Directors Report of Muthoot Capital Services Ltd.
Mar 31, 2019
Dear Members,
The Directors are pleased to present the 25th Boardâs Report on your Companyâs business and operations, together with audited financial statements of the Company for the financial year ended March 31, 2019.
1. PERFORMANCE HIGHLIGHTS
a) Financial Results
The summarized financial results of your Company for the FY 2018 - 2019 are given below:
(Rs. in lakhs, except earnings per share)
|
Particulars |
2018 - 2019 |
2017 - 2018 |
|
Total Income |
535 27.42 |
398 08.56 |
|
Total Expenses |
408 02.88 |
315 62.54 |
|
Profit Before Tax (PBT) |
127 24.54 |
82 46.02 |
|
Tax Expense |
44 82.07 |
28 78.30 |
|
Profit After Tax (PAT) |
82 42.47 |
53 67.72 |
|
Basic Earnings Per Share (EPS) |
50.11 |
36.39 |
b) Business Growth
During the Financial Year (FY) ended March 31, 2019, your Company was able to achieve an impressive growth. The total Asset Under Management (AUM) (including sold portfolio) of your Company increased by 22.48%. The AUM (including sold portfolio) of the Company as on March 31, 2019 stood at Rs.2741 04.67 lakhs, whereas the same as on March 31, 2018 was Rs.2238 02.63 lakhs.
c) Profitability
The total income of the Company increased to Rs.535 27.42 lakhs during the FY 2018 - 2019 as against t 398 08.56 lakhs during the FY 2017 - 2018. The total expenditure for the FY 2018 - 2019 was at Rs.408 02.88 lakhs. The Company achieved an all-time high profit of Rs.82 42.47 lakhs while the same was Rs.53 67.72 lakhs in FY 2017 - 2018. The Net Interest Margin (NIM) improved to 69.83% as against 69.15% in FY 2017 - 2018.
d) Asset Quality
As on March 31, 2019, the gross NPA and net NPA in the books of your Company stood at Rs.113 13.80 lakhs and Rs. 61 90.43 lakhs respectively. The Provision Coverage Ratio stood at 45.28%. Your Company has adopted new and aggressive methods to control delinquencies and the NPA figures and hence have been able to achieve this in spite of the aftermath of the Kerala floods, which temporarily increased the delinquency substantially.
e) Net worth & Capital Adequacy Ratio
Based on the higher profitability of Rs. 82 42.47 lakhs, the net worth of your Company increased by 20.92% to Rs.476 35.45 lakhs as against t 393 92.98 lakhs in the previous year. The Companyâs total Capital Adequacy Ratio (CAR) as on March 31, 2019 stood at 21.88% of the aggregate risk weighted assets on the Balance Sheet and risk adjusted value of the off - Balance Sheet items, which is above the statutory minimum of 15%. Out of the above, Tier I CAR stood at 21.17% and Tier II CAR stood at 0.71%. The CAR as on March 31, 2018, stood at 22.04%.
f) Earnings Per Share
Earnings Per Share of your Company has improved from t 36.39 to t 50.11 during the year under review. Return on Equity reached 19.37% during the year.
2. DIVIDEND
In view of the business growth plans of the Company, the launch of new products and proposed investment in IT/infrastructure in the forthcoming years, the Board of Directors of your Company decided to plough back the profit after tax into the business and hence have not recommended any dividend for the FY 2018- 2019.
3. RESERVES
Your Board of Directors has transferred an amount of Rs. 16 50.00 lakhs to the Statutory Reserve maintained under Section 45-IC of the Reserve Bank of India Act, 1934. The Company has not transferred any amount to the General Reserve for the FY ended March 31, 2019. Post transfer of profits to reserves, your Board decided to retain Rs.185 04.84 lakhs as surplus in the Profit and Loss Account.
4. RESOURCE MOBILISATION
a) Share Capital
The authorized share capital of the Company is Rs.25 00.00 lakhs and the paid-up share capital of the Company is Rs.16 44.75 lakhs. The Company had not issued any equity shares either with or without differential rights during the FY 2018 - 2019 and hence, the disclosure requirements under Section 43 of the Companies Act, 2013 and Rule 4 (4) of the Companies (Share Capital and Debentures) Rules, 2014 is not applicable.
b) Debentures
The Company has not issued any debentures during the FY 2018 - 2019. As on March 31, 2019, the residual portion of secured redeemable non-convertible debentures under private placement during earlier years along with interest accrued is Rs.6.21 lakhs. The debentures issued are secured by way of floating charge on the current assets of the Company. The non-convertible debentures of your Company is rated as âA/Stableâ by CRISIL.
Trustees for Debenture Holders: Mr. A Gopalakrishnan, Chartered Accountant, M/s. K. Venkatachalam Aiyer & Co., Chartered Accountants, Building No. 41/3647 B, First Floor, Blue Bird Towers, Providence Road, Kochi - 682 018, is the Debenture Trustee for ensuring and protecting the interests of debenture holders.
c) Commercial Papers
During the year under review, your Company has raised funds for its working capital requirements by way of issue of Commercial Papers and duly repaid the same on the maturity date(s). The Commercial Papers of your Company are rated âA1â by CRISIL.
d) Fixed Deposits
Your Company is a Non - Banking Financial Company (NBFC), registered with Reserve Bank of India (RBI) having a Deposit Taking License. The Company started accepting fixed deposits during FY 2013 -2014. The fixed deposits of the Company are rated âFA /Stableâ by CRISIL.
The outstanding amount of fixed deposits as on March 31, 2019, received by the Company including interest accrued at that date is Rs.66 07.17 lakhs. As on March 31, 2019, there are 92 accounts of fixed deposits amounting to Rs.1 77.34 lakhs which have become due for payment but have not been claimed by the depositors.
Being an NBFC registered with RBI, the provisions of Chapter V of the Companies Act, 2013, relating to acceptance of deposits by Companies, is not applicable to the Company.
Communication to Deposit Holders: The Company has the practice of sending communication by registered post to the deposit holders whose accounts are about to mature, two months prior to the date of maturity. If the deposit holders are not responding to the communication, Company contacts the depositors 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 holder and other modes to contact the deposit holders are also initiated till the deposits are repaid.
Trustees for Deposit Holders: Subject to the RBI Guidelines for trustees of deposit holders of the NBFC, your Company has appointed IDBI Trusteeship Services Limited, as trustees for protecting the interests of deposit holders.
In compliance with the Master Circular - Miscellaneous Instruction to all NBFCs dated July 01, 2014, your Company has 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 the extant provisions.
e) Subordinated Debts
The Company has, in the current year, raised money through issue of subordinated debts. As of March 31, 2019, the total amount of outstanding subordinated debts, including accrued interest was Rs.63 72.38 lakhs as against Rs.65 05.99 lakhs in the previous year.
The subordinated debts and public deposits consists of 8.26% of our total funding.
f) Bank Finance
The Company raised funds for its working capital resources mainly from banks. As on March 31, 2019, the total outstanding amount of credit facilities from Banks were Rs.1349 04.18 lakhs as against t 1149 10.26 lakhs as on March 31, 2018 excluding interest accrued.
Apart from the above, the Company has been sourcing funds through Securitization and Direct Assignment transactions. During the year under review the Company has sourced Rs.837 34.51 lakhs (net of MRR) (previous year Rs.439 76.23 lakhs). The same has been invested into by Banks / NBFCs / Mutual Funds and the value remaining outstanding as on March 31, 2019 was Rs.656 84.87 lakhs (previous year Rs.322 02.37 lakhs).
5. DIRECTORS
The Board of your Company consists of the following seven Directors:
|
Category |
Name of Directors |
|
Executive Director |
Mr. Thomas George Muthoot, Managing Director |
|
Non - Executive - Non - Independent Directors |
Mr. Thomas John Muthoot, Chairman |
|
Mr. Thomas Muthoot |
|
|
Non - Executive Independent Directors |
Mr. A.P. Kurian |
|
Mr. R.K. Nair1 |
|
|
Mrs. Radha Unni |
|
|
Mr. K M Abraham2 |
|
|
Mr. Thomas Mathew3 |
1 Resigned with effect from March 28, 2019
2 Appointed as Additional Independent Director with effect from January 18, 2019
3 Appointed as Additional Independent Director with effect from April 01, 2019
The composition of the Board is in line with the requirements of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) (LODR) Regulations, 2015. All the Directors are having vast knowledge and experience in their relevant fields and the Company had benefitted immensely by their presence in the Board. The key Board qualifications, expertise, attributes are given in details in the Report on Corporate Governance forming part of this Report.
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 Director of the Company. The detailed profile of Mr. Thomas John Muthoot recommended for re-appointment is enclosed with the Notice for the 25th AGM of the Company.
Mr. A.P. Kurian (DIN: 00008022) and Mrs. Radha Unni (DIN: 03242769) were appointed as the Independent Directors of the Company by the shareholders at the 20th Annual General Meeting held on September 03, 2014 for a period of five consecutive years, i.e., for a term upto September 02, 2019. Hence, Mr. A P Kurian and Mrs. Radha Unni will complete their initial term as per Companies Act, 2013 as an Independent Director of the Company on September 02, 2019. Since they are eligible, your Board recommends the re-appointment of Mr. A.P. Kurian and Mrs. Radha Unni for one more term subject to the approval of shareholders by way of special resolution. The detailed profile of Mr. A.P. Kurian and Mrs. Radha Unni, recommended for re-appointment in the ensuing AGM is enclosed with the Notice for the 25th AGM of the Company.
a) Changes in Directors and Key Managerial Personnel (KMP) during the FY 2018 - 2019
During the FY 2018 - 2019, Mr. K.M. Abraham (DIN: 05178826) has been appointed as the Additional Independent Director on the Board with effect from January 18, 2019. The Board of your Company recommends the regularization of appointment of Mr. K.M. Abraham in the ensuing AGM for a period of five years.
