Mar 31, 2023
The Board of Directors of Manappuram Finance Limited have pleasure in presenting before you the Thirty First Annual Report of the Company together with the Audited Standalone and Consolidated Statements of Accounts for the financial year ended March 31, 2023.
Financial Highlights |
'' in million |
|||
Description |
Standalone |
Consolidated |
||
2022-23 |
2021-22 |
2022-23 |
2021-22 |
|
Gross Income |
48,268.58 |
45,869.97 |
67,499.47 |
61,263.14 |
Total Expenditure |
31,205.30 |
28,372.18 |
47,088.97 |
43,427.91 |
Profit Before Tax |
17,063.28 |
17,497.79 |
20,410.50 |
17,835.23 |
Provision for Taxes/ Deferred tax |
4,400.65 |
4,452.42 |
5,408.78 |
4,548.17 |
PAT before comprehensive income |
12,662.63 |
13,045.37 |
15,001.72 |
13,287.06 |
Other Comprehensive Income |
245.42 |
-113.20 |
267.18 |
-81.53 |
Minority interest |
- |
- |
42.30 |
3.36 |
PAT including comprehensive income |
12,908.05 |
12,932.16 |
15,226.59 |
13,202.18 |
Amount available for appropriations (Retained Earnings-Opening balance) |
42,592.22 |
35,134.99 |
45,718.91 |
38,135.58 |
Appropriations: |
||||
Profit for the year |
12,662.63 |
13,045.37 |
15,069.33 |
13,295.09 |
Transfer to statutory Reserve |
-2,532.53 |
-2,609.07 |
-3,007.73 |
-2,650.36 |
Interim Dividend on Equity share |
-2,539.18 |
-2,539.14 |
-2,619.57 |
-2,539.14 |
Adjustment on account of IND AS (Impairment Reserve) |
- |
-439.93 |
- |
-439.93 |
Loss on acquisition |
- |
- |
- |
-82.32 |
Utilised during the year |
- |
- |
- |
|
Balance carried forward to next year (Closing Balance) |
50,183.14 |
42,592.22 |
55,160.94 |
45,718.91 |
Company''s Performance
The Company''s gross income for the financial year ended March 31, 2023 increased to ''48,268.58 million as compared to ''45,869.97 million in the previous financial year thereby registering an increase of 5.23%. The profit before tax of the Company decreased to ''17,063.28 million during the year as against ''17,497.79 million in the previous year. The net profit for the year decreased by 2.93% to ''12,662.63 million from ''13,045.37 million in the previous financial year. The Asset Under Management (AUM) was at ''2,42,022.03 million as at March 31, 2023 as against ''2,24,127.93 million as at March 31, 2022.
The Company''s consolidated AUM grew by 17.20% to ''3,54,523 million during the year owing to rapid growth in the microfinance (39.70%), housing finance (29.60%) and vehicle finance (49.40%) AUMs. Gold loan AUMs decreased by 2.10% during the year.
1. Diversification of Business
I ncorporated in 1992, your Company is operating in the NBFC sector, with diversified businesses and a branch size network of 5232.
The primary objective and increased thrust of our diversification and rebalancing strategy is to emerge as a "diversified NBFCâ with at least a 50% AUM being contributed by the non-gold loan business. With this, we aim to reduce our dependence on Gold Loan Assets Under Management (AUM) alone and achieve a comfortable balance between our new lines of business and gold loans.
The Company''s strategy is to strengthen both Gold and Non-Gold segments. It is also working on growing its
Gold Loan segment along with other business segments and maintaining its gold loan yield, irrespective of pricing pressures. We aim to achieve a 50-50 mix between Gold Loans and other diversified business segments.
The Company is focusing on serving customers at the bottom of the pyramid through other business segments like affordable housing finance, vehicle and equipment finance, which includes commercial vehicle loans, two-wheeler loans, tractor & car loans; microfinance, SME finance, project and industrial finance, corporate finance and insurance broking. In the last 4-5 years, the Company has made significant progress in each of these new business segments, having steadily scaled up its operations by leveraging its existing customer base of Gold Loans, extensive and growing branch network, and capitalising on the goodwill of Brand Manappuram.
Through the process of diversification, we aim to address several key business paradigms, the prime among which is to enhance regulatory comfort by migrating from a single product NBFC to a multi-product and diversified financial services provider, serving the needs of existing and new customers. Finally, the move on diversification also enables your Company to play contribute towards accelerating financial inclusion by addressing the needs of the unserved and under-served segments of the society.
The Company also improved its credit monitoring, which play a critical role in facilitating responsible lending across the non-gold businesses. By mitigating the risks and ensuring credit quality, we maintain a healthy environment for the Company. The monitoring function in the Company covers 2 stages. One, verification fixed percentage of accounts immediately after the disbursement, and two, verification of risk-based accounts subsequently (for eg., immediate delinquent).
The Credit Monitors conduct 360-degree due diligence of loans randomly selected by National Credit Head of the company. These are verified for any credit/valuation/ legal process lapses and informed about to National Credit
Head on time. This ensures completeness of documents in the file and nil negligence on any process/policy. This is post-disbursement visit at employment and property of the customers, which is randomly selected by National Credit Head and ensures nil negligence on any process/ policy. It ensures overall compliance in credit/operations related works across the branches. These Credit Monitors visit branches frequently and submit the visit report to the National Credit Head.
The Company''s credit monitoring policies play a critical role in facilitating responsible lending across the non-gold verticals. By mitigating the risks and ensuring the credit quality of the company, a healthy environment for the company and borrowers is maintained.
Loan underwriting is the comprehensive assessment and evaluation of a borrower''s credit worthiness and ability to repay a loan. The underwriting process involves a careful examination of various financial factors such as credit history, income, assets, debt levels and overall financial stability. The importance of this process is risk mitigation, credit quality and regulatory compliance
Underwriting rules, process, and systems are in place for the company. Different verticals have a well-documented underwriting policy which help evaluate the credit worthiness of borrowers, thereby containing credit risk to the maximum. The Company''s credit policies for Non-Gold Loan verticals ensure good quality credit underwriting through better credit assessment, financial analysis, collateral evaluation and risk-based pricing.
Credit assessment begins with a thorough examination of the borrower''s credit history which includes reviewing credit scores, payment history, outstanding debts and any derogatory marks. The borrower''s financial statements are analysed to assess their repayment capacity, considering factors like employment stability, income level and debt-to-income ratio to determine how comfortably the borrower can meet his loan obligations. In collateral evaluation, the value and quality of collateral offered by the borrower to secure the loan is assessed through risk-based pricing methodologies to determine if the interest rates and loan terms offered are decided. Higher risk borrowers will have higher interest rates to compensate for increased likelihood of default of and lower risk borrowers can have favorable rates and terms.
I mproved loan underwriting policies also play a critical role in facilitating responsible lending and providing with valuable insights to make informed decisions regarding loan approvals terms and interest rates. By mitigating risks, ensuring credit quality and adhering to regulatory requirements, the Company''s underwriting policy helps in fostering a healthy environment for the company and its borrowers.
I n the financial services industry where multiple entities offering a slew of products co-exist, retaining existing customers and acquiring new customers has become the key to success. The changing demographic profile of customers in India, with 58% of these aged between 18-35 years, is another decisive factor as it becomes very important to understand their tastes, preferences, and behavioural patterns to design products customised as per their needs.
MAFIL''s CRM is embedded in various business functions
such as lending and customer service to ensure that customers'' needs are at the forefront of all the business processes. MAFIL believes that customer satisfaction, customer loyalty and customer retention add to the overall profitability and efficiency of the organisation. Retained customers significantly bring down marketing and promotional cost as satisfied customers also bring in more customers through referrals and word of mouth publicity.
MAFIL has developed a robust CRM with a clear overview of customer profile facilitated by business intelligence and analytics. The CRM dashboard provides Relationship
Managers an overview of customers'' history, status of credit facilities, due dates for servicing loans, outstanding customer service issues, among other things. Such data helps MAFIL in effective management of collection, lead generation and its ultimate conversion to sales.
The CRM team maintains a close relationship with its borrowers, which facilitates collection of their instalments on the due date. The relationship helps MAFIL maintain delinquencies in the Non-Gold verticals at low levels and can be considered amongst the best in the industry. Relationship with customers has also facilitated more cross-selling opportunities and has helped increase collections from borrowers who had earlier defaulted on their loans.
Today, the Non-Gold businesses contribute 44.3% to the Total AUM. Gold Loan contributes the remaining 55.7%.
During the year under review, the Company''s Total AUM stood at '' 354,522.57 million vis-a-vis '' 302,608.16 million in FY2022.
Among the business segments, Microfinance AUM grew from '' 70,021.83 million in FY2022 to '' 100,408.93 million in FY2023. Vehicle and Equipment Finance and Onlending Business ended the year with an AUM of '' 24,551.40 million (compared to '' 16,431.60 million in FY2022) and '' 10,048.22 million (vis-a-vis '' 315.59 million in FY2022), respectively. Manappuram Home Finance Limited, the Company''s housing subsidiary, ended the year with an AUM of '' 10.95 billion, compared to '' 8.45 billion in the earlier year. The other business verticals of the Company include Payments business, SME business and fee-based services, including Forex and Money Transfer.
The vehicle finance portfolio is about ''24551.40 million spread across 281 locations in 23 states as of March 31, 2023. The preowned commercial vehicles portfolio is ''13,150 million and new commercial vehicles are of 701 million with 23,413 contracts. The two-wheeler finance portfolio is of ''4,256 million with 1,06,227 contracts, Car finance portfolio is of ''5017million with 15422 contracts and other vehicle loans make up a portfolio of around ''1,428 million. The business is supported by robust pre-screening methodologies and credit assessment for a healthy portfolio mix.
⢠Market is bullish towards commercial vehicle as in the budget 2023 a lot of emphasize has been
given on building of the infrastructure. Focus on warehouse and logistic infrastructure to result in higher demand for Small Commercial Vehicle & Heavy Commercial Vehicle.
⢠Used car market growing faster in tier 1 & 2 cities and rural area because of emission norms are changing in metro cities due to increase in pollution and Govt. restrictions on old vehicles in metros. This will continue to be so in the coming years. According to a study, up to Financial Year 2025 used car market share will be 70% in non-metro and 30% in metro.
⢠NBFC''s have close to 60% market share in tractor financing space followed by pvt banks taking the remaining 38% market share. PSU banks have the remaining 2% share. Average loan size is increasing to ''0.5 Million from ''0.4 Million earlier and average IRR in new tractor is @ 14%.
⢠The India Two-Wheeler Market is expected to grow at a CAGR of around 3% during the forecast period
2022-2028.
MSME and Personal Loan Business
MSMEs are an important sector for the Indian economy and have contributed immensely to the country''s socio-economic development. It not only generates employment opportunities but also works together towards the development of the nation''s backward and rural areas. To tap the potential of growing MSMEs across the country, having started MSME lending from a zero base in January 2019, we could easily see there was good demand for such loans. Simultaneously we started Micro Home Loans and Personal Loans to provide affordable loans to the MSME customers. Accordingly, within a short period, we went ahead and scaled up the business to new geographies like Tamil Nadu, Karnataka, and Andhra Pradesh etc. Our initial focus remained on the southern states where we targeted the local ''Kirana'' shops and small industrial establishments. We were careful to exercise due care when vetting the loan applications and in this we were helped by our pool of existing gold loan customers who gave us good leads about quality borrowers.
Interestingly, we started this new line of business without recruiting anyone from the market with prior experience in MSME lending. Instead, the employees were selected from our home-grown gold loan employees based on their contact with the relevant micro-markets, and after assessing their aptitude to handle this new line of business. We also chose to explore a different path by recruiting fresh youngsters as field sales representatives for the purpose of interfacing with quality MSME borrowers.
We were confident that MSME lending would be one of the major growth areas for us given that entrepreneurship at the grassroots is taking off in a big way. To serve a broader
range of customers, now we started to offer a wider range of Loan products across different categories - health care industry Loans, smaLL-scaLe industrial finance, food industry
Loans, restaurant finance etc. Most MSMEs were faced with an acute cash crunch, and they needed immediate Liquidity to tide over the situation. The disruptions gave us an excellent opportunity to serve these MSMEs by speedily catering to their urgent requirement of working capital. We seized the opportunity and expanded the business to the rest of India, adding states Like Odisha, West Bengal, Uttar Pradesh, Chhattisgarh, Madhya Pradesh, Maharashtra, Gujarat, Rajasthan, Haryana etc. We disburse fuLLy secured Loans only for business purposes, and the maximum Loan amount was Limited to ''5 Million for shops and establishments. We have a range of products as follows:
⢠Loan to Business/ Service Providers.
⢠Loan against Property (Micro Mortgage).
⢠Financing home improvements.
⢠Personal Loan
Perhaps the most important factor in any Lending business is its asset quaLity, and how successfuL you are in hoLding down non-performing assets (NPAs). An important factor that enabled us to maintain good asset quality is our use of
novel methods for Loan appraisal. Before sanctioning any Loan, we thoroughly analyze the repayment behavior of the appLicant. It heLps us to assess the credibiLity and financiaL status of the borrower and that is taken to their credit score. After the Loan is disbursed, we provide our customer with user friendLy onLine payment options Like GoogLe Pay, Paytm, PhonePe etc. so that Loan repayments can be made easily, thus improving our collections. Further, we have estabLished coLLection and customer reLations teams to exclusively cater to MSME borrowers and they have played a crucial roLe in holding down our cheque bounce rate to below 4 per cent, and the Gross NPA Level to weLL below 1.5 per cent despite the severe challenges of the pandemic.
Fee-Based Services Including Forex and Money Transfer
Business overview
We have an Authorized Dealers Category-II License by the RBI, and engage in providing soLutions for fast, easy and safe money transfer up to ''0.05 Million without the need for a bank account. Our services incLude transfer to both India and abroad.
Key Developments, FY 2022-23
Our Company''s fee-based services include money transfer, foreign exchange, and depository services. We facilitate fast, easy, and safe money transfer and the customer does not require a bank account for an amount of up to ''0.05 MiLLion subject to compLiance with appLicabLe RBI norms. We assist in the exchange of currency for purposes as permitted under the Foreign Exchange Management Act (FEMA). Our Company is an Authorized Dealer (AD)
Category 2 License holder from RBI. In December 2017, Manappuram Finance Limited received RBI''s License to act as the Indian Agent for Western Union Money Transfer. We aLso act as sub-agents to the Indian representatives of other companies providing money transfer inward remittance. Following are the highlights of our fee-based services: -
⢠Tie up with Eight money transfer agencies for inward remittance.
⢠About 60% of the inward remittance is contributed by Western Union. As an Indian agent of Western Union, we can appoint sub - agents to work on our behalf all over India.
⢠Turnover of MTSS business is around ''105 Million
per month.
⢠We have 23 active sub-agents for Western Union business who contributes about ''16.5 MiLLion of the business per month.
I t was in March 2017 that Manappuram Finance Limited received RBI''s authorization to issue prepaid payment instruments (payment waLLet) and went on to Launch the MAkash wallet. A mobile wallet is a way to carry cash in digitaL format that promotes the country''s cashLess payments initiative. Customers can Load money into the wallet using a credit card, debit card. Alternatively, they can walk into any of the MAFIL branches across India and Load cash into the waLLet without any extra cost. With over one Lakh customers, MAkash has registered steady growth. The wallet registers an average of 19,508 transactions per annum valued at about ''125.5 Million. Customers can avail the assistance of MAFIL Branches to create the wallet and conduct transactions. The following services are available with MAkash Online and Offline modes:
⢠Phone Recharge & DTH: With money Loaded in your MAkash wallet, it takes just seconds to make phone and DTH recharges.
⢠Bill Payments: Pay all your bills across categories via MAkash in no time and avoid Late payment charges.
⢠Transfer money to Bank: You can Load money from your Credit card/ Debit Card and send it to any bank
account in India, any time.
State of Affairs of Our Subsidiaries
Asirvad Micro Finance Limited (AMFL)
Asirvad Microfinance Limited ("AMFL/ Companyâ) was formed with the intention of providing financial access to the underserved through the formation of a commercially viable business. The Company has successfully started in Tamil Nadu and is incorporated under the Companies Act, 1956 on 29th August, 2007. Access to financial services is perhaps one of the most important requirements of any household across the world and in turn leads to access to other services and consequently better standard of living. AMFL has obtained NBFC License from the Reserve Bank of India on 14th December 2007. Started forming groups from 15th December 2007, and first lending operations with effect from 21st January 2008. The Company''s Vision is "Small loans, Big dreams."
In February 2015 Manappuram Finance Limited took over the Company with the stake of 85%. After the takeover, AMFL was able to leverage its parent''s credit worthiness. It got better access to bank finance at significantly lower cost and expanded to new geographies like Madhya Pradesh, Chhattisgarh, Punjab, Haryana, Chandigarh, Jharkhand, Bihar, West Bengal, and Uttar Pradesh the portfolio touched '' 10,000 million AUM (Asset Under Management) by end of 2015 -16.
Performance of the Company
The company was able to grow its business substantially in the first full year of operations after its takeover. The net profit for the year ended March 31, 2016, has gone up to ''239.6 Million. Fiscal year 2016-17 was overall a good year for AMFL as it was able to grow its business substantially to end the year with an AUM of nearly ''18,000 Million on an 80% increase compared to the year ago.
MFI Loans
Currently, the Company has a presence in 23 states and 2 union territories. The Company''s AUM stands at
''100,408.9 Million (MFI AUM - ''92,972.1 Million) and it represents a significant accomplishment. The total centres are 3,25,274 which includes 1206 branches with 29 Lakh active members. The single-point objective of the Company is to make a valuable contribution towards the lives of our customers, and we made it a point to stand strong with them even during the tough pandemic days by introducing new loan products. AMFL is determined to serve the customers keeping their best interests in mind.
MSME Loan
MSME Business commenced in the month of July 2019. The loan products, process and people focus on enhancing the economic output of customers. It caters to the "Missing Middle" segment largely comprising of small businesses like Kirana Shops, Small Manufacturing units, Agri and Allied trading etc., The non-traditional methods of income assessments not only have given good results but are also well appreciated by customers. All MSME loans are backed with land and building as collateral. Total number of branches are 25, and the AUM is ''363.9 Million.
Gold Loan
A new loan product called "Gold Loan" was launched in Odisha and West Bengal on March 10, 2021. This was
introduced with a key objective to help customers on-going business capital for income generation activity. Thereby, so far Asirvad has launched 461 branches of Gold Loan in Andhra Pradesh, Assam, Bihar, Gujarat, Haryana, Karnataka, Madhya Pradesh, Maharashtra, Odisha, Punjab, Rajasthan, Telangana, Uttar Pradesh & West Bengal.
The Company offers progressively higher loan amounts at higher price points through different Gold loan schemes with different interest rates. Asirvad is intensely looking to expand business. As a Company, AMFL believes in the power of technology and over the years have adopted various innovations such as Loan Management System (LMS) and usage of DigiPay and other digital platforms for payment, with many more initiatives in the pipeline. Automation has enriched the lives of both employees and customers without compromising on the quality of work done. AMFL is constantly looking for ways to improve knowledge and skills of employees and, based on this consideration, the Company has introduced the Learning Management System to create awareness, knowledge, and vigilance.
Manappuram Home Finance Limited (MAHOFIN)
MANAPPURAM HOME FINANCE LIMITED (MAHOFIN), a wholly owned subsidiary of Manappuram Finance Limited, started operations in January 2015 and focuses on affordable housing loans and aims to cater to the needs of mid-income to the low-income group. The housing finance business registered 29.64 per cent growth in its AUM in Fiscal 2023, posting a CAGR of 16 per cent in the past five years. It reached an AUM of ''10957.70 million as on March 31, 2023. Currently, there are 66 branches across 12 states. The southern region contributes the largest share of the loan portfolio. Considering the increasing urbanisation and the rise of tier II and tier III cities, the Company is also planning to cover nearby states and locations.
Positioned as an affordable home finance company, target customers are the self-employed from the unorganised sector and others lacking access to credit facilities from mainstream financial institutions. The Company offers two products - Home Loans and Loans Against Property. The average ticket size of a Home Loan is about ''0.67 million, and for the LAP segment, it stands at about ''0.60 million.
As a part of digitisation, the Company has introduced the "Mobile-Customer Acquisition System" (mCAS) for faster processing of loan applications and "Mobile Collect" (M-Collect) for speeding up the collection process.
The Company is looking to diversify funding sources and in
October 2019 it succeeded in raising about ''943.19 million by a public issue of NCDs. The portfolio faced minimal
delinquencies with GNPA held at 1.87%. The Company has a capital adequacy ratio around 33.13% (well above the regulatory requirement).
Manappuram Insurance Brokers Limited (MAIBRO)
Manappuram Insurance Brokers Limited (MAIBRO) a
Licensed Insurance Broker with (Insurance Regulatory and Development Authority of India) began its journey in the year 2006. Being a direct insurance broker licensed by Insurance Regulatory and Development Authority of India (IRDAI) for doing life and non-life business the growth of the company was steady. Company during the year was recognised among the 10 best insurance broking startup 2023, for its innovative, technologically driven digital insurance platform "MaSurakshaâ. Masuraksha is an innovative e-commerce portaL operated by Manappuram Insurance Brokers.
As an IRDAI-Licensed direct insurance broker, the company primarily deals with Life and General Insurance products in the retail segment. Two-wheeLer, automobile, health, term, investment pLans, shopkeeper poLicy, homeowners policy, personal accident insurance, critical sickness policy, trip and hospitaL cash poLicy were among the product segments provided. The company''s success mantra has been its intelligent after-sales support, which guides consumers through the insurance process. In the portal, there is access granted to agents (POSP), who can then sell different policies to clients via a separate POSP Login module. The customer service team is available 24 hours a day, seven days a week. The smooth customer purchase journey, prompt claim support, prompt renewal, and other service support had been significantly aiding the company''s growth.
Company due to its extensive knowledge of changing consumer requirements and the numerous insurance options available in the market offered products as per the customers requirement. Customers can choose the best product after comparing it to other options. We supplied contact centres or chat support whenever customers needed it. Manappuram Insurance Brokers was supported by a team of seasoned people who are continuously on the lookout for ways to provide timely service delivery. A full-service claims support team was also available to help with claim settlement.
Furthermore, customers had access to help 24 hours a day, seven days a week where they will receive a response within a few hours. Since the portal was in its early stages, the company was constantly working towards introducing new features and services. To generate the required innovation, cutting edge technologies like AI and block chain technology were combined. Because cyber security is critical, Manappuram had already adopted precautions similar to those of an insurance firm.
The Company ended the fiscal year 2022-23 at ''1625.8 million of total business of which new business was of
''1412.1 million in the fiscal. Company during the year served 1.062 million customers. MAIBRO achieved a net
profit of '' 31.5 million in FY 2022-23 vs '' 33.31 million in FY 2021-22 and is constantly in a thrive to achieve new hights by focusing to digitalise the solicitation process.
Company had over 8500 Point of sales Agents who were working PAN India and helped in penetration of Insurance Products among all sectors of people. Company supported families during the difficult hours and has been able to
successfully settle 95% of claims reported.
Manappuram Comptech and Consultants Limited
Manappuram Comptech and Consultants Limited (MACOM), another subsidiary of your company, concluded the year with total revenue of ''407.30 million. The Company''s revenue portfolio has grown by ''103.09 million. The company provides audit and taxation services, as well as core IT services, to meet a variety of market needs, such as application development for digital personal loans, loan management solutions, microfinance solutions etc. During the year, MACOM has successfully completed cloud migration of the parent company and has provided oracle-based cloud platforms to other fellow-subsidiaries. The company built a name for itself during the year by producing totally android-based apps for EMI collection, customer and agent collection, and so on. MACOM''s net profit was ''34.27 million in FY 2022-23, compared to INR 18.25 million in FY 2021-22, and the company is prepared to take off from here. MACOM has successfully achieved ISO 27001:2013 Information Security Management Systems Certification.
Your Company holds 97.60% equity shares of
M/s. Asirvad Microfinance Limited, 100% equity shares of M/s. Manappuram Home Finance Limited, 100% equity
shares of M/s. Manappuram Insurance Brokers Limited and 99.81% of Manappuram Comptech and Consultants Limited as on March 31, 2023.
