company will retire by rotation at the ensuing 40^th AGM and being eligible, offers himself for re-appointment.

All the above appointments/re-appointments by the Board of Directors are based on the recommendation of the Nomination and Remuneration Committee. The resolutions for aforementioned appointment/re-appointments and for payment of remuneration to Managing Director & CEO together with requisite disclosures are set out in the Notice of the ensuing 40th AGM. The Board recommends all the resolutions for your approval.

Declaration by Independent Directors

The Board has received the declaration from all the Independent Directors as per the Section 149(7) of the Act and Regulation 16(1)(b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âthe Listing Regulationsâ) and the Board is satisfied that all the Independent Directors meet the criteria of independence as mentioned in Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations.

Policies on appointment of Directors and Remuneration Your Company recognizes the importance and benefits of having the diverse Board to enhance quality of its performance and has adopted a Policy on Board Diversity formulated by the Nomination and Remuneration Committee. The Companyâs Remuneration Policy has laid down a framework for remuneration of Directors (Executive and Non-Executive), Key Managerial Personnel and Senior Management Personnel. These Policies are available on the Companyâs website at the weblink:https://www.stfc.in/pdf/Policy-on-Board-Diversity.pdf and https://www.stfc.in/pdf/STFC-Remuneration-Policy-Final.pdf.

The Nomination and Remuneration Committee also takes into account the fit and proper criteria for appointment of directors as stipulated by Reserve Bank of India. The Company has also formulated policy on Succession Planning for Directors and Key Managerial Personnel for continuity and smooth functioning of the Company.

Number of Meetings of the Board

Five Board Meetings were held during the financial year. The details of the Board and various Committee meetings are given in the Corporate Governance Report.

Performance evaluation of directors at Board and independent directorsâ meetings

Pursuant to the provisions of the Act and Listing Regulations, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its various Committees for the financial year 2018-19. The evaluation was conducted on the basis of a structured questionnaire which comprises performance criteria such as performance ofduties and obligations, independence ofjudgement, level of engagement and participation, attendance of directors, their contribution in enhancing the Boardâs overall effectiveness, etc. The Board has expressed their satisfaction with the evaluation process. The observations made during the evaluation process were noted and based on the outcome of the evaluation and feedback of the Directors, the Board and the management agreed on various action points to be implemented in subsequent meetings. The observations included those relating to further improvement in participation and deliberations at the meetings and conduct of the meetings, circulation of board presentations and its content.

The independent directors met on January 28, 2019 without the presence of other directors or members of Management. All the independent directors were present at the meeting. In the meeting, the independent directors reviewed performance of nonindependent directors, the Board as a whole and Chairman. They assessed the quality, quantity and timeliness of flow of information between the Company management and the Board.

KEY MANAGERIAL PERSONNEL

There was no change (appointment/resignation) in the key managerial personnel namely, Managing Director & CEO, the Chief Financial Officer and the Company Secretary of the Company during the financial year.

DIRECTORSâ RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) of the Act, the directors confirm that, to the best of their knowledge and belief:

a) In the preparation of the annual accounts, the applicable Indian accounting standards have been followed along with proper explanation relating to material departures;

b) That such accounting policies as mentioned in note 6 to the financial statements have been selected and applied consistently, and judgments and estimates have been made 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, 2019 and of the profit of the Company for the year ended on that date;

c) That proper and sufficient care has 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;

d) The annual accounts have been prepared on a going concern basis.

e) The Company had followed the internal financial controls laid down by the directors and that such internal financial controls are adequate and were operating effectively.

f) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

RBI GUIDELINES

The Company continues to comply with all the requirements prescribed by the Reserve Bank of India, from time to time.

BUSINESS RESPONSIBILITY REPORT

Pursuant to Regulation 34(2)(f) of the Listing Regulations, Business Responsibility Report is annexed and forms part of the Annual Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The CSR Report for the Financial Year 2018-19 is annexed to this report as Annexure-I. The composition of CSR Committee and the details of the ongoing CSR projects/ programs/activities are included in the CSR report/section. The CSR policy is uploaded on the Companyâs website at the web link:http://stfc.in/pdf/Corporate-Social-Responsibility-Policy.pdf.

EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of Section 92(3) of the Act, the extract of the annual return in form MGT-9 is annexed as Annexure - II. The same is also available on the website of the company at the web link: https://www.stfc.in/annual-reports.aspx

DISCLOSURES AS PER THE SECTION 134 OF THE ACT READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014

Conservation of Energy, Technical Absorption and Foreign Exchange Earnings and Outgo

The information pursuant to Section 134(3)(m) of the Act, read with Companies (Accounts) Rules, 2014 is as follows:

a. The Company has no activity involving conservation of energy or technology absorption.

b. The Company does not have any Foreign Exchange Earnings.

c. Outgo under Foreign Exchange - Rs. 6,836.66 lacs.

Loans, guarantee or investments in securities

Contracts or Arrangements with Related Parties

All the related party transactions were entered in ordinary course of business on an armâs length basis. Hence, no disclosure in Form AOC-2 is necessary and the same does not form part of this report. For details of the transactions with related party entered in ordinary course of business on an armâs length basis refer to the Note 51 to the financial statements.

As required under the Master Direction - Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016, policy on materiality of related party transactions and dealing with related party transactions as approved by the Board is uploaded on the Companyâs website at the web link:http://stfc.in/pdf/Policy-on-Materiality-of-Related-Party-Transactions-and-dealing-with-Related-Party-Transactions-v1.pdf.

There are no materially significant related party transactions made by the Company with promoters, directors, key managerial personnel or other designated persons which may have a potential conflict with the interest of the Company at large. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company save and except the payment of sitting fees and commission paid to independent directors.

Risk Management

The Companyâs Risk Management policy deals with identification, mitigation and management of risks across the organization. The same has been dealt with the Management Discussion and Analysis annexed to the Annual Report.

Whistle Blower Policy/ Vigil Mechanism

The Companyâs Whistle Blower policy provides a mechanism under which an employee/director of the Company may report unethical behaviour, suspected or actual fraud, violation of code of conduct and personnel policies of the Company. The Vigil Mechanism ensures standards of professionalism, honesty, integrity and ethical behavior. The Whistle Blower Policy/Vigil Mechanism is uploaded on the Companyâs website: www.stfc.in.

Financial summary/highlights

The details are spread over in the Annual Report as well as are provided in the beginning of this report.

Subsidiaries, joint ventures or associate companies

There were no entity(ies) which became or ceased to be subsidiaries, joint ventures or associate companies of the Company during the financial year ended March 31, 2019. Shriram Automall India Limited (SAMIL), Associate of the Company provides fee-based facilitation services for the sale of pre-owned commercial and passenger vehicles, agricultural and construction equipment, dealerâs stock of pre-owned two wheelers, etc. repossessed by banks and financing companies. SAMIL has 81 Automalls located across the Country. For the year ended March 31, 2019, SAMILâs total revenue from operations was Rs. 16,040.74 lacs as against Rs. 10,795.20 lacs in the previous year 2017-18 and the Net Profit of Rs. 2,623.47 lacs as against net profit of Rs. 2,054.64 lacs in the previous year 2017-18.

Internal Financial Control System

The Companyâs well defined organisational structure, documented policy guidelines, defined authority matrix and internal financial controls ensure efficiency of operations, protection of resources and compliance with the applicable laws and regulations. Moreover, the Company continuously upgrades its systems and undertakes review of policies.

Composition of Audit Committee

The Audit Committee comprised of following directors namely, Mr. S. Sridhar - Chairman, Mrs. Kishori Udeshi, Mr. S. M. Bafna (upto January 28, 2019), Mr. Pradeep Kumar Panja (w.e.f January 29, 2019) and Mr. Puneet Bhatia.

OTHER DISCLOSURES

- There were no material changes and commitments, affecting the financial position of the Company which has occurred between the end of the financial year of the Company and the date of the Directorsâ report.

- There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and companyâs operations in future.

- No equity shares were issued with differential rights as to dividend, voting or otherwise.

- No equity shares (including sweat equity shares) were issued to employees of your company, under any scheme.

- The company has not resorted to any buy back of its equity shares during the year under review.

- There was no change in the nature of business of the Company.

- There was no fraud reported by the Auditors of the Company under the Section 143(12) of Act to the Audit Committee.

- Your Company has constituted IT Strategy committee and the committee has approved IT Strategy policy and documents to mitigate the Companyâs exposure towards IT risks. The detailed terms of reference of the IT Strategy committee are given in the Corporate Governance Report forming part of the Annual Report.

- The Company has a policy for prevention of Sexual Harassment for Women at Workplace. An Internal Complaints Committee has been constituted in line with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (âthe said Actâ). During the year under review, there were no cases filed under the said Act.

- Disclosure regarding details relating to deposits covered under Chapter V of the Act is not applicable since our company is a Non-Banking Financial Company regulated by Reserve Bank of India. The Company accepts deposits as per Master Direction - non-banking financial companies acceptance of public deposits (Reserve Bank) Directions, 2016.

- The Company has obtained a certificate from the statutory auditor certifying that the Company has complied with the requirements of the Regulation 9 of the Master Direction - Foreign Investment in India with regard to downstream investments.

- The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings, Annual General Meetings and Dividend.

CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to Section 129 read with Rule 5 to the Companies (Accounts) Rules, 2014, Statement containing salient features of the financial statement of associate company (Form AOC-1) and a statement on consolidated financial position of the Company with that ofthe SAMIL, an associate ofthe Company is attached to the Annual Report. The consolidated financial statements attached to this Annual Report are prepared in compliance with the applicable Indian Accounting Standards and Listing Regulations. The annual report and the annual accounts of SAMIL and the related detailed information shall be made available to members of the Company seeking such information. The annual accounts of the SAMIL shall also be kept for inspection by members at the Registered Office of the Company and of the SAMIL. The annual accounts of SAMIL shall be available on the website of the Company viz. https://www.stfc.in/annual-reports.aspx. The Company shall furnish hard copy of details of accounts of the SAMIL to the member on demand.

PARTICULARS OF EMPLOYEES

The Disclosure required as under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to this report as Annexure-III.

AUDITORS

Pursuant to the provisions of Section 139 of the Act and the Companies (Audit and Auditors) Rules, 2014, M/s Haribhakti & Co. LLP, Chartered Accountants, Mumbai (Firm Registration No. 103523W/W100048) and M/s Pijush Gupta & Co. Chartered Accountants, Gurugram (Firm Registration No. 309015E) had been appointed as joint Auditors of the Company at the 38th AGM held on June 29, 2017 to hold office from the conclusion of the 38^th AGM until the conclusion of the 43rd AGM of the Company. The Companies (Amendment) Act, 2017 has waived the requirement for ratification of the appointment of auditor by the shareholders at every Annual General Meeting with effect from May 07, 2018. Hence, the approval of the members is not being sought for the re-appointment of the joint Auditors in line with the resolution passed for their appointment at the 38th AGM held on June 29, 2017. The joint Auditors have confirmed that they are not disqualified to act as Auditors and are eligible to hold office as Auditors of the Company. They have also confirmed that they hold a valid peer review certificate as prescribed under Listing Regulations. Approval of the members is being sought for fixation of remuneration of joint Auditors of the Company for the financial year 2019-20. The Auditorsâ Report to the members for the year under review does not contain any qualification, reservation or adverse remark.

SECRETARIAL AUDIT

Secretarial Audit Report pursuant to the provisions of Section 204 of the Act for the financial year 2018-19 issued by Mr. P. Sriram, Practicing Company Secretary (Certificate of Practice No. 3310) (Membership No. FCS 4862) is annexed to this report as Annexure-IV. The report does not contain any qualification, reservation or adverse remark.

CORPORATE GOVERNANCE

Pursuant to Schedule V to the Listing Regulations, the following Reports/Certificates form part of the Annual Report:

- the Report on Corporate Governance;

- the Certificate duly signed by the Managing Director & CEO and Chief Financial Officer on the Financial Statements of the Company for the year ended March 31, 2019 as submitted to the Board of Directors at their meeting held on May 08, 2019 ;

- the declaration by the Managing Director & CEO regarding compliance by the Board members and senior management personnel with the Companyâs Code of Conduct ; and

- the Management Discussion & Analysis Report

The Auditorsâ Certificate on Corporate Governance is annexed to this report as Annexure-V.

ACKNOWLEDGEMENT

For and on behalf of the Board of Directors

S. Lakshminarayanan

Mumbai Chairman

May 08, 2019 (DIN: 02808698)

Mar 31, 2018

The Directors have pleasure in presenting their Thirty Ninth Annual Report and the Audited Statements of Accounts for the financial year ended March 31, 2018.

FINANCIAL HIGHLIGHTS

(Rs. in lacs)

Particulars	2017-18	2016-17
Profit before depreciation and taxation	240,796.87	195,783.33
Less: Depreciation and amortisation	3,613.40	3,390.78
Profit before tax	237,183.47	192,392.55
Less: Provision for taxation	80,381.22	66,658.30
Profit after tax	156,802.25	125,734.25
Add: Balance brought forward from previous year	511,702.28	418,745.82
Balance available for appropriation	668,504.53	544,480.07
Appropriations
General reserve	15,700.00	12,600.00
Statutory reserve	31,400.00	25,200.00
Debenture redemption reserve	9,206.55	(15,945.04)
Dividend on equity shares of Rs.10/- each	24,957.10	9,075.31
Tax on dividend	4,836.39	1,847.52
Balance carried to Balance Sheet	582,404.49	511,702.28

DIVIDEND

Your Directors at their meeting held on November 01, 2017 declared higher interim dividend of Rs. 5.00/- per equity share (i.e. 50%) for the financial year 2017-18 as against interim dividend of Rs. 4.00/- per equity share (i.e. 40%) for the financial year 2016-17. The interim dividend was paid on November 20, 2017 and involved a cash outflow of Rs. 13,409.25 lacs together with tax on dividend.

