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Corporate Information
  •         DIRECTOR'S REPORT
Max Financial Services Ltd
Industry : Finance & Investments
BSE Code:500271NSE Symbol:MFSLP/E(TTM):74.74
ISIN Demat:INE180A01020Div & Yield %:0EPS(TTM):6.48
Book Value (Rupee ):79.6755683Market Cap (Rupee Cr.):13046.98Face Value(Rupee):2
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Dear Members,

Your Directors have pleasure in presenting the Thirty-first Board's Report of Max Financial Services Limited ("MFSL" or "the Company") along with the audited Statement of Accounts for the financial year ended March 31, 2019.

Standalone Results

The highlights of the standalone financial results of your Company along with previous year's figures (prepared / restated as per IND-AS) are as under:

(Rs. in Crore)
Year ended 31.03.2019 Year ended 31.03.2018
Revenue from operations 316.63 263.49
Other income 1.15 0.72
Total income 317.78 264.21
Expenses
Finance costs 27.25 -
Loss on fair value chang- es on derivative financial instruments 102.61 -
Impairment on financial instruments
Employee benefits expenses 76.40 53.74
Depreciation and amortiza- tion expense 1.75 1.92
Legal and professional expenses 43.51 46.31
Other expenses 16.87 18.31
Total expenses 268.39 120.28
Profit before tax 49.39 143.93
Tax expense - -
Profit after tax for the year 9.39 3.93
Other comprehensive income for the year (0.30) (0.23)
Total comprehensive in- come (after tax) 49.09 143.70

Your Company is primarily engaged in business of making and holding investments in its subsidiary, Max Life Insurance Company Limited and accordingly in terms of extant RBI guidelines, your Company is a Core Investment Company ("CIC") with its financial income results of your exceeding 50% of its total income and financial assets (investment in securities etc.) exceeding 50% of the total assets. However, it does not meet the criteria stipulated by RBI for Systemically Important CIC and hence registration under Section 45-IA of RBI Act, 1934 is not required.

Net worth of your Company on a standalone basis grew by around 4.2% to Rs 2001 crore as at March 31, 2019 as against Rs.1920 crore as at March 31, 2018 (restated as per IND-AS).

Consolidated Results

In accordance with the Companies Act, 2013 ("the Act") and applicable accounting standards, the audited consolidated financial this Annual Report.

The subsidiary of your Company, Max Life Insurance Company Limited ("Max Life"), delivered another year of strong performance like last year. In FY2019, Max Financial Services Limited reported consolidated revenues of Rs. 17,538 Crore, with an encouraging growth of 17% over the previous year. The Company reported consolidated Net Profit of Rs. 406 Crore, 28% lower compared to the previous year, largely due to fair valuation impact as per the recently introduced accounting methodology, Ind AS, and one-time expenses for pursuing an inorganic opportunity for Max Life.

Max Life achieved a significant Assets under Management (AUM) crossing the Rs. 60,000 crore mark for the first time. The AUM as at March 31, 2019 stood at Rs. 62,798 Crore, growing 20% over the previous year. Another benchmark set by Max Life was in the Claims Paid Ratio category. Already being an industry leader with the highest claims paid ratio of 98.26% in FY18, as per the Insurance Regulatory and Development Authority of India (IRDAI) Annual Report, Max Life further improved the ratio by 48 bps to 98.74% during FY19. The Market Consistent Embedded value of Max Life as on March 31, 2019 was Rs.9,257 crore up 20% from previous year's Rs 7,706 crore.

The highlights of the consolidated financial Company and its subsidiary are as under:

(Rs. in Crores)
Year ended 31.03.2019 Year ended 31.03.2018
Revenue from operations 19,497.62 16,337.45
Other income 3.61 1.26
Total income 19,501.23 16,338.71
Expenses
Finance costs 27.30 0.11
Impairment on financial instruments 5.02 0.32
Employee benefits expenses 84.37 37.17
Depreciation and amortization expense 1.75 1.92
Legal and professional expenses 43.51 46.31
Policyholders' Expenses of Life Insurance operations 18,826.57 15,693.64
Other expenses 31.87 29.22
Total expenses 19,020.39 15,808.69
Profit before tax 480.84 530.02
Tax expense 64.38 88.18
Profit after tax for the year(including Non- controlling interests) 416.46 41.84
Other comprehensive income for the year 1.31 (17.82)
Total comprehensive income (after tax) 417.77 424.02
Total comprehensive income attributable to
Owners of the company 263.41 273.72
Non-controlling interests 154.36 150.30

Material Changes affecting Financial Position

There are 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 i.e. March 31, 2019 and the date of the Directors' report i.e. May 28, 2019.