The Board also appointed Mr. Thomas Mathew (DIN: 01277149) as the Additional Independent Director of the Company at the Board meeting held on March 28, 2019. The appointment of Mr. Thomas Mathew is effective from April 01, 2019. The Board of your Company recommends the regularization of appointment of Mr. Thomas Mathew in the ensuing AGM for a period of five years.
The detailed profile of Mr. K.M. Abraham and Mr. Thomas Mathew recommended for re-appointment in the ensuing AGM is enclosed with the Notice for the 25th AGM of the Company.
During the FY 2018 - 2019, Mr. R.K. Nair, Independent Director (DIN: 00631889), has resigned from the Board with effect from March 28, 2019 due to compelling personal reasons and pre-occupation with other professional commitments. The Board places on record their appreciation for the commendable contribution made by Mr. R.K. Nair as Independent Director during his tenure in the Company. The Board took on record the confirmation from Mr. R.K. Nair that there are no material reasons for resignation other than those provided.
Mr. Ravi Oruganti, who was appointed as the Company Secretary & Compliance Officer at the Board meeting held on April 17, 2018, has resigned with effect from the closing hours of March 28, 2019, due to personal reasons.
Mr. Thomas George Muthoot, Managing Director and Mr. Vinodkumar M. Panicker, Chief Finance Officer are the KMPs of the Company, as recorded by the Board, as on March 31, 2019.
b) Declaration by Independent Directors
On April 01, 2019, the Company has received declaration from each Independent Director of the Company under Section 149 (7) of the Companies Act, 2013 that, they meet the criteria of independence as laid down in Section 149 (6) of the Companies Act, 2013 and subsequently the same was placed at the Board Meeting held on April 24, 2019.
A declaration by Managing Director confirming the receipt of this declaration from Independent Directors is enclosed to this Report as Annexure 1.
c) Policy on Board Diversity
The Policy on Board Diversity approved and adopted by the Company are as follows:
(i) Diversity is ensured through consideration of a number of factors, including but not limited to skills, regional and industry experience, background and other qualities.
(ii) The Company shall also take into account factors based on its own business model and specific needs from time to time.
(iii) 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.
(iv) 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.
(v) 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.
d) Policy on Nomination & Remuneration
The Companyâs policy on Directorâs appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under Section 178 (3) of the Companies Act, 2013 is provided on the website of the Company and can be accessed on: https:// muthootcap.com/admin/uploads/Policy_on_Nomination_and_Remuneration.pdf
The Policy on Nomination and Remuneration sets out the criteria for determining qualifications, positive attributes and independence of Director and the norms for evaluation of the Board, its Committees and individual Directors.
e) Formal Annual Evaluation of Board and its Committees
Based on the Policy on Nomination and Remuneration, the Board has carried out an annual evaluation of its own performance, its Committees and Independent Directors, excluding the Director being evaluated.
The detailed note on the annual Board evaluation process undertaken in compliance with the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015, is given in the Report on Corporate Governance, which forms part of this Report.
f) Meetings of the Board
During the FY 2018 - 2019, your Board of Directors met seven times. More details about the meetings of the Board is given the Report on Corporate Governance, forming part of this Report.
g) Committees of the Board
The details of the Committees of the Board, their composition, terms of reference and the activities during the year are elaborated in the Report on Corporate Governance forming part of this Report.
6. SUBSIDIARIES/JOINT VENTURE/ASSOCIATE COMPANY
The Company has no subsidiary/joint venture/associate company and hence consolidation and the provisions relating to the same under the Companies Act, 2013 and Rules made thereunder are not applicable to the Company.
7. CHANGE IN THE NATURE OF BUSINESS, IF ANY
During the year under review, there was no change in the nature of business of the Company. The Company is mainly into the business of providing two-wheeler loans, for which, during the year under review the Company has disbursed loans to the extent of t 1851 00.78 lakhs and as on March 31, 2019, the total outstanding amount (including sold portfolio) was Rs.2339 39.44 lakhs. The Company had disbursed business/corporate loans to the extent of Rs.225 43.50 lakhs and as on March 31, 2019, the outstanding amount is Rs.315 88.81 lakhs. Apart from the above, the Company has ventured into the disbursement of used car loans and disbursed an amount of Rs.4 12.22 lakhs during the year under review. As on March 31, 2019, the total outstanding amount was Rs.3 45.85 lakhs.
The Company had entered into pool buyout arrangement of loan receivables amounting to Rs.54 45.73 lakhs (after deducting 5% / 10% for MRR requirement) during the year under review. The aggregate amount outstanding under loan buyout, as on March 31, 2019, was Rs.52 06.46 lakhs.
The sourcing of two-wheeler and used car business of the Company takes place mainly at the dealer points for two wheelers and through branches of its group company, Muthoot Fincorp Limited. During the FY 2018 - 2019, the Company has also started sourcing through its mobile app which is in the nascent stage.
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
There were no material changes and commitments affecting the financial position of the Company between the end of financial year and the date of this Report.
9. SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS, COURTS AND TRIBUNALS
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 Companyâs operations in future.
10. RISK MANAGEMENT
The Board oversees the enterprise wide risk management functions of the Company and a separate Risk Management Committee of the Board supervises the risk management functions. Apart from these, the Company has a separate Risk Management Department that co-ordinates and administers the risk management functions to have a âtop to downâ focus on the risk management.
The Company believes that risk resilience is key to achieving higher growth. To this effect, the Company have a well-defined Risk Management Policy in place, to create and protect shareholder value, by minimizing threats or losses and identifying and maximizing opportunities to ensure sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with the business. The policy lays down broad guidelines for timely identification, assessment, and prioritization of risks affecting the Company in the short and foreseeable future. The Policy suggests framing an appropriate response for the key risks identified, so as to make sure that risks are adequately addressed or mitigated. The said policy is approved by the Board and reviewed from time to time.
The risk management framework in the Company is periodically reviewed by the Risk Management Committee of the Board. The Internal Auditors are also having a complete review of risk assessments and associated management action plans. All material risks of the Company emerging in the course of its business are identified, assessed and monitored on a regular basis.
Detailed discussion on Risk Management forms part of Management Discussion & Analysis under the section âRisks and Concernsâ, which forms part of this Annual Report. At present, in the opinion of your Board of Directors, there are no material risks which may threaten the existence of the Company.
11. ADEQUACY OF INTERNAL AUDIT AND FINANCIAL CONTROLS
The Company has in place a stabilized and effective Internal Audit and Financial Controls system, calibrated to the risk appetite of the Company and aligned to the size, scale and complexity of the business operations of the Company. The said financial controls of the Company are evaluated by the Audit Committee as per Schedule II Part C of the SEBI (LODR) Regulations, 2015.
Apart from Statutory Audit and Concurrent Audit, your Company, in compliance with Section 138 of the Companies Act, 2013, had engaged PKF Sridhar & Santhanam LLP as the Internal Auditors of the Company for the FY 2018 - 2019. The scope and authority of the Internal Audit function is defined in the Audit Policy of the Company, duly recommended by the Audit Committee of the Board and approved and adopted by the Board of Directors. The Internal Audit function essentially validates and ensures that the Company, has in place, adequate controls, procedures and policies, ensuring orderly and efficient conduct of its business, including adherence to the Companyâs policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial information. The Internal Audit function provides independent assurance to the Board of Directors and Senior Management on the quality and effectiveness of the Companyâs internal control, risk management and governance systems and processes, thereby helping the Board and Senior Management to protect the Company and its reputation.
The Audit Committee oversees and reviews the functioning of the entire audit team and the effectiveness of internal control system at all levels and monitors the implementation of audit recommendations. During the year, such control systems were assessed and no reportable material weaknesses in the design or operations were observed. Accordingly, your Board, is of the opinion that the Companyâs internal financial controls were adequate and effective during FY 2018 - 2019.
12. CORPORATE SOCIAL RESPONSIBILITY (CSR)
Corporate Social Responsibility activities at Muthoot Capital Services Limited encompasses much more than social outreach programmes. Aligning with its vision, your Company has been continuing to increase value in the community in which it operates, through its services and CSR initiatives, so as to stimulate well-being for the community, in fulfillment of its role as a responsible corporate citizen. The Company has undertaken a number of enriching and enlivening activities in the areas of Health, Education, Environment and Livelihood.
The Board has constituted a Corporate Social Responsibility Committee (CSR Committee) to oversee and monitor the CSR activities of the Company. The CSR Committee of the Company has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board. The Companyâs CSR Policy is committed towards CSR activities as envisaged in Schedule VII of the Companies Act, 2013. The CSR Policy is available on the website of the Company at https://muthootcap.com/admin/uploads/CSR_Policy-MCSL.pdf
During the year, the Company spent an amount of t 131.21 lakhs towards its CSR activities. The details of the CSR Policy and CSR Committee of the Company and the initiatives undertaken by the Company on CSR activities during the year under review are set out in Annexure 2 to this Report in the format prescribed as per the Companies (Corporate Social Responsibility Policy) Rules, 2014.
The composition and other details of the CSR Committee and its meetings are detailed in the Report on Corporate Governance, forming part of this Report.
