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Directors Report of Muthoot Capital Services Ltd.

Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting their 21st Annual Report on the business and operations of the Company and the accounts for the financial year ended 31st March, 2015.

1. Financial summary and Performance of the Company

(RS. in 000RS. except per share)

Particulars 2014 - 2015 2013 - 2014

Total Income 191 28 64 158 75 78

Total Expenditure 152 14 25 121 69 58

Profit before Depreciation and other 39 14 39 37 06 20 Provisions

Depreciation 138 97 78 94

Provisions and Write offs 358 86 2 69 03

Exceptional Items - 4

Profit Before Tax 34 16 56 33 58 27

Provision for Taxation

Current Tax 13 23 00 11 78 00

Deferred Tax (1 36 02) (32 56)

Income Tax adjustment for earlier years 43 (7 73)

Proft After Tax 22 29 15 22 20 56

Basic Earnings Per Share 17.87 17.80

An analysis of the Company's performance for the current and previous fiscal years reveal that the Company was able to achieve an impressive growth during the year under review. The total income rose to RS. 191 28.64 lakhs during 2014 - 2015 as against RS. 158 75.78 lakhs during the previous year. The total expenditure were RS. 152 14.25 lakhs against RS. 121 69.58 lakhs during the previous year. The net profit of the Company stood at RS. 22 29.15 lakhs compared to RS. 22 20.56 lakhs in the previous year. An amount of RS. 15 00.59 lakhs has been proposed to be transferred to Reserves and Surplus during the year under review.

The Company raised funds for its working capital resources mainly from banks, the total amount of working capital loans outstanding being RS. 580 61.96 lakhs as at 31st March, 2015. Further, the Company had in the current year raised money by way of subordinated debts and public deposits. As on 31st March, 2015 the total amount outstanding on subordinated debts and public deposits (including interest accrued) was RS. 4 46.70 lakhs and RS. 113 57.53 lakhs respectively. With emphasis on other sources of funding, the Company expects to reduce its dependence on bank funds. Another source of funds for the Company in the earlier years was issue of secured redeemable non-convertible debentures under private placement, a residual portion of which is still outstanding as on 31st March, 2015. The debentures issued are secured by way of floating charge on current assets of the Company. The Company has appointed trustees for ensuring that the interests of debenture holders are protected. The debentures outstanding together with interest accrued amounts to RS. 7 59.91 lakhs as at 31st March, 2015.

The Company had, during the year 2012 - 2013, entered into sellout arrangement of loan receivables amounting to RS. 37 25.84 lakhs (after deducting 10% for Minimum Retention Requirement). The aggregate amount outstanding under loan sellout as on 31st March, 2015 was RS. 71.05 lakhs.

The sourcing of the business for the Company viz. two wheeler financing takes place at the dealer points for two wheelers. The Company has already activated 1800 dealers. It plans to activate 400-500 dealerships/sub dealerships additionally in the financial year 2015 - 2016. The Company is the preferred financier for Hero and Honda. It also has initiated steps to focus on other manufacturers like Suzuki, Yamaha, Royal Enfield, TVS, and Bajaj etc. during the financial year 2015 - 2016.

2. Change in the nature of business, if any

The Company is into the business of providing two wheeler loans only. There is no structural change in the business carried out by the Company during the year under review. Apart from the two traditional methods of growth through branches and dealer points, the Company is currently working at expanding the business by providing loans through the Micro Finance Division of Muthoot Fincorp Limited (MFL) to the micro finance customers. Under the arrangement, the Micro Finance Division will take care of the collection of loan repayment also. It is also looking at additional growth through loan portfolio buyout of good quality assets.

As mentioned above, the Company proposes to look at other means of funding like Non-Convertible Debentures/ Commercial Papers, apart from the existing means of financing by way of bank loans, public deposits, subordinated debts etc.

3. Directors

The Board of your Company consists of six Directors as on the date of this report as follows:

Category Name of Directors

Executive Director Mr. Thomas George Muthoot, Managing Director

Non - Executive - Mr. Thomas John Muthoot, Chairman Non - Independent Mr. Thomas Muthoot Directors

Mr. A.P Kurian Non - Executive Mr. R.K. Nair Independent Directors Ms. Radha Unni

All the Directors have rich experience and specialized knowledge in various areas of relevance to the Company. The Company is immensely benefited by the range of experience and skills that the Directors bring to the Board. The composition of the Board is as per the Companies Act, 2013 and the Listing Agreement.

Mr. Thomas John Muthoot, Director (DIN: 00011618) retires at the ensuing Annual General Meeting (AGM) and being eligible offers himself for re-appointment. The Board of Directors recommends the re-appointment of Mr. Thomas John Muthoot as a Director of the Company. The detailed profile of Mr. Thomas John Muthoot, recommended for re-appointment is mentioned in the Notice for the AGM.

