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Directors Report of Manappuram Finance Ltd.

Mar 31, 2016

The Directors have pleasure in presenting before you the 24th Annual Report of the Company together with the Audited Consolidated and Standalone Statements of Accounts for the financial year ended 31st March, 2016.

1. FINANCIAL SUMMARY/HIGHLIGHTS, OPERATIONS, STATE OF AFFAIRS

(Rs. In millions)

Description Standalone Consolidated

2015-16 2014-15 2015-16 2014-15

Gross Income 22174.74 19809.40 23738.26 19934.27

Total Expenditure 16985.62 15685.12 18254.45 15797.54

Profit Before Tax 5189.12 4124.28 5483.8 4136.73

Provision for Taxes/ Deferred tax 1816.69 1416.96 1932.25 1421.96

Minority interest - - 17.90 1.60

Net Profit 3372.43 2707.32 3533.68 2713.17

Balance b/f from previous year 2848.66 2469.29 2,851.54 2468.99

Amount available for appropraitions 6221.09 5176.60 6385.22 5182.16

Appropriation

Transfer to Statutory Reserve 674.49 541.46 722.41 544.13

Transfer to General reserve 0 0 0 0

Transfer to Debenture Redemption Reserve 169.91 435.14 169.91 435.14

Interim Dividend on Equity share 1892.74 1135.64 1892.74 1135.64

Tax on Interim Dividend 385.31 215.71 385.31 215.71

Proposed Equity dividend - - - -

Tax on dividend - - - -

Balance c/f to next year 3098.64 2848.66 3159.29 2851.54

The comparative operational results shown above summarize the financial performance of the company for the year under report and for the previous year. Profit after tax for the year under review has gone up by 24.57% in comparison to the previous year and total revenue of the company has gone up by 12%. As of March 31, 2016, the loan book of the company stands at Rs.103055.98 million as against Rs. 92594.57 million recorded on March 31, 2015. The positive growth in loan book was the consequence of multiple factors such as focus on growth in gold collateral and number of customers, diversification of portfolios, macro-economic scenario, and certainties in the regulatory environment for gold loan NBFCs. A system of regular, periodical collection of interest has been introduced across our branches. Our improving credit and risk profile enabled us to lower our cost of funding significantly. All these enabled us to report encouraging results with a good increase in profits during FY2015-16.

During the year, the company implemented customer friendly short tenure loan schemes with an option to the customers to choose the schemes based on their convenience and requirement, in lieu of longer tenure loan schemes in previous years; and these Loan Schemes also gives comfort to customers that interest sensitive customers can choose lower interest product, LTV sensitive customers can choose higher LTV product.

During the year, the Company also launched Online Gold Loan (''OGL'') facility for the customers, where customers with access to any internet enabled device can get a gold loan anytime, from anywhere in the world. For availing this facility, the customer needs to make an initial visit to the nearest branch of the Company to get his/her gold ornaments appraised for purity and value and then, he/she need to handover the custody to branch against the receipt.

Local marketing activities like village campaigns, Loan Melas, Shop visits, Home visits, Notice distribution were carried out immensely. Campaigns for acquiring new customers, Proper review and monitoring at field level. Employee motivation through incentives and other activities also contributed to the positive growth of company.

No material changes/commitments, effecting financial position of the Company, have occurred between the financial year ended March 31, 2016 and the date of this report.

2. MEETINGS OF THE BOARD

During the financial year 2015-16, the Board met on six occasions viz. 14-05-2015, 14-08-2015, 05-11-2015, 07-11-2015, 12-02-2016 and 11-03-2016.

3. DIRECTOR''S RESPONSIBILITY STATEMENT:

Pursuant to section 134(5) of the Companies Act, 2013, the board of directors, to the best of their knowledge and ability, confirm that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;

ii. they have 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;

iii. they have 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;

iv. they have prepared the annual accounts on a going concern basis;

v. they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively;

vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and external consultants, including audit of internal financial controls over financial reporting by the statutory auditors, and the reviews performed by management and the relevant board committees, including the audit committee, the board is of the opinion that the Company''s internal financial controls were adequate and effective during FY 2015-16.

4. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS

The Company has received necessary declaration from each Independent Director of the Company as per Section 149(7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149(6). The Company has also received undertaking and declaration from each director on fit and proper criteria in terms of the provisions of corporate governance (Reserve Bank) Directions, 2015.

5. POLICY ON BOARD COMPOSITION COMPENSATION AND EVALUATION CRITERIA AND RELATED DISCLOSURE

The Board of Directors has adopted a policy on director''s appointment and remuneration for directors, Key Managerial Personnel and other employees including criteria for determining qualification, positive attributes, and independence of directors as laid down by the nomination compensation and corporate governance committee of the board which is annexed to this report as Annexure I. The Board has also adopted criteria for evaluating its own performance and of its committees and individual directors as laid down by the nomination and remuneration committee. The evaluation processes carried out on the following parameters:

Board Committees Individual Director

Board Structure and Composition Committee Structure and Attendance Composition

Effectiveness of Board processes, Degree of fulfillment of key Professional Conduct information and functioning responsibilities

Establishment and delineation of Effectiveness of meetings Role and functions responsibilities to Committees

Quality of relationship between the Committee dynamics Duties Board and the Management

Quality of relationship of the Contribution to the Board/ Committee with the Board and Committees/ Senior the management management

6. BOARD REPLY ON STATUTORY AUDIT AND SECRETARIAL AUDIT QUALIFICATION

There were no such audit qualifications during the financial year 2015-16.

7. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Particulars of Loans, Guarantees or Investments are annexed herewith as Annexure -II

8. PARTICULARS OF CONTRACTORS AND ARRANGEMENT WITH RELATED PARTIES

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were on an arm''s length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. Details of the same is attached in Form AOC-2 as Annexure III.

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 the link: http://manappuram.com/files/Policy-on- Materiality-of-Related-Party-and-Manner-of-Dealing-With-Related-Party -Transactions.pdf

Your Directors draw attention of the members to Note 24 to the financial statement which sets out related party disclosures.

9. RESERVES

During the year, the company has not transferred any amount to General Reserves and it remains same as Rs. 3885.08 million. The total reserves and surplus as on March 31, 2016 stands at Rs.25,685.67 million.

10. DIVIDEND

The Company has paid four interim dividends for the financial year 2015-16 with an amount of 0.45 paise per equity share (face value Rs.2/- per share) on 14th August 2015, 05th November 2015, 12th February, 2016, and 11th March 2016, respectively. The aggregate amount of Rs. 1.80/- per shares paid as dividend for the financial year 2015-16, amounts to 90 percent of the paid up value of the shares.

11. MATERIAL EVENT SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENT

Your Directors had approved the proposal for issuing of Employee Stock Options to eligible employees of Subsidiary Companies and revised draft Employee Stock Option Scheme 2016 in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014, subject to approval of the Shareholders through Postal Ballot, at their meeting held on 12th May, 2016.

12. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO:

(A) Conservation of energy & Technology absorption:

The company is engaged in the financial services and therefore conservation of energy etc. have a limited application. However, the company follows a practice of purchasing and using energy efficient electrical or electronic equipment and gadgets for its operations. Additionally, optimal use of technology may also lead to substantial conservation of energy.

In respect of technology absorption, the company was one of the first NBFCs to build and operate a centrally managed software application and all its branches across the country operate online with direct access to the centrally hosted applications, through wide area data network. The company continues to differentiate itself from other market competitors by continuously developing new technological platforms to offer ease of operations and transparency for its customers. As described above, these next-gen innovations are poised to completely transform the gold loan industry itself.

(B) Foreign exchange earnings and Outgo

The Company holds AD Category II licence from the Reserve Bank of India for its foreign exchange operations. Following are the details of foreign exchange earnings and outgo during the period covered by this report: Foreign Exchange Earning : Nil

Foreign Exchange Outgo : 0.09 million towards foreign travel and training expenses Nil towards import of capital goods

13. RISK MANAGEMENT POLICY

The Company has a Board approved Risk Management Policy wherein all material risks faced by the Company viz. Operational Risk, Regulatory Risk, Price, Interest rate Risk and Credit Risk are identified and assessed. Risk Management Department is headed and managed by competent professionals for identification, assessment and managing/mitigating risk related issues across the organization. For each of the Risks identified in the process, corresponding controls are assessed and policies and procedure are put in place for monitoring, mitigating and reporting risk on a periodic basis.

14. CORPORATE SOCIAL RESPONSIBILTY POLICY

The Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company has been formulated by the Board based on the recommendation of the Corporate Social Responsibility Committee (CSR Committee). The CSR Policy may be accessed on the Company''s website at the link: http://www. manappuram.com/files/CSR_Policy.pdf

The Report on CSR activities is annexed herewith marked as Annexure IV.

15. FORMAL ANNUAL EVALUATION

The board of directors has carried out an annual evaluation of its own performance, board committees and individual directors pursuant to the provisions of the Companies Act, 2013 and the corporate governance requirements as prescribed by Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations, 2015 ["SEBI (LODR) Regulations, 2015"].

The board and the nomination, compensation and corporate governance committee reviewed the performance of the individual director on the basis of the criteria various factors such as attendance, level of participation, contribution to the meetings and its decision making, continuity on the board, and performance appraisal questionnaire, etc. In addition, the chairman was also evaluated on the key aspects of his role.

The performance of the board was evaluated by the board after seeking inputs from all the directors on the basis of the criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc.

The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.

In a separate meeting of independent directors, performance of non-independent directors, performance of the board as a whole and performance of the chairman was evaluated, taking into account the views of executive directors. Performance evaluation of independent directors was done by the entire board, excluding the independent director being evaluated.

The board of Directors has confirmed that all existing Directors are fit and proper to continue to hold the appointment as Directors in Board as reviewed and recommended by the Nomination Compension and Corporate Goverance Committee on fit and proper criteria under Corporate Governance (Reserve Bank) Directions, 2015

16. DETAILS OF REMUNERATION / COMMISSION RECEIVED BY MD OR ED FROM SUBSIDIARIES.

Name of Subsidiary V.P Nanda kumar B.N Raveendra Babu

Manappuram Home Finance Private Limited NIL NIL

Asirvad Micro Finance Private Limited NIL NIL

Manappuram Insurance Brokers Private Limited NIL NIL

Total NIL NIL

17. AUDIT AND AUDITORS REPORT:

Statutory Audit

The statutory Auditors M/s S.R. Batliboi & Associates LLP, Chartered Accountants, Firm Registration Number

- 101049W, TIDEL Park, 6th and 7th Floor - A Block, Module 601, 701-702, No 4 Rajiv Gandhi Salai, Taramani, Chennai 600 1 13, are being reappointed as the auditors of the Company to hold office from the conclusion of 22nd Annual General Meeting to the conclusion of the 25th Annual General Meeting of the Company.

The notes annexed to the Standalone and Consolidated financial statements referred in the Independent Auditors'' Reports are self-explanatory and do not call for any further comments.

Secretarial Audit

The Board appointed M/s KSR & Co. Practicing Company Secretaries LLP, to conduct Secretarial Audit for the financial year 2015-16.

Secretarial audit report for year ended on March 31, 2016 as provided by M/s KSR & Co. Practicing Company Secretaries LLP, Indus chambers, Ground floor, No.101, Govt Arts College Road, Coimbatore-641018, is annexed to this Report as Annexure- V.

18. MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis Report is attached and forms an integral part of the Annual Report.