Gross Income of the Company as on March 31, 2023 is ''17,592.76 Million as compared to ''13,996.99 Million (''14118.89 reinstated Gross Income) for the year ended March 31, 2022 and Profit After Tax is ''2,181.30 Million for the year ended March 31, 2023 as compared to ''134.32 Million (''152.56 reinstated PAT) for the year ended March 31, 2022.
Manappuram Home Finance Limited
Gross Income of the Company as on March 31, 2023 is ''1657.41 million as compared to ''1226.07 million for the year ended March 31, 2022, and Profit After Tax is ''194.69 million for the year ended March 31, 2023 as compared to ''72.11 million for the year ended March 31, 2022. AUM of the Company as on March 31, 2023 is ''10957.70 million.
Manappuram Insurance Brokers Limited
MAIBRO has entered a tie-up with the best insurance companies in the market, which helped the Company in providing best quotes and services to its customers. MAIBRO offered insurance products of 35 insurance companies through new portal and all companies offline.
Gross income of the Company for the year ended March 31, 2023 stood at ''121.9 million as compared to ''113.26 million for the year ended March 31, 2022 and
Profit After Tax for the year ended March 31, 2023 is ''31.5 million as compared to ''33.31 million for the year ended March 31, 2022.
Manappuram Comptech and Consultants Limited
Manappuram Comptech and Consultants Limited''s gross income for the financial year ended March 31, 2023 is ''409.76 million, compared to ''307.07 million for the year ended March 31, 2022, and profit after tax for the year ended March 31, 2022, is ''26.62 million, compared to profit of ''13.27 million for the year ended March 31, 2023.
Salient features of financial statements of the Company''s subsidiaries in Form AOC-1 and highlights of the
performance of subsidiaries are annexed with the Directors'' Report as Annexure - I
The amounts proposed to be transferred to the General Reserve and Statutory Reserve etc. are mentioned in the Financial Highlights under the heading ''Appropriations.''
During the FY 2022-23, the Company has utilized ''Nil
with regards to adoption of Ind AS 116 "Leasesâ from Retained earnings.
The total standalone reserves and surplus as on March 31, 2023 stands at ''88,106.29 million
4. Debenture Redemption Reserve
Pursuant to notification issued by Ministry of Corporate
Affairs on August 16, 2019 in exercise of the powers conferred by sub-sections (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government amended the Companies (Share Capital and Debentures) Rules, 2014.
In the principal rules, in rule 18, for sub-rule (7), the limits with respect to adequacy of Debenture Redemption Reserve and investment or deposits for listed companies (other than All India Financial Institutions and Banking Companies as specified in sub-clause (i)), Debenture Redemption Reserve is not required to maintain in case of public issue of debentures as well as privately placed debentures for NBFCs registered with Reserve Bank of India under section 45-IA of the RBI Act, 1934.
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, 2023 availed various credit facilities from 27 banks, 1 NBFC (Bajaj Finance), NABARD and International Finance Corporation (IFC).
Management has been making continuous efforts to broaden the resource base of the Company 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.
6. Management Discussion And Analysis
Management Discussion and Analysis Report is attached
and forms an integral part of the Annual Report. The report discusses in detail the overall industry situation, economic developments, sector-wise performance, outlook, and state of the company''s affairs.
7. Report on Corporate Governance
The 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 to adhere to good Corporate Governance standards that lay strong emphasis on integrity, transparency, and overall accountability. The report on corporate governance forms an integral part of the Annual report.
8. Business Responsibility and Sustainability Report
Pursuant to Regulation 34(2)(f) of the Listing Regulations,
the Business Responsibility and Sustainability Report is annexed and forms part of the Annual Report.
9. Director''s Responsibility Statement Pursuant to Section 134 of the Act
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 is no material departures;
ii. That the accounting policies as mentioned in note no.1 to no.7 to the Standalone financial statements and note no.1 to no.8 to the Consolidated financial statements have been selected and applied consistently and judgments and estimates have been
made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2023 and of the profit of the Company
for the year ended on that date;
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 2022-23.
During the financial year 2022 - 23, 8 (Eight) meetings of
the Board of Directors were held. The details of the said meetings and other Committee meetings are given in the Corporate Governance Report.
11. Declaration from Independent Directors on Annual Basis
Your Company has received necessary declarations from all the Independent Directors of the Company confirming that they meet criteria as mentioned in Section 149 of the Act and SEBI LODR. Your Company has also received undertaking and declaration from each director on fit and proper criteria in terms of the provisions of Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 ("RBI NDSI Master Directions, 2016â).
12. Proficiency of Independent Directors Appointed During the Year
I n the opinion of the Board of Directors of the Company,
Independent Directors on the Board of Company hold the highest standards of integrity and are highly qualified, recognized, and respected individuals in their respective
fields. It''s an optimum mix of expertise (including financial expertise), leadership and professionalism. All the Independent Directors of the Company have registered themselves with the Indian Institute of Corporate Affairs (''MCA'') towards the inclusion of their names in the data bank maintained with it and they meet the requirements of proficiency self-assessment test.
13. Policy on Board Composition & Compensation
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 Committee of the Board in compliance with the provisions of Section 178 of the Act. The Policy on Board composition and compensation is annexed to this report as Annexure - II and also hosted on the website of the Company at https://www.manappuram.com/public/uploads/ editor-images/files/B0ARD%20Composition%20May%20 2023%20%281%29.pdf
14. Particulars of Loans, Guarantees or Investments
The loan made, guarantee given, or security provided in the ordinary course of business by a NBFC registered with the Reserve Bank of India are exempt from the applicability of the provisions of Section 186 of the Act. As such, the particulars of loans and guarantees have not been disclosed in this Report. For details of investments of the Company, refer to Note no.10,11,20,and 42 of the Standalone Financial Statements.
15. Particulars of Contracts or Arrangement with Related Parties
The contracts/ arrangements/ transactions entered by the Company during the financial year 2022 - 23 with related parties under Section 188 of the Act were in the ordinary course of business and on arms'' length basis. During the year, the Company had not entered any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the provisions of Regulation 23 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Company''s policy on related party transactions. Therefore, particulars of contracts/ arrangements with related parties under Section 188 in Form AOC-2 are not annexed with this report. Your directors draw the attention of the Members to Note. 42 of the Standalone Financial Statement which sets out related party disclosures.
The Policy on determination of related parties and dealing with related party transactions as approved by the Board of Directors of the Company is annexed to this report as Annexure - III and also made available on the Company''s website at https://www.manappuram. com/public/uploads/editor-images/files/MAFL-RPT%20 Policy-Revised.pdf
Four interim dividends at the rate of 0.75 paise per equity share were declared during the financial year 2022-23 on May 18, 2022, August 04, 2022, November 12, 2022, and February 03, 2023.
An aggregate of ''3.00 (Rupees Three Only) per equity share, amounting to 150% of the paid-up value of the shares was paid by the Company during the financial year 2022-23.
The Dividend Distribution Policy as per the SEBI LODR is made available on the Company''s website at https:// www.manappuram.com/public/uploads/editor-images/ files/Dividend%20Distribution%20policy%20 %28formated%29.pdf
17. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The information in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 134 (3) (m) of the Companies Act, 2013 read with Rule (8) (3) of the Companies (Accounts) Rules, 2014 is annexed to this report as Annexure - IV.
The Company has a Board of Directors approved Risk Management Policy wherein material risks faced by the Company including Operational Risk, Regulatory Risk, Price, Interest Rate Risk and Credit Risk are identified and assessed. The Risk Management Committee periodically reviews the various risks faced by the Company and advises the Board on risk mitigation plans. Elements of risk identified by the Board are mentioned in the MDA part of the annual report.
The Board has appointed a Chief Risk Officer as the asset size of the Company is above ''50 billion with a tenure of One year subject to re-appointment by the Board every financial year.
Risk Management policy may be accessed on the Company''s website at the link: https://www.manappuram. com/Dublic/uoloads/editor-imaQes/files/No.2-ERM%20
19. Corporate Social Responsibility Policy
Corporate Social Responsibility Policy (CSR Policy)
indicating the activities to be undertaken by the Company have been formulated by the Board of Directors 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: https:// www.manappuram.com/public/uploads/editor-images/ files/CSR%20policy%282%29.pdf
The Corporate Social Responsibility initiatives taken by the Company during the financial year 2022-23, are detailed in
the Report on corporate social responsibility activities and the same is annexed to this report as Annexure - V.
The Board of Directors decided to appoint a third party to assist the Board in carrying out the formal evaluation of the Board pursuant to which NASDAQ Corporate solutions was appointed to assist in the evaluation process of its own performance, board committees and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. As part of the evaluation process questionnaire on various aspects governing the company was circulated to directors for their individual opinion through electronic mode, thereafter individual telephonic interviews with all directors were carried out as part of the evaluation process and it was ascertained that the company has maintained the highest standards of corporate governance and integrity in all its practices. The Nomination, Compensation and Corporate Governance Committee and the Board of Directors of the Company further considered the observations and have taken necessary measures to implement the suggestions.
21. Details of Remuneration/ Commission Received by Managing Director From Subsidiaries
Mr. V P Nandakumar, Managing Director & Chief Executive Officer, has not received any remuneration or commission from any of the subsidiaries of the Company during the financial year-2022-23.
22. Names of Companies which Have Become or Ceased to be its Subsidiaries, Joint Ventures or Associate Companies During the Year
No company became or ceased to be subsidiary or joint venture or associate company of M/s. Manappuram Finance Limited during the Financial Year 2022-23.
In compliance with the Reserve Bank of India''s Guidelines on appointment of Statutory Auditor (s) by Non-Banking Financial Company (âNBFCâ) vide Circular RBI/ 2021-22/
25 Ref. No. DoS. CD.ARG/ SEC.01/ 08.91.001/ 2021-22 dated April 27, 2021 (âRBI Guidelinesâ) and pursuant to
Section 139 of the Companies Act, 2013, the Members of the Company appointed M/s. M S K A & Associates (ICAI
Firm Registration No:105047W) and M/s. S K Patodia & Associates (ICAI Firm Registration No:112723W) as the Joint Statutory Auditors of the Company at the 29th Annual General Meeting held on September 10, 2021 to hold office from conclusion of the 29th Annual General Meeting till the conclusion of 32nd Annual General Meeting of the Company to conduct the audit of accounts of the Company on such remuneration plus out of pocket expenses, if any, as may be mutually agreed upon between the Board of Directors of the Company and the said Joint Statutory
Auditors. The Joint Statutory Auditors holds a valid peer
review certificate as prescribed under the SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015. The Auditors'' Report to the Members for the year under review is unmodified, i.e., it does not contain any qualification, reservation or adverse remark or disclaimer, and the notes annexed to the Standalone and Consolidated financial statements referred to in the Independent Auditors'' Reports are self-explanatory and do not call for any further comments. Further, there was no fraud reported by the Statutory Auditors to the Audit Committee or Board of Directors of the Company under Section 143 the Act.
The Board appointed M/s. KSR & Co. Practicing Company
Secretaries LLP, to conduct a Secretarial Audit for the financial year 2022-23. Secretarial audit report for the year ended on March 31, 2023 as provided by M/s. KSR & Co. Practicing Company Secretaries LLP, Indus Chambers, Ground Floor, No.101, Government Arts College Road, Coimbatore - 641018, is annexed to this Report as Annexure - VI. The report does not contain any qualifications, reservation, adverse remarks, or disclaimer. Further, no fraud has been reported by the Secretarial auditors under Section 143 (14) of Companies Act 2013.
As per Regulation 24A (1) of the SEBI (Listing Obligation
and Disclosure Requirements) 2015, the company does not have any unlisted material subsidiaries.
In terms of the Master Direction of the Information Technology Framework for the NBFC Sector, NBFCs are required to have an information system audit at least once a year. In compliance with the RBI Master Direction on the IT framework for the NBFC sector, we are doing the Information Systems Audit at least once every year. For FY 2021 - 22, a system audit was conducted by Deloitte Touche Tohmatsu India LLP. The areas audited were, inter alia, user access management, patch management, business continuity and disaster recovery, data protection, and the information security management system framework. The audit revealed no major observations.
MAFIL has engaged PricewaterhouseCoopers (PwC) to conduct an IS audit for FY 2022-23. The scope of the audit covers the effectiveness of the policies, IT systems, adequacy of internal controls, the effectiveness of BCP and DR, compliance with legal and statutory requirements, and the security testing of critical applications. IS Audit for FY 2022-23 is in progress.
24. Directors and Key Managerial Personnel
The Board of Directors of the Company is duly constituted,
and none of the directors of the Company is disqualified under the provisions of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations
and Disclosure Requirements) Regulations 2015
Mr. Blangat Narayanan Raveendra Babu (DIN: 00043622), Non-Executive Non-Independent Director, Ms. Sutapa Banerjee (DIN: 02844650), Independent Director, & Mr. Gautam Ravi Narayan (DIN: 02971674), Non-Executive Non-Independent Director had resigned from the directorship of the Company with effect from May 18, 2022, July 04, 2022 and April 04, 2023 respectively. The Board of Directors of the Company had appreciated the guidance and contribution on various matters made by Mr. Blangat Narayanan Raveendra Babu, Ms. Sutapa Banerjee, and Mr. Gautam Ravi Narayan during their tenure as Directors of the Company.
The Board of Directors of the Company based on the recommendation of the Nomination, Compensation and Corporate Governance Committee at their meeting held on September 23, 2022, has appointed Ms. Pratima Ram (DIN: 03518633) as Woman Independent Director of the company subject to the approval of Members of the company for a period beginning from September 23, 2022 to April 01, 2024 in the casual vacancy caused due to the resignation of Ms. Sutapa Banerjee (DIN: 02844650). Thereafter, on 10th December 2022, the members of the company passed Special Resolution through Postal Ballot for appointment of Ms. Pratima Ram (DIN: 03518633) as Woman Independent Director of the company for a period beginning from September 23, 2022 to April 01, 2024.
The Board of Directors of the Company, based on the
recommendation of the Nomination, Compensation and Corporate Governance Committee at their meeting held
on September 23, 2022, has appointed Adv. Veliath Pappu Seemanthini (DIN: 07850522) as additional director (Non-Executive) of the Company, to be re-classified as an Independent Director of the Company under Section 161 of the Companies Act, 2013 ("the Actâ) read with applicable provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulationsâ), Articles of Association of the Company and subject to the approval of Members of the company. In the said meeting the Board further decided to appoint Dr. Sumitha Nandan (DIN: 03625120) as an Additional Director (Executive) of the Company with effect from January 01, 2023 and recommended to the Members for the appointment of Dr. Sumitha Nandan as Whole-time Director of the Company for a period of five years with effect from January 01, 2023. Thereafter, on February 03, 2023 the members of the company passed Special Resolutions through Postal Ballot for the appointment of Adv. Veliath Pappu Seemanthini as a Non-Executive Independent Director of the Company to hold office for a term of five consecutive years with effect from December 23, 2022 to December 22, 2027, not subject to retirement by rotation and Dr. Sumitha Nandan as a Whole-time Director of the Company to hold office for a term of five consecutive years with effect from January 01, 2023, liable to retirement by rotation.
Mr. Sekaripuram Ramanath BaLasubramanian (DIN: 03200547), Non-Executive Non-Independent Director of the Company, will retire by rotation at the ensuing annual general meeting (the ''AGM'') and, being eligible, offers himself for re-appointment. In this regard, the Board of Directors of the Company, based on the recommendation of Nomination, Compensation and Corporate Governance Committee, recommended to the Members for re-appointment of Mr. S.R BaLasubramanian (DIN: 03200547), as Non-Independent Non-Executive Director of the Company by way of ordinary resolution. Hence, the proposal wiLL form part of the notice of the 31st AGM, and the information about the Director seeking his re-appointment as per Para 1.2.5 of the Secretarial Standards on General Meetings (i.e., SS - 2) and Regulation 36 (3) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) ReguLations 2015 has been given in the notice convening the 31st AGM.
There was no change in Key Managerial Persons of the Company during the financiaL 2022-2023 except for the re-appointment of Mr. V P Nandakumar (DIN: 00044512) in the annuaL generaL meeting of the company heLd on August 25, 2022 as Managing Director and Chief Executive Officer of the Company with effect from July 28, 2022 up to March 31, 2024, and the appointment of Dr. Sumitha Nandan (DIN: 03625120) by way of postal ballot held on February 03, 2023 as a Whole-time Director of the Company to hold office for a term of five consecutive years with effect from January 01, 2023.
The issued, subscribed, and paid-up Equity Share Capital
as on March 31, 2023 was ''1,692.79 million, consisting of 846,394,729 Equity Shares of the face value of ''2 each, fully paid-up. There was no change in the Share Capital during the year under review. As on March 31, 2023, none of the Directors of the Company holds instruments convertible into equity shares of the Company.
Change in Nature of Business if any
There was no change in the nature of business during the financial year 2022-23.
As you are aware, your Company had stopped accepting deposits from the public since the financial year 2009-10 onwards. Your Company has converted itself into a non-deposit taking Category ''B'' NBFC. During the financial
year 2022-23 the Company has not accepted deposits as per Chapter V of the Act.
The Company has no unclaimed deposit as at March 31, 2023.
27. Compliance with NBFC Regulations
Your Company has generally complied with all the regulatory provisions of the Reserve Bank of India applicable to
Non-Banking Financial Company - Systemically Important Non-Deposit taking Company. Further, constitution of
Statutory Committees is in compliance with the corporate governance provisions as specified in the master direction issued by the Reserve Bank of India.
Your Company''s total Capital Adequacy Ratio (CAR), as on March 31, 2023, stood at 31.70% as compared to 31.33% as on March 31, 2022, of the aggregate risk weighted assets on balance sheet and risk adjusted value of the off-balance sheet items, which is well above the regulatory requirement of minimum 15%.
The Tier 1 ratio as on March 31, 2023, improved to 31.70% as against 31.01% as on March 31, 2022. Your Company''s overall gearing (Debt/ Tangible Net-worth) as on March 31, 2023, improved to 2.14 as against 2.26 as on March 31,2022.
The Tier 2 ratio as on March 31, 2023, was Nil as against 0.32% as on March 31, 2022.
28. Compliance with Secretarial Standards of ICSI
Company has complied with Secretarial Standards-1 (SS-1) on Board meetings and Secretarial Standards-2 (SS-2) on General meetings issued by the Institute of Company Secretaries of India.
29. Qualification, Adverse Remarks Reservations by Auditors if Any
There are no Qualification, Adverse Remarks, Reservations by statutory Auditors in the Independent Auditors
Report and secretarial auditors in the Independent Auditors Report.
30. Employee Stock Option Scheme (ESOS)
To retain the best available talent, ensure long term commitment to the Company, and encourage individual ownership, the Company has instituted employee stock options plans from time to time.
Presently, the Company has the Employee Stock Option Scheme 2016 (ESOS-2016).
The disclosures in terms of ''Guidance note on accounting for employee share-based payments'' issued by ICAI and diluted EPS in accordance with Indian Accounting Standard (Ind AS) 33 - Earnings Per Share are provided in Note 35 of Standalone Financial Statements in this Annual Report.
The details related to stock option schemes as required under the SEBI (Share Based Employee Benefits) Regulations read with the Securities and Exchange Board of India Circular No. CIR/CFD/POLICY CELL/2/2015 dated June 16, 2015 are provided in Note 36 of the Standalone Financial Statements. Further, the details are annexed to this report as Annexure - VII and also made available on the Company''s website at https://www.manappuram.com/ investors/annual-reports.html
A certificate from M/s. KSR & Co. Practicing Company Secretaries LLP, Practicing Company Secretaries, confirming that ESOS 2016 has been implemented in accordance with the SEBI (Share Based Employee Benefits) Regulations and the respective resolutions passed by the Company in General Meetings would be placed in the ensuing Annual General Meeting for inspection by the Members.
Composition of the Corporate Social Responsibility
Committee and Audit Committee are detailed in the Corporate Governance Report.
32. Whistle Blower Policy and Vigil Mechanism
The Vigil Mechanism of the Company provides adequate safeguards against the victimization of any directors or employees or any other person who avail the mechanism and provides direct access through an e-mail, or dedicated telephone line or a letter to the Chairperson and a Member of the Audit Committee.
No person has been denied access to the Chairman and a Member of the audit committee. The company has ensured that its employees are aware of the content and procedure of the policy and fully protected. The Whistle Blower Policy and Vigil Mechanism may be accessed on the Company''s website at the link: https://www.manappuram.com/public/uploads/ editor-images/files/whistle%20blower%20policy%20 May%202023%20%282%29.pdf
Further, there were no complaints reported during the financial year 2022-23.
I n accordance with the provisions of Section 92(3) of the Act, Annual return in Form-MGT - 7 has been uploaded in
the website of the Company at https://www.manappuram. com/investors/annual-reports.html
34. Details of Adequacy of Internal Financial Controls and Internal Audit
The Company has put in place, well defined and adequate Internal Control System, and Internal Financial Control (IFC) mechanism commensurate with size, scale, and complexity of its operations to ensure control of entire business and assets. The internal audit policy has been upgraded as Risk Based Internal Audit Policy based on the RBI Circular - RBI/2020-21/88 (Ref. No. DoS. CO. PPG. / SEC.05/11.01.005/2020-21) dated February 03, 2021 and functioning of internal audit is also realigned as per the policy. The functioning of controls is regularly monitored to ensure their efficiency in mitigating risks. A comprehensive internal audit department functions in-house to continuously audit and report gaps if any, in
the diverse business verticals and statutory compliances applicable.
During the year, Internal Financial Controls were reviewed periodically by the management and Audit Committee. Key areas were subject to various statutory and internal audits to review the adequacy and strength of IFC followed by the Company. As per the assessment, Controls are strong and there are no major concerns. The internal financial controls are adequate and operate effectively to ensure orderly and efficient conduct of business operations.
Your Company has an independent internal audit function
which carries out regular internal audits to test the design, operations, adequacy, and effectiveness of its internal control processes and to suggest improvements to the management. The Board of Directors of your Company also appointed M/s. Deloitte, to provide co-sourced internal audit services to assist the Management of the Company in the appraisal of its internal control functions, recommend improvements in processes and procedures and surface significant observations and recommendations for process improvements. Their observations along with management response are periodically reviewed by the Audit Committee and the Board and necessary actions are taken.
35. Listing with Stock Exchanges
Your Company confirms that it has paid the Annual Listing Fees for the financial year 2022-23 to BSE Limited and National Stock Exchange of India Limited where the Company''s securities are listed.
36. Sexual Harassment of Women at Workplace
During the year under review, there were seven (7) complaints filed with the Internal Complaints Committee of the Company, pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the same were investigated and resolved. No complaints were pending for more than 90 days during FY 2022-23.
The Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
37. Consolidated Financial Statements
In accordance with the Companies Act, 2013, the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Indian Accounting Standard (Ind AS) 27 on Consolidated Financial
Statements, the audited consolidated financial statement is provided in the Annual Report.
38. Credit Rating The credit rating of the Non-Convertible Debentures, Short-term & Long-term Bank Facilities and Commercial Paper of the Company as on March 31, 2023, was as follows: |
|||||
Name of Rating Agency Securities/ Instruments/ Loans, Credit Facilities, and other Borrowings |
Ratings |
||||
BRICKWORK |
Non-Convertible debentures |
BWR AA (Stable) |
|||
CRISIL |
Bank Loan Facility - Long term |
CRISIL AA/ Stable |
|||
Bank Loan Facility - Short term |
CRISIL A1 |
||||
Non-Convertible Debenture |
CRISIL AA/Stable |
||||
Commercial Paper |
CRISIL A1 |
||||
CARE |
Bank Loan Facility - Long Term |
CARE AA Stable |
|||
Bank Loan Facility - Short Term |
CARE A1 |
||||
Non-Convertible Debentures |
CARE AA Stable |
||||
Commercial Paper |
CARE A1 |
||||
39. Details of Auctions Held During the Year 2022-23 Additional disclosures as required by RBI NDSI Master Directions, 2016: |
|||||
Year |
Number of Principal Amount Loan Accounts outstanding at the dates of auctions (A) (''in million) |
Interest Amount outstanding at the dates of auctions (B) (''in million) |
Total (A B) Value fetched (''in million) (''in million) |
||
March 31, 2022 |
8,13,792 36,151.34 |
8,655.91 |
44,807.25 |
41,865.87 |
|
March 31, 2023 |
1,98,782 7,721.21 |
1,886.58 |
9,607.79 |
9790.01 |
|
Note: No sister concerns participated in the auctions held during the financial year ended on March 31,2022 and March 31,2023. |
40. Particulars of Employees and Related Disclosure
The particulars of employees and related disclosures are annexed herewith as Annexure - VIII as per Section 197 of the Act.