13. AUDIT & AUDITORS
a) Statutory Auditors
M/s. Varma & Varma, Chartered Accountants (FRN: 004532S), Sreeraghavam, Kerala Varma Tower, Bldg. No. 53/2600 B, C, D & E, Off. Kunjanbava Road, Vyttila, P.O., Kochi - 682 019 were appointed as the Statutory Auditors of the Company during the 23rd AGM held on June 06, 2017, for a period of five years.
The Board has duly examined the Statutory Auditorsâ Report to the accounts, which is self-explanatory. Clarifications, wherever necessary, have been included in the Notes to the Accounts section of the Annual Report. Further, your Directors confirm that there are no qualifications, reservations or adverse remarks or disclaimers in the Independent Auditorâs Report provided by Statutory Auditors for the FY 2018 - 2019.
b) Secretarial Auditors
The Board, at its meeting held on April 17, 2018, appointed M/s. SVJS & Associates, Company Secretaries, 65/2364A, Ponoth Road, Kaloor, Kochi, Ernakulam - 682 017 to conduct the Secretarial Audit for the year ended March 31, 2019 in compliance with the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
The Secretarial Audit Report in form MR-3, submitted by the Secretarial Auditors for the FY 2018 -2019 is enclosed to this report as Annexure 3. The Directors of your Company confirms that there are no qualifications, reservations or adverse remarks or disclaimers in Secretarial Audit Report for the period under review.
14. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
Considering the nature of activities, the provisions of Section 134 (3) (m) of the Companies Act, 2013, read with Rule 8 (3) of the Companies (Accounts) Rules, 2014 relating to conservation of energy and technology absorption does not apply to your Company. The Company is, however, constantly pursuing its goal of technological upgradation in a cost-effective manner for delivering quality customer service.
15. WHISTLE BLOWER POLICY OR VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES
Your Company, has in place, a comprehensive Whistle Blower Policy in compliance with Section 177 (9) & 177 (10) of the Companies Act, 2013 and as per Regulation 4 (2) (d) (iv) & 34 (3) read with Para 10 of Part C of Schedule V of the SEBI (LODR) Regulations, 2015.
A brief note on the highlights of the Whistle Blower Policy and compliance with the same is also provided in the Report on Corporate Governance, which forms part of this Report.
16. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
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.
17. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
Your Directors confirm that all contracts/arrangements/transactions entered into by the Company during the FY 2018 - 2019 with related parties were in compliance with the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. The Company had obtained prior approval of the Audit Committee for all the related party transactions during the FY 2018 - 2019 as envisaged in Regulation 23 (2) of the SEBI (LODR) Regulations, 2015. Further, the Audit Committee had given prior omnibus approval under Regulation 23 (3) of the SEBI (LODR) Regulations, 2015, for related party transactions that are foreseen and of repetitive nature during the period under review and the required disclosures are made to the Committee on quarterly basis against the approval of the Committee.
In addition to the above, the Company had obtained the approval of the shareholders for related party transactions with Muthoot Microfin Limited, Muthoot Fincorp Limited and Muthoot Bankers at the AGMs held on August 21, 2015, June 06, 2017 and June 14, 2018 respectively for a period of five years even though the said transactions were not material in nature.
All related party transactions that were entered into during the financial year ended March 31, 2019 were on an armâs length basis and were in the ordinary course of business. Therefore, the provisions of Section 188 of the Companies Act, 2013 were not attracted.
Also, there are no materially significant related party transactions during the year under review made by the Company with Promoters, Directors, or other designated persons which may have a potential conflict with the interest of the Company at large. Thus, disclosures as per Form AOC-2 under Section 134 (3) (h) of the Companies Act, 2013, read with Rule 8 (2) of the Companies (Accounts) Rules, 2014 is not required. However, the disclosure of transactions with related party for the year, as per Accounting Standard-18 Related Party Disclosures is given in Notes to the Accounts section of the Annual Report.
The Company has in place, a Board approved Related Party Transaction Policy, which is available on the website of the Company at https://muthootcap.com/admin/uploads/RPT-Policy-MCSL.pdf
18. PARTICULARS OF EMPLOYEES
Disclosures relating to remuneration of Directors under Section 197 (12) of the Companies Act, 2013 read with Rule 5 (1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed to this Report as Annexure 4.
The information, as required to be provided in terms of Section 197 (12) of the Companies Act, 2013 read with Rule 5 (2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed to this Report as Annexure 5.
19. LISTING
Equity shares of your Company is listed on BSE Limited since April 24, 1995 and on National Stock Exchange of India Limited since August 24, 2015. Your Company has paid the required listing fees to both the Stock Exchanges for the FY 2019 - 2020.
20. CORPORATE GOVERNANCE REPORT
Your Company has taken adequate steps to adhere to all the stipulations laid down in Regulation 27 read with Part E of Schedule II and Schedule V of the SEBI (LODR) Regulations, 2015 on Corporate Governance. The detailed Report on Corporate Governance along with certificate on Corporate Governance from the Statutory Auditors forms part of this Report.
21. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis Report for the year under review is included as a separate section and forms part of this Report.
22. FAIR PRACTICE CODE (FPC)
The Company, has in place, a Fair Practice Code approved by the Board on April 02, 2012, in compliance with the guidelines issued by the RBI, to ensure better service and provide necessary information to customers to take informed decisions. The FPC is available on the website of the Company at: https:// muthootcap.com/admin/uploads/Fair_Practice_Code-MCSL.pdf
The FPC is also reviewed by the Board at frequent intervals to ensure its level of adequacy and appropriateness.
23. CUSTOMER GRIEVANCE
The Company has a dedicated Customer Grievance Redressal Cell for receiving and handling customer complaints/grievances and ensuring that the customers are treated fairly and without bias at all times. All issues raised by the customers are dealt with courtesy and redressed expeditiously.
24. EXTRACT OF ANNUAL RETURN
The extract of the annual return in form MGT-9 is placed on the website of the Company and can be accessed at: https://muthootcap.com/admin/uploads/MGT-9_31.03.2019.pdf
25. DIRECTORSâ RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 134 (3) (c) and 134 (5) 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.
26. ACKNOWLEDGEMENTS
Your Directors wishes to place on record their appreciation and sincerely acknowledge the contribution and support from shareholders, customers, depositors, debenture holders, Central and State Governments, Bankers, Reserve Bank of India, Registrar of Companies, Kerala and Lakshadweep, Securities and Exchange Board of India, BSE Limited, National Stock Exchange of India Limited, Registrar & Share Transfer Agents, Credit Rating Agencies and other Statutory and Regulatory Authorities for the kind cooperation and assistance provided to us.
Your Directors also extend their special appreciation to each Muthootians for their continuing support and unstinting efforts in ensuring an excellent all-round operational performance and every well-wisher for their continued commitment, dedication and co-operation.
For and on behalf of the Board of Directors
Sd/-
THOMAS JOHN MUTHOOT
Kochi Chairman
April 24, 2019 DIN: 00011618
Mar 31, 2018
BOARD''S REPORT
Dear Members,
The Directors are pleased to present the 24th Boardâs Report on the Companyâs business and operations, together with audited financial statements of the Company for the financial year ended March 31, 2018.
1. PERFORMANCE HIGHLIGHTS
a) Financial Results
The summarized financial results of your Company for the FY 2017 - 2018 are given below:
(Rs, in lakhs, except earnings per share)
|
Particulars |
2017 - 2018 |
2016 - 2017 |
|
Total Income |
398 08.56 |
284 19.99 |
|
Total Expenses |
315 62.54 |
238 01.32 |
|
Profit Before Tax |
82 46.02 |
46 18.67 |
|
Tax Expense |
28 78.30 |
16 09.50 |
|
Profit After Tax |
53 67.72 |
30 09.17 |
|
Basic Earnings Per Share (EPS) |
36.39 |
21.93 |
Note: Previous year figures have been reworked, re-grouped, re-arranged and re-classified to conform to the current year presentation. EPS for FY 2016 - 2017 has been restated based on the bonus issue made in June, 2017 (Previous year reported at t 24.13).
b) Business Growth
During the Financial Year (FY) ended March 31, 2018, your Company was able to achieve an impressive growth. The total Asset Under Management (AUM) of your Company increased by 55.45%. The AUM of the Company as on March 31, 2018 stood at Rs, 22 38 02.63 lakhs whereas for the same for the FY 2016 - 2017 was Rs, 14 39 68.04 lakhs.
c) Profitability
The total income of the Company increased to Rs, 398 08.56 lakhs during the FY 2017 - 2018 as against Rs, 284 19.99 lakhs during the FY 2016 - 2017. The total expenditure for the FY 2017 - 2018 was at Rs, 315 62.54 lakhs. The Company achieved an all-time high profit of Rs, 53 67.72 lakhs while the same was Rs, 30 09.17 lakhs in FY 2016 - 2017. The Net Interest Margin (NIM) improved to 69.15% as against 63.43% in FY 2016 - 2017.
d) Asset Quality
As on March 31, 2018, the gross NPA and net NPA in the books of your Company stood at Rs, 87 91.27 lakhs and Rs, 56 92.98 lakhs respectively. The Provision Coverage Ratio stood at 35.33%. Your Company has also adopted new methods to control NPA figures and improve asset quality at lower costs.
e) Net worth & Capital Adequacy Ratio
Based on the higher profitability and the Qualified Institutional Placement (QIP) of Rs, 165 02.59 lakhs undertaken by the Company, the net worth of your Company increased by 121.33% to Rs, 393 92.99 lakhs as against Rs, 177 98.50 lakhs in the previous year. The Companyâs total Capital Adequacy Ratio (CAR) as on March 31, 2018 stood at 22.04% of the aggregate risk weighted assets on the Balance Sheet and risk adjusted value of the off - Balance Sheet items, which is above the statutory minimum of 15%. Out of the above, Tier I CAR stood at 19.69% and Tier II CAR stood at 2.35%. The CAR as on March 31, 2017, stood at 16.98%.
f) Earnings Per Share
Earnings Per Share of your Company has improved from Rs, 21.93 (restated from Rs, 24.13 as reported last year, based on bonus issue made in June, 2017) to Rs, 36.39 during the year under review. Return on Equity reached 21.17% during the year.