Your Directors have maintained a final dividend of Rs. 6.00/per equity share (i.e. 60%) for the financial year 2017-18. The final dividend distribution will involve in a cash outflow of Rs. 16,411.14 lacs together with tax on dividend.

Thus, the total dividend (including interim dividend paid) for the financial year 2017-18 shall be Rs. 11.00/- per equity share (i.e. 110%) aggregating to Rs. 29,820.39 lacs together with tax on dividend as against Rs. 10.00/- per equity share (i.e. 100%) aggregating to Rs. 27,307.07 lacs together with tax on dividend for the financial year 2016-17.

TRANSFER TO RESERVES

The amounts proposed to be transferred to General Reserve, Statutory Reserve and Debenture Redemption Reserve are mentioned in the Financial Highlights under the heading âAppropriations.

CAPITAL ADEQUACY RATIO

Your Companyâs total Capital Adequacy Ratio (CAR), as of March 31, 2018, stood at 16.87% of the aggregate risk weighted assets on balance sheet and risk adjusted value of the off-balance sheet items, which is above the regulatory minimum of 15%.

CREDIT RATING

The credit rating enjoyed by the Company as on March 31, 2018 is as follows:

Credit Rating Agency	Instrument	Ratings
CRISIL	Bank Loan Long Term	CRISIL AA /Stable
	Bank Loan Short Term	CRISIL A1
	Non-Convertible Debentures	CRISIL AA /Stable
	Subordinate Debt	CRISIL AA /Stable
	Short Term Debt	CRISIL A1
	Fixed Deposit	CRISIL FAAA/Stable
India Ratings & Research Private Limited	Non-Convertible Debentures	IND AA /Stable
	Subordinated Debt	IND AA /Stable
	Commercial Paper	IND A1
CARE	Non-Convertible Debentures	CARE AA /Stable
	Subordinate Debt	CARE AA /Stable
	Commercial Paper	CARE A1
ICRA	Fixed Deposit	MAA with Stable
Standard & Poorâs Ratings	Long-Term Issuer Credit Rating	BB /Stable
	Short-Term Issuer Credit Rating	B
	Offshore Rupee Denominated Bond (Masala Bond)	BB
	Medium Term Note Programme (Masala Bond)	BB
Fitch Ratings	Long-Term Issuer Default Rating	BB /Stable Outlook
	Short-Term Issuer Default Rating	B
	Offshore Rupee Denominated Bond (Masala Bond)	BB
	Medium Term Note Programme (Masala Bond)	BB

OPERATIONS & COMPANYâS PERFORMANCE

For the financial year ended March 31, 2018, your Company earned Profit Before Tax of Rs. 237,183.47 lacs as against Rs. 192,392.55 lacs in the previous financial year and the Profit After Tax of Rs. 156,802.25 lacs as against Rs. 125,734.25 lacs in the previous financial year. The total Income for the year under consideration was Rs. 1,241,658.01 lacs (incl. exceptional income) and total expenditure was Rs. 1,004,474.54 lacs. Your Company has adopted the three months norm to classify Non-Performing Assets as March 31, 2018.

Mobilization of funds from following sources/instruments was as under:

(Rs. in lacs)

Sr. No.	Particulars	2017-18	2016-17
1	Non-Convertible Debentures - Institutional	973,340.00	831,225.00
2	Subordinated Debts - Institutional	142,900.00	17,500.00
3	Term Loans from Banks - Secured	2,140,325.00	1,135,365.50
4	Term Loans from Banks - Unsecured	-	16,000.00
5	Term Loans from Financial Institutions/ corporates - Secured	185,000.00	110,000.00
6	Commercial Papers	1,401,900.00	640,500.00
7	Fixed Deposit	302,106.45	278,542.69
8	Masala Bonds	116,000.00	135,000.00
9	Inter Corporate Deposits	18,770.00	5,040.00

The total Assets Under Management had increased from Rs. 7,876,093.08 lacs as on March 31, 2017 to Rs. 9,530,629.43 lacs as on March 31, 2018 . During 2017-18, the company securitised its assets worth Rs. 1,246,710.00 lacs (accounting for 13.08% of the total assets under management as on March 31, 2018) as against Rs. 1,121,420.00 lacs during 2016-17. With securitisation, the company ensures better borrowing profile, leading to lower interest liability owing to its lending to priority sector as per RBI. The outstanding securitised assets portfolio stood at Rs. 1,563,310.93 lacs as on March 31, 2018.

The Company continued its focus on financing of pre-owned commercial vehicles. Our relationship based business model enabled us to maintain the leadership position in the preowned commercial vehicles financing segment. For further penetration into rural market, the Company opened 8 new Rural Centres and 295 new Branch Offices. With this the total number of Rural Centres has now increased to 862 and the total number of Branch offices across India has now increased to 1213.

ISSUE OF SECURITIES

Share Capital

The paid up Equity Share Capital of the Company stood at Rs. 22,688.27 lacs (226,882,736 shares of Rs. 10/- each) as on March 31, 2018. There was no change in the paid up Equity Share Capital in the Financial Year 2017-18.

Issue of Rupee Denominated Bonds Overseas under the Medium Term Note Programme (âMasala Bondsâ)

In order to diversify the borrowing portfolio of the Company and to open new market/avenue for borrowing, the Company issued Rs. 84,000 lacs 8.10% Senior Secured Notes Due 2023 under the Medium Term Note Programme and Rs. 32,000 lacs 7.90% Senior Secured Notes Due 2021 under the Medium Term Note Programme which are listed on the Singapore Exchange Securities Trading Limited. The proceeds of Notes have been utilized in accordance with the guidelines issued by the Reserve Bank of India. This is a Rupee based transaction and there is no foreign exposure for the Company.

FIXED DEPOSITS

As on March 31, 2018, there were 17,819 fixed deposits aggregating to Rs. 17,713.58 lacs that have matured but remained unclaimed. There were no deposits, which were claimed but not paid by the Company. The unclaimed deposits have since reduced to 12,922 deposits amounting to Rs. 11,315.19 lacs. Appropriate steps are being taken continuously to obtain the depositorsâ instructions so as to ensure renewal/ repayment of the matured deposits in time.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Puneet Bhatia, Non-Executive Non-Independent Director of the Company will retire by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offers himself for re-appointment.

There was no change (appointment/resignation) in the Key Managerial Personnel of the Company during the Financial year.

Declaration by Independent Directors

The Board has received the declaration from all the Independent Directors as per the Section 149(7) of the Companies Act, 2013 and the Board is satisfied that all the Independent Directors meet the criteria of independence as mentioned in Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations).

Policies on appointment of Directors and Remuneration

Your Company recognizes the importance and benefits of having the diverse Board to enhance quality of its performance and has adopted a Policy on Board Diversity formulated by the Nomination and Remuneration Committee. The Companyâs Remuneration Policy has laid down a framework for remuneration of Directors (Executive and Non-Executive), Key Managerial Personnel and Senior Management Personnel. These Policies are annexed as Annexure I and II. The Nomination and Remuneration Committee also takes into account the fit and proper criteria for appointment of directors as stipulated by Reserve Bank of India. The Company has also formulated policy on Succession Planning for Directors and Key Managerial Personnel for continuity and smooth functioning of the Company.

Number of Meetings of the Board

Six Board Meetings were held during the financial year. The details of the Board and various Committee meetings are given in the Corporate Governance Report.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its various Committees. The evaluation was conducted on the basis of a structured questionnaire which comprises performance criteria such as performance of duties and obligations, independence of judgement, level of engagement and participation, their contribution in enhancing the Boardâs overall effectiveness, etc. The Board has expressed their satisfaction with the evaluation process.

DIRECTORSâ RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) of the Companies Act, 2013, the Directors confirm that, to the best of their knowledge and belief:

a) In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

b) That such accounting policies as mentioned in note 2.1 to the financial statements have been selected and applied consistently, and judgments and estimates have been made 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 the year ended on that date;

d) The Annual Accounts have been prepared on a going concern basis.

e) The Company had followed the internal financial controls laid down by the directors and that such internal financial controls are adequate and were operating effectively.

f) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

RBI GUIDELINES

The Company continues to comply with all the regulations prescribed by the Reserve Bank of India, from time to time.

BUSINESS RESPONSIBILITY REPORT

Pursuant to Regulation 34(2)(f) of the Listing Regulations, Business Responsibility Report is annexed and forms part of the Annual Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The CSR Report for the Financial Year 2017-18 annexed to this report as Annexure-III. The composition of CSR Committee is included in the CSR report. The CSR Policy is uploaded on the Companyâs website at the web link: http:// stfc.in/pdf/Corporate-Social-Responsibility-Policy.pdf.

DISCLOSURES AS PER THE SECTION 134 OF THE COMPANIES ACT, 2013 READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014

Extract of Annual Return

The extract of the annual return in the Form MGT 9 is annexed to this report as Annexure -IV.

Conservation of Energy, Technical Absorption and Foreign Exchange Earnings and Outgo

The information pursuant to Section 134(3)(m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 is as follows:

a. The Company has no activity involving conservation of energy or technology absorption.

b. The Company does not have any Foreign Exchange Earnings.

c. Outgo under Foreign Exchange - Rs. 1,733.60 lacs.

Loans, guarantee or investments in securities

Pursuant to Section 186(11)(a) of the Companies Act, 2013 (the âActâ) read with Rule 11(2) of the Companies (Meetings of Board and its Powers) Rules, 2014, the loan made, guarantee given or security provided in the ordinary course of business by a Non-Banking Financial Company (NBFC) registered with Reserve Bank of India are exempt from the applicability of provisions of Section 186 of the Act. As such the particulars of loans and guarantee have not been disclosed in this Report.

During the year under review the Company has invested surplus funds in various securities in the ordinary course of business. For details of the Current Investments and NonCurrent Investments of the Company refer to Note 14 & 10 respectively of the financial statements.

Contracts or Arrangements with Related Parties

The Related Party Transactions (RPTs) were entered in ordinary course of business on an armâs length basis and were in compliance with the provisions of the Companies Act, 2013 and the SEBI Regulations 2015. The statement of RPTs was reviewed by the Audit Committee on a quarterly basis. Omnibus approval of the Audit Committee was obtained for the RPTs of repetitive nature. As required under the Master Direction - Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016, the Policy on Materiality of Related Party Transactions and dealing with Related Party Transactions as approved by the Board is annexed to this report as Annexure V and is also uploaded on the Companyâs website at the web link:http://stfc.in/pdf/Policy-on-Materiality-of-Related-Party-Transactions-and-dealing-with-Related-Party-Transactions-v1.pdf.

There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. Accordingly, particulars of contracts or arrangements with related parties referred to in Section 188(1) along with the justification for entering into such contract or arrangement in Form AOC-2 does not form part of the report. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company save and except the payment of sitting fees and commission to Independent Directors. For details of the transactions with Related Party refer to the note 27 to the financial statements.

Risk Management

Whistle Blower Policy/ Vigil Mechanism

The Companyâs Whistle Blower Policy provides a mechanism under which an employee/director of the Company may report unethical behaviour, suspected or actual fraud, violation of code of conduct and personnel policies of the Company. The Vigil Mechanism ensures standards of professionalism, honesty, integrity and ethical behavior. The Whistle Blower Policy/Vigil Mechanism is uploaded on the Companyâs website: http://www.stfc.in/pdf/Whistle-Blower-Policy-Vigil-Mechanism.pdf

Financial summary/highlights

The details are spread over in the Annual Report as well as are provided in the beginning of this report.

Subsidiaries, joint ventures or associate companies

Shriram Automall India Limited (SAMIL) through its 74 Automalls located across the Country provides fee-based facilitation services for the sale of pre-owned commercial and passenger vehicles, agricultural and construction equipments, dealerâs stock of pre-owned two wheelers, etc. repossessed by banks and financing companies. For the year ended March 31, 2018, SAMILâs total income from operations was Rs. 10,528.42 lacs as against Rs. 8,030.53 lacs in the previous year 2016-17 and the Net Profit of Rs. 2,004.75 lacs as against net profit of Rs. 829.15 lacs in the previous year 2016-17.

The Company sold 16630435 Equity Shares of SAMIL of face value of Rs. 10/- each fully paid up to MXC Solutions India Private Limited at Rs. 94.03 per share consideration for Rs. 15637.60 lacs. Consequently, SAMIL ceased to be the wholly-owned subsidiary on February 07, 2018 and became an Associate of the Company from February 07, 2018.

Except this there were no other entity(ies) which became or ceased to be subsidiaries, joint ventures or associate companies of the Company during the year.

Internal Financial Control System

The details in respect of internal financial control and their adequacy are included in Management Discussion and Analysis, which is a part of the Annual Report.

Composition of Audit Committee

The Audit Committee comprises of four directors namely, Mr. S. Sridhar - Chairman, Mrs. Kishori Udeshi, Mr. S. M. Bafna and Mr. Puneet Bhatia.

Others

- There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and companyâs operations in future.

- There was no change in the nature of business of the Company. The company continues to be an Asset Finance Company.

- There was no fraud reported by the Auditors of the Company under the Section 143(12) of the Companies Act, 2013 to the Audit Committee.

- The internal complaint committee constituted under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 received and disposed one complaint during the year under review.

- Disclosure regarding details relating to Deposits covered under Chapter V of the Act is not applicable since our company is a Non-Banking Financial Company regulated by Reserve Bank of India. The Company accepts deposits as per Master Direction - Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016.

- The Company has obtained a certificate from its Statutory Auditor certifying that the Company is in compliance with the provisions of FEMA Regulations with regard to downstream investment made by the Company during the Financial Year.

- The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings, Annual General Meetings and Dividend.

CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to Section 129 read with Rule 5 to the Companies (Accounts) Rules, 2014, Statement Containing salient features of the financial statement of subsidiary, and associate company (Form AOC-1) and a statement on consolidated financial position of the Company with that of the subsidiary upto February 06, 2018 and thereafter of the associate is attached to the Annual Report. The consolidated financial statements attached to this Annual Report are prepared in compliance with the applicable Accounting Standards and Listing Regulations.