41. Certificate on Corporate Governance
Certificate provided by KSR & Co., Practicing Company Secretaries LLP, Indus Chambers, Ground Floor, No. 101, Govt. Arts College Road, Coimbatore - 641018 towards compliance of the provisions of Corporate Governance, forms an integral part of this Report and is given as Annexure - IX
42. Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the company''s operations in future.
There are no significant and material orders passed by the regulators or courts or tribunals during the year under review that would impact the going concern status of the Company and its future operations.
43. Material changes and commitments affecting the financial position of the company which have occurred between the end of the financial year to which the financial statement relates and the date of the report.
There were no material changes and commitments, affecting the financial position of the Company which occurred between the end of the financial year of the Company and the date of the Directors'' report.
44. Maintenance of Cost Records
The provision of Section 148 of the Act relating to maintenance of cost records and cost audits is not applicable to the Company.
Your directors express 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, Debenture Trustees, RTA''s, Depositories, Central and State Governments and its statutory bodies for the support, guidance, and co-operation. Your directors wish to thank the Customers, Investors, Shareholders, Debenture holders, Bankers, Auditors, Scrutinizer and other financial institutions and other stakeholders for the wholehearted support and confidence reposed on the Company.
For and on behalf of the Board of Directors
Sd/-
Place: Valapad Shailesh. J. Mehta
Date: May 12, 2023 DIN: 01633893
Mar 31, 2022
The Board of Directors of Manappuram Finance Limited have pleasure in presenting before you, the 30th Annual Report of the Company together with the Audited Consolidated and Standalone Statements of Accounts for the financial year ended 31st March, 2022.
1. FINANCIAL SUMMARY/ HIGHLIGHTS AND STATE OF AFFAIRS |
'' in million |
|||
Description |
Standalone |
Consolidated |
||
2021-22 |
2020-21 |
2021-22 |
2020-21 |
|
Gross Income |
45,869.97 |
51,935.15 |
61,263.14 |
63,746.24 |
Total Expenditure |
28,372.18 |
29,239.63 |
43,427.91 |
40,585.84 |
Profit Before Tax |
17,497.79 |
22,695.52 |
17,835.23 |
23,160.40 |
Provision for Taxes/ Deferred tax |
4,452.42 |
5,716.33 |
4,548.18 |
5,910.83 |
PAT before comprehensive income |
13,045.37 |
16,979.19 |
13,287.05 |
17,249.57 |
Other Comprehensive Income |
(113.21) |
(146.03) |
(81.53) |
(156.78) |
Minority interest |
3.36 |
6.56 |
||
PAT including comprehensive income |
12,932.16 |
16,833.16 |
13,202.18 |
17,086.23 |
Amount available for appropriations (Retained Earnings-Opening balance) |
35,134.99 |
22,615.19 |
38,135.58 |
25,516.18 |
Appropriations: |
||||
Profit for the year |
13,045.37 |
16979.19 |
13,295.09 |
17,249.54 |
Transfer to statutory Reserve |
(2,609.07) |
(3401.68) |
(2,650.36) |
(3,461.01) |
Interim Dividend on Equity share |
(2,539.14) |
(1,057.71) |
(2,539.14) |
(1,057.71) |
Tax on Dividend |
||||
Adjustment on account of IND AS (Impairment Reserve) |
(439.93) |
0 |
(439.93) |
(12.14) |
Loss on acquisition |
(82.32) |
(88.07) |
||
Utilised during the year |
(11.21) |
|||
Balance carried forward to next year (Closing Balance) |
42592.22 |
35134.99 |
45,718.91 |
38,135.58 |
The Company''s gross income for the financial year ended 31st March 2022 decreased to ''45,869.97 million as compared to ''51,935.15 million in the previous financial year thereby registering an decrease of 11.68%. The profit before tax of the Company decreased to ''17,497.79 million during the year as against ''22,695.52 million in the previous year. The net profit for the year decreased by 23.17% to ''12,932.16 million from ''16,833.16 million in the previous financial year. Asset Under Management (AUM) were at ''2,24,127.93 million as at 31st March 2022 as against ''2,05,304.25 million as at 31st March 2021.
The Company''s consolidated AUM grew by 11.15% to ''3,02,608.17 million during the year owing to rapid growth in the microfinance (17.00%), housing finance (26.87%) and vehicle finance (56.11%) AUMs. Gold loan AUMs grew 4.14 % during the year.
The Company also implemented multiple campaigns to increase awareness among the customers about the
benefits of digital transactions. Through its local marketing
initiatives, the Company covered individuals belonging to the masses segment and concentrated on getting close and personally relevant to understand the financial needs of the people in these sections. Consistent review and monitoring at field level was also done to ensure business propensity.
During the year, the Company undertook various employee engagement initiatives to motivate them and improve their efficiencies. The Company will continue to engage in such initiatives in the future to serve its customers better and thereby achieve higher growth.
2. DIVERSIFICATION OF BUSINESS
I n 2014 your Company decided to pursue diversification into other complementary businesses on the strength of large net worth, access to debt capital on competitive terms and access to customer relationships built over decades, through business mainstay of gold loans.
The objective of the diversification strategy is to reduce the dependence of the company on gold Loan AUM atone and to achieve a comfortable balance between the new Lines of business and gold Loans.
Our ambition is to achieve a 50-50 mix between the diversified business and goLd Loans in years to come. In this process we are endeavouring to address certain key business paradigms such as enhancing regulatory
comfort by migrating from a single product NBFC to a multi-product financial services provider and thereby cater needs of existing and new customers with new products and services in the financial space. Finally, it enables your Company to ptay a Leading rote in accelerating the National objective of financiaL incLusion by addressing the needs of the underprivileged sections of our population.
Accordingly, your Company is now focusing on affordable housing finance, vehicle and equipment finance which incLudes commerciaL vehicLe Loans, two-wheeLer Loans, tractor & car Loans, microfinance, SME finance, project and industriaL finance, corporate finance and insurance broking. Over the Last four to five years, the Company has made much progress in aLL these new businesses, having steadiLy scaLed up operations by Leveraging its existing customer base, branch network and the goodwiLL of the Manappuram Brand.
The key achievement thus far is that having begun LiteraLLy from scratch in FY 2015, the Company''s non-goLd new businesses now contribute 11.36% of the totaL assets under management. In the past year, Microfinance AUM has grown from ''59,846.30 miLLion in FY2021 to ''70,021.83 miLLionin FY2022. Your Company''s divisions vehicLe and equipment finance and corporate finance have ended the year with an AUM of ''16,431.60 miLLion and ''9.02 miLLion, respectively. Your Company''s housing subsidiary, Manappuram Home Finance Limited has ended the year with an AUM of ''8.45 biLLion whiLe the insurance broking subsidiary has contributed revenue of ''113.26 miLLion.
The other business verticaLs of our Company incLude Payments business, SME business and fee-based services incLuding forex and money transfer.
The vehicLe finance portfoLio is about '' 16,431.60 miLLion spread across 242 Locations in 23 states as of 31st March 2022. The preowned commerciaL vehicLes portfoLio is ''9,750 miLLion and new commerciaL vehicLes are of ''632 miLLion with 19,914 contracts. The two-wheeLer finance portfoLio is of ''2722 miLLion with 78853 contracts and other vehicLe Loans make up a portfoLio of around ''3,327 miLLion. The business is supported by robust pre-screening methodoLogies and credit assessment for a heaLthy portfoLio mix.
Market is buLLish towards commerciaL vehicLe as in the budget 2022 a Lot of emphasize is given on buiLding
of the infrastructure. Focus on warehouse and Logistic infrastructure to resuLt in higher demand for SmaLL CommerciaL VehicLe & Heavy CommerciaL VehicLe. The portfoLio exposure is to retaiL cLienteLe and is spread across industries thus ensuring appropriate de risking.
The tractor demand is mainLy seen as a derivative of the ruraL economy and farming. The agricuLture and farming sector contributes about 16% to India''s GDP. There are a Lot of opportunities and utiLities for tractors beyond the farm and ruraL sectors.
Two-wheeLer Loan market in India is projected to grow from an estimated $ 7.2 biLLion in 2020 to $ 12.3 biLLion by 2025.
MSMEs are an important sector for the Indian economy and have contributed immenseLy to the country''s socio-economic deveLopment. It not onLy generates empLoyment opportunities but aLso works hand-in-hand towards the deveLopment of the nation''s backward and ruraL areas. UnLike Large and medium enterprises that have access to institutionaL finance, smaLL enterprises depend on reguLar cash fLows for their survival
To tap the potentiaLs of growing MSMEs across the country, in 2019 we started MSME finance manned and managed by home grown goLd Loan empLoyees. SimuLtaneousLy we started Micro Home Loans and DigitaL PersonaL Loans for providing affordabLe Loans to the MSME customers. InitiaLLy, we entered in the southern markets of KeraLa, TamiL Nadu, Karnataka & Andhra Pradesh targeting the LocaL Kirana shops, smaLL restaurants, smaLL industriaL estabLishments etc, supported by Leads from our pooL of goLd Loan customers. As business grew, we have augmented our staff by recruiting freshers and provided them quaLitative training through our digitaL pLatform âMADUâ and on the job training.
During the pandemic, we extensiveLy focused on heLping our customers to overcome their financial DifficuLties but at the same time we managed the portfoLio without impairment supported by our trained and efficient coLLection team. Learning from the experience during the pandemic, we spread our presence to northern as weLL as eastern regions. JudiciousLy, we Limited the Loan amount up to 15 Lakhs and disbursed onLy secured Loans. We have a range of products as foLLows.
a. Loan to Business/ Service Providers.
b. Loan Against Property (Micro Mortgage)
c. Consumption Loans
d. Lease RentaL Discounting
e. Financing of home improvements.
We have adopted a hub and spoke model which eased the loan approval process and reduced TAT. The hubs are staffed by credit managers, sales managers, and operations managers. MSME business looks at the overall family income, indebtedness, and repayment obligations of the family as a whole, which helps us to estimate cashflows of the small borrowers accurately. To ensure credit quality, functions of credit and risk are made independent. Credit Monitoring team which conducts review of loans immediately after sanction, oversight by Credit and Risk on the credit processes, credit audit and audit by vigilance etc helped the division to reduce delinquencies and maintain good asset quality. Establishment of customer relation management team, exclusively to cater the MSME borrowers helped the division to bring down the cheque bounce ratio below 4% and net NPA level @ 1.1% as on 31st March 2022 despite the intermittent challenges posed by the pandemic.
The consolidated MSME AUM as on 31st March 2022 stands
at 871Cr. We are targeting growth at a CAGR of 25% in the next five years. Manappuram Finance''s MSME business has made a strong start and we look forward to keep our small enterprises flourish.
FEE-BASED SERVICES INCLUDING FOREX AND MONEYTRANSFER
Our Company''s fee-based services include money transfer, foreign exchange, and depository services. We facilitate fast, easy, and safe money transfer and the customer does not require a bank account for an amount of up to ''50,000 subject to compliance with applicable RBI norms. We assist in exchange of currency for purposes as permitted under the foreign exchange management act (FEMA). Our Company is an Authorized Dealer (AD) Category 2 license holder from RBI. In December 2017, Manappuram Finance Limited received RBI''s license to act as the Indian Agent for Western Union Money Transfer. We also act as sub-agents to the Indian representatives of other companies providing money transfer inward remittance.
Following are the highlights of our fee-based services:
Tie up with nine money transfer agencies for inward remittance.
About 60% of the inward remittance is contributed by Western Union.
As an Indian agent of Western Union, we can appoint sub agents to work on our behalf all over India.
Turnover of MTSS business is around ''13 crore per month.
We have more than 178 active sub-agents for Western Union business who contribute about ''1.65 crore of business per month.
I t was in March 2017 that Manappuram Finance Limited received RBI''s authorisation to issue prepaid payment instruments (payment wallet) and went on to launch the MAkash wallet. A mobile wallet is a way to carry cash in digital format that promotes the country''s cashless payments initiative. Customers can load money into the wallet using a credit card, debit card, net banking and UPI. Alternatively, they can walk into any of the MAFIL branches across India and load cash into the wallet without any extra cost.
With over one lakh customers, MAkash has registered steady growth. The wallet registers an average of 13,000 transactions per month valued at about ''9 Crore. Customers can avail the assistance of MAFIL Branches to create the wallet and conduct transactions. The following services are available with MAkash Online and Offline modes:
Phone Recharge & DTH: With money loaded in your MAkash wallet, it takes just seconds to make phone and DTH recharges.
Bill Payments: Pay all your bills across categories via MAkash in no time and avoid late payment charges
Transfer money to Bank: You can Load money from your Credit card/ Debit Card/ Net Banking and send it to any
bank account in India, any time.
STATE OF AFFAIRS OF OUR SUBSIDIARIES
ASIRVAD MICRO FINANCE LIMITED (AMFL)
Asirvad Microfinance Limited ("AMFL/Companyâ) was formed with the intention of providing financial access to the underserved through the formation of a commercially viable business. The Company has successfully started in Tamil Nadu and is incorporated under The Companies Act,1956 on 29th Aug 2007. Access to financial services is perhaps one of the most important requirements of any household across the world and in turn leads to access to other services and consequently better standard of living. AMFL has obtained NBFC License from Reserve Bank of India on 14th Dec, 2007. Started forming groups from 15th Dec, 2007, and first lending operations with effect from 21st Jan, 2008. The Company''s Vision is "Small loans, Big dreamsâ
In February 2015 Manappuram Finance Ltd took over the Company with the stake of 85%, the portfolio touched ''1000 crores AUM (Asset Under Management). After Manappuram
Finance take cover, AMFL was able to leverage its parent''s credit worthiness. It got better access to bank finance at significantly lower cost and expanded to new geographies like Madhya Pradesh, Chhatisgarh, Punjab, Haryana, Chandigarh, Jharkhand, Bihar, West Bengal, and Uttar Pradesh by end of 2015-16.
Performance of the Company
Asirvad was able to grow its business substantially in the first full year of operations after its takeover. The net profit for the year ended March 31, 2016, has gone up to ''23.96 Cr. Fiscal year 2016-17 was overall a good year for AMFL as it was able to grow its business substantially to end the year with an AUM of nearly 1,800 Cr on an 80% increase compared to the year ago.
MFI Loans
Currently, the Company has a presence in 23 states/ UTs and it is also ranked as the 2nd largest MFI in India. The Company''s AUM stands at ''6,653.00 Crores and it represents a significant accomplishment. The total centres are 2,57,031 which includes 1204 branches with 25,37,031 active members and 12,581 staffs. The single-point objective of the Company is to make a valuable contribution towards the lives of our customers, and we made it a point to stand strong with them even during these tough pandemic days by introducing new loan products. AMFL has launched gold loans in branches across the states of Assam, Bihar, Odisha and West Bengal. AMFL is determined to serve the customers keeping their best interests in mind. The Company has forayed into lending for MSME enterprise against the security of property having started operations in 23 branches across Andhra Pradesh, Telangana, Karnataka, and Tamil Nadu.
MSME Loans
MSME Business commenced in the month of July 2019. The loan products, process and people focus on enhancing the economic output of customers. It caters to the "Missing Middleâ segment largely comprising of small businesses like Kirana Shops, Small Manufacturing units, Agri and Allied trading etc., The non-traditional methods of income assessments not only have given good results but are also well appreciated by customers. All MSME loans are backed with land and building as collateral. Total branches are 23, no of customers 1240 and the AUM 47.9 crores.
Gold Loan
A new loan product called "Gold Loanâ was launched in Odisha and West Bengal on 10th March 2021. This was introduced with a key objective to help customers on-going business capital for income generation activity. Thereby, so far Asirvad has launched 305 branches of Gold Loan in Assam, Andhra Pradesh, Bihar, Hariyana, Madhya Pradesh, Odisha, Punjab, Rajasthan, Telangana, Uttar Pradesh & West Bengal with effect from 10th March 2021. The company offers progressively higher loan amounts at higher price points through different Gold loan schemes with different interest rates.
Asirvad is intensely looking to expand business. As a
Company, AMFL believes in the power of technology and over the years have adopted various innovations such as Loan Management System (LMS) and usage of DigiPay
and other digital platforms for payment, with many more initiatives in the pipeline. Automation has enriched the lives
of both employees and customers without compromising on the quality of work done. AMFL is constantly looking for ways to improve knowledge and skills of employees and, based on this consideration, the Company has introduced the Learning Management System to create awareness, knowledge, and vigilance. Also, to further improve the morale and confidence of women employees, the Company has launched a "Women''s Clubâ in March 2021 on the occasion of International Women''s Day. The club provides women with a platform within the organization where they can showcase their skills and talent for a healthy work environment.
MANAPPURAM HOME FINANCE LIMITED (MAHOFIN)
MAHOFIN, a wholly owned subsidiary of Manappuram Finance Limited, started operations in January 2015 and focuses on affordable housing loans and aims to cater to the needs of mid-income to the low-income group. The housing finance business registered 26.86 per cent growth in its AUM in Fiscal 2022, posting a CAGR of 17.67 per cent in the past five years. It reached an AUM of ''8452.69 millions as on 31st March, 2022. Currently, there are 73 branches across 12 states. The southern region contributes the largest share of the loan portfolio. Considering the increasing urbanisation and the rise of tier II and tier III cities, the Company is also planning to cover nearby states and locations.
Positioned as an affordable home finance company, target customers are the self-employed from the unorganised sector and others lacking access to credit facilities from mainstream financial institutions. The Company offers two products - Home Loans and Loans Against Property. The average ticket size of a Home Loan is about ''0.727 million, and for the LAP segment, it stands at about ''0.629 million.
As a part of digitisation, the Company has introduced the "Mobile-Customer Acquisition Systemâ (mCAS) for faster processing of loan applications and "Mobile Collectâ (M-Collect) for speeding up the collection process.
The Company is looking to diversify funding sources and in October 2019 it succeeded in raising about ''943.19 millions by a public issue of NCDs. The portfolio faced
minimal delinquencies with GNPA held at 5.94 per cent. The Company has a capital adequacy ratio around 38.66 per cent (well above the regulatory requirement).
MANAPPURAM INSURANCE BROKERS LIMITED (MAIBRO)
Manappuram Insurance Brokers Limited (MAIBRO) became
a wholly owned Subsidiary of Manappuram Finance Limited in January 2016, In 2006, MAIBRO became a licensed Broker with (Insurance Regulatory and Development Authority of India) since then the growth of the Company has been steady. It is a direct insurance broker licensed by Insurance Regulatory and Development Authority of India (IRDAI) for doing life and non-life business. Company during
the year marked its achievement by Launching its B2C platform www.masuraksha.com. The platform provides facility for customers to compare premium rates of various insurance companies and choose best policy at best rate. The policy taking steps are very simple "select productâ "fill detailsâ "make payment and get policyâ. As a first phase company Launched Two wheeler insurance, Four wheeler insurance and Health Insurance products in the platform. This will support customers to compare and take best policy with in few minutes. The portal works 24X7 and offers best coverage, rates and services. Company during the financial year 2021-22 had also focused on faster claim processing, providing best quote to its clients and in speedy resolution of customer query, request and complaints.
The Company ended the fiscal year 2021-22 at ''1752.5 million of total business of which new business was of ''1533.3 million in the fiscal. Company during the year served 2.47 million customers. MAIBRO achieved a net profit of ''33.31 million in FY 2021-22 vs ''29.03 million in FY 2020-21 and is constantly in a thrive to achieve new hights by focusing to digitalise the solicitation process.
The Company covered 0.039 millions families with a health cover, 0.032 millions customers with PA cover and 2.35 million customers with death cover.
Company today has over 8000 Point of sales Agents who are working PAN India and helps in penetration of Insurance Products among all sectors of people. Company supported families during the difficult hours and has been able to successfully settle 91% of claims reported.
MANAPPURAM COMPTECH AND CONSULTANTS LTD. (MACOM)
Manappuram Comptech and Consultants Limited (MACOM), another subsidiary of your company, concluded the year with total revenue of INR 304.21 million. The Company''s revenue portfolio has grown by INR 79.40 million. The company provides audit and taxation services, as well as core IT services, to meet a variety of market needs, such as application development for digital personal loans, loan management solutions, microfinance solutions etc. During the year, MACOM has successfully completed cloud migration of the parent company has provided oracle based cloud platforms to other fellow-subsidiaries. The company built a name for itself during the year by producing totally android-based apps for EMI collection, customer and agent collection, and so on. MACOM''s net profit was INR 18.25 million in FY 2021-22, compared to INR 42.71 million in FY 2020-21, and the company is prepared to take off from here. MACOM has successfully achieved ISO 27001:2013 Information Security Management Systems Certification.
3. SUBSIDIARIES PERFORMANCE
Your Company holds 97.51% equity shares of Asirvad Microfinance Limited, 100% equity shares of Manappuram
Home Finance Limited, 100 % equity shares of Manappuram Insurance Brokers Limited and 99.81% of Manappuram
Comptech and Consultants Limited as on 31st March, 2022.
Asirvad Microfinance Limited
Gross Income of the Company as on 31st March, 2022 is ''139,96.997 million as compared to ''107,71.836 million for the year ended 31st March, 2021 and Profit After Tax is ''134.32 million for the year ended 31st March, 2022 as compared to ''168.81 million for the year ended 31st March, 2021.
Manappuram Home Finance Limited
Gross Income of the Company as on 31st March, 2022 is ''1226.07 millions as compared to ''971.31 millions for the year ended 31 March, 2021, and Profit After Tax is ''72.11 millions for the year ended 31st March, 2022 as compared to ''102.90 millions for the year ended 31st March, 2021. AUM of the Company as on 31 '' March, 2022 is ''8452.69 millions.
Manappuram Insurance Brokers Limited
MAIBRO has entered tie up with the best insurance companies in the market which helped the Company in providing best quotes and services to its customers. MAIBRO offered insurance products of 37 insurance companies (22 general insurance companies and 15 life insurance companies) registered with IRDAI and ensured best claim settlement ratio.
Gross income of the Company for the year ended 31st March, 2022 stood at ''113.26 million as compared to ''99.00 million for the year ended 31st March, 2021 and Profit After Tax for the year ended 31st March, 2022 is ''33.31million as compared to ''29.03 million for the year ended 31 March, 2021.
Manappuram Comptech and Consultants Limited
Manappuram Comptech and Consultants Limited''s gross income for the year ended March 31, 2022 is INR 307.07 million, compared to INR 227.28 million for the year ended March 31, 2021, and profit after tax for the year ended March 31, 2022 is INR 13.27 million, compared to profit of INR 31.46 million for the year ended March 31, 2021.
Salient features of financial statements of the Company''s subsidiaries in Form AOC-1 and highlights of the
performance of subsidiaries are annexed herewith as Annexure - I
During the FY 2021-22, the Company has utilized ''Nil
with regards to adoption of Ind AS 116 "Leasesâ from Retained earnings.
The total standalone reserves and surplus as on 31st March, 2022 stands at ''77,735.99 million
5. DEBENTURE REDEMPTION RESERVE
Pursuant to notification issued by Ministry of Corporate
Affairs on 16th August, 2019 in exercise of the powers conferred by sub-sections (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government amended the Companies (Share Capital and Debentures) Rules, 2014.
In the principal rules, in rule 18, for sub-rule (7), the limits with respect to adequacy of Debenture Redemption Reserve and investment or deposits for listed companies (other than ALL India Financial Institutions and Banking Companies as specified in sub-clause (i)), Debenture Redemption Reserve is not required to maintain in case of public issue of debentures as well as privately placed debentures for NBFCs registered with Reserve Bank of India under section 45-IA of the RBI Act, 1934.
The Company 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 lines from the banks and financial institutions. Your Company as at 31 March, 2022 availed various credit facilities from 25 banks, 1 NBFC (Bajaj Finance), NABARD, SBI Life Insurance and International Finance Corporation (IFC).
