TATA Capital Unlisted Shares

Annual Report Summary

Being agile. Tata Capital Limited ("TCL"), a subsidiary of Tata Sons Private Limited, is registered with the Reserve Bank of India as a Systemically Important Non-Deposit Accepting Core Investment Company. Tata Capital caters to retail, corporate, and institutional customers with financial services.

Our Purpose and Pillars: A responsible financial partner fulfilling India’s aspirations through Lead with Trust, Better Together, Future Ready, Faster Forward, Capital & More, and Delivering Delight.

Corporate Social Responsibility (CSR) Initiatives: Tata Capital’s CSR is oriented towards stakeholder participation methodology, where the well-being of the target groups, like the community and the environment, are integral to the long-term success of the company. Some initiatives include:

• The Cluster Development program, providing supplementary education to underprivileged students in Maharashtra.
• The Tata Capital Pankh Scholarship program, supporting meritorious underprivileged youth with scholarships and mentoring.
• ProAspire, a skilling initiative for underprivileged youth in the BFSI sector.
• Dhan Gyan, a free e-learning course on financial literacy.
• Health care initiatives like Aarogyatara and Cancer CELL, aiming to provide access to quality preventive healthcare.
• The JalAadhar project, an integrated watershed management program.
• The Green Switch project, aiming to provide clean and renewable electricity to unlit homes in rural India.
• Project Ecosphere, ensuring the availability of clean drinking water and water for irrigation with the use of solar pumping systems in Maharashtra.
• COVID Relief project, aimed at setting up Oxygen plants in Maharashtra and UP, providing COVID relief materials in Karnataka, and vaccination in Maharashtra.
• Welfare activities for women, including refurbishment of restrooms and washrooms for women at Nagpada and Byculla Police Stations, Mumbai, and online social, educational and entrepreneurial empowerment programs for Army Veer Naris.

Product Portfolio: As a one-stop financial services provider, Tata Capital caters to retail, corporate, and institutional customers with a comprehensive suite of products and service offerings:

• Personal Loans, Home Loans, Business Loans, Other Consumer Loans, Cleantech Finance, and Institutional Distribution.
• Private Equity, Loan Against Property, Wealth Products Distribution, Commercial and SME Finance, Leasing Solutions, and Tata Cards.

Digital Initiatives: In FY 21-22, Tata Capital accelerated its digital transformation to achieve business growth, drive customer centricity, and attain operational excellence by building new digital platforms and improving direct-to-customer journeys.

• Sugam loans were launched for Tier 2 retailers and distributors.
• Customer service platforms were also strengthened, with features introduced for leasing customers and new service requests added, such as WhatsApp based servicing for commercial loan customers.
• Real-time sanctions are available for Personal, Business, and Home Loan products.
• 'Loan against Shares and Mutual Funds' enable seamless on-boarding and servicing journeys for customers.
• Products such as EMI Cards and Personal Loans were launched on the 'Tata Neu' platform.
• New channels of payment, including UPI based payments and BPPS, were launched, and collection from digital channels saw an increase over the year.
• Robotics process automation for back-office processes continued, enhancing productivity and reducing costs.
• Data analytics was enhanced across the lending value chain, increasing the use of scorecards for underwriting and using data science for risk and portfolio monitoring.
• Tata Capital will continue to make investments in new technologies to seek opportunities for growth, build new capabilities, and build products and services through digital.

New Products Introduced:

• Digital Loan Against Shares: Enables customers to avail loans upto Rs 5 crores by simply pledging their dematerialised shares online.
• Digital Loan Against Mutual Funds: Provided against equity and debt schemes across Mutual Funds, with loan amount customized based on value of units.
• Flexi Plus Loans: Exclusive range of new offerings that can be availed across product categories, including personal loans, business loans, loan against property, two wheeler loans, used car loans, and home loans, with features including longer tenure, overdraft facility, and step up plan.