A) Changes in Directors and Key Managerial Personnel during the year 2014 - 2015

During the year under review, Mr. Philip Thomas, Director (DIN: 00051384) ceased to be a member from the Board on 28th June, 2014. Ms. Radha Unni (DIN: 03242769) was appointed as Additional Director on the Board on 28th June, 2014. Further at the 20th AGM held on 03rd September, 2014, Mr. A P Kurian (DIN: 00008022), Mr. R. K. Nair (DIN: 00631889) and Ms. Radha Unni were appointed as Independent Directors on the Board pursuant to Section 149,150,152 and other applicable provisions of the Companies Act, 2013, for a period of 5 years from 03rd September, 2014.

Ms. Malathy N., Company Secretary (ACS: 20399), resigned with effect from 21st April, 2014. Mr. Syam Kumar R. (FCS: 6086), was appointed as Company Secretary & Head-Governance with effect from 02nd June, 2014.

The following persons are the Key Managerial Persons of the Company as recorded by the Board:

1. Mr. Thomas George Muthoot - Managing Director

2. Mr. R. Manomohanan - Chief Executive Officer

3. Mr. Vinodkumar M. Panicker - Chief Finance Officer

4. Mr. Syam Kumar R. - Company Secretary & Head-Governance

B) Woman Director

In terms of the provisions of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Company shall have at least one Woman Director on the Board. Your Company has Ms. Radha Unni, as Woman Director on the Board of the Company.

C) Declaration by Independent Director(s) and re-appointment, if any

The Company has three Independent Directors on the Board. The Company has received necessary declaration from each Independent Director under Section 149 (7) of the Companies Act, 2013, that the Independent Directors of the Company meet the criteria for their independence laid down in Section 149 (6) of the Companies Act, 2013.

The Company has formulated a familiarization programme for its Directors which gives an insight into the history of the Company, its promoters, performance of the Company over the previous year's etc.The familiarization programme is posted on the website of the Company and the web link is:

http://www.muthootcap.com/pdf/Familirisation_Programme.pdf

D) Policy on Board Diversity

The Policy on Board Diversity adopted by the Company includes the following:

a. Diversity is ensured through consideration of a number of factors, including but not limited to skills, regional and industry experience, background and other qualities;

b. The Company shall also take into account factors based on its own business model and specific needs from time to time;

c. The Nomination & Remuneration Committee shall lead the process for Board appointment and for identifying and nominating, for approval of the Board, candidates for appointment to the Board;

d. The benefits of experience/knowledge in the areas relevant to the Company and diversity continue to influence succession planning and continue to be the key criteria for the search and nomination of Directors to the Board; and

e. Board appointments are based on merit and candidates will be considered against objective criteria, having due regard for the benefits of diversity on the Board, including gender.

E) Formal Annual Evaluation of Board

As per Section 134 (3) (e) of the Companies Act, 2013, and Rule 8 (4) of the Companies (Accounts) Rules, 2014, the Nomination and Remuneration Committee formulated the criteria for determining qualifications, positive attributes and independence of Director and recommended to the Board a Policy on remuneration of the Directors, Key Managerial Personnel and other Employees. The Policy also included norms for evaluation of Directors, Chairman, MD, Board as a whole and various Committees of the Board. Based on the recommendation of the Committee, the said Policy on Nomination & Remuneration and Evaluation of Directors was adopted by the Board.

The Board of Directors has carried out an annual evaluation of its own performance, its Committees and individual Directors pursuant to the provisions of Section 178 (3) of the Companies Act, 2013, and the Corporate Governance requirements as prescribed under Clause 49 (IV) of the Listing Agreement. A structured questionnaire was prepared after seeking inputs from all the Directors on the basis of the criteria such as the Board composition and structure, Board processes and procedures, Board effectiveness etc.

The Board and Nomination & Remuneration Committee reviewed the performance of the individual Directors inter alia, on the basis of understanding and knowledge of the market in which the Company is operating, ability to appreciate the working of the Company and the challenges it faces, attendance of meeting, extend of participation and involvement in the meetings, ability to convey his views and flexibility to work with others. The performance of the Committees was evaluated by the Board based on composition of the Committees, effectiveness of the Committee meetings with respect to the terms of reference and conduct of meetings and procedures followed.

Separate meeting of Independent Directors was conducted during the year, to review the performance of the Board as a whole, performance of Non-Independent Directors, performance of the Chairman and assess the quality, quantity, timelines of flow of information from the Management to the Board of Directors.

F) Managerial Remuneration

The Company's Policy on Director's appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under Sub Section (3) of Section 178 of the Companies Act, 2013, is detailed in Corporate Governance Report forming part of the Directors Report.

4. Number of meetings of the Board of Directors

The Board of Directors met 7 times during the financial year 2014 - 2015 on the following dates: 20.05.2014, 28.06.2014, 04.08.2014, 02.09.2014, 05.11.2014, 10.12.2014 and 30.01.2015.