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.
7. MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis Report is attached
and forms an integral part of the Annual Report. The report discusses in detail, the overall industry situation, economic developments, sector wise performance, outlook and state of company''s affairs.
8. REPORT ON CORPORATE GOVERNANCE
The 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 adhere to good Corporate Governance standards that lays strong emphasis on integrity, transparency, and
overall accountability. The report on corporate governance forms integral part of this annual report.
9. BUSINESS RESPONSIBILITY REPORT
Business Responsibility Report in line with the National Voluntary Guidelines (NVG) on Social, Environmental
and Economic Responsibilities of Business, released by the Ministry of Corporate Affairs, Government of India and as stipulated under Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (''SEBI LODR'') forms integral part of this Annual Report and the same has been hosted on the website of the Company https:// www.manappuram.com/investors/annual-reports.html
Business Responsibility Report provides information on
key initiatives undertaken by the Company, driven by the triple bottom line (people, planet and Profit) aspects and
is aligned with the nine principles of NVG. Your Company, together with its subsidiaries viz. Manappuram Home Finance Limited, Asirvad Microfinance Limited, Manappuram Insurance Brokers Limited and Manappuram Comptech and Consultants Limited, serves millions of customers in the financial services space. Your Company has moved towards enhancing the Business Responsibility framework to align them with the Business Responsibility Reporting guidelines/standards as per SEBI.
Your Company''s initiatives of Sustainability, Corporate Social Responsibility (CSR) and Business Responsibility
is driven from the top. Board-level CSR Committee is entrusted with formulating, revising, and updating our CSR Policy which governs the implementation of all our CSR initiatives in compliance with Section 135 of Companies Act, 2013. Various policies including CSR Policy and Business responsibility policy guide our stringent adherence to compliance and governance. The business responsibility performance of the Company is assessed annually by the Board of Directors. Your Company believes in conducting its operations in a fair and transparent manner. Within the organization, your Company works towards integrating community development, responsible governance, stakeholder inclusiveness and environmental responsibility into business practices and operations.
Your Company seeks to differentiate itself by building a
new age NBFC to serve the financial needs of all sections of society in India, especially the less privileged/ under privileged sections. This will be achieved by providing a basket of diversified products and services, backed by state-of-the-art technology, and driven through a culture that values customer service.
10. DIRECTOR''S RESPONSIBILITY STATEMENT PURSUANT TO SECTION 134 OF THE ACT
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 2021-22.
11. MEETINGS OF THE BOARD
During the financial year 2021-22, Board of Directors met
on (10) Ten occasions. For further details of these Board Meetings, please refer to the Corporate Governance Section of this Report.
12. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS
Your Company has received necessary declarations from all Independent Directors of the Company confirming that they meet criteria as mentioned in Section 149 of the Act and SEBI LODR. Your Company has also received undertaking and declaration from each director on fit and proper criteria in terms of the provisions of Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 ("RBI NDSI Master Directions, 2016â).
13. PROFICIENCY OF INDEPENDENT DIRECTORS APPOINTED DURING THE YEAR
I n the opinion of Board of Directors of the Company,
Independent Directors on the Board of Company hold highest standards of integrity and are highly qualified, recognized, and respected individuals in their respective fields. It''s an optimum mix of expertise (including financial expertise), leadership and professionalism. All the Independent Directors of the Company have registered themselves with the Indian Institute of Corporate Affairs
(''MCA'') towards the inclusion of their names in the data bank maintained with it and they meet the requirements of proficiency self-assessment test.
14. POLICY ON BOARD COMPOSITION & COMPENSATION
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 Committee of the Board in compliance with the provisions of Section 178 of the Act. The policy can be viewed at https:// www.manappuram.com/public/uploads/editor-images/ files/Board%20composition%202022clean.pdf and is also annexed to this report as Annexure II.
15. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are provided in Note No. 10, 20, 42 and 11 to the Standalone Financial Statement.
16. PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES
Contracts/ arrangements/ transactions entered by the Company during the FY 2021-22 with related parties under Section 188 of the Act were in ordinary course of business and on arm''s length basis. During the year, the Company had not entered any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the provisions of Regulation 23 of SEBI LODR and the Company''s policy on related party transactions. Therefore, particulars of contracts/ arrangements with related parties under Section 188 in Form AOC-2 is not annexed with this report.
Your Directors draw attention of the members to Note. 42 of the Standalone Financial Statement which sets out related party disclosures.
The Policy on related party transactions as approved by the Board which is annexed to this report as Annexure III may be accessed on the Company''s website at the https:// www.manappuram.com/public/uploads/editor-images/ files/MAFL-RPT%20Policy-Revised-clean.pdf
17. DIVIDEND
Four interim dividends at the rate of 0.75 paise per equity share were declared during the financial year 2021-22, on 26.05.2021, 10.08.2021, 13.11.2021 and 14.02.2022.
An aggregate of ''3.00 per equity share, amounting to 150 % of the paid-up value of the shares was paid by the Company during the financial year 2021-22.
The Dividend Distribution Policy as per the SEBI LODR is available at the following link: https://www.manappuram. com/public/uploads/editor-images/files/Dividend%20 distribution%20policy%2014-02-2022.pdf
18. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO:
These details are provided as Annexure IV to this report.
19. RISK MANAGEMENT POLICY
The Company has a Board of Directors approved Risk Management Policy wherein material risks faced by the Company including Operational Risk, Regulatory Risk,
Price, Interest Rate Risk and Credit Risk are identified and assessed. The Risk Management Committee periodically reviews the various risks faced by the Company and advises the Board on risk mitigation plans.
The Board has appointed a chief risk officer as the asset size of the Company is above ''50 billion with a tenure of One year subject to re-appointment by the Board every financial year.
Risk Management policy may be accessed on the Company''s website at the link: https://www.manappuram.com/ Dublic/uoloads/editor-images/files/Risk%20ADDetite%20
And%20Tolerance%20policy%20And%20Framework%20
20. CORPORATE SOCIAL RESPONSIBILITY POLICY
Corporate Social Responsibility Policy (CSR Policy)
indicating the activities to be undertaken by the Company have 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: https:// www.manappuram.com/public/uploads/editor-images/ files/CSR%20policy.pdf
The Corporate Social Responsibility initiatives taken by the Company during the FY 2021-22, is detailed in the Report
on CSR activities which is annexed herewith marked as Annexure V.
21. FORMAL ANNUAL EVALUATION
The Board of Directors decided to appoint a third party to assist the Board in carrying out the formal evaluation of
the Board pursuant to which NASDAQ Corporate solutions was appointed to assist in the evaluation process of its own performance, board committees and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by SEBI LODR. As part of evaluation process questionnaire on various aspects governing the company was circulated to directors for their individual opinion through electronic mode, thereafter individual telephonic interviews with all directors were carried out as part of the evaluation process and it was ascertained that the company has maintained the highest standards of the Corporate governance and integrity in all its practices. The NRC and Board further considered the observations and has taken necessary measures to implement the suggestions.
22. DETAILS OF REMUNERATION/ COMMISSION RECEIVED BY MANAGING DIRECTOR FROM SUBSIDIARIES
Mr. V P Nandakumar, Managing Director & Chief Executive Officer has not received any remuneration or commission from any of the subsidiaries of the Company for the FY 2021-22.
23. NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR
No company became or ceased to be subsidiary or joint venture or associate company of Manappuram Finance Limited during the Financial Year 2021-22
24. AUDIT AND AUDITORS REPORT
MSKA & Associates and S K Patodia & Associates have been appointed as the Statutory Auditors by shareholders at the 29th AGM, to hold office up to the conclusion of 32nd AGM.
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. There are no qualifications, reservations or adverse remarks made by the Statutory Auditors in their report for the financial year ended 31st March, 2022
There were no frauds reported by the statutory auditors to Audit Committee or Board under Section 143 of the Act.
Secretarial Audit
The Board appointed KSR & Co. Practicing Company
Secretaries LLP, to conduct Secretarial Audit for the financial year 2021-22.
Secretarial audit report for year ended on 31st March, 2022 as provided by 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- VI. The report does not contain any qualification, reservation, adverse remark or disclaimer.
No Fraud has been reported by the Secretarial auditors under Section 143(14) of Companies Act 2013.
As per Regulation 24A (1) of SEBI (Listing Obligation and
Disclosure Requirements) 2015 company does not have any unlisted material subsidiaries.
The reports issued by Statutory Auditor and Secretarial Auditor does not contain any qualification, reservation, adverse remark, or disclaimer.
Annual Secretarial Compliance Report
The Company has undertaken an audit for the Financial Year ended 31st March, 2022 for all applicable compliances as per the Regulation 24Aof the Listing Regulations and
Circulars/Guidelines issued thereunder. The Annual Secretarial Compliance Report issued by KSR & Co, Company Secretaries LLP has been submitted to the stock exchanges within 60 days of the end of the financial year.
Information systems Audit
In terms of the Master Direction on Information Technology Framework for the NBFC Sector, NBFCs are required to have an information system audit at least once in in a year. In compliance with the RBI Master Direction on the IT framework for the NBFC sector, we are doing the Information Systems Audit at least once in every year. During FY 2021, a system audit was conducted by PricewaterhouseCoopers (PwC). The areas audited were, inter alia, user access management, patch management, business continuity and disaster recovery, data protection and the information security management system framework. The audit revealed no major observations.
MAFIL has engaged Deloitte Touche Tohmatsu India LLP for
conducting this audit for the FY 2022-23. The scope of the audit covers the effectiveness of the policies, IT systems, adequacy of internal controls, effectiveness of BCP and DR, compliance to legal and statutory requirements and the security testing of critical applications.
25. DIRECTORS AND KEY MANAGERIAL PERSONNEL, CHANGE, IF ANY
The Board of the Company is duly constituted. None of the
directors of the Company is disqualified under the provisions of the Companies Act, 2013 or the Listing Regulations.
During the financial year 2021-22 under review, Mr. Jagdish Capoor (DIN:00002516) has tendered his resignation as Independent Non-Executive Director w.e.f 18th October 2021. The Board appreciated the guidance and contribution on various matters made by Mr. Jagdish Capoor during his tenure as a Director of the Company.
During the financial year 2021-22 under review, the Board of Directors of the Company at their meeting held on 13th November 2021 had approved the appointment of Mr. Shailesh J Mehta (DIN: 01633893), Independent Non-Executive Director as Chairperson of the Board with effect from 13th November 2021.
During the financial year 2021-22 under review, the shareholders of the Company at the 29th annual general meeting held on 10th September, 2021 had approved the appointment of Mr. S.R Balasubramanian (DIN: 03200547), as Non-Independent Non-Executive Director of the Company.
Further, in accordance with the provisions of the Companies Act, 2013 Mr. Gautam Ravi Narayan (DIN: 02971674), Director, retires by rotation and being eligible, offers himself for re-appointment at the ensuing annual general meeting. His appointment is placed for approval of the members and forms part of the notice of the 30th AGM. The information about the Director seeking his re-appointment as per Para 1.2.5 of Secretarial Standards on General Meetings and Regulation 36 (3) of Listing Regulations has been given in the notice convening the 30th AGM.
There was no change in Key Managerial Persons during the FY 2021-2022
During the year 2021-22, the Company has allotted 30,000 equity shares of ''2.00 each pursuant to exercise of stock options. Consequently, the paid-up equity shares capital of
the Company stood as on 31.03.2022 at ''1,692.79 million consisting of 84,63,94,729 equity shares of ''2.00 each. During the year under review, the Company has not issued shares with differential voting rights, bonus shares and sweat equity shares.
Change in Nature of Business if any
There has been no change in the nature of business during the financial year 2021-22
As you are aware, your Company had stopped acceptance of deposits from the public since FY 2009-10. Your Company had converted itself into a non-deposit taking Category ''B'' NBFC. During FY 2021-22 the Company has not accepted
deposits as per Chapter V of the Act.
The Company has no unclaimed deposit as at 31st March, 2022.
28. COMPLIANCE WITH NBFC REGULATIONS
Your Company has generally complied with all the regulatory provisions of the Reserve Bank of India applicable to Non-Banking Financial Company - Systemically Important Non-Deposit taking Company.
Constitution of Statutory committees are in compliance with the corporate governance provisions as specified in the master direction issued by the Reserve Bank of India.
As on 31st March, 2022, the Capital Adequacy Ratio of the
Company is 31.33%, which is well above the statutory requirement of 15%. The Company has not issued any Perpetual Debt Instruments.
29. COMPLIANCE WITH SECRETARIAL STANDARDS OF ICSI
Company has complied with Secretarial Standards-1 (SS-1) on Board meetings and Secretarial Standards-2 (SS-2) on General meetings issued by the Institute of Company Secretaries of India.
30. QUALIFICATION, ADVERSE REMARKS RESERVATIONS BY AUDITORS IF ANY
There are no Qualification, Adverse Remarks Reservations by statutory Auditors in the Independent Auditors Report
and secretarial auditors in the Independent Auditors Report.
31. EMPLOYEE STOCK OPTION SCHEME (ESOS)
In order to retain the best available talent, ensure long term commitment to the Company, and encourage individual ownership, Company has instituted employee stock options plans from time to time.
Presently, the Company has Employee Stock Option Scheme 2016 (''ESOS-2016'').
Disclosures in terms of ''Guidance note on accounting for employee share-based payments'' issued by ICAI and diluted EPS in accordance with Indian Accounting Standard (Ind AS) 33 - Earnings Per Share are provided in note 36 of Standalone Financial Statements in this Annual Report.
Details related to stock option schemes as required under SEBI SBEB Regulations read with Securities and Exchange Board of India circular no. CIR/CFD/POLICY CELL/2/2015 dated 16 June, 2015 are provided in Note 37 of the Standalone Financial Statements in this Annual Report and Annexure VII of this report and are also available on Company''s website at https://manappuram.com/investors/ annual-reports.html
A certificate from KSR & Co. Practicing Company Secretaries LLP, Practicing Company Secretaries, confirming that ESOS 2016 has been implemented in accordance with the SEBI SBEB Regulations and that the respective resolutions passed by the Company in General Meetings would be placed in the ensuing Annual General Meeting for inspection by the members
The Composition of CSR Committee and Audit Committee are detailed in the Corporate Governance Report.
33. WHISTLE BLOWER POLICY AND VIGIL MECHANISM
The Vigil Mechanism of the Company provides adequate safeguards against the victimization 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 and a Member of the Audit Committee.
No person has been denied access to the Chairman and a Member of the audit committee. Company has ensured that its employees are aware of the content and procedure of the policy and fully protected. The Whistle Blower Policy and Vigil Mechanism may be accessed on the Company''s website at the link: https://www.manappuram.com/public/ uploads/editor-images/files/whistle%20blower%20 policy%202022.pdf
No complaints were reported during the FY 2021-22.
Annual return in Form-MGT-07 has been posted in the
website the link of the same is mentioned below for reference https://www.manappuram.com/investors/ annual-reports.html
35. DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS AND INTERNAL AUDIT
Your Company has put in place, well defined and adequate Internal Control System, and Internal Financial Control
(IFC) mechanism commensurate with size, scale, and complexity of its operations to ensure control of entire
business and assets. The internal audit policy has been upgraded as Risk Based Internal Audit Policy based on the
RBI Circular - RBI/2020-21/88 (Ref. No. DoS. CO. PPG. / SEC.05/11.01.005/2020-21) dated 3rd February 2021 and functioning of internal audit is also realigned as per the policy. The functioning of controls is regularly monitored to ensure their efficiency in mitigating risks. A comprehensive internal audit department functions in house to continuously audit and report gaps if any, in the diverse business verticals and statutory compliances applicable.
During the year, Internal Financial Controls were reviewed periodically by the management and Audit Committee. Key areas were subject to various statutory and internal audits in order to review the adequacy and strength of IFC followed by the Company. As per the assessment, Controls are strong and there are no major concerns. The internal financial controls are adequate and operating effectively to ensure orderly and efficient conduct of business operations.
Your Company has an independent internal audit function
which carries out regular internal audits to test the design, operations, adequacy, and effectiveness of its internal control processes and also to suggest improvements to the management. Board also proposed to appoint Deloitte, to provide co-sourced internal audit services to assist management of the company in the appraisal of its internal control functions, recommend improvements in processes and procedures and surface significant observations and recommendations for process improvements. Their observations along with management response are periodically reviewed by Audit Committee and Board and necessary actions are taken.
36. LISTING WITH STOCK EXCHANGES
Your Company confirms that it has paid the Annual Listing Fees for the financial year 2021-22 to BSE and National Stock Exchange (NSE) where the Company''s shares are listed.
37. SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
During the year under review, there were (9) nine complaints filed with the Internal Complaints Committee of the Company, pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the same were investigated and resolved. No complaints were pending more than 90 days during FY 2021-22.
The Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
38. CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Act, SEBI LODR and Indian Accounting Standard (IndAS) 27 on Consolidated Financial
Statements, the audited consolidated financial statement is provided in the Annual Report.
Your Company holds valid credit rating from Brickwork,
CRISIL and CARE for Non-Convertible Debentures, Short
Term and Long-Term Bank Facilities and Commercial Paper
as follows:
a. CRISIL rated Long Term Bank Loan Facilities amounting to ''43,200 million as CRISIL AA/ Stable.
b. CRISIL rated Short Term Bank Loan Facilities amounting to ''6,800 million as CRISIL A1 .
c. CRISIL rated Non-Convertible Debentures amounting to ''26,750 million as CRISIL AA/ Stable.
d. CRISIL rated Commercial Paper of ''40,000 million as CRISIL A1
e. CRISIL rated Market Linked Debenture of ''5,000 million as CRISIL PP - MLD AA r/ Stable
f. CRISIL rated PCG DA Nov 2019 of ''1,000 million as CRISIL AA (SO)
g. CARE rated Bank Loan Facilities for Long-Term amounting to ''49,270 million as CARE AA (Stable)
(Double A; Stable)
h. CARE rated Bank Loan Facilities for Short-Term amounting to ''40,730 million as CARE A1 (A One Plus)
i. CARE rated Non-Convertible Debentures amounting to ''19,805.8 million as CARE as AA (Stable)
j. CARE rated Commercial Paper of ''40,000 million as CARE A1 (A1 Plus)
k. Brickwork rated Non-Convertible Debentures amounting to ''10,030 million as BWR AA (Stable)
l. Brickwork rated Bank Loan facilities amounting to ''70,000 million as BWR AA (Stable)
m. S&P rated US$750 million EMTN Programme and Senior Secured Notes as BB-/ Stable and Short Term as B
n. Fitch rated US $ 750 million EMTN Programme and Senior Secured Notes as BB-/ Stable
40. |
DETAILS OF AUCTIONS HELD DURING THE YEAR 2021-22 Additional disclosures as required by RBI NDSI Master Directions, 2016: |
|||||
Year |
Number of Loan Accounts |
Principal Amount outstanding Interest Amount outstanding at the dates of auctions (A) at the dates of auctions (B) ('' in million) ('' in million) |
Total (A B) ('' in million) |
Value fetched ('' in million) |
||
31-03-2021 |
74553 |
4122.48 |
696.92 |
4819.40 |
4602.17 |
|
31-03-2022 |
813792 |
36151.34 |
8655.91 |
44807.25 |
41865.87 |
Note: No sister concern participated in the auctions during the year ended on 31st March, 2021 and 31st March, 2022.
41. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURE
Particulars of employees and related disclosures are annexed herewith as Annexure VIII as per Section 197 of the Act.
42. SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS
There were no significant/ material orders passed by the regulators or courts or tribunals during the financial year 2021-22, impacting the going concern status and Company''s operations in future.
43 CERTIFICATE ON CORPORATE GOVERNANCE
Certificate provided by KSR & Co., Practicing Company Secretaries LLP, Indus Chambers, Ground Floor, No. 101, Govt. Arts College Road, Coimbatore - 641018 towards compliance of the provisions of Corporate Governance, forms an integral part of this Report and is given as Annexure - IX
44. MATERIAL EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENT
There have been no material changes and commitments, affecting the financial position of the Company which occurred between the end of the FY 2021-22 and the date of this report.
45. MAINTENANCE OF COST RECORDS
The Company is an NBFC, and hence the requirement under sub-section (1) of section 148 of the Companies Act, 2013 w.r.t Maintenance of cost records is not applicable.
Your Directors express 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, Debenture Trustees, RTA''s, Depositories, Central and State Governments and its statutory bodies for the support, guidance, and co-operation. Your directors wish to thank the Customers, Investors, Shareholders, Debenture holders, Bankers, Auditors, Scrutinizer and other financial institutions and other stakeholders for the wholehearted support and confidence reposed on the Company.
Place: Valapad For and on behalf of the Board of Directors
Date: 18.05.2022 Sd/-
Shailesh. J. Mehta DIN:01633893
Mar 31, 2021
Board of Directors of your company wish to start by expressing its empathy with the bereaved families of aLL our employees shareholders and all others who have lost their near and dear ones due to COVID-19 Pandemic.
The Board of Directors of Manappuram Finance Limited have pleasure in presenting before you, the 29th Annual Report of the Company together with the Audited Consolidated and Standalone Statements of Accounts for the financial year ended 31st March, 2021.
1. FINANCIAL SUMMARY/HIGHLIGHTS AND STATE OF AFFAIRS '' in million
Description |
Standalone |
Consolidated |
||
2020-21 |
2019-20 |
2020-21 |
2019-20 |
|
Gross Income |
51,935.14 |
43,521.91 |
63746.23 |
55,511.88 |
TotaL Expenditure |
29,239.74 |
26,721.81 |
40585.85 |
35,438.90 |
Profit Before Tax |
22,695.40 |
16,800.10 |
23160.38 |
20,072.98 |
Provision for Taxes/Deferred tax |
5,716.33 |
4,496.98 |
5910.83 |
5,269.81 |
Other Comprehensive Income |
(146.03) |
(54.32) |
(156.79) |
(60.00) |
Minority interest |
- |
- |
6.96 |
125.60 |
Net Profit |
16,979.07 |
12,303.12 |
17249.55 |
14,803.17 |
Amount avaiLabLe for appropriations |
39,816.87 |
27,023.18 |
42,895.21 |
30,532.55 |
Appropriations: |
||||
Transfer to statutory Reserve |
3,406.67 |
2,449.77 |
3468.14 |
2,920.43 |
Transfer to/(from) Debenture Redemption Reserve |
- |
(1,115.33) |
- |
(1,115.33) |
Interim Dividend on Equity share |
1,057.71 |
2,321.75 |
1,057.71 |
2,371.99 |
Tax on Dividend |
- |
477.25 |
- |
487.58 |
Adjustment on account of IND AS |
217.60 |
274.55 |
233.82 |
351.50 |
BaLance carried forward to next year |
35,134.89 |
22,615.19 |
38,135.54 |
25,516.38 |
During the Financial Year ("FYâ) 2020-21, under review, the Company''s consolidated revenue from operations grew by 1.1 % and the Profit after Tax increased by 17.6 % to ''4,683.5 million. The Company''s consolidated AUM grew by 7.9% to ''2,72,242 million during the year owing to rapid growth in the microfinance (8.8%), housing finance (5.8%) and vehicle finance (-21.7%) AUMs. Gold Loan AUMs grew 12.4% during the year.
The Company also implemented multiple campaigns to increase awareness among the customers about the benefits of digital transactions. Through its Local marketing initiatives, the Company covered individuaLs beLonging to the masses segment and concentrated on getting cLose and personaLLy reLevant to understand the financiaL needs of the peopLe in these sections. Consistent review and monitoring at field Level was also done to ensure business propensity.
During the year, the Company undertook various empLoyee engagement initiatives to motivate them and improve their
efficiencies. These efforts pLayed a prominent roLe in the Company''s growth during the year. The Company wiLL continue to engage in such initiatives in the future to serve its customers better and thereby achieve higher growth.
2. DIVERSIFICATION OF BUSINESS
In 2014 your Company decided to pursue diversification on the strength of Large net worth, access to debt capitaL on competitive terms and access to customer reLationships buiLt over decades, through business mainstay of gold Loans.
The objective of the diversification strategy is to bring down the dependence of the company on goLd Loan AUM and reach a comfortabLe parity between the new streams of business and goLd Loans. In the intervening years, we have assiduousLy buiLt competencies and capabiLities to bring the share of new business in our AUM cLose to 29.9%.
