The Directors have pleasure in presenting the 19th Annual Report on business and operations of Star Health and Allied Insurance Company Limited (the Company), along with the audited financial statements for the financial year ended March 31, 2024.
BUSINESS OUTLOOK
The Company received the approval from the Insurance Regulatory and Development Authority of India (IRDAI) on March 16, 2006 to carry on General Insurance business to underwrite Health, Personal Accident and Travel Insurance. Since, then the Company had been servicing the public in the Health insurance segment. The Company has renewed its IRDAI license within the stipulated time on January 10, 2024.
Considering the awareness and increased demand for Health Insurance, the Company has designed specialized products for every segment and strives to be the most admired health insurer.
The Company continues to grow through prudent underwriting practices, strong retention of premium coupled with diversified investments portfolio, control over incurred claims ratio and rationalizing expenses.
The Company's core values - Customer Centricity, Innovation and Transparency are established through efficient and effective customer service and robust digital infrastructure.
CHANGE IN THE NATURE OF BUSINESS
During the year, there has been no change in the nature of the business of the Company.
FINANCIAL HIGHLIGHTS
( in Crore)
INVESTMENTS
The investment assets was 15,490.89 Crore (PY 13,413.10 Crore) and the weighted average yield on income bearing investments was 7.66% as on March 31, 2024 (PY 6.94%).
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION
There are no material changes and commitments affecting the financial position of the Company.
RESERVES & SURPLUS
The company has not made any apportionment to Capital Reserve, Capital Redemption Reserve, General Reserves or any other reserves including the Debenture Redemption Reserve.
SOLVENCY
IRDAI requires insurance companies to maintain a minimum solvency of 1.5 times, which is calculated in a manner as specified in the IRDAI (Actuarial, Finance and Investment) Regulations, 2024.
The solvency position of the Company as at March 31, 2024 was 2.21 times as compared to 2.14 times as at March 31, 2023.
SHARE CAPITAL
During the year, the Company allotted 36,06,033 equity shares to eligible employees under the Employee Stock Option Scheme -ESOP 2019.
The equity shares allotted during the year rank paripassu with the existing equity shares issued by the Company.
As on March 31, 2024 the issued, subscribed and paid-up equity share capital of the Company stood at 585.28 Crore (PY- 581.68 Crore) comprising of 58,52,83,381 equity shares (PY- 581,677,348 equity shares) of face value of 10 each.
The Company has not issued any equity shares with differential voting rights or sweat equity shares during the year.
NON_CONVERTIBLE DEBENTURES _NCD'S_
The Company had issued NCD's that are listed, unsecured, fully paid up, redeemable and issued in the nature of ‘subordinated debt' in accordance with IRDAI (Other Forms of Capital) Regulations, 2015, (Issue and Listing of Non-Convertible Securities) Regulations, 2021 and other applicable rules, laws and regulations in FY 2021-22.The NCD's are listed on the Debt market segment of National Stock Exchange of India Limited.
As at March 31, 2024, the Company had 4700 outstanding NCD's with face value of 10,00,000 each aggregating to 470 Crore (Rupees Four hundred and Seventy crore only). The details of the NCD's are as given below.
The Company has ensured to meet its obligations towards NCD's and paid the interest to the debenture holders on the respective due dates.
CREDIT RATING
During the year, India Rating and Research Private Limited assigned, IND AA-/Stable, for the subordinate debt of 4700 Non-Convertible Debentures issued by the Company.