PARTICULARS OF EMPLOYEES

The Company has not employed any individual whose remuneration falls within the purview of the limits prescribed under the provisions of Section 197 of the Companies Act, 2013 read with Rule 5(2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

The Disclosure required as under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to this report as Annexure - VI.

AUDITORS

Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, M/s Haribhakti & Co. LLP, Chartered Accountants, Mumbai (Firm Registration No. 103523W/W100048) and M/s Pijush Gupta & Co. Chartered Accountants, Guru Gram (Firm Registration No. 309015E) had been appointed as joint Auditors of the Company at the 38th Annual General Meeting (AGM) held on June 29, 2017 to hold office from the conclusion of the 38th Annual General Meeting (AGM) until the conclusion of the 43rd Annual General Meeting (AGM) of the Company, subject to the ratification of their appointment at every AGM, if required under law. Accordingly, necessary resolution for ratification of appointment auditors is included in the notice of the AGM. Joint Auditors have confirmed that they are not disqualified to act as Auditors and are eligible to hold office as Auditors of your Company. They have also confirmed that they hold a valid peer review certificate as prescribed under Listing Regulations. Approval of the Members is being sought for fixation of remuneration of Joint Auditors of your Company.

The Auditorsâ Report to the Shareholders for the year under review does not contain any qualification, reservation or adverse remark.

SECRETARIAL AUDIT

Secretarial Audit Report pursuant to the provisions of Section 204 of the Companies Act, 2013 for the financial year 2017-18 issued by Mr. P. Sriram, Practicing Company Secretary (Certificate of Practice No. 3310) (Membership No. FCS 4862) is annexed to this report as Annexure-VII. The report does not contain any qualification, reservation or adverse remark.

CORPORATE GOVERNANCE

Pursuant to Schedule V of the SEBI Regulations the following Reports/Certificates form part of the Annual Report:

- the Report on Corporate Governance;

- the Certificate duly signed by the Managing Director & CEO and Chief Financial Officer on the Financial Statements of the Company for the year ended March 31, 2018 as submitted to the Board of Directors at their meeting held on April 27, 2018 ;

- the declaration by the Managing Director & CEO regarding compliance by the Board members and senior management personnel with the Companyâs Code of Conduct ; and

- the Management Discussion & Analysis Report

The Auditorsâ Certificate on Corporate Governance is annexed to this report as Annexure-VIII.

ACKNOWLEDGEMENT

For and on behalf of the Board of Directors

S. Lakshminarayanan

Mumbai Chairman

April 27, 2018 (DIN: 02808698)

Mar 31, 2017

The Directors have pleasure in presenting their Thirty Eighth Annual Report and the Audited Statements of Accounts of the Company for the financial year ended March 31, 2017.

FINANCIAL HIGHLIGHTS

(Rs. in lacs)

Particulars	2016-17	2015-16
Profit Before Depreciation And Taxation	195,783.33	181,773.73
Less: Depreciation and amortization	3,390.78	3,630.61
Profit Before Tax	192,392.55	178,143.12
Less: Provision for taxation	66,658.30	60,323.36
Profit After Tax	125,734.25	117,819.76
Add: Balance brought forward from previous year	418,745.82	383,829.91
Add: Additions on account of amalgamation as on April 01, 2015	-	(3,503.89)
Balance available for appropriation	544,480.07	498,145.78
Appropriations
General reserve	12,600.00	12,000.00
Statutory reserve	25,200.00	24,000.00
Debenture redemption reserve	(15,945.04)	16,043.39
Dividend on equity shares of Rs.10/- each	9,075.31	22,688.27
Tax on dividend	1,847.52	4,668.30
Balance carried to Balance Sheet	511,702.28	418,745.82

DIVIDEND

Your Directors have maintained total dividend of Rs. 10/per equity share i.e. 100% for the financial year ended March 31, 2017 consisting of an interim dividend of Rs. 4/- per equity share i.e. 40% declared at the Board meeting held on October 25, 2016 and a final dividend of Rs. 6/- per equity share i.e. 60% recommended at the Board meeting held on April 27, 2017. The interim dividend was paid to the eligible shareholders on November 16, 2016.

TRANSFER TO RESERVES

The amounts proposed to be transferred to General Reserve and Statutory Reserve and from Debenture Redemption Reserve are mentioned in the Financial Highlights under the heading Appropriationsâ.

CAPITAL ADEQUACY RATIO

Your Companyâs total Capital Adequacy Ratio (CAR), as of March 31, 2017, stood at 16.94 % of the aggregate risk weighted assets on balance sheet and risk adjusted value of the off-balance sheet items, which is above the regulatory minimum of 15%.

CREDIT RATING

The credit rating enjoyed by the Company as on March 31, 2017 is as follows:

Credit Rating Agency	Instruments	Ratings
CARE	Non-Convertible Debentures	CARE AA
CARE	Subordinated Debt	CARE AA
CRISIL	Fixed Deposit	CRISIL FAAA/Stable
CRISIL	Subordinated Debt	CRISIL AA /Stable
CRISIL	Non-Convertible Debentures	CRISIL AA /Stable
CRISIL	Short Term Debt	CRISIL A1
CRISIL	Bank Loan- Short Term	CRISIL A1
CRISIL	Bank Loan- Long Term	CRISIL AA / Stable
ICRA	Fixed Deposit	MAA with Stable outlook
India Ratings & Research Pvt. Ltd. (Formerly known as âFITCHâ)	Non-Convertible Debentures	IND AA /Stable Outlook
India Ratings & Research Pvt. Ltd. (Formerly known as FITCHâ)	Subordinated Debt	IND AA /Stable Outlook
Fitch Ratings	Long-Term Issuer Default Rating	BB /Stable Outlook
Fitch Ratings	Short-Term Issuer Default Rating	B
Standard & Poorâs Ratings	Long-Term Issuer Credit Rating	BB /Stable
Standard & Poorâs Ratings	Short-Term Issuer Credit Rating	B
Standard & Poorâs Ratings	Offshore Rupee Denominated Bond (Masala Bond)	BB

OPERATIONS & COMPANYâS PERFORMANCE

For the financial year ended March 31, 2017, your Company earned Profit Before Tax of Rs. 192,392.55 lacs as against Rs. 178,143.12 lacs in the previous financial year and the Profit After Tax of Rs. 125,734.25 lacs as against Rs. 117,819.76 lacs in the previous financial year. The total Income for the year under consideration was Rs. 1,083,061.23 lacs and total expenditure was Rs. 890,668.68 lacs. The revised NPAs norms stipulated by Reserve Bank of India which required higher provisioning in respect of Non-Performing loan assets in a phased manner had impacted the profitability of the Company during the current year.

As on March 31, 2017, the outstanding hypothecation loans were Rs. 6,410,197.35 lacs. The total Assets Under Management had increased from Rs. 7,276,060.55 lacs as on March 31, 2016 to Rs. 7,876,093.08 lacs as on March 31, 2017. During the Financial Year 2016-17, the company securitized its assets worth Rs. 1,121,420.00 lacs (accounting for 14.24 % of the total assets under management as on March 31, 2017) as against Rs. 899,175.10 lacs during the Financial Year 2015-16. With securitization, the company ensures better borrowing profile, leading to lower interest liability owing to its lending to priority sector as per RBI. The outstanding securitized assets portfolio stood at Rs. 1,329,474.16 lacs as on March 31, 2017.

Mobilization of funds from following sources/instruments during the financial year ended March 31, 2017 was as under:

(Rs. in lacs)

Sr. No.	Particulars	Funds mobilized by the Company
1	Non-Convertible Debentures - Institutional	831,225.00
2	Subordinated Debts - Institutional	17,500.00
3	Term Loans from Banks - Secured	1,135,365.50
4	Term Loans from Banks - Unsecured	16,000.00
5	Term Loans from Financial Institutions / corporate - Secured	110,000.00
6	Commercial Papers	640,500.00
7	Fixed Deposit	278,542.69
8	Offshore Rupee Denominated Bonds (Masala Bonds)	135,000.00

The Company continued its focus on financing of pre-owned commercial vehicles. Our relationship based business model enabled us to maintain the leadership position in the preowned commercial vehicles financing segment. For further penetration into rural market, the Company opened 51 new Rural Centres and 65 new Branch Offices. With this the total number of Rural Centres has now increased to 854 and the total number of Branch offices across India has now increased to 918.

ISSUE OF SECURITIES Share Capital

There was no change in the paid up Equity Share Capital in the Financial Year 2016-17.

Issue of Masala Bonds

In order to diversify the borrowing portfolio of the Company and to open new market/avenue for borrowing, the Company issued Rs. 135,000 lacs 8.25% Senior Secured Notes Due 2020 which are listed on the Singapore Exchange Securities Trading Limited. The proceeds of Notes have been utilized in accordance with the guidelines issued by the Reserve Bank of India.

FIXED DEPOSITS

As on March 31, 2017, there were 15,150 fixed deposits aggregating to Rs. 13,039.67 lacs that have matured but remained unclaimed. There were no deposits, which were claimed but not paid by the Company. The unclaimed deposits have since reduced to 11,077 deposits amounting to Rs. 8,693.13 lacs. Appropriate steps are being taken continuously to obtain the depositorsâ instructions so as to ensure renewal/ repayment of the matured deposits in time.

DIRECTORS AND KEY MANAGERIAL PERSONNEL Director retiring by rotation

Mr. Gerrit Lodewyk Van Heerde, Non-Executive Non Independent Director of the Company will retire by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offers himself for re-appointment.

Change in Directors

Mr. Ramakrishnan Subramanian resigned from the directorship of the Company on February 03, 2017. He was appointed as an Additional Director in the capacity of NonExecutive Non-Independent Director of the Company by the Board of Directors in its meeting held on July 27, 2016.

Mr. Jasmit Singh Gujral resigned as Managing Director & CEO of the Company and also from the directorship of the Company with effect from close of business hours on October 25, 2016. The Board of Directors have placed on record their appreciation of the services rendered by Mr. Jasmit Singh Gujral and Mr. Ramakrishnan Subramanian.

On recommendation of Nomination and Remuneration Committee, the Board of Directors in its meeting held on October 25, 2016 has appointed Mr. Umesh Revankar as an Additional Director and also as Managing Director & CEO of the Company. The Board of Directors recommend the resolutions contained in Notice of the ensuing AGM for his appointment as Director and also as Managing Director & CEO of the Company. There was no other change in Key Managerial Personnel of the Company during the year under review.

DECLARATION BY INDEPENDENT DIRECTORS

The Board has received the declaration from all the Independent Directors as per the Section 149(7) of the Companies Act, 2013 (the âActâ) and the Board is satisfied that all the Independent Directors meet the criteria of independence as mentioned in Section 149(6) of the Companies Act, 2013.

POLICIES ON APPOINTMENT OF DIRECTORS AND REMUNERATION

The Companyâs Policy on Board Diversity provides criteria for appointment of directors. The Companyâs Remuneration Policy provides for remuneration of Managing Director & CEO, Independent Director, Key Managerial Personnel, Employees, etc. These Policies are annexed to this report as Annexure I and II. The Nomination and Remuneration Committee also takes into account the Fit and Proper criteria for appointment of directors as stipulated by Reserve Bank of India.

NUMBER OF MEETINGS OF THE BOARD

During the year five Board Meetings were held. The details of the Board and various Committee meetings are given in the Corporate Governance Report.

BOARD EVALUATION

Pursuant to the provisions of the Act and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its various Committees. The evaluation was conducted on the basis of a structured questionnaire which comprises performance criteria such as performance of duties and obligations, independence of judgment, level of engagement and participation, contribution in enhancing the Boardâs overall effectiveness, etc. The Board of Directors has expressed its satisfaction on functioning and performance of Board and Committees and the performance of individual directors.

DIRECTORSâ RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) of the Act, the Directors confirm that, to the best of their knowledge and belief:

a) In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

b) That such accounting policies as mentioned in note

2.1 to the financial statements have been selected and applied consistently, and judgments and estimates have been made 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, 2017 and of the profit of the Company for the year ended on that date;

d) The Annual Accounts have been prepared on a going concern basis.

e) The Company had followed the internal financial controls laid down by the directors and that such internal financial controls are adequate and were operating effectively.

f) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

RBI GUIDELINES

The Company continues to comply with all the requirements prescribed by the Reserve Bank of India, from time to time.

BUSINESS RESPONSIBILITY REPORT

Pursuant to Regulation 34(2)(f) of the Listing Regulations, Business Responsibility Report is annexed and forms part of the Annual Report

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Report on CSR activities for the Financial Year 2016-17 is annexed to this report as Annexure-III. The composition of CSR Committee is included in the Report on CSR activities. The CSR Policy is uploaded on the Companyâs website at the web link:http://stfc.in/pdf/Corporate-Social-Responsibility-Policy.p df

DISCLOSURES AS PER THE SECTION 134 OF THE ACT, READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014

Extract of Annual Return

The extract of the annual return in the Form MGT 9 is annexed to this report as Annexure-IV.

Conservation of Energy, Technical Absorption and Foreign Exchange Earnings and Outgo

The information pursuant to Section 134(3)(m) of the Act read with the Companies (Accounts) Rules, 2014 is as follows:

a. The Company has no activity involving conservation of energy or technology absorption.

b. The Company does not have any Foreign Exchange Earnings.

c. Outgo under Foreign Exchange - Rs. 1,367.99 lacs. Loans, guarantee or investments

Pursuant to Section 186(11)(a) of the Act read with Rule 11(2) of the Companies (Meetings of Board and its Powers) Rules, 2014, the loan made, guarantee given or security provided in the ordinary course of business by a Non- Banking Financial Company (NBFC) registered with Reserve Bank of India are exempt from the applicability of provisions of Section 186 of the Act. As such the particulars of loans and guarantee have not been disclosed in this Report.