Our ambition is to achieve a 50-50 mix between the diversified business and gold loans in years to come. This
will address three key business paradigms; First, it addresses the regulatory discomfort with mono-line NBFCs perceived as vulnerable to concentration risk. Second, it would enable the Company to cater to existing and new customers with new products and services. Finally, it enables your Company to play a leading role in accelerating the government''s agenda for inclusion by addressing the needs of the underprivileged sections of our population.
Accordingly, your Company is focusing on affordable housing finance, vehicle and equipment finance which includes commercial vehicle loans, two-wheeler loans, tractor & car loans, microfinance, SME finance, project and industrial finance, corporate finance and insurance broking. Over the last four to five years, the Company has made much progress in all these new businesses, having steadily scaled up operations by leveraging its existing customer base, branch network and the goodwill of the Manappuram Brand.
The key achievement thus far is that having begun literally from scratch in FY2015, the Company''s non-gold new businesses now contribute 29.9 % of the total assets under management. In the past year, Microfinance AUM has grown from '' 45,284 million in FY2020 to ''53,930 million in FY2021. Your Company''s divisions vehicle and equipment finance and corporate finance have ended the year with an AUM of '' 10,292 million and '' 15.52 million, respectively. Your Company''s housing subsidiary, Manappuram Home Finance Limited has ended the year with an AUM of '' 6,735 million while the insurance broking subsidiary has contributed revenue of ''99 million.
The other business verticals of our Company include Payments business, SME business and fee-based services including forex and money transfer.
The vehicle finance portfolio is about ''10,571 Million spread across 222 locations in 23 states as of 31st March, 2021. The preowned commercial vehicles portfolio is ''6.99 billion and new commercial vehicles are of '' 550 million with 16,638 contracts. The two-wheeler finance portfolio is of ''1.78 billion with 80,217 contracts, and other vehicle loans make up a portfolio of around ''1,240 million. The business is supported by robust prescreening methodologies and credit assessment for a healthy portfolio mix.
With plans to target the existing customer base for consumer vehicle loans, your Company firmly believes that digital technology would be an integral component for the growth of the business in the coming years.
Your Company commenced SME business in November 2017 to serve the underserved segment and help them grow their businesses. The SME business vertical covers loans provided against the collateral security of property with the loan amount ranging from ''0.2 million to ''2.50 million. The Company deliberately went slow in adding new business due to constraints faced by the customers, hence AUM of the SME business stood at ''326.27 million as of 31st March, 2021 as against ''270.15 million in Fiscal 2020.
FEE-BASED SERVICES (INCLUDING FOREX AND MONEY TRANSFER)
Our Company''s fee-based services include money transfer, foreign exchange, and depository services. We facilitate fast, easy, and safe money transfer and the customer does not require a bank account for an amount of up to '' 50,000 subject to compliance with applicable RBI norms. We assist in exchange of currency and sell traveller''s cheques for purposes as permitted under the foreign exchange management act (FEMA). Fee-based services accounted for about 20 basis points of our total revenue for Fiscal 2021.
Our Company is an Authorised Dealer (AD) Category 2 license holder from RBI. In December 2017, Manappuram Finance Ltd. received RBI''s license to act as the Indian Agent for Western Union Money Transfer. We also act as sub-agents to the Indian representatives of other companies providing money transfer inward remittance.
Following are the highlights of our fee-based services:
⢠Tie up with nine money transfer agencies for inward remittance.
⢠About 60% of the inward remittance is contributed by Western Union.
⢠As an Indian agent of Western Union, we can appoint sub agents to work on our behalf all over India.
⢠Turnover of MTSS business is around '' 15 crore per month.
⢠We have more than 150 active sub-agents for Western Union business who contribute about '' 75 lakhs of business per month.
It was in March 2017 that Manappuram Finance Ltd. received RBI''s authorisation to issue prepaid payment instruments (payment wallet) and went on to launch the MAkash wallet. A mobile wallet is a way to carry cash in digital format that promotes the country''s cashless payments initiative. Customers
can Load money into the waLLet using a credit card, debit card, net banking and UPI. Alternatively, they can walk into any of the MAFIL branches across India and load cash into the wallet without any extra cost.
With over one lakh customers, MAkash has registered steady growth. The wallet registers an average of 30,000 transactions per month valued at about ''15 crore. Customers can avail the assistance of MAFIL Branches to create the wallet and conduct transactions. The following services are available with Makash Online and Offline modes:
⢠Phone Recharge & DTH: With money loaded in your MAkash wallet, it takes just seconds to make phone and DTH recharges.
⢠Bill Payments: Pay all your bills across categories via MAkash in no time and avoid late payment charges
⢠Gold Loan repayment: Load Your wallet using Debit/Credit Card and Pay your MAFIL Gold Loan repayment or make interest payment instantly via MAkash
⢠Transfer money to Bank: You can Load money from your Credit card/ Debit Card/ Net Banking and send it to any
bank account in India, any time.
STATE OF AFFAIRS OF OUR SUBSIDIARIES
ASIRVAD MICRO FINANCE LIMITED (AML)
Asirvad Micro Finance Limited, an NBFC operating as a microfinance institution (NBFC-MFI) is a majority-owned subsidiary of our company. Asirvad Micro Finance Limited provides mainly three types of loans namely Income Generating Programme Loans (IGP), Product loans and MSME loans.
During the year, company consolidated its operations in the existing 24 states including union territories. In March 2021, the company forayed into lending of Gold Loan against the security
of the Gold jewellery by starting operations in 23 branches across 4 states.
Asirvad Micro Finance Limited is ranked as the 4th largest NBFC MFI in India. The company has a network of 1,025 branches across 22 states and union territories with a presence in 315 districts and 2,25,444 centers with respect to Micro Finance Business and 22 branches across 4 states with a presence in 14 districts with respect to MSME. During the year company has passed on the reduction in interest rate in respect of Microfinance loans charged by Banks/Financial institutions by reducing the interest rate charged to customers from 21.30% pa to 20.67% pa.
The assets under management of this business increased by 8.78 per cent during fiscal 2021. This growth was an outcome of multiple factors such as healthy addition of new customer
aggregation to 0.05 million, enhanced reach via a balanced mix of branch-led expansion as well as more client acquisition via our online/digital platforms. AML had an AUM of '' 59.85 billion
as of 31st March, 2021, as compared to '' 55.02 billion as of 31st March, 2020. AML has high capital adequacy with CAR at 23.33 percent and excellent ROA at 0.29 per cent.
Being the most significant business, after MSME and Gold loans,
microfinance is strategically essential to the company. Asirvad is adequately capitalized and has consistently shown healthy and profitable growth.
MANAPPURAM HOME FINANCE LIMITED (MAHOFIN)
MAHOFIN, a wholly own subsidiary of Manappuram Finance, started operations in January 2015 and focuses on affordable housing loans and aims to cater to the needs of the midincome to the low-income group. The housing finance business registered 5.83 per cent growth in its AUM in Fiscal 2021, posting a CAGR of 16.51% in the past five years. It reached an AUM of '' 6,735 million as of 31st March, 2021. Currently, there are 47 branches across nine states. The western region contributes the largest share of the loan portfolio. Considering the increasing urbanisation and the rise of tier II and tier III cities, the Company is also planning to cover nearby states and locations.
Positioned as an affordable home finance company, target customers are the self-employed from the unorganised sector and others lacking access to credit facilities from mainstream financial institutions. The Company offers two products - Home Loans and Loan Against Property. The average ticket size of a Home Loan is about ''1.05 million, and for the LAP segment, it stands at about ''0.63 million.
As a part of digitisation, the Company has introduced the âMobile-
Customer Acquisition Systemâ (mCAS) for faster processing of loan applications and âMobile Collectâ (M-Collect) for speeding up the collection process.
The Company is looking to diversify funding sources and in October 2019 it succeeded in raising about '' 943.1 million by a public issue of NCDs. The portfolio faced minimal delinquencies with GNPA held at 6.38%. The Company has a capital adequacy ratio is around 52.86% (well above the regulatory requirement).
MANAPPURAM INSURANCE BROKERS LIMITED (MAIBRO)
Manappuram Insurance Brokers Limited (MAIBRO), ended the year at '' 1,273.0 million of total business. The Company did the
new business of ''1,073.5 million in the fiscal. The Company now operates in various products of Life, Health, Personal Accident and Motor insurance to cater to multiple sections of the society. The Company has the distinction of covering 0.10Cr customers in FY 2021. MAIBRO posted a net profit of '' 29.03 million in FY 2021 vs '' 73.29 million in FY 2020 and is likely to snowball from here on by entering new tie-ups with insurance companies. The Company covered 25,668 families with a health cover, 18,900 customers with Personal Accident cover and 0.09 Cr customers
with death cover.
MAIBRO today has a presence across the Length and breadth of the country. MAIBRO has also launched portal
www.masuraksha.com to issue two-wheeler policy directly to customers 24*7 without any manual dependency. Company is also planning to extend the service for all insurance products and digitalise its sales process from proposal to issuance. The
Company has been able to successfully settle 93.50 % of claims reported.
MANAPPURAM COMPTECH AND CONSULTANTS LTD. (MACOM)
Your Company''s another subsidiary, Manappuram Comptech and Consultants Limited (MACOM) ended the year at '' 224.82 million of total business. The Company has enhanced its revenue portfolio by ''125.67 million. The Company offers services in audit and taxation along with core IT services to service varied market requirements including application development for Digital Personal Loan, Loan Management Solutions etc. During the year, the Company made a mark by developing fully android based apps for EMI collection, Customer and Agent Collection etc. MAcOm posted a net profit of '' 31.46 million in FY2021 vs '' 17.7 million in FY2020 and is poised for take-off from here on.
Your Company holds 94.79% equity shares of Asirvad Micro Finance Limited, 100% equity shares of Manappuram
Home Finance Limited, 100% equity shares of Manappuram Insurance Brokers Limited and 99.81% of Manappuram
Comptech and Consultants Limited as on 31st March, 2021.
Gross Income of the Company as of 31st March, 2021 is ''10,771.84 million as compared to '' 11,014.44 million for the
year ended 31st March, 2020 and profit after Tax is ''168.81 million for the year ended 31st March, 2021 as compared to '' 2,353.28 million for the year ended 31st March, 2020.
Manappuram Home Finance Limited
Gross Income of the Company as of 31st March, 2021 is '' 971.32 million as compared to '' 856.73 million for the year ended 31st March, and profit after tax is ''102.9 million for the
year ended 31st March, 2021 as compared to ''105.64 million for the year ended 31st March, 2020. AUM of the Company as of 31st March, 2021 is ''6,662.7 million which is 2.51% of consolidated AUM.
Manappuram Insurance Brokers Limited
Gross Income of the Company for the year ended 31st March, 2021 is ''99.00 million as compared to ''150.24 million for
the year ended 31st March, 2020 and profit after tax for the year ended 31st March, 2021 is '' 29.03 million as compared to '' 73.3 million for the year ended 31st March, 2020.
Manappuram Comptech and Consultants Limited
Gross Income of the Company for the year ended 31st March, 2021 is ''227.28 million as compared to ''101.35 million for the year ended 31st March, 2020 and Profit after tax for the year ended 31st March, 2021 is ''31.46 million as compared to the profit of '' 17.69 million for the year ended 31st March, 2020
Salient features of financial statements of the Company''s subsidiaries in form AOC-1 are annexed herewith as Annexure - I(a) and the highlights of performance of subsidiaries are
annexed herewith as Annexure - I(b).
4. RESERVES
During the FY 2020-21, the Company has utilised '' 1,308.53 million with regards to adoption of IndAS 116 "Leasesâ from Retained earnings.
The total reserves and surplus as on 31st March, 2021 stands at '' 67,324.39 million.
5. DEBENTURE REDEMPTION RESERVE
Pursuant to notification issued by Ministry of Corporate
Affairs on 16th August, 2019 in exercise of the powers conferred by sub-sections (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government amend the Companies (Share Capital and Debentures) Rules, 2014.
In the principal rules, in rule 18, for sub-ruLe (7), the Limits with respect to adequacy of Debenture Redemption Reserve and investment or deposits for Listed companies (other than ALL India Financial Institutions and Banking Companies as specified in sub-cLause (i)), Debenture Redemption Reserve is not required to be maintained in the case of public issue of debentures as weLL as privately pLaced debentures for NBFCs registered with Reserve Bank of India under section 45-IA of the RBI Act, 1934.
By compLying with the above notification, the Company has not created DRR during the year ended 31st March, 2021.
6. RESOURCES
The Company 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 Lines from the banks and financiaL institutions. Your Company as at 31st March, 2021 avaiLed various credit faciLities from 25 banks, 1 NBFC (Bajaj Finance), NABARD and InternationaL Finance Corporation (IFC).
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 NonConvertible 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.
7. MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis Report is attached
and forms an integral part of the Annual Report. The report discusses in detail, the overall industry situation, economic developments, sector wise performance, outlook and state of company''s affairs.
8. REPORT ON CORPORATE GOVERNANCE
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 adhere to good Corporate Governance standards that lays strong emphasis on integrity, transparency and overall accountability. The report on corporate governance forms integral part of this annual report.
9. BUSINESS RESPONSIBILITY REPORT
Business Responsibility Report in line with the National Voluntary Guidelines (NVG) on Social, Environmental and Economic Responsibilities of Business, released by the Ministry of Corporate Affairs, Government of India and as stipulated under Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (''SEBI LODR'') forms integral part of this Annual Report and the same has been hosted on the website of the Company https://www. manappuram.com/public/uploads/editor-images/files/ Business%20Responsibility%20Policy.pdf
Business Responsibility Report provides information on
key initiatives undertaken by the Company, driven by the triple bottom line (people, planet and Profit) aspects and is aligned with the nine principles of NVG. Your Company, together with its subsidiaries viz. Manappuram Home Finance Limited, Asirvad Micro Finance Limited, Manappuram Insurance Brokers Limited and Manappuram Comptech and Consultants Limited, serves millions of customers in the financial services space. Your Company
has moved towards enhancing the Business Responsibility framework to align them with the Business Responsibility Reporting guidelines/standards as per SEBI.
Your Company''s initiatives of Sustainability, Corporate
Social Responsibility (CSR) and Business Responsibility is driven from the top. Board-level CSR Committee is entrusted with formulating, revising and updating our CSR Policy which governs the implementation of all our CSR initiatives in compliance with Section 135 of Companies Act, 2013. Various policies including CSR Policy and Business responsibility policy guide our stringent adherence to compliance and governance. The business responsibility performance of the Company is assessed annually by the Board of Directors. Your Company believes in conducting its operations in a fair and transparent manner. Within the organisation, your Company works towards integrating community development, responsible governance, stakeholder inclusiveness and environmental responsibility into business practices and operations.
Your Company seeks to differentiate itself by building a new age NBFC to serve the financial needs of all sections of society in India, especially the less privileged/ under privileged sections. This will be achieved by providing a basket of diversified products and services, backed by state of the art technology, and driven through a culture that values customer service.
10. DIRECTOR''S RESPONSIBILITY STATEMENT PURSUANT TO SECTION 134 OF THE ACT
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
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 2020-21.
11. MEETINGS OF THE BOARD
During the financial year 2020-21, Board of Directors met on Nine occasions. For further details of these Board Meetings, please refer to the Corporate Governance Section of this Report.
12. DECLARATION ON INDEPENDENCE FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS
Your Company has received necessary declarations from all Independent Directors of the Company confirming that they meet criteria as mentioned in Section 149 of the Act and SEBI LODR. Your Company has also received undertaking and declaration from each director on fit and proper criteria in terms of the provisions of Non-Banking Financial Company- Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 ("RBI NDSI Master Directions, 2016â).
13. PROFICIENCY OF INDEPENDENT DIRECTORS APPOINTED DURING THE YEAR
Board of Directors of Manappuram Finance Limited is of the opinion that Mr Shailesh J Mehta (DIN: 01633893) and Mr Harshan Kollara (DIN: 01519810) who were appointed as Independent Directors in the Annual General Meeting held on 28th August 2020 possess requisite skills expertise experience and proficiency to be appointed as Independent Director. Both the directors are registered with Indian Institute of Corporate Affairs.
All other Independent Directors of the company also possess requisite skills expertise experience integrity and proficiency to be appointed as Independent Director
14. POLICY ON BOARD COMPOSITION COMPENSATION
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 Committee of the board in compliance with the provisions of Section 178 of the Act. The policy can be viewed at https://www.manappuram.com/public/uploads/ editor-imaaes/files/Policu%2022-Board%20comDosition. pdf and is also annexed to this report as Annexure II.
15. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are provided in Note 10,11,44 & 49 to the Standalone Financial Statements.
16. PARTICULARS OF CONTRACTS ORARRANGEMENT WITH RELATED PARTIES
Contracts / arrangements / transactions entered by the Company during the FY 2020-21 with related parties under Section 188 of the Act were in ordinary course of business and on 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 provisions of Regulation 23 of SEBI LODR and the Company''s policy on related party transactions. Therefore, particulars of contracts / arrangements with related parties under Section 188 in Form AOC-2 is not annexed with this report.
Your Directors draw attention of the members to Note 42 of the Standalone Financial Statement which sets out related party disclosures.
The Policy on related party transactions as approved by the Board which is annexed to this report as Annexure III may be accessed on the Company''s website at the https:// www.manappuram.com/public/uploads/editor-images/ files/RPT%20Policy.pdf
Two interim dividends at the rate of 0.60 paise and 0.65 paise per equity share were declared during the financial year 2020-21, on, 06.11.2020 and 29.01.2021.
An aggregate of '' 1.25/- per equity share, amounting to
62.5% of the paid-up value of the shares was paid by the Company during the financial year 2020-21.
the Act and the corporate governance requirements as prescribed by SEBI LODR. As part of evaluation
process questionnaire on various aspects governing the company was circulated to directors for their individual opinion through electronic mode, thereafter individual telephonic interviews with all directors were carried out as part of the evaluation process and it was ascertained that the company has maintained the highest standards of the Corporate governance and integrity in all its practices. The NRC and Board further considered the observations and has taken necessary measures to implement the suggestions.
.22. DETAILS OF REMUNERATION / COMMISSION RECEIVED BY MD OR ED FROM SUBSIDIARIES
During the FY 2020-21, Mr. B.N. Raveendra Babu (Non-executive director) (DIN:00043622) has received remuneration by way of sitting fee, ''0.40 million, for attending Board/Committee meetings of the subsidiary, Manappuram Insurance Brokers Limited and Mr. V. P Nandakumar (Managing Director & CEO) (DIN: 00044512) has not received any remuneration or commission from any of the subsidiaries of the Company for the FY 2020-21.
23. NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR
No company became or ceased to be subsidiary or joint venture or associate company of Manappuram Finance Limited during the Financial Year 2020-21
24. AUDIT AND AUDITORS REPORT
Deloitte Haskins & Sells LLP, Chartered Accountants have been appointed as the Statutory Auditors by shareholders at the 25th AGM, to hold office up to the conclusion of 30th AGM.
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.
There were no frauds reported by the statutory auditors to Audit Committee or Board under Section 143(12) of the Act.
The Dividend Distribution Policy as per the SEBI LODR is available at the following link https://www.manappuram. com/public/uploads/editor-images/files/Dividend%20 distribution%20policu.pdf
18. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO:
These details are provided as Annexure IV to this report.
The Company has a Board of Directors approved Risk Management Policy wherein material risks faced by the Company including Operational Risk, Regulatory Risk,
Price, Interest Rate Risk and Credit Risk are identified and assessed. The Risk Management Committee periodically reviews the various risks faced by the Company and advises the Board on risk mitigation plans.
The Board has appointed a chief risk officer as the asset size of the Company is above '' 50 billion with a tenure of One year subject to re-appointment by the board every Financial year.
Risk Management policy may be accessed on the Company''s website at the link https://www.manappuram. com/Dublic/uploads/editor-images/files/ERM%20%20
20. CORPORATE SOCIAL RESPONSIBILITY POLICY
Corporate Social Responsibility Policy (CSR Policy)
indicating the activities to be undertaken by the Company have 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: https:// www.manappuram.com/public/uploads/editor-images/ files/Polic^-7-CSR%20Polic^.pdf
The Corporate Social Responsibility initiatives taken by the Company during the FY 2020-21, is detailed in the Report
on CSR activities which is annexed herewith marked as Annexure V.
The board of directors decided to appoint a third party to assist the Board in carrying out the formal evaluation of board pursuant to which NASDAQ Corporate solutions was appointed on 29.01.2021 to assist in the evaluation process of its own performance, board committees and individual directors pursuant to the provisions of
Secretarial Audit
The Board appointed KSR & Co. Practicing Company Secretaries LLP, to conduct Secretarial Audit for the financial year 2020-21.
Secretarial audit report for year ended on 31st March, 2021 as provided by 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- VI.
No Fraud has been reported by the Secretarial auditors under Section 143(14) of Companies Act 2013
As per Regulation 24A(1) of SEBI (Listing Obligation
and Disclosure Requirements) 2015 company does not have any unlisted material subsidiaries.
Company has a debt listed Material Subsidiary Asirvad Micro Finance Limited and we hereby attach its secretarial Audit report for the FY 2020-21 for your reference
The reports issued by Statutory Auditor and Secretarial Auditor does not contain any qualification, reservation, adverse remark or disclaimer
Information systems Audit
In terms of the Master Direction on Information Technology Framework for the NBFC Sector, NBFCs are required to have an information system audit at least once in two years. During FY2021, a system audit was conducted by a CERT-in empanelled audit firm. The areas audited were, inter alia, user access management, patch management, business continuity and disaster recovery, data protection and the information security management system framework. The audit revealed no major observations.
In compliance with the RBI Master Direction on the IT framework for the NBFC sector, We are doing the Information Systems Audit at least once in every year. MAFIL has engaged PricewaterhouseCoopers(PwC) for conducting this audit for the FY 2020-21. The scope of the audit covers the effectiveness of the policies, IT systems, adequacy of internal controls, effectiveness of BCP and DR, compliance to legal and statutory requirements and the security testing of critical applications.
25. DIRECTORS AND KEY MANAGERIAL PERSONNEL, CHANGE, IF ANY
Mr B.N Raveendra Babu (DIN: 00043622) ceased to be Executive Director with effect from 01.06.2020 and was redesignated as Non-executive director in the Board meeting held on 29th May, 2020 with effect from 01.06.2020.
Mr. Harshan Kollara (DIN: 01519810) has been appointed as Additional Director of the Board with effect from
28.01.2020, considering his integrity, expertise and experience and he was appointed as Independent Director in the Annual General Meeting held on 28.08.2020 with effect from 28.08.2020.
Mr. Shailesh Mehta (DIN: 01633893) has been appointed as Additional Director of the Board with effect from
27.02.2020, considering his integrity, expertise and experience and he was appointed as Independent Director in the Annual General Meeting held on 28.08.2020 with effect from 28.08.2020.
There was no change in Key managerial Person''s during the FY 2020-21
During the year 2020-21, the Company has allotted
13,71,604 equity shares of '' 2 each pursuant to exercise of stock options. Consequently, the paid-up equity share capital of the Company stood as on 31.03.2021 at '' 1,692.73 million consisting of 84,63,64,729 equity shares of '' 2 each.
During the year under review, the Company has not issued shares with differential voting rights, bonus shares and sweat equity shares.
Change in Nature of Business if any
There has been no change in the nature if business during the Financial year 2020-21
As you are aware, your Company had stopped acceptance of deposits from the public since FY 2009-10. Your Company had converted itself into a non-deposit taking Category ''B'' NBFC. During FY 2020-21 the Company has
not accepted deposits as per Chapter V of the Act.
28. COMPLIANCE WITH NBFC REGULATIONS
Your Company has complied with all the regulatory provisions of the Reserve Bank of India applicable to NonBanking Financial Company - Systemically Important Non-Deposit taking Company.
Constitution of Statutory committees are in compliance with the corporate governance provisions as specified in the master direction issued by the Reserve Bank of India.
As on 31st March, 2021, the Capital Adequacy Ratio of the
Company is 29.02%, which is well above the statutory requirement of 15%. The Company has not issued any Perpetual Debt Instruments.