2. DIVIDEND
In view of the business growth plans of the Company and investment planned in digitization and technology, the Board of
Directors of your Company decided to plough back the profit after tax into the business and hence have not recommended any dividend for the FY 2017 - 2018.
3. RESERVES
Your Board of Directors has transferred an amount of Rs, 10 80.00 lakhs to the Statutory Reserve maintained under Section 45-IC of the Reserve Bank of India Act, 1934. The Company has not transferred any amount to the General Reserve for the FY ended March 31, 2018. Post transfer of profits to reserves, your Board decided to retain Rs, 119 12.37 lakhs as surplus in the Profit and Loss Account.
4. RESOURCE MOBILISATION
a) Share Capital
The authorised share capital of the Company was increased from Rs, 15 00.00 lakhs to Rs, 25 00.00 lakhs during the FY 2017 - 2018. The change in paid up share capital of the Company during the year is given below:
|
Reason for Change |
No. of Shares |
Face Value ('') |
Premium, if any (Rs,) |
Issue Size (Rs, in lakhs) |
|
Issue of Bonus Shares |
12 47 258 |
10.00 |
Nil |
124.73 |
|
Issue of shares under Qualified Institutions Placement (QIP) |
27 27 700 |
10.00 |
595.00 |
165 02.59 |
The paid up capital of your Company as on March 31, 2018 is Rs, 16 44.75 lakhs. The Company had not issued any equity shares with differential rights during the FY 2017 - 2018 and hence, the disclosure requirements under Section 43 and Rule 4 (4) of the Companies (Share Capital and Debentures) Rules, 2014 is not applicable.
b) Debentures
The Company has not issued any debentures during the FY 2017 - 2018. As on March 31, 2018, the residual portion of secured redeemable non-convertible debentures under private placement during earlier years along with interest accrued is Rs, 18.13 lakhs. The debentures issued are secured by way of floating charge on the current assets of the Company. The non-convertible debentures of your Company is rated as âA-/Stableâ by CRISIL.
Trustees for Debenture Holders: Mr. A Gopalakrishnan, Chartered Accountant, M/s. K. Venkatachalam Aiyer & Co., Chartered Accountants, Building No. 41/3647 B, First Floor, Blue Bird Towers, Providence Road, Kochi - 682 018, is the Debenture Trustee for ensuring and protecting the interests of debenture holders.
c) Commercial Papers
During the year under review, your Company has raised funds for its working capital requirements by way of issue of Commercial Papers. The Commercial Papers of your Company are rated as âA1â by CRISIL.
The outstanding amount of Commercial Papers as on March 31, 2018 is Rs, 145 23.09 lakhs.
d) Fixed Deposits
Your Company is a Non - Banking Financial Company (NBFC), registered with Reserve Bank of India (RBI) having a Category A (Deposit Taking) License. The Company started accepting fixed from the FY 2013 - 2014. The fixed deposits of the Company are rated as âFA-/Stableâ by CRISIL.
The outstanding amount of fixed deposits as on March 31, 2018, received by the Company including interest accrued at that date is Rs, 88 00.20 lakhs. As on March 31, 2018, there are 124 accounts of fixed deposits amounting to Rs, 1 99.82 lakhs which have become due for payment, but have not been claimed by the depositors.
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.
Communication to Deposit Holders: 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 depositors 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 holder and other modes to contact the deposit holders are also initiated till the deposits are repaid.
Trustees for Deposit Holders: Subject to the provisions of RBI Guidelines for trustees of deposit holders of the NBFC, your Company has appointed IDBI Trusteeship Services Limited, as trustees for protecting the interests of deposit holders.
In compliance with the Master Circular - Miscellaneous Instruction to all NBFCs dated July 01, 2014, your Company has 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 the extant provisions.
e) Subordinated Debts
The Company had in the current year raised money through issue of subordinated debts. As of March 31, 2018, the total amount of outstanding subordinated debts, including accrued interest was Rs, 65 05.99 lakhs as against Rs, 52 37.71 lakhs in the previous year.
The subordinated debts and public deposits consists of 10.49 % of our total funding.
f) Bank Finance
The Company raised funds for its working capital resources mainly from banks. As on March 31, 2018, the total outstanding amount of credit facilities from Banks were Rs, 1149 10.25 lakhs as against Rs, 814 81.62 lakhs as on March 31, 2017 (Amounts are given without interest accrued).
Apart from the above, the Company has been sourcing funds through Securitization and Direct Assignment transactions. During the year under review the Company has sourced Rs, 439 76 .23 lakhs (net of MRR) (previous year Rs, 349 55.74 lakhs). The same has been invested by Banks/ NBFCs and the value remaining outstanding as on March 31, 2018 was Rs, 322 02 .37 lakhs (previous year Rs, 236 00.89 lakhs).
5. DIRECTORS
As on March 31, 2018, the Board of your Company consists of six Directors as follows:
|
Category |
Name of Directors |
|
Executive Director |
Mr. Thomas George Muthoot, Managing Director |
|
Non - Executive - Non Independent Directors |
Mr. Thomas John Muthoot, Chairman Mr. Thomas Muthoot, Director |
|
Mr. A.P. Kurian |
|
|
Non - Executive Independent Directors |
Mr. R.K. Nair Ms. Radha Unni |
The composition of the Board is in line with the requirements of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) (LODR) Regulations, 2015. All the Directors are having vast knowledge and experience in their relevant fields and the Company had benefitted immensely by their presence in the Board.
Mr. Thomas Muthoot, Director (DIN: 00082099) 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 Muthoot as Director of the Company. The detailed profile of Mr. Thomas Muthoot, recommended for re-appointment is enclosed with the Notice for the 24th AGM of the Company.
a) Changes in Directors and Key Managerial Personnel (KMP) during the FY 2017 - 2018
During the year under review, there were no changes in the composition of the Board of Directors of your Company.
Mr. Syam Kumar R., Company Secretary & Head - Governance one of the KMPs of the Company has resigned with effect from the closing hours of January 15, 2018, due to personal reasons.
Mr. Thomas George Muthoot, Managing Director and Mr. Vinodkumar M. Panicker, Chief Finance Officer are the KMPs of the Company, as recorded by the Board as on March 31, 2018.
b) Declaration by Independent Directors
On April 01, 2018, the Company has received declaration from each Independent Director of the Company under Section 149 (7) of the Companies Act, 2013 that, they meet the criteria of independence as laid down in Section 149 (6) of the Companies Act, 2013 and subsequently the same was placed at the Board Meeting held on April 17, 2018.
A declaration by Managing Director confirming the receipt of this declaration from Independent Directors is enclosed to this Report as Annexure 1.
c) Policy on Board Diversity
The Policy on Board Diversity approved and adopted by the Company are as follows:
(i) Diversity is ensured through consideration of a number of factors, including but not limited to skills, regional and industry experience, background and other qualities.
(ii) The Company shall also take into account factors based on its own business model and specific needs from time to time.
(iii) 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.
(iv) 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.
(v) 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.
d) Policy on Nomination & Remuneration
The Companyâs policy on Directorâs appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under Section 178 (3) of the Companies Act, 2013 is enclosed to this Report as Annexure 2.
The Policy on Nomination and Remuneration sets out the criteria for determining qualifications, positive attributes and independence of Director and the norms for evaluation of the Board, its Committees and individual Directors.
e) Formal Annual Evaluation of Board and its Committees
Based on the Policy on Nomination and Remuneration, the Board has carried out an annual evaluation of its own performance, its Committees and Independent Directors, excluding the Director being evaluated.
The detailed note on the annual Board evaluation process undertaken in compliance with the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015 is given in the Report on Corporate Governance, which forms part of this Report.
f) Meetings of the Board
During the FY 2017 - 2018, your Board of Directors met eight times. More details about the meetings of the Board is given the Report on Corporate Governance, forming part of this Report.
g) Committees of the Board
The details of the Committees of the Board, their composition, terms of reference and the activities during the year are elaborated in the Report on Corporate Governance forming part of this Report.
6. SUBSIDIARIES/JOINT VENTURE/ASSOCIATE COMPANY
The Company has no subsidiary/joint venture/associate company and hence consolidation and the provisions relating to the same under the Companies Act, 2013 and Rules made thereunder are not applicable to the Company.
7. CHANGE IN THE NATURE OF BUSINESS
During the year under review, there was no change in the nature of business of the Company. The Company is mainly into the business of providing two wheeler loans for which during the year under review the Company has disbursed loans to the extent of Rs, 1758 38.00 lakhs and as on March 31, 2018, the total outstanding amount was Rs, 1939 76.65 lakhs. The Company had disbursed business/corporate loans to the extent of Rs, 211 31.11 lakhs and as on March 31, 2018, the outstanding amount is Rs, 267 54.03 lakhs.
The Company had entered into pool buyout arrangement of loan receivables amounting to Rs, 34.53 lakhs (after deducting 5% or 10% for MRR requirement). The aggregate amount outstanding under loan buyout as on March 31, 2018 was Rs, 57.89 lakhs.