During the year under review the Company has invested surplus funds in various securities in the ordinary course of business. For details of the Current Investments and Noncurrent Investments of the Company refer to Note 10 & 14 respectively of the financial statements.

Contracts or Arrangements with Related Parties

The Related Party Transactions (RPTs) were entered in ordinary course of business on an armâs length basis and were in compliance with the provisions of the Act and the Listing Regulations. The statement of RPTs was reviewed by the Audit Committee on a quarterly basis. Omnibus approval of the Audit Committee was obtained for the RPTs of repetitive nature. As required under the Master Direction - Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016, the Policy on Materiality of Related Party Transactions and dealing with Related Party Transactions as approved by the Board is annexed to this report as Annexure-V and is also uploaded on the Companyâs website at the web link:

http://stfc.in/pdf/Policy-on-Materiality-of-Related-

Party-Transactions-and-dealing-with-Related-Party- Transactions-v1.pdf.

There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. Accordingly, particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Act along with the justification for entering into such contract or arrangement in Form AOC-2 does not form part of the report. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company save and except the payment of sitting fees and commission to Independent Directors. For details of the transactions with Related Party refer to the note 27 to the financial statements.

Risk Management

The Companyâs Risk Management Policy deals with identification, mitigation and management of risks across the organization. The same has been dealt with in the Management Discussion and Analysis Report annexed to the Annual Report.

Whistle Blower Policy/ Vigil Mechanism

The details are spread over in the Annual Report as well as are provided in the beginning of this report.

Subsidiaries, joint ventures or associate companies

Shriram Automall India Limited (SAIL), Wholly Owned subsidiary of the Company through its 67 Automalls located across the Country provides fee-based facilitation services for the sale of pre-owned commercial and passenger vehicles, agricultural and construction equipments, dealerâs stock of pre-owned two wheelers, etc. repossessed by banks and financing companies. For the year ended March 31, 2017, SAILâs total income from operations was Rs. 8,030.53 lacs as against Rs. 7,452.95 lacs in the previous year 2015-16 and the Net Profit of Rs. 829.15 lacs as against net profit of Rs. 542.07 lacs in the previous year 2015-16. Eleven new Automalls were opened during the Financial Year 2016-17.

The annual report and the annual accounts of SAIL and the related detailed information shall be made available to shareholders of the Company seeking such information. The annual accounts of the SAIL shall also be kept for inspection by shareholders at the Registered Office of the Company and of the SAIL. The annual accounts of SAIL shall be available on the website of the Company viz. http://www.stfc.in/annual-reports.aspx The Company shall furnish hard copy of details of accounts of the SAIL to any shareholder on demand.

No Company has become or ceased to be its Subsidiary, joint venture or associate company during the year.

Internal Financial Control System

The Companyâs well defined organizational structure, documented policy guidelines, defined authority matrix and internal financial controls ensure efficiency of operations, protection of resources and compliance with the applicable laws and regulations. Moreover, the Company continuously upgrades its systems and undertakes review of policies. The internal financial control is supplemented by extensive internal audits, regular reviews by management and standard policies and guidelines to ensure reliability of financial and all other records to prepare financial statements and other data. The Audit Committee of the Board reviews internal audit reports given along with management comments. The Audit Committee also monitors the implemented suggestions.

Composition of Audit Committee

The Audit Committee comprises of four directors namely, Mr. S. Sridhar - Chairman, Mrs. Kishori Udeshi, Mr. S. M. Bafna and Mr. Puneet Bhatia.

Others

- There are no significant and material orders passed by the Regulators or courts or tribunals impacting the going concern status and companyâs operations in future.

- There was no change in the nature of business of the Company. The company continues to be an Asset Finance Company.

- During the year under review, there were no cases filed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to Section 129 of the Act read with Rule 5 to the Companies (Accounts) Rules, 2014, Statement comparing salient features of the financial statement of Subsidiary (Form AOC-1) and a statement on consolidated financial position of the Company with that of the subsidiary is attached to the Annual Report. The consolidated financial statements attached to this Annual Report are prepared in compliance with the applicable Accounting Standards and Listing Regulations.

PARTICULARS OF EMPLOYEES

The Company has not employed any individual whose remuneration falls within the purview of the limits prescribed under the provisions of Section 197 of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

The Disclosure required as under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended is annexed to this report as Annexure-VI.

AUDITORS

M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, Mumbai (ICAI Firm Registration No. 301003E / E300005) and M/s. G. D. Apte & Co., Chartered Accountants, Mumbai, (ICAI Firm Registration No. 100515W), Auditors of the Company will retire at the conclusion of the ensuing AGM. In compliance with mandatory rotation of Auditors as per provision of Section 139 of the Act and the Companies (Audit and Auditors) Rules 2014, the Company is required to appoint new Auditors in place of the retiring joint Auditors at the ensuing AGM.

The Audit Committee and the Board of Directors have recommended appointment of M/s Haribhakti & Co. LLP, Chartered Accountants, Mumbai (Firm Registration No. 103523W/W100048) and M/s Pijush Gupta & Co. Chartered Accountants, Kolkata (Firm Registration No. 309015E) as new joint Auditors Certificates have been received from them to the effect that their appointment as Auditors of the Company, if made would be within the limits prescribed under Section 139 and 141 of the Act. They have also confirmed that they hold a valid peer review certificate as prescribed under Listing Regulations. The Board of Directors recommend passing of the resolution for appointment of new joint Auditors at the ensuing AGM.

The Auditorsâ Report to the Shareholders for the year under review does not contain any qualification.

SECRETARIAL AUDIT

The Board had appointed Mr. P. Sriram, Practicing Company Secretary (Certificate of Practice No.3310) (Membership No. FCS 4862) to carry out Secretarial Audit under the provisions of Section 204 of the Act for the financial year 2016-17. The Secretarial Audit Report is annexed to this report as Annexure-VII. The report does not contain any qualification.

CORPORATE GOVERNANCE

Pursuant to Schedule V of the Listing Regulations the following Reports/Certificates form part of the Annual Report:

-the Report on Corporate Governance;

- the Certificate duly signed by the Managing Director & CEO and Chief Financial Officer on the Financial Statements of the Company for the year ended March 31, 2017 as submitted to the Board of Directors at their meeting held on April 27, 2017;

- the declaration by the Managing Director & CEO regarding compliance by the Board members and senior management personnel with the Companyâs Code of Conduct ; and

- the Management Discussion & Analysis Report

The Auditorsâ Certificate on Corporate Governance is annexed to this report as Annexure-VIII.

ACKNOWLEDGEMENT

The Board of Directors would like to place on record their gratitude for the guidance and cooperation extended by Reserve Bank of India and the other regulatory authorities. The Board takes this opportunity to express their sincere appreciation for the excellent patronage received from the Banks and Financial Institutions and for the continued enthusiasm, total commitment, dedicated efforts of the executives and employees of the Company at all levels. We are also deeply grateful for the continued confidence and faith reposed on us by the Shareholders, Depositors, Debenture holders and Debt holders.

For and on behalf of the Board of Directors

S. Lakshminarayanan

Mumbai Chairman

April 27, 2017 (DIN : 02808698)

Mar 31, 2014

The Directors have pleasure in presenting their Thirty Fifth Annual Report and the Audited Statements of Accounts for the financial year ended March 31, 2014.

financial highlights

(Rs. in lacs)

Particulars 2013-14 2012-13

Profit Before Depreciation and Taxation 185,718.05 203,452.20

Less: Depreciation and Amortisation 2,913.79 1,833.09

Profit Before Tax 182,804.26 201,619.11

Less: Provision for Taxation 56,383.49 65,557.10

Profit After Tax 126,420.77 136,062.01

Add: Balance brought forward from previous year 288,626.08 191,157.33

Balance available for appropriation 415,046.85 327,219.34

appropriations

Excess provision written back Â tax on dividend - 0.41

General Reserve 13,000.00 14,000.00

Statutory Reserve 26,000.00 28,000.00

Debenture Redemption Reserve 11,155.41 (21,956.09)

Dividend on Equity Shares of Rs. 10/- each 15,881.79 15,900.24

Tax on Dividend 2,698.69 2,649.52

Balance carried to Balance Sheet 346,310.96 288,626.08

Dividend

Your Directors at their meeting held on October 29, 2013 declared an interim dividend of Rs. 3.00/- per equity share (i.e. 30%) for the financial year 2013-14, which was paid on November 25, 2013.

Your Directors have recommended a final dividend of Rs.4/- per equity share (i.e. 40%) for the financial year ended March 31, 2014. Thus, the total dividend (including interim dividend paid) for the year ended March 31, 2014 shall be Rs.7/- per equity share (i.e.70%).

Capital adequacy ratio

Your Company''s total Capital Adequacy Ratio (CAR), as of March 31, 2014, stood at 23.39% of the aggregate risk weighted assets on balance sheet and risk adjusted value of the off-balance sheet items, which is well above the regulatory minimum of 15%.

Credit rating

The credit rating enjoyed by the Company as on March 31, 2014 are as follows:

Credit rating agency Instruments ratings

CARE Non-Convertible Debentures CARE AA

CARE Subordinate Debt CARE AA

CRISIL Fixed Deposit CRISIL FAA /Stable

CRISIL Subordinate Debts CRISIL AA/Stable

CRISIL Non-Convertible Debentures-Public CRISIL AA/Stable

CRISIL Short Term Debt CRISIL A1

CRISIL Bank Loan Long Term & Short Term CRISIL AA/Stable

ICRA Fixed Deposit MAA with Stable outlook

India Ratings & Research Private Limited Non-Convertible Debentures-Public IND AA (Formerly known as "FITCH")

India Ratings & Research Private Limited Subordinate Debt IND AA (Formerly known as "FITCH")

operationsÂ

For the financial year ended March 31, 2014, your Company earned Profit Before Tax of Rs.182,804.26 lacs as against Rs.201,619.11 lacs in the previous financial year and the Profit After Tax of Rs.126,420.77 lacs as against Rs. 136,062.01 lacs in the previous financial year. The total Income for the year under consideration was Rs. 788,825.91 lacs and total expenditure was Rs.606,021.65 lacs. As on March 31, 2014, the outstanding hypothecation loans were Rs. 3,525,312.21 lacs.

During the financial year ended March 31, 2014, the Company mobilized Rs. 483,718.01 lacs through Non-convertible debentures, Rs.129,011.38 lacs through subordinated debts, Rs.1,363,900 lacs through term loans, Rs. 48,700 lacs through working capital loans, Rs.46,000 lacs through commercial paper,Rs.1,067,954.78 lacs through assignment of loan receivables from the customers, Rs.161,630.58 lacs through Fixed deposit and Rs. 1,400 lacs through ICD.

Economic and Business Environment

According to the advance estimates of national income for the year 2013-14 issued by the Central Statistical Office (CSO), Ministry of Statistics and Programme Implementation, Government of India vide Press Release dated February 7, 2014, the growth of Gross Domestic Product (GDP) during 2013-14 is estimated at 4.9% as compared to growth rate of 4.5% in the year 2012-13 (previous year). The Agriculture sector comprising ''agriculture, forestry and fishing'' sectors is likely to show a growth of 4.6% during 2013-14 as against the previous year''s growth rate of 1.4%. The production of food grains is expected to grow by 2.3% as compared to decline of 0.8% in the previous agriculture year. In Industry sector de-growth of 0.2% is estimated in the ''manufacturing'' sector as compared to the growth of 1.1% in the previous year. The mining and quarrying de-growth of 1.9% is estimated as compared to the de-growth of 2.2% in the previous year. A growth rate of 1.7% is estimated in the ''construction'' as compared to 1.1% in the previous year.

In the Service sector ''trade, hotels, transport and communication'' is estimated to grow at 3.5% as against growth of 5.1% in the previous year. The sector ''financing, insurance, real estate and business services'' is expected to show a growth rate of 11.2% as compared to growth rate of 10.9% in the previous year.

automobile Industry

The Society of Indian Automobile Manufacturers (SIAM) has reported that the overall domestic sales of vehicles during the year 2013-14 grew marginally by 3.53% as compared to year 2012-13 (last year). The sales of Passenger Vehicles declined by 6.05%. Within the Passenger Vehicles, Passenger Cars, Utility Vehicles and Vans dropped by 4.65%, 5.01% and 19.58% respectively as compared to the last year. The overall Commercial Vehicles sales registered a de-growth of 20.23% as compared to the last year. Medium & Heavy Commercial Vehicles (M&HCVs) registered negative growth of 25.33% and Light Commercial Vehicles also dropped by 17.62%. Three Wheelers sales declined by 10.90%.

Passenger Carriers and Goods Carriers declined by 12.74% and 2.53% respectively. Two Wheelers registered growth of 7.31%. Within the Two Wheelers segment, Scooters and Motorcycles grew at 23.24% and 3.91% respectively, while Mopeds declined by 8.35% during April, 2013- March, 2014.

The overall automobile exports grew by 7.21%. Passenger vehicles, Three Wheelers and Two Wheelers exports registered growth of 6.09%, 16.60% and 6.52% respectively, while Commercial Vehicles exports declined by 3.71% (SIAM Media Release 11/04/2014).

The heavy goods transport vehicles sector faced many challenges in terms of idle time due to de-growth in manufacturing, mining and quarrying sectors, pressure on margins as the freight rate increases were not commensurate with fuel price increases. This resulted into lower demand for credit from urban areas. The rural and semi-urban credit demand was maintained due to impressive growth in foodgrain production.

Company''s performance

Considering the difficult macro-economic conditions and challenging business environment, the Company''s performance during the year under review was satisfactory. The Company continued its focus on financing of pre-owned commercial vehicles and penetration into rural market. The assets under management had increased. However, the finance cost had increased. The Net interest margins were under pressure.

outlook and opportunities

The real GDP growth rate is projected to pick up to a range of 5% to 6% in 2014-15. Easing of domestic supply bottlenecks and progress on the implementation of stalled projects already cleared should contribute to growth. The Current Account Deficit is expected to be about 2% of GDP.