19. DIRECTORS AND KEY MANANGERIAL PERSONNEL, CHANGE, IF ANY:

Mr. Ramesh Periasamy joined the Company as Company Secretary on May 02, 2015.

Mr. B. N. Raveendra Babu was reappointed as Executive Director for the period of 5 years with effect from January 11, 2015 through Postal Ballot conducted on November 30, 2015. Mr. Raveendra Babu is a qualified ICMA (Inter), M.com and having over 21 years of working experience in NBFC. He has also worked in a senior position in the Finance & Accounts Department of Blue Marine International in U.A.E. He is also acting as Director of Asirvad Micro Finance Private Limited, a subsidiary of the Company.

Mr. I Unnikrishnan, Non-Executive Director resigned from the Company w.e.f. November 05, 2015.

20. DIVERSIFICATION OF BUSINESS

Back in FY2015 with a large net worth and access to debt capital, your Company had decided to diversify its business by leveraging its vast number of existing and new customer relationships developed through its mainstay Gold Loans business over the years. The objective of this diversification was to build at least 50 percent of total Asset Under Management from sources other than gold loans, so as to mitigate the risk of being a single-product NBFC. Over FY2016, the new business verticals have been highly successful in leveraging your Company''s vast customer base, branch network and the goodwill of the Manappuram Brand. During the year, the management was able to stabilise the business processes, establish the manpower strength of each vertical and forge synergistic lead generation connections with the group''s vast network. The key achievement for FY2016 has been the building up of highly experienced teams with the precise domain expertise and the setting up if the dedicated branches to serve their respective products.

Microfinance:

Your Company has produced remarkable progress and results for its Microfinance business in FY2016. Spearheaded by it subsidiary Asirvad Microfinance, this business segment has been the fastest growing segment for the Manappuram Group. The AUM of Asirvad Microfinance has grown by ~210% from Rs 3,221 million in FY15 to Rs 9,988 million in FY16. The robust growth in the segment has been driven by increasing geographical penetration and growing customer base. Asirvad now is present in 10 states/UT''s as compared to 4 states/UT''s in the last fiscal, with the new states contributing 8.8% to the AUM. It now has a network of 346 branches spread across these states successfully serving 6.2 lakh customers as of FY2016. As a result of this robust growth, Asirvad has moved up 8 places in the MFIN Rankings and is currently ranked as 14th largest microfinance organization in India as per MFIN rankings. The credit rating of the company has also improved this year after being acquired by Manappuram Finance, by virtue of Manappuram having a better credit rating and strong capital adequacy. Credit Rating of Asirvad Microfinance has gone up 3 notches from BBB- to A- this year leading to reduction in cost of funds from 17% to 14%. The profitability and asset quality of the microfinance segment is robust and the company successfully generated an ROA of 3.9% in FY2016. Manappuram Finance has further increased their stake in the company to 90.3% and have infused equity capital of Rs 1,000 million as growth capital to continue its strong growth in the business going forward.

Housing Finance:

Manappuram Home Finance Pvt. Ltd. (MAHOFIN), is your Company''s dedicated subsidiary that has been set up to cater to the affordable housing space. Its overall objective is to provide options for affordable home finance in the ticket size generally ranging from 15-20 lacs, majorly distributed into the outskirts of metros, tier-II and tier-III cities. Your Company''s customer acquisition strategy focuses on the team''s ability to understand the needs of the customer, his net-worth and financial limits. Its management team is made up of seasoned people with core domain expertise and who possess mature appraisal methodologies and product structuring solutions that are friendly for a customer to manage. In combination with its dedicated branches, the growth of the home loans business will be based fresh lead generation and on the cross selling strategies within the Manappuram group''s network of branches and regional points of contacts. Having established its IT backbone and product configurations in FY2015, in FY2016 the management essentially focused on establishing the unit''s manpower strength through recruitment and training on a strong business model for building the business. During the year, it established dedicated human resources and branches in urban and semi-urban locations, both in the South and the West. By the end of FY2016, MAHOFIN achieved a loan book growth of Rs.128 crore. The business grew by 5718% YoY and the loan portfolio has so far faced no delinquencies. Going forward, your Company is now ready with its teams, products and branches to grow the loan book size steadily to more than Rs. 500 crore plus in FYE2017. Going forward, with strong demand, professional management and strong brand and network support of the parent, MAHOFIN remains focused delivering results responsibly and achieving steady expansion over the period of time.

Commercial Vehicles:

In line with the decision made to diversify into other asset classes, your company started loans against commercial vehicles in FY2015, selectively in the South and West regions. The strategy envisages financing commercial vehicles to the underserved category of customers who are from largely unorganised sector without formal access to banking and other financial institutions, with a reasonable margin. In FY2016, your Company focused on establishing a strong team with domain experience, and establishing the marketing channels and networks for lead generation. The target segment is the retail clientele that is underserved by the big banks.

Since the start of this business your Company has so far disbursed around Rs.130 crore and built a presence to sell across 36 locations, with a strong focus on the western and the southern regions. The portfolio comprises of approximately 65% pre-owned vehicles and the balance for new vehicles. Your Company''s objective is to utilise its established brand equity in these regions before it decides to expand towards the Northern and Eastern areas of the country. The business is supported by strong appraisal and pre-screening methodologies, where the credit scoring cut-offs are strictly adhered to. Now, staffed by some 156 domain specialists, your Company is targeting to cross Rs. 400 crore total disbursements by FY2017.

21. RAISING OF ADDITIONAL CAPITAL

Company has not allotted any shares during the financial year 2015-16.

22. DEBENTURE REDEMPTION RESERVE

Pursuant to the provisions of the Companies Act, 2013 and the relevant circulars issue by the Ministry of Corporate Affairs, the company is required to create a Debenture Redemption Reserve (DRR), to which amounts shall be transferred from the profits every year till the debenture is redeemed. The amount of DRR shall be 25 percent of the NCDs issued through public issue in compliance with SEBI (Issue and Listing of Debt Securities) Regulations 2008, and no reserve is required in respect of NCDs issued through private placement. As a matter of policy, your company creates a reserve on a proportionate basis till the redemption of the debentures. Accordingly, the company transferred a sum of Rs. 169.91 Million to DRR during the year. Further, the company has to invest, in the prescribed manner, a sum equal to 15 percent of the NCDs maturing on or before March 31, 2016 towards which the company has deposited Rs. 255.13 million with a Scheduled Bank. (Subsequent to the year-end has deposited Rs.189.08 million)

23. RESOURCES

The Company as an NBFC, mobilization of resources at optimal cost and its deployment in the most profitable and secured manner constitutes the two important functions of the company. The main source of funding for the company continues to be credit lines from the banks and financial institutions. Your company as at March 31, 2016 availed various credit facilities from 28 banks.

Management has been making continuous efforts to broaden the resource base of the company so as to maintain its competitive edge. The next important source of funding is the issue of Secured Redeemable Non Convertible Debentures (NCDs). In addition, the Company also raised funds through the issue of Commercial Papers (CPs).

Your directors are confident that the company will be able to raise adequate resources for onward lending in line with its business plans.

24. DEPOSITS

As you are aware, your company had stopped acceptance of deposits from the public in 2007. Your company had converted itself into a non deposit taking Category ''B'' NBFC. All amounts due to deposit holders have been transferred to an ESCROW account opened with Punjab National Bank. The balance outstanding as on March 31, 2016 was Rs. 74007/-..

As on the date of this report, there were no deposits which are due for transfer to the IEPF Account of the Central Government on the expiry of seven years after maturity. There is regular follow up on the part of the Company to redeem unclaimed deposits.

25. COMPLIANCE WITH NBFC REGULATIONS

Your Company has complied with all the regulatory provisions of the Reserve Bank of India applicable to Non- Banking Financial Companies. As on March 31, 2016, the Capital Adequacy Ratio of the Company is 24 percent, well above the statutory requirement of 15 percent.

26. EMPLOYEE STOCK OPTION SCHEME (ESOS)

Your Directors had approved the proposal for issuing of Employee Stock Options and draft Employee Stock Option Scheme 2016 in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014, subject to approval of the Shareholders through Postal Ballot, at their meeting held on 11th March 2016 to reward the eligible non- independent directors and employees of the Company based on their performance as an incentive to attract and retain the best available talent, ensure long term commitment to the Company, encourage individual ownership of the Company, by motivating them to contribute to the growth and development of the Company through ownership interest and thereby helping to achieve the ultimate objective of enhancing the enterprise value.

27. DISCLOSURE:

Composition of CSR Committee

Name of the Member Position Category of Directors

Mr. Rajiven.V.R Chairman Independent, Non-Executive

Mr. V.P.Nandakumar Member Non-Independent, Executive

Adv. V.R.Ramachandran Member Independent, Non-Executive

Dr. Amla Samanta Member Independent, Non-Executive

Composition of Audit Committee

Name of the Member Position Category of Directors

1. Mr. P. Manomohanan Chairman Independent, Non-Executive

2. Mr. Sailesh J Mehta Member Independent, Non-Executive

3. Mr. E.A. Kshirsagar Member Non-Independent, Non-Executive (Nominee director)

4. Mr. V.R. Rajiven Member Independent, Non-Executive

5. Dr. Amla Samanta Member Independent, Non-Executive

Vigil Mechanism and Whistle Blower Policy

The Vigil Mechanism of the Company provides adequate safeguards against the victimisation of any directors or employees or any other person who avail the mechanism and also provides direct access through an e-mail, or dedicated telephone line or a letter to the Chairperson of the Audit Committee.

No person has been denied access to the Chairman of the audit committee. Company has ensured that its employees are well aware of the content and procedure of the policy and fully protected. The Vigil Mechanism and Whistle Blower Policy may be accessed on the Company''s website at the below link: http://www.manappuram.com/files/Whistle-blower-Policy-v2.pdf

Related Party Disclosure

Pursuant to Part A of schedule V of the SEBI (LODR) Regulations, 2015

(Rs. in millions)

Sl. No. In the accounts of Amounts at the year end Maximum amount of loans/ advances/ investments outstanding during the year

1 Manappuram Home Finance NIL 405.00 Private Limited

2 Asirvad Micro Finance Private NIL 500.00 Limited

During the financial year 2015-16, no investment made by the loanee in the shares of the company and subsidiary company, when the company has made a loan or advance in the nature of loan.

28. EXTRACT OF ANNUAL RETURN:

Extract of annual return in Form MGT-9 is annexed herewith as Annexure- VI.

29. DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS

The company has put in place adequate internal financial controls including core gold loan operations and these controls are robust, defensible and thereby operating effectively in mitigating the risks. During the FY 2015-16, such controls were tested and test reports were reviewed by the Audit Committee of the Board. No reportable material weaknesses in the design or operation were observed.

30. LISTING WITH STOCK EXCHANGES:

The Company confirms that it has paid the Annual Listing Fees for the financial year 2016-2017 to Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) where the Company''s shares are listed and pursuant to SEBI Circular No. CIR/CFD/CMD/06/2015 dated October 13, 2015 and SEBI (LODR) Regulations, 2015, the Company has executed fresh Uniform Listing Agreements with the BSE and NSE on 24th February 2016.

31. CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION:

The Company has been practicing principle of good Corporate Governance over the years. The endeavour of the Company is not only to comply with the regulatory requirements but also practice good Corporate Governance that lays strong emphasis on integrity, transparency and overall accountability. The report on corporate governance forms integral part of this annual report.

32. SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

33. SUBSIDIARIES

Details of the Companies which have become / ceased to be its Subsidiary/ JV/ Associate Company.