The rating letter is displayed in the website under the web link https://d28c6jni2fmamz.cloudfront.net/Star_Health_And_Allied_ Insurance_Company_Limited_Rating_Letter_17207_1_f164491a57. pdf
Subsequently on April 05, 2024, the subordinate debt of the Company has been assigned a rating of AA Stable by Care Ratings Limited. The rating letter is displayed in the website under the web link: https://d28c6jni2fmamz.cloudfront.net/Credit_ Rating05042024_2a3e45c92f.pdf
ISSUER RATING
During the year India Rating and Research Private Limited assigned long-term issuer rating of IND AA/Stable, to the Company. The rating letter is displayed in the website under the web link https://d28c6jni2fmamz.cloudfront.net/Star_Health_And_Allied_ Insurance_Company_Limited_Rating_Letter_17207_1_f164491a57. pdf
Subsequently on April 05, 2024, the Company was assigned issuer rating of AA+ Stable by Care Ratings Limited. The rating letter is displayed in the website under the web link: https://d28c6jni2fmamz. cloudfront.net/Credit_ Rating05042024_2a3e45c92f.pdf
LOANS, GUARANTEES, SECURITIES AND INVESTMENTS
The provisions of Section 186 of the Companies Act 2013 (Act) except sub-section 1 thereof is not applicable for your Company. The company has not made any investments under Section 186 (1) of the Act.
LOANS RECEIVED FROM DIRECTORS AND/OR THEIR RELATIVES:
During the year under review, your Company has not received any loans from the Directors or their relatives.
DEPOSITS
The Company has not accepted any deposits from public and no amount on account of principal or interest on deposits from public was outstanding as on the date of the Balance Sheet.
DIVIDEND
The Board has not recommended any dividend for the financial year ended March 31, 2024.
POLICY ON DIVIDEND DISTRIBUTION
In terms of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI LODR"), the Board of Directors have formulated and adopted the Policy on Dividend Distribution. The Policy is displayed in the website under web link https://d28c6jni2fmamz.cloudfront.net/Dividend_Distribution_ Policy_1db3217dfe.pdf
TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND
The Company has not paid any dividends during the year and hence there is no requirement to transfer unpaid or unclaimed dividends to Investor Education and Protection Fund as on March 31, 2024.
SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES
Pursuant to section 129 (3) (1) of the Act read with rule 5 of Companies (Accounts) Rules, 2014 the Company does not have any associate, Joint Venture or Subsidiary as on March 31, 2024. Hence, the disclosure under Section 129(2) of the Act in Form AOC-1 is not applicable.
BOARD OF DIRECTORS
Pursuant to the Insurance Act, 1938 and Regulations framed thereunder, the Act and relevant rules made thereunder, the SEBI LODR and IRDAI (Corporate Governance for Insurers) Regulations 2024 ("IRDAI CGR 2024") the Company has a strong, independent and diverse Board with optimum combination of Executive and Non –Executive Directors.
As on March 31, 2024, the Board of the Company consisted of nine (9) Directors, out of which five (5) are Non-Executive Independent Directors including two (2) women Non-Executive Independent Directors, three (3) Non-Executive Nominee Directors and one (1) Managing Director & Chief Executive Officer(CEO).
The Board comprises of members who are eminent persons with considerable expertise and experience in Insurance, Marketing, Finance, Public administration and Law.
None of the Directors of the Company are disqualified from being appointed as Directors as specified in Section 164(2) of the Act.
All the Independent Directors of the Company have submitted the declaration confirming that they fulfill the criteria of independence as prescribed under the Act and the SEBI LODR. There has been no change in circumstances affecting their status as Independent Directors of the Company.
CHANGE IN THE BOARD OF DIRECTORS_MARCH 31, 2024
During the year under review, three (3) directors had tendered resignation. The details of the same are as given below.
MEETINGS OF THE BOARD
During the year under review, eight (8) Board meetings were held.
Further details, are provided in the Report on Corporate Governance, which forms a part of the Annual Report.
COMMITTEES OF THE BOARD
The below are the committees constituted by the Board A. Audit Committee B. Investment Committee C. Nomination and Remuneration Committee D. Corporate Social Responsibility Committee E. Risk Management Committee
F. Policyholders Protection Grievance Redressal and Claims Monitoring Committee G. Stakeholder Relationship Committee H. Information Technology Committee I. Board Administrative Committee
The details of composition, terms of reference and number of meetings held for respective Committees are available in the Report on Corporate Governance, which forms a part of this Annual Report.