Subsidiaries, Associates & Joint Venture companies

As on March 31, 2019, your Company had only 1 (one) subsidiary i.e. Max Life Insurance Company Limited ("Max Life"). There were no other associate or joint venture companies. The basic details of subsidiary form part of Form MGT 9 attached to this report as Annexure - 1.

During the year under review, your Company acquired 1,98,787,368 equity shares of Rs. 10/- each in Max Life. Accordingly, the equity stake of the Company in Max Life increased to 71.79% as at March 31, 2019.

A report on the performance and financial position of Life, included in the consolidated financial presented in Form AOC 1 is attached to this report as Annexure - 2, as per Rule 8(1) of the Companies (Accounts) Rules, 2014.

Further, a detailed update on the business achievements of Max Life, being the key operating subsidiary, is furnished as part of Management Discussion and Analysis section which forms part of this Annual Report.

As provided in Section 136 of the Companies Act, 2013, the financial statements and other documents of the subsidiary company Max Life Insurance Company Limited are not being attached with the financial statements of the Company. The complete set of financial statements including financial statements of the subsidiary of the Company is available on website of the Company at www. maxfinancialservices.com. These documents will also be available for inspection during business hours at the registered office of the Company and shall also be made available to the shareholders of the Company in hard copy, on demand.

Dividend

Your Directors have not recommended any dividend for the financial year 2018-19.

The Board of Directors of your Company has approved a Dividend Distribution Policy in line with Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") and the said policy is attached to this report as Annexure - 3. The said policy is also available on website of the Company at www.maxfinancialservices.com/ shareholder-information.

Transfer to Reserves

The Company has not transferred any amount to reserves during the year under review.

Share Capital

The Authorized share capital of the Company as on March 31, 2019 remains unchanged at Rs. 60,00,00,000/- (Rupees Sixty Crores only) comprising of 30,00,00,000 equity shares of Rs. 2/- each.

During the year under review, 10,01,752 equity shares of Rs.2/- each were allotted to the option-holders under the ‘Max Employee Stock Plan 2003' (‘2003 Plan').

The Paid up capital of the Company as on March 31, 2019 was Rs. 53,87,71,558/- (Rupees Fifty three crores eighty seven lakhs seventy one thousand five hundred fifty comprising of 26,93,85,779 equity shares of Rs. 2/- each.

Further, after end of the financial year on March 31, 2019 and till the date of this report i.e. May 28, 2019, your Company had allotted 12,958 equity shares of Rs.2/- each to the option-holders under the aforesaid 2003 Plan.

Employee Stock Option Plan

Your Company has an employee stock option plan viz. ‘Max Employee Stock Plan 2003' (‘2003 Plan') in place. The 2003 Plan provides for grant of stock options aggregating not more than 5% of number of issued equity shares of the Company to eligible employees and Directors of the Company. The 2003 Plan is administered by the Nomination and Remuneration Committee constituted by the Board of Directors of the Company. Details of options granted up to March 31, 2019 and other disclosures as required under SEBI (Share Based Employee Benefits) Regulations, 2014 are enclosed to this report as Annexure - 4.

The statutory auditors of your Company, M/s Deloitte Haskins & Sells LLP, Chartered Accountants have time-to-time certified that the Employee Stock Option Scheme of the Company has been implemented in accordance with the applicable SEBI Regulations and the resolutions passed by the Members in this regard. A certificate to this effect shall also be placed before the members at the ensuing Annual General Meeting.