Your Company has subscribed 10351966 equity shares of Asirvad Microfinance Pvt. Ltd during the financial year 2015-16, at present company holds 90.38% of its shares.

Your Company has subscribed 55000000 equity shares of Manappuram Home Finance Private Limited during the financial year 2015-16, at present company holds 100% of its shares.

Your Company has acquired 770000 equity shares of Manappuram Insurance Brokers Private Limited during the financial year 2015-16, at present company holding 100% of its shares.

Asirvad Microfinance Private Limited

Gross Income of the Company as at 31st March, 2016 is Rs.1560.9 Million as compared to Rs. 673.2 Million for the year ended 31st March, 2015 and Profit after Tax has gone up by 130% as at 31st March, 2016 with Rs.239.6 Million as compared to Rs.104.00 Million for the year ended 31st March, 2015.

Manappuram Home Finance Private Limited

Gross Income of the Company as at 31st March, 2016 is Rs. 98.6 Million as compared to Rs. 9.4 Million for the year ended 31st March, 2015 and net loss is Rs.53.8 Million for the year ended 31st March, 2016 as compared to the net loss of Rs.0.59 Million as at 31st March, 2015.

Manappuram Insurance Brokers Private Limited

Gross Income of the Company as at 31st March, 2016 is Rs. 18.98 Million as compared to Rs. 10.72 Million as for the year ended 31st March, 2015 and Profit after Tax for the year ended 31st March, 2016 is Rs.1.36 Million as compared to the net loss of Rs. 7.22 Million as at 31st March, 2015

Performance and financial position of subsidiary is annexed herewith as Annexure —VII(a) (AOC-1) and Information about subsidiary/ joint venture /associate company is annexed herewith as Annexure - VII(b).

34. CONSOLIDATE FINANCIAL STATEMENTS

In accordance with the Companies Act, 2013 ("the Act"), SEBI (LODR) Regulations, 2015 and Accounting Standard (AS) - 21 on Consolidated Financial Statements read with AS - 23 on Accounting for Investments in Associates and AS - 27 on Financial Reporting of Interests in Joint Ventures, the audited consolidated financial statement is provided in the Annual Report.

35. CREDIT RATING

The Company holds valid rating from Brickwork, CRISIL, ICRA and CARE for Non-Convertible Debentures, Loan Short Term and Long Term Bank Facility and Short Term Debts as follows:

a. CRISIL rated Bank Loan Facility of Rs. 2,500 Million as CRISIL A / Stable

b. CRISIL rated Non-Convertible Debenture of Rs. 16,325 Million as CRISIL A / Stable

c. CRISIL rated Short Term Debt of Rs. 15,000 Million as CRISIL A1 Stable

d. ICRA rated Non-Convertible Debentures of Rs. 4230 Million as [ICRA]A (Stable)

e. ICRA rated Bank Loan Short Term of Rs. 15,240 Million as [ICRA]A1

f. ICRA rated Short term fund based bank facilities of Rs. 5000 Million as [ICRA]A1

g. CARE rated Bank Loan Facility for Long Term of Rs. 36,770 Million as CARE AA-Stable

h. CARE rated Bank Loan Facility for Short Term of Rs. 23,230 Million as CARE A1 Stable

i. CARE rated Non-Convertible Debentures of Rs. 3,000 Million as CARE AA-Stable

j. Brickwork rated Non-Convertible debentures for Rs. 2500 Millions as BWRA to BWR AA-

36. DETAILS OF AUCTIONS HELD DURING THE YEAR 2015-16

Additional disclosures as required by circular No. DNBS.CC.PD.No.356/03.10.01/2013-2014 dated September16, 2013 issued by the Reserve Bank of India:

(Amount in Rs. millions)

Year Number of Principal Interest Total (A B) Value fetched Loan Accounts Amount Amount outstanding out standing at the dates of at the dates of auctions (A) auctions (B)

31-Mar-16 7,02,038 19,319.03 4,890.18 24,209.21 22,094.92

31-Mar-15 347,845 11,887.34 4,117.00 16,004.34 13,544.98

Note: No sister concerns participated in the auctions during the year ended March 31, 2016 and March 31, 2015

37. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURE

Particulars of Employees and Related Disclosure is annexed herewith as Annexure VIII as per Section 197 (12) of the Companies Act, 2013.

38. AUDITORS CERTIFICATE ON CORPORATE GOVERNANCE

A certificate from Statutory Auditor in compliance with the conditions of corporate governance by the Company, for the year ended on March 31, 2016 as stipulated in Part E of Schedule V of SEBI (LODR) Regulations, 2015 is annexed as Annexure - IX

39. GENERAL

(a) Details relating to deposit

The Company has not accepted any deposit during the financial year 2015-16.

(b) Significant & Material orders passed by the regulators

There were no such significant / material orders passed by the Regulators during the financial year 2015- 16 except the SEBI Settlement Order No. EAD-5/SVKM/04/2015-16 dated September 23, 2015 on the Application No. 2914 of 2015 submitted by the Company in terms of SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2014. The application was made with SEBI to settle, through settlement order, the adjudication proceedings for the non-compliance of Part A of Schedule I read with regulation 12(1) of SEBI (Prohibition of Insider Trading) Regulations, 1992. The settlement order disposed of aforesaid adjudication proceedings initiated against the Company vide Show Cause Notice No. EAD -05/ADJ/ASK/SPV/ OW/23151/2014 dated August 06, 2014.

c) List of employees who were in the receipt of remuneration for the year exceeding the limit prescribed under Rule 5 of Companies (Appointment and Remuneration of Managerial Personal) Rules, 2014, is attached here with as Annexure-X.

40. ACKNOWLEDGEMENT

Your Directors acknowledge and place on record its sincere appreciation and gratitude to the employees of the company at all levels for their dedicated service and commitments, to the Reserve Bank of India, Rating Agencies, Stock Exchanges, Governments and its statutory agencies for the support, guidance and co-operation, to the Investors, shareholders, Debenture holders, Bankers and other financial institutions and customers and other stakeholders for the whole hearted support and confidence reposed on the company and the management and to the general public at large for their blessings and good wishes the company has been receiving in good measure over the year.

For and on behalf of the Board of directors of

Manappuram Finance Limited

Sd/-

Place: Valapad Jagdish Capoor

Date: May 12, 2016 Chairman


Mar 31, 2014

To, The Members of Manappuram Finance Limited.

The Directors are pleased to present the 22nd Annual Report on the working of the Company with the Audited Accounts and the Report of the Auditors for the financial year ended March 31, 2014.

1. FINANCIAL RESULTS AT A GLANCE

(In Rs. million)

Description Standalone Consolidated 2013-14 2012-13 2013-14

Gross Income 21117.93 22669.53 21118.27

Total Expenditure 17687.43 19604.49 17688.02

Profit Before Tax 3430.50 3065.04 3430.25

Provision for Taxes/Deferred ta 1170.39 980.72 1170.44

Net Profit 2260.11 2084.32 2259.81

Profit b/f from previous year 2772.6 2780.11 2772.63

Amount available for appropriations 5032.74 4864.43 5032.44

Appropriations:

Transfer to Statutory Reserve 452.02 416.86 452.02

Transfer to General Reserve 226.01 208.43 226.01

Transfer to Debenture Redemption 113.90 113.90 Reserve

Interim Dividend on Equity Shares 1135.65 1261.81 1135.65

Tax on Interim Dividend 193.00 204.70 193.00

Proposed Equity Dividend 378.54 - 378.54

Tax on dividend 64.33 - 64.33

Balance carried forward to next year 2469.28 2772.63 2468.99

The comparative operational results shown above summarise the financial performance of the company for the year under report and for the previous year. Profit after tax for the year under review has gone up by 8.43 percent in comparison to the previous year despite a 6.84 percent decline in total revenue. Revenue declined mainly due to negative growth in the overall loan book of the company. As of March 31, 2014, the loan book of the company stands at Rs. 81,630.7 million as against Rs. 99,563.0 million recorded on March 31, 2013. The negative growth in loan book was the consequence of multiple factors such as the sluggish macro-economic scenario, uncertainties in the regulatory environment for gold loan NBFCs, and increased competition from banks and the unorganised sectors. However, your management was able to rein in expenditure and improve collection efficiencies which enabled the company to register a moderate growth in net Profit despite the fall in revenue.

During the last quarter of the year, your company acquired Milestone Home Finance Co. Pvt. Ltd. as a 100 percent subsidiary; therefore, consolidated performance highlights are also given.

2. BUSINESS OUTLOOK

In recent years, especially in the decade up to 2012, NBFCs engaged in the gold loan business have registered rapid growth. In these years, your company too registered substantial growth in terms of business volumes, Profitability, human capital etc., and it also acquired a pan India presence.

Regulatory environment for Gold Loan NBFCs: On March 21, 2012, the Reserve Bank of India (RBI) issued a circular amending the Non-Banking Financial Companies (Non- Deposit Accepting or Holding) Prudential Norms Reserve Bank Directions, 2007. It was stipulated that all Gold Loan NBFCs should maintain a Loan- to Value (LTV) ratio of 60 percent for loans granted against the collateral of gold jewellery. It may be noted that no restrictions on LTV were applicable until this point, and individual NBFCs were free to offer loan-to-value ratios of their choice. Further, banks were kept out of the purview of the cap on LTV. As a result, NBFCs specialised in gold loans faced a significant slowdown in growth.

Fiscal year 2013-14 witnessed a gradual return to stability in the regulatory environment. RBI came out with further guidelines on strengthening fair practices across the sector such as streamlining the auction process, PAN based transactions (beyond a defined threshold value), standardisation of the method of valuation of gold etc. Moreover, in January 2014, RBI issued a circular permitting gold loan NBFCs to lend up to 75 percent of the collateral value of gold, i.e. at LTV of 75 percent. Further, banks were also directed to adhere to this stipulation. Consequently, a level playing field has been restored with banks and NBFCs treated on par within the organised gold loans sector. The measures put in place by RBI relating to the cap on LTV and the standardisation of the method of valuation of gold (for the purpose of arriving at LTV ratio) will help better insulate the company against adverse movements in the price of gold and is considered positive for the future of the industry.

Earlier, in June and July, 2013, RBI had issued circulars imposing certain restrictions on privately placed debentures in terms of the minimum amount of subscription and the maximum number of subscriptions per issue. In the past, your company was mobilising substantial funds through its branches by issue of Secured Redeemable Non-convertible Debentures (NCDS) to retail investors. In the changed regulatory environment, the company is required to focus on raising of resources through public issues of debentures in compliance with the SEBI (Issue and Listing of Debt Securities) Regulation, 2008. This may result in escalation of cost of funds compared to the past.

Credit Rating: The company holds valid ratings from CRISIL and ICRA for long term and short term borrowing programmes. During the year under review, the long-term rating of the company has improved from A (negative outlook) to A (stable outlook). Management is hopeful that the improved rating will enable the company to access resources at a more competitive price.

Thanks to the above developments, the outlook for growth of the gold loan business is considered more positive than in the past couple of years. While the market continues to be competitive, management is confident that the company can achieve reasonable growth in view of the inherent strengths of the company such as transparent business practices, a pan- India presence, brand recognition, faster customer service, competitive pricing etc. Moreover, your company has a strong management team with demonstrated capabilities for operating in an adverse environment.

