Building on Strengths L&T Finance Ho L Dings Limi T Ed | ANN U a L R E P O RT 2020-21
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BUILDING ON Strengths L&T FINANCE HO L DINGS LIMI T ED | ANN U A L R E P O RT 2020-21 RT Registered Office: L&T Finance Holdings Limited Brindavan, Plot No. 177, C.S.T. Road Kalina, Santacruz (East) Mumbai - 400 098, Maharashtra, India Phone: +91 22 6212 5000 Fax: +91 22 6212 5553 www.ltfs.com [email protected] ANNUAL REPORT 2020-21 CIN:L67120MH2008PLC181833 © L&T Finance Holdings Limited 2021 01-15 CORPORATE OVERVIEW BUILDING ON 02 About Us 04 FY21 Performance Snapshot 06 Chairman’s Message 09 Board of Directors Strengths 13 Group Executive Committee 14 Value-accretive Business Model A cube symbolises steadiness and adaptability. It is one whole, yet each side has its own individuality that adds to the united strength of the cube. 16-85 The multi-dimensional appearance of a cube perfectly echoes the Corporate STATUTORY REPORTS strength of LTFH. It stands for your Company’s robustness through a Information 16 Management Discussion and Analysis diversified business presence, exceptional usage of digital and data 41 Board’s Report analytics and a strong risk management framework. 63 Corporate Governance Report BOARD OF DIRECTORS JOINT STATUTORY AUDITORS The theme ‘Building on Strengths’ helps weave all these factors into a consolidated whole, one that reflects your Company’s SHAILESH HARIBHAKTI M/s. Deloitte Haskins & Sells, LLP M/s. B. K. Khare & Co. commitment to creating value for all stakeholders. Non-Executive Chairman 86-227 DINANATH DUBHASHI Managing Director & REGISTERED OFFICE & FINANCIAL STATEMENTS Chief Executive Officer INVESTOR SERVICE CENTRE 86 Standalone R. SHANKAR RAMAN 147 Consolidated Non-Executive Director Brindavan, Plot No.177, C.S.T. Road, QUICK Kalina, Santacruz (East), INFORMATION: P. V. BHIDE Mumbai - 400 098, 228 Notice of the AGM Independent Director Maharashtra, India Market Capitalisation Phone: +91 22 6212 5000 THOMAS MATHEW T. Fax: +91 22 6212 5553 as at March 31, 2021 Independent Director Website: www.ltfs.com ` Cr 23,669 NISHI VASUDEVA Email: [email protected] Independent Director BSE Code REGISTRAR & SHARE RAJANI R. GUPTE TRANSFER AGENTS 533519 Independent Director NSE Symbol Link Intime India Private Limited PRABHAKAR B. L&TFH Non-Executive Director C-101, 247 Park, L.B.S. Marg, Vikhroli (West), PAVNINDER SINGH Mumbai - 400 083, AGM Day & Date Nominee Director Maharashtra, India Wednesday, July 28, 2021 Phone: +91 22 4918 6000 COMPANY SECRETARY Fax: +91 22 4918 6060 AGM Mode Website: www.linkintime.co.in Video-Conference/Other Audio-Visual Means APURVA RATHOD Email: [email protected] CORPORATE OVERVIEW REPORTS FINANCIAL STATEMENTS BUILDING ON STRENGTHS About Us OUR OFFERINGS Lending Businesses L&T Finance Holdings Limited (‘LTFH’ or ‘Your Company’) is one of the leading, well- diversified Non-Banking Financial Companies (NBFCs) Rural Finance with a strong presence across lending and investment management businesses. LTFH was incorporated in 2008, and in 2011, your Company went on to become a public listed company (BSE and NSE). Headquartered in Mumbai, LTFH is a financial solutions provider that caters to the diverse financing needs of its customers across various sectors, including Rural (Farm-Equipment Finance, Two-Wheeler Finance, Farm Equipment Two-Wheeler Micro Loans Consumer Loans Finance Finance Micro Loans and Consumer Loans), Housing (Home Loan, Loan Against Property and Real Estate Finance), Infrastructure and Mutual Funds. These businesses offer varied products and services that help customers Housing Finance secure both their financing needs as well as their future, including in the unserved and underserved segments of the society. Home Loan Loan Against Real Estate Property Finance BRANCHES 197 Infrastructure Finance MICRO LOANS MEETING CENTRES 1,395 Infra Finance Infra Debt Fund Non-Lending Businesses CUSTOMER BASE 111+ Lakh Investment EMPLOYEES 22,532 Management All figures as on March 31, 2021 2 ANNUAL REPORT 2020-21 3 CORPORATE OVERVIEW REPORTS FINANCIAL STATEMENTS BUILDING ON STRENGTHS Strong Collections Framework ~20% ~33% in Focused Businesses FY21 Performance Snapshot Continued witnessing strong collection volumes owing to concerted on-field efforts, analytics-led prioritisation and resource allocation HIGHER YoY COLLECTIONS FY21 can be aptly described as a year of two halves - the first half focused on challenges in business environment and the IN FY21 DESPITE IMPACT Achieved Collection Efficiency (CE) of pre-Covid level across businesses second half focused on maximising growth opportunities. Despite prevailing uncertainties in the operating environment, OF COVID-19 your Company has delivered a balanced outcome by building on its strengths. The pandemic surely posed a challenge to the