5. Audit Committee

As on 31st March, 2015, the Audit Committee consists of four Non-Executive Directors of which three are Non- Executive Independent Directors. All the Members of the Committee possess accounting or related financial management expertise. Composition of the Audit Committee is as follows:

Name of the Members

Mr. Philip Thomas Chairman*

Mr. A.P. Kurian Chairman**

Mr. Thomas Muthoot Member

Mr. R.K. Nair Member

Ms. Radha Unni*** Member

* Relinquished his Chairmanship effective 28th June, 2014

** Appointed as Chairman of the Committee on 04th August, 2014

*** Appointed as a Member on 04th August, 2014

The constitution and terms of reference of the Committee are in accordance with the Listing Agreement, Companies Act, 2013 and Reserve Bank of India (RBI), Regulations which are elaborated in the Corporate Governance Report forming part of the Directors Report.

6. Other Committees of the Board

The details of the other Committees of the Board, their composition, terms of reference and the activities during the year are elaborated in the Corporate Governance Report forming part of the Directors Report.

7. Subsidiaries/Joint Venture/Associate Company

The Company has no subsidiary/joint venture/associate company and hence consolidation and applicable provision under the Companies Act, 2013, and Rules made thereunder are not applicable to the Company.

8. Material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report

No material changes or events have occurred since the date of the Balance Sheet that could have any effect on the financial position of the Company.

9. Deposits

As you are aware, your Company is a Non-Banking Financial Company (NBFC) registered with RBI having a category A (Deposit Taking) License. The Company started accepting public deposits during the previous year. The outstanding amount of public deposits as on 31st March, 2015, received by the Company including interest accrued that date is RS. 1 13 57.53 lakhs. As on 31st March, 2015, there are 245 numbers of accounts of public deposits amounting to RS. 3 46.56 lakhs which have become due for payment but have not been claimed by the depositors. The public deposits of the Company are rated as "FA Stable" by CRISIL.

The Company has the practice of sending communication by registered post two months in advance to the deposit holders whose accounts are about to mature. If the deposit holders are not responding to the communication, Company will contact the depositor in person instructing them to surrender the fixed deposit certificate and claim the amount. In case where the depositors are not traceable due to change in address/phone numbers, another regular communication is sent to the deposit holders and other modes to contact the deposit holders are also initiated till the deposits are repaid.

Chapter V of the Companies Act, 2013 relating to acceptance of deposits by Companies, is not applicable to the Company since it is an NBFC registered with RBI.

10. Trustees for deposit holders

Subject to the provisions of RBI Guidelines for Trustees of deposit holders of the Non-Banking Financial Companies (NBFC), the Board appointed IDBI Trusteeship Services Limited as trustees for deposit holders.

As per the Master Circular-Miscellaneous Instruction to all NBFCs dated 1st July, 2014, NBFCs accepting/holding public deposits were directed to create a floating charge on the Statutory Liquid Assets invested in terms of Section 45-1B of the RBI Act, 1934, in favour of the depositors.

The Company created a floating charge on the Statutory Liquid Assets in favour of IDBI Trusteeship Services Limited as Trustee on behalf of the depositors as required under Section 45-1B of the RBI Act, 1934.

11. Capital Adequacy Ratio

Your Company's total Capital Adequacy Ratio (CAR) as on 31st March, 2015 stood at 15.97 % of the aggregate risk weighted assets on the Balance Sheet and risk adjusted value of the off-Balance Sheet items, which is above the regulatory minimum of 15%. The CAR as on 31st March, 2014 (previous year) stood at 17.32%.

12. Credit Rating

The Credit Rating enjoyed by the Company as on 31st March, 2015 and migration of rating during the year is as given below:

Credit Rating Agency Instrument Rating as on 31st March, 2015

CRISIL Bank Loan Facilities CRISIL A/Stable

CRISIL Public Deposits FA Stable

CRISIL Short-Term Debts CRISIL A1

Credit Rating Agency Migration during the financial year 2014 - 2015

CRISIL CRISIL A (Negative) was converted to CRISIL A/Stable on 26.08.2014

CRISIL Revised the outlook to FA Stable from FA (Negative) on 26.08.2014

CRISIL No change

13. Significant & Material Orders passed by the Regulators

Your Directors confirm that there were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.

14. Details in respect of adequacy of internal financial controls with reference to the Financial Statements.

The Company has in place adequate internal financial controls with reference to the financial statements. During the year under review there were no reportable material weaknesses in the systems or operations.

15. Corporate Social Responsibility (CSR)

Your Company has always responded in a reasonable manner to the growing needs of the society. A number of enriching and enlivening activities that contribute to the community in the areas of health, education, environment and preservation of the country's rich culture and heritage have been taken up.

The brief outline of the CSR Policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure 1 to this report in the format prescribed in the Companies (Accounts) Rules, 2014. The policy is available on the website of the Company.

The composition and other details of the CSR Committee is detailed in the Corporate Governance Report.

16. Dividend

Your Directors have recommended a dividend of RS. 5/- per equity share (i.e. 50 % on the face value of RS. 10) aggregating to RS. 6 23.63 lakhs for the financial year ended 31st March, 2015. This would result in an additional cash outflow of RS. 1 26.96 lakhs on account of corporate dividend tax. Once approved by the ensuing AGM, the dividend will be paid to Members whose names appear in the Register of Members as on 14th August, 2015.

