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Notes to Accounts of Shriram City Union Finance Ltd.

Mar 31, 2015

1. Corporate information

Shriram City Union Finance Limited (the Company) is a public Company domiciled in India and is incorporated under the provisions of the Companies Act, 1956.The Corporate Identification Number (CIN) is L65191TN1986PLC012840. Its shares are listed on Bombay Stock Exchange Ltd.(BSE) and National Stock Exchange of India Ltd(NSE). The Company''s shares got delisted from Madras Stock Exchange (MSE) voluntarily with effect from February 23,2015. The Company is a Deposit Accepting Non Banking Finance Company (NBFC) registered with Reserve Bank of India (RBI) with registration number 07-00458 . The Company operates in India.

2. Basis of preparation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP), including the accounting standards notified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules 2014 and the guidelines issued by RBI as applicable to NBFCs. The financial statements have been prepared on accrual basis and under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent with those used in the previous year, except the changes in accounting policy mentioned below.

3. Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs.10 per share. Each holder of the equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting.

For the period ended March 31, 2015, the amount of dividend per equity share recognised as distributions to equity shareholders is ''15 (March 31,2014 : Rs.10 including interim dividend) including interim dividend.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

3.1 Shares reserved for issue under option:

For details of share reserved for issue under the employees stock option scheme (ESOP) [Refer note 24]

3.2 The Company issued 11,90,030 equity shares (March 31,2014: 11,48,690) during the period of five years immediately preceding the reporting date on exercise of options granted under ESOP wherein a part of the consideration was received in form of employee service.

In terms of the composite Scheme of Arrangement ("Scheme") among Shriram Retail Holdings Private Limited ("SRHPL''), Shriram Enterprise Holdings Private Limited ("SEHPL'') and Shriram City Union Finance Limited ("SCUF"), under section 391 to 394 read with Section 100-104 of the Companies Act, 1956 was approved by the Hon''ble High Court of Madras on June 24, 2013. The Scheme came into effect on August 16, 2013 with filing of Form 21 with Registrar of Companies, Chennai on the same date. Prior to the merger, SRHPL held 26,610,571 shares of the Company. On merger 2,73,91,613 equity shares of ''10 each fully paid of the Company were allotted to the shareholders of Consolidated SRHPL on August 19, 2013, which resulted in increase in paid up share capital of the Company by 7,81,042 equity shares of ''10 each.

Nature of security

The redemption of principal amount of secured redeemable non-convertible debentures with all interest there on are secured by a legal mortgage on the specified immovable property and by way of charge on the Company''s specifically identified movable assets such as book debts / loan receivables in favour of the Trustees appointed.

These secured redeemable non-convertible debentures are redeemable at par over a period of 12 months to 60 months from the date of allotment depending on the terms of the agreement.

Secured redeemable non-convertible debentures may be bought back subject to applicable statutory and /or regulatory requirements, upon the terms and conditions as may be decided by the Company. The Company may grant loan against the security of Secured Non-Convertible Debentures upon the terms and conditions as may be decided by the Company and subject to applicable statutory and /or regulatory requirements.

Nature of security

The redemption of principal amount of secured redeemable non-convertible debentures with all interest there on are secured by a legal mortgage on the specified immovable property and by way of charge on the Company''s specifically identified movable assets such as book debts / loan receivables in favour of the Trustees appointed.

Secured redeemable non-convertible debenture may be bought favour back subject to applicable statutory and /or regulatory requirements, upon the terms and conditions as may be decided by the Company.

Nature of security

The repayment of secured redeemable non-convertible debentures of Rs.1,000/- each at face value on maturity together with interest thereon are secured by mortgage of immovable property and by way of charge on the Company''s specifically identified movable assets such as book debts / loan receivables in favour of the Trustees appointed.

Secured redeemable non-convertible debenture may be bought back subject to applicable statutory and /or regulatory requirements, upon the terms and conditions as may be decided by the Company.

During the year non-convertible debentures worth of Rs.30,347.20 lacs was bought back and Rs.13,792 lacs was redeemed.

Nature of security

The repayment of secured redeemable non-convertible debentures of Rs.1,000/- each at face value on maturity together with interest thereon are secured by mortgage of immovable property and by way of charge on the Company''s specifically identified movable assets such as book debts / loan receivables in favour of the Trustees appointed.

Nature of security

The repayment of secured redeemable non-convertible debentures of Rs.1,000/- each at face value on maturity together with interest thereon are secured by mortgage of immovable property and by way of charge on the Company''s specifically identified movable assets such as book debts / loan receivables in favour of the Trustees appointed.

Nature of security

The repayment of secured redeemable non-convertible debentures of Rs.1,000/- each at face value on maturity together with interest thereon are secured by mortgage of immovable property and by way of charge on the Company''s specifically identified movable assets such as book debts / loan receivables in favour of the Trustees appointed.

# As regards the recovery of Service tax on lease and hire purchase transactions, the Hon''ble Supreme Court vide its order dated October 26, 2010 has directed the competent authority under the Finance act, 1994 to decide the matter in accordance with the law laid down.

*Accrued interest is up to the date of maturity. Amounts shall be credited to Investor Education & Protection Fund to the extend unclaimed as and when due.

3.2 CASH CREDIT AND WORKING CAPITAL DEMAND LOANS Nature of Security

Cash credit and working capital demand loan from banks are secured by way of hypothecation of specific movable assets relating to the loans.