29. COMPLIANCE WITH SECRETARIAL STANDARDS OF ICSI
Company has complied with Secretarial Standards-1 (SS-1) on Board meetings and Secretarial Standards-2 (SS-2) on General meetings issued by the Institute of Company secretaries of India.
30. QUALIFICATION, ADVERSE REMARKS RESERVATIONS BY AUDITORS IF ANY
There are no Qualification, Adverse Remarks Reservations by statutory Auditors in the Independent Auditors Report
and secretarial auditors in the Independent Auditors Report.
31. EMPLOYEE STOCK OPTION SCHEME (ESOS)
In order to retain the best available talent, ensure long term commitment to the Company, and encourage individual ownership, Company has instituted employee stock options plans from time to time.
Presently, the Company has Employee Stock Option Scheme 2016 (''ESOS-2016'').
Disclosures in terms of ''Guidance note on accounting for employee share based payments'' issued by ICAI and diluted EPS in accordance with Indian Accounting Standard (IndAS) 33 - Earnings Per Share are provided in note 36 of Standalone Financial Statements in this Annual Report.
Details related to stock option schemes as required under SEBI SBEB Regulations read with Securities and Exchange Board of India circular no. CIR/CFD/POLICY CELL/2/2015 dated 16 June, 2015 are provided in Note 37 of the Standalone Financial Statements in this Annual Report and Annexure VII of this report and are also available on Company''s website at https://www.manappuram.com/ investors/annual-reports.html
A certificate from Deloitte Haskins and Sells LLP, Statutory Auditors (Firm''s Registration No.117366W/W-100018), Statutory Auditors, confirming that ESOS 2016 has been implemented in accordance with the SEBI SBEB Regulations and that the respective resolutions passed by the Company in General Meetings would be placed in the ensuing Annual General Meeting for inspection by the members
32. DISCLOSURE
The Composition of CSR Committee and Audit Committee are detailed in the Corporate Governance Report.
33. WHISTLE BLOWER POLICY AND VIGIL MECHANISM
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 and a Member of the Audit Committee.
No person has been denied access to the Chairman and a Member (Woman Director) 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 Whistle Blower Policy and Vigil Mechanism may be accessed on the Company''s website at the link https://www.manappuram.com/public/ uploads/editor-imaqes/files/Policu-18-whistle%20 blower%20policu.pdf
No complaints were reported during the FY 2020-21
34. EXTRACT OF ANNUAL RETURN
Annual return in Form-MGT-07 has been posted in the
website the link of the same is mentioned below for reference https://www.manappuram.com/investors/ annual-reports.html
35. DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS AND INTERNAL AUDIT
Your Company has put in place, well defined and adequate Internal Control System and Internal Financial Control (IFC) mechanism commensurate with size, scale and complexity of its operations to ensure control of entire business and assets. The functioning of controls is regularly monitored to ensure their efficiency in mitigating risks. A comprehensive internal audit department functions in house to continuously audit and report gaps if any, in the diverse business verticals and statutory compliances applicable.
During the year, Internal Financial Controls were reviewed periodically by the management and Audit Committee. Key areas were subject to various statutory and internal audits in order to review the adequacy and strength of IFC followed by the Company. As per the assessment, Controls are strong and there are no major concerns. The internal
Your Company has an independent internal audit function which carries out regular internal audits to test the design, operations, adequacy and effectiveness of its internal control processes and also to suggest improvements to the management. Board also appointed KPMG to provide co-sourced internal audit services to assist management of the company in the appraisal of its internal control functions, recommend improvements in processes and procedures and surface significant observations and recommendations for process improvements. Their observations along with management response are periodically reviewed by Audit Committee and Board and neccessary actions are taken.
36. LISTING WITH STOCK EXCHANGES
Your Company confirms that it has paid the Annual Listing Fees for the financial year 2020-21 to BSE and National Stock
Exchange (NSE) where the Company''s shares are listed.
37. SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
During the year under review, there were 12 cases filed with the Internal Complaints Committee of the Company, pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the same were investigated and resolved. No complaints were pending more than 90 days during FY 2020-21.
The Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
38. CONSOLIDATED FINANCIAL STATEMENTS
In Accordance with the Act, SEBI LODR and Indian Accounting Standard (IndAS) 27 on Consolidated Financial
statements the audited consolidated financial statement is provided in the Annual Report.
Your Company holds valid credit rating from Brickwork, CRISIL and CARE for Non-Convertible Debentures, Short Term and Long-Term Bank Facilities and Commercial Paper as follows:
a. CRISIL rated Bank Loan Facilities amounting to '' 50,000 million as CRISIL AA/Stable.
b. CRISIL rated Non - Convertible Debentures amounting to '' 47,151 million as CRISIL AA/Stable.
c. CRISIL rated Commercial Paper of ''40,000 million as CRISIL A1
d. CRISIL rated PCG DA Nov 2019 of ''1,000 million as CRISIL AA (SO)
e. CRISIL rated Market Linked Debenture of '' 5,000 million as CRISIL PP - MLD AA r/Stable
f. CARE rated Bank Loan Facilities for Long Term amounting to '' 60,444 million as CARE AA (Stable) (Double A; Stable)
g. CARE rated Bank Loan Facilities for Short Term amounting to '' 29,556 million as CARE A1 (A One Plus)
h. Care rated Non-Convertible Debentures amounting to '' 30,972 million as CARE as AA (Stable)
i. Care rated Commercial Paper of ''40,000 million as CARE A1 (A 1 Plus)
j. Brickwork rated Non - Convertible Debentures amounting to ''10,030 million as BWR AA (Stable)
k. Brickwork rated Bank Loan facilities amounting to ''70,000 million as BWR AA (Stable)
l. S&P rated US$ 750 million EMTN Programme and Senior Secured Notes as B /Stable and Short Term as B
m. Fitch rated US$ 750 million EMTN Programme and Senior Secured Notes as BB- /Stable
40. DETAILS OF AUCTIONS HELD DURING THE YEAR 2020 -21
Additional disclosures as required by RBI NDSI Master Directions, 2016 except for the below;
Year |
Number of Loan Accounts |
Principal Amount outstanding at the dates of auctions (A) ('' in million) |
Interest Amount outstanding at the dates of auctions (B) ('' in million) |
Total (A B) ('' in million) |
Value fetched ('' in million) |
31-03-2020 |
48,026 |
1,161.54 |
214.87 |
1,376.41 |
1,505.62 |
31-03-2021 |
74,553 |
4,122.48 |
696.92 |
4,819.40 |
4,464.11 |
Note: No sister concern participated in the auctions during the year ended 31st March, 2020 and 31st March, 2021.
The excess amount realized in the auction is credited in a separate bank account.
41. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURE
Particulars of employees and related disclosures are annexed herewith as Annexure IX as per Section 197 of the Act.
42. 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 31st March, 2021 as stipulated in Part E of Schedule V of SEBI LODR is annexed as Annexure - X.
43. SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS
There were no such significant / material orders passed by the Regulators during the financial year 2020-21 except for the below.
Regulator |
Regulation |
Amount of penalty |
Paid details |
RBI |
Para 26 (2) of the Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 (updated from time to time) Charge - Failure to keep a record of verification of ownership of jewellery pledged by the borrowers and absence of Board approved policy in this regard. RBI Letter Ref No - EFD. CO.S0/106/02.14.006/2020-21 November 19, 2020 |
'' 5,00,000/- |
Penalty paid on 23-11-2020 UTRNo: NEFT/AXISP00162251894/ MANAPPURAM231120203/Enforce |
44 MATERIAL EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENT
There have been no material changes and commitments, affecting the financial position of the Company which occurred between the end of the FY 2020-21 and the date of this report.
45. MAINTENANCE OF COST RECORDS
The Company is an NBFC, and hence the requirement under sub-section (1) of section 148 of the Companies Act, 2013 w.r.t Maintenance of cost records is not applicable.
Your Directors express 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, Debenture Trustees, RTA''s, Depositories, Central and State Governments and its statutory bodies for the support, guidance and co-operation. Your Directors wish to thank the Customers, Investors, Shareholders, Debenture holders, Bankers, Auditors, Scrutiniser and other financial institutions and other stakeholders for the whole hearted support and confidence reposed on the Company.
For and on behalf of the Board of directors of
Manappuram Finance Limited
Place: Valapad Sd/-
Date: 26th May, 2021 Jagdish Capoor
Mar 31, 2018
Boardâs Report
Dear Members,
The Board of Directors of Manappuram Finance Limited have pleasure in presenting before you, the 26th Annual Report of the Company together with the Audited Consolidated and Standalone Statements of Accounts for the financial year ended 31st March, 2018.
1. FINANCIAL SUMMARY/HIGHLIGHTS AND STATE OF AFFAIRS
The standalone and consolidated financial highlights of your Company are as follows:
(Rs, in million)
Description |
Standalone |
Consolidated |
||||
2017-18 |
2016-17 |
2015-16 |
2017-18 |
2016-17 |
2015-16 |
|
Gross Income |
29498.59 |
30084.33 |
22148.89 |
34765.56 |
34,089.16 |
23,712.35 |
Total Expenditure |
18833.04 |
18935.56 |
16959.77 |
24595.47 |
22,431.96 |
18,228.52 |
Profit Before Tax |
10665.55 |
11148.77 |
5189.12 |
10170.09 |
11,657.20 |
5,483.83 |
Provision for Taxes/Deferred tax |
3663.86 |
3888.43 |
1816.69 |
3486.01 |
4072.3 |
1932.25 |
Minority interest |
0 |
0 |
0 |
-24.86 |
26.42 |
17.9 |
Net Profit |
7001.69 |
7260.34 |
3272.43 |
6708.94 |
7,558.48 |
3,533.68 |
Profit b/f from previous year |
7285.07 |
3098.64 |
2848.66 |
7574.79 |
3,159.29 |
2,851.54 |
Amount available for appropriations |
14286.76 |
10358.98 |
6221.09 |
14283.73 |
10,717.77 |
6,385.22 |
Appropriations: |
||||||
Transfer to Statutory Reserve |
1400.34 |
1452.07 |
674.49 |
1400.34 |
1,521.12 |
722.41 |
Transfer to General Reserve |
0 |
0 |
0 |
0 |
0 |
0 |
Transfer to Debenture Redemption Reserve |
-676.68 |
102.26 |
169.91 |
-676.68 |
102.26 |
169.91 |
Interim Dividend on Equity Shares |
1683.94 |
1262.56 |
1892.74 |
1683.94 |
1,262.56 |
1,892.74 |
Tax on Interim Dividend |
342.81 |
257.02 |
385.31 |
343.27 |
257.02 |
385.31 |
Proposed Equity Dividend |
0 |
0 |
0 |
0 |
0 |
0 |
Tax on dividend |
0 |
0 |
0 |
0 |
0 |
0 |
Balance carried forward to next year |
11536.35 |
7285.07 |
3098.64 |
11532.86 |
7,574.81 |
3,159.29 |
During the Financial Year ("FYâ) 2017-18 under review, the Company''s consolidated revenue from operations grew 1.10% to Rs, 34,234.00 million and the Profit after Tax fell by 11.2% to Rs, 6,709.00 million. The profitability was impacted by a onetime provisioning of Rs, 120 million towards a legal case where the Company could liquidate only half of the collateral that was handed over to it. The Company liquidated the rest of the collateral in the quarter ended 30th June , 2018, following which, management believes provisions are likely to normalise. The Company''s consolidated AUM grew by 15.4% to Rs, 1,57,648.00 million during the year owing to rapid growth in the microfinance (grew 35.7%), housing finance (grew 20.7%) and vehicle finance (grew 104.5%) AUMs. Gold loan AUMs grew 5.5% during the year. Addition of new customers, increasing branch activation for the non-gold businesses, fall in average cost of borrowing and all-round improvement in asset quality were the key factors driving the Company''s financial performance during the year.
During the year, the Company continued to augment its digital platforms to facilitate customers to avail loans at their convenience. In the gold loan business, the Company introduced doorstep gold loans (pilot stage) and further leveraged its online gold lending platform which accounted for 32% of the total gold loan book. The Company also invested in ramping up safety of the lockers by installing IOT-based keyless e-lockers which offer multiple benefits including monitoring of the lockers by the customer from a remote location. Similarly, a host of other digital initiatives were implemented to drive greater convenience for the customers at every stage of their engagement with us -from applying for the loan to repaying it back. Healthy additions of new customers along with continued branch expansions and investments in branding and marketing activities aided growth of the new businesses in the year. These businesses now form about a fourth of the Company''s consolidated AUMs as compared to 19% in the preceding year.
The Company also implemented multiple campaigns to increase awareness among the customers about the benefits of digital transactions. Through its local marketing initiatives the Company covered individuals belonging to the masses segment and concentrated on getting close and personally relevant to understand the financial needs of the people in these sections. Consistent review and monitoring at field level was also done to ensure business propensity.
During the year, the Company undertook various employee engagement initiatives to motivate them and improve their efficiencies. These efforts played a prominent role in the Company''s growth during the year. The Company will continue to engage in such initiatives in the future to serve its customers better and thereby achieve higher growth.
2. DIVERSIFICATION OF BUSINESS
Since 2014, with its large net worth and access to debt capital on competitive terms, your Company in the verge of diversification its business by leveraging its vast numbers of existing and new customers'' relationship developed through its mainstay Gold Loans business over the years. The objective of this diversification was to build at least 40 to 50% of total Assets under Management from sources other than gold loans, so as to mitigate the risk of being a single-product NBFC.
Your Company''s diversification strategy offered three clear potential advantages: Firstly, it sought to address the regulatory discomfort with mono-line NBFCs perceived as vulnerable to concentration risk. Secondly, it would enable the Company to cater to existing and new customers with new products and services. Finally, your Company would be able to accelerate the government''s agenda for inclusion by addressing the needs of the underprivileged sections of the population.
Accordingly, your Company is focusing on affordable housing finance, vehicle and equipment finance which includes commercial vehicle loans, two-wheeler loans, tractor 8 car loans, microfinance, SME finance, project and industrial finance, corporate finance and insurance broking. The idea was that with home and vehicle and equipment finance, the Company would reach out to the upwardly mobile customers. To cater to the people at the bottom of the pyramid, the Company would take the microfinance route with the collateral-free, joint liability model.
Over the last three years, i.e. FY 2016, FY 2017 8 FY 2018, the new business verticals have been successful in steadily scaling up their operations by leveraging (wherever required) your Company''s customer base, branch network and the goodwill of the Manappuram Brand. During the year under reference, the management was able to stabilize the business processes, scale up the operations (including network), enhance the manpower strength of each vertical and forge synergistic lead generation connections with the Company''s network.
The key achievement for FY 2018 has been that having begun literally from scratch in FY 2015, the Company''s non-gold new businesses now contribute 25.5% of the total assets under management. Over the three two years, Microfinance AUM has grown from Rs, 3,221 million in FY 2015 to Rs, 24,372 million in FY 2018. Your Company''s divisions vehicle and equipment finance and corporate finance have ended the year with an AUM of Rs, 6,254 million and Rs, 5,513 million, respectively. Your Company''s housing subsidiary, Manappuram Home Finance Limited has ended the year with an AUM of Rs, 3,747 million while insurance broking subsidiary has contributed a revenue of Rs, 19.6 million. Importantly, having established a sound footing, home loans, microfinance, corporate loans and vehicle 8 equipment loans are expected to continue to record strong growth in the coming years.
Microfinance
Asirvad Microfinance Limited took steps to consolidate the operations by addressing the issues arising out of demonetization event during November/December 2016. The full financial effect of that event spilled over to this financial year resulting in loss of Rs, 323 million. Most of the geographies, where Asirvad operates bounced back to pre-demonetization repayment levels except for few States like Karnataka and Haryana.
Asirvad is ranked 6th All India as NBFC MFIs. The Company has a network of 832 branches across 20 States with presence in 245 districts and 1,45,394 centres. It pursues the policy of continuing re-assessment of concentration risk 8 diversification. During the year, the Company passed on the reduction in interest rate charged by banks/Financial Institutions by reducing interest rate charged to customers from 23% to 22.25%.
Asirvad AUM grew by 36% to Rs, 24372 million in FY 17-18 from Rs, 17959 million in FY16-17, Active loan accounts grew by 21% to 2.3 million from 1.9 million in March 2017. 1.6 million Loan accounts were disbursed during the financial year and these loans have 99.4% repayment rate.
Total Operational Revenue grew by 28% to Rs, 4372 million for period FY17-18 compared with Rs, 3428 million for period FY 16-17, Pre provisional profit of Rs, 1083 million for period FY 17-18 compared to Rs, 1045 million for corresponding period. Provision for loan loss/Bad debt written off stood at Rs, 1583 million including standard provision of Rs, 205 million made for perioc FY17-18 as per Company policy. Had the Company followed RBI norms provision, Rs, 240 million less provision would have createc during the financial year.
Housing Finance
Manappuram Home Finance Limited (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 of about Rs, 8-11 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 35 branches the growth of the Home Loans business and Loan Against Property will be based on 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 the period between FY 2015 to FY 2017, in FY 2018 the management essentially focused on establishing the unit''s manpower strength through recruitment and training in robust business practices 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 FY 2018, MAHOFIN achieved a loan book size of '' 3,746 million. The business grew by 20.8% YoY and the loan portfolio has so far faced minimal delinquencies with NPAs held to 4.8%. Going forward, your Company is now ready with its teams, products and branches to grow the loan book size steadily to touch '' 7,773 million plus in FY 2019. Going forward, with strong demand, professional management and strong brand and network support of the parent, MAHOFIN remains focused on delivering results responsibly and achieving steady growth of business.
Manappuram Insurance Brokers
Manappuram Insurance Brokers Limited (MAIBRO), a 100% Subsidiary of Manappuram Finance Limited has closed the year at Rs, 91 crore of Total Business. The Company has done a new Business of Rs, 84.5 crore. The Company has in 2017-2018 launched various products across protection, health and motor to cater to various sections of the society.
The Company has the distinction of covering 16.7 lakh customers in 2017-2018. The Company covered 50000 families with a Health cover and 15.5 lakh customers through a Death cover. MAIBRO today has presence across the length and breadth of the country. The Company has used the parents brand anc strength to its advantage and provided new products across all Branches of the parent company and the Group companies.
In 2017-2018 MAIBRO has exclusively setup a renewal anc claims team to cater to its customers. The Company has improved its 13 month persistency to 71% and has been able to settle 95% of claims reported. The renewal and claims team regularly call up the customer to either collect the renewal premiums or help the customers get the benefits of the claims. MAIBRO is poised to achieve newer heights in 2018-2019.
Vehicle and Equipment Finance
I n order to diversify and de-risk portfolio, your Company had entered into commercial vehicle financing activity in FY 15 operating from southern and western regions and subsequently into other regions. The vehicle finance portfolio is about Rs, 6.28 billion spread across 116 locations in 20 States as on Mar 31, 18.
The Commercial Vehicle and construction equipment portfolio comprises of approximately 70% pre-owned vehicles and balance new vehicles with portfolio of Rs, 5.33 billion with 10030 live contracts as at the end of Mar 31,18. The two-wheeler finance portfolio is of Rs, 0.64 billion with more than 15000 live contracts and other vehicle loans comprises of a portfolio of around Rs, 0.31 billion.
The team consists of domain specialists and has established marketing channels and networks for lead acquisition, processing and receivable management. The business is supported by strong pre-screening methodologies and credit assessment for a healthy portfolio mix.
Our strategy envisages financing customers who are largely from unorganised sector, the retail clientele that is underservec by the formal banking channels. With the background of gooc monsoon prediction and increased government outlay for infrastructure projects, the growth of vehicle loan portfolio is expected to be robust in FY 19.
Your Company is in the course of building a scorecard model for a quicker customer assessment process and disbursements reducing the end to end turnaround time. With plans to focus on existing customer base for consumer vehicle loans your Company strongly believes that digital technology would be an integral component for the growth of the business in coming years.
MSME Lending
Micro, small and medium enterprise (MSME) sector is a vibrant and dynamic sector promising high growth potential for the Indian Economy. MSME''s play a critical role in the economy by providing large employment opportunities while contributing significantly to the Gross Domestic product (GDP) and exports of India. There are close to 51 million MSME units in the country that employ about 117 million people across various sectors constituting 40% of the workforce. The MSME share to the total GDP is about 37% and they also contribute to 43% of exports based on the data maintained by Ministry of Commerce. Apart from being a key contributor to the Indian economy, the MSME sector also has the fastest growing exposures in the commercial lending space with low delinquency (NPA) rates.
To participate in the robust growth demonstrated by the MSME sector and to address its ever-increasing credit demand, your Company has decided to foray into MSME lending by way of introducing tailored products for meeting working capital demands of MSME''s, which would be different than traditional secured financing options available. A focused approach, customized product offerings and a healthy mix of target geographies, will enable your Company to build a good quality book in this segment.
Corporate Lending
Manappuram corporate lending vertical caters to financing small and mid size NBFC''s which are mainly into housing, micro finance, vehicle and SME lending. It targets transactions ranging from Rs, 2 crore to 40 crore. Borrowers benefit from a range of products at competitive rates, each customizable in terms of repayment schedule and security. The attractiveness of lending to such companies is that they fetch better yield. In corporate loans, Manappuram focuses on providing funds to other NBFC''s for their portfolio origination. Corporate loan portfolio primarily consists of fund based product i.e. Term Loan.
Currently, all such loans are sourced through Northern Arc Capital (earlier known as IFMR Capital) who go beyond what the rating agencies do, they do a lot of field level study and basec on that Manappuram also have its own internal set of criteria for evaluation. Such corporate lenders are typically companies, which have some external private equity investments so that one can be assured of the corporate governance and also good auditors, and a professional promoter, so these are kind of companies which normally Manappuram lends.
Forex and Payments
Your Company has started taking baby steps in the payments landscape. Broadly the Payments division in MAFIL includes Inward Remittances under Money Transfer Service Scheme, Domestic Remittances under Banking Correspondent and Prepaid Instrument, Outward Remittances and Money Changing. The Company has recently raised its profile by becoming an RBI licensed Principal Agent. The Company already offers MTSS services through its network of branches. It has tied up with Western Union as a principal agent to bring in more focus on this business.
Your Company has a PPI license and a digital wallet offering "MAKASHâ to its customer. The Company is also a Banking Correspondent through its tie up with Yes Bank. Your Company offers this service to its gold loan customers. The Company intends to bring in focus by adding innovative features in its wallet proposition.
Your Company is an AD Category 2 license holder from Reserve Bank of India. RBI had also increased the limit outward remittances by an individual to USD 2,50,000 per annum in Jan 2016 under the LRS scheme. The sub segments of "travel abroadâ and "Studies abroadâ have grown the maximum. Your Company intends to enter this market in a focused way by starting this business in a few branches and then growing it in phase-wise manner.
3. SUBSIDIARIES
Your Company holds 90.38% equity shares of Asirvac Microfinance Limited and 100% equity shares of Manappuram Home Finance Limited and 100% equity shares of Manappuram Insurance Brokers Limited as on FY 2017-18.
Asirvad Microfinance Limited
Gross Income of the Company as at 31st March, 2018 is Rs, 4,683.28 million as compared to Rs, 3,634.20 million for the year ended 31st March, 2017 and Loss after Tax 31st March, 2018 with Rs, 323.01 million as compared to Rs, 343.32 million for the year ended 31st March, 2017.
Manappuram Home Finance Limited
Gross Income of the Company as at 31st March, 2018 is Rs, 535.27 million as compared to Rs, 368.36 million for the year ended 31st March, 2017 and net loss is Rs, 8.05 million for the year ended 31st March, 2018 as compared to the net loss of Rs, 10.7 million as at 31st March, 2017. AUM of the Company as at 31st March, 2018 is Rs, 3746.61 million which is 2.43% of consolidated AUM.
Manappuram Insurance Brokers Limited
Gross Income of the Company as at 31st March, 2018 is Rs, 4,97,64,635/- as compared to Rs, 2,02,84,414/- as for the year ended 31st March, 2017 and Profit for the year ended 31st March, 2018 is Rs, 134,79,858/- as compared to the Loss of Rs, 80,98,768/- as at 31st March, 2017.
Salient features of financial statements of the Company''s subsidiaries in form AOC-1 are annexed herewith as Annexure
- I(a) and the highlights of performance of subsidiaries are annexed herewith as Annexure - I(b).