DIRECTORS RETIRING BY ROTATION
In accordance with Section 152 of the Act and the Company's Articles of Association, Mr. Deepak Ramineedi, (DIN: 07631768) Nominee Director, Safecrop Investments India LLP retires by rotation in the ensuing AGM and is eligible for re-appointment. Mr Deepak Ramineedi offers himself for re-appointment. He is not disqualified under Section 164 of the Act. A resolution seeking the approval of the members and other details as required under the statutory provisions forms part of the Notice of the AGM.
INDEPENDENT DIRECTORS
All Independent Directors of the Company have declared that they meet the criteria of independence as laid down under Section 149(6) & (7) of the Act, the Companies (Appointment and Qualification of Directors) Rules, 2014 and Regulation 16(1)(b) and Regulation 25 of the SEBI LODR, each as amended. All the Independent Directors have also confirmed that they have complied with the Code of Independent Directors prescribed in Schedule IV of the Act and the Company's Code of Conduct (applicable to the Directors including Independent Directors and Senior Management). There has been no change in their circumstance affecting their status as Independent Directors of the Company.
ANNUAL EVALUATION OF BOARD PERFORMANCE AND PERFORMANCE OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS
The annual evaluation of the Board of Directors, Individual Directors and Board sub- committees was conducted in accordance with the provisions of the Act, IRDAI CGR 2024 and the SEBI LODR.
The Company has in place a Board approved performance evaluation framework, which lays down Guidelines for annual performance evaluation of the Board and its Committee(s), Managing Director & Chief Executive Officer, Chairperson, Individual Directors and Independent Directors.
KEY MANAGERIAL PERSONNEL _KMP_
Pursuant to Section 203 of the Act and IRDAI CGR 2024, the KMP of the Company as on March 31, 2024 are as given below
1. Mr. Anand Roy, Managing Director & CEO
2. Mr. Nilesh Kambli, Chief Financial Officer
3. Ms. Jayashree Sethuraman, Company Secretary
4. Mr. Amitabh Jain, Chief Operating Officer
5. Mr. Aneesh Srivastava ,Chief Investment Officer
6. Mr. Himanshu Walia ,Chief Marketing Officer
7. Mr. Vikas Sharma ,Chief Distribution Officer
8. Mr. Biju Menon, Chief Business Officer
9. Mr. Mukesh Sharma, Chief Digital Transformation Officer
0. Dr. Sriharsha Anant Achar, Chief Human Resource Officer
11. Mr. Vishwajeet Mohnot, Chief Compliance Officer
12. Mr. Chandrashekhar Dwivedi, Appointed Actuary
13. Mr. Kapil Punwani, Chief Risk Officer
CHANGES IN KMP
During the year under review Mr. Amitabh Jain, Chief Operating Officer, Mr. Himanshu Walia, Chief Marketing Officer, Mr. Vikas Sharma, Chief Distribution Officer w.e.f June 26, 2023, Mr.Chittibabu N, Chief Innovation Officer, Mr. Biju Menon, Chief Business Officer, Mr. Mukesh Sharma, Chief Digital Transformation Officer w.e.f July 28, 2023, Mr. Vishwajeet Mohnot, Chief Compliance Officer w.e.f August 15, 2023 were appointed as KMPs of the Company.
Further on account of re-organisation at top management level during the year under review Dr K Harikrishnan, Mr. S Sundaresan, and Mr. K C Kumar w.e.f July 28, 2023 and Mr. V Jayaprakash w.e.f August 14, 2023 were re-classified as non- KMP.
Dr Subbarayan Prakash, Strategic Management Executive w.e.f November 27, 2023, Mr. Chittibabu N, Chief Innovation Officer w.e.f February 18, 2024 and Mr. Chandrashekhar Dwivedi, Appointed Actuary w.e.f May 03, 2024 resigned from the services of the Company.