RBI has set ambitious target of bringing down the CPI inflation to 8% by January 2015 and 6% by January, 2016. But the factors such as possible El Nino effects on agricultural production, uncertainty on the setting of minimum support prices for agricultural commodities and setting of other administered prices of fuel, fertilizer and electricity may post threat in achievement of these targets.

Your directors expect that with stable government in center, estimates of better GDP growth rate, the Company''s strong business model, innovative fund management techniques, continued confidence of investors and support of the lending institutions to the Company''s fund mobilization activities on account of good track record of debt servicing, your Company should achieve better performance in the year 2014-15.

fixed Deposits

As on March 31, 2014, there were 3,619 fixed deposits aggregating to Rs. 3,945.82 lacs that have matured but remained unclaimed. There were no deposits, which we reclaimed but not paid by the Company. The unclaimed deposits have since reduced to 3,012 deposits amounting to Rs. 3,040.09 lacs. Appropriate steps are being taken continuously to obtain the depositors'' instructions so as to ensure renewal/ repayment of the matured deposits in time.

Subsidiaries

For the year ended March 31, 2014, the Income from Operations and Profit after Tax of Shriram Equipment Finance Company Limited (SEFCL) was Rs. 54,377.78 lacs and Rs.8,683.00 lacs respectively.

For the year ended March 31, 2014, the income from operations and Profit after Tax of Shriram Automall India Limited (SAIL) was Rs.7,325.13 lacs and Rs. 826.35 lacs respectively. During the year 2013-14, SAIL has established 11 additional Automalls, thereby increasing the total number of Automalls to 32.

As the Company received Corporate Agent license from Insurance Regulatory and Development Authority (IRDA) for procuring business of both Life and General Insurance a decision was taken not to obtain separate license by the Company''s wholly owned subsidiary Shriram Insurance Broking Company Limited (SIBCL). SIBCL withdrew its application pending with IRDA. The application filed by SIBCL under the provisions of Section 560 of the Companies Act, 1956 to strike off its name was accepted and confirmed by the Ministry of Corporate Affairs vide notice dated December 13, 2013.

A statement on consolidated financial position of the Company with that of the subsidiaries is attached to the Annual Report. The consolidated financial statements attached to this Annual Report are prepared in compliance with the applicable Accounting Standards and Listing Agreement.

The annual reports and the annual accounts of the subsidiaries and the related detailed information shall be made available to shareholders of the Company seeking such information. The annual accounts of the subsidiaries shall also be kept for inspection by shareholders at the Registered Office of the Company and of the respective subsidiaries. The annual accounts of the subsidiaries shall be available on the website of the Company viz. www.stfc.in. The Company shall furnish hard copy of details of accounts of the subsidiaries to any shareholder on demand.

Share Capital

During the year under review, the Company allotted 18,800 fully paid up equity shares of the face value of Rs. 10/- each to its employees on their exercise of stock Options by them. Details of the shares issued and allotted under the Employees Stock Option Scheme of the Company, as well as the disclosures in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are set out in Annexure to this Report.

Public Issue of Secured redeemable non-Convertible Debentures

In order to raise funds for various financing activities including lending and investments, to repay existing loans and for business operations including for meeting capital expenditure and working capital requirements, the Company made two Public Issues of Secured Redeemable Non-Convertible Debentures (NCDs) of face value of Rs.1,000/- each during the year under review. The first Public Issue of NCDs opened on July 16, 2013 with the Base Issue aggregating up to Rs. 37,500 lacs with an option to retain over-subscription up to Rs. 37,500 lacs for issuance of additional NCDs aggregating to a total of up to Rs. 75,000 lacs. After considering the technical rejections, the Issue was subscribed 1.96 times of the Base Issue size and 0.98 times of the Total Issue Size. The Second Public Issue of NCDs opened on October 07, 2013 with the Base Issue aggregating up to Rs. 25,000 lacs with an option to retain over-subscription up to Rs. 25,000 lacs for issuance of additional NCDs aggregating to a total of up to Rs. 50,000 lacs. After considering the technical rejections, the Issue was subscribed 2.1356 times of the Base Issue Size and 1.0678 times of the Total Issue Size.

Board of Directors

Mr. Ranvir Dewan, a Non-Executive Non-Independent Director nominated by Newbridge India Investments II Limited (New bridge) on the Board of the Company resigned from directorship of the Company on September 02, 2013 subsequent to disposal of its entire shareholding in the Company by Newbridge. The Board has placed on record its appreciation of the invaluable services rendered by Mr. Ranvir Dewan.

The Board of Directors in its meeting held on April 29, 2014 has appointed Mr. Gerrit Van Heerde as Additional Director of the Company in the category of Non-Executive, Non- Independent director.

Mr. Arun Duggal will retires by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offers himself for re-appointment.

Mr. Puneet Bhatia, Non Executive Non-Independent Director will subject to approval of member at the ensuing AGM, continue as Non Executive Non Independent Director liable to retirement by rotation.

The Board of Director seek your support for passing of the resolution for appointment/re-appointment of the above directors.

DirectorsÂ responsibility Statement

Pursuant to the provisions of section 217(2AA) the Companies Act, 1956, the Directors confirm that, to the best of their knowledge and belief:

a) In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

b) That such accounting policies as mentioned in Note 2.1 of the Accounts have been selected and applied consistently, and judgments and estimates have been made 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, 2014 and of the profit of the Company for the year ended on that date;

c) That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) The Annual Accounts have been prepared on a going concern basis.

Corporate Social responsibility Committee

Pursuant to Section 135 of the Companies Act, 2013 the Board of Directors in its meeting held on April 29, 2014 has constituted Corporate Social Responsibility Committee of three directors.

RBI guidelines

The Company continues to comply with all the requirements prescribed by the Reserve Bank of India, from time to time as applicable to it.

annexure

Vide General Circular 08/2014 dated 04/04/2014, the Ministry of Corporate Affairs (MCA) has clarified that the financial statements(and documents required to be attached thereto), auditorÂs report and Board''s report in respect of financial years that commenced earlier than April 01,2014 shall be governed by the relevant provisions/Schedules/rules of the Companies Act,1956.

Following Reports are attached to this Report pursuant to the provisions of the Listing Agreement with the Stock Exchange:

(i) The Report on Corporate Governance as per clause 49 of the Listing agreement forms part of the Annual Report, and is annexed herewith together with Auditors'' Certificate on Corporate Governance, the certificate, duly signed by the Managing Director and Chief Financial Officer on the Financial Statements of the Company for the year ended March 31, 2014 as submitted to the Board of Directors at their meeting held on April 29, 2014 and the declaration by the Managing Director regarding compliance by the Board members and senior management personnel with the Company''s Code of Conduct.

(ii) The Management Discussion & Analysis Report as per clause 49 of the Listing agreement is given as a separate Report forming part of the Annual Report.

(iii) Business Responsibility Report as per clause 55 of the Listing agreement is given as a separate Report forming part of the Annual Report.

auditors

M/s. S. R. BATLIBOI & Co. LLP, Chartered Accountants, Mumbai and M/s. G. D. Apte & Co., Chartered Accountants, Mumbai, Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and are eligible for re- appointment. Certificates have been received from them to the effect that their re-appointment as Auditors of the Company, if made, would be within the limits prescribed under Section 139 & 141 of the Companies Act, 2013. They have also confirmed that they hold a valid peer review certificate as prescribed under clause 41(1)(h) of the Listing Agreement. Members are requested to consider their re-appointment.

Conservation of Energy, Technology absorption and foreign Exchange Earnings and outgo

Pursuant to the requirement under Section 217(1)(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988:

a. The Company has no activity involving conservation of energy or technology absorption.

b. The Company does not have any Foreign Exchange Earnings.

c. Outgo under Foreign Exchange - Rs.51.23 lacs.

Particulars of Employees

The Company has not employed any individual whose remuneration falls within the purview of the limits prescribed under the provisions of Sec 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975.

acknowledgement

The Board of Directors would like to place on record their gratitude for the guidance and cooperation extended by Reserve Bank of India and the other regulatory authorities. The Board takes this opportunity to express their sincere appreciation for the excellent patronage received from the Banks and Financial Institutions and for the continued enthusiasm, total commitment, dedicated efforts of the executives and employees of the Company at all levels. We are also deeply grateful for the continued confidence and faith reposed on us by the Shareholders, Depositors, Debenture holders and Debt holders.

For and on behalf of the Board of Directors

Mumbai arun Duggal

April 29, 2014 Chairman

Mar 31, 2013

The Directors have pleasure in presenting their Thirty Fourth Annual Report and the Audited Statements of Accounts for the financial year ended March 31, 2013.

FINANCIAL HIGHLIGHTS

(Rs. in lacs)

Particulars 2012-13 2011-12

Profit Before Depreciation and Taxation 203,452.20 189,437.37

Less: Depreciation and Amortisation 1,833.09 1,346.35

Profit Before Tax 201,619.11 188,091.02

Less: Provision for Taxation 65,557.10 62,346.06

Profit After Tax 136,062.01 125,744.96

Add: Balance brought forward from previous year 191,157.33 140,584.21

Balance available for appropriation 327,219.34 266,329.17

Appropriations

Excess provision written back - Tax on Dividend 0.41 35.18

General Reserve 14,000.00 12,600.00

Statutory Reserve 28,000.00 25,200.00

Debenture Redemption Reserve (21,956.09) 20,312.44

Dividend on Equity Shares of Rs. 10/- each 15,900.24 14,708.50

Tax on Dividend 2,649.52 2,386.08

Balance carried to Balance Sheet 288,626.08 191,157.33

DIVIDEND

Your Directors at their meeting held on October 30, 2012 declared higher interim dividend of Rs. 3.00 per equity share (i.e.30%) for the financial year 2012-13 as compared to interim dividend of Rs. 2.50 per equity share (i.e 25%) for the previous financial year 2011-12. The interim dividend was paid on November 26, 2012.

Your Directors have recommended a final dividend of Rs. 4.00 per equity share (i.e. 40%) for the financial year ended March 31, 2013. Thus, the total dividend (including interim dividend paid) for the year ended March 31, 2013 shall be Rs.7.00 per equity share (i.e. 70%).

CAPITAL ADEQUACY RATIO

Your Company''s total Capital Adequacy Ratio (CAR), as of March 31, 2013, stood at 20.74% of the aggregate risk weighted assets on balance sheet and risk adjusted value of the off-balance sheet items, which is well above the regulatory minimum of 15%.

CREDIT RATING

The credit rating enjoyed by the Company as on March 31, 2013 is as follows.

Credit Rating Agency Instruments Ratings

CARE Non-Convertible Debentures CARE AA

CARE Subordinate Debt CARE AA

CRISIL Fixed Deposit CRISIL FAA / Stable

CRISIL Subordinate Debt CRISIL AA/Stable

CRISIL Non-Convertible Debentures- Public CRISIL AA/Stable

CRISIL Short Term Debt CRISIL A1

CRISIL Bank Loan Long Term & Short Term CRISIL AA/Stable

ICRA Fixed Deposit MAA with Stable outlook

India Ratings & Research Private Limited Non-Convertible Debentures -Public IND AA (Formerly known as FITCH )

India Ratings & Research Private Limited Short Term Debt IND A1 (Formerly known as FITCH )

India Ratings & Research Private Limited Subordinate Debt IND AA (Formerly known as FITCH)

OPERATIONS

For the financial year ended March 31, 2013, your Company earned Profit Before Tax of Rs. 201,619.11 lacs as against Rs.188,091.02 lacs in the previous financial year and the Profit After Tax of Rs.136,062.01 lacs as against Rs. 125,744.96 lacs in the previous f i nancial year. The total Income for the year under consideration was Rs. 656,358.99 lacs and total expenditure was Rs. 454,739.88 lacs. As on March 31, 2013, the outstanding hypothecation loans were Rs. 3,044,719.53 lacs.

During the financial year ended March 31, 2013, the Company mobilised Rs. 794,525.93 lacs through Non-convertible debentures, Rs. 62,913.30 lacs through subordinated debts, Rs. 1,241,800.00 lacs through term loans, Rs. 20,000.00 lacs through working capital loans, Rs.141,000.00 lacs through commercial paper and Rs. 878,430.32 lacs through assignment of loan receivables from the customers.

ECONOMIC AND BUSINESS ENVIRONMENT

Amidst global slowdown and uncertainty, the economic activity in India remained subdued on account of halted investment demand, moderation in consumption spending, declining exports and weakening business and consumer confidence. The loss of growth momentum continued throughout the year 2012-13. The year-on-year growth rate of Gross Domestic Product (GDP) during 2012-13 slowed from 5.5% in the fi rst quarter to 5.3% in the second quarter and 4.5 % in the third quarter. Vide Press Release dated February 7, 2013, the Central Statistical Office (CSO), Ministry of Statistics and Programme Implementation, Government of India has estimated 5% growth in GDP for the year 2012-13.

The Headline inflation measured by the Wholesale Price Index (WIP) which remained sticky at above 7.5% on year- on-year basis through first half of 2012-13, fell to 5.96% level in March, 2013.The softening of global commodity prices and lower pricing power of corporates domestically moderated non-food manufactured product infiation. However, the food inflation moved into double digit.

Continuous contracting exports, rising imports on the back of higher oil and gold imports widened trade deficit. On top of the large trade deficit, the slowdown in net exports of services and larger outflows of investment income payments widened the Current Account Deficit to reach at the peak level of 6.7% of GDP in the third quarter of the year 2012-13.