The sourcing of two wheeler business for the Company takes place mainly at the dealer points for two wheelers. The Company has already activated 2,869 dealers.
8. MATERIAL CHANGES AND COMMITMENTS, 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
There were no material changes and commitments affecting the financial position of the Company between the end of financial year and the date of this Report.
9. CREDIT RATING
The Credit Rating enjoyed by the Company as on March 31, 2018, is as given below:
|
Credit Rating Agency |
Instrument |
Rating as on March 31, 2018 |
Migration during the FY 2017 - 2018 |
|
CRISIL |
Bank Facilities |
CRISIL A-/ Stable |
No change |
|
CRISIL |
Public Deposits |
FA-/Stable |
No change |
|
CRISIL |
Commercial Paper |
CRISIL A1 |
No change |
|
CRISIL |
Non-Convertible Debentures |
CRISIL A-/ Stable |
No change |
10. 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 Companyâs operations in future.
11. RISK MANAGEMENT
Risk Management is embedded in the operating framework of the Company. The Company believes that risk resilience is key to achieving higher growth. To this effect, the Company has a well-defined Risk Management Policy in place to create and protect shareholder value by minimizing threats or losses and identifying and maximizing opportunities and thereby to ensure sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with the business. The policy lays down broad guidelines for timely identification, assessment and prioritization of risks affecting the Company in the short and foreseeable future. The Policy suggests framing an appropriate response action for the key risks identified, so as to make sure that risks are adequately addressed or mitigated.
The risk management framework in the Company is periodically reviewed by the Risk Management Committee of Board of Directors. The Internal Auditors are also having a complete review of risk assessments and associated management action plans.
Detailed discussion on Risk Management forms part of Management Discussion & Analysis under the section âRisks and Concernsâ, which forms part of this Annual Report. At present, in the opinion of your Board of Directors, there are no risks which may threaten the existence of the Company.
12. ADEQUACY OF INTERNAL AUDIT AND FINANCIAL CONTROLS
The Company has in place robust Internal Audit and Financial Controls with reference to the financial statements, which is evaluated by the Audit Committee as per Schedule II Part C of the SEBI (LODR) Regulations, 2015.
Apart from Statutory Audit and Concurrent Audit, your Company, in compliance with Section 138 of the Companies Act, 2013, had engaged PKF Sridhar & Santhanam LLP as the Internal Auditors of the Company for the FY 2017 - 2018. The Internal Audit function essentially validates and ensures that the Company has in place adequate controls, procedures and policies, ensuring orderly and efficient conduct of its business, including adherence to the Companyâs policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records and timely preparation of reliable financial information.
The Audit Committee oversees and reviews the functioning of the entire audit team and the effectiveness of internal control system at all levels and monitors the implementation of audit recommendations. During the year, such control systems were assessed and no reportable material weaknesses in the design or operation were observed. Accordingly, your Board is of the opinion that the Companyâs internal financial controls were adequate and effective during FY 2017 - 2018.
13. CORPORATE SOCIAL RESPONSIBILITY (CSR)
Corporate Social Responsibility activities at Muthoot Capital Services Limited encompasses much more than social outreach programmes. Aligning with its vision, your Company has been continuing to increase value in the community in which it operates, through its services and CSR initiatives, so as to stimulate well-being for the community, in fulfillment of its role as a responsible corporate citizen. The Company had undertaken a number of enriching and enlivening activities in the areas of health, education, environment and livelihood.
The Companyâs CSR Policy is committed towards CSR activities as envisaged in Schedule VII of the Companies Act, 2013. The details of the CSR Policy and CSR Committee of the Company and the initiatives undertaken by the Company on CSR activities during the year under review are set out in Annexure 3 to this Report in the format prescribed as per the Companies (Corporate Social Responsibility Policy) Rules, 2014.
The CSR Policy is available on the website of the Company at http://muthootcap.com/wp-content/uploads/CSR-Policy.pdf.
The composition and other details of the CSR Committee is detailed in the Report on Corporate Governance, forming part of this Report.
14. AUDIT & AUDITORS
a) Statutory Auditors
M/s. Varma & Varma, Chartered Accountants (FRN: 004532S), Sreeraghavam, Kerala Varma Tower, Bldg. No. 53/2600 B, C, D & E, Off. Kunjanbava Road, Vyttila, P.O., Kochi - 682 019 were appointed as the Statutory Auditors of the Company during the 23rd AGM held on June 06, 2017, for a period of five years.
The Board has duly examined the Statutory Auditorsâ Report to the accounts, which is self-explanatory. Clarifications, wherever necessary, have been included in the Notes to the Accounts section of the Annual Report. Further, your Directors confirm that there are no qualification, reservation or adverse remark or disclaimer in the Independent Auditorâs Report provided by Statutory Auditors for the FY 2017 - 2018.
b) Secretarial Auditors
The Board, at its meeting held on April 18, 2017, appointed M/s. SVJS & Associates, Company Secretaries, 39/3525, Kausthubham, Manikkath Road, Ravipuram, Kochi - 680 016 to conduct the Secretarial Audit for the year ended March 31, 2018 in compliance with the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
The Secretarial Audit Report in form MR-3, submitted by the Secretarial Auditors for the FY 2017 - 2018 is enclosed to this report as Annexure 4. The Directors of your Company confirms that there are no qualification, reservation or adverse remark or disclaimer in Secretarial Audit Report for the period under review.
15. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
Considering the nature of activities, the provisions of Section 134 (3) (m) of the Companies Act, 2013, read with Rule 8 (3) of the Companies (Accounts) Rules, 2014 relating to conservation of energy and technology absorption does not apply to your Company. The Company is, however, constantly pursuing its goal of technological up gradation in a cost-effective manner for delivering quality customer service.
16. WHISTLE BLOWER POLICY OR VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES
Your Company has in place, a comprehensive Whistle Blower Policy in compliance with Section 177 (9) & 177 (10) of the
Companies Act, 2013 and as per Regulation 4 (2) (d) (iv) & 34 (3) read with Para 10 of Part C of Schedule V of the SEBI (LODR) Regulations, 2015.
A brief note on the highlights of the Whistle Blower Policy and compliance with Code of Conduct is also provided in the Report on Corporate Governance, which forms part of this Report.
17. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
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.
18. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
Your Directors confirm that all contracts/arrangements/transactions entered into by the Company during the FY 2017 - 2018 with related parties were in compliance with the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. The Company had obtained prior approval of the Audit Committee for all the related party transactions during the FY 2017 -2018 as envisaged in Regulation 23 (2) of the SEBI (LODR) Regulations, 2015. Further, the Audit Committee had given prior omnibus approval under Regulation 23 (3) of the SEBI (LODR) Regulations, 2015 for related party transactions that are foreseen and of repetitive in nature during the period under review and the required disclosures are made to the Committee on quarterly basis against the approval of the Committee.
In addition to the above, the Company had obtained the approval of the Members for related party transactions with Muthoot Fincorp Limited, Muthoot Bankers and Muthoot Microfin Limited at the AGMs held on September 03, 2014, August 21, 2015 and June 06, 2017 respectively for a period of five years even though the said transactions were not material in nature.
The disclosures as per Form AOC-2 under Section 134 (3) (h) of the Companies Act, 2013, read with Rule 8 (2) of the Companies (Accounts) Rules, 2014 is enclosed to this Report as Annexure 5. All the related party transactions entered into by the Company were in the ordinary course of business, on an armâs length basis and there were no material contracts or arrangement or transactions at armâs length basis during the period.
The Company has in place a Board approved Related Party Transaction Policy which is enclosed to this Report as Annexure 6 and is also available on the website of the Company at http://muthootcap.com/wp-content/uploads/RPT Policy.pdf.
19. PARTICULARS OF EMPLOYEES
Disclosures relating to remuneration of Directors under Section 197 (12) of the Companies Act, 2013 read with Rule 5 (1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed to this Report as Annexure 7.
The information, as required to be provided in terms of Section 197 (12) of the Companies Act, 2013 read with Rule 5 (2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed to this Report as Annexure 8.
20. LISTING
Equity shares of your Company was listed on BSE Limited since April 24, 1995 and on National Stock Exchange of India Limited since August 24, 2015. Your Company has paid the required listing fees to both the Stock Exchanges for the FY 2018 - 2019.
21. CORPORATE GOVERNANCE REPORT
Your Company has taken adequate steps to adhere to all the stipulations laid down in Regulation 27 read with Part E of Schedule
II and Schedule V of the SEBI (LODR) Regulations, 2015 on Corporate Governance. The detailed Report on Corporate Governance along with certificate on Corporate Governance from the Statutory Auditors forms part of this Report.
22. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis Report for the year under review is included as a separate section forms part of this Report.
23. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
Your Company has been employing 407 women employees in various cadres as on March 31, 2018. The Company has in place a Policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace and an Internal Complaint Committee in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013 and Rules made there under for reporting and conducting inquiry into the complaints made by the victim on the harassments at the work place. The functioning of the Committees were carried out as per letter and spirit contained in the provisions of the Act. During the FY 2017 - 2018, the Company has not received any complaint of sexual harassment and hence, there were no complaints pending for redressal as on March 31, 2018. The Company had conducted 8 workshops/awareness programs regarding women empowerment during the period under review.
24. FAIR PRACTICE CODE (FPC)
The Company has in place, a Fair Practice Code approved by the Board on April 02, 2012, in compliance with the guidelines issued by the RBI, to ensure better service and provide necessary information to customers to take informed decisions. The FPC is available on the website of the Company at: http://muthootcap.com/fair-practice-code/.