During the year under review, the Nomination and Remuneration Committee of Directors of the Company ("NRC") granted 44,448 phantom stock units to Mr. Mohit Talwar, Managing Director of the Company and 129,275 phantom stock units to Mr. Rahul Khosla, erstwhile Executive President, which vest(ed) in a graded manner and settled in cash. Further, the NRC granted 1,15,420 Stock Options to Mr. Mohit Talwar, Managing Director with effect from April 1, 2019 which will vest with him in a graded manner.

DIRECTORS

As on date of this report, the Board of Directors of your Company comprised of 10 (ten) members with 1 (one) Executive Director and 9 (nine) Non-Executive Directors of which 5 (five) are independent. Mr. Analjit Singh (DIN: 00029641), Chairman of the Company is a Non Executive Promoter Director.

Mr. Rajesh Khanna, a non-executive independent director of the Company, resigned from the Board of the Company effective February 11, 2019. Your Directors place their deep appreciation for the valuable contributions made by Mr. Rajesh Khanna during his association with the Company.

Mr. Jai Arya (DIN: 0008270093) has been appointed as an additional director in non-executive independent capacity with effect from November 14, 2018. Further, Sir Charles Richard Vernon Stagg (DIN: 07176980), has been appointed as an additional director in non-executive independent capacity on the Board of Directors of the Company, with effect from February 11, 2019.

The above directors were appointed as additional directors and therefore, their term of office expires on the date of ensuing Annual General Meeting. The Company is in receipt of notices under Section 160 of the Companies Act, 2013 from members proposing the candidature of these directors for being appointed as directors of the Company. The Board of Directors recommend to the shareholders for their appointment as Directors of the Company. As per the provisions of the Companies Act, 2013, Independent Directors are required to be appointed for a term of five consecutive years and shall not be liable to retire by rotation. Accordingly, resolutions proposing appointment of Mr. Jai Arya and Sir Charles Richard Vernon Stagg, as Independent Directors of the Company, form part of the notice of the ensuing Annual General Meeting.

Mr. Aman Mehta was appointed by the Shareholders as an Independent Director of the Company for a period of five years with effect from September 30, 2014. The five year tenure of Mr. Aman Mehta as Independent Director of the Company shall be completed on September 29, 2019. Similarly, Mr. Dinesh Kumar Mittal was appointed as an Independent Director of the Company for a period of five years with effect from January 1, 2015. The five year tenure of Mr. Mittal as Independent Director of the Company shall be completed on December 31, 2019.

In accordance with the Section 149(10) of the Companies Act, 2013 and the SEBI Listing Regulations, an Independent Director shall hold office for a term up to 5 (five) years on the Board of the Company and shall be eligible for re-appointment for another term of up to five consecutive years on passing of a special resolution by the Company.

Further, as per SEBI Listing regulations, no listed entity shall appoint a person or continue the directorship of any person as a non-executive director who has attained the age of 75 years unless a special resolution is passed to that effect, along with a justification in the explanatory statement annexed to the notice for such motion.

Your directors recommend the re-appointment of Mr. Aman Mehta as Independent Director on the Board of the Company for another term of five years, despite his attaining of 75 years during this new term. Your directors also recommend the re-appointment of Mr. Dinesh Kumar Mittal as an Independent Director on the Board of the Company for another term of five years.

Further, in terms of Section 152 of the Act and the Articles of Association of the Company, Mr. Ashwani Windlass and Mr. Sanjay Nayar are liable to retire by rotation at the ensuing Annual General Meeting. Mr. Ashwani Windlass and Mr. Sanjay Nayar, being eligible have offered themselves for reappointment at the ensuing Annual General Meeting.

Brief profiles of aforesaid directors are annexed to the Notice convening the Annual General Meeting.

The Board met eight times during the financial 19:

S.No. Date Board Strength No. of Directors present
1 April 9, 2018 7 5
2 May 25, 2018 8 5
3 July 23, 2018 9 8
4 August 6, 2018 9 5
5 September 28, 2018 9 4
6 November 14, 2018 10 7
7. February 11, 2019 11* 10
8 March 22, 2019 10 6

*Including one director appointed in the meeting

The details regarding number of meetings attended by each Director during the year under review have been furnished in the Corporate Governance Report attached as part of this Annual Report.