The Society of Indian Automobile Manufacturers (SIAM) has reported growth of 2.61% in the overall domestic sales of vehicles during the f i nancial year 2012-13 over the same period last year. The overall Commercial Vehicles segment registered de-growth of 2.02%. The Medium and Heavy Commercial Vehicles (M&HCVs) sales were worst affected and declined by 23.18%. The Light Commercial Vehicles (LCVs) sales grew at 14.04% and the Passenger Vehicle segment grew by 2.15%. However, Passenger cars declined by 6.69%. Utility vehicles grew by 52.20% and Vans grew by modest 1.18%. Three-Wheelers grew by 4.87%. Passenger Carriers grew by 8.58%. The Goods Carriers registered de- growth of 9.20%.

The overall automobile exports during the financial year 2012-13 registered de-growth of 1.34% as compared to the same period in the previous year. While Passenger Vehicles exports grew by 9.02%, the exports of other segment namely Commercial Vehicles, Three Wheelers and Two Wheelers fell by 13.35%, 16.22% and 0.72% respectively.

Despite tough macro-economic conditions and negative growth rates in sales of new M&HCV, the business of the Company was not impacted due to the Company''s continued focus on financing of pre-owned commercial vehicles, thrust on financing LCVs, rural market penetration , customer relationships etc. Despite tight liquidity conditions, subdued sentiments in the stock market, the Company''s fund mobilization from banks, institutions , issue of non-convertible debentures and securitization of receivables continued to be smooth on account of its innovative resource mobilisation techniques, good track record of debt servicing, investors'' confidence etc.

OUTLOOK AND OPPORTUNITIES

Various measures undertaken by the Government since mid-September, including liberalization of Foreign Direct Investment (FDI) in retail, aviation, broadcasting and insurance, deferment General Anti-Avoidance Rules (GAAR), reduction in withholding tax on overseas borrowings by domestic companies, progressive deregulation of administered fuel prices and setting up of Cabinet Committee on Investment should help in improvement in market sentiments and spur investment. The fall in global commodity prices should help in reducing the Current Account Deficit from lowering of import of crude oil and gold.

Your directors are of the opinion that despite weak macro- economic factors and uncertainty, your Company''s business operations would not be seriously affected and your Company would continue to grow in future as well.

FIXED DEPOSITS

As on March 31, 2013, there were 1,576 fixed deposits aggregating to Rs. 1,109.99 lacs that have matured but remained unclaimed. There were no deposits, which were claimed but not paid by the Company. The unclaimed deposits have since reduced to 1,284 deposits amounting to Rs. 819.12 lacs. Appropriate Steps are being taken continuously to obtain the depositors'' instructions so as to ensure renewal/ repayment of the matured deposits in time.

SUBSIDIARIES

Shriram Equipment Finance Company Limited (SEFCL)

SEFCL''s income from operations for the year ended March 31, 2013 was Rs. 40,476.84 lacs as against Rs. 21,010.10 lacs in the previous year.

Shriram Automall India Limited (SAIL)

During the year 2012-13 SAIL has established 13 additional Automalls, thereby increasing the total number of Automalls to 21. SAIL has reported income from operations of Rs. 7,496.66 for the year ended March 31, 2013 as against Rs.10,728.76 lacs in the previous year.

Shriram Insurance Broking Company Limited (SIBCL)

SIBCL was incorporated on January 01, 2013 as a wholly- owned subsidiary of the Company primarily to act as a Direct Broker in General insurance and Life insurance sector. SIBCL is awaiting regulatory approvals for commencement of its operations.

A statement on consolidated financial position of the Company with that of the subsidiaries is attached to the Annual Report. The consolidated financial statements attached to this Annual Report are prepared in compliance with the applicable Accounting Standards and Listing Agreement.

The annual reports and the annual accounts of the subsidiaries and the related detailed information shall be made available to shareholders of the Company seeking such information. The annual accounts of the subsidiaries shall also be kept for inspection by shareholders at the Registered Office of the Company and of the respective subsidiaries. The annual accounts of the subsidiaries shall be available on the website of the Company viz. www.stfc.in. The Company shall furnish hard copy of details of accounts of the subsidiaries to any shareholder on demand.

SCHEME OF ARRANGEMENT

The Hon''ble High Court of Madras, has sanctioned the Scheme of Arrangement entailing merger of Shriram Holdings (Madras) Private Limited (''SHMPL''or ''Transferor Company'') with the Company (hereinafter referred to as the ''Scheme''). The Certif i ed True Copy of the High Court Order was filed with Registrar of Companies (ROC), Chennai, Tamil Nadu, on November 5, 2012.

Pursuant to the Scheme, the investment of the Transferor Company in the share capital of the Transferee Company viz. 9,33,71,512 fully paid-up Equity shares of Rs. 10/- each stood cancelled upon coming into effect of the Scheme. Accordingly, on November 5, 2012 the Company issued and allotted 9,38,72,380 New Equity shares on Amalgamation of Rs. 10/- each fully paid-up to the shareholders of the Transferor Company in the ratio of 313:124 i.e 313 equity shares of Rs. 10/- each fully paid up of the Transferee Company issued for every 124 equity shares of Rs. 10/- each fully paid up of the Transferor Company. The Transferor Company was dissolved without winding up.

SHARE CAPITAL

Pursuant to the said Scheme of Arrangement and upon merger of SHMPL with the Company as mentioned above, the Authorized Capital of the Company has increased to Rs. 59,700 lacs. Considering cancellation of investment of erstwhile SHMPL in the Company, the effective increase in the Paid-up capital of the Company was Rs. 50.09 lacs. The erstwhile SHMPL ceased to be Promoter and shareholder of the Company from November 5, 2012. Shriram Capital Limited is Promoter of the Company.

During the year under review, the Company allotted 62,500 fully paid up equity shares of the face value of Rs. 10/- each to its employees on their exercise of stock Options by them. Details of the shares issued and allotted under the Employees Stock Option Scheme of the Company, as well as the disclosures in compliance with Clause 12 of the

Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,1999 are set out in Annexure to this Report.

PUBLIC ISSUE OF SECURED NON-CONVERTIBLE DEBENTURES

In July 2012 your Company made Public Issue of Secured Non-Convertible Debentures (NCDs) of face value of Rs. 1,000 each, aggregating to Rs. 30,000 lacs (Base Issue) with an option to retain over-subscription upto Rs. 30,000 lacs for issuance of additional NCDs aggregating to a total of upto Rs. 60,000 lacs, pursuant to the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 and subject to the necessary approvals, consents and permissions. Despite tough market conditions, the Public Issue received good response from investors. The Issue was over-subscribed 2.24 times of the Base Issue size and 1.12 times of the total Issue size. Your Company issued and allotted NCDs aggregating to Rs. 60,000 lacs. The objects of the Public issue was to raise funds for various financing activities including lending and investments, to repay existing loans and for business operations including for meeting capital expenditure and working capital requirement.

The Board in its meeting held on May 7, 2013 has accorded its approval for raising funds by way of Public Issue of NCDs upto Rs. 200,000 lacs in one or more tranches at appropriate time during the current financial year.

BOARD OF DIRECTORS

Mrs. Kishori Udeshi and Mr. Amitabh Chaudhry, who were appointed as Additional Directors by the Board of Directors with effect from October 30, 2012 will hold off ice of an Additional Director upto the date of the ensuing Annual General Meeting pursuant to Section 260 of the Companies Act,1956.

Mr. R. Sridhar, who was appointed as Director on May 8, 2012 in the casual vacancy caused by resignation of Mr. S. Venkatakrishnan will hold office upto the date of the ensuing Annual General Meeting pursuant to Section 262 of the Companies Act,1956.

Company has received notices pursuant to Section 257 of the Companies Act,1956 from shareholders signifying their intention to propose candidatures of Mrs.Kishori Udeshi, Mr. Amitabh Chaudhry and Mr. R. Sridhar for their appointment as directors of the Company in the ensuing Annual General Meeting. Accordingly, the necessary resolutions are included in the Notice of the 34th Annual General Meeting for appointment of said persons as Directors of the Company. The Board has also recommended their appointment as directors of the Company.

Mr. S. Lakshminarayanan will retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of section 217(2AA) the Companies Act, 1956, the Directors confirm that, to the best of their knowledge and belief:

a) In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

b) That such accounting policies as mentioned in Note 2.1 of the Accounts have been selected and applied consistently, and judgments and estimates have been made 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, 2013 and of the prof it of the Company for the year ended on that date;

c) That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) The Annual Accounts have been prepared on a going concern basis.

RBI GUIDELINES

The Company continues to comply with all the requirements prescribed by the Reserve Bank of India, from time to time as applicable to it.

CORPORATE GOVERNANCE

The Report on Corporate Governance forms part of the Annual Report, and is annexed herewith.

As required by the Listing Agreement, Auditors'' Report on Corporate Governance and a declaration by the Managing Director with regard to Code of Conduct are attached to the said Report.

The Management Discussion & Analysis is given as a separate statement forming part of the Annual Report.

Further, as required under Clause 49 of the Listing Agreement, a certificate, duly signed by the Managing Director and Chief Financial Officer on the Financial Statements of the Company for the year ended March 31, 2013, was submitted to the Board of Directors at their meeting held on May 7, 2013. The certificate is attached to the Report on Corporate Governance.

BUSINESS RESPONSIBILITY REPORT

Pursuant to clause 55 of the Listing Agreement, Top 100 Listed companies shall prepare Business Responsibility Report every year and the same shall form part of the company''s Annual Report. The Board has constituted a committee of directors which has framed the Business Responsibility Policy of the Company. The Business Responsibility Report of the Company forms part of the Annual Report and is annexed herewith.

AWARDS AND RECOGNITIONS "Padma Bhushan"

The Directors are pleased to report that Shri R. Thyagarajan, Founder Chairman of Shriram Group has been conferred with the prestigious ''Padma Bhushan'' Award for the year 2012 in the f i eld of "Trade and Industry" by the Hon''ble President of India in a grand function held at Rashtrapati Bhawan on April 5, 2013.

"SAFA" Certifi cate of Merit for excellence in Financial Reporting

The Committee of South Asia Federation of Accountants

(SAFA) has awarded ''Certificate of Merit'' to our Company''s Annual Report for the year 2011 in the category of ''Financial Services Sector''.The Awards under different categories are conferred on the basis of evaluation of the published Annual Reports of entries from South Asian countries administered by the committee of SAFA. The Awards were distributed on March 22, 2013 in the premises of the Institute of Chartered Accountants of Sri Lanka, Colombo.

AUDITORS

M/s. S. R. BATLIBOI & Co. LLP, Chartered Accountants, Mumbai and M/s. G. D. Apte & Co., Chartered Accountants, Mumbai, Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. Certificates have been received from them to the effect that their re-appointment as Auditors of the Company, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. They have also confi rmed that they hold a valid peer review certificate as prescribed under clause 41(1)(h) of the Listing Agreement. Members are requested to consider their re-appointment.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Pursuant to the requirement under Section 217(1)(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988:

a. The Company has no activity involving conservation of energy or technology absorption.

b. The Company does not have any Foreign Exchange Earnings.

c. Outgo under Foreign Exchange - Rs. 0.83 lacs.

PARTICULARS OF EMPLOYEES

The Company has not employed any individual whose remuneration falls within the purview of the limits prescribed under the provisions of Sec 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975.

ACKNOWLEDGEMENT

The Board of Directors would like to place on record their gratitude for the guidance and cooperation extended by Reserve Bank of India and the other regulatory authorities. The Board takes this opportunity to express their sincere appreciation for the excellent patronage received from the Banks and Financial Institutions and for the continued enthusiasm, total commitment, dedicated efforts of the executives and employees of the Company at all levels. We are also deeply grateful for the continued confidence and faith reposed on us by the Shareholders, Depositors, Debenture holders and Debt holders.

For and on behalf of the Board of Directors Mumbai Arun Duggal

May 07, 2013 Chairman

Mar 31, 2011

The Directors have pleasure in presenting their Thirty Second Annual Report and the Audited Statements of Accounts for the financial year ended March 31, 2011.

FINANCIAL HIGHLIGHTS

(Rs. in lacs)

2010-11 2009-10

Profit Before Depreciation and Taxation 185,974.83 133,954.96

Less: Depreciation and Amortisation 1,082.07 1,495.84

Profit Before Tax 184,892.76 132,459.12

Less: Provision for Taxation 61,904.76 45,147.38

Profit After Tax 122,988.00 87,311.74

Add: Balance brought forward from previous year 93,001.65 58,309.25

Balance available for appropriation 215,989.65 145,620.99

Appropriations

General Reserve 12,300.00 8,800.00

Statutory Reserve 24,600.00 17,500.00

Debenture Redemption Reserve 21,381.60 10,442.08

Dividend on Equity Shares of Rs. 10/- each 14,684.89 13,600.65

Tax on Dividend 2,438.95 2,276.61

Balance carried to Balance Sheet 140,584.21 93,001.65

DIVIDEND

Your Directors at their meeting held on October 27, 2010 declared an interim dividend of Rs. 2.50/- per equity share (i.e. 25 percent) for the financial year 2010-11, which was paid on November 22, 2010. The payment of this Interim Dividend involved an outflow, including tax on dividend, of Rs. 6,574.91 lacs.

Your Directors have recommended a fi nal dividend of Rs. 4/- per equity share (i.e. 40 percent) for the financial year ended March 31, 2011. This dividend distribution would result in a cash outflow of Rs. 10,548.93 lacs including tax on dividend of Rs.1,502.50 lacs.

Thus, the total amount of dividend (including interim dividend paid) for the year ended March 31, 2011 shall be Rs. 17,123.84 lacs including tax on dividend of Rs. 2,438.95 lacs, as against Rs. 15,496.82 lacs, including tax an dividend of Rs. 2,221.35 lacs for the previous fi -nancial year.

CAPITAL ADEQUACY RATIO

Your Companys total Capital Adequacy Ratio (CAR), as of March 31, 2011, stood at 24.85 percent of the aggregate risk weighted assets on balance sheet and risk adjusted value of the off-balance sheet items, which is well above the regulatory minimum of 12.00 percent.

CREDIT RATING

The credit rating enjoyed by the Company as on March 31, 2011 is as follows.