The FPC is also reviewed by the Board at frequent intervals to ensure its level of adequacy and appropriateness.
25. CUSTOMER GRIEVANCE
The Company has a dedicated Customer Grievance Cell for receiving and handling customer complaints/grievances and ensuring that the customers are treated fairly and without bias at all times. All issues raised by the customers are dealt with courtesy and redressed expeditiously.
26. EXTRACT OF ANNUAL RETURN
The extract of the annual return in form MGT-9 is annexed to this report as Annexure 9.
27. DIRECTORSâ RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 134 (3) (c) and 134 (5) 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.
28. ACKNOWLEDGEMENTS
Your Directors wishes to place on record their appreciation and sincerely acknowledge the contribution and support from shareholders, customers, depositors, debenture holders, Central and State Governments, Bankers, Reserve Bank of India, Registrar of Companies, Kerala and Lakshadweep, Securities and Exchange Board of India, BSE Limited, National Stock Exchange of India Limited, Registrar & Share Transfer Agents, Credit Rating Agencies and other Statutory and Regulatory Authorities for the kind co-operation and assistance provided to us.
Your Directors also extend their special appreciation to each Muthootians for their continuing support and unstinting efforts in ensuring an excellent all-round operational performance and every well-wisher for their continued commitment, dedication and co-operation.
For and on behalf of the Board of Directors
Sd/-
Kochi Thomas John Muthoot
April 17, 2018 Chairman
DIN: 00011618
Mar 31, 2017
To
The Members of
Muthoot Capital Services Limited
The Directors are pleased to present their 23rd Board''s Report on the Company''s business and operations, together with audited financial statements of your Company for the financial year ended 31st March, 2017.
I 1. FINANCIAL SUMMARY
The summarised financial results of your Company for the FY 2016 - 2017 are given below:
(Rs. in lakhs, except earnings per share)
|
Particulars |
2016 - 2017 |
2015 - 2016 |
|
Total Income |
284 19.99 |
228 49.43 |
|
Total Expenses |
238 01.32 |
193 04.45 |
|
Profit Before Tax |
46 18.67 |
35 44.98 |
|
Tax Expense |
16 09.50 |
12 59.64 |
|
Profit After Tax |
30 09.17 |
22 85.34 |
|
Basic earnings per share |
24.13 |
18.32 |
Note: Previous year figures have been reworked, re-grouped, re-arranged and re-classified to conform to the current year presentation.
I Highlights of Performance Growth:
During the year ended 31st March, 2017, the Company was able to achieve an impressive growth when compared to the previous year. The total income of the Company clocked at Rs. 284 19.99 lakhs during the FY 2016 - 2017 as against Rs. 228 49.43 lakhs during the FY 2015 - 2016. The total expenditure for the FY 2016 - 2017 witnessed an increase of 23.29% which reached Rs. 238 01.32 lakhs. The Company achieved an all-time high profit of Rs. 30 09.17 lakhs while the same for the previous year was Rs. 22 85.34 lakhs. The Asset Under Management (AUM) of the Company as on 31st March, 2017 was stood at Rs. 14 39 70.00 lakhs. The Net Interest Margin (NIM) improved to 63.43% as against 61.93% in the FY 2015 - 2016.
2. DIVIDEND
Based on the aggressive growth plans for the coming years, Directors of your Company decided to plough back the profit after tax for business activities and hence have not recommended any dividend for the FY 2016 - 2017.
3. RESERVES
Out of the profits generated by the Company, your Board has transferred an amount of Rs. 6 10.00 lakhs to the Statutory Reserves maintained under Section 45-ICof the Reserve Bank of India Act, 1934. The Company has not transferred any amount to the General Reserve for the FY ended 31st March, 2017. Post transfer of profits to reserves, your Board decided to retain Rs. 76 24.65 lakhs as surplus in the Profit and Loss Account.
4. BONUS ISSUE
Your Directors have recommended to issue bonus shares in the ratio of 1:10 (i.e., one share for every ten shares held) having face value of Rs. 10.00 by way of capitalization of reserves to the Members of the Company as a reward for your loyalty towards the Company and Management. This will be subject to the approval of Members in the ensuing Annual General Meeting and Stock Exchanges where the shares of the Company are listed. The said issue of bonus shares, if approved, would result in capitalization of reserves amounting to Rs. 1 24.73 lakhs.
5. RESOURCE MOBILISATION
a) Share Capital
The authorized share capital of the Company is Rs. 15 00.00 lakhs and the paid up share capital of the Company is Rs. 12 47.25 lakhs. The Company had not issued any equity shares either with or without differential rights during the FY
2016 - 2017 and hence, the disclosure requirements under Section 43 and Rule 4 (4) of the Companies (Share Capital and Debentures) Rules, 2014 is not applicable.
Your Directors have decided to increase the authorized share capital of the Company from the existing Rs. 15 00.00 lakhs to Rs. 25 00.00 lakhs, subject to the approval of Members in the ensuing Annual General Meeting.
b) Debentures
The Company had not issued any debentures during the FY 2016 - 2017. The residual portion of secured redeemable non-convertible debentures under private placement during earlier years along with interest accrued is Rs. 232.79 lakhs as on 31st March, 2017. The debentures issued are secured by way of floating charge on the current assets of the Company.
Trustees for Debenture Holders
Mr. A Gopalakrishnan, Chartered Accountant, Partner, M/s. K. Venkatachalam Aiyer & Co., Chartered Accountants, Building No. 41/3647 B, First Floor, Blue Bird Towers, Providence Road, Kochi - 682 018, is the Debenture Trustee for ensuring and protecting the interests of debenture holders.
c) Public Deposits
Your Company is a Non - Banking Financial Company (NBFC), registered with Reserve Bank of India (RBI) having a Category A (Deposit Taking) License. The Company started accepting public deposits during FY 2013 - 2014. The public deposits of the Company are rated as "FA-/Stable" by CRISIL.
The outstanding amount of public deposits as on 31st March, 2017, received by the Company including interest accrued at that date is Rs. 115 17.98 lakhs. As on 31st March, 2017, there are 124 accounts of public deposits amounting to Rs. 1 61.54 lakhs which have become due for payment, but have not been claimed by the depositors.
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.
Communication to Deposit Holders
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 depositors 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 holder and other modes to contact the deposit holders are also initiated till the deposits are repaid.
Trustees for Deposit Holders
Subject to the provisions of RBI Guidelines for trustees of deposit holders of the NBFC, your Company has appointed IDBI Trusteeship Services Limited, as trustees for protecting the interests of deposit holders.
As per the Master Circular - Miscellaneous Instruction to all NBFCs dated 01st 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.
Your Company has 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 the extant provisions.
d) Subordinated Debts
The Company had in the current year raised money through issue of subordinated debts. As of 31st March, 2017, the total amount of outstanding subordinated debts, including interest accrued was Rs. 52 37.71 lakhs as against Rs. 17 75.22 lakhs in the previous year.
e) Bank Finance
The Company raised funds for its working capital resources mainly from banks. As on 31st March, 2017, the total outstanding amount of credit facilities from Banks were Rs. 814 81.62 lakhs as against Rs. 738 24.75 lakhs as on 31st March, 2016.
6. DIRECTORS
As on 31st March, 2017, the Board of your Company consists of six Directors as follows:
|
Category |
Name of Directors |
|
Executive Director |
Mr. Thomas George Muthoot, Managing Director |
|
Non - Executive - Non Independent Directors |
Mr. Thomas John Muthoot, Chairman |
|
Mr. Thomas Muthoot, Director |
|
|
Non - Executive Independent Directors |
Mr. A.P. Kurian |
|
Mr. R.K. Nair |
|
|
Ms. Radha Unni |
The composition of the Board is as per the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) (LODR) Regulations, 2015. All the Directors are having vast knowledge and experience in their relevant fields and the Company had benefitted immensely by their presence in the Board.
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 Director of the Company. The detailed profile of Mr. Thomas John Muthoot, recommended for re-appointment is enclosed with the Notice for the 23rd AGM of the Company.
I a) Changes in Directors and Key Managerial Personnel (KMP) during the FY 2016 - 2017
During the year under review, there were no changes in the composition of the Board of Directors of your Company.
Mr. R. Manomohanan, Chief Executive Officer, one of the KMPs of the Company has resigned with effect from 28th February, 2017, due to personal reasons.
The following persons are the KMPs of the Company, as recorded by the Board as on 31st March, 2017:
Mr. Thomas George Muthoot : Managing Director
Mr. Vinodkumar M. Panicker : Chief Finance Officer
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 Regulation 17 (1) (a) of the SEBI (LODR) Regulations, 2015, 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. On 01st April, 2017, the Company has received declaration from each Independent Director of the Company under Section 149 (7) of the Companies Act, 2013 that, they meet the criteria of independence as laid down in Section 149 (6) of the Companies Act, 2013, and subsequently the same was placed at the Board Meeting held on 18th April, 2017.
A declaration by Managing Director confirming the receipt of this declaration from Independent Directors is annexed to this report as Annexure 1.
During the FY 2016 - 2017, the Company has conducted a development programme for its Independent Directors on the topic "An Awareness on Board Evaluation".
The presentation made in this regard is posted on the website of the Company and the web link is: http://muthootcap.com/wp-content/uploads/Details-of-Familiarisation-Refresher-Programme-1.pdf
d) Policy on Board Diversity
The Policy on Board Diversity adopted by the Company includes the following:
(i) Diversity is ensured through consideration of a number of factors, including but not limited to skills, regional and industry experience, background and other qualities.