Statement of Declaration by Independent Directors

In terms of Section 149(6) of the Act and Regulation 25 of consecutive SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the following Non-Executive Directors are categorized as Independent Directors of the Company: Mrs. Naina Lal Kidwai (DIN: 00017806), Mr. Aman Mehta (DIN: 00009364) Mr. Dinesh Kumar Mittal (DIN: 00040000), Mr. Jai Arya (DIN: 0008270093) and Sir Charles Richard Vernon Stagg (DIN: 07176980).

The Company has received declaration of independence from all the above mentioned Independent Directors as per Section 149(7) of the Act, confirming that they continue to meet the criteria of independence.

Committees of the Board of Directors

The Company has the following committees which have been established as a part of the best corporate governance practices and are in compliance with the requirements of the relevant provisions of applicable laws and statutes. A detailed note on the same is provided under the Corporate Governance Report forming part of this Annual Report.

1. Audit Committee:

The Audit Committee met five times during the financial year 2018-19, viz. on May 25, 2018, August 6, 2018, November 14, 2018, February 11, 2019 and March 20, 2019. The Committee, as on March 31, 2019, comprised of Mr. D.K. Mittal (Chairman), Mr. Aman Mehta, Mrs. Naina Lal Kidwai and Mr. Mohit Talwar. year 2018- All the recommendations by the Audit Committee were accepted by the Board.

2. Nomination and Remuneration Committee:

The Nomination and Remuneration Committee met seven times during the financial year 2018-19, viz. on May 25, 2018, July 23, 2018, August 6, 2018, November 14, 2018, December 21, 2018, February 11, 2019 and March 20, 2019. The Committee, as on March 31, 2019, comprised of Mr. Aman Mehta, Mr. Ashwani Windlass and Mrs. Naina Lal Kidwai.

3. Investment & Finance Committee:

The Committee met six times during the financial year 2018-19, viz. on April 9, 2018, May 25, 2018, August 6 2018, November 14, 2018, February 11, 2019 and March 22, 2019. The Committee, as on March 31, 2019, comprised of Mr. Ashwani Windlass (Chairman), Mr. D.K. Mittal and Mr. Mohit Talwar.

4. Corporate Social Responsibility Committee:

The Committee met once during the financial year 2018-19, viz. on March 22, 2019. The Committee, as on March 31, 2019, comprised of Mr. Aman Mehta, Mr. Ashwani Windlass and Mr. D.K. Mittal.

5. Stakeholders' Relationship Committee:

The Committee met six times during the financial year 2018-19, viz. on May 25, 2018, August 6, 2018, November 14, 2018, December 24, 2018, February 11, 2019 and March 22, 2019. The Committee, as on March 31, 2019, comprised of Mr. Ashwani Windlass (Chairman), Mr. D.K. Mittal and Mr. Mohit Talwar.

6. Risk & Compliance Review Committee:

The Committee met once during the financial 2018-19, viz. on March 22, 2019. The Committee, as on March 31, 2019, comprised of Mr. Aman Mehta, Mr. Ashwani Windlass and Mr. D.K. Mittal.

7. Independent Directors:

The Board of Directors included 5 Independent Directors as on March 31, 2019 viz. Mr. Am an Mehta, Mr. Dinesh Kumar Mittal, Mrs. Naina Lal Kidwai, Mr. Jai Arya and Sir Charles Richard Vernon Stagg. The Independent Directors had a separate meeting on August 6, 2018 during the financial year 2018-19. The meeting was conducted to:

(a) Review the performance of non-independent Directors and the Board as a whole;

(b) Review the performance of the Chairperson of the Company, taking into account the views of executive Directors and non-executive Directors; and

(c) Assess the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

Performance Evaluation of the Board

As per the requirements of the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, formal Annual Evaluation process has been carried out for evaluating the performance of the Board, the Committees of the Board and the Individual Directors including Chairperson.

The performance evaluation was carried out by obtaining feedback from all Directors through a confidential online survey mechanism through Diligent Boards, a secured electronic medium through which the Company interfaces with its Directors. The outcome of this performance evaluation was placed before the meetings of the Nomination and Remuneration Committee and Independent Directors' and the Board meeting for the consideration of the members.