17. Reserves

Out of the profits generated by the Company, the Board proposes to make the following allocations to the various Reserves: (RS. in '000)

Particulars Amount

Transfer to Statutory Reserves 5 00 00

Transfer to General Reserves 2 50 00

Proposed dividend 6 23 63

Tax on proposed dividend 1 26 96

Total 15 00 59

18. Share Capital

The Company had not issued any equity shares either with or without differential rights during the financial year under review and hence, the disclosure requirements under Rule 4 (4) and Rule 16 (4) of the Companies (Share Capital and Debentures) Rules, 2014 is not applicable.

19. Statutory Auditors

M/s K. Venkatachalam Aiyer & Co., Chartered Accountants, were appointed as the Statutory Auditors of the Company during the 20th AGM held on 3rd September, 2014 for a period of three years. As per the provisions of Section 139 of the Companies Act, 2013, the appointment need to be ratified at each AGM during their tenure and your Directors recommend ratification of the appointment of Statutory Auditors for the financial year 2015 - 2016 in the ensuing AGM.

20. Auditors Report

There are no qualifications or adverse remarks mentioned in the Auditors' Report for the financial year 2014 - 2015. The notes to accounts forming part of financial statements are self explanatory and need no further clarification.

21. Secretarial Auditors Report

Secretarial Auditors Report for the financial year 2014 - 2015 as provided by M/s SVJS & Associates, Company Secretaries, 39/3519 B, 1st Floor, Padmam Apartments, Manikkath Road, Ravipuram, Kochi-16 is annexed to this report as Annexure 2.

There are no qualifications or adverse remarks in the Secretarial Auditors' Report.

22. Conservation of energy and technology absorption, foreign exchange earnings and outgo

Considering its nature of activities, the following disclosures are made as per the provisions of Section 134 (3) (m) of the Companies Act, 2013, read with Rule 8 (3) of the Companies (Accounts) Rules, 2014:

a. The Company has no activities relating to conservation of energy and technology absorption.

b. There are no foreign exchange earnings or outgo during the period under review.

23. Whistle Blower Policy / Vigil mechanism for Directors and employees

The Company promotes ethical behavior in all its business activities and has a mechanism for reporting unethical behavior, actual or suspected frauds or violation of the Company's Code of Conduct or ethics policy. Pursuant to Section 177 (9) & 177 (10) of the Companies Act, 2013 and as per Clause 49 (II) (F) of the Listing Agreement, the Company has a Whistle Blower Policy/Vigil Mechanism in place. The mechanism should also provide for adequate safeguards against victimization of Director(s)/Employee(s) who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. The said policy is available in the website of the Company which can be accessed by following the below link.

http://www.muthootcap.com/pdf/MCSL_Whistle_Blowing_GuidelinesV1.pdf

24. Particulars of loans, guarantees or investments under Section 186

The Company has not given any loans or provided any guarantee or made any investments pursuant to Section 186 of the Companies Act, 2013 during the period under review.

25. Particulars of contracts or arrangements with Related Parties

All the Related Party Transactions have been approved by the Audit Committee and also by the Board. The transactions with Muthoot Fincorp Limited (MFL) and Muthoot Bankers were approved by the shareholders at the last AGM of the Company held on 03rd September, 2014, and the approval is valid for a period of 5 years.

Transactions with related parties during the financial year under review are at arms length and in the ordinary course of business and confirming to the requirements of Companies Act, 2013. Omnibus approvals from Audit Committee were taken on a quarterly basis for the transactions that are foreseen and of repetitive in nature. Form AOC-2 as required under Section 134 (3) (h) of the Companies Act, 2013, read with Rule 8 (2) of the Companies (Accounts) Rules, 2014 is enclosed as Annexure 3.

The Company has in place a Related Party Transaction Policy which was approved by the Board and has been placed in the website of the Company.

The web link to the said policy is http://www.muthootcap.com/pdf/c_Policy.pdf

26. Corporate Governance Report

Your Company has taken adequate steps to adhere to all the stipulations laid down in Clause 49 of the Listing Agreement on Corporate Governance. A detailed report on Corporate Governance together with a certificate from the Statutory Auditors is included as a part of this report.

27. Management Discussion and Analysis Report

The Management Discussion and Analysis Report of the year under review is presented in a separate section forming part of this report.

28. Particulars of Employees

As required by the provision of Section 197 of the Companies Act, 2013, read with Rule 5 (1) and 5 (2) (i) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of the Employees who were in receipt of remuneration in excess of RS. 60 lakhs per annum during the year is attached to this report.

29. Listing with Stock Exchanges

The Company confirms that it has paid the annual listing fees upto the financial year 2015 - 2016 to BSE where the Company's shares are listed. The Company has also initiated steps to get the shares listed on National Stock Exchange (NSE).

30. Internal Control Systems and their adequacy

The details in respect of internal control systems and their adequacy are included in the Management Discussion and Analysis Report, which forms part of this report.