Snapshot of Numbers:

• Book Size: 94,349 cr
• Total Comprehensive Income: 1,648 cr
• Locations: 267, 86% in non-metros
• Customers: 2.5 million+, 79% from non-metros

Awards: The company won several awards across different categories, including Human Excellence Awards, TISS and Leapvault CLO Awards, Assocham CSR & Sustainability Summit Awards, Drivers of Digital Awards, CII(WR) SHE Excellence and Innovation Award, Marketing Campaign of the Year, and Excellence in Water Conservation.

Message from the Chairman (Saurabh Agrawal): The last year was a sound reminder of how the human spirit has the ability to overcome all odds, and the pandemic's impact on the economy was limited by proactive government and regulator measures. Financial services reinforced its vital place, and NBFCs displayed resilience. He notes that the financial sector has come out of years of balance sheet repair and is well capitalized, and that Tata Capital has corrected its cost structure and restructured the business. He comments on the focus on growth, credit quality, and digital capabilities, and the empowerment of people. Consolidated balance sheet expanded to Rs 94,349 crore, with a Y-o-Y growth of 22%, and Company recorded its highest ever profits of Rs 1,648 crore, with a Y-o-Y growth of 46%, resulting in a ROE of 15%+. Despite some geo-political and inflationary uncertainty, he feels confident in India's potential to grow and emerge as the fastest-growing major economy in Asia, and expects Tata Capital to continue to play a pivotal role in bringing together pools of capital and providing credit to a diverse set of customers, expanding its footprint to 450+ locations.

Message from the Managing Director and CEO (Rajiv Sabharwal): The company navigated the debilitating impact of the pandemic and consolidated its position amongst the Top 3 diversified NBFCs in India. The year 2021 will be remembered as the year in which the human spirit rose above the adversity caused by the pandemic and embraced the 'new normal'. Registered a strong recovery in disbursements during the year - higher by 109% as compared to last year; recorded highest ever quarterly disbursals in the retail segment during Q4 FY 21-22. Loan book also grew by 22% over the year, which is considerably higher than the industry growth. Margins improved by ~60 bps over the year in FY 21-22. As of March 2022, the gross NPA and net NPA stood at 1.9% and 0.6% respectively. Tata Capital has adopted the RBI circular dated 12th Nov, 2021 pertaining to reclassification of NPA accounts on a prudent basis, instead of opting for deferment.

Transformation Journey:

• Digital Transformation: Close to 60% of personal loans are now disbursed through an end-to-end paperless process, with collections almost entirely digital.
• Diversification of book: A diversified book is key to our growth strategy which helps us spread our risks well. As a result of the same, we have steered away from product concentration and no single product accounts for more than 20% of our loan book. Moreover, we have been laying emphasis on growing our retail mix which has increased to 63% of our overall loan book as of March’22. Our loan book continues to be more than 80% secured
• Collaboration with FinTechs: We believe in the power of ecosystems and partnerships at Tata Capital in order to serve the customer better. We’re working with 70+ FinTechs offering customized solutions across the customer life cycle, aligned with emerging customer needs.
• Expansion of Branch network: added 119 new branches during FY 21-22 taking the total count to 267. Aim to widen network to 450+ branches over this year in order to tap the immense opportunity presented by Tier II, III and IV towns

Evolving regulatory landscape: The regulations between the Banks and NBFCs are being gradually harmonized, and scale based regulations have been introduced. These changes are welcomed. Future outlook: Remains cautious of economic headwinds. Tata Capital will be guided by the Tata Group's principle of Simplicity, Scale, and Synergy as One-Tata Philosophy. Rajiv Sabharwal expresses gratitude towards colleagues and the Board and thanks customers and shareholders.

Board’s Report: Tata Capital Limited is registered with the RBI as a Systemically Important Non-Deposit Accepting Core Investment Company. The Board reports on the financial results for the year ended March 31, 2022, including consolidated and standalone figures.