4. GRATUITY AND OTHER POST-EMPLOYMENT BENEFIT PLANS

The Company has an unfunded defined benefit gratuity plan. Every employee who has completed five years or more of service is eligible for a gratuity on separation at 15 days basic salary (last drawn salary) for each completed year of service. Consequent to the adoption of AS 15 ''Employee Benefits'' (revised), the following disclosures are made as required by the standard:

4.2 A new ESOP scheme "SCUF Employees Stock Option Scheme 2013" was approved at an EGM on May 31, 2013.

Accordingly 2,627,000 equity shares @ Rs.10 each have been reserved under this scheme with an exercise price of Rs.300 per option and with a maximum vesting period of five years from the date of grant.

5. SEGMENT INFORMATION

The Company has got a single reportable segment. Therefore, the segment wise reporting has not been given.

6. RELATED PARTY DISCLOSURE

I) Key Managerial Personnel

a. Mr. R Duruvasan, Managing Director & CEO

b. Mrs. Subhasri Sriram, Chief Financial Officer

c. Mr. C R Dash, Company Secretary

II) Relatives of Key Managerial Personnel

a. Ms. A. Komaleeswari (Spouse of Mr. R Duruvasan)

b. Mr. Aiyneni Ramachandra Naaidu (Father of Mr. R Duruvasan)

c. Ms. Aiyneni Ammayamma (Mother of Mr. R Duruvasan)

d. Mr. Aiyneni Vamsi Krishna (son of Mr. R Duruvasan)

e. Mr. B. Perumal (Brother of Mr. R Duruvasan)

f. Mr. S.Usha Rani (Sister of Mr. R Duruvasan)

g. Mr. Sriram (Spouse of Mrs. Subhasri Sriram)

h. Mr. Sankaralingam (Father of Mrs. Subhasri Sriram)

i. Ms. Gomathy Lingam (Mother of Mrs. Subhasri Sriram)

j. Mr. Sailesh Sriram (Son of Mrs. Subhasri Sriram)

k. Ms. Shewta Sriram (Daughter of Mrs. Subhasri Sriram)

l. Ms. Sasmita Dash (Spouse of Mr. C R Dash)

m. Mr. Durga Charan Dash (Father of Mr. C R Dash)

n. Ms. Radhamani Dash (Mother of Mr. C R Dash)

o. Mr. Abhijit Dash (Son of Mr. C R Dash)

III) Subsidiary

Shriram Housing Finance Limited

IV) Associates

a. Shriram Capital Ltd

b. TPG India Investments I INC

(I) CONTINGENT LIABILITIES Rs in lacs As at March 31, Income Tax 2015 2014

a. Income Tax 4,831.24 7,570.87

b. Kerala Value Added Tax - 4.654.65

The Income tax assessment of the Company has been completed up to the Assessment Year 2012-13.

The disputed demand outstanding for the assessment Year 2012-13 is Rs. 2,337.47 lacs. For assessment year 2011-12, disputed demand outstanding is Rs. 1,530.54 lacs. For assessment year 2010-11, disputed demand outstanding is Rs. 963.23 lacs. The Company has filed appeal for all these disputed cases. The appeal is pending before the Commissioner of Income Tax Appeals, Chennai & ITAT, Chennai.

The disputed Kerala Value Added Tax demand on account of sale of seized vehicles for the assessment year 2007-08 is Rs.4.65 lacs. The Company has filed appeal before the Deputy Commissioner ( Appeals), Ernakulam.

(II) COMMITMENTS

As at March 31, 2015, Rs. 5.88 lacs (March 31, 2014Rs.36.89 lacs) (net of advances) is the estimated amount of contracts remaining to be executed on capital account.

7. DERIVATIVE INSTRUMENTS:

The amount of derivative transactions outstanding as on March 31,2015 is NIL (March 31,2014 Nil). The Company entered into a interest rate swap to convert the floating rate into a fixed rate liability @ 10.49% till maturity date of March 30, 2017 (underlying long term debt of Rs.27,500 lacs).

7.1. Disclosures on Risk Exposure in Derivatives a) Qualitative Disclosures

Currently there are no transactions involving derivatives trading and that the existing transaction is in nature of interest rate swap (where in the Company have converted a floating rate liability to a fixed rate).

8. The Company had no discontinuing operations during the year ended March 31, 2015 and during the year ended March 31,2014.

9. Details of non-performing financial assets purchased / sold - Nil

10. Details of financing of parent company products - Nil

11. Details of Single Borrower Limit (SGL) / Group Borrower Limit (GBL) exceeded by the NBFCs - Nil

12. Registration obtained from other financial sector regulators - Nil

13. Disclosure of Penalties imposed by RBI and other regulators - Nil

14. Corporate Social Responsibility

Section 135 of the Companies Act, 2013, which mandates CSR for specified companies, applies to the Company. Accordingly the Company is required to spend at least 2% of the average net profits of the Company made during the three immediately preceding financial years. which amounts to Rs. 1,313.39 lacs for the year 2014-15 .The Company has spent Rs.9.33 lacs during the year.

15. Overseas Assets (for those with Joint Ventures and Subsidiaries abroad) - Nil

16. Off-balance Sheet SPVs sponsored (which are required to be consolidated as per accounting norms) - Nil

17. Additional information in Form AOC-1 with respect to subsidiary as required under Section 129(3) of the Companies Act, 2013 is attached to the Financial Statement.