Dr P M Nair and Mr. A G Gajapathy retired from the services of the Company w.e.f July 01, 2023 and May 31, 2023 respectively.
POLICY RELATING TO THE NOMINATION AND REMUNERATION OF DIRECTORS, KMP AND OTHER EMPLOYEES
The Company has a Board approved Policy relating to Nomination and Remuneration of the Directors, KMP and Other Employees. The policy strives to establish an effective governance of compensation and sound remuneration structure for the Directors, KMP and other employees. Further, it aims at preventing situations of conflict of interest while appointing any employee or member of the Board. The said policy is hosted on the company's website under the web link https://d28c6jni2fmamz.cloudfront.net/Nomination_and_ remuneration_policy_24aee0fd19.pdf
CORPORATE GOVERNANCE
Pursuant to Regulation 34 of the SEBI LODR, IRDAI CGR 2024, the Report on Corporate Governance is enclosed as Annexure 1 along with the certificate from a Practicing Company Secretary certifying compliance, which is enclosed as Annexure A.
CODE OF CONDUCT
The Company has adopted a Code of Conduct for the Board and senior management. The Code is hosted on the company's website under the web link https://d28c6jni2fmamz.cloudfront.net/code_of_ conduct_09a08d8c20.pdf.
The Board and the Senior Management have afirmed compliance with the aforesaid code for the financial year ended March 31, 2024. The Managing Director & CEO certification in this respect is enclosed as Annexure – B to the report on Corporate Governance, which forms a part of the Annual Report.
CORPORATE SOCIAL RESPONSIBILITY _CSR_
In accordance with the provisions of the Act and IRDAI CGR 2024, the Board has initially constituted Corporate Social Responsibility Committee ("the Committee") on May 08, 2014 and the Board subsequently reconstituted the Committee on May 23, 2021 and July 28, 2023.
The Company has formulated the Policy on Corporate Social Responsibility, which sets out the framework guiding the Company's CSR activities. The Policy also sets out the framework for selecting and implementing CSR activities. The Policy is hosted on the company's website under the web link https://d28c6jni2fmamz.cloudfront.net/ Corporate_Social_Responsibility_Policy_ea3c53aa5e.pdf
The average net profit or loss of the company for the three preceding financial years aggregates to (672.02) crore.
In view of the above, the obligation to create CSR Corpus for incurring the CSR Expenditure and preparation of Annual plan for the financial year ended March 31, 2024 did not arise.
However, during FY 24, considering the on-going projects and other individual projects undertaken by the Company during the preceding years, the company on a voluntary basis has created CSR budget aggregating to 1.67 Crore and the Company has spent the same for FY 24.
The company has incurred 1.57 crore towards its ongoing projects and 0.10 crore towards other individual projects.
The Composition of the Committee and the Report on the CSR Activities undertaken by the Company during FY 24 forms part of the Annual Report as Annexure II.
VIGIL MECHANISM/WHISLE BLOWER POLICY
Pursuant to Section 177(9) of the Act, a vigil mechanism/Whistle Blower Policy was formulated for directors, employees and all other stakeholders associated with the company to report to the management instances of unethical behavior, actual or suspected, fraud or violation of the Company's policies and so on.
The details of the disclosure under the Vigil Mechanism/Whistle Blower Policy are detailed in the Report on Corporate Governance, which forms part of the Annual Report.
INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
The company's internal financial control systems have been implemented with robust processes that protects the interest of the Company and commensurate with the nature and size of the business, the complexity of operations and such controls with reference to the Financial Statements are adequate.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS
No significant and materials orders were passed by the regulators or courts or tribunals impacting the going concern status and the Company's operations in future. There was no application made or proceeding pending against the Company under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year under review.
AUDITORS
A. Statutory Auditors
The Members of the Company had approved the appointment of M/s Brahmayya & Co (FRN: 000511S) and V. Sankar Aiyar & Co (FRN:109208W) as the joint statutory auditors of the Company for a term of 5 years commencing from the conclusion of the 14th AGM of the Company till the conclusion of the 19th AGM of the Company.
