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HDFC ERGO GENERAL INSURANCE COMPANY LIMITED A Subsidiary of Housing Development Finance Corporation Limited Fourteenth Annual Report 2020-2021 Fourteenth Annual Report 2020-21 Board of Directors Mr. Ritesh Kumar Mr. Deepak S. Parekh Managing Director & CEO Chairman (DIN: 02213019) (DIN: 00009078) Directors Company Secretary Mr. Keki M. Mistry Mr. Dayananda V. Shetty (DIN: 00008886) Membership No.: FCS 4638 Ms. Renu Sud Karnad (DIN: 00008064) Auditors Dr. Oliver Martin Willmes G. M. Kapadia & Co. (DIN: 08876420) Chartered Accountants (w.e.f October 12, 2020) B. K. Khare & Co. Mr. Alexander Ankel Chartered Accountants (DIN: 07798908) (upto October 11, 2020) Dr. Clemens Matthias Muth Banker (DIN: 07824451) HDFC Bank Ltd. (w.e.f October 12, 2020) Mr. Theodoros Kokkalas Debenture Trustee (DIN: 08093899) IDBI Trusteeship Services Limited (upto October 11, 2020) Asian Building, Ground Floor, Mr. Bernhard Steinruecke 17, R. Kamani Marg, Ballard Estate, (DIN: 01122939) Mumbai – 400 001 Tel. No: +91 22 40807062 Mr. Mehernosh B. Kapadia Fax No: +91 22 22882312 (DIN: 00046612) Axis Trustee Services Limited Mr. Arvind Mahajan 2nd Floor, Axis Bank Limited, Plot No. 25, (DIN: 07553144) Pusa Road, Karol Bagh, New Delhi – 110005 Mr. Ameet P.Hariani (DIN: 00087866) Mr. Samir H. Shah Registered & Corporate Office Executive Director & CFO HDFC House, 1st Floor, (DIN: 08114828) 165-166, Backbay Reclamation, H. T. Parekh Marg, Churchgate, Mr. Anuj Tyagi Mumbai-400 020. Executive Director & CBO Website: www.hdfcergo.com Upto April 19, 2021) E-mail: care@hdfcergo.com (DIN: 07505313) Tel. No: +91 22 66383600 Deputy Managing Director CIN: U66030MH2007PLC177117 (w.e.f April 20, 2021) IRDAI Reg. No. 146 450 HDFC ERGO General Insurance Company Limited Directors’ Report TO THE MEMBERS Performance Your Directors are pleased to present the Fourteenth The Gross Written Premium (GWP) of the Company Annual Report of your Company together with the increased to ` 12,443.9 crore (PY: ` 9,760.1 crore). audited financial statements for the financial year ended The Net Earned Premium increased to ` 6,405.6 crore on March 31, 2021. The merger of HDFC ERGO Health (PY: ` 4,450.4 crore). The Company achieved a Profit Insurance Limited (HEHI) with the Company was effective before Tax of ` 791.8 crore (PY: ` 459.0 crore) after from November 13, 2020 with Appointed Date as March providing for diminution in the value of investments and 1, 2020. Accordingly, the financial results for FY 2020- write-off of Bad and Doubtful Investments amounting to 21 are for the merged entity. ` 31.2 crore (PY: ` 21.7 crore). The Profit after Tax for the Financial Results (` in crore) year is ` 591.7 crore (PY: ` 326.9 crore). Particulars Year ended Year ended Dividend March 31, 2021 March 31, 2020* Gross Written Premium 12,443.9 9,760.1 The Board of Directors had approved the payment of an Net Written Premium 6,504.3 4,866.9 interim dividend of ` 3 per equity share of ` 10 each for Net Earned Premium 6,405.6 4,450.4 the financial year 2020-21 in March 2021. During FY20, Other Income/Liabilities 7.4 4.8 the Company did not pay any dividend in view of advice written back from IRDAI to all insurers to refrain from dividend pay- Net Incurred Claims 4,852.0 3,524.1 outs in view of COVID-19 pandemic. No amount is lying Net Commission (198.3) (211.9) in the unpaid dividend account. (Income)/ Expenses No final dividend was recommended by the Board. Expenses of Management 2,080.8 1,543.6 Increase in Paid-up Share capital Investment Income – 958.5 734.9 Policyholders During the year, the Company allotted 3,45,651 equity General Insurance Result 636.9 334.3 shares of ` 10 each pursuant to exercise of stock options Investment Income – 186.0 146.4 under Employees Stock Option Plan-2009 (ESOP-2009). Shareholders Further, in terms of the Scheme of Amalgamation of Profit before Tax - Before 822.9 480.7 HEHI with the Company, 10,53,77,232 equity shares of providing for diminution ` 10 each were allotted to the shareholders of HEHI on in value of investments November 13, 2020. & write-off of Bad and The Paid-up equity share capital of the Company has Doubtful Investments increased to ` 711.6 crore as on March 31, 2021 from Provision towards 31.2 21.7 ` 605.8 crore as on March 31, 2020 and the Share diminution in value of Premium Account increased to ` 1,401.3 crore as on investments & write- off March 31, 2021 from ` 1,395.8 crore as on March 31, of Bad and Doubtful 2020. Investments Profit before Tax - After 791.8 459.0 Non-Convertible Debentures providing for diminution As at March 31, 2021, the Company’s outstanding Non- in value of investments Convertible Debentures (NCDs) stood at ` 504.00 crore & write-off of Bad and consisting of: Doubtful Investments i. 3,500 Unsecured, Subordinated, Fully Paid-up, Provision for Tax 200.1 103.6 Listed, Redeemable NCDs of the face value of MAT Credit Written Off - 28.4 ` 10,00,000 each, with a coupon of 7.60% per Profit after Tax 591.7 326.9 annum allotted on November 9, 2016 and are Interim Dividend 213.5 - redeemable on November 9, 2026. Transfer to Debenture - 2.4 The NCDs are rated by CRISIL and ICRA and were Redemption Reserve assigned the highest rating of CRISIL AAA/Stable Profit