18. Previous year figures have been regrouped / rearranged, wherever considered necessary, to conform with current year presentation.


Mar 31, 2014

1. Corporate information

Shriram City Union Finance Limited (the company) is a public company domiciled in India and is incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange Ltd. (BSE), National Stock Exchange of India Ltd.(NSE) and Madras Stock Exchange Ltd.(MSE). The company is a Deposit Accepting Non Banking Finance Company (NBFC) registered with Reserve Bank of India (RBI). The company operates in India.

2. Basis of preparation

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006 as amended, the relevant provisions of the Companies Act, 1956 and the guidelines issued by RBI as applicable to NBFCs. The financial statements have been prepared on an accrual basis and under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent with those used in the previous year, except the changes in accounting policy mentioned be- low.

3. GRATUITY AND OTHER POST-EMPLOYMENT BENEFIT PLANS

The Company has an unfunded defend benefit gratuity plan. Every employee who has completed five years or more of service is eligible for a gratuity on separation at 15 days basic salary (last drawn salary) for each completed year of service.

Consequent to the adoption of revised AS 15 ''Employee Benefits'' issued under Companies Accounting Standard Rules, 2006, as amended, the following disclosures are made as required by the standard:

Statement of Profit and Loss

Net Employee benefit expenses recognised in the employee cost

4. RELATED PARTY DISCLOSURE

(i) Subsidiaries

Shriram Housing Finance Limited (from 9th November 2010) (SHFL)

(ii) Other Related Parties

Enterprises having significant influence over the Company

a. Shriram Enterprises Holding Private Limited (SEHPL)*

b. Shriram Retail Holdings Private Limited (SRHPL)*

c. Shriram Capital Limited (SCL)

d. TPG India Investments I Inc. (TPGI)

e. Shriram Ownership Trust (SOT)

(iii) Key Managerial Personnel

a. R Duruvasan, Managing Director

b. G.S.Sundararajan, Managing Director

(iv) Relatives of Key Managerial Personnel

a. A. Komaleeswari (spouse of R.Duruvasan)

b. Nithya Sundararajan (spouse of G.S.Sundararajan)

5. CONTINGENT LIBILITIES AND COMMITMENTS TO THE EXTENT NOT PROVIDED FOR

(I) CONTINGENT LIABILITIES Rs. in lacs

As at March 31, Income Tax 2014 2013

a. Income Tax 7,570.87 10,743.64

b. Kerala Value Added Tax 4.65 -

c. Guarantees issued by the Company 100.00 250.00

d. Guarantees issued by others - -

The Income tax assessment of the company has been completed up to the Assessment Year 2011-12.

The disputed demand outstanding for the assessment Year 2011-12 is Rs.2605.75 lacs. For assessment year 2010-11, disputed demand outstanding is Rs.672.55 lacs. For assessment year 2008-09, disputed amount on account of penalty proceedings is Rs.1106.48 lacs. The assessment has been re-opened for assessment year 2007-08 and the disputed amount outstanding is Rs.3186.09 lacs. The company has fled appeal for all these disputed cases and the same is pending before the Commissioner of Income Tax Appeals, Chennai.

The Company has provided NSE with bank guarantee of Rs.100 lacs from ING Vysya bank, Mount Road branch, Chennai and a deposit of Rs.100 lacs as security deposit both together 1% of total public issue of secured non-convertible debentures of Rs.20,000 lacs (refer note 28).

The disputed Kerala Value Added Tax demand on account of sale of seized vehicles for the assessment year 2007-08 is Rs.4.65 lacs. The company has fled appeal before the Deputy Commissioner (Appeals), Ernakulam.

(II) COMMITMENTS

(i) As at March 31, 2014, Rs. 36.89 lacs (March 31, 2013 Rs. 118.88 lacs) (net of advances) is the estimated amount of contracts remaining to be executed on capital account.

6. DERIVATIVE INSTRUMENTS:

The amount of derivative transactions outstanding as on March 31, 2014 is NIL (March 31, 2013 Rs. 486.75 lacs). The company entered into a interest rate swap to convert the foating rate into a fixed rate liability @ 10.49% till maturity date of March 30, 2017 (underlying long term debt of Rs. 25,000 lacs )

7. The company had no discontinuing operations during the year ended March 31, 2014 and during the year ended March 31, 2013.

8. In addition to payments made to auditors shown in Note-20, the Company has made a payment of Rs. 8.99 lacs to auditors for services rendered by them in connection with the public issue of non-convertible debentures amortised as "public issue expenses for non-convertible debentures" in accordance with the accounting policy stated under Note 2.1.(v)

9. Based on the intimation received by the company, none of the suppliers have confirmed to be registered under "the Micro, Small and Medium Enterprises Development (''MSMED'') Act, 2006". Therefore, the related information for this purpose stands to be Nil.

10. The ministry of Corporate Affairs, Government of India, vide General Circular No. 2 and 3 dated 8th February 2011 and 21st February 2011 respectively has granted a general exemption from compliance with section 212 of the Companies Act, 1956, subject to fulfilment of conditions stipulated in the circular and hence is entitled to the exemption. Necessary information relating to the subsidiaries has been included in the Consolidated Financial Statements.