The Statutory Auditors were present in the last AGM.
B. Secretarial Auditor
Pursuant to 204 of the Act and the SEBI LODR, M /s. Chitra Lalitha & Associates, a firm of Practicing Company Secretaries, were appointed as Secretarial Auditors of the Company for FY 24.
C. Concurrent Auditor
M/s. Singhi & Co, Chartered Accountants were appointed as Concurrent Auditors to carry out concurrent audit of the investment functions for FY 24.
D. Internal Auditor
The Company has an in house Internal Audit team. They effectively carry out the internal audit of all the functions of the Company, highlight areas that require attention and report their findings and recommendations to the Audit Committee of the Board. The Audit Committee reviews the audit findings, the actions taken thereon, and the effectiveness of the internal control systems on a quarterly basis.
AUDIT REPORTS, QUALIFICATIONS AND ADVERSE REMARKS
The Company did not receive any audit qualifications/adverse remarks from the Statutory Auditors, Secretarial Auditors, Concurrent Auditors and Internal Auditors for FY 24.
As required under the Act and SEBI LODR, the Secretarial Audit Report forms part of the Annual Report as Annexure III.
REPORTING OF FRAUDS BY AUDITORS
During the year under review, there were no instances of frauds reported by the Joint Statutory Auditors and Secretarial Auditors under Section 143(12) of the Act to the Audit Committee or Board of Directors of the Company.
MAINTENANCE OF COST RECORDS
Being a Health Insurance Company, the Company is not required to maintain cost records under Section 148(1) of the Act.
SECRETARIAL STANDARDS
The Company has in place proper systems to ensure compliance with the provisions of Secretarial Standards i.e. SS-1 and SS-2, issued by the Institute of Company Secretaries of India, as amended from time to time with respect to Meetings of Board and its Committees and General Meetings respectively. The systems are adequate and operate effectively.
RELATED PARTY TRANSACTIONS
In line with the requirements of the Act and the SEBI LODR, the Company has formulated a Policy on Related Party Transactions. The Policy is hosted on the company's website under the web link: https:// d28c6jni2fmamz.cloudfront.net/Related_Party_Transactions_Policy_ ab744f2a20.pdf
The Audit Committee had accorded Omnibus approval for related party transactions and all the Related Party Transactions are reviewed by the Audit Committee on a quarterly basis. There were no material transactions of the Company with any of its related parties. Hence, the requirement for Members approval and disclosure of Related Party Transactions as required under Section 134(3)(h) of the Act in Form AOC-2 did not arise.
The details of related party transactions are disclosed in Note No.5.2.6 of the Notes to Financial Statements for FY 24.
ANNUAL RETURN
Pursuant to Section 92(3), Section 134 of the Act read with Rule 11 of the Companies (Management and Administration) Rules, 2014, as amended, the Annual Return in Form MGT-7 for FY 24 will be hosted on the website of the Company under the web link https://www. starhealth.in/investors/companies-act-2013-disclosures/#annual-return
RISK MANAGEMENT FRAMEWORK
The Board of Directors have constituted a Risk Management Committee, which regularly assesses the risk and advises suitable measures to mitigate the same. The Board approved Enterprise Risk Management policy sets out the framework for risk management, and mitigation.
The Chief Risk officer is responsible for identification, reporting and monitoring the risks and reports to the Risk Management Committee on a quarterly basis.
In the opinion of the Board there are no elements having significant impact on the Company.
PREVENTION OF SEXUAL HARASSMENT
The Company has zero tolerance for sexual harassment at the workplace and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace. The Policy aims at providing protection to employees at the workplace and for the prevention and redressal of complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment.
The Company has constituted an Internal Complaints Committee as required under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013. Further details in this respect forms part of the Report on Corporate Governance.