Credit Rating Agency Instruments Ratings Limit in Rs. (lacs)

CARE Non Convertible Debentures AA+ 255,000

CARE Subordinate Debt AA 180,000

CRISIL Fixed Deposit FAA+

CRISIL Subordinate Debt AA 70,000

CRISIL Non Convertible Debentures AA 50,000

CRISIL Short Term P1+ 200,000

ICRA Fixed Deposit MAA+

FITCH Non Convertible Debentures AA(Ind) 550,000

FITCH Short Term FI+(Ind) 150,000

FITCH Subordinate Debt AA(Ind) 120,000

OPERATIONS

For the financial year ended March 31, 2011, your Company earned Profi t Before Tax of Rs. 184,892.76 lacs as against Rs. 132,459.12 lacs of the earlier year, posting an increase of 39.58 percent year-on-year. The Profit After Tax of Rs. 122,988.00 lacs also is 40.86 percent more when compared to the previous year, which was Rs. 87,311.74 lacs. The total income for the year under consideration was Rs. 542,965.40 lacs and total expenditure was Rs. 358,072.64 lacs.

The total disbursements made for financing of commercial vehicles during the year under review were Rs. 1,988,368.64 lacs. As on March 31, 2011, the outstanding hypothecation loans were Rs. 1,946,414.11 lacs.

During the financial year ended March 31, 2011, the Company mobilised Rs.119,920.93 lacs through non-convertible debentures, Rs. 17,981.66 lacs through subordinated debts, Rs. 61,869.26 lacs through term loans, Rs. 10,650.00 lacs through working capital loans, Rs. 1,000.00 lacs through commercial paper and Rs. 1,020,361.35 lacs through assignment of loan receivables from the customers.

ECONOMIC SCENERIO

The economic meltdown originated in the United States of America in the year 2008 seems to have enforced a major shift in the global economic power hierarchy. The timely support through a series of economic measures and by active governmental monitoring of the financial health, the Indian economy registered speedy recovery. Weathering the turbulent global slowdown, the Indian economy managed commendable expansion of 8.00 percent in 2009-10 and 6.80 percent in 2008-09. During the financial year ended March 31, 2011, the growth has been reported as over 8.60 percent. It is now widely believed that India could well be on course to be the third largest economy in the world in a couple of years, overtaking Japan. Besides, it is expected that, after 2020, Indias growth would be faster than that of even China. The Indian economy has benefi ted immensely from robust domestic demand and a revival in investor and consumer sentiment. This has resulted in stronger capital inflows into the country. The agricultural sector, which was lagging behind, has also performed well assisted by favourable monsoon, which in turn, gave a major thrust to the rural demand.

The Indian economy is projected to grow 8.50 percent - 9.00 percent in 2011-12. A good south-west monsoon season is forecasted for the year, which in turn, would give a fi llip to our growth dynamics. A 9.00 percent GDP growth, then could be well within the reach. The Twelfth Five Year Plan could probably set a target growth of 9.00 percent to 9.50 percent. However, managing the infl ationary pressures and the balance of payment situation would be a challenge. Besides, the volatile interest rates could also prove to be a dampener.

The growth of the commercial vehicle segment, which is closely linked to the countrys GDP growth, has also been good during these years. During the year ended March 31, 2011, the passenger vehicles segment grew at 29.16 percent when compared to the previous year. During this period, utility vehicles grew by 18.87 percent and multi-purpose vehicles grew by 42.10 percent. The overall commercial vehicles segment registered growth of 26.97 percent during April- March 2011 as compared to the same period last year. While medium & heavy commercial vehicles registered growth of 31.78 percent, light commercial vehicles grew at 22.88 percent. Three wheelers sales recorded a growth rate of 19.44 percent in April-March 2011. While passenger carriers grew by 22.03 percent during April-March 2011, goods carriers registered growth of 9.45 percent. In the export front, during April-March 2011, the passenger vehicles segment registered marginal growth at 1.64 percent, while the commercial vehicles and three wheelers segments recorded growth of 69.51 percent and 55.86 percent respectively.

The enhanced industrial activity, expected agricultural growth and huge governmental expenditure on infrastructure development are some of the major factors, which are expected to propel the demand for new commercial vehicles. Besides, increased passenger movement through the roads and introduction of new and improved vehicles in the market are also expected to push up the demand. It is projected that during the fi nancial year 2011-12, the light commercial vehicle and the medium & heavy commercial vehicle segments would grow 18-21 percent and 10-12 percent respectively. The passenger bus segment would be recording a growth of 8-10 percent. The three wheelers (cargo) and three wheelers (passenger) would grow 4-6 percent and 10-12 percent respectively.

The sale of commercial vehicle has averaged about 11.00 percent in the fi ve years ended 2010. Considering the typical life cycle of the commercial vehicles, most of the vehicles that have been sold in the last four to fi ve years would be due for resale shortly. The market for large commercial vehicle in India alone is estimated to be about Rs. 70,000 crores and the market for financing the pre-owned vehicles of 5-12 years is expected to be around Rs. 40,000 crores. Your Company, therefore, expects that the demand for commercial vehicles financing would continue to remain strong.

FIXED DEPOSITS

As on March 31, 2011, there were 635 fi xed deposits aggregating to Rs. 278.50 lacs that have matured but remained unclaimed. There were no deposits, which were claimed but not paid by the Company. The unclaimed deposits have since fallen down to 569 deposits amounting to Rs. 221.22 lacs. Appropriate steps are being taken continuously to obtain the depositors instructions so as to ensure renewal/ repayment of the deposits in time.

SUBSIDIARIES

The Company has two wholly owned subsidiaries viz. Shriram Equipment Finance Company Limited (SEFCL) and Shriram Automall India Limited (SAIL). These subsidiary companies are non-material Indian unlisted subsidiaries of the Company.

Shriram Equipment Finance Company Limited (SEFCL):

SEFCL is engaged in the business of hire purchase/loan financing of equipment, especially construction equipment and has been registered under Section 45-IA of the Reserve Bank of India Act, 1934 as Non-Banking Finance Company (Non-Deposit Accepting) vide Certifi cate No. N-07-00786 dated October 8, 2010 issued by Reserve Bank of India.

For the financial year ended March 31, 2011, which is the first full financial year of operation, SEFCL has reported income from operations of Rs. 2,002.83 lacs as against none for the previous year and Profit after tax of Rs. 115.70 lacs as against loss of Rs. 1.19 lacs for the earlier year.

During the year under review, your Company subscribed to 15,000,000, 0.01 percent compulsorily convertible preference shares of Rs. 100/- each issued by SEFCL.

Shriram Automall India Limited (SAIL):

SAIL plans to set up Automalls, which would be a trading platform for the sale of pre-owned commercial vehicles. In these Automalls to be set up by SAIL, it intends to provide showrooms for new commercial vehicles, a platform for sale of refurbished pre-owned commercial vehicles and will also facilitate sale of commercial vehicles repossessed by financing companies and for this purpose would set up touch-screen kiosks across the country, through which customers will be able to access real- time information on pre-owned vehicles available for sale. SAIL proposes that the Automalls would ultimately become a one- stop shop catering to the various needs of commercial vehicle owners. SAIL opened its first Automall in Chennai in the month of March 2011 and has a target of opening 50 to 60 Automallsin the current financial year.

For the financial year ended March 31, 2011, SAIL has reported income from operations of Rs. 6,216.27 lacs as against none for the previous year. Being the initial stages of its operations the company has incurred a loss of Rs. 1,391.51 lacs as compared to the loss of Rs. 0.55 lacs for the period ended on March 31, 2010.

During the year under review, your Company subscribed to 9,950,000 equity shares of Rs. 10/- each issued by SAIL.

In terms of the Circular No: 51/12/2007-CL-III dated February 08, 2011 of the Ministry of Corporate Affairs, Government of India, the Board of Directors of the Company at their meeting held on April 29, 2011 has, by resolution passed thereat, given their consent for not attaching the Annual Reports of the subsidiaries to the Balance Sheet of the Company. A statement on consolidated financial position of the Company with that of the subsidiaries is attached to the Annual Report. The consolidated financial statements attached to this Annual Report are prepared in compliance with the applicable Accounting Standards and Listing Agreement.

The annual reports and the annual accounts of the subsidiaries and the related detailed information shall be made available to Shareholders of the Company and the subsidiaries seeking such information at any point of time. The annual accounts of the subsidiaries shall also be kept for inspection by shareholders at the Registered office of the Company and of the respective subsidiaries. The Company shall furnish hard copy of details of accounts of the subsidiaries to any Shareholder on demand.

The annual accounts of the subsidiaries shall be available on the website of the Company viz. www.stfc.in and shall also be provided to the Shareholders on their written request to the Company.

SHARE CAPITAL

During the year under review, the Company allotted 642,850 fully paid up equity shares of the face value of Rs. 10/- each to its employees on exercise of stock options by them.

Details of the shares issued and allotted under the Employees Stock Option Scheme of the Company, as well as the disclosures in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are set out in Annexure to this Report.

PUBLIC ISSUE OF NCDs

With a view to develop an additional channel for raising monies to fund the business operations, your Company, pursuant to the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 and subject to the necessary approvals, consents and permissions, issued and allotted Secured and Unsecured Non Convertible Debentures (NCDs), through a public issue and raised a sum of Rs. 49,999.99 lacs in May 2010.

Considering the potential in raising funds through public issuance of NCDs and the extra ordinary support received from the investing public for its previous NCDs offerings, your Board, at its meeting held on April 29, 2011, has decided to offer and allot to public, subject to the aforementioned Regulations and such approvals as may be necessary, secured NCDs not exceeding Rs. 200,000 lacs.

CORPORATE SOCIAL RESPONSILITY INITIATIVES

Your Company is fully aware of the fact that as a corporate citizen, it is also entrusted with the responsibility to contribute for the betterment of the community at large and has the necessary resources at its disposal to do so. Hence, your Company endeavours to empower the under privileged and the weaker sections of the community. Your Company has been supporting several NGOs involved in educational, vocational and other charitable programmes and has continued to engage itself in social welfare activities by contributing to charitable institutions.

During the financial year ended March 31, 2011, your Company supported a variety of charitable projects and has contributed a sum of Rs. 272.06 lacs to several charitable organizations.

HUMAN CAPITAL

Your Company fi rmly believes that the human capital built up by it over the years is its most valuable asset and all efforts are made to empower them continuously. The broader employee ownership of its share capital has contributed to a large extent on retaining its employees and has also impacted positively on the Companys performance. Imparting of training through internal as well as external training programmes is being done continuously so as to equip them to face the new challenges in the market place.

As of March 31, 2011, the Company has 16,919 employees.

DIRECTORATE

As per Section 256 of the Companies Act, 1956, Mr. Arun Duggal, Mr. Ranvir Dewan and Mr. S. Venkatakrishnan would retire by rotation at the ensuing Annual General Meeting, and being eligible, offer themselves for re-appointment.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors confi rm that, to the best of their knowledge and belief:

a. In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

b. That such accounting policies as mentioned in Schedule 21.1 of the Accounts have been selected and applied consistently, and judgments and estimates have been made 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, 2011 and of the Profit of the Company for the year ended on that date;

c. That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. The Annual Accounts have been prepared on a going concern basis.

RBI GUIDELINES

The Company continues to comply with all the requirements prescribed by the Reserve Bank of India, from time to time, as applicable to it.

CORPORATE GOVERNANCE

The Report on Corporate Governance forms part of the Directors Report, and is annexed herewith.

As required by the Listing Agreement, Auditors Report on Corporate Governance and a declaration by the Managing Director with regard to Code of Conduct are attached to the said Report.

The Management Discussion & Analysis is given as a separate statement forming part of the Annual Report.

Further, as required under Clause 49 of the Listing Agreement, a certifi cate, duly signed by the Managing Director and Chief Financial officer on the Financial Statements of the Company for the year ended March 31, 2011, was submitted to the Board of Directors at their meeting held on April 29, 2011. The certifi cate is attached to the Report on Corporate Governance.

Corporate Governance - Voluntary Guidelines: The Board of Directors have taken note of the Corporate Governance Voluntary Guidelines 2009 issued by the Ministry of Corporate Affairs (MCA) in December 2009. Though these guidelines are recommendatory in nature, the Board is aware of its importance and would consider adopting the relevant provisions of these Guidelines as and when deemed appropriate.

AUDITORS

M/s. S. R. BATLIBOI & Co., Chartered Accountants, Mumbai and M/s. G. D. Apte & Co., Chartered Accountants, Mumbai, Auditors of the Company, retire at the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. Certifi cates have been received from them to the effect that their re-appointment as Auditors of the Company, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. They have also confi rmed that they hold a valid peer review certifi cate as prescribed under

Clause 41(1)(h) of Listing Agreement. Members are requested to consider their re-appointment.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS & OUTGO

Pursuant to the requirement under Section 217(1)(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988:

a. The Company has no activity involving conservation of energy or technology absorption.

b. The Company does not have any Foreign Exchange Earnings.

c. Outgo under Foreign Exchange - Rs. 0.76 lacs.

PARTICULARS OF EMPLOYEES

Information in accordance with the provisions of Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, as amended, forms part of the Directors Report. However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, this Report and Accounts are being sent to all the Shareholders of the Company, excluding the statement of particulars of employees under Section 217(2A) of the Companies Act, 1956. Any Shareholder interested in obtaining a copy of the said statement may write to the Vice President (Corporate Affairs) & Company Secretary at the Head Offi ce of the Company, and the same will be sent by post.

ACKNOWLEDGEMENT

The Board of Directors would like to place on record their gratitude for the guidance and cooperation extended by Reserve Bank of India and the other regulatory authorities. The Board takes this opportunity to express their sincere appreciation for the excellent patronage received from the Banks and Financial Institutions and for the continued enthusiasm, total commitment, dedicated efforts of the executives and employees of the Company at all levels. We are also deeply grateful for the continued confi dence and faith reposed on us by the Shareholders, Depositors, Debenture holders and Debt holders.