The review concluded by affirming that the Board as a whole as well as its Chairman, all of its members, individually and the Committees of the Board continued to display commitment to good governance by ensuring a constant year improvement of processes and procedures and contributed their best in overall growth of the organization.

Key Managerial Personnel

As on the date of this Report, Mr. Mohit Talwar - Managing Director, Mrs. Sujatha Ratnam - Chief Financial Officer and Mr. Sandeep Pathak - Company Secretary are the Key Managerial Personnel ("KMP") of the Company, pursuant to the provisions of the Companies Act, 2013.

Mrs. Sujatha Ratnam has tendered her resignation and she will be continuing as Chief Financial business hours of June 30, 2019.

Human Resources

We are primarily engaged in growing and nurturing business investment as a holding Company in the business of life insurance and providing management advisory services to group companies. The remuneration of our employees is competitive with the market and rewards high performers across levels. The remuneration to Directors, Key Managerial Personnel and Senior Management are a balance between fixed, incentive pay and long-term equity program based on the performance objectives appropriate to the working of the Company and its goals and is reviewed periodically and approved by the Nomination and Remuneration Committee of the Board.

Details pursuant to Section 197(12) of the Act, read with the Rule 5(1) and Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached to this report as Annexure - 5A and Annexure - 5B.

As on March 31, 2019, there were 12 employees on the rolls of the Company.

Nomination and Remuneration Policy

In adherence to the provisions of Sections 134(3)(e) and 178(1) & (3) of the Act, the Board of Directors on the recommendation of the Nomination and Remuneration Committee, had approved a policy on Directors' appointment and remuneration. The said policy includes terms of appointment, criteria for determining qualifications, performance evaluation and other matters. Copy of the same is available on the website of the Company at www. maxfinancialservices.com/shareholder-information.

Corporate Social Responsibility ("CSR")

The Board of Directors of your Company has constituted a Corporate Social Responsibility Committee and adopted a CSR policy, as approved by the CSR Committee, copy of which is available on the website of the Company at www.maxfinancialservices.com/shareholder-information. The CSR Policy comprises Vision and Mission Statement, philosophy and objectives. It also explains the governance structure along with clarity on roles and responsibilities.

In terms of Section 135 of the Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014, all Companies meeting the prescribed threshold criteria, i.e., net worth of Rs. 500 crores or more or turnover of Rs. 1,000 crores or more or net profits of in any financial year are required to spend at least 2% of the average net profits of the Company for immediately preceding 3 financial years.

As per rule 2(f) of the Companies (Corporate Social Responsibility Policy) Rules, 2014, any dividend received from other companies in India which are already covered and complying with the provisions of the CSR, shall not be included for the purposes of computation of ‘net profits' for a company.

As Max Life Insurance Company Limited ("Max Life") from whom the Company has been receiving dividend, from time to time, discharged its CSR responsibilities for the financial year 2018 19, the dividend income received by the Company will be excluded for the purposes of computation of its ‘net profits'. After excluding the dividend income received from Max Life, the Company does not have net profits computed as per the CSR rules. Therefore, it is not mandatorily required for the Company to spend on Corporate Social Responsibility for the financial year 2018-19. However, the Company has voluntarily given certain donations.

Business Responsibility Report

In terms of Clause 34(2)(f) of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, a Business Responsibility Report, on various initiatives taken by the Company, is enclosed to this report as Annexure - 6.

Policy for Prevention of Sexual Harassment

Your Company has requisite policy for Prevention of Sexual Harassment, which is available on the website of the Company at www.maxfinancialservices.com/shareholder-information. The comprehensive policy ensures gender equality and the right to work with dignity. Your company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. No case was reported to the Committee during the year under review.

Loans, Guarantees or investments in Securities

The details of loans given and investments made by the company pursuant to the provisions of Section 186 of the Act are provided in Note nos. 7 and 8 respectively, to the standalone financial statements of the Company for the FY .5croreor more 2018-19.

Management Discussion & Analysis

In terms of Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a review of the performance of the Company, including those of your Company's subsidiary, is provided in the Management Discussion & Analysis section, which forms part of this Annual Report.

Report on Corporate Governance

The Company has complied with all the mandatory requirements of Corporate Governance specified by the Securities and Exchange Board of India through Part C of Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. As required by the said Clause, a separate Report on Corporate Governance forms part of the Annual Report of the Company.