While volatility in gold prices is a concern, the strong demand for physical gold in the domestic markets holds the promise of enlarging the scope for monetisation of idle household jewellery. However, growth rates are likely to be subdued in comparison to past performances on account of greater competition (especially from the unorganised sector) and considering the international scenario where gold prices appear to have stabilised at lower levels, in the range of US$ 1,200 to 1,400 per ounce, after having corrected from the highs of US$ 1,900 in 2012.

Diversification: In line with the expectations of the regulatory establishment, your management has decided to diversify the portfolio and move into other asset classes for lending. Since the company is focused on fully collateralised lending, management is keen to begin by building up a portfolio of loans to the micro and small enterprises sector secured by immovable property. During the last quarter of the financial year under review, your company launched loans against property in Kerala targeting this very segment and we propose to expand to other markets with potential in a phased manner. Similarly, your management feels that growth prospects in the affordable housing finance segment hold promise. While institutions catering to the housing needs of premium customers are many, people belonging to the lower socio-economic classes continue to face challenges in accessing institutional finance for housing requirements. The company plans to enter this segment as it offers reasonable margins and return on equity. Moreover, it would serve a larger social purpose by enabling better living conditions to those who are unable to access loans from traditional banks.

As a first step towards entry into the Housing Finance Sector, your company has acquired Milestone Home Finance Company Pvt. Ltd. (Milestone)—a company possessing a valid Certificate of Registration from National Housing Bank—as a fully owned subsidiary. Milestone is yet to commence its commercial operations. Your management is in the process of obtaining necessary regulatory clearances to change the name and commence commercial operations and also to set up the required infrastructure to run the company in a professional manner.

3. DIVIDEND

Your Board had earlier declared an interim dividend for the year 2013-14 of Rs.1.35 per equity share (face value Rs. 2.0 per share), which amounts to 67.50 percent of the paid up value of the shares. The Board has now recommended a final dividend of 0.45 paisa per share, taking the total dividend for the year to Rs. 1.80 per share, at a rate of 90 percent of the paid up capital. The final dividend of 0.45 paisa will be paid on declaration by the share holders at the ensuing annual general meeting.

4. RAISING OF ADDITIONAL CAPITAL

Company has not allotted any shares during the financial year 2013-14.

5. RESERVES

During the year, the company transferred Rs. 226.01 million to General Reserve, taking it to a total of Rs. 3,885.08 million. The total Reserves & Surplus as on March 31, 2014 stands at Rs. 23,235.31 million.

6. DEBENTURE REDEMPTION RESERVE

Pursuant to the provisions of the Companies Act, 1956 and the relevant circulars issue by the Ministry of Corporate Affairs, the company is required to create a Debenture Redemption Reserve (DRR), to which amounts shall be transferred from the Profits every year till the debenture is redeemed. The amount of DRR shall be 25 percent of the NCDs issued through public issue in compliance with SEBI (Issue and Listing of Debt Securities) Regulation 2008, and no reserve is required in respect of NCDs issued through private placement. As a matter of policy, your company creates a reserve on a proportionate basis till the redemption of the debentures. Accordingly, the company transferred a sum of Rs. 113.90 million to DRR during the year. Further, the company has to invest, in the prescribed manner, a sum equal to 15 percent of the NCDs maturing on or before March 31, 2015 towards which the company has deposited Rs. 68.34 million with a Scheduled Bank.

7. RESOURCES

As an NBFC, mobilisation of resources at optimal cost and its deployment in the most Profitable and secured manner constitutes the two important functions of the company. The main source of funding for the company continues to be credit ines from the banks and financial institutions. Your company currently enjoys credit facilities from about 30 banks.

Management has been making continuous efforts to broaden the resource base of the company so as to maintain its competitive edge. The next important source of funding is the issue of Secured Redeemable Non Convertible Debentures (NCDs). Your company issues NCDs under the listed & unlisted private placement route to Institutional Investors and to high net worth individuals. During the year under review, the Company has fully repaid the NCDs raised during the public issue of August 2011 amounting to Rs. 2,980 million (along with applicable interest). We are pleased to inform you that your company has successfully completed two rounds of public issues during the year, raising Rs. 4,000 million, including the exercise of the green shoe option. Incidentally, both the issues were oversubscribed. In addition, the Company also raised funds through the issue of Commercial Paper (CPs).

Your directors are confident that the company will be able to raise adequate resources for onward lending in line with its business plans.

8. DEPOSITS

As you are aware, your company had stopped acceptance of deposits from the public in 2007. Your company had converted itself into a non deposit taking Category ''B'' NBFC. All amounts due to deposit holders have been transferred to an ESCROW account opened with Punjab National Bank. The balance outstanding as on March 31, 2014 was Rs. 217,708.

As on the date of this report, there were no deposits which are due for transfer to the IEPF Account of the Central Government on the expiry of seven years after maturity. There is regular follow up on the part of the Company to redeem unclaimed deposits.

9. COMPLIANCE WITH NBFC REGULATIONS

Your Company has complied with all the regulatory provisions of the Reserve Bank of India applicable to Non-Banking Financial Companies. As on March 31, 2014, the Capital Adequacy Ratio of the Company is 27.68 percent, well above the statutory requirement of 15 percent.

10. CONSERVATION OF ENERGY,

TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO - INFORMATION AS PER SECTION 217 (1) (E) OF THE COMPANIES ACT, 1956

The company is engaged in the financial services sector and therefore conservation of energy, technology absorption etc. have a limited application. However, the company follows a practice of purchase and use of energy efficient electrical and electronic equipment and gadgets in its operations.

The Company holds AD Category II licence from the Reserve Bank of India for its foreign exchange operations. Following are the details of foreign exchange earnings and outgo during the period covered by this report:

Foreign Exchange Earnings : Nil

Foreign Exchange Outgo : Rs. 2.37 million towards foreign travel and training expenses Nil towards import of capital goods

11. PARTICULARS OF EMPLOYEES

Particulars of the employees covered by the provisions of section 217 (2A) of the Companies Act, 1956 read with Company''s (Particulars of Employees) Rules, 1975 is as under:

STATEMENT PURSUANT TO SECTION 217 (2A) OF THE COMPANIES ACT, 1956 READ WITH COMPANY''S (PARTICULARS OF EMPLOYEES) RULES, 1975

Name Designation Age Remuneration Date Of Experience Received Joining In Years

Mr. V.P. Nandakumar Managing Director & CEO 60 45.55 15.07. 1992 34

Mr. I. Unnikrishnan ED & Dy.CEO 50 14.06 01.10. 2006 24

Mr. B.N. Raveendra Babu ED 62 11.34 17.08. 2009 34

12. DIRECTORS'' RESPONSIBILITY STATEMENT

As required under Section 217 (2AA) of the Companies Act, 1956, the Board of Directors hereby declares that:

a) In the preparation of Annual Accounts for the financial year ended March 31, 2014, applicable Accounting Standards have been followed along with proper explanation relating to material departures.

b) The Directors have 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 2013-14 and of the Profit of the Company for that period.

c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d) The Directors have prepared the Annual Accounts for the year 2013-14 on a going concern basis.

13. REPLY TO AUDITORS'' OBSERVATIONS

1. In point No. (ix) (a) and (b) of the annexure to the auditor''s report they have observed that there were delay in remittances of professional taxes relating to a few branches. The observation of the auditors has been noted and the Company has already paid the tax demands. However, it may be noted that profession tax is a state/ local body levy and different states are following different procedure for registration and collection of taxes. Since the company is having nationwide branch network there are practical difficulties in obtaining registration under profession tax and making payments on time.

2. In point No. (xxi) of the annexure to the Auditors Report they have also pointed out certain incidents of fraud on the company by employees and others. Considering the nature of its business, these are instances of certain inherent risks associated with the business of the Company. The observation is self explanatory and the members may also refer to note No. 37 to the notes on accounts for more information.

14. AUDITORS

The statutory Auditors M/s S.R. Batliboi & Associates, Chartered Accountants, Firm Registration Number- 101049W, TIDEL Park, 6th and 7th Floor - A Block , Module 601, 701-702, No 4 Rajiv Gandhi Salai, Taramani , Chennai 600 113, India will retire at the ensuing Annual General Meeting of the Company and are eligible for re-appointment.

15. REPORT ON CORPORATE GOVERNANCE

Your Company has been practicing principle of good Corporate Governance over the years. The endeavour of the Company is not only to comply with the regulatory requirements but also practice good Corporate Governance that lays strong emphasis on integrity, transparency and overall accountability. A separate section on Corporate Governance along with a certificate from the Statutory Auditors confirming compliance is annexed and forms part of this report.

16. MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis Report is attached and forms an integral part of the Report of the Board of Directors.

17. ACKNOWLEDGEMENT

Your Directors acknowledge and place on record its sincere appreciation and gratitude to the employees of the company at all levels for their dedicated service and commitments, to the Reserve Bank of India, Rating Agencies, Stock Exchanges, Governments and its statutory agencies for the support, guidance and co-operation, to the Investors, shareholders Bankers and other financial institutions and customers for the whole hearted support and confidence reposed on the company and the management and to the general public at large for their blessings and good wishes the company has been receiving in good measure over the years.

For and on behalf of the Board of Directors of

Manappuram Finance Limited

Sd/-

Jagdish Capoor

Chairman

Place: Valappad

Date: May 15, 2014


Mar 31, 2013

The Member of Manappuram Finance Limited

The Directors are pleased to present the 21st Annual Report on the working of the Company with the Audited Accounts and the Report of the Auditors for the financial year ended March 31, 2013.

1. FINANCIAL RESULTS AT A GLANCE (In Rs. Million)

FY 2012-13 FY 2011-12

Gross Income 22,641.28 26,558.45

Total Expenditure 19,576.24 17,786.39

Profit Before Tax 3,065.04 8,772.06

Provision for Taxes/Deferred tax 980.72 2,857.45

Net Profit 2,084.32 5,914.61

Profit b/f from previous year 2,780.11 2,314.36

Amount available for appropriations 4,864.43 8,228.97

Appropriations:

Transfer to Statutory Reserve 416.86 1,182.92

Transfer to General Reserve 208.43 591.48

Transfer to Debenture Redemption Reserve - 2,208.10

Interim Dividend on Equity Shares 1,261.81 420.55

Tax on Interim Dividend on Equity Shares 204.70 68.21

Proposed Final Equity Dividend - 841.15

Tax on dividend - 136.45

Balance carried forward to next year 2,772.63 2,780.11

The comparative operational results shown above reveal the performance of the Company for the year under report and for the previous year. Profit after tax for the year under review has come down by 64.76 percent in comparison to the previous year. During the year under review, the management focus has been mostly on consolidation, with priority given to strengthening of infrastructure, rationalisation of branch operations and re-engineering of business processes to enable the Company to face the challenges arising from changes in the regulatory environment, increased competition etc.

The fall in profits is largely on account of under-recovery of interest amounting to Rs. 2,842 million on a specific pool of its portfolio that was booked during the latter half of FY 2011-12. The Company has also made additional provision amounting to Rs. 514 million being the reversal of interest booked in FY-2011- 12. The Company has faced a higher incidence of defaults in this pool after it began realigning its portfolio under the new loan to value (LTV) regime brought into effect in March 2012.

2. BUSINESS OUTLOOK

In recent years, NBFCs engaged in the gold loan business have registered rapid growth. In these years, your Company has also registered substantial growth in terms of business volumes, profitability, human capital etc., and it also acquired a pan India presence.