31. Directors' Responsibility Statement

Pursuant to Sub Clause (c) of Sub Section (3) of Section 134 of the Companies Act, 2013, your Directors state that-

(a) in the preparation of the annual accounts, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;

(b) we had 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 and loss of the Company for that period;

(c) we had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) we had prepared the annual accounts on a going concern basis;

(e) we had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

(f) we had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

32. Extract of Annual Return

The extract of the annual return in form No. MGT-9 is attached to this report as Annexure 4.

33. Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has been employing 417 women employees in various cadres as on 31st March, 2015. The Company has in place an Internal Complaint Committee in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. There was no compliant received from any women employee during the period and hence no complaint is outstanding as on 31st March, 2015 for redressal.

34. Acknowledgements

The Directors sincerely acknowledge the contribution and support from customers, shareholders, depositors, debenture holders, Central and State governments, Bankers, SEBI, Bombay Stock Exchange Limited, Share Transfer Agents, Rating Agencies, Reserve Bank of India, Registrar of Companies, Kerala and Lakshadweep and Other government authorities for the kind co-operation and assistance provided to us. The Directors also place on record their gratitude to the employees and well-wishers for their continued commitment, dedication and co-operation.

For and on behalf of the Board of Directors

Kochi Thomas John Muthoot 25th May, 2015 Chairman


Mar 31, 2014

The Directors are pleased to present to you the 20th Annual Report together with the Audited Statements of Accounts and the Auditor''s report for the financial year ended March 31, 2014.

Financial Results

(Rs.in 000''s, except per share)

Particulars 2013-14 2012-13

Total Income 158 75 78 107 21 71

Total Expenditure 121 69 58 73 08 01

Profit before Depreciation and other Provisions 37 06 20 34 13 70

Depreciation 78 94 53 35

Provisions and Write offs 2 69 03 1 33 27

Exceptional Items 4 7

Profit before Tax 33 58 27 32 27 15

Provision for Taxation Current Tax 11 78 00 10 80 83

Deferred Tax (32 56) (29 00)

Income Tax adjustment for earlier years (7 73) (61)

Proft after Tax 22 20 56 21 75 93

Basic Earnings Per Share 17.80 17.45

An analysis of the Company''s performance for the current and previous fiscal years reveal that the Company was able to achieve an impressive growth during the year under review. The total loan disbursements during the year under consideration was Rs. 581 62.73 Lakhs as compared to Rs. 431 17 Lakhs for the year ended March 31, 2013. The total income rose to Rs. 1 58 76 Lakhs during 2013 - 2014 as against Rs. 107 22 Lakhs during 2012 - 2013. The total expenditure including depreciation and amortization expenses were Rs. 125 17.50 Lakhs as against Rs. 74 94.64 Lakhs during the previous financial year. The net profits of the Company was Rs. 2220.56 Lakhs as compared to Rs. 2175.93 Lakhs in the previous year. An amount ofRs. 1563.90 Lakhs has been proposed to be transferred to reserves and surplus during the year under review.

The Company raised funds for its working capital resources mainly from banks, the total amount of working capital loans outstanding beingRs. 488 63 Lakhs as at March 31, 2014. Another source of funds for the Company was issue of secured redeemable non convertible debentures under private placement. The debentures issued are secured by way of floating charge on current assets of the Company. The Company has appointed trustees for ensuring that the interests of debenture holders are protected. The debentures outstanding together with interest accrued amounts to Rs. 15 83.68 Lakhs as at March 31, 2014. Further the Company had in the current year raised money by way of Subordinated Debt and Public Deposits. As on March 31, 2014 the total amount due on Subordinated Debt and Public Deposit (including accrued interest) was Rs. 283.85 Lakhs and Rs. 5986.19 Lakhs respectively.

The Company had, in the previous year, also entered into pool buyout arrangement of auto loan (Three wheeler) receivables with Dhanlaxmi Bank Limited. for an outstanding amount of Rs. 3725.84 Lakhs (after deducting 10% for MRR requirement). The aggregate amount outstanding under loan buyout as on March 31, 2014 wasRs. 1092.21 Lakhs.

Dividend

Your Directors have recommended a dividend of 4.50 per share (i.e. 45%) aggregating to Rs. 561.27 Lakhs for the financial year ended March 31, 2014. This would result in an additional cash outflow of Rs. 95.39 Lakhs on account of dividend distribution tax. The Company had during the year 2013 - 2014 transferred an amount of Rs. 2,02,254 to Investor Education and Protection Fund, being unclaimed dividend for the year 2005 - 2006. Members are requested to make claim to the Company for any unclaimed dividend declared since 2006 - 2007.

Share Capital

There were no changes in the share capital of the Company during the year under review.

Directors

As per the erstwhile provisions of the Companies Act, 1956, Mr. Thomas Muthoot and Mr. R K Nair, Directors are to retire by rotation at the ensuing Annual General Meeting. In terms of Section 149 and other applicable provisions of the Companies Act, 2013, an Independent Director should be appointed for a fixed term and is not liable to retire by rotation. Hence Mr. R K Nair and Mr. A P Kurian being Independent Directors on the Board are proposed to be re appointed as Independent Directors for a period of 5 years from the date of AGM (03.09.2014). Mr. Thomas Muthoot, being a non independent director and being eligible for re appointment has offered himself for re appointment, liable to retire by rotation. The Board recommends his appointment as Director.