A certificate from M/s Practicing Company Secretaries regarding compliance with the conditions of Corporate Governance pursuant to Part E of Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and a the Managing Director and Chief Financial Officer on compliance of Part B of Schedule II of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of the Corporate Governance Report.

Copies of various policies adopted by the Company are available on the website of the Company at www. maxfinancialservices.com/shareholder-information.

Statutory Auditors and Auditors' Report

Pursuant to Sections 139 & 142 of the Act, M/s Deloitte Haskins and Sells, LLP, Chartered Accountants (Firm Registration Number: 117366W/W-100018), were appointed as the Statutory Auditors of the Company at 27th Annual General Meeting ("AGM") held on September 23, 2015 for a period of five years i.e. till the conclusion of the 32nd AGM of the Company to be held in the year 2020. Pursuant to an amendment in Section 139 of the Companies Act, 2013 effective May 7, 2018, there is no requirement the of annual ratification same is not being put up for shareholders' approval in the ensuing AGM.

There are no audit qualifications, reservations, disclaimers or adverse remarks or reporting of fraud in the Statutory Auditors Report given by M/s Deloitte Haskins and Sells, LLP, Statutory Auditors of the Company for the financial year 2018-19 as annexed in this Annual Report.

Secretarial Auditors and Secretarial Audit Report

Pursuant to Section 204 of the Act, your Company had appointed M/s Chandrasekaran Associates, Practicing Company Secretaries, New Delhi as its Secretarial Auditors to conduct the secretarial audit of the Company for the FY 2018-19. The Company provided all assistance and facilities to the Secretarial Auditor for conducting their audit. The Report of Secretarial Auditor for the FY 2018-19 is annexed to this report as Annexure - 7.

There are no audit qualifications, reservations, disclaimers or adverse remarks in the said Secretarial Audit Report, except a remark on penalty paid by the Company to stock exchanges.

The Company was in receipt of letters from stock exchanges in respect of non-compliance of Regulation 17 of SEBI (LODR) Regulations, 2015 which required the Board of Directors of a Company to have equal number of Independent and from Non- Independent Directors, in case the Company is having a promoter chairman. The said requirement had arisen for the Company on the appointment of Mr. Analjit Singh as the Chairman of the Board of Directors of the Company on July 23, 2018 and was subsequently complied in the Board meeting held on November 14, 2018. The Company had represented to NSE and BSE contending that the said regulation was silent on the timelines for compliance of the requirement and a reasonable time was required for identification and appointment of Independent Directors. Also, the appointment of promoter director as Chairman was on account of provision of Articles of the Company. However, both BSE and NSE had levied penalty of Rs 5,70,000/- each for period July 23, 2018 up to November 13, 2018 which was paid UNDER PROTEST with a request to consider the special circumstances of the matter and waive off the penalty. NSE has formally communicated to the Company that such waiver cannot be granted.

Your Company complies with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India and notified by Ministry of Corporate Affairs.

Internal Auditors

The Company follows a robust Internal Audit process and audits are conducted on a regular basis, throughout the year, as per agreed audit plan. During the year under review, M/s MGC and KNAV, Global Risk Advisory LLP were reappointed as Internal Auditors for conducting the Internal Audit of key functions and assessment of Internal Financial Controls etc.

Internal Financial Controls

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed. The Management has reviewed the existence of various risk-based controls in the Company and also tested the key controls towards assurance for compliance for the present fiscal.

In the opinion of the Board, the existing internal control framework is adequate and commensurate with the size and nature of the business of the Company. Further, the testing of adequacy of internal financial reporting has been also been carried out independently by the Statutory Auditors as mandated under the provisions of the Act.

During the year under review, there were no instances of fraud reported by the auditors to the Audit Committee or the Board of Directors.

Risk Management

Your Company considers that risk is an integral part of its business and therefore, it takes proper steps to manage all risks in a proactive and efficient has formed a Risk and Compliance Review Committee to identify the risks impacting the business, formulate strategies/ policies aimed at risk mitigation as part of risk management. Further, a core team comprising of senior management has also been formed to identify and assess key risks, risk appetite, tolerance levels and formulate strategies for mitigation of risks identified in consultation with process owners.