On March 21, 2012, the Reserve Bank of India (RBI) issued a circular amending the Non-Banking Financial Companies (Non-Deposit Accepting or Holding) Prudential Norms Reserve Bank Directions, 2007. It was mandated that all Gold Loan NBFCs should maintain a Loan to Value (LTV) ratio of 60 percent for loans granted against the collateral of gold jewellery. Since then, your Company has been following the LTV as notified by AGLOC (Association of Gold Loan Companies), an industry association.

The outlook remains positive for the growth of the gold loan business. Though the market remains highly competitive, and despite uncertainties on the regulatory front, your management is confident that the Company can achieve reasonable growth in view of the inherent strengths of the Company like its transparent business practices, pan India presence, brand recognition, speedy and efficient customer service, competitive pricing etc. Moreover, your Company has a strong management team capable of adapting to changes and of operating in adverse environment.

Though volatility in gold prices is a point of concern, the strong demand for physical gold in the domestic markets holds the promise of enlarging the scope for monetisation of idle household jewellery in India. However, growth rates are likely to be subdued in comparison to past performances, considering the regulations on LTV and also considering the recent scenario where gold prices appear to have moved into a correction phase.

The recently published report of the working group constituted by RBI under the Chairmanship of Mr. K.U.B. Rao emphasises the positive role of gold loan companies in monetising idle gold and in facilitating investment into productive areas, thereby supporting the national economy. The committee has also recommended an LTV of 75 percent of the scrap value of gold jewellery which will level the playing field for NBFCs and banks. We are of the opinion that the RBI will consider these recommendations favourably and appropriate guidelines will be issued shortly so as to bring about greater regulatory clarity for the industry.

3. DIVIDEND

On March 13, 2013, your Board had declared an interim dividend for the year 2012-13 of Rs. 1.50 per equity share (face value Rs. 2 per share), which amounts to 75 percent of the paid up value of the shares. The Board recommended that the interim dividend may be confirmed as the final dividend at the ensuing Annual General Meeting.

4. RAISING OF ADDITIONAL CAPITAL

During the year under review, the Company has issued 54,000 equity shares to its employees under the ESOP 2009 scheme of the Company. Consequent to the above allotment, the paid up capital of the Company has increased to Rs. 1,682.41 million and the share premium account has increased to Rs. 13,699.17 million as on March 31, 2013.

5. RESERVES

During the year the Company has transferred to general reserve an amount of Rs. 208.43 million taking the general reserve to Rs. 2,165.41 million and the total reserves and surplus as on March 31, 2013 stands at Rs. 22,746.73 million

6. DEBENTURE REDEMPTION RESERVE

The Company has created a Debenture Redemption Reserve (DRR) of Rs. 2,208.10 million as on March 31, 2012. However, the Ministry of Corporate Affairs (MCA), vide its circular dated February 11, 2013, reduced the DRR requirement to 25 percent of the amount of NCDs raised in public issue. Prior to this, the DRR requirement was 50 percent. NCDs issued in private placement continue to be exempt from the requirement of creation of DRR. Under the above circular, the Company was required to invest a sum equal to 15 percent of the amount of debentures maturing on before March 31, 2014 in one or more approved investments before April 30, 2013. Accordingly, the Company has made fixed deposits with a scheduled bank (which is an approved investment for the purpose) of an amount of Rs. 448 million which is equivalent to 15 percent of the amount of debentures raised in the public issue and maturing in September 2013.

7. RESOURCES

As an NBFC, mobilisation of resources at the optimal cost and its deployment in the most profitable and secured manner constitutes the two important functions of the Company. The main source of funding for the Company continues to be the credit limits from normal banking channel. Your Company is currently enjoying credit facilities from about 32 banks.

The next important source of funding is the issue of Secured Redeemable Non Convertible Debentures (NCDs). Your Company is issuing NCDs in the listed private placement route to Institutional Investors and to high net worth Individuals. Further your Company continues to issue unlisted NCDs in private placement to retail individuals through its branches. The NCD issues are also well received by the investor community as the returns on such instruments are relatively higher compared to the alternatives in the market. The Company has fully redeemed series I of the NCDs raised through public issue with a 400 days tenure aggregating to Rs. 1,428.8 million on October 12, 2012 and the remaining amount of Rs. 2,987 million will be redeemed on September 8, 2013. The Company also raises funds through the issue of Commercial Paper (CPs).

Your Directors are confident that the Company will be able to raises adequate resources for onward lending in line with its business plans.

8. DEPOSITS

As you are aware, your Company had stopped acceptance of deposits way back from 2007. Your Company had changed itself into a non deposit-taking Category B NBFC. An amount of Rs. 1,23,84,323/- due to the deposit holders have been transferred to an ESCROW account No 3314002900000024 of Punjab National Bank. The balance outstanding as on 31st March 2013 is Rs. 7,29,766/-.

As on the date of this report, there were no deposits which are due for transfer to the IEPF Account of the Central Government on the expiry of seven years after maturity. There is regular follow up on the part of the Company to redeem unclaimed deposits.

9. COMPLIANCE WITH NBFC REGULATIONS

Your Company has complied with all the regulatory provisions of the Reserve Bank of India for Non-Banking Financial Companies. The Capital Adequacy Ratio of the Company as on March 31, 2013 is 22.67 percent as against the statutory requirement of 15 percent.

10. DIRECTORS

Retirement of Directors by Rotation

1) Mr. P. Manomohanan, Director whose office is liable to be determined by rotation, retires at the meeting and being eligible for re-appointment, offers himself for appointment.

2) Dr. Shailesh J. Mehta Director whose office is liable to be determined by rotation, retires at the meeting and being eligible for re-appointment, offers himself for appointment.

3) Dr. V. M. Manoharan, Director whose office is liable to be determined by rotation, retires at the meeting and being eligible for re-appointment, offers himself for appointment.

11. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO - INFORMATION AS PER SECTION 217 (1) (E) OF THE COMPANIES ACT, 1956

The Company is engaged in the financial services sector and therefore conservation of energy, technology absorption etc. have a limited application only. However, the Company follows a practice of purchasing and using energy efficient electrical and electronic equipment and gadgets in its operation.

The Company holds AD Category II licence from the Reserve Bank of India for its foreign exchange operations. Following are the details of foreign exchange earnings and outgo during the period covered by this report:

Foreign Exchange Earnings : Nil

Foreign Exchange Outgo : Rs. 0.82 million towards foreign travel Rs. 24.74 million towards import of capital goods

12. PARTICULARS OF EMPLOYEES

Particulars of the employees covered by the provisions of section 217 (2A) of the Companies Act, 1956 read with Company''s (Particulars of Employees) Rules, 1975 is as under:

STATEMENT PURSUANT TO SECTION 217 (2A) OF THE COMPANIES ACT, 1956 READ WITH COMPANY''S (PARTICULARS OF EMPLOYEES) RULES, 1975

13. DIRECTORS'' RESPONSIBILITY STATEMENT

As required under Section 217 (2AA) of the Companies Act, 1956, the Board of Directors hereby declares that:

a) In the preparation of Annual Accounts for the financial year ended March 31, 2013, applicable Accounting Standards have been followed along with proper explanation relating to material departures.

b) The Directors have 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 FY 2012-13 and of the profit of the Company for that period.

c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d) The Directors have prepared the Annual Accounts for the FY 2012-13 on a going concern basis.

14. REPLY TO AUDITORS'' OBSERVATION

1. In point No. (ix) (a) of the annexure to auditors'' report, the auditors have observed that there were slight delays in payment of provident fund, professional tax, service tax, value added tax, wealth tax, employees state insurance and income-tax deducted at source in a few cases.

The observation of the auditors has been noted and would take effective steps to avoid such delays in the future. However, it may be noted that the Company has made the payments with applicable interest subsequently.

2. In point No.(xxi) of the annexure to the Auditors'' Report they have also pointed out certain incidents of fraud on the Company by employees and others. Considering the nature of its business, these are instances of certain inherent risks associated with the business of the Company. The observation is self explanatory and the members may also refer to Note No.39 to the notes on accounts for more information.

15. AUDITORS

The statutory Auditors M/s S. R. Batliboi 8 Associates, Chartered Accountants, ICAI Firm Registration Number- 101049W, TIDEL Park, 6th and 7th Floor - A Block, Module 601, 701-702, No 4 Rajiv Gandhi Salai, Taramani, Chennai 600 113, India have informed the Company that they have changed their status from partnership firm to that of a Limited Liability Partnership (LLP) by registration under the Limited Liability Partnership Act 2008, namely S.R. Batliboi 8 Associates LLP and they have confirmed to the board that the change in status does not in any way affect their roles, responsibilities and liabilities. They have signed the account for the year under review in the new name.

The auditors will retire at the ensuing Annual General Meeting of the Company and are eligible for re-appointment.

16. REPORT ON CORPORATE GOVERNANCE

Your Company has been practicing principle of good Corporate Governance over the years. The endeavour of the Company is not only to comply with the regulatory requirements but also practice good Corporate Governance that lays strong emphasis on integrity, transparency and overall accountability. A separate section on Corporate Governance along with a certificate from the Statutory Auditors confirming compliance is annexed and forms part of this report.

17. CORPORATE SOCIAL RESPONSIBILITY

The Company is committed to the social cause in addition to the value creation through its business activities to the society. Company is discharging its social responsibilities through Manappuram Foundation, a Charitable Trust, promoted by the Company''s promoter Mr. V. P.Nandakumar. The trustees of the Trust also includes two of the Independent Directors of the Company. During the year under review the Company has donated a sum of Rs. 18.75 million to Manappuram Foundation. The trust is engaged in socially relevant activities such as free health insurance to families in the Below Poverty Line (BPL) category, financial support to pain clinics, providing subsidised clinical facilities and medicines, day care for the aged people, free health check up and family counselling centres etc. to mention a few.

18. MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis Report is attached and forms an integral part of the Report of the Board of Directors.

19. ACKNOWLEDGEMENT

Your Directors acknowledge and place on record its sincere appreciation and gratitude to the employees of the Company at all levels for their dedicated service and commitments, to the Reserve Bank of India, Rating Agencies, Stock Exchanges, Governments and its statutory agencies for the support, guidance and co-operation, to the Investors, shareholders Bankers and other financial institutions and customers for the whole hearted support and confidence reposed on the Company and the management and to the general public at large for their blessings and good wishes the Company has been receiving in good measure over the years.

For and on behalf of the Board of Directors of

Manappuram Finance Limited

Sd/-

Jagdish Capoor

Chairman

Place: Kochi

Date: May 15, 2013


Mar 31, 2012

To, The Members Manappuram Finance Limited

The Directors are pleased to present the 20th Annual Report on the working of the Company with the Audited Accounts and the Report of the Auditors for the financial year ended March 31, 2012.

1. Financial Results

(In Rs. million)

Description 2011-12 2010-11

Gross Income 26,558.45 11,815.26

Total Expenditure 17,786.39 7,576.30

Profit Before tax 8,772.06 4,238.96

Provision for Taxes/Deferred tax 2,857.45 1,412.32

net Profit 5,914.61 2,826.64

Profit b/f from previous year 2,319.84 917.13

Amount available for appropriations 8,228.97 3,743.75 appropriations:

Transfer to Statutory Reserve 1,182.92 565.33

Transfer to General Reserve 591.48 282.67

Transfer to Debenture Redemption 2,208.10 -

Reserve

Transfer to Capital Redemption - -

Reserve

Dividend on Preference shares - -

Interim Dividend on Equity Shares 420.55 -

Tax on Interim Dividend 68.21 -

Proposed Equity Dividend 841.15 500.25

Tax on dividend 136.45 81.14

Balance carried forward to next 2,780.11 2,314.36 year

The comparative operational results shown above reveals the performance of the Company for the year under report and of the previous year. It is evident that the Company has achieved enviable results during the fiscal 2011-12 compared to that of the previous year. During the year under review gross total income of the Company rose to Rs. 26,558.45 million as against Rs. 11,815.26 million of the corresponding previous year marking an increase of 124.78%. Total expenditure for the year ended March 31, 2012 is Rs. 17,786.39 million as against Rs. 7,576.30 million of the previous year.