Mr. Philip Thomas has resigned from the Board citing personal reasons and the same was accepted by the Board at its meeting held on 28.06.2014. The Directors place on record the valuable contributions made by Mr. Philip Thomas during his tenure in office of the Director of the Company and sub committees of the Board.

The Board has appointed Ms. Radha Unni as Additional Director on the Board with effect from 28.06.2014. The details of the qualification and experience of the said Director are given separately in the Annual Report. The Board recommends the appointment of Ms. Radha Unni in the ensuing Annual General meeting as an Independent Woman Director for a period of five years from the date of AGM (03.09.2014).

None of the Directors is disqualified under Section 274(1) (g) of the Companies Act, 1956.

Personnel

The particulars of employees as required under provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Amendment Rules, 2011, are attached to this report.

Auditors

M/s K. Venkatachalam Aiyer & Co., Chartered Accountants, retires at the ensuing Annual General Meeting and is eligible for re appointment. Pursuant to Section 139 of the Companies Act, 2013 and the rules made thereunder, the Statutory Auditors are eligible to be appointed for a term of three year from the conclusion of this Annual General Meeting subject to ratification by shareholders at every Annual General Meeting during the term.

The Auditors have confirmed that if re appointed, it would be within the limits and conditions specified under section 141 of the Companies Act, 2013.

Reply to Auditor''s Report

There are no qualifications or adverse remarks mentioned in the Auditors'' Report. The notes to accounts forming part of financial statements are self explanatory and need no further clarification.

Conservation of energy and technology absorption, foreign exchange earnings and outgo

Considering its nature of activities, the following disclosures are made as per the provisions of Section 217(1 )(e) of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988:

a. The Company has no activities relating to Conservation of energy and technology absorption.

b. There are no foreign exchange earnings or outgo during the period under review.

Directors'' Responsibility Statement

As per the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm that:

a. In the preparation of the Annual Accounts for the year ended March 31, 2014, the applicable accounting standards read with the requirements of Schedule VI to the Companies Act, 1956, have been followed with proper explanation relating to material departures, if any;

b. The directors have selected such accounting policies and applied them consistently and made judgements 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 - 2014 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 the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

d. The Directors have prepared the Annual Accounts on a going concern basis.

RBI guidelines

Your Company has complied with the guidelines issued by the Reserve Bank of India on prudential norms covering all areas like income recognition, investment accounting, provisioning for non performing assets and Know Your Customer (KYC) norms.

Management Discussion and Analysis Report

The Management Discussion and Analysis Report annexed hereto forming part of this Report, states performance of the Company and future outlook also.

Corporate Governance

A report on corporate governance together with Auditor''s Certificate on compliance with the conditions of the said clauses, as per the Listing Agreement, forms part of this report. The details of Committees of Board of Directors are contained in the Corporate Governance Report.

Green Initiative

As part of green initiative practice, the Company proposes to effect electronic delivery of its Annual Report in lieu of the paper form to Members. A physical copy of the Annual Report will be sent free of cost to those Members who have not provided their email addresses for receiving the same electronically or specifically requested for physical copy. The copy of the Annual Report is also uploaded in the website of the Company www.muthootcap.com.

Acknowledgements

The Directors sincerely acknowledge the contribution and support from customers, debenture holders, deposit holders, central and state governments, bankers, SEBI, Bombay Stock Exchange Limited, Share Transfer Agents, Reserve Bank of India, Registrar of Companies, Kerala and other government authorities for the kind co operation and assistance provided to us. The Directors also place on record their appreciation to the employees for their continued commitment, dedication and co operation. The Directors also acknowledge the continued support and co operation of the shareholders for the activities and performance of the Company and record their gratitude for the same.

For Muthoot Capital Services Limited

Sd/-

Kochi - 35 Thomas John Muthoot June 28, 2014 Chairman


Mar 31, 2013

To the Members,

The Directors are pleased to present to you the 19th Annual Report together with the Audited Statements of Accounts and the Auditor''s report forthe financial year ended March 3 1,2013.

Financial Results

(Rs.in 000''s, except per share)

Particulars 2012-2013 2011-2012

Total Income 107,21,71 67,35,22

Total Expenditure 72,76,87 42,91,31

Profit before Depreciation and other Provisions 34,44,84 24,43,91

Depreciation 53,35 31,03

Provisions and Write offs 1,64,41 1,12,35

Exceptional Items 7

Profit before Tax 32,27,15 23,00,53

Provision fortaxation

Current Tax 10,80,83 7,87,60

Deferred Tax (29,00) (36,92)

Income Taxadjustment forearlieryears (61) (1,14)

Profit after Tax 21,75,93 15,50,99

Basic earnings per share 17.45 13.12

An analysis ofthe Company''s performance for the current and previous fiscal years reveal that the Company was able to achieve an impressive growth during the year under review. The total loan disbursements during the year under consideration was Rs. 431 16 lakhs compared to Rs. 28845 lakhs forthe year ended March 31, 2012. The total income rose to Rs. 10721.71 lakhs during 2012 - 2013 as againstRs. 6735.22 lakhs during 201 I - 2012. The total expenditure including depreciation and provisions was Rs. 7494.63 lakhs as against Rs. 4434.69 lakhs during the previous financial year. The net profits ofthe Company stood at Rs. 2175.93 lakhs as compared to Rs. 1550.99 lakhs in the previous year marking an increase of40.30%. An amount ofRs. 1592.23 lakhs has been proposed to be transferred to reserves and surplus duringthe year under review.