For and on behalf of the Board of Directors

Arun Duggal

Chairman

Mumbai April 29, 2011

Mar 31, 2010

The Directors have pleasure in presenting their thirty First Annual Report and the Audited Statements of Accounts for the year ended March 31, 2010.

FINANCIAL HIGHLIGHTS

(Rs. in lacs)

2009-10 2008-09

Profit Before 133,954.96 96,104.57 Depreciation and taxation

Less: Depreciation, 1,495.84 4,041.46 Amortisation and Impairment Loss Profit Before Tax 132,459.12 92,063.11

Less: Provision for 45,147.38 30,822.90 taxation including Fringe Benefit Tax Profit After Tax 87,311.74 61,240.21

Add: Balance brought 58,309.25 27,486.21 forward from previous year

Balance available for 145,620.99 88,726.42 appropriation

General Reserve 8,800.00 6,200.00

Statutory Reserve 17,500.00 12,300.00

Debenture Redemption 10,442.08 -

Reserve

Dividend on Equity Shares 13,600.65 10,186.01 of Rs. 10/- each

Tax on Dividend 2,276.61 1,731.16

Balance carried to 93,001.65 58,309.25 Balance Sheet

DIVIDEND

Your Directors at their meeting held on october 28, 2009 declared an interim dividend of Rs. 2/- per equity share (i.e. 20%) for the financial year 2009-10, which was paid on November 20, 2009. the payment of this Interim Dividend involved an outflow, including tax on dividend, of Rs. 4,977.86 lacs.

Your Directors have recommended a final dividend of Rs. 4/- per equity share (i.e. 40%) for the financial year ended

March 31, 2010. the dividend distribution would result in a cash outflow of Rs. 10,518.96 lacs including tax on dividend of Rs. 1,498.25 lacs.

For the financial year 2008-09, the total dividend outflow, including on account of interim dividend, was Rs. 12,285.26 lacs which included tax on dividend of Rs. 1,784.59 lacs.

PROSPECTS AND OPPORTUNITIES

After experiencing one of the worst economic crisis ever during the financial year 2008-09 triggered by the subprime crisis, that plunged even the worldÃs leading economies into financial meltdown, the global economic conditions picked up momentum during the financial year 2009-10, though slowly and with some uncertainty. It was widely feared that the crisis will continue for a long time. Contrary to the general belief, the turnaround has been quicker than what was expected. While it is generally felt that the risk relating to the macro economies have somewhat lessened, there are fears relating to the financial stability of some of the countries. Capital infusion, especially from the private sector, continues to be slow even in the developed economies and coupled with low capacity utilization as well as depressed consumption have forced their governments to continue with the fiscal and monetary stimuli which were extended at the peak of the crisis.

During the crisis period, the fight of capital has been one of the big concerns for the Emerging Market Economies, which saw alarming capital outflows. However, these economies, especially the Asian Emerging Market Economies, led by India and China, exhibited commendable resilience and are now significantly ahead on recovery path as compared to the developed economies. Prompted by the growth of the Emerging Market Economies, the International Monetary Fund has projected that global growth will recover from (-) 0.8 per cent in 2009 to 3.9 per cent in 2010 and further to 4.3 per cent in 2011.

On account of timely support extended through a series of economic measures and close monitoring of the financial health of the economy by the Government of India, the Reserve Bank of India and the other regulatory bodies of the Country, the Indian economy demonstrated a clear momentum of economic recovery. this is achieved despite a deficient monsoon and its consequent adverse impact on the agricultural production. the GDP growth for the fiscal 2009-10 has been estimated at 7.2 per cent as against 6.7 recorded in 2008-09. the recovery has been broad based on account of rebound in industrial production and the resilience of the services sector. In March 2010, the six key sectors i.e. crude oil, petroleum refinery, coal, electricity, cement and finished steel posted an annual growth of 7.2 per cent as against 3.3 per cent in March 2009, boosting prospects of a robust across the board growth.

The growth during the fiscal 2010-11 is widely expected to be higher than that of the year that has gone by. the capacity utilization and consumption are expected to pick up further in the coming months. However, despite commendable stability achieved during the past several months and revival of inflow of capital, there are concerns on account of spiraling inflation and large government borrowings.

The overall Commercial Vehicles segment registered positive growth at 38.31 percent during financial year 2009-10 when compared to 2008-09. Medium & Heavy Commercial Vehicles segment registered growth at 33.55 per cent and Light Commercial Vehicles grew at 42.67 percent.

The growth of the passenger vehicles segment during 2009-10 was at 25.57 percent as compared to last year. Utility Vehicles grew by 20.88 percent and Multi Purpose Vehicles grew by 40.94 percent. During the year, the Passenger vehicles production crossed 2 million mark.

Despite the turmoil witnessed across the globe as well as in our country, Your Company continued to remain in the growth momentum. Your Company was able to consolidate its position further and aggressively pursued to tap markets in the rural areas. Your Company now has a wide array of financial products tailor made for the Commercial Vehicle segment.

The recent venturing into financing of pre-owned passenger vehicles, multi utility vehicles, tractors, construction equipments as well as three wheelers and the foray into extending secondary finances, such as loans for replacement of tyres, engine and extending of finances to its customers to meet their working capital needs, have met with extra ordinary success in the market place. The co-financing arrangements with the local private financiers throughout the country have helped the Company to strategically expand its reach and the customer base. the relationships we have developed with our customers provide us with opportunities for repeat business and to cross sell our other products as well as derive benefit from customer referrals. Despite difficult and volatile conditions, Your Company has been able to borrow from a range of sources at competitive rates to achieve a relatively stable cost of funds primarily due to our improved credit ratings, effective treasury management and innovative fund raising programs. In spite of the volatile financial market conditions Your Company continued to be the leader and retained its position as the largest asset financing Non Banking Financial Company in the country.

OPERATIONS

Your Company has earned a Profit Before Tax of Rs. 132,459.12 lacs for the year ended March 31, 2010, as against Rs. 92,063.11 lacs of the earlier year, posting an increase of 43.88 % year on year. The Profit After Tax of Rs. 87,311.74 lacs also is 42.57 % more when compared to the previous year, which was Rs. 61,240.21 lacs. the total Income for the year under consideration was Rs. 449,963.82 lacs and total expenditure was Rs. 317,504.70 lacs.

The total disbursements made for financing of commercial vehicles during the year under review were Rs. 1,468,359 lacs. As on March 31, 2010, the outstanding hypothecation loans were Rs. 1,773,740.20 lacs.

During the year ended March 31, 2010, the Company mobilised Rs. 232,652.34 lacs through non convertible debentures, Rs. 53,196.13 lacs through subordinated debts, Rs. 699,929.21 lacs through term loans, Rs. 77,700 lacs through working capital loans, Rs. 2,500.00 lacs through commercial paper, Rs. 875,681.04 lacs through securitisation deals.

FIXED DEPOSITS

As on March 31, 2010, there were 414 fixed deposits aggregating to Rs. 60.65 lacs that have matured but remained unclaimed. there were no deposits, which were claimed but not paid by the Company. the unclaimed deposits have since fallen down to 12 deposits amounting to Rs. 3.16 lacs. Steps are being taken continuously to obtain the depositorsÃ instructions so as to ensure renewal/ repayment of the deposits in time.

SUBSIDIARY

During the Financial Year ended March 31, 2010, the Company incorporated two wholly owned subsidiaries by name, Shriram Equipment Finance Company Limited and Shriram Automall India Limited on December 15, 2009 and February 11, 2010 respectively.

Shriram Equipment Finance Company Limited (SEFCL) received the Certificate of Commencement of Business from the Registrar of Companies, Tamil Nadu on December 23, 2009 and has applied to Reserve Bank of India (RBI) for registration as a Non-Banking Finance Company (Non- Deposit taking). SEFCL will be engaged in the business of hire purchase / loan financing of equipments, especially construction equipments.

Shriram Automall India Limited (SAIL) received the Certificate of Commencement of Business from the Registrar of Companies, Tamil Nadu on April 16, 2010. SAIL intends to develop pre-owned commercial vehicle hubs across India called ÃAutomallsÃ and set up a one- stop shop catering to the various needs of commercial vehicle owners.

These subsidiary companies are non-material unlisted subsidiaries of the Company.

The Company has made necessary application to the Central Government u/s 212 (8) of the Companies Act, 1956 read with Rule 7D of the Companies (Central Government) General Rules and Forms, 1956 seeking exemption from attaching the annual accounts of its subsidiaries to the Annual Report of the Company. However, the consolidated financial statement attached to this Annual Report is prepared in compliance with Accounting Standard and Listing Agreement. Further, the annual accounts of the subsidiaries shall be available on the website of the Company viz. www.stfc.in and shall also be provided to the Shareholders on their written request to the Company.

SHARE CAPITAL

Qualifed Institutional Placement

During the year under review, the Company issued and allotted to 45 qualified institutional buyers 11,658,552 equity shares of Rs. 10/- each at a premium of Rs. 490.80 per equity share aggregating to Rs. 58,386.03 lacs under Chapter VIII of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.

Employee stock options

During the year under review, the Company allotted 2,347,650 fully paid up equity shares of the face value of Rs. 10 each to its employees on exercise of stock options by them and also granted additional 50,000 options to eligible senior managerial personnel.

Details of the shares issued and allotted under ESOS, as well as the disclosures in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are set out in Annexure to this Report.

PUBLIC ISSUE OF NCDs

To explore and develop additional source of financing and with a view to meet Your CompanyÃs business operations, Your Company, pursuant to the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 and subject to the necessary approvals, consents and permissions, issued and allotted Secured Non Convertible Debentures, through a public issue and raised a sum of Rs. 99,999.96 lacs.

Considering the potential in raising funds by issue of non convertible debentures (NCDs), Your Board, at its meeting held on January 18, 2010, has decided to offer and allot, subject to the aforementioned Regulations and such approvals as may be necessary, secured / unsecured, NCDs not exceeding Rs. 50,000 lacs in one or more tranches through another public issue which is expected to open for public subscriptions in May 2010.

Directorate

Mr. Ravindra Bahl, Non Executive Nominee of Uno Investments on the Board of the Company, resigned as a Director with effect from November 19, 2009. Consequent to the repayment of loan taken by the Company from Indian Renewable Energy Development Authority, they withdrew their nomination of Dr. T.S. Sethurathnam, their nominee on the Board, and he ceased to be a Director of the Company with effect from November 11, 2009. the Board has placed on record its appreciation of the invaluable services rendered by Mr. Bahl and Dr. Sethurathnam during their respective tenures as Directors of the Company.

As per Section 256 of the Companies Act, 1956, Mr. M.S. Verma and Mr. S. M. Bafna would retire by rotation, and being eligible, offer themselves for re-appointment.

Mr. S. Lakshminarayanan was appointed as an Additional Director by the Board with effect from September 22, 2009. In accordance with Section 260 of the Companies Act, 1956, he will hold office only upto the date of the ensuing Annual General Meeting. Being eligible, he offers himself for re-appointment.

The term of office of Mr. R. Sridhar as the Managing Director, will come to an end on September 14, 2010. the Board at its meeting held on April 29, 2010, subject to the approval of the Shareholders, has re-appointed him for a further term of five years. The necessary resolution for his re-appointment and for the remuneration payable to him will be moved at the ensuing Annual General Meeting.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of the Companies Act, 1956, the Directors confirm that, to the best of their knowledge and belief:

a) In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

b) that such accounting policies as mentioned in Schedule 20.1 of the Accounts have been selected and applied consistently, and judgments and estimates have been made 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, 2010 and of the profit of the Company for the year ended on that date;

c) That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Annual Accounts have been prepared on a going concern basis.

RBI GUIDELINES

The Company continues to comply with all the requirements prescribed by the Reserve Bank of India as applicable to it.

CORPORATE GOVERANANCE

The Report on Corporate Governance forms part of the DirectorsÃ Report, and is annexed herewith.

As required by the Listing Agreement, AuditorsÃ Report on Corporate Governance and a declaration by the Managing Director with regard to Code of Conduct are attached to the said Report.

The Management Discussion & Analysis is given as a separate statement forming part of the Annual Report.

Further, as required under Clause 49 of the Listing Agreement, a certificate, duly signed by the Managing Director and Chief Financial Officer on the Financial Statements of the Company for the year ended March 31, 2010, was submitted to the Board of Directors at their meeting held on April 29, 2010. The certificate is attached to the Report on Corporate Governance.

AUDITORS

M/s. S. R. BATLIBoI & Co., Chartered Accountants, Mumbai and M/s. G. D. Apte & Co., Chartered Accountants, Mumbai, Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. Certificates have been received from them to the effect that their re-appointment as Auditors of the Company, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Pursuant to the requirement under Section 217(1) (e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988:

a. The Company has no activity involving conservation of energy or technology absorption.

b. The Company does not have any Foreign Exchange Earnings.

c. Outgo under Foreign Exchange - Rs. 6.85 lacs.

PARTICULARS OF EMPLOYEES

Information in accordance with the provisions of Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, as amended, forms part of the DirectorsÃ Report. However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, this Report and Accounts are being sent to all the Shareholders of the Company, excluding the statement of particulars of employees under Section 217(2A) of the Companies Act, 1956. Any Shareholder interested in obtaining a copy of the said statement may write to the Vice President (Corporate Affairs) & Company Secretary at the Head Office of the Company, and the same will be sent by post.

ACKNOWLEDGEMENT

The Board of Directors take this opportunity to express their sincere appreciation for the excellent support and co-operation received from the Banks and Financial Institutions, for the continued enthusiasm, total commitment, dedication and efforts of the executives and employees of the Company at all levels. We are also deeply grateful for the continued confidence and faith reposed on us by the Shareholders, Depositors, Debenture holders and Debt holders.

For and on behalf of the Board of Directors

Arun Duggal

Chairman Mumbai April 29, 2010

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