4. RESERVES
During the FY 2017-18, the Company has not transferred any amount to General Reserves and it remains same as last FY, Rs, 3885.08 million. The total reserves and surplus as on March 31, 2018 stands at Rs, 36,459.76 million.
5. DEBENTURE REDEMPTION RESERVE
Pursuant to the provisions of the Companies Act, 2013 ("Actâ) 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% 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, 676.68 million from DRR during the year.
Furthermore, the Act stipulates that the Company has to invest, on or before 30th April of each year, in the prescribed manner, a sum equal to 15% of the NCDs maturing during the year ending on the 31st March of the next year The Company hac duly deposited with a Scheduled Bank, Rs, 291.20 million in April
2017 w.r.t debentures matured during FY 2017-18 and has also deposited Rs, 2.62 million in April 2018 w.r.t. debentures maturing in FY 2018-19.
6. RESOURCES
The Company 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 lines from the banks and financial institutions. Your Company as at March 31, 2018 availed various credit facilities from 20 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 privately placed 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.
7. MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis Report is attached and forms an integral part of the Annual Report. The report discusses in detail, the overall industry situation, economic developments, sector wise performance, outlook and state of company''s affairs.
8. REPORT ON CORPORATE GOVERNANCE
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 adhere to good Corporate Governance standards that lays strong emphasis on integrity, transparency and overall accountability. The report on corporate governance forms integral part of this annual report.
9. BUSINESS RESPONSIBILITY REPORT
Business Responsibility Report in line with the National Voluntary Guidelines (NVG) on Social, Environmental and Economic Responsibilities of Business, released by the Ministry of Corporate Affairs, Government of India and as stipulated under Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (''SEBI LODR'') forms integral part of this Annual Report and the same has been hosted on the website of the Company https://manappuram.com/public/uploads/editor-images/files/ Manappuram%20BRR%2014-21%20Pages%20%281%29.pdf
Business Responsibility Report provides information on key initiatives undertaken by the Company, driven by the triple bottom line (people, planet and Profit) aspects and is aligned with the nine principles of NVG. Your Company, together with its subsidiaries viz. Manappuram Home Finance Limited, Asirvad Microfinance Limited and Manappuram Insurance Brokers Limited, serves millions of customers in the financial services space. Your Company has moved towards enhancing the Business Responsibility framework to align them with the Business Responsibility Reporting guidelines/standards as per SEBI.
Your Company''s initiatives of Sustainability, Corporate Social Responsibility (CSR) and Business Responsibility is driven from the top. Board-level CSR Committee is entrusted with formulating, revising and updating our CSR Policy which governs the implementation of all our CSR initiatives in compliance with Section 135 of Companies Act, 2013. Various policies including CSR Policy policies and Business responsibility policy guide our stringent adherence to compliance and governance. The business responsibility performance of the Company is assessed annually by the Board of Directors. Your Company believes in conducting its operations in a fair and transparent manner. Within the organization, your Company works towards integrating community development, responsible governance, stakeholder inclusiveness and environmental responsibility into business practices and operations.
Your Company seeks to differentiate itself by building a new age NBFC to serve the financial needs of all sections of society in India, especially the less privileged/ under privileged sections. This will be achieved by providing a basket of diversifies products and services, backed by state of the art technology, and driven through a culture that values customer service.
10. DIRECTOR''S RESPONSIBILITY STATEMENT
Pursuant to section 134 of the Act the board of directors, to the best of their knowledge and ability, confirm that:
i. I n 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 applies 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 2017-18.
11. MEETINGS OF THE BOARD
During the financial year 2017-18, Board of Directors met on seven occasions. For further details of these Board Meetings, please refer to the Corporate Governance Section of this Report.
12. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS
Your Company has received necessary declarations from all Independent Directors of the Company confirming that they meet criteria as mentioned in Section 149 of the Act anc SEBI LODR. Your Company has also received undertaking and declaration from each director on fit and proper criteria in terms of the provisions of Non-Banking Financial Company
- Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 ("RBI NDSI Master Directions, 2016â).
13. POLICY ON BOARD COMPOSITION COMPENSATION
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 Committee of the board in compliance with the provisions of Section 178 of the Act. The policy can be viewed at https://www.manappuram.com/ public/uploads/edit.or-imaees/files/Policy%20on%20Board%20 composition%20and%20Compensation..pdf and is also annexes to this report as Annexure II.
14. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are provides in Note-12,14, 15 and 33 to the Standalone Financial Statements
15. PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES
contracts / arrangements / transactions entered by the Company during the FY 2017-18 with related parties under Section 188 of the Act were in ordinary course of business and on 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 provisions of Regulation 23 of SEBI LODR and the Company''s policy on related party transactions. Therefore, particulars of contracts / arrangements with related parties under Section 188 in Form AOC-2 is not annexed with this report.
Your Directors draw attention of the members to Note 25 to the Standalone Financial Statement which sets out related party disclosures.
The Policy on related party transactions as approved by the Board which is annexed to this report as Annexure III may be accessed on the Company''s website at the https:// www.manappuram.com/public/uploads/editor-images/files/ POLICYONRELATEDPARTYTRANSACTIQNS080217.pdf.
16. DIVIDEND
Four interim dividends were declared at the rate of 50 paise per equity share during the financial year 2017-18, on 25th May 2017, 10th August 2017, 7th November 2017 and 08th February, 2018 respectively.
An aggregate of '' 2.00/- per equity share, amounting to 100% of the paid-up value of the shares was paid by the Company during the financial year 2017-18.
The Dividend Distribution Policy as per the SEBI LODR is available at the following link: https://www.manappuram.com/ public/uploads/editor-images/files/Dividend%20Distribution%20 Policy-090816.pdf
17. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO:
These details are provided as Annexure IV to this report.
18. RISK MANAGEMENT POLICY
The Company has a Board of Directors approved Risk Management Policy wherein material risks faced by the Company including Operational Risk, Regulatory Risk, Price, Interest Rate Risk and Credit Risk are identified and assessed. The Risk Management Committee periodically reviews the various risks faced by the Company and advises the Board on risk mitigation plans. Risk Management policy may be accessed on the Company''s website at the link: https://www. manappuram. com/public/uploads/editor-images/files/20-Risk-Management-Policy.pdf
19. CORPORATE SOCIAL RESPONSIBILITY POLICY
The Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company have 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: https://www.manappuram.com/public/uploads/edit.or-images/files/CSR%20Policy.pdf
The Corporate Social Responsibility initiatives taken by the Company during the FY 2017-18, is detailed in the Report on CSR activities which is annexed herewith marked as Annexure V.
20. FORMAL ANNUAL EVALUATION
The board of directors have carried out annual evaluation of its own performance, board committees and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by SEBI LODR. The following were the performance evaluation parameters during the year;
Board |
Committees |
Non-Executive Directors (including Independent Director) |
Board Composition and Quality |
Function and Duties |
Participation at Board/ Committee Meetings. |
Board Meetings and Procedure |
Committee Meetings and Procedures |
Relationship, Knowledge and Skill |
Board Strategy and Risk Management |
Overall rating of Board Committees |
Independence |
Overall rating of Boarc Performance |
The board and the Nomination Committee reviewed the performance of the Non-Executive directors (including Independent Director) on the basis of the criteria 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 furtherance to above performance evaluation parameters pertaining to Non-Executive directors (including Independent Director),Nomination Committee and Board has evaluated performance of Managing Director and Whole-time Director based on the performance of additional criteria as detailed in the Corporate Governance Report. 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 on the Board, as reviewed and recommended by the Nomination Committee on fit and proper criteria under RBI NDSI Master Directions, 2016.
21. DETAILS OF REMUNERATION / COMMISSION RECEIVED BY MD OR ED FROM SUBSIDIARIES
During the FY 2017-18, Mr. B.N.Raveendra Babu (Executive Director) has received remuneration by way of sitting fee, Rs, 0.32 million for attending Board/Committees meetings of the subsidiary, Manappuram Insurance Brokers Limited and Mr. V. P Nandakumar (Managing Director 8 CEO) has not received any remuneration or commission from any of the subsidiaries of the Company for the FY 2017-18.
22. AUDIT AND AUDITORS REPORT
Deloitte Haskins 8 Sells LLP, Chartered Accountants have been appointed as the Statutory Auditors by shareholders at the 25th AGM, to hold office up to the conclusion of 30th AGM.
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.
There were no frauds reported by the statutory auditors to Audit Committee or Board under Section 143 of the Act.
Secretarial Audit
The Board appointed KSR 8 Co. Practicing Company Secretaries LLP, to conduct Secretarial Audit for the financial year 2017-18.
Secretarial audit report for year ended on March 31, 2018 as provided by KSR 8 Co. Practicing Company Secretaries LLP, Indus chambers, Ground floor, No.101, Govt Arts College Road, Coimbatore-641018, is annexed to this Report as Annexure- VI.
The reports issued by Statutory Auditor and Secretarial Auditor does not contain any qualification, reservation adverse remark or disclaimer.
23. DIRECTORS AND KEY MANAGERIAL PERSONNEL, CHANGE, IF ANY
Mr.Gautam Ravi Narayan has been appointed as Additional Director on 08.02.2018. The Board recommends his appointment subject to approval by the Shareholders at the ensuing Annual General Meeting.
There were no other changes in Directors or Key Managerial Personnel during the FY 2017-18.
24. SHARE CAPITAL
During the year 2017-18, the Company has allotted 636126 equity shares of '' 2 each pursuant to exercise of stock options.
Consequently, the paid-up equity share capital of the Company stood as on 31.03.2018 at Rs, 1,685.07 million consisting of 842,535,762 equity shares of Rs, 2 each.
During the year under review, the Company has not issued shares with differential voting rights, bonus shares and sweat equity shares.
25. DEPOSITS
As you are aware, your Company had stopped acceptance of deposits from the public since FY 2009-10. Your Company had converted itself into a non deposit taking Category ''B'' NBFC. During FY 2017-18 the Company has not accepted deposits as per Chapter V of the Act..
The balance unclaimed deposit as on March 31, 2017 was Rs, 0.062 million and the same has been transferred to IEPF in accordance with the provisions of Companies Act, 2013, during FY 2017-18. There is NIL balance unclaimed deposit as on March 31, 2018.
26. COMPLIANCE WITH NBFC REGULATIONS
Your Company has complied with all the regulatory provisions of the Reserve Bank of India applicable to Non-Banking Financial Company - Systemically Important Non-Deposit taking Company. As on March 31, 2018, the Capital Adequacy Ratio of the Company is 26.60%, well above the statutory requirement of 15%. The Company has not issued any Perpetual Debt Instruments.
27. EMPLOYEE STOCK OPTION SCHEME (ESOS)
In order to retain the best available talent, ensure long term commitment to the Company, and encourage individual ownership, Company has instituted employee stock options plans from time to time.
Presently, the Company has Employee Stock Option Scheme 2016 (''ESOS-2016'').
Board at its meeting held on August 10, 2017 has canceled the ESOS 2009 and 448500 lapsed options under ESOS 2009 based on the recommendation of the Nomination Compensation anc Corporate Governance Committee with effect from August 10, 2017 and the same has been intimated to the stock exchanges.
Disclosures in terms of ''Guidance note on accounting for employee share based payments'' issued by ICAI and diluted EPS in accordance with Accounting Standard 20 - Earnings Per Share are provided in note 24 of Standalone Financial Statements in this Annual Report.
Details related to stock option schemes as required under SEBI SBEB Regulations read with Securities and Exchange Board of India circular no. CIR/CFD/POLICY CELL/2/2015 dated June 16, 2015 are provided in Note 24 of the Standalone Financial
Statements in this Annual Report and Annexure VII of this report and are also available on Company''s website at https:// manappuram.com/investors/annual-reports.html
A certificate from Deloitte Haskins and Sells LLP, Statutory Auditors (Firm''s Registration No.117366W/W-100018), Statutory Auditors, confirming that ESOS 2016 has been implemented in accordance with the SEBI SBEB Regulations and that the respective resolutions passed by the Company in General Meetings would be placed in the ensuing Annual General Meeting for inspection by the members.
28. 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 |
Mr. P. |
Chairman |
Independent, |
Manomohanan |
Non-Executive |
|
Dr. Shailesh J Mehta |
Member |
Independent, Non-Executive |
Mr. E.A. Kshirsagar |
Member |
Non-Independent Non-Executive |
Mr. V.R. Rajiven |
Member |
Non-Independent Non-Executive |
Dr. Amla Samanta |
Member |
Non-Independent Non-Executive |
Whistle Blower Policy and Vigil Mechanism
The Vigil Mechanism of the Company provides adequate safeguards against the victimization 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 and a Member (Woman Director) of the Audit Committee.
No person has been denied access to the Chairman and a Member (Woman Director) of the audit committee. Company has ensure that its employees are well aware of the content and procedure of the policy and fully protected. The Whistle Blower Policy anc Vigil Mechanism may be accessed on the Company''s website at the link: https://www.manappuram.com/public/uploads/editor-images/files/22-Whistle-blower-Policy-v2.pdf
29. EXTRACT OF ANNUAL RETURN
Extract of annual return in Form MGT-9 is annexed herewith as Annexure- VIII.
30. DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS AND INTERNAL AUDIT
Your Company has put in place, well defined and adequate Internal Control System and Internal Financial Control (IFC) mechanism commensurate with size, scale and complexity of its operations to ensure control of entire business and assets. The functioning of controls is regularly monitored to ensure their efficiency in mitigating risks. A comprehensive internal audit department functions in house to continuously audit and report gaps if any, in the diverse business verticals and statutory compliances applicable.
During the year, Internal Financial Controls were reviewed periodically by the management and Audit Committee. Key areas were subject to various statutory and internal audits in order to review the adequacy and strength of IFC followed by the Company. As per the assessment, Controls are strong and there are no major concerns. The internal financial controls are adequate and operating effectively so as to ensure orderly and efficient conduct of business operations.
Your Company has an independent internal audit function which carries out regular internal audits to test the design, operations, adequacy and effectiveness of its internal control processes and also to suggest improvements to the management. KPMG was appointed in terms of Section 138, to conduct internal audit of functions. Their observations along with management response are periodically reviewed by Audit Committee and Board anc necessary actions are taken.
31. LISTING WITH STOCK EXCHANGES
Your Company confirms that it has paid the Annual Listing Fees for the financial year 2017-18 to Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) where the Company''s shares are listed..
32. SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
During the year under review, there were 4 cases filed with the Internal Complaints Committee of the Company, pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the same were investigated and resolved. No complaints were pending more than 90 days during FY 2017-18.
33. CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Act, SEBI LODR and Accounting Standard (AS) - 21 on Consolidated Financial Statements, the audited consolidated financial statement is provided in the Annual Report.
34. CREDIT RATING
Your Company holds valid credit rating from Brickwork, CRISIL, ICRA and CARE for Non-Convertible Debentures, Short Term and Long Term Bank Facilities and Commercial Paper as follows:
a. CRISIL rated Bank Loan Facilities amounting to '' 2,500 million as CRISIL AA- / Stable.
b. CRISIL rated Non - Convertible Debentures amounting to '' 25,075 million as CRISIL AA- / Stable.
c. CRISIL rated Commercial Paper of '' 35,000 million as CRISIL A1 Stable
d. I CRA rated Non - Convertible Debentures amounting to 2,701.2 million as [ICRA] AA- (Stable)
e. CARE rated Bank Loan Facilities for Long Term amounting to '' 56,800 million as CARE AA;- Stable (Double A; Stable)
f. CARE rated Bank Loan Facilities for Short Term amounting to '' 33,200 million as CARE A1 (A One Plus)
g. Care rated Non-Convertible Debentures amounting to '' 5,800 million as CARE as AA-;Stable
h. Care rated Commercial Paper of '' 35,000 million as CARE A1 (A 1 Plus)
i. Brickwork rated Non - Convertible Debentures amounting to '' 547 million as BWR AA-
35. DETAILS OF AUCTIONS HELD DURING THE YEAR 2017-18
Additional disclosures as required by RBI NDSI Master Directions, 2016:
Year |
Number of Loan Accounts |
Principal Amount outstanding at the dates of auctions (A) (Rs, In Millions) |
Interest Amount outstanding at the dates of auctions (B) (Rs, In Millions) |
Total (A B) (Rs, In Millions) |
Value fetched (Rs, In Millions) |
March 31, 2017 |
3,05,439 |
9289.54 |
1466.29 |
10755.83 |
10704.05 |
March 31, 2018 |
3,32,767 |
9,045.30 |
1,126.70 |
10,172.00 |
10,585.50 |
Note: No sister concern participated in the auctions during the year ended March 31, 2017 and March 31, 2018
36. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURE
Particulars of employees and related disclosures are annexed herewith as Annexure IX as per Section 197 of the Act.
37. 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, 2018 as stipulated in Part E of Schedule V of SEBI LODR is annexed as Annexure - X.
38. SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS
There were no such significant / material orders passed by the Regulators during the financial year 2017-18.
39. MATERIAL EVENT SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENT
There have been no material changes and commitments, affecting the financial position of the Company which occurred between the end of the FY 2017-18 and the date of this report.
40. ACKNOWLEDGEMENT
Your Directors express 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, Debenture Trustees, RTA''s, Depositories, Central and State Governments and its statutory bodies for the support, guidance and co-operation. Your Directors wish to thank the Customers, Investors, Shareholders, Debenture holders, Bankers, Auditors, Scrutinizer and other financial institutions and other stakeholders for the whole hearted support and confidence reposed on the Company
For and on behalf of the Board of directors
of Manappuram Finance Limited
Sd/-
Jagdish Capoor
Place: Valapad DIN: 00002516
Date: May 18, 2018 Chairman
Mar 31, 2017
Dear Members,
The Board of Directors of Manappuram Finance Limited have pleasure in presenting before you, the 25th Annual Report of the Company together with the Audited Consolidated and Standalone Statements of Accounts for the financial year ended 31st March, 2017.
1. FINANCIAL SUMMARY/HIGHLIGHTS AND STATE OF AFFAIRS
The standalone and consolidated financial highlights of your Company are as follows:
(Rs, in million)
Description |
Standalone |
Consolidated |
||
2016-17 |
2015-16 |
2016-17 |
2016-17 |
|
Gross Income |
30084.33 |
22148.89 |
34,089.16 |
23,712.35 |
Total Expenditure |
18935.56 |
16959.77 |
22,431.96 |
18,228.52 |
Profit Before Tax |
11148.77 |
5189.12 |
11,657.20 |
5,483.83 |
Provision for Taxes/Deferred tax |
3888.43 |
1816.69 |
4072.30 |
1932.25 |
Minority interest |
0.00 |
0.00 |
26.42 |
17.90 |
Net Profit |
7260.34 |
3272.43 |
7,558.48 |
3,533.68 |
Profit b/f from previous year |
3098.64 |
2848.66 |
3,159.29 |
2,851.54 |
Amount available for appropriations |
10358.98 |
6221.09 |
10,717.77 |
6,385.22 |
Appropriations: |
||||
Transfer to Statutory Reserve |
1452.07 |
674.49 |
1,521.12 |
722.41 |
Transfer to General Reserve |
0.00 |
0.00 |
0.00 |
0.00 |
Transfer to Debenture Redemption Reserve |
102.26 |
169.91 |
102.26 |
169.91 |
Interim Dividend on Equity Shares |
1262.56 |
1892.74 |
1,262.56 |
1,892.74 |
Tax on Interim Dividend |
257.02 |
385.31 |
257.02 |
385.31 |
Proposed Equity Dividend |
0.00 |
0.00 |
0.00 |
0.00 |
Tax on dividend |
0.00 |
0.00 |
0.00 |
0.00 |
Balance carried forward to next year |
7285.07 |
3098.64 |
7,574.81 |
3,159.29 |
During the Financial Year ("FY") 2016-17 under review, total revenue of the Company has gone up by 35.8% and Profit after tax has gone up by 115.3% in comparison to the previous year. As of March 31, 2017, the loan book of the Company stood at Rs, 115,509.63 million as against Rs, 103,055.98 million on March 31, 2016. 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, short term loan schemes, macro-economic scenario, and certainties in the regulatory environment for gold loan NBFCs. A system of regular, periodical collection of interest is being followed across our branches. Our improving credit and risk profile enabled us to lower our cost of funding significantly.
During FY 2016-17, the Company has undertaken several initiatives to facilitate customers to avail online gold loan. Customers can use the facility to remit interest, repay loan and even avail the loan sitting anywhere. The Online Gold Loan Facility for customers have increased ease of availing loan and hence has also contributed in the accelerated growth in Net Profits. In creating an awareness among the customers to remit online and repay loan various technology awareness campaign have been conducted across various branches in each and every state and significantly enhanced our marketing spend with growing BTL 8 ATL activities.
During the year, the Company continued to offer customer friendly short tenure loan schemes with an option for the customers to choose the schemes based on their convenience and requirement. Compared to longer tenure loan schemes in previous years, 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.
Local marketing activities like village campaigns, Loan Melas, Shop visits, Home visits, notice distribution were carried out extensively. Major 360-degree campaign for Online Gold Loans were conducted on mass media which had accelerated acquiring of new customers during FY 2016-17 despite various extraneous challenges. Consistent review and monitoring at field level was done to ensure business propensity. Employee motivation through incentives and other activities also contributed to the positive growth of Company. Local marketing activities were conducted on a scale ranging from mass marketing to individual marketing. Local marketing lies between these two levels and implies segmentation on a local level and implies "Grassroots marketing" where in marketing activities concentrate on getting close and personally relevant to individual customers'' possible level.
I n the aftermath of demonetization, the Company as a part its commitment to its roots engaged in intense on-ground digital literacy program "Project E-Valapad" in partnership with the Panchayat aimed at spreading digital financial literacy among households in the Valapad village area. For this purpose, a dedicated team consisting of employees of the Company, ward members and a batch of trained volunteer students from the nearby S.N. College, Nattika fanned out to all the wards. They went door-to-door imparting training to all the households in the use of various online means of payments and other financial transactions. The mission was to ensure that at least one member of each of the 9809 households would become e-literate in terms of being conversant with the different platforms of making cashless transactions. The Project was completed successfully and the Valapad Panchayat 89% households was declared fully literate village. The Panchayat covers an area of 16.33 sq. km with a population of about 35,000, a literacy rate of 86.5%, and with the BPL population at 40% (2011 census). This also encouraged the customers from the Valapad area to make interest payments and loan re-payment through electronic mode.
Employees'' motivation through incentives, awards and other activities has also contributed to the positive growth of the Company. The endeavour is to take forward more such initiatives to gain business growth through such community engagements besides mass media and digital initiatives.
2. DIVERSIFICATION OF BUSINESS
I n FY 2015, with its large net worth and access to debt capital on competitive terms, your Company decided to diversify its business by leveraging its vast numbers of existing and new customers'' relationship developed through its mainstay Gold Loans business over the years. The objective of this diversification was to build at least 40 to 50 percent of total Assets under Management from sources other than gold loans, so as to mitigate the risk of being a single-product NBFC.
Your Company''s diversification strategy offered three clear potential advantages: Firstly, it sought to address the regulatory discomfort with mono-line NBFCs perceived as vulnerable to concentration risk. Secondly, it would enable the Company to cater to existing and new customers with new products and services. Finally, your Company would be able to accelerate the government''s agenda for inclusion by addressing the needs of the underprivileged sections of the population.
Accordingly, your Company focused on three areas of affordable housing finance, commercial vehicle loans and microfinance. The idea was that with home and commercial vehicle loans, the Company would reach out to the upwardly mobile customers. To cater to the people at the bottom of the pyramid, the Company would take the microfinance route with the collateral-free, joint liability model. The Chennai based Asirvad Microfinance Limited. was acquired by your Company in February 2015 pursuant to this strategy.
Over the last two years, i.e. FY 2016 and FY 2017, the new business verticals have been successful in rapidly scaling up their operations by leveraging (wherever required) your Company''s customer base, branch network and the goodwill of the Manappuram Brand. During the year under reference, the management was able to stabilize the business processes, scale up the operations (including network), enhance the manpower strength of each vertical and forge synergistic lead generation connections with the Company''s network.