The Company raised funds for its working capital resources mainly from banks, the total amount of working capital demand loan outstanding beingRs. 32430 lakhs as at March 31, 2013. Another source of funds forthe Company was issue of secured redeemable non convertible debentures under private placement. The debentures issued are secured by way of floating charge on current assets of the Company. The Company has appointed trustees for ensuring that the interests of debenture holders are protected. The debentures outstanding together with interest accrued amounts to Rs. 2285.51 lakhs as at March 3 1,2013.

The Company had also entered into pool buyout arrangement of auto loan (3 wheeler) receivables with Dhanlaxmi Bank Ltd for an outstanding amount of Rs. 3725.84 lakhs (after deducting 10% for M RR requirement) as on September

24,2012. The aggregate amount outstanding under loan buyout as on March 3 1,2013 is Rs.2781.28 lakhs.

Dividend

Your Directors have recommended a dividend of Rs. 4 per share (i.e. 40 %) aggregating to Rs. 498.91 lakhs for the financial year ended March 3 1, 2013. This would result in an additional cash outflow ofRs. 84.79 lakhs on account of dividend distribution tax. The Company had during the year 2012 - 2013 transferred an amount of Rs. 1,34,984 to Investor Education and Protection Fund, being unclaimed dividend forthe year 2004-2005. Members are requested to make claim to the Company for any unclaimed dividend declared since 2005 - 2006.

Share Capital

There were no changes in the share capital duringthe year under review.

Directors

Mr. A. R Kurian and Mr. Philip Thomas, retire by rotation atthe ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The Board recommends their re-appointment.

None ofthe Director is disqualified underSection 274( I )(g) ofthe Companies Act, 1956.

Personnel

The particulars of employees as required under provisions of Section 217 (2A) ofthe Companies Act, 1956, read with the Companies (Particulars of Employees) Amendment Rules, 201 I, are attached to this report.

Auditors

M/s K. Venkatachalam Aiyer & Co., Chartered Accountants, retire atthe ensuing Annual General Meeting and are eligible for re - appointment. They have confirmed that if re-appointed, it would be within the limits specified under section 224 (IB) ofthe Companies Act, 1956.

Reply to Auditor''s report

There are no qualifications or adverse remarks mentioned in the Auditors'' report. The notes to accounts forming part of financial statements are self-explanatory and need no further clarification.

Conservation of energy and technology absorption, foreign exchange earnings and outgo

Considering its nature of activities, the following disclosures are made as perthe provisions of Section 217( I )(e) ofthe Companies Act, 1956, read with the Companies (disclosure of particulars in the report of Board of Directors) Rules, 1988:

a. The Company has no activities relatingto conservation of energy and technology absorption.

b. There are no foreign exchange earnings oroutgo duringthe period under review.

Directors'' Responsibility Statement

As perthe provisions of Section 217(2AA) ofthe Companies Act, 1956, the Directors hereby confirm that:

a. In the preparation of the annual accounts for the year ended March 31, 2013, the applicable accounting standards read with the requirements of Schedule VI to the Companies Act 1956, have been followed with proper explanation relatingto material departures, if any;

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 ofthe financial year 2012 - 2013 and ofthe profit ofthe Company for that period;

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

d. The Directors have prepared the annual accounts on agoing concern basis.

RBI guidelines

Your Company has complied with the guidelines issued by the Reserve Bank of India on prudential norms covering all areas like income recognition, investment accounting, provisioning for non performing assets and Know Your Customer (KYC) norms.

Management Discussion and Analysis Report

The management discussion and analysis report annexed hereto forming part of this Report, states performance ofthe Company and future outlook also.

Corporate Governance

A report on corporate governance together with Auditor''s certificate on compliance with the conditions ofthe said clauses, as perthe Listing Agreement, forms part of this report. The details of Committees of Board of Directors are contained in the Corporate Governance Report.

Green Initiative

As part of green initiative practice, the Company proposes to effect electronic delivery of its Annual Report in lieu ofthe paperformto Members. A physical copy ofthe Annual Report will be sent free of cost to those Members who have not provided their email addresses for receiving the same electronically or specifically requested for physical copy. The copy of Annual Report is also uploaded in the website ofthe Companywww.muthootcap.com.