PARTICULARS OF REMUNERATION _EMPLOYEES
The statement containing particulars of employees as required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this Report as Annexure IV.
The statement containing particulars of employees as required under Section 197 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. Pursuant to the provisions of the Act, the Annual Report including Financial Statements are being sent to the Members of the Company excluding the aforesaid statement. Further in terms of Section 136 of the Act, the said annexure is open for inspection and any Member interested in obtaining a copy of the same may write to the Company Secretary of the Company at investors@starhealth.in
FOREIGN EXCHANGE _ EARNINGS AND OUTGO
CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION:
The details of energy and technology absorption is disclosed in Business Responsibility and Sustainability Report for the year ended March 31, 2024 and forms part of the Annual Report as Annexure V.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT _BRSR_
Pursuant to Regulation 34(2)(f) of the SEBI Listing Regulations read with the various circulars issued by SEBI the report on BRSR for FY 24 forms part of the Annual Report as Annexure V.
The Report is hosted on the Company's website under the web link https://www.starhealth.in/investors/sebi-equity-disclosures/
MANAGEMENT'S DISCUSSION AND ANALYSIS
Pursuant to Regulation 34 of the SEBI LODR, the Management's discussion and analysis forms part of the Annual Report.
APPLICATION / PROCEEDING PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016
There are no applications or proceedings filed or pending under the Insolvency and Bankruptcy Code 2016 that would impact the operations of the Company.
DETAILS OF DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME OF ONE TIME SETTLEMENT ANDTHEVALUATION DONEWHILETAKING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF.
During the year, the Company has not done any one- time settlement nor availed any loans from Banks or Financial Institutions.
MANAGEMENT REPORT
In accordance with Part IV, Schedule B of the IRDAI (Preparation of Financial statements and Auditor's Report of Insurance Companies) Regulations 2002, the Management Report forms a part of the financial statements.
EMPLOYEE STOCK OPTION PLAN _ESOP__ ESOP 2019
In order to motivate the eligible employees and to give them an opportunity to participate in the Company's growth, thereby, acting as a retention tool as well as to align the efforts of such talent towards long term value creation in the organization and to attract new talent, your Company pursuant to the resolutions passed by the Board and the Members on August 6, 2019 had approved the ESOP 2019 for issuance and allotment of 2,40,05,326 (Two crore, Forty Lakh, Five thousand, Three Hundred and Twenty Six) equity shares under the said scheme, out of which 2,26,22,088 (Net) options were granted till FY 24 to the employees.
In compliance with Section 62(1) (b) of the Act, rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014, as amended, the salient features of the ESOP 2019 are stated as below:
DIRECTORS' RESPONSIBILITY STATEMENT
Based on the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the internal, statutory and secretarial auditors and the reviews performed by management and the relevant Board sub Committees, the Board is of the opinion that the Company's internal financial controls were adequate and effective during FY 24
Pursuant to Section 134(5) of the Act and in accordance with Insurance Act, 1938, the Board of Directors, to the best of its knowledge and ability, confirm that:
a) in the preparation of the Annual Accounts for the year ended March 31,2024 the applicable Accounting Standards have been followed and there are no material departures;
b) appropriate accounting policies have been selected and applied consistently and such judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year ended March 31, 2024 and of the profit of the Company for the financial year ended March 31, 2024;
c) 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 financial statements have been prepared on a ‘going concern' basis;
e) internal financial controls had been laid down to be followed by the company and that such internal financial controls are adequate and are operating effectively;
f) proper systems are devised to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.
ACKNOWLEDGEMENT
The Directors wish to thank the offcials and members of IRDAI for their continued guidance and support to your Company. The support and co-operation extended by all the shareholders and stakeholders merit appreciation. The Directors express their sincere appreciation to the employees of the Company at all levels for their hard work, dedication and commitment.
The Directors also thank the Bankers, Corporate partners and customers for their valued support to your Company.
For and on behalf of the Board
Managing Director & CEO