(ii) The Company shall also take into account factors based on its own business model and specific needs from time to time.
(iii) 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.
(iv) 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.
(v) 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 and its Committees
Pursuant to Section 178 (3) of the Companies Act, 2013, the Nomination & Remuneration Committee of the Company has 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 includes the norms for evaluation of the Board, its Committees and individual Directors. Based on the recommendation of the Committee, the said Policy on Nomination & Remuneration was approved and adopted by the Board.
The Board has carried out an annual evaluation of its own performance, its Committees and Independent Directors, excluding the Director being evaluated. Structured evaluation forms were prepared on the basis of the criteria laid down by the Policy on Nomination & Remuneration.
The Nomination & Remuneration Committee reviewed the performance of the individual Directors on the basis of the duly filled evaluation forms submitted by the Directors. Each evaluation form prescribes various norms for evaluation such as 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, composition of the Board and its Committees, attendance of meetings of the Board and its Committees, extend of participation and involvement in the meetings, ability to convey his/her views and flexibility to work with others, etc.
Separate meeting of Independent Directors was conducted during the FY 2016 - 2017, to review:
a) The performance of the Non-Independent Directors and the Board as a whole;
b) The performance of the Chairman of the Company; and
c) The quality, quantity and timeliness of flow of information between the management and the Board that is necessary for the Board to effectively and reasonably perform their duties.
All Directors participated in the evaluation survey and reviews was carried out. The outcomes of each evaluation forms were collated by the Nomination & Remuneration Committee and placed before the Board on 18th April, 2017. The Board reviewed the same and arrived at a conclusion that the performance of the Board, its Committees and individual Directors were exemplary.
The Board also noted the comments/suggestions of Independent Directors and Chairmen of respective Committees and discussed various initiatives to further strengthen Board effectiveness.
f) Policy on Nomination and Remuneration
The Companyâs policy on Director''s appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under Section 178 (3) of the Companies Act, 2013, annexed herewith as Annexure 2.
g) Meetings of the Board
During the FY 2016 - 2017, your Board of Directors met five times on the following dates: -
19.04.2016 06.06.2016 14.07.2016 24.10.2016 18.01.2017
h) Audit Committee
As on 31st March, 2017, 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 Member |
Designation in the Committee |
Nature of Directorship |
|
Mr. A.P Kurian |
Chairman |
Independent Director |
|
Mr. Thomas Muthoot |
Member |
Non - Executive, Non - Independent Director |
|
Mr. R.K. Nair |
Member |
Independent Director |
|
Ms. Radha Unni |
Member |
Independent Director |
The constitution and terms of reference of the Committee are in accordance with the SEBI (LODR) Regulations, 2015, Companies Act, 2013 and RBI Regulations, which are elaborated in the Corporate Governance Report forming part of this Report.
i) 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 this 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 there under are not applicable to the Company.
8. CHANGE IN THE NATURE OF BUSINESS, IF ANY
During the year under review, there was no change in the nature of business of the Company. The Company is mainly into the business of providing two wheeler loans. The Company had disbursed business/corporate loans to the extent of Rs. 162 78.00 lakhs and as on 31st March, 2017, the outstanding amount is Rs. 181 79.21 lakhs.
The Company had entered into pool buyout arrangement of loan receivables amounting to Rs. 4 47.53 lakhs (after deducting 5% or 10% for MRR requirement). The aggregate amount outstanding under loan buyout as on 31st March, 2017 was Rs. 6 72.09 lakhs.
The sourcing of two wheeler business for the Company takes place mainly 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 FY 2016 - 2017.
The Company proposes to look at other means of funding like NCDs, apart from the existing means of financing by way of bank loans, public deposits, subordinated debts etc.
9. 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.
10. CAPITAL ADEQUACY RATIO
Right from the inception, your Company has been strong on capital adequacy. The Company''s total Capital Adequacy Ratio (CAR) as on 31st March, 2017 stood at 16.98% of the aggregate risk weighted assets on the Balance Sheet and risk adjusted value of the off - Balance Sheet items, which is above the statutory minimum of 15%. Out of the above, Tier I CAR stood at 13.61% and Tier II CAR stood at 3.37%. The CAR as on 31st March, 2016, stood at 15.40%.
11. CREDIT RATING
The Credit Rating enjoyed by the Company as on 31st March, 2017, is as given below:
|
Credit Rating Agency |
Instrument |
Rating as on 31st March, 2017 |
Migration during the FY 2016 - 2017 |
|
CRISIL |
Bank Facilities |
CRISIL A-/ Stable |
Downgraded from CRISIL A/Stable |
|
CRISIL |
Public Deposits |
FA-/Stable |
Downgraded from FA/Stable |
|
CRISIL |
Short Term Debt |
CRISIL A1 |
No change |
|
CRISIL |
Non-Convertible Debentures |
CRISIL A-/ Stable |
Downgraded from CRISIL A/Stable |
12. 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.
13. ADEQUACY OF INTERNAL AUDIT AND FINANCIAL CONTROLS
The Company has in place adequate Internal Audit and Financial Controls with reference to the financial statements, which is evaluated by the Audit Committee as per Schedule II Part C of the SEBI (LODR) Regulations, 2015.
Apart from Statutory Audit and Concurrent Audit, your Company, in compliance with Section 138 of the Companies Act, 2013, had engaged M/s. Varma & Varma, Chartered Accountants, Kochi - 682 019 as the Internal Auditors of the Company for the FY 2016 - 2017. Their scope of work includes review of operational efficiency, effectiveness of systems & processes, compliances and assessing the strengths and weaknesses of internal controls in all areas. Findings and observations of the Internal Auditors are discussed and suitable corrective actions are taken as per the directions of Audit Committee on an on-going basis to improve efficiency in operations. Thus the Internal Audit function essentially validates the compliance of your Company''s processes and operations with regulatory guidelines, accounting procedures and Company''s own internal rules and instructions.
The Company''s internal control systems are well established and commensurate with the nature of its business and the size and complexity of its operations. The stabilized and effective internal control system calibrates the risk appetite of your Company and ensures that all its assets are safeguarded and protected to prevent any revenue leakage and losses to the Company. Such controls enable reliable financial reporting also.
The Audit Committee oversees and reviews the functioning of the entire audit team and the effectiveness of internal control system at all levels and monitors the implementation of audit recommendations. The present system of reporting ensures independence of the internal audit function and symbolizes best corporate governance practices. Your Directors confirm that during the year under review, there were no reportable material weaknesses in the present systems or operations of internal controls.
14. CORPORATE SOCIAL RESPONSIBILITY (CSR)
Aligning with its vision, your Company has been continuing to increase value creation in the community in which it operates, through its services and CSR initiatives, so as to stimulate well-being for the community, in fulfillment of its role as a responsible corporate citizen. The Company had undertaken a number of enriching and enlivening activities in the areas of health, education, environment and livelihood. The Company''s CSR Policy is committed towards CSR activities as envisaged in Schedule VII of the Companies Act, 2013. The details of the CSR Policy and CSR Committee of the Company and the initiatives undertaken by the Company on CSR activities during the year under review are set out in Annexure 3 to this Report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014.
The CSR Policy is also available on the website of the Company by accessing the following link: http://muthootcap.com/wp-content/uploads/CSR-Policy-2016.pdf
The composition and other details of the CSR Committee is detailed in the Corporate Governance Report.
15. AUDIT & AUDITORS
a) Statutory Auditors
M/s. K. Venkatachalam Aiyer & Co., Chartered Accountants, (FRN: 004610S) Building No. 41/3647 B, First Floor, Blue Bird Towers, Providence Road, Kochi - 682 018 were appointed as the Statutory Auditors of the Company during the 20th AGM held on 03rd September, 2014, for a period of three years. As per the provisions of Section 139 of the Companies Act, 2013, an audit firm shall not be appointed as the Statutory Auditors for more than two terms of five consecutive years and after completing such term, the audit firm shall not be eligible for re-appointment as auditor in the same Company for five years from the completion of such term.
In this background, yours Directors have recommended the appointment of M/s. Varma & Varma, Chartered Accountants (FRN: 004532S), Sreeraghavam, Kerala Varma Tower, Bldg. No. 53/2600 B, C, D & E, Off. Kunjanbava Road, Vyttila P.O., Kochi - 682 019, Kerala, India as the Statutory Auditors of the Company subject to the approval of Members for a period of five years from the conclusion of 23rd AGM. The Company had obtained a certificate from them that the appointment, if made, shall be in accordance with the provisions of Section 141 of the Companies Act, 2013.
Further, your Directors confirm that there is no qualification, reservation or adverse remark or disclaimer in the Independent Auditor''s Report provided by Statutory Auditors for the FY 2016 - 2017. The notes to accounts forming part of financial statements are self-explanatory and need no further clarification.
b) Secretarial Auditors
The Board had, at its meeting held on 19th April, 2016, appointed M/s. SVJS & Associates, Company Secretaries, 39/3519 B, First Floor, Padmam Apartments, Manikkath Road, Ravipuram, Kochi - 680 016 to conduct the Secretarial Audit for the year ended 31st March, 2017 in compliance with the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
The Secretarial Audit Report in form MR-3, submitted by the Secretarial Auditors for the FY 2016 - 2017 is annexed to this Report as Annexure 4. The Directors of your Company confirms that there is no qualification, reservation or adverse remark or disclaimer in Secretarial Audit Report for the period under review.