11. Previous year figures have been regrouped / rearranged, wherever considered necessary, to conform with current year presentation.


Mar 31, 2013

1. Corporate information

Shriram City Union Finance Limited (the company) is a public company domiciled in India and is incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange Ltd. (BSE), National Stock Exchange of India Ltd. (NSE) and Madras Stock Exchange Ltd. (MSE). The company is a Deposit Accepting Non Banking Finance Company (NBFC) registered with Reserve Bank of India (RBI). The company operates in India.

2. Basis of preparation

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006 as amended, the relevant provisions of the Companies Act, 1956 and the guidelines issued by RBI as applicable to NBFCs. The financial statements have been prepared on an accrual basis and under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent with those used in the previous year, except the changes in accounting policy mentioned in the paragraphs below.

3.1 Terms / rights attached to equity shares

The company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of the equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting.

During the year ended March 31, 2013, the amount of dividend per equity share recognised as distributions to equity shareholders is Rs.8.50 (March 31, 2012: Rs.6.50 including interim dividend) including interim dividend.

In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

3.2 Shares reserved for issue under option:

(i) For details of share reserved for issue under the employees stock option scheme (ESOP) [Refer note 23]

(ii) Preferential issue of share warrants:

During 2011-12, 59,00,000 warrants were issued /allotted to Shriram Capital Limited at a subscription price of not less than Rs.143/- for each warrant conferring an option to the holder to subscribe to one equity share per warrant at the exercise price of Rs.570/- per warrant being a price higher than the price determined as per Regulation 76(1) Chapter VII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009. The warrants are convertible within a period not exceeding 18 months from the date of allotment.

During the year, 28,50,000 warrants have been converted to equity shares, out of the total 59,00,000 warrants issued / allotted.

3.3 The company issued 13,55,000 equity shares (March 31, 2012: 13,55,000) during the period of five years immediately preceding the reporting date on exercise of options granted under ESOP, wherein a part of the consideration was received in form of employee service.

3.4 Preferential allotment of equity shares :

During 2011-12, 23,00,000 equity shares of the company were issued/allotted to Shriram Capital Limited for cash at a subscription price of Rs.570.00 per equity share (includes a premium of Rs.560.00 per equity share) being the price higher than the price determined under chapter VII of the Securities Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.(Refer note 3.1)

There was no preferential issue during the financial year 2012-13.

4. Gratuity and other post-employment benefit plans

The Company has an unfunded defined benefit gratuity plan. Every employee who has completed five years or more of service is eligible for a gratuity on separation at 15 days basic salary (last drawn salary) for each completed year of service.

Consequent to the adoption of revised AS 15 ''Employee Benefits'' issued under Companies Accounting Standard Rules, 2006, as amended, the following disclosures are made as required by the standard:

5. Segment Information

The company has got a single reportable segment. Therefore, the segment wise reporting has not been given.

6. Related Party Disclosure

(i) Subsidiaries

Shriram Housing Finance Limited (from 9th November 2010) (SHFL)

(ii) Other Related Parties

Enterprises having significant influence over the Company

a. Shriram Enterprises Holding Private Limited (SEHPL)

b. Shriram Retail Holdings Private Limited (SRHPL)

c. Shriram Capital Limited (SCL)

d. TPG India Investments I Inc. (TPGI)

e. Shriram Ownership Trust (SOT)

(iii) Key Managerial Personnel

a. Mr. R Duruvasan, Managing Director

b. Mr. G.S.Sundararajan, Managing Director

c. Mr. R. Kannan

(iv) Relatives of Key Managerial Personnel

a. Mrs. D. Komaleeswari (spouse of Mr. R.Duruvasan)

b. Mrs. Nithya Sundararajan (spouse of Mr. G.S.Sundararajan)

c. Mrs. Vasanthi Kannan (spouse of Mr. R. Kannan)

7. Contingent liabilities and commitments to the extent not provided for

(i) Contingent liabilities

Rs. in lacs

As at March 31,

Income Tax 2013 2012

a. Income tax 10,743.64 1,447.80

b. Guarantees issued by the Company 250.00 450.00

The Income tax assessment of the company has been completed upto the Assessment Year 2010-11.

The disputed demand outstanding for the assessment Year 2010-11 is Rs.5,718.28 lacs. For assessment year 2008-09, disputed amount on account of penalty proceedings is Rs.1106.48 lacs. The assessment has been re-opened for assessment year 2007-08 and the disputed amount outstanding is Rs.3,918.88 lacs. The company has filed appeal for all these disputed cases and the same is pending before the Commissioner of Income Tax Appeals, Chennai.

The company has provided NSE with a bank guarantee for Rs. 250.00 lacs from Indus Ind Bank, Nugambakkam, Chennai branch and a deposit of Rs. 250.00 lacs as security deposit both together 1% of total public issue of secured non- convertible debentures of Rs.50,000.00 lacs.[Refer note: 27]

(ii) Commitments

(i) As at March 31, 2013 Rs. 118.88 lacs (March 31, 2012: Rs.686.76 lacs (net of advances) is the estimated amount of contracts remaining to be executed on capital account.