The Company has posted a record profit after tax of Rs. 5,915 million for the period under consideration as against Rs. 2,827 million of the previous year, signifying an increase of 109.23% over the net profit for the corresponding previous year.

2. Dividend

Your Board is pleased to recommend a final dividend of Rs. 1 per equity shares (50%- per equity share of Rs. 2 each) on the paid up equity capital of the Company. On approval by the Members at the ensuing Annual General Meeting, the said dividend would be paid to those Members whose name appears on the Register of Members as on the date of Book Closure. The above final dividend includes a special dividend of 50paise per equity share as commemorative of 20th

Anniversary of the Company. Members may kindly recall that the Board has already declared an interim dividend of 50 paise per equity share during February 2012. Thus the total dividend for the year is Rs. 1.50 per equity share of Rs. 2 per share.

The total cash outflow exclusive of tax on account of equity dividend for the year 2011-12 would be Rs. 1,261.70 million (inclusive of interim dividend) as compared to Rs. 500.25 million during the previous year.

3. Raising of additional capital

During the year, Company has issued 1:1 bonus shares which resulted in the increase of shares by 416,874,188 nos. Further the Company has issued 7,404,760 shares to its employees under the ESOP 2009 scheme of the Company resulting in the paid up share capital increasing to Rs. 1,682,306,272 as on March 31, 2012.

4. Capital and Reserves

Capital and Reserves of the Company as on March 31, 2012 stood at Rs. 23,810.08 million. During the year under review the Company transferred Rs. 1,182.85 million to Statutory Reserve

5. Debenture Redemption Reserve

Members may recall that the Company had made a public issue of Redeemable Non Convertible Debentures during the year under review. The issue opened on August 18, 2011 and closed on August 26, 2011. The Company has issued debentures equivalent to Rs. 4,416 million to the successful applicants under the issue. The issue proceeds net of issue expenses have been utilised for the stated purpose being working capital for lending against the security of gold jewellery. Under section 117C read with the circulars issued thereunder the Company should create Debenture Redemption Reserve (DRR) out of its profits for the purpose of providing resources for redemption of debentures. During the year, your Company has transferred Rs. 2,208.10 million to DRR in compliance with the above provision out of the profits of the Company.

6. Business outlook

In the recent past, NBFCs engaged in the gold loan business have been registering rapid growth. Your Company is also witnessing substantial growth in terms of business volumes and human capital, and has acquired a pan India presence. The future for the Company remains robust. Recently, Reserve Bank of India (RBI) has issued a circular on March 21, 2012 amending the Non-Banking Financial (Non-Deposit Accepting or Holding) companies Prudential Norms (Reserve Bank) Directions, 2007 to the effect that all NBFCs shall maintain a Loan- to Value (LTV) ratio of 60 % for loans granted against the collateral of gold jewellery. In line with the latest regulatory measures and encouraged by the Company's success so far, we have shaped our business plan for the financial year 2012-13 which will help to realise our long term strategy to 'energise' at least 10% of the vast privately held gold reserves in the country. For this, it is necessary to develop a country- wide presence to be close to the customers.

Your Company provides credit, the average size of which is Rs. 38,582. Your Company has decided to make a way in to nnovative products, improved relationship management, brand building, efficient customer service, better use of technology and reduced operational costs which will become the hallmark of successful NBFCs in future.

7. Resources

Your Directors could successfully mobilise Rs. 4,416 million from whole sale debt market by issue of listed Non convertible Secured Debenture. The Company was also successful in mobilising funds from the issue of debentures to both retail and nstitutional investors and from instruments like Commercia Paper.

Details of resources raised during the year under review are given below:

a) secured Redeemable non-convertible Debentures

Your Company continues to issue fully secured redeemable convertible debentures ofRs. 1000/- each on private placement basis, both retail and institutional. During the year, your Company has raised Rs. 4416 million from the public issue of NCDs. The outstanding balance of Debentures including interest accrued and due as on March 31, 2012 amounts to Rs. 14,739.56 million. The debentures issued on private placement basis are secured by a floating charge created on the receivables and other current assets of the Company. The Company has appointed Trustees to see that the interests of debenture holders are well protected.

b) unsecured Bonds.

The Company has issued unsecured Subordinated Bonds in the nature of Promissory Notes on private placement basis. These Bonds will be treated as Tier II Capital as per RBI norms. The outstanding figure of these bonds as on March 31, 2012 amounted to Rs. 4,266.84 million.

c) assignment of Receivables

The Company has procured funds through assignment of receivables to Banks and Financial Institutions during the year. The aggregate amount assigned as at March 31, 2012 is Rs. 1916.36 million.

d) commercial Paper (cP)

During the year, the Company made several issues of the CPs and the outstanding figure of these CPs as on March 31, 2012 amounted to Rs. 232 million.

8. compliance with nbfc Regulations

Your Company has complied with all the regulatory provisions framed by Reserve Bank of India for Non-Banking Financia Companies. The Capital Adequacy Ratio of the Company as on March 31, 2012 is 23.38 % as against the statutory requirement of 15%.

However, on 1st February, 2012, the Company received a letter from Reserve Bank of India (RBI) directing the Company to disassociate, its name, officials, and infrastructure from that of any other group concerns carrying on financial activities. The Company has complied with all the directions issued by RBI with the professional assistance of reputed corporate lega firm and management consultants and updated the progress regularly to RBI.

9. Important Regulatory Developments

In order to further strengthen the existing regulatory framework, Reserve Bank of India (RBI) has issued revised guidelines amending the existing the Fair Practices Code (FPC). Accordingly, as required under the guidelines, the Board of Directors of the Company at its meeting held on 24th April, 2012, has approved a new Fair Practices Code. The Company has posted the new Fair Practices Code at its website at www.manappuram.com. Further, as required under the said guidelines, the Company has put in place an elaborate Customer Grievance Mechanism, a revised Loan Policy and a revised Auction Policy.

10. Directors

Retirement of Directors by Rotation

1) Mr. A.R Sankaranarayanan, Director, retires by rotation and he is eligible for re-appointment.

2) Adv.V.R.Ramachandran, Director, retires by rotation and he is eligible for re-appointment.

11. conseRvation oF eneRgy, technology aBsoRPtion anD FoReign exchange eaRnings & outgo - inFoRmation as PeR section 217 (1) (e) oF the comPanies act, 1956

The Company does not have any activity relating to conservation of energy or technology absorption.

The Company holds AD Category II licence from the Reserve Bank of India for its foreign exchange operations. Following are the details of foreign exchange earnings and outgo during the period covered by this report:

Foreign Exchange Earnings : Nil Foreign Exchange Outgo : Nil

12. PaRticulaRs oF emPloyees

Particulars of the employees covered by the provisions of section 217 (2A) of the Companies Act, 1956 read with Company's (Particulars of Employees) Rules, 1975 is as under:

13. DiRectoRs' ResPonsiBility statement

As required under Section 217 (2AA) of the Companies Act, 1956, the Board of Directors hereby declares that:

a) In the preparation of Annual Accounts for the financial year ended March 31, 2012, applicable Accounting Standards have been followed along with proper explanation relating to material departures.

b) The Directors have 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 2011-12 and of the profit of the Company for that period.

c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d) The Directors have prepared the Annual Accounts for the year 2011-12 on a going concern basis.

14. Auditors

The Statutory Auditors M/s S.R. Batliboi & Associates, Chartered Accountants, (Firm Registration Number- 101049W, (TIDEL Park, 6th and 7th Floor - A Block, Module 601, 701-702, No 4 Rajiv Gandhi Salai, Taramani, Chennai 600 113, India, Office: 91 44 6654 8100) retires at the ensuing Annual General Meeting of the Company and are eligible for re-appointment.

15. Report on Corporate Governance

Your Company has been practicing principle of good Corporate Governance over the years. The endeavor of the Company is not only to comply with the regulatory requirements but also practice good Corporate Governance that lays strong emphasis on integrity, transparency and overall accountability. A separate section on Corporate Governance along with a certificate from the Statutory Auditors confirming compliance is annexed and forms part of this report.

16. Management Discussion and analysis Report

Management Discussion and Analysis Report is attached and forms an integral part of the Report of the Board of Directors.

17. Acknowledgement

Your Directors acknowledge and place on record its sincere appreciation and gratitude to the employees of the Company at all levels for their dedicated service and commitments, to the Reserve Bank of India, Rating Agencies, Stock exchanges, Governments and its statutory agencies for the support, guidance and co-operation, to the Investors, shareholders Banks and other financial institutions and customers for the whole hearted support and confidence reposed on the Company and the management and to the general public at large for their blessings and good wishes the Company have been receiving in good measure over the years.

For and on behalf of the Board of Directors

Place: Valapad V.P.Nandakumar Date : May 18, 2012 Executive Chairman


Mar 31, 2011

The Members

Manappuram General Finance and Leasing Limited

The Directors are pleased to present the 19th Annual Report on the working of the Company with the Audited Accounts and the Report of the Auditors for the financial year ended March 31, 2011.

1. FINANCIAL RESULTS

(in Rs. million)

Description 2010-11 2009-10

Gross Income 11,815.26 4,782.01

Total Expenditure 7,576.30 2,963.75

Profit Before Tax 4,238.96 18,18.26

Provision for Taxes/Deferred tax 1,412.32 621.04

Net Profit 2,826.64 1,197.22

Profit b/f from previous year 917.11 188.73

Amount available for appropriations 3,743.75 1,474.07

Appropriations:

Transfer to Statutoiy Reserve 565.33 239.45

Transfer to General Reserve 282.67 119.72

Transfer to Capital Redemption Reserve - 17.15

Dividend on Preference shares - -

Interim Dividend on Equity Shares - -

Proposed Equity Dividend 500.25 165.89

Tax on dividend 81.14 27.21

Balance carried forward to next year 2,314.36 904.65

2. DIVIDEND

Your Board is pleased to recommend a dividend of 30% (i.e., Rs. 0.60 per equity share of Rs. 2 each) on the paid up equity capital of the Company. On approval by the Members at the ensuing Annual General Meeting, the said dividend would be paid to those Members whose names appear on the Register of Members as on the date of Book Closure.

The total cash outflow exclusive of tax on account of equity dividend would be Rs. 500.25 million as compared to Rs. 165.89 million during the previous year. It may be noted that the said dividend is tax free in the hands of the shareholders.

3. RAISING OF ADDITIONAL CAPITAL

As per the approval given by the members at the Extraordinary General Meeting of the Company held on August 24, 2010, your directors had allotted 13,210,039 equity shares of Rs. 2 each at a price of Rs. 75.70 per share to the promoters by way of preferential allotment. Further, your Company had raised an amount of Rs. 10,000 million by way of Qualified Institutions Placement in November 2010 by allotting 59,523,809 equity shares @ Rs. 168 per share. The amount raised from these issues was utilised for the purposes of augmenting the funding needs of the Company and to meet capital adequacy norms.