The key achievement for FY 2017 has been that having begun literally from scratch in FY 2015, the Company''s non-gold new businesses now contribute nearly 19 percent of the total assets under management. Over the last two years, Asirvad Microfinance Limited has grown at a CAGR of 136 percent with its AUM growing from '' 3,221 million in FY 2015 to '' 17,959 million in FY 2017. Your Company''s housing subsidiary, Manappuram Home Finance Private Limited has ended the year with an AUM of '' 3,104 million while the commercial vehicle loans vertical has recorded an AUM of '' 3,058 million. Importantly, having established a sound footing, both home loans and vehicle loans are expected to continue to record strong growth in the coming years.
Microfinance:
Asirvad Micro Finance Limited (''Asirvad'') has continued to strengthen its Microfinance business in FY 2017. Asirvad has relied upon its distribution capability to drive its growth. Despite the growth rates slowing down post demonetization, Asirvad has achieved growth in AUM to '' 17,959 million in FY 2017 as compared to '' 9,988 million in FY 2016. The healthy 80% growth rate is achieved by broad basing the customer base and venturing into newer geographies. This compares very favorably with the Industry growth rate of 26%. Asirvad is now present in 16 States 8 2 Union Territories as compared to13 States 8 2 UT''s as of the end of the previous financial year. Asirvad has branch network of 763 branches located in these states efficiently serving 1.19 million customers. With this phenomenal growth and also conversion of few large MFIs as Small Finance Banks, Asirvad has moved up 8 places in the MFIN rankings and is currently ranked as 6th largest NBFC MFI in India. The Credit ranking of Asirvad improved by 2 notches from A- to A this year. The acquisition of majority stake of the Company by Manappuram Finance in Feb 2015 and further infusion of equity by it in March 2016 enabled Asirvad raise debt from Banks and NBFCs besides issue of various debt instruments at attractive interest rates thereby bringing down the cost of funds from 16% to 13%. Asirvad also passed on this interest benefit by reducing the lending rate to its borrowers from 26 % to 23% during the period. Asirvad also raised Tier II debt amounting to '' 1,150 million from reputed Institutions during FY 2017 which helped it improve its capital adequacy ratio to 20.6%. These positive factors will enable it to continue its growth momentum 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 of about Rs, 12-13 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 35 branches the growth of the home loans business and LAP will be based on 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 the period between FY 2015 to FY 2016, in FY 2017 the management essentially focused on establishing the unit''s manpower strength through recruitment and training in robust business practices 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 FY 2017, MAHOFIN achieved a loan book size of '' 3,104 million. The business grew by 142% YoY and the loan portfolio has so far faced minimal delinquencies with NPAs held down to 1.5%. Going forward, your Company is now ready with its teams, products and branches to grow the loan book size steadily to touch '' 8,000 million plus in FY 2018. Going forward, with strong demand, professional management and strong brand and network support of the parent, MAHOFIN remains focused on delivering results responsibly and achieving steady growth of business.
Commercial Vehicle Finance:
In order to diversify and de-risk portfolio, your Company had entered into commercial vehicle financing activity in FY 15 primarily in the Southern and Western regions and has recently launched operations in the Northern markets as well. The vehicle finance portfolio is about '' 3.06 billion spread across 43 hubs in 10 States as of March 31, 2017. The portfolio comprises approximately 65% pre-owned vehicles and the balance being new vehicles. The vertical has a team of around 300 domain specialists and has established marketing channels and networks for lead acquisition and processing. The business is supported by strong pre-screening methodologies and credit assessment.
Our strategy envisages financing Vehicle and Construction Equipment for the category of customers who are largely from the unorganized sector, the retail clientele that is underserved by the big banks. Increased Infrastructure spends, faster movement of goods across the country by e-retailers, and availability of finance has resulted in growth in CV sales during FY 2017. Against the backdrop of good monsoon, growth in the sector is expected to be robust in FY 2018. The Construction segment continues to grow strongly due to increase in road construction, as contractors have started on ground execution of projects. The Coal and Iron Ore mining segment is also showing momentum and will support incremental demand for Construction Equipment.
The Commercial Vehicle Finance vertical has its focus on digitization for the technological functions across analytics, lending platform and performance measurement tool for process efficiency, competitiveness and customer satisfaction. With plans to focus on construction equipment, auto loans and two wheeler loans along with commercial vehicles, your Company strongly believes that digital technology would be an integral component of the business growth going forward.
3. SUBSIDIARIES
Your Company holds 90.38% equity shares of Asirvad Microfinance Limited and 100% equity shares of Manappuram Home Finance Private Limited and 100% equity shares of Manappuram Insurance Brokers Private Limited as on FY 2016-17.
Asirvad Microfinance Limited
Gross Income of the Company as at 31st March, 2017 is '' 3634.20 Million as compared to '' 1560.90 Million for the year ended 31st March, 2016 and Profit after Tax has gone up by 43% as at 31st March, 2017 with '' 343.30 Million as compared to '' 239.60 Million for the year ended 31st March, 2016.
Manappuram Home Finance Private Limited
Gross Income of the Company as at 31st March, 2017 is '' 368.36 Million as compared to '' 98.62 Million for the year ended 31st March, 2016 and net loss is '' 10.7 Million for the year ended 31st March, 2017 as compared to the net loss of '' 53.80 Million as at 31st March, 2016. AUM of the Company as at 31st March, 2017 is '' 3,100.14 Million which is 2.27% of consolidated AUM.
Manappuram Insurance Brokers Private Limited
Gross Income of the Company as at 31st March, 2017 is '' 20.28 Million as compared to '' 18.98 Million as for the year ended 31st March, 2016 and Loss for the year ended 31st March, 2017 is '' 8.09 Million as compared to the Profit after tax of '' 1.36 Million as at 31st March, 2016.
Salient features of financial statements of the Company''s subsidiaries in form AOC-1 are annexed herewith as Annexure -I(a) and the highlights of performance of subsidiaries are annexed herewith as Annexure - I(b).
4. RESERVES
During the FY 2016-17, the Company has not transferred any amount to General Reserves and it remains same as last FY, '' 3885.08 million. The total reserves and surplus as on March 31, 2017 stands at '' 31,423.73 million.
5. DEBENTURE REDEMPTION RESERVE
Pursuant to the provisions of the Companies Act, 2013 ("Act") 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 '' 102.26 Million to DRR during the year.
Furthermore, the Act stipulates that the Company has to invest, on or before 30th April of each year, in the prescribed manner, a sum equal to 15 percent of the NCDs maturing during the year ending on the 31st March of the next year. The Company had duly deposited with a Scheduled Bank, '' 189.08 million in April 2016 w.r.t debentures matured during FY 2016-17 and has also deposited '' 291.20 million in April 2017 w.r.t . debentures maturing in FY 2017-18.
6. 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, 2017 availed various credit facilities from 26 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 privately placed 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.
7. MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis Report is attached and forms an integral part of the Annual Report. The report discusses in detail, the overall industry situation, economic developments, sector wise performance, outlook and state of company''s affairs.
8. REPORT ON CORPORATE GOVERNANCE
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 adhere to good Corporate Governance standards that lays strong emphasis on integrity, transparency and overall accountability. The report on corporate governance forms integral part of this annual report.
9. BUSINESS RESPONSIBILITY REPORT
Business Responsibility Report in line with the National Voluntary Guidelines (NVG) on Social, Environmental and Economic Responsibilities of Business, released by the Ministry of Corporate Affairs, Government of India and as stipulated under Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (''SEBI LODR'') forms integral part of this Annual Report and the same has been hosted on the website of the Company http://www. manappuram. com/public/uploads/editor-imaees/files/Manappuram BRR 16 17.pdf
Business Responsibility Report provides information on key initiatives undertaken by the Company, driven by the triple bottom line (people, planet and Profit) aspects and is aligned with the nine principles of NVG. Your Company, together with its subsidiaries viz. Manappuram Home Finance Pvt. Ltd, Asirvad Microfinance Limited and Manappuram Insurance Brokers Private Limited, serves millions of customers in the financial services space. Your Company has moved towards enhancing the Business Responsibility framework to align them with the Business Responsibility Reporting guidelines/standards as per SEBI.
Your Company''s initiatives of Sustainability, Corporate Social Responsibility (CSR) and Business Responsibility is driven from the top. Board-level CSR Committee is entrusted with formulating, revising and updating our CSR Policy which governs the implementation of all our CSR initiatives in compliance with Section 135 of Companies Act, 2013. Various policies including CSR Policy policies and Business responsibility policy guide our stringent adherence to compliance and governance. The business responsibility performance of the Company is assessed annually by the Board of Directors. Your Company believes in conducting its operations in a fair and transparent manner. Within the organization, your Company works towards integrating community development, responsible governance, stakeholder inclusiveness and environmental responsibility into business practices and operations.
Your Company seeks to differentiate itself by building a new age NBFC to serve the financial needs of all sections of society in India, especially the less privileged/ under privileged sections. This will be achieved by providing a basket of diversified products and services, backed by state of the art technology, and driven through a culture that values customer service.
10. DIRECTOR''S RESPONSIBILITY STATEMENT:
Pursuant to section 134 of the Act the board of directors, to the best of their knowledge and ability, confirm that:
i. I n 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 2016-17.
11. MEETINGS OF THE BOARD
During the financial year 2016-17, Board of Directors met on six occasions. For further details of these Board Meetings, please refer to the Corporate Governance Section of this Report.
12. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS
Your Company has received necessary declarations from all Independent Directors of the Company confirming that they meet criteria as mentioned in Section 149 of the Act and SEBI LODR. Your Company has also received undertaking and declaration from each director on fit and proper criteria in terms of the provisions of Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 ("RBI NDSI Master Directions, 2016").
13. POLICY ON BOARD COMPOSITION COMPENSATION
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 Committee of the board in compliance with the provisions of Section 178 of the Act. The policy can be viewed at http://www.manappuram.com/ public/uploads/editor-images/files/Policy%20on%20Board%20 composition%20and%20Compensation..pdf and is also annexed to this report as Annexure II.
14. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are provided in Note-11,13, 14 and 32 to the Standalone Financial Statements
15. PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES
ll contracts / arrangements / transactions entered by the Company during the FY 2016-17 with related parties under Section 188 of the Act were in ordinary course of business and on 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 provisions of Regulation 23 of SEBI LODR and the Company''s policy on related party transactions. Therefore, particulars of contracts / arrangements with related parties under Section 188 in Form AOC-2 is not annexed with this report.
Your Directors draw attention of the members to Note 24 to the Standalone Financial Statement which sets out related party disclosures.
The Policy on related party transactions as approved by the Board which is annexed to this report as Annexure III may be accessed on the Company''s website at the http://www. manappuram.com/public/uploads/editor-images/files/Policy%20 on%20Board%20composition%20and%20Compensation..pdf
16. DIVIDEND
Three interim dividends were declared at the rate of 50 paise per equity share during the financial year 2016-17, on 09th August 2016, 10th November 2016 and 08th February, 2017 respectively.
An aggregate of '' 1.5/- per equity share, amounting to 75 percent of the paid-up value of the shares was paid by the Company during the financial year 2016-17.
During FY 2016-17, the Board of Directors has approved a Dividend Distribution Policy as per the SEBI LODR which is available at the following link: http://www.manappuram.com/ public/uploads/editor-images/files/Dividend%20Distribution%20 Policy-090816.pdf
17. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO:
These details are provided as Annexure IV to this report.
18. RISK MANAGEMENT POLICY
The Company has a Board of Directors approved Risk Management Policy wherein material risks faced by the Company including Operational Risk, Regulatory Risk, Price, Interest Rate Risk and
Credit Risk are identified and assessed. The Risk Management Committee periodically reviews the various risks faced by the Company and advises the Board on risk mitigation plans. Risk Management policy may be accessed on the Company''s website at the link: http://www.manappuram.com/public/uploads/editor-images/files/20-Risk-Management-Policy.pdf.
19. CORPORATE SOCIAL RESPONSIBILITY POLICY
The Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company have 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/public/uploads/editor-images/files/04-CSR-Policy.pdf
The Corporate Social Responsibility initiatives taken by the Company during the FY 2016-17, is detailed in the Report on CSR activities which is annexed herewith marked as Annexure V.
20. FORMAL ANNUAL EVALUATION
The board of directors have carried out annual evaluation of its own performance, board committees and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by SEBI LODR. The following were the performance evaluation parameters during the year;
Board |
Committees |
Individual Director |
Board Structure |
Committee |
Attendance |
and Composition |
Structure and Composition |
|
Effectiveness of |
Degree of |
Professional Conduct |
Board processes, |
fulfillment of key |
|
information and functioning |
responsibilities |
|
Establishment |
Effectiveness of |
Role and functions |
and delineation of responsibilities to Committees |
meetings |
|
Quality of |
Committee |
Duties |
relationship between the Board and the Management |
dynamics |
|
Quality of |
Contribution to the |
|
relationship of the |
Board/ Committees/ |
|
Committee with the Board and the management |
Senior management |
The board and the Nomination Committee reviewed the performance of the individual directors on the basis of the criteria 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 furtherance to above performance evaluation parameters pertaining to individual Directors,
Nomination Committee and Board has evaluated performance of Managing Director and Whole-time Director based on the performance of additional criteria as detailed in the Corporate Governance Report. 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 on the Board, as reviewed and recommended by the Nomination Committee on fit and proper criteria under RBI NDSI Master Directions, 2016.
21. DETAILS OF REMUNERATION / COMMISSION RECEIVED BY MD OR ED FROM SUBSIDIARIES.
During the FY 2016-17, Mr. B.N.Raveendra Babu (Executive Director) has received remuneration by way of sitting fee, '' 43 million for attending Board/Committees meetings of the subsidiary, Manappuram Insurance Brokers Private Limited and Mr. V. P Nandakumar (Managing Director 8 CEO) has not received any remuneration or commission from any of the subsidiaries of the Company for the FY 2016-17.
22. AUDIT AND AUDITORS REPORT:
S.R. Batliboi 8 Associates LLP, Chartered Accountants, (Firm Reg. No. 101049W) has been continuing as Auditors from FY 2007-08 and on applicability of Act, they were re-appointed from 22nd AGM to hold office up to forthcoming 25th AGM.
As per Section 139, no Listed Company shall appoint or reappoint as Auditor, an Audit Firm for a period of more than 3 years, which has already completed a term of 7 years or more, as on the commencement of the Act.
Accordingly, Board of Directors at its meeting held on May 25 2017 have approved the appointment of Deloitte Haskins 8 Sells LLP, Chartered Accountants as the Statutory Auditors subject to the approval of shareholders at the ensuing AGM, to hold office from the conclusion of this AGM up to the conclusion of 30th AGM, subject to ratification by shareholders, each year.
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.
There were no frauds reported by the statutory auditors to Audit Committee or Board under Section 143 of the Act.
Secretarial Audit
The Board appointed KSR 8 Co. Practicing Company Secretaries LLP, to conduct Secretarial Audit for the financial year 2016-17.
Secretarial audit report for year ended on March 31, 2017 as provided by KSR 8 Co. Practicing Company Secretaries LLP, Indus chambers, Ground floor, No.101, Govt Arts College Road, Coimbatore-641018, is annexed to this Report as Annexure- VI.
The reports issued by Statutory Auditor and Secretarial Auditor does not contain any qualification, reservation adverse remark or disclaimer .
23. DIRECTORS AND KEY MANAGERIAL PERSONNEL, CHANGE, IF ANY:
Mr. Pradeep Saxena, Director, Nominee of Hudson Equity Holdings Limited had retired as a director of the board with effect from 24th Annual General Meeting held on August 09, 2016.
There were no other changes in Directors or Key Managerial Personnel during the FY 2016-17.
24. SHARE CAPITAL
During the year 2016-17, the Company has allotted 692500 equity shares of '' 2 each pursuant to exercise of stock options. Consequently, the paid-up equity share capital of the Company stood as on 31.03.2017 at '' 1683.80 million consisting of 84,18,99,636 equity shares of '' 2 each..
During the year under review, the Company has not issued shares with differential voting rights, bonus shares and sweat equity shares.
25. DEPOSITS
As you are aware, your Company had stopped acceptance of deposits from the public since FY 2009-10. Your Company had converted itself into a non deposit taking Category ''B'' NBFC. During FY 2016-17 the Company has not accepted deposits as per Chapter V of the Act..
No deposit which was due for repayment or payment of interest and all unclaimed deposit amounts have been transferred to an ESCROW account opened with Punjab National Bank, Palace Road Branch, Thrissur. The balance unclaimed amount as on March 31, 2017 is '' 0.062 Million.
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
26. COMPLIANCE WITH NBFC REGULATIONS
Your Company has complied with all the regulatory provisions of the Reserve Bank of India applicable to Non-Banking Financial Company - Systemically Important Non-Deposit taking Company. As on March 31, 2017, the Capital Adequacy Ratio of the Company is 26.12 percent, well above the statutory requirement of 15 percent. The Company has not issued any Perpetual Debt Instruments.
27. EMPLOYEE STOCK OPTION SCHEME (ESOS)
I n order to retain the best available talent, ensure long term commitment to the Company, and encourage individual ownership, Company has instituted employee stock options plans from time to time.
Presently, the Company has the following stock option schemes:
1) Employee Stock Option Scheme 2009(''ESOS-2009'').
2) Employee Stock Option Scheme 2016 (''ESOS-2016'').
I n respect of ESOS 2009, Nomination Committee had reissued the lapsed options during the FY 2014-15 to Senior Management Personnel which had been vested and exercised during the FY 2015-16 and 2016-17. During the year, no options were granted by the Nomination Committee under ESOS 2009.
During the FY 2016-17, ESOS 2016 was approved by the shareholders vide special resolution dated July 05, 2016 and Nomination Committee had granted 13,750,466 number of options at an exercise price of '' 86.45 per option at its meeting held on August 08, 2016. Such Stock Options also include the options granted to employees of subsidiaries of the Company under ESOS 2016.
The stock option schemes are in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 ("SEBI SBEB Regulations") and there have been no material changes to these plans during the FY 2016-17.
Disclosures in terms of ''Guidance note on accounting for employee share based payments'' issued by ICAI and diluted EPS in accordance with Accounting Standard 20 - Earnings Per Share are provided in note 23 of Standalone Financial Statements in this Annual Report..
Details related to stock option schemes as required under SEBI SBEB Regulations read with Securities and Exchange Board of India circular no. CIR/CFD/POLICY CELL/2/2015 dated June 16, 2015 are provided in Note 23 of the Standalone Financial Statements in this Annual Report and Annexure VII of this report and are also available on Company''s website at http://www. manappuram.com/investors/annual-reports.html
Your Company has received a certificate from S.R. Batliboi 8 Associates LLP, Chartered Accountants, (Firm Reg. No. 101049W), Statutory Auditors, confirming that the ESOS 2009 and ESOS 2016 has been implemented in accordance with the SEBI SBEB Regulations and the respective resolutions passed by the Company in General Meetings. The certificates would be placed in the ensuing Annual General Meeting for inspection by the members.
28. 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 |
Mr. P. Manomohanan |
Chairman |
Independent, Non-Executive |
Dr. Shailesh J Mehta |
Member |
Independent, Non-Executive |
Mr. E.A. Kshirsagar |
Member |
Non-Independent, Non-Executive |
Mr. V.R. Rajiven |
Member |
Independent, Non-Executive |
Dr. Amla Samanta |
Member |
Independent, Non-Executive |
Whistle Blower Policy and Vigil Mechanism
The Vigil Mechanism of the Company provides adequate safeguards against the victimization 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 and a Member (Woman Director) of the Audit Committee.
No person has been denied access to the Chairman and a Member (Woman Director) 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 Whistle Blower Policy and Vigil Mechanism may be accessed on the Company''s website at the link: http://www.manappuram.com/public/uploads/editor-images/ files/22-Whistle-blower-Policy-v2.pdf
29. EXTRACT OF ANNUAL RETURN:
Extract of annual return in Form MGT-9 is annexed herewith as Annexure- VIII.
30. DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS AND INTERNAL AUDIT
Your Company has put in place, well defined and adequate Internal Control System and Internal Financial Control (IFC) mechanism commensurate with size, scale and complexity of its operations to ensure control of entire business and assets. The functioning of controls is regularly monitored to ensure their efficiency in mitigating risks. A comprehensive internal audit department functions in house to continuously audit and report gaps if any, in the diverse business verticals and statutory compliances applicable.
During the year, Internal Financial Controls were reviewed periodically by the management and Audit Committee. Key areas were subject to various statutory and internal audits in order to review the adequacy and strength of IFC followed by the Company. As per the assessment, Controls are strong and there are no major concerns. The internal financial controls are adequate and operating effectively so as to ensure orderly and efficient conduct of business operations.
Your Company has an independent internal audit function which carries out regular internal audits to test the design, operations, adequacy and effectiveness of its internal control processes and also to suggest improvements to the management. KPMG was appointed in terms of Section 138, to conduct internal audit of functions. Their observations along with management response are periodically reviewed by Audit Committee and Board and necessary actions are taken.
31. LISTING WITH STOCK EXCHANGES:
Your Company confirms that it has paid the Annual Listing Fees for the financial year 2017-18 to Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) where the Company''s shares are listed..
32. SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
During the year under review, there were 4 cases filed with the Internal Complaints Committee of the Company, pursuant to
the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the same were investigated and resolved. No complaints were pending more than 90 days during FY 2016-17.
33. CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Act, SEBI LODR and Accounting Standard (AS) - 21 on Consolidated Financial Statements, the audited consolidated financial statement is provided in the Annual Report.
34. CREDIT RATING
Your Company holds valid credit rating from Brickwork, CRISIL, ICRA and CARE for Non-Convertible Debentures, Short Term and Long Term Bank Facilities and Short Term Debt as follows:
a. CRISIL rated Bank Loan Facilities amounting to '' 2,500 Million as CRISIL AA-/ Stable
b. CRISIL rated Non-Convertible Debentures amounting to '' 23,075 Million as CRISIL AA-/ Stable
c. CRISIL rated Short Term Debt of '' 22,500 Million as CRISIL A1 Stable
d. ICRA rated Non-Convertible Debentures amounting to '' 4429.7 Million as [ICRA] AA-(Stable)
e. ICRA rated Short Term Debt of '' 5000 Million as [ICRA] A1
f. CARE rated Bank Loan Facilities for Long Term amounting to '' 56,800 Million as CARE AA-Stable
g. CARE rated Bank Loan Facilities for Short Term amounting to '' 33,200 Million as CARE A1 Stable
h. CARE rated Non-Convertible Debentures amounting to '' 4,900 Million as CARE AA-Stable
i. Brickwork rated Non-Convertible Debentures amounting to '' 547 Million as BWR AA-
35. DETAILS OF AUCTIONS HELD DURING THE YEAR 2016-17
Additional disclosures as required by RBI NDSI Master Directions, 2016:
Year |
Number of Loan Accounts |
Principal Amount outstanding at the dates of auctions (A) (Rs, In Millions) |
Interest Amount outstanding at the dates of auctions (B) (Rs, In Million) |
Total (A B) (Rs, In Million) |
Value fetched (Rs, In Million) |
March 31, 2017 |
305439 |
9289.54 |
1466.29 |
10755.83 |
10704.05 |
March 31, 2016 |
7,02,038 |
19,319.03 |
4,890.18 |
24,209.21 |
22,094.92 |
Note: No sister concerns participated in the auctions during the year ended March 31, 2017 and March 31, 2016
36. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURE
Particulars of employees and related disclosures are annexed herewith as Annexure IX as per Section 197 of the Act.
37. 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, 2017 as stipulated in Part E of Schedule V of SEBI LODR is annexed as Annexure - X.
38. SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS
There were no such significant / material orders passed by the Regulators during the financial year 2016-17.
39. MATERIAL EVENT SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENT
There have been no material changes and commitments, affecting the financial position of the Company which occurred between the end of the FY 2016-17 and the date of this report.
40. ACKNOWLEDGEMENT
Your Directors express 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, Debenture Trustees, RTA''s, Depositories, Central and State Governments and its statutory bodies for the support, guidance and co-operation. Your Directors wish to thank the Customers, Investors, Shareholders, Debenture holders, Bankers, Auditors, Scrutinizer and other financial institutions 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.
For and on behalf of the Board of directors of Manappuram Finance Limited Sd/-
Jagdish Capoor
Date: May 25, 2017 DIN: 00002516
Place: Valapad Chairman
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 ÂVII(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)Âa company possessing a valid Certificate of Registration
from National Housing BankÂas 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
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