(ii) The company has got further commitments to invest in the subsidiary company i.e. Shriram Housing Finance Limited as at March 31, 2013 Rs. 9,544.00 (March 31, 2012 Rs. 5,529.55 )

8. Utilization of money raised through public issue of debenture and preferential issue of equity shares and warrants

(i) through public issue of debentures [Refer note 5.1 (A)(iii)]

During the year ended March 31, 2013, the company has raised Rs.43,360.00 lacs through public issue of secured redeemable non convertible debenture of face value of Rs.1000/- each. The proceeds of issue are utilized for the following purpose:

9. Derivative Instruments:

The Notional principal amount of derivative transactions outstanding as on March 31 2013, is Rs. 486.75 lacs, for interest rate swaps is Rs.12,500 lacs (March 31 2012 Rs.12,500 lacs).

10. The company had no discontinuing operations during the year ended March 31, 2013 and during the year ended March 31, 2012.

11. In addition to payments made to auditors shown in Note-19, the Company has made a payment of Rs. 8.99 lacs to auditors for services rendered by them in connection with the public issue of non-convertible debentures amortised as "public issue expenses for non-convertible debentures" in accordance with the accounting policy stated under Note 2.1.(v)

12. Based on the intimation received by the company, none of the suppliers have confirmed to be registered under "the Micro, Small and Medium Enterprises Development (''MSMED'') Act, 2006". Therefore, the related information for this purpose stands to be Nil.

13. The ministry of Corporate Affairs, Government of India, vide General Circular No. 2 and 3 dated 8th February 2011 and 21st February 2011 respectively has granted a general exemption from compliance with section 212 of the Companies Act, 1956, subject to fulfilment of conditions stipulated in the circular and hence is entitled to the exemption. Necessary information relating to the subsidiaries has been included in the Consolidated Financial Statements.

14. Previous year figures have been regrouped/rearranged, wherever considered necessary, to conform with current year presentation.


Mar 31, 2012

1. Corporate information

Shriram City Union Finance Limited (the company) is a public company domiciled in India and is incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange Ltd. (BSE),National Stock Exchange of India Ltd.(NSE) and Madras Stock Exchange Ltd.(MSE). The company is a Deposit Accepting Non Banking Finance Company (NBFC) registered with Reserve Bank of India (RBI). The company operates in India.

2. Basis of preparation

The financial statements of the company have been prepared in accordance with Generally Accepted Accounting Principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006 as amended, the relevant provisions of the Companies Act, 1956 and the guidelines issued by RBI as applicable to NBFCs. The financial statements have been prepared on an accrual basis and under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent with those used in the previous year, except the changes in accounting policy mentioned below.

3. Terms / rights attached to equity shares

The company has only one class of equity shares having a par value of Rs 10 per share. Each holder of the equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting.

During the year ended March 31,2012, the amount of dividend per equity share recognized as distributions to equity shareholders is Rs 6.50 (March 31,2011:Rs 6.00 including interim dividend) including interim dividend.

In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

As per records of the company, including the register of shareholders /members and other declarations received from shareholders/members regarding beneficial interest, the above shareholding represents legal ownerships of shares.

4. Shares reserved for issue under option:

(i) For detail of share reserved for issue under the employees stock option scheme (ESOP) [Refer note 23]

(ii) Preferential issue of share warrants:

During the year 59,00,000 warrants were issued /allotted to Shriram Capital Limited at a subscription price of not less than Rs 143/- for each warrant conferring an option to the holder to subscribe to one equity share per warrant at the exercise price of Rs 570/- per warrant being a price higher than the price determined as per Regulation 76(1) Chapter VII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009. The warrants are convertible within a period not exceeding 18 months from the date of allotment.

5. The company issued 13,55,000 equity shares (March 31, 2011:13,55,000) during the period of five years immediately preceding the reporting date on exercise of options granted under ESOP, wherein a part of the consideration was received in form of employee service.

6. Preferential allotment of equity shares :

During the year 23,00,000 equity shares of the company were issued/allotted to Shriram Capital Limited for cash at a subscription price of Rs 570.00 per equity share (includes a premium of Rs 560.00 per equity share) being the price higher than the price determined under chapter VII of the Securities Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.

Nature of security

The redemption of principal amount of secured redeemable non-convertible debentures with all interest there on are secured by a legal mortgage on the specified immovable property and by way of charge on the company's specifically identified movable assets such as book debts/loan receivables in favors of the Trustees appointed.

These secured redeemable non-convertible debentures are redeemable at par over a period of 12 months to 160 months from the date of allotment depending on the terms of the agreement.

Secured redeemable non-convertible debentures may be bought back by the company subject to applicable statutory and /or regulatory requirements, upon the terms and conditions as may be decided by the company. The company may grant loan against the security of IMCDs upon the terms and conditions as may be decided by the company and subject to applicable statutory and/or regulatory requirements.

Nature of security

The redemption of principal amount of secured redeemable non-convertible debentures with all interest there on are secured by a legal mortgage on the specified immovable property and by way of charge on the company's specifically identified movable assets such as book debts/loan receivables in favor of the Trustees appointed.

Secured redeemable non-convertible debentures may be bought back by the company subject to applicable statutory and /or regulatory requirements, upon the terms and conditions as may be decided by the company.

Nature of security

The repayment of secured redeemable non convertible debentures ofRs 1,000/- each at face value on maturity together with interest thereon are secured by mortgage of specified immovable property and by way of charge on the company's specifically identified movable assets such as book debts/ loan receivables in favor of the Trustees appointed.