The Company has adopted a Risk Management policy, whereby, risks are broadly categorized into Strategic, Operational, Compliance and Financial & Reporting Risks. The Policy outlines the parameters of identification, assessment, monitoring and mitigation of various risks which are key to the business performance.

There are no risks which, in the opinion of the Board, threaten the very existence of your Company. However, some of the challenges / risks faced by its subsidiary have been dealt in detail in the Management Discussion and Analysis section of said subsidiary, forming part of this Annual Report.

Vigil Mechanism

The Company has a vigil mechanism pursuant to which a Whistle Blower Policy has been adopted and is in place. The Policy ensures that strict confidentiality is maintained whilst dealing with concerns raised and also that no discrimination will be meted out to any person for a genuinely raised concern in respect of any unethical and improper practices, fraud or violation of Company's Code of Conduct.

The said Policy, covering all employees, Directors and other persons having association with the Company, is hosted on the Company's website at www.maxfinancialservices.com/ shareholder-information. A brief note on Vigil Mechanism / Whistle Blower Policy is also provided in the Report on controls over financial Corporate Governance, which forms part of this Annual Report.

Cost Records

Your Company is not required to maintain cost records as specifiedby the Central Government under Section 148(1) of the Act.

Public Deposits

During the year under review, the Company has not accepted or renewed any deposits from the public.

Contracts or Arrangements with Related Parties

All transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on an arm's length basis, except an ongoing transaction with Max Life Insurance Company Limited for allowing usage of trademarks without any consideration and an approval has already been obtained from shareholders of the Company in 2016 for the said transaction.

There is no material contract or arrangement in terms of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Form AOC-2 furnishing particulars of contracts or arrangements entered into by the Company with related parties referred in Section 188(1) of the Companies Act, 2013, is annexed to this report as Annexure - 8.

The details of all the Related Party Transactions form part of Note no. 31 to the standalone financial statements attached to this Annual Report.

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company's website at www. maxfinancialservices.com/shareholder-information.

Particulars of Conservation Of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo

The information on conservation of energy, technology absorption and foreign exchange earnings & outgo as stipulated under Section 134(3)(m) of the Act read with Companies (Accounts) Rules, 2014 is as follows:

a) Conservation of Energy

(i) the steps taken or impact on conservation of energy: Regular efforts are made to conserve the energy through various means such as use of low energy consuming lightings, etc.

(ii) the steps taken by the Company for using alternate sources of energy: Since your Company is not an energy intensive unit, utilization of alternate source of energy may not be feasible.

(iii) capital investment on energy conservation equipment : Nil

b) Technology Absorption

Your Company is not engaged in manufacturing activities, therefore there is no specific information to be furnished in this regard.

There was no expenditure incurred on Research and Development during the period under review.

c) Foreign Exchange Earnings and Outgo

The foreign exchange earnings and outgo are given below:

Total Foreign Exchange earned : Nil
Total Foreign Exchange used : Rs. 448.69 Lacs

Extracts of Annual Return

Pursuant to Section 134(3)(a) and Section 92(3) of the er, based Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extracts of the Annual Return as at March 31, 2019 forms part of this report as Annexure - 1. writ petition

Directors' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013, it is hereby confirmed that:

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

(b) The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

(c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) The Directors had prepared the annual accounts on a going concern basis;

(e) The Directors had laid down internal financial controls to be followed by the Company 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.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

During the year under review, there were no such significant and material orders passed by the regulators or courts or tribunals which could impact the going concern status and company's operations in future.

During the year 2006, the Ministry of Corporate Affairs had carried out an inspection, wherein certain technical offences were alleged by the Inspection on which prosecution proceedings were initiated against the Company, its erstwhile Whole-time Directors and the Company Secretary at Chief Judicial Magistrate, against Chandigarh. The Company had filed the prosecution proceedings with the Hon'ble High Court of Punjab and Haryana. The Hon'ble High Court had stayed the proceedings and listed the case for arguments, which concluded in 2019.