carried to Balance and ICRA AAA/Stable respectively; Sheet 378.2 324.5 Credit balance in P & L 778.4 832.0 ii. 800 Unsecured, Subordinated, Fully Paid-up, account at the year end Listed, Redeemable NCDs of the face value of *Comprises of financial results of the Company for ` 10,00,000 each, with a coupon of 8.40% per the period of 12 months and 1 month of HEHI as the annum allotted on September 18, 2017 and Appointed Date for merger was March 1, 2020. redeemable on September 17, 2027; 451 Fourteenth Annual Report 2020-21 iii. 740 Unsecured, Subordinated, Fully Paid-up, Listed, Number of meetings of the Board Redeemable NCDs of the face value of ` 10,00,000 During the year, the Board met seven (7) times on each, with a coupon of 10.25% per annum allotted May 8, 2020, June 12, 2020, July 22, 2020, October on September 18, 2018 and redeemable on 21, 2020, November 13, 2020, January 21, 2021 and September 17, 2028. March 3, 2021. The above two NCDs are rated by CRISIL, CARE, Acuité The details of attendance of the Directors at the Board and ICRA and were assigned the highest rating of CRISIL and Committee meetings are provided in the Report of AAA/Stable, CARE AAA/Stable, Acuité AAA/Stable and the Directors on Corporate Governance. ICRA AAA/Stable respectively. Policy on Director’s appointment and remuneration All the above NCDs are listed on the Whole Sale Debt The Company has in place a Board approved Policy Market Segment of BSE Limited. on Appointment of Directors and Members of Senior The Company has been regular in servicing its interest Management and other Employees (Appointment towards NCDs. Policy) and Remuneration Policy for the Directors, Key Managerial Personnel (KMPs), Senior Management and Debenture Redemption Reserve other Employees (Remuneration Policy). In accordance with the provisions of Section 71 of the The objective of the Appointment Policy is inter-alia Companies Act, 2013 (‘Act’) read with Rule 18 of the to provide a framework and set standards for the Companies (Share Capital and Debentures) Rules, 2014, appointment of high quality directors who should have the Company was transferring amounts to the Debenture the capacity and ability to lead the Company towards Redemption Reserve (DRR) from its profit till the quarter achieving its stated goals and strategic objectives, ended June 30, 2019. taking into account the interest of all stakeholders In terms of the Companies (Share Capital and Debenture) including shareholders, policyholders, channel partners Amendment Rules, 2019 issued by the Ministry of and employees. Corporate Affairs (MCA) vide its notification dated August The objective of the Remuneration Policy is inter-alia to 16, 2019, DRR is not required to be created by listed ensure that (i) the level and composition of remuneration companies in case of privately placed debentures. In is in line with other companies in the industry, sufficient view of the same, the Company has stopped creating to attract and retain right talent at all levels and keep DRR w.e.f quarter ended September 30, 2019. them motivated enough to meet the organizational objectives; (ii) a reasonable balance is maintained in By an amendment to the Companies (Specification of the composition of remuneration (fixed and variable definitions details) Rules, 2014, MCA vide its notification component); (iii) to have performance measurement dated February 19, 2021 has clarified that, public parameters in place to assess the overall performance of companies which have not listed their equity shares on Directors, KMPs, Members of Senior Management and a recognized stock exchange but have listed their non- other employees; and (iv) the remuneration of Whole- convertible debt securities issued on private placement time Directors including Managing Director & CEO, is basis in terms of SEBI (Issue and Listing of Debt fixed keeping in perspective the various risks including Securities) Regulation, 2008 shall not be considered as their time horizon and that such remuneration reflects a listed company w.e.f April 1, 2021. the performance of the Company measured against Accordingly, the Company will not be categorized as performance objectives including risk outcomes. a listed company under the Act and consequently, in The said Policies are available on the website of the terms of Rule 18(7)(b)(iv)(B) of the Companies (Share Company (www.hdfcergo.com). Capital and Debentures) Rules, 2014 as amended, Comments on Auditor’s Report the Company has to create DRR of 10% of value of Neither the Secretarial Auditor nor the Joint Statutory outstanding debentures, w.e.f April 1, 2021. Auditors have made any qualification, reservation or As at March 31, 2021, the balance in DRR stands at adverse remark or disclaimer in their reports. The reports ` 35.6 crore. of the Secretarial Auditor and the Joint Statutory Auditors are appended to this Report. Extract of Annual Return Further, during the year under review, the Joint Statutory The extract of the Annual Return in prescribed Auditors have not come across or reported any incident Form MGT- 9 is available on the website of the Company of fraud to the Audit and Compliance Committee of (www.hdfcergo.com). Directors. 452
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