Secured redeemable non-convertible debentures may be bought back by the company subject to applicable statutory and /or regulatory requirements, upon the terms and conditions as may be decided by the company.

# As regards the recovery of Service tax on lease and hire purchase transactions, the Hon'ble Supreme Court vide its order dated October 26,2010 has directed the competent authority under the Finance act, 1994 to decide the matter in accordance with the law laid down.

*Accrued interest is up to the date of maturity. Amounts shall be credited to Investor Education & Protection Fund as and when due to the extent unclaimed.

7. Nature of security

Cash credit and working capital demand loans from banks are secured by way of hypothecation of specific movable assets relating to the loans.

In accordance with the Reserve Bank of India circular no. RBI/2006-07/225 DNBS (PD) C.C No.87/03.02.2004/2006-07 dated January 4, 2007, the company has created a floating charge on the statutory liquid assets comprising of investment in government securities being statutory liquid assets to the extent of Rs 101.45 Lacs (March 31,2011: Rs 101.45 lacs) in favor of trustees representing the public deposit holders of the company.

8.Gratuity and other post-employment benefit plans:

The company has an unfunded defined benefit gratuity plan. Every employee who has completed five years or more of service is eligible for a gratuity on separation at 15 days basic salary (last drawn salary) for each completed year of service Consequent to the adoption of revised AS 15 'Employee Benefits' issued under Companies Accounting Standard Rules, 2006, as amended, the following disclosures are made as required by the standard:

The expected volatility was determined based on historical volatility data equal to the NSE volatility rate of Bank Nifty which is considered as a comparable peer group of the Company. To allow for the effects of early exercise it was assumed that the employees would exercise the options within six months from the date of vesting in view of the exercise price being significantly lower than the market price.

9. Segment information

The company has got a single reportable segment.

10. Related party disclosure

(i) Subsidiaries

Shriram Housing Finance Limited (from 9th November 2010) (SHFL)

ii) Other related parties

Enterprises having significant influence over the company

a. Shriram Enterprises Holding Private Limited (SEHPL)

b. Shriram Retail Holdings Private Limited (SRHPL)

c. Shriram Capital Limited (SCL)

d. TPG India Investments Inc. (TPGI)

e. Shriram Ownership Trust (SOT)

11. Contingent liabilities and commitments to the extent not provided for

(i) Contingent liabilities Rs in lacs

Income Tax For the year ended Mareh31,

2012 2011

a. Income tax 1,447.80 -

b. Guarantees issued by the company 450.00 6.81

c. Guarantees issued by others - 1,942.77

The Income tax assessments of the company have been completed up to the Assessment Year 2009-10. The disputed demand outstanding up to the assessment Year 2009-10 is Rs 1,447.80 lacs.

The company has provided NSE with a bank guarantee for Rs 450.00 lacs from Indusind bank, Nugambakkam, Chennai branch and a deposit of Rs 300.00 lacs as security deposit both together 1% of total public issue of secured non-convertible debentures of Rs 75,000.00 lacs.[Refer note: 27]

Standard Chartered Bank had provided guarantee for Rs 1,942.77 lacs in favor of Bank of Maharashtra for Securitization. The guarantee was closed on May 22,2011.

(ii) Commitments

(i) As at March 31,2012 Rs 686.76 lacs (March 31,2011: Rs 61.78 lacs (net of advances) is the estimated amount of contracts remaining to be executed on capital account.

(ii) The company has got further commitments to invest in the subsidiary company i.e. Shriram Housing Finance Limited as at March 31, 2012 Rs 5529.55 (March 31,2011 Rs Nil)

12. Utilization of money raised through public issue of debentures and preferential issue of equity shares and warrants

(i) through public issue of debentures [Refer note 5.1 (A)(iii)]

During the year ended March 31, 2012, the company has raised Rs 75,000 lacs through public issue of secured redeemable non convertible debentures of face value of Rs 1000/- each (March 31 2011 :Nil). The proceeds of issue are utilized for the following purposes:

13. Derivative Instruments:

The Notional principal amount of derivative transactions outstanding as on March 31, 2012 for interest rate swaps Rs 12,500.00 lacs (March 31 2011 Rs 12,500.00 lacs).

14. The company had no discontinuing operations during the year ended March 31, 2012 and during the year ended March 31,2011.

15. The company operates in single reportable segment. Therefore, the segment wise reporting has not been given.

16. in addition to auditors remuneration shown in other expenses, the company has also incurred auditors remuneration amounting to Rs 10.00 lacs in connection with other services provided by auditors for public issue of non-convertible debentures and the same has been amortized as per note 2.1(v) stated under "other assets" as public issue expenditure to the extent not written off.

17. Based on the intimation received by the company, none of the suppliers have confirmed to be registered under "the Micro, Small and Medium Enterprises Development ('MSMED') Act, 2006". Therefore, the related information for this purpose stands to be Nil.

18. The ministry of Corporate Affairs, Government of India, vide General Circular No. 2 and 3 dated 8th February 2011 and 21st February 2011 respectively has granted a general exemption from compliance with section 212 of the Companies Act, 1956, subject to fulfillment of conditions stipulated in the circular and hence the company is entitled to the exemption. Necessary information relating to the subsidiaries has been included in the Consolidated financial statements.