intrinsic strengths of business as well as people, however your Company was able to navigate the storm with conviction and Well Established Liability Franchise confidence. Most of the key achievements of the year were a result of our ongoing efforts of embracing lessons learnt over the years and we continue to maintain sharp focus on delivering value for all our stakeholders. Continued maintaining prudent ALM (Asset Liability Management) and diversified funding owing to AAA rating and strong parentage Business Strengths 78 bps Demonstrated astute treasury management to diversify sources of YoY REDUCTION IN COST funding at a lower cost of borrowing OF BORROWINGS IN Raised over `15,000 Cr in long term borrowings across quarters Q4FY21 (LOWEST EVER) Infrastructure reflecting the strength of the balance sheet; raised over `3,500 Cr of Mutual Funds Priority Sector Loans (PSL) during FY21 Rural Finance Finance Increased AUM by Best in class performance Demonstrated strength focusing on high in disbursements, and sustainability of quality products that collections and asset LTFH churn model with led to growth in Debt quality excellent disbursement AUM by 29%. Equity and sell down AUM grew by 44% Improved Asset Quality and Provisions Strengthened Balance Sheet momentum Reduced Gross Stage 3 (GS3) and improved Provision Coverage Ratio Raised additional capital through (PCR) Rights Issue Achieved lowest level of Net Stage 3 (NS3) since FY16 Improved Capital Adequacy Carried forward `1,033 Cr of additional provisions to cushion for any Reduced Debt Equity Ratio future uncertainty due to second wave of COVID-19 `6,026 Cr `9,803 Cr `72,874 Cr +36% +33% ALL-TIME HIGH YoY DISBURSEMENTS AUM GROWTH YoY DISBURSEMENT IN FY21 IN FY21 `1,757 Cr `724 Cr `~3,000 Cr IN Q4FY21 ADDITIONAL PROVISIONS ADDITIONAL PROVISIONS RIGHTS ISSUE CREATED (TILL Q2FY21) UTILISED (FY21) `6,478 Cr SELL DOWN `1,033 Cr 4.97% 23.80% VOLUMES IN FY21 1.20% of standard book Reduction by 39 bps YoY ADDITIONAL PROVISIONS GROSS STAGE 3 CAPITAL ADEQUACY CARRIED FORWARD TO FY22 (TIER 1: 18.79%) Market Share lowest since FY16 Increased market share in Farm Equipment Retailisation 1.57% 69% X 40% 43% Reduction by 71 bps YoY Increase by 10% YoY 4.72 Finance and Two-Wheeler Finance Continued to deliver on the 26% retailisation strategy NET STAGE 3 PROVISION COVERAGE DEBT EQUITY RATIO Continues to be one of the leading players FY16 FY20 FY21 RATIO ON GROSS STAGE 3 in Micro Loans and Renewable Finance GS3 and NS3 figures are on principal outstanding basis 4 ANNUAL REPORT 2020-21 5 CORPORATE OVERVIEW REPORTS FINANCIAL STATEMENTS BUILDING ON STRENGTHS start underwriting new customers. In our Housing Finance ‘Core’ in our ‘Right to Win’ framework, right from the start, has business, we mostly focussed on existing real estate projects positioned us well ahead of the curve in navigating the Covid Chairman’s Message and restricted disbursement for LAP. Under Infrastructure related crisis. Your Company will continue to leverage Digital “AS THE NATION CONTINUES Finance, we continued to maintain our sell down abilities and and Data Intelligence to drive Scale, Cost Effectiveness and FIGHTING A PANDEMIC, THE concentrating on projects with strong sponsors. Our Mutual Customer Experience across businesses. SPOTLIGHT IS DRAWN ON Fund business, saw an increase in Assets under Management Commitment to ESG this year owing to our consistent focus on building a high- We believe sustainability is the nucleus of comprehensive THE SHOCK ABSORBERS quality portfolio. OF OUR ECONOMY – OUR growth, and addressing its issues is your Company’s topmost Collection: Being in the lending business, collections play a priority. For us, sustainability is a dynamic process of RESPECTED GOVERNMENT crucial role in establishing business stability. Our continuous meeting the needs of our employees and our society with a AND ESTEEMED REGULATORY on-field efforts, rebalancing the sales and collection teams compassionate mindset and responsible approach. To this end, BODIES, BANKS, NBFCS within products, coupled with analytics-led prioritisation and your Company’s Corporate Social Responsibility Committee’s resource allocation, led to improved collections across all our remit extends to ESG initiatives as well. AND OTHER SUPPORTING businesses. The collection efficiencies reached pre-Covid levels FINANCIAL SERVICE and surpassed FY20 collections by ~20%. Your Company’s Covid Care support for employees was immediate. In addition to safety kits and vaccination cost ALM and Liquidity: The objective of our liability franchise INTERMEDIARIES. I HAVE reimbursement, we were amongst the first to announce ex- has always been to raise funds in a timely manner and ensure EXTREME GRATITUDE FOR gratia and two-year salary payment, as well as education and sufficient liquidity. During the year, your