• The consolidated book size increased to 94,349 crore.
• Tata Capital recorded consolidated Total Income of ₹ 10,253 crore.
• Impairment on Investments and Financial Instruments decreased to ₹ 1,083 crore.
• The consolidated Gross Non-Performing Assets ("GNPA") showed decrease from 2.5% to 1.9%.
• Tata Capital's Profit After Tax attributable to owners of the Company on a consolidated basis increased by about 46%, to ₹ 1,648 crore.
• The consolidated Return on Assets (“RoA") for FY 2021-22 was 2.0% while the Return on Equity (“RoE”) was 15.6%.
• Standalone TCL recorded Gross Income of Rs 511.89 crore and Profit after Tax of 83.10 crore.
• The paid-up Equity Share Capital of the Company was₹ 35,16,16,77,440. Cumulative Redeemable Preference Shares were redeemed during FY2021-22.
• The Board declared Interim Dividend on the CRPS for the following tranches for the period April 1, 2021 to March 31, 2022, on March 25, 2022.
• The Directors recommend a final dividend of Re. 0.16 per Equity Share.
• TCL is primarily a holding company, holding investments in its subsidiaries and other group companies.
• The Company has set up six Private Equity Funds in India with aggregate Assets Under Management of ₹ 3,359 crore.
• TCSSF focuses on investing in turnaround opportunities, which have had an TVPI (Total Value, including Distributions, to Paid in Capital) of 1.18x.
• The Overseas Funds raised by the Overseas Funds as at March 31, 2022 were US$ 888 million.
• Tata Capital has a co-investment arrangement with TOF, whereby the Company has a commitment to co-invest the Indian Rupee equivalent of an amount of up to US $ 50 million alongside TOF
• TCFSL's portfolio increased by ₹ 11,068 crore. The Profit After Tax for the year increased by about 21% to₹ 817 crore.
• TCHFL's loan portfolio stood at₹ 30,150 crore. Profit After Tax for the year increased by 60% to₹ 569 crore.
• TCCL's portfolio increased by ₹ 1,551 crore. The Profit After Tax increased by about 22% to ₹ 204 crore.
• During the year under review, Tata Securities reported a Gross Income of 5.78 crore and Loss after Tax of ₹ 11.72 crore.
• During the year under review, TCPL recorded a consolidated Gross Income of US$ 16 million. Profit After Tax was at US$ 9 million.
• As at March 31, 2022, the Company had total investments of ₹ 1,066 crore in associate companies.
• As at March 31, 2022, the Company had other investments of ₹ 6,780 crore.
• During FY 2021-22, the Company met its funding requirements through issue of Commercial Papers and Unsecured Non-Convertible Debentures (“NCD").
• The Board approved the appointment of Ms. Malvika Sinha as an Independent Director and the re-appointment of Ms. Varsha Purandare as an Independent Director.
• The Board has carried out an annual evaluation of its own performance and of the individual Directors as well as an evaluation of the working of all the Committees of the Board.
• The NRC develops the competency requirements of the Board, conducts a gap analysis, and recommends the reconstitution of the Board.
• The Policy on Board Diversity and Director Attributes has been framed to encourage diversity of thought, experience, knowledge, perspective, age and gender in the Board
• The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience and expertise and that they hold the highest standards of integrity.
• The Directors confirm that the Company has complied with all applicable laws, rules, circulars and regulations.
• The Company spent₹ 2,611.11 lakh on CSR activities.
• The Company did not hold any public deposits at the beginning of the year nor has it accepted any public deposits during the year under review.
• The Company is in compliance with Secretarial Standards
• Mr. Rajiv Sabharwal, Managing Director & CEO, Mr. Rakesh Bhatia, Chief Financial Officer and Ms. Sarita Kamath, Head – Legal and Compliance & Company Secretary, are the KMPs of the Company.
• The Directors are of the opinion that the Company's internal financial controls were adequate and effective during FY 2021-22.
• Tata Capital continues to enhance its Digital platform for both the Retail and the Corporate businesses, across customer acquisition as well as customer servicing area. The use of Robotic Process Automation, Artificial Intelligence and Machine Learning has been adopted to drive business growth, improve productivity and enhance customer experience.
• Eight meetings of the Board were held during the year
• During the year under review, rating agencies reaffirmed/issued ratings to the Company.
• The Company has a co-investment arrangement with TOF, whereby the Company has a commitment to co-invest the Indian Rupee equivalent of an amount of up to US $ 50 million alongside TOF, subject to regulatory restrictions.

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