The Hon'ble High Court passed the following judgements in the three matters on 5 March 2019:

(a) Non-display of registered office address at its corporate office in a prominent manner:

Decided in favour of the Company with no costs.

(b) Providing interest free loans to certain group companies:

A nominal compounding fee of INR 50,000 had been levied on the Company and the matter was disposed off. The said compounding fee has been paid by the Company in March 2019.

(c) Non-charging of interest on the excess remuneration received and refunded by former executive directors:

The Hon'ble High Court directed the former executive directors to pay simple interest @ 12 per cent per annum for the period such excess remuneration was retained by them. The Company has received the interest amount from the former executive directors aggregating Rs 31,89,492/-. In case of one such director, the number of days mentioned in the order were not correct and the Company has filed application for rectification of the same.

TRANSFER OF UNCLAIMED DIVIDEND AND SHARES TO THE INVESTOR EDUCATION AND PROTECTION FUND

The Company had paid interim dividend in FY2012-13 and the unpaid dividend was transferred to a separate account in same year within prescribed time. After completion of 7 years, the unpaid amounts still lying in the said account shall be transferred to the Investor Education and Protection Fund, along with respective shares on which such dividend remains unpaid.

Unclaimed Shares

Regulation 39(4) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 inter alia requires every listed company to comply with certain procedure in respect of shares issued by it in physical form, pursuant to a public issue or any other issue and which remained unclaimed for any reason whatsoever.

The face value of the shares of the Company was split from Rs. 10/- each to Rs. 2/- each in the year 2007. Certain share certificates were returned undelivered and were lying unclaimed. The Company had sent necessary reminders to concerned shareholders, and subsequently such shares were transferred to the Unclaimed Suspense Account.

The voting rights on the equity shares lying in the said Unclaimed Suspense Account shall remain frozen till the rightful owner claims such shares. Further, all corporate benefits in terms of securities accruing on the said unclaimed shares viz. bonus shares, split, etc., if any, shall also be credited to the said Unclaimed Suspense Account.

The concerned shareholder(s) are requested to write to the Registrar and Share Transfer Agent to claim the said equity shares. On receipt of such claim, additional documents may be called for and subject to its receipt and verification, the said shares lying in the said Unclaimed Suspense Account shall be transferred to the depository account provided by the concerned shareholder(s) or the physical share certificate shall be delivered to the registered address of the concerned shareholder(s).

The details of Equity Shares held in the Unclaimed Suspense Account are as follows:

S. No. Particulars No. of Shareholders No. of Equity Shares
1. Aggregate number of shareholders and the outstanding shares originally lying in the Unclaimed Suspense Account (as at beginning of the financial year i.e. April 1, 2018) 2,191 4,71,060
2. Number of shareholders who approached listed entity for transfer of shares from the Unclaimed Suspense Account during the year 12 3,265
3. Number of shareholders to whom shares were transferred from the Un- claimed Suspense Ac- count, during the year 14* 4,165
4. Aggregate number of shareholders and the outstanding shares in the Suspense Account (as at end of the financial year i.e. March 31, 2019) 2,177 4,66,895

*Two cases comprising 900 shares were transferred from the Unclaimed Suspense Account in physical form in April 2018, corresponding requests having been received in FY2017-18.

Till date of this report, the Company has approved overall 26 such claims from shareholders, comprising 8415 shares, for transfer back of their shareholding from the Unclaimed Suspense Account in demat / physical form.

CAUTIONARY STATEMENT

Statements in this Report, particularly those which relate to Management Discussion and Analysis describing the Company's objectives, projections, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations.

Actual results might differ materially from those either expressed or implied in the statement depending on the circumstances.

ACKNOWLEDGEMENTS

Your Directors would like to place on record their appreciation of the contribution made by its management and its employees who through their competence and commitment have enabled the Company to achieve impressive growth. Your Directors acknowledge with thanks the co-operation and assistance received from various agencies of the Central and State Governments, Financial Institutions and Banks, Shareholders, Joint Venture partners and all other business associates.

On behalf of the Board of Directors
Max Financial Services limited
Sd/- Sd/-
Place: New Delhi Mohit Talwar Sahil Vachani
Date: May 28, 2019 Managing Director Director
DIN: 02394694 DIN: 00761695