19. Previous Year Comparatives

Till the year ended March 31,2011, the company was using pre-revised Schedule VI to the Companies Act, 1956, for preparation and presentation of its financial statements. During the year ended March 31,2012 the revised Schedule VI notified under the Companies Act 1956, has become applicable to the company. The company has reclassified previous year figures to conform to this year1 classification. It significantly impacts presentation and disclosures made in the financial statements, particularly presentation of balance sheet. The following is a summary of the effects that revised Schedule VI had on presentation of balance sheet of the company as at March 31,2011:


Mar 31, 2011

Back Ground

Shriram City Union Finance Limited (SCUFL) was incorporated on 27th March 1986, as a Private Limited Company and became a Public Limited Company on 29th October 1988. The Company is a Non-Banking Finance Company registered with Reserve Bankof India.

1. Particulars of Secured Loans

a) Privately placed Redeemable Non-convertible Debentures ofRs.1,000/- each (Retail) Secured by equitable mortgage of title deeds of immovable property. Further secured by charge on plant and machinery, furniture and other fixed assets of the Company, charge on Company's hypothecation loans, other loans, advances and investments of the Company subject to prior charges created or to be created in favor of the Company's bankers, financial institutions and others.

These Debentures are redeemable at par over a period of 12 months to 160 months from the date of allotment depending on the terms of the agreement. The earliest date of redemption is April 1, 2011 (March 31, 2010; April 1, 2010). The last date of redemption is October 25, 2017 (March 31, 2010; October 25, 2017).

Debentures may be bought back subject to applicable statutory and /or regulatory requirements, upon the terms and conditions as may be decided by the Company. The Company may grant loan against the security of Non Convertible Debentures upon the terms and conditions as may be decided by the Company and subject to applicable statutory and/or regulatory requirements.

2. Subordinated Debt

The Company has as on 31.03.2011 subordinated debt bonds amounting to Rs. 53272.33 Lacs (March 31,2010: Rs. 53002.95 Lacs) with coupon rate of 7.00% to 13.00% Per annum which are redeemable over a period of 60 months to 216 months.

3. Gratuity and other post-employment benefit plans:

The Company has an unfunded defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on separation at 15 days basic salary (last drawn salary) for each completed year of service.

4. Related Party Disclosures

Related Parities have been identified by the Management and relied upon by the auditors.

Subsidiary

Shriram Housing Finance Limited (from 9th November 2010)

Shriram Non-Conventional Energy Limited (till 26th June 2009)

Enterprises having significant influence over the Company

Shriram Enterprise Holdings Private Limited

Shriram Retail Holdings Private Limited

Shriram Capital Limited

Shriram Ownership Trust TPG India Investments I Inc.

Key Managerial Personnel

R Kannan Managing Director

5. In accordance with the Reserve Bank of India circular no. RBI/2006-07/225 DNBS (PD) C.C No.87/03.02.2004/2006-07 dated January 4,2007, the Company has created a floating charge on the statutory liquid assets comprising of investment in Government Securities to the extent of Rs. 101.45 Lacs ( March 31,2010: Rs:101.45Lacs) in favour of trustees representing the publicdeposit holders ofthe Company.

5. Contingent Liabilities not provided for

(Rs. in lacs)

As at As at

March 31, 2011 March 31, 2010

Guarantees issued by the Company 6.81 6.81

Guarantees issued by others 1942.77 1942.77

6. Income Tax/Wealth Tax/Service Tax/Fringe Benefit Tax

Disputed Wealth Tax/Service Tax demands contested in appeal as on March 31st, 2011. Wealth tax- Rs. 1.76 lacs (March 31st 2010 : Rs.1.76 lacs) Service Tax - Rs.1553.08 Lacs (March 31st 2010 : Rs.1553.08 lacs) However provision is made in the books for any liability that may arise.

The expected volatility was determined based on historical volatility data equal to the NSE volatility rate of Bank Nifty which is considered as a comparable peer group of the Company. To allow for the effects of early exercise it was assumed that the employees would exercise the options within six months from the date of vesting in view of the exercise price being significantly lowerthan the market price.

7. Derivative Instruments:

The Notional principal amount of derivative transactions outstanding as on March 31 2011 for interest rate swaps Rs. 12500 lacs (March 31 2010-12500 lacs).

8. Supplementary Statutory Information

8.1 Managing Director's Remuneration

The computation of profits under section 349 of the Act has not been given as no remuneration / commission is payable to the Managing Director.

9. Additional information pursuant to the provisions of paragraphs 3 4C and 4D of Part II of schedule VI to the Act

The Company does not have licensed capacity as it is a Non Banking Finance Company.

10. Previous Year Comparatives

The figures for the previous year have been regrouped and reclassified, wherever necessary to conform to current year's classification.


Mar 31, 2010

Back Ground

Shriram City Union Finance Limited (SCUFL) was incorporated on 27th March 1986, as a Private Limited Company and became a Public Limited Company on 29th October 1988. The Company is a Non-Banking Finance Company registered with Reserve Bank of India.

a) All Debentures under (a) and (b) above are secured by exclusive mortgage of office premise and further secured by charge on Plant and Machinery, Furniture and other fixed assets of the Company, charge on Companys book debts, loans, advances and other investments of the Company subject to prior charges created or to be created in favour of the Companys bankers, financial institutions and others.

1. Gratuity and other post-employment benefit plans:

The Company has an unfunded defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on separation at 15 days salary (last drawn salary) for each completed year of service.