Acknowledgements

The Directors sincerely acknowledge the contribution and support from customers, shareholders, debenture holders, central and state governments, bankers, SEBI, Bombay Stock Exchange Ltd, Share Transfer Agents, Reserve Bank of India, Registrar of Companies, Kerala and other government authorities for the kind co - operation and assistance provided to us. The Directors also place on record their gratitude to the employees for their continued commitment, dedication and co-operation.

For and on behalf of Board of Directors

sd/-

Kochi-35 Thomas John Muthoot

May5,20l3 Chairman


Mar 31, 2010

The Directors are pleased to present their 16th Annual Report with audited accounts for the year ended 31st March, 2010.

FINANCIAL RESULTS

(All amounts in lakhs except EPS)

Rs.

Operating Results 31.03.2010 31.03.2009 31.03.2008

Total Income 2,247.56 1,738.62 1,225.40

Profit before tax 1,087.42 835.15 611.53

Tax 370.13 293.40 211.38

Profit after tax 717.29 541.75 400.15

Net worth 2,136.92 1,609.75 1,220.09

Capital employed 10,087.34 6,937.07 4,686.54

Return on net worth (%) 33.57% 33.65% 32.80%

Earning per share 11.04 8.33 6.16

REVIEW OF PERFORMANCE

The total Income of the Company registered a growth of 29.27 % from Rs. 1,738.62 lakhs during the previous year to Rs. 2,24756 lakhs in the current year. This year the Company succeeded in restricting the interest expenses to Rs. 691.60 lakhs compared to Rs. 615.29 lakhs in the last year, which is an increase of only 12.40%. Due to the cost control measures adopted by the Company, the profit before tax recorded a jump of 30.21% from Rs. 835.15 lakhs during the last year to Rs. 1,087.42 lakhs this year. The net profit increased from Rs. 541.75 lakhs last year to Rs. 717.29 lakhs in the year ended 31.03.2010, recording an increase of 32.40%. The management is taking the maximum efforts for the future performance also by adopting proactive strategies.

APPROPRIATIONS

The net profit of Rs. 717.29 lakhs along with a sum of Rs. 621.16 lakhs brought forward from the previous year aggregated to Rs. 1,338.45 lakhs which is appropriated as under:

Appropriations Rs. in lakhs

Transfer to Statutory Reserves 144.00

Proposed Dividends 162.50

Dividend Tax 27.62

Balance Carried to Balance Sheet 1,004.33

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs. 2.50 per share for the year-ended 31.03.2010 subject to the approval of Members at the ensuing Annual General Meeting. Dividend will be paid to (i) all members whose name appear in the Register of Members as on 31st July, 2010 and (ii) all members whose name appear as beneficial owners, as furnished by National Securities Depository Limited and Central Depository Services (India) Limited for the purpose as on that date.

DIRECTORS

Mr. A.P. Kurian and Mr. R.K. Nair retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

AUDITORS

M/s. K. Venkatachalam Aiyer & Co., Chartered Accountants, retire at the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received confirmation that their appointment is within the limits prescribed under section 224(1B) of the Companies Act, 1956.

RBI GUIDELINES

The company has complied with the guidelines issued by the Reserve Bank of India on prudential norms covering all areas like income recognition, investment accounting, provisioning for non performing assets and know your customer (KYC) norms.

CORPORATE GOVERNANCE

Your company has adopted the best practices of corporate governance. A separate report on corporate governance together with certificate from auditors of the Company M/s. K. Venkatachalam Aiyer & Co., Chartered Accountants, confirming compliance with Clause 49 of Listing Agreement is enclosed and forms part of this Report.

The Management Discussion and Analysis is given as a separate statement forming part of the Annual Report.

DIRECTORS RESPONSIBILITY STATEMENT

Your Directors confirm that:

i) Applicable Accounting Standards have been followed in preparation of the annual accounts with proper explanation relating to material departures, if any.

ii) They have selected such accounting policies in consultation with the Statutory Auditors and applied them consistently and made judgments and estimates that were 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 or Loss of the Company for the period under review.

iii) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, 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.

PERSONNEL

None of the Employees is in receipt of remuneration in excess of the limit as laid down under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

The Company being in the business of financial service has not consumed energy of any significant level and thus considering its nature of activities no comments are necessary in respect of energy conservation, reduction of energy consumption and technology absorption.

FOREIGN EXCHANGE EARNINGS AND OUTGO

There was no foreign exchange earnings and outgo during the period under review.

ACKNOWLEDGEMENTS

Your Directors gratefully acknowledge the trust reposed in your Company and the assistance and co-operation received from Reserve Bank of India, Registrar of Companies, Kerala, Bombay Stock Exchange Limited, Bankers, Share Transfer Agents, other Government Authorities, Shareholders, Debenture holders and clients and look forward to their continued support and co-operation.

Your Directors also wish to express their appreciation to all the employees of the Company for their dedication, commitment and wholehearted support and co-operation extended. To them goes the credit for the Companys achievements.

And to you our Shareholders, your Directors are deeply grateful for the confidence and faith that you have always reposed in us.

On behalf of the Board of Directors

Kochi-35 Thomas John Muthoot

12.05.2010 Chairman

 
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