During the year, the Company had subdivided its equity shares from Rs. 10 per share to Rs. 2 per share. The Company had also made a bonus issue in the ratio of one fully paid equity share for each share held in the Company. During the year, the Company had also issued 3,755,120 shares to its employees under the ESOP 2009 scheme of the Company.

4. CAPITAL AND RESERVES

Capital and Reserves of the Company as on March 31, 2011 stood at Rs. 19,239.57 million. During the year under review the Company transferred Rs. 565.33 million to Statutory Reserve.

5. WORKING RESULTS

The year 2010-11 was a year with excellent financial results as far as your Company is concerned. The Gross Income for this period was Rs. 11,815.26 million as against Rs. 4,782.01 million in the year 2009-10. The Total Expenditure for the period was Rs. 7576.30 million. The Company had posted a record profit after tax of Rs. 2,826.64 million for the period under consideration, signifying an increase of Rs. 1,629.41 million over the previous year.

6. BUSINESS OUTLOOK

Your Company is engaged in the business of gold loans and would like to be positioned as such, much stronger, in future. Encouraged by the Company's success year after year, we have shaped our business plan for the financial year 2010-11 as part of realisation of our long term strategy to 'energise' at least 10% of the vast privately held gold reserves in the country. Your Company provides credit, the average size of which is Rs. 50,000. Given the nature of our operations, it is essential that we have to be close with the customers and a country wide presence becomes inevitable. We have decided to penetrate into areas hitherto underserved by us. Innovative products, improved relationship management, brand building, efficient customer service, better use of technology and reduced operational costs will become the hallmark of successful NBFCs in future. Your Company's business strategy is in recognition of these facts.

7. RESOURCES

Your Directors could successfully mobilise Rs. 10,000 million by way of Qualified Institutions Placement during the year. The Company was also successful in mobilising funds from the issue of debentures to both retail and institutional investors and from instruments like Commercial Paper. Apart from this, the company is in the process of raising money from wholesale debt market by the issue of listed debentures.

a) Deposits

As you are aware, your company had stopped acceptance of deposits way back from 2007 Your company had changed itself into a non - deposit taking category B NBFC with effect from March 22, 2011. All amounts due to deposit holders have been transferred to an ESCROW account opened with Punjab National Bank

As on the date of this report, there were no deposits which are due for transfer to the IEPF Account of the Central Government on the expiry of seven years after maturity. There is a regular follow up on the part of the Company to redeem unclaimed deposits. The Company continues to enjoy MA rating awarded by ICRA for its public deposits.

b) Secured Redeemable Non-Convertible Debentures

Your Company continues to issue fully secured redeemable Non-Convertible Debentures of Rs. 1000/- each on private placement basis. The outstanding balance of Debentures including interest accrued and due as on March 31, 2011 amounts to Rs. 1,333 million. The debentures are issued on private placement basis and are secured by a floating charge created on the receivables and other current assets of the Company. The Company has appointed Trustees to see that the interests of debenture holders are well protected.

During the period under consideration, your Company came out with the issue of listed Non-Convertible Debentures to institutions. ICRA has assigned 'LA /stable' rating for the same indicating average credit risk Under this programme your Company mobilised Rs. 3,700 million.

c) Unsecured Bonds

The Company issued unsecured Subordinated Bonds in the nature of Promissory Notes on private placement basis. These Bonds will be treated as Tier II Capital as per RBI norms. The outstanding figure of these bonds as on March 31, 2011 amounted to Rs. 1,778.76 million.

d) Assignment of Receivables

The Company has procured funds through assignment of receivables to Banks and Financial Institutions during the year. The aggregate amount assigned as at March 31, 2011 is Rs. 11,182.83 million.

e) Commercial Paper

Your Company enjoys a limit of Rs. 3 billion for Commercial Paper (CP) / Short Term Debt programme having a 'A1 ' rating from ICRA, which indicates lowest credit risk in the short term. During the year, the Company made several issues of the CP and the outstanding figure of these CP's as on March 31, 2011 amounted to Rs. 10,00787 million.

8. NEW RECOGNITIONS

Your directors are pleased to inform that the earlier LA rating of the Company has since been upgraded to LA by ICRA. The outlook on this rating is stable. The Company has also been awarded 'A1 ' rating by ICRA for its short term borrowings in enhancement of the earlier Al rating. Further, CARE has assigned AA- rating for long term credit.

9 COMPLIANCE WITH NBFC REGULATIONS

Your Company has complied with all the regulatory provisions framed by Reserve Bank of India for Non-Banking Financial Companies. The Capital Adequacy Ratio of the Company as on March 31, 2011 is 29.13 % as against the statutoiy requirement of 15%.

10. DIRECTORS

Retirement of Directors by Rotation

1) Mr. P. Manomohanan, Director retires by rotation and being eligible offers himself for re-appointment.

2) Dr. V. M. Manoharan, Director retires by rotation and being eligible offers himself for re-appointment.

3) Mr. M. Anandan Director retires by rotation and being eligible offers himself for re-appointment.

Appointment

Mr. T. V. Antony and Mr. K. P. Balaraj were appointed to the Board of your Company as Additional Directors on May 11, 2010. Mr. K. P. Balaraj was the nominee of Sequoia Capital and consequent to the sale of its entire holding in the Company, he resigned from the directorship and offered himself to be appointed as an independent director.

Resignation

During the year Mr. Ashvin C Chadha who was the nominee of M/s Hudson Equity Holdings Limited resigned from the directorship of the company on account of his change from the parent organisation. In addition, Mr. K. P. Balaraj, who was the nominee of M/s Sequoia Capital had also resigned on the sale of the entire shares by the nominating company. Mr. T. V. Antony, director who was appointed on May 11, 2010 resigned with effect from August 28, 2010 on account of health reasons. Your Board accepted all the above resignations. The Board places on record its appreciations for the remarkable service and support rendered by the above personalities as directors of the company.

11. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO - INFORMATION AS PER SECTION 217 (1) (e) OF THE COMPANIES ACT, 1956

The Company does not have any activity relating to conservation of energy or technology absorption.

The Company holds AD Category II licence from the Reserve Bank of India for its foreign exchange operations. Following are the details of foreign exchange earnings and outgo during the period covered by this report: Foreign Exchange Earnings: Nil Foreign Exchange Outgo: Nil

12. PARTICULARS OF EMPLOYEES

Particulars of the employees covered by the provisions of section 217 (2A) of the Companies Act, 1956, read with Company's (Particulars of Employees) Rules, 1975 is as under:

Statement Pursuant To Section 217 (2A) Of The Companies Act, 1956, read with Company's (Particulars Of Employees) Rules, 1975

Name Designation Age Remuneration Date of Joining Experience in Years Received

Mr. V. P. Nandakumar Executive Chairman 57 30,000,000 July 15, 1992 31

Mr. I. Unnikrishnan Managing Director 47 9,600,000 October 01,2006 21

Mr. B. N. Raveendra Babu Joint Managing Director 59 7,800,000 August 17,2009 33

13. DIRECTORS' RESPONSIBILITY STATEMENT

As required under Section 217 (2AA) of the Companies Act, 1956, the Board of Directors hereby declares that:

a) In the preparation of Annual Accounts for the financial year ended March 31, 2011, applicable Accounting Standards have been followed along with proper explanation relating to material departures.

b) The Directors have 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 2010-11 and of the profit of the Company for that period.

c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d) The Directors have prepared the Annual Accounts for the year 2010-11 on a going concern basis.

14. AUDITORS

The statutory Auditors M/s S.R. Batliboi & Associates, Chartered Accountants, Firm Registration Number- 101049W, TPL House, Second Floor, 3, Cenotaph Road, Teynampet, Chennai - 600 018, retire at the ensuing Annual General Meeting of the Company and are eligible for re-appointment.

15. REPORT ON CORPORATE GOVERNANCE

Your Company has been practicing principles of good Corporate Governance over the years. The endeavor of the Company is not only to comply with the regulatory requirements but also practice good Corporate Governance that lays strong emphasis on integrity, transparency and overall accountability. A separate section on Corporate Governance along with a certificate from the Statutory Auditors confirming compliance is annexed and forms part of this report.

16. MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis Report is attached and forms an integral part of the Report of the Board of Directors.

17. ESOP2009

The company had launched an Employees Stock Option Scheme 2009 (ESOP 2009), under the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as approved by the shareholders on 1708.2009.

The ESOP 2009 provides for 1 million Stock Options of Rs. 10 each, out of which the Company has granted 8,29,500 Options to the employees. The disclosures in terms of Clause 12 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are set out in the Annexure to this Report. The number of options were adjusted in lines with the split of face value of shares and bonus issue made by the company.

18. ACKNOWLEDGEMENT

Your Directors acknowledge the dedicated service rendered by the Employees of the Company at all levels. The Directors also acknowledge the support and co-operation received especially from Shareholders, Investors, Customers and Well-wishers, Reserve Bank of India, Government Departments, Investment Bankers, Rating Agencies, Banks and other Financial Institutions.

For and on behalf of the Board of Directors

Place: Valapad V. P. Nandakumar

Date: April 28, 2011 Executive Chairman


Mar 31, 2010

The Directors are pleased to present the 18 th Annual Report on the working of the Company with the Audited Accounts and the Report of the Auditors for the financial year ended March 31.2010.

Results of the Combined Entity

At the outset your directors wish to inform you that the scheme of amalgamation entered Into by the Company with Manappuram Fiance Tamlnadu Limted (MAFIT) was approved by the Horble High Court of Judicature at Mddras on December 8,2009, and Honble High Court of Judicature at Kerala on December 23.2009 Further, the Company has acquired all the assets art) liabities of Manappuram Printers, asole proprietorship which was engaged in the business of trading stationery items with effect from April 1, 2009 This being the first result of the combined entity is not fairty comparable with figures of the previous year 2008 09

1.Financial Results (In NR Milion)

Description 2009-10 2008-09

Gross income 4782.01 1661.11

Total Expenditure 2963.76 1198.28

Profit before Tax 1818.25 462.83

provision for Taxes Deferred Tax 621.04 159.86

Net Profit 1197.21 302.97

Profith/ffrompreviousyear 188.74 39.00

Amounts adjusted on amalgamation of MAFTT: Profit aftertax and appropriation for the financial year 2008-09 88.12 -

Amount available for appropriations 1474.07 341.97

Appropriations;

Transfer to Statutory Reserve 739.45 239.45

Transfer to General Reserve 119.72 31.00

Transfer to Capital Redemption Reserve 17.15 5.72

Dviderd on Preference shares - 3.00

Interm Dividend on Equity Shares - 1.64

Proposed Equity Dividend 165.89 43.14

Tax on divided 27.21 8.13

Balance carried orward to next year 904.65 188.74



2. DIVIDEND

Encouraged by the improved perfor mance of your Company during the year the Board is pleased to recommend a dividend of 23% (i e.( Rs 050 per equity snare of Rs 2 each] on the paid up equity capital of the Company, On approval by the Members at the ensung Annual General Meeting, the sari dividend would be paid to those Members whose names appear on the Register of Members as on the date of Book Closure.

Your Directors are delihghted to inform that the Members will get dual gair this year because of the dividend on the 1:1 bonus shares issued as approved by the Members at the meeting held on 22.04.2010

The total cash outflow exclusive of tax on account of equity dividend would be Rs 165.89 milion as compared to Rs 44.78 milion during the previous year.