Consequent to the adoption of revised AS15Employee Benefits issued by the lCAl. the following disclosures have been made as required by the standard:

2. Contingent Liabilities not provided for (RS. in lacs) As at As at March 31, 2010 March 31, 2009 Guarantees issued by the Company 6.81 6.81 Guarantees issued by others 1942.77 3117.77

Income Tax/Wealth Tax/Service Tax/Fringe Benefit Tax

Disputed Income tax/Wealth Tax/Service Tax/Fringe Benefit Tax demands contested in appeal as on March 31st, 2010 amount to Rs.1553.08 lacs (March 31st 2009: Rs.1554.83 lacs.) However provision is made in the books for any liability that may arise.

3. The Company during the year converted 32,50,000 warrants issued on preferential basis into equity shares of Rs. 10/- each at a premium of Rs.390/-. The company forfeited 35,00,000 warrants for non exercise of option and the amount of Rs.1400 lacs was transferred to Capital Reserve.

The expected volatility was determined based on historical volatility data equal to the NSE volatility rate of Bank Nifty which is considered as a comparable peer group of the Company. To allow for the effects of early exercise, it was assumed that the employees will exercise the options within six months from the date of vesting in view of the exercise price being significantly lowerthan the market price.

Since the enterprise used the intrinsic value method the impact on the reported net profit and earnings per share by applying the fair value based method is as follows:

In March 2005, ICAI has issued a guidance note on "Accounting for Employees Share Based Payments" applicable to employee based share plan the grant date in respect of which falls on or after April 1, 2005. The said guidance note requires that the proforma disclosures of the impact of the fair value method of accounting of employee stock compensation accounting in the financial statements. Applying the fair value based method defined in the said guidance note, the impact on the reported net profit and earnings per share would be as follows:

4. Derivative Instruments:

The Notional principal amount of derivative transactions outstanding as on March 31,2010 for interest rate swaps Rs. 12500 lacs (March 31,2009 12500 lacs).

5. Supplementary Statutory Information

5.1 Managing Directors Remuneration

The computation of profits under section 349 of the Act has not been given as no remuneration / commission is payable to the Managing Director.

Notes:

1. As defined in Paragraph 2(1)(xii) of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions,1998.

2. Provisioning norms shall be applicable as prescribed in the Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions,2007.

3. All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of investments and other assets as also assets acquired in satisfaction of debt. However, marketvalue in respect of quoted investments and break-up/fair value/NAV in respect of unquoted investments should be disclosed irrespective of whether they are classified as long term or current in column(5) above.

6. Previous Year Comparatives

The figures for the previous year have been regrouped and reclassified, wherever necessary to conform to current years classification.


Mar 31, 2000

(1) Secured Loans

(i) Redeemable Non Convertible Debentures

Redeemable at par over a period of 12 months to 100 months from the date of allotment depending on the terms of the issue. Secured by mortgage of building and charge on the plant and machinery and charge on Companys book debts, leased assets, lease rentals and future receivables subject to prior charges created or to be created in favour of the Companys bankers.

(ii) Cash Credit from Banks

Secured by hypothecation of all movable properties covered by specific hire purchase agreements and all present and future assets of the Company covered by the specific hire purchase agreements.

(iii) Term Loan from Indian Renewable Energy Development Agency Limited Secured by way of mortgage/hypothecation of all immovable / movable assets, both present and future of the project, subsequent charge over all other immovable/movable assets and personal guarantee of the Managing Director.

(iv) Term Loan from Karnataka State Finance Corporation Secured by the specific hire purchase agreements financed under the scheme, personal guarantee of Directors and Corporate Guarantee of other bodies corporate.

(v) ICICI Limited under Deferred Payment Guarantee Scheme Secured by Guarantee given by a bank against hypothecation of specific equipments.

(2) In the opinion of the Board of Directors, Sundry Debtors, Current Assets and Loans and Advances have a value on realisation, in the ordinary course of business, at least equal to the amount at which they are stated.

(3) Expenses in respect of common branches and infrastructure are shared by the Company with other Companies and are booked under respective account heads.

(4) The Company does not have any dues payable to small scale industries.

(5) Included under Loans and Advances is Project Development Finance amounting to Rs. 1666.07 Lakhs (Previous Year Rs. 1385.08 Lakhs), secured, as certified by the Management by mortgage of immovable/movable assets and current assets of assisted units as well as guarantor companies. The Company has a long term financial assistance agreement taking into account the gestation period of the assisted projects. Income on these finances have been recognised as per the options specified in the said agreements.

(7) The Company has a contingent liability in respect of guarantees given on behalf of others amounting to Rs.461.14 Lakhs (Previous year Rs.496.76 Lakhs)

(8) Provision for taxation for the year represents income tax due under Minimum Alternate Tax. The said sum is available for set off in future years in accordance with the provision of the Income Tax, 1961.

(9) Stock on hire under hire purchase agreements is net of assets securitised for Rs. 191.97 Lakhs (Previous Year-Nil) in respect of used vehicles. The Company is under obligation to repurchase the relevant assets in case of default, if any.

(10) Figures for current financial year comprises nine months period from 1st July, 1999 to 31st March, 2000 and as such are not comparable with the figures for the previous year.

(11) Previous years figures have been regrouped wherever necessary.

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