It may be noted that the said dividend is tax free in the hands of the shareholders.

3. RAISING OF ADDITIONAL CAPITAL

As per the approval given by the members at the Extraordinary General Meethg of the Company held on 20.01 2010, your directors had alotted 3,540,420 Equity shares of Rs 10 each to Qualified Institutional Buyers on 0403 2010 by way of a private placement at a premium of Rs 681 per share. The amount of Rs 2,446 43 miion raised from this issue would be utiized for the purposes of augmenting the funding needs of the Company and to meet capital adequacy norms.

As per the terms of agreement entered into. Share Warrants issued on 05.11.2008 to promoters were converted In to 1,564392 Equlty shares of Rs 10 each on 18.03.2010 With the aforesaid alotments, the paid up share capital of the Company has increased to Rs 340l385,220.

4. CAPITAL AND RESERVES

Capital and Reserves of the Company as on 31.03.2010 stood at Rs 6105,6 million During the year under review the Company transferred Rs 239,45 milon to Statutory Reserve, Rs 119.72 million to General Reserve and 1715 miion to Capital Redemption Reserve.

Redemption of Preference shares

The Company had allotted 400,000 75% redeemable preference shares of Rs 100 each fully paid up in September, 2004 red emable after seven years. The shareholders had a right for early redemption but not earlier than 2 years from the date of allotment. During the year, the shareholders have exercised Their right of carry redemption and redeemed the shares on March 18.2010 and the outflow was met from the Capital Redemption Reserve of the Company.

5. WORKING RESULTS

The year 2009-10 was a year with excellent financial results as far as your Company is concerned. The Gross income for this period was Rs.4782.01 million as against Rs 1661.11 milion in the year 2008 Oft The Total Expenditure for the period was 2963 76 milion.

The Company has posted a record profit after tax of Rs 119721 million for the period under consideration signrfyig an increase of Rs 894.24 million (295.16%) over the previous year.

6.BUSINESS OUTLOOK

Your Company is predominancy engaged in the busness of gold loans and would like to be positioned as such in future even at the cost of exiting from other fund-based business areas. Encouraged by your Companys success in weathering the aftermath of global financiaI crisis, we have given shape to Our business pan for the financial year 2009-10 as part of realization of our long term strategy to energize at least 10% of the vast privately held gold reserves in the country Your Company is de-facto a micro credit institution ihasmuch as nearly 85% of Its loans pertain to a ticket sire of below Rs 50.000 except for the act that we accept gold as security Given the nature of our operations as also the fact that your Companys vision is la make life easy" for our customers it is essential that we have to be close to them. A pan India presence therefore becomes inevitable, we have therefore decided to penetrate aggressively Into areas hitherto underserved by us. Innovative products, improved relationship management. brand bulding. efficient customer service, better use of technology and reduced operational costs will become the hallmark of successful NBFCs in future, Your Companys business strategy is in recognition of these facts.

7.RESOURCES

As part of the efforts to identify cheaper source of funds, your Directors had discoissions with reputed concerns at national and intenational levels. As a result of the negotiations and discussions, your Company could mobilize funds to the tune of Rs 2.446 43 million in the form of Qualified Institutional Placement. Your Company was also successful in raising resources from products such as Commercial Papers and rated No-Convertible Debentures during the period under consideration.

Detalls of resources curing the year under review are shown in the chart below:

a) Deposits

Your Directors have decided at the Board meeting held on 15,012007 to phase out the public deposits herd by the Company Accordingly, the Company stopped accepting fresh public deposits, The existing deposits will not be renewed and the Company is sending notice to the matured and unclaimed deposit holders.

Detals required as per para 5(1) of special provisions applicable to NBFCs are given below:

Total number of accounts of public deposits of the Company as at March 31 2010, which have not been claimed by the depositors or not pald by the Company after the due date: 551 Nos

Total amount cue under such accounts remaining unclaimed or unpaid beyond the dates referred to in above as on 31032010: Rs. 4.59 Milion.

As on the date of this report, there were no deposits which are due for transfer to the IEPF Account of the Central Government on the expiry of seven years after maturity There is a regutar follow up on the part of the Company to redeem unclaimed deposits. The Company continues to enjoy MA+ rating awarded by ICRA for its public deposit programme.

b) Secured Redeemable Non-Convertible Debentures

Your Company continues to issue fully secured redeemable non convertible debentures of Rs 1000/- each on private place* ment basis The out standing balance of Debentures including interest accrued and due as on 31.03.2010 amounts to Rs 263936 milion. Tne debentures are issued on private placement basis and are secured by a floating charge created on the receivables and other current assets of the Company The Company has appointed trustees to see that the interests of debenture holders are well protected. Any amount remainng unclaimed is transferred to debenture trustees* account after the expiry of sixty days from the date of maturity.

During the period under consideration, your Company came out with a No inconvertible Debenture Programme to the tune of Rs 1 billon and ICRA has assigned "LA+/stable rating for the same indicating average credit risk Order this programme your Company mobilized Rs 2S0 trillion by way of Institutional Placement.

c) Unsecured Bords

The Company issued unsecured Subordinated Bonds in the nature of Promissory Notes on private placement basis. These Bonds wilbe treated as Tier ll Capital as per RBI norms The outstanding figure of these bonds as on 31.03.2010 amounted to Rs 1165.14 million.

d) Assignment of Receivables

The Company has procured funds through assignment of receivables to Banks and Financial Institutions during the year The aggregate amount assigned as at 31.03-2010 is Rs 7077 milion.

e) Commercial Paper

Your Company enjoys a limit of Rs 3 billon for Commercial Paper (CF)/ Short Term Debt programme having a "A1+ rating from ICRA, which indicates lowest credit risk in the short term. During the year, the Company made several issues of the CP and the outstanding figure of these CPs as on 31.03. 2010 amounted to Rs 650.73 million.

8. NEW RECOGNTIONS

Your directors are pleased to inform that the then existing LA rating of the Company has been upgraded to "LA+ by ICRA, for the working capital limit of Rs 30025 million under Basel II norms, The outlook on this rating is stable The Company has also been awarded A1+ rating by ICRA for its short term borrowings in enhancement of the then existing A1 rating. Further the Company continues to enjoy MA+ rating from ICRA for its Pubic Deposit programme.

9.COMPLIANCE WITH NBFC REGULATIONS

Your Company has complied with at the regulatory provisions framed by Reserve Sank of India for Non-Bankinng Financial Companies. The Capital Adequacy Ratio of the Company as on 3103.2010 is 2873% as against the statutory retirement of 15%.

10. DIRECTORS

Retirement by Rotation

Following Directors are lable to retire by rotation at the ensuing

Annual General Meeting;

1) Adv. VR. Ramachandran Director retires by rotation and being eligible offers himself for re-appointment. He was appointed as an additional director on 13.09 2002.

2) Mr. Snalesh J Mehta, Director retires by rotation and being eligible offers himself for re appointment He was appointed as an additional director on 06.11.2008.

3) Mr. Gautam Saigal Director retires by rotation and being eligible offers director on 06.11.2008.

Resignation

Mr.Juguna G.Panikkamparambl, Director stepped down from the Board on his own, effective from 27.02.2010 Your Board accepted his resignation and places on record appreciations for his remarkable service and support offered to the Company during his lenure.

Appointment

Mr.B.N.Raveendra Babu was appointed to the Board of your Company as an Additional Director on 1708.2009 and he was elevated to the office of Joint Managing Director of the Company effective from 11.01.2010.

Mr.T.V. Antony and Mr. K.P.Balaraj were appointed to the Board of your Company as Additional Directors on 11.0&2010.

Mr.T.V.Antony was retired from Indian Administrative Service (IAS) after serving top administrative positions in Government of Tamilnadu for quite a long period.

Mr.K. P.Baiaraj was the nominee of Sequoia Capital and consequent to the sale of its entire holding in the Company he resgned from the directorship and offered himself to oe appohted as an independent director.

11. Conservation of Energy. Technology Absorption and Foreign Exchange Earmings, & Outgo- Information as per Section 217 (1) (e) of the Companies Act. 1956.

The Company does not have any activity relating to conserva- tion of energy or technology absorption.

The Company holds AD Category I licence from the Reserve Bank of India for its foreign exchange operations There were no foreign exchange earnngs or outgo during the period covered by this report.

12. PARTICULARS OF EMPLOYEES Particulars of the employees covered by the provisions of section 217 (2A) of the Companies Act, 1956 read with Companys (Particulars of Employees} Rules. 1975 is as under.

STATEMENT PURSUANT TO SECTION 217 (2A) OF THE COMPANIES ACT. 1956 READ WITH COMPANYS (PARTICULARS OF EMPLOYEES) RULES, 1975

NAME AGE DESIGNATION REMUNERATION RECEIVED DATE OF JOINING EXPERIENCE IN YEARS

MR. V.P.NANDAKUMAR 56 Executive Chairman 1,60,80,000.00 15.071992 3O

Mr. I. UNNKRSHNAN 46 Managing Director 51.60,00000 01.10.2O06 20

Mr. B.N. RAVEENDRA BABU 58 Joint Managing Director 48,2.00000 17.08.2009 32



13. DIRECTORS RESPONSIBILITY STATEMENT

As required under Section 217 (2AA) of the Companies Act, 1956, the Board of Directors hereby declares that:

a) In the preparation of Annual Accounts for the fnancial year ended 31.032010, applicable Accounting Standards have been followed along with proper expiration relating to material departures.

b) The Directors have setected such accounting policies and applied them consistently and made judgments and estimates thaiare reasonable and prudent so as to give a true and falir view of the state of affairs of the Company at the end of the financial year 2009-10 and of the profit of the Company for that period.

c) The Diectors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Compares Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d) The Directors have prepared the Annual Accounts for the year 2009-10 on a going concern basis.

14.AUDITORS

The statutory Auditors M/s S.R BatlIiboi & Associates, Chartered Accountants, Firm Registration Number 101049W, tpl House, Second Floor, 3, Cenotaph Road, Teynampet, Chennai- 600 018. retire at the ensuing Annual General Meeting of the Company and are eligible for re-appointment.

15.REPORT ON CORPORATE GOVERNANCE

Your Company has been practises prnciple of good Corporate Governance over the years. The endeavor of the Company is not only to comply with the regulatory requtements but also practice good Corporate Governance that lays strong emphasis on Integrity, transparency and overall accountability. A separate section on Corporate Governance along with a certificate from the Statutory Auditors confirmng compkance is annexed and forms part of this report.

16.MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis Report is ttached and forms an integral part of the Report of the Board of Directors.

17. ESOP 2009

With a view to attract and retain talent and for ensuring commitment, your Company has launched an Employees Stock Option Scheme 2009
The ESOP 2009 provides for 1 milion Stock Options of Rs 10 each, out of which your Company granted 8,29.500 Options to the emtloyees durig the period The disclosures in terms of Clause 12 of the SEBI [Employee Stock Option Scheme and Employee Stock Purtnase Scheme} Guidelines, 1999 are set out in the Annexure to this report.

18. ACKNOWLEDGEMENT

Your Directors acknowledge the dedicated service rendered by the Employees of the Company at all levels. The Directors also acknowledge the support and co-operation received especially from Shareholders, Investors, Customers and Well-wishers, Reserve Bank of india, Government Departments, Investment Bankers, Rating Agencies, Banks and other Financial Institu- tions.

For and on behalf of the Board of Directors



V.P.Nandakumar Place: valapad

Executive Chairman Date 11.052010