ANNUAL KBrUK I ZU1D-1/
16. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
Considering the nature of activities, the provisions of Section 134 (3) (m) of the Companies Act, 2013, read with Rule 8 (3) of the Companies (Accounts) Rules, 2014 relating to conservation of energy and technology absorption does not apply to your Company. The Company is, however, constantly pursuing its goal of technological up gradation in a cost-effective manner for delivering quality customer service.
17. WHISTLE BLOWER POLICY OR VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES
Your Company has in place, a comprehensive Whistle Blower Policy in compliance with Section 177 (9) & 177 (10) of the Companies Act, 2013 and as per Regulation 4 (2) (d) (iv) & 34 (3) read with Para 10 of Part C of Schedule V of the SEBI (LODR) Regulations, 2015 which are reviewed and updated from time to time. Directors, employees, customers and other stakeholders of the Company can lodge complaints/disclosures regarding unethical behavior, actual or suspected frauds or violation of the Company''s Code of Conduct through the mechanism provided under Whistle Blower Policy. The mechanism also provide for adequate safeguards against victimization of Director(s)/ employee(s) who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee in exceptional cases. No personnel have been denied access to the Chairman of the Audit Committee, for giving any information on any integrity issue as envisaged in the Whistle Blower Policy.
The said policy is available on the website of the Company which can be accessed by following link: http://muthootcap.com/wp-content/uploads/Whistle-Blower-Policy.pdf
18. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The Company has not given any loans or provided any guarantee except the investments made in the PMS account with Hedge Equities Limited pursuant to Section 186 of the Companies Act, 2013, during the period under review.
19. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
Your Directors confirm that all contracts/arrangements/transactions entered into by the Company during the FY 2016 - 2017 in compliance with the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. The Company had obtained prior approval of the Audit Committee for all the related party transactions during the FY 2016 - 2017 as envisaged in Regulation 23 (2) of the SEBI (LODR) Regulations, 2015. Further, the Audit Committee had given prior omnibus approval under Regulation 23 (3) of the SEBI (LODR) Regulations, 2015 for related party transactions that are foreseen and of repetitive in nature during the period under review and the required disclosures are made to the Committee on quarterly basis against the approval of the Committee.
In addition to the above, the Company had obtained the approval of the Members for related party transactions with Muthoot Fincorp Limited and Muthoot Bankers at the AGMs held on 03rd September, 2014 and 21st August, 2015 for a period of five years even though the said transactions were not material in nature.
The disclosures as per Form AOC-2 under Section 134 (3) (h) of the Companies Act, 2013, read with Rule 8 (2) of the Companies (Accounts) Rules, 2014 is annexed to this Report as Annexure 5. All the related party transactions entered into by the Company were in the ordinary course of business, on an arm''s length basis and there were no material contracts or arrangement or transactions at arm''s length basis during the period.
The Company has in place a Board approved Related Party Transaction Policy which can be accessed at http://muthootcap.com/wp-content/uploads/RPT Policy.pdf
The Company proposes to do business of sourcing of two-wheeler loans and its collection through Muthoot Microfin Limited (MML), a related party. All terms of the said transaction are subject to the conditions that the prescribed price/charges payable under the contracts shall be competitive, based on the prevailing market price, not prejudicial to the interest of either parties.
Your Directors have decided to enter into the above transaction with MML for a period of five years subject to the approval of Members at the ensuing AGM.
20. HUMAN RESOURCES
Your Company is well aware of the importance of its human capital and thus provides positive work environment which is conducive, flexible and enriched. The Company continuously strive to build a best-in class organizational culture to attract, build and retain talent at all levels. The Company have taken an integrated talent management approach that spans the complete employee lifecycle.
Your Company offers various benefits to employees including various statutory and non-statutory staff welfare measures. All eligible employees are covered under statutory provisions namely Employees Provident Fund, Employee State Insurance, Maternity Benefits, Gratuity etc.
The disclosures required under the provisions of Section 197 (12) of the Companies Act, 2013, read with Rule 5 (1) and 5 (2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended up to date, is annexed to this Report as Annexure 6.
21. LISTING
Equity shares of your Company were listed on BSE Limited since 24th April, 1995 and on National Stock Exchange of India Limited since 24th August, 2015. Your Company has paid the required listing fees to both the Stock Exchanges for the FY 2017 - 2018.
22. CORPORATE GOVERNANCE REPORT
Your Company has taken adequate steps to adhere to all the stipulations laid down in Regulation 27 read with Part E of Schedule II and Schedule V of the SEBI (LODR) Regulations, 2015 on Corporate Governance. The detailed report on Corporate Governance along with certificate on Corporate Governance from the Statutory Auditors is forming part of this Report.
23. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis Report for the year under review is included as a separate section forming part of this Report.
24. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has zero tolerance towards sexual harassment of women at the workplace. The Company has been employing 363 women employees in various cadres as on 31st March, 2017. The Company has in place a Policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace and an Internal Complaint Committee in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and rules made there under for reporting and conducting inquiry into the complaints made by the victim on the harassments at the work place. The functioning of the Committees were carried out as per letter and spirit contained in the provisions of the Act. During the FY 2016 - 2017, the Company has not received any complaint of sexual harassment and hence there were no complaints pending for redressal as on 31st March, 2017. The Company had conducted 11 workshops/awareness programs regarding women empowerment during the period under review.
25. FAIR PRACTICE CODE (FPC)
The Company has in place, a Fair Practice Code approved by the Board on 02nd April, 2012, in compliance with the guidelines issued by the RBI, to ensure better service and provide necessary information to customers to take informed decisions. The FPC is posted on the website of the Company and can be accessed at the following link: http://muthootcap.com/fair-practice-code/
The FPC is also reviewed by the Board at frequent intervals to ensure its level of adequacy and appropriateness.
26. CUSTOMER GRIEVANCE
The Company has a dedicated Customer Grievance Cell for receiving and handling customer complaints/grievances and ensuring that the customers are treated fairly and without bias at all times. All issues raised by the customers are dealt with courtesy and redressed expeditiously.
27. EXTRACT OF ANNUAL RETURN
The extract of the annual return in form MGT-9 is annexed to this Report as Annexure 7.
28. DIRECTORS'' RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 134 (3) (c) and 134 (5) of the Companies Act, 2013, your Directors state that:
(i) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
(ii) 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;
(iii) 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;
(iv) We had prepared the annual accounts on a going concern basis;
(v) 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
(vi) We had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
29. ACKNOWLEDGEMENTS
Your Directors sincerely acknowledge the contribution and support from shareholders, customers, depositors, debenture holders, Central and State governments, Bankers, SEBI, BSE Limited, National Stock Exchange of India Limited, Registrar & Share Transfer Agents, Credit Rating Agencies, Reserve Bank of India, Registrar of Companies, Kerala and Lakshadweep and other Statutory and Regulatory Authorities for the kind co-operation and assistance provided to us.
Your Directors also place on record their special appreciation to each Muthootians and every well-wisher for their continued commitment, dedication and co-operation.
For and on behalf of the Board of Directors Sd/-
Kochi Thomas John Muthoot
18th April, 2017 Chairman
DIN: 00011618
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, 2012
The Directors present to you the 18th Annual Report together with the
Audited Statements of Accounts for the year ended March 31, 2012.
Financial Results
PARTICULARS (Rs. in 000's, except per share)
2011 - 2012 2010 - 2011
TOTAL INCOME 67 35 22 37 17 61
TOTAL EXPENDITURE 42 91 31 21 94 16
PROFIT BEFORE DEPRECIATION
AND OTHER PROVISIONS 24 43 91 15 23 45
Depreciation 31 03 14 33
Provisions and Write offs 1 12 35 58 50
PROFIT BEFORE TAX 23 00 53 14 50 62
Provision for taxation:
Current Tax 7 87 60 5 07 00
Deferred Tax (36 92) (23 17)
Income Tax adjustment for earlier years (114) 25
PROFT AFTER TAX 15 50 99 9 66 54
Basic earnings per share 13.12 12.09
Your Company has been constantly focused on improving its revenue and
maintaining a sustainable growth. This is evident from the financial
performance of the Company during the year under review. As on 31st
March, 2012, the total revenue was Rs. 6735.22 lakhs as against Rs.
3717.61 lakhs in the previous year registering a growth of 81.17%. The
total expenses rose to Rs. 4291.31lakhs from Rs. 2194.16 lakhs
resulting in an increase of 95.58%. The net profits of your Company
stood at Rs. 1550.99 lakhs as compared to Rs. 966.54 lakhs in the
previous year reporting an increase of 60.47%.
Based on the requirement under section 217(2AA) of the Companies Act,
1956, the Directors hereby confirm that:
1) In the preparation of the Annual Accounts for the year ended March
31, 2012, 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;
2) The Directors have selected such accounting policies and applied
them consistently, except for the change in accounting policy explained
below, 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 as at March 31, 2012, and of the profit of the Company for that
period :
a. Presentation and disclosure of 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,
for preparation and presentation of its financial statements. The
adoption of revised Schedule VI does not impact recognition and
measurement principles followed for preparation of the financial
statements. However it has significant impact on presentation and
disclosures made in the financial statements. The Company has also
reclassified the previous year figures in accordance with the
requirements applicable in the current year.
b. Interest on hypothecation loans was recognized on accrual basis up
to the current reporting date as against for the completed months up to
the previous year. This resulted in an increase of operating revenue by
Rs. 412.39 Lakhs for the year ended March 31, 2012.
3) 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
4) The Directors have prepared the Annual Accounts on a going concern
basis.
The Management Discussion and Analysis Report annexed hereto, forming
part of this Report, provides interalia, the performance of the Company
and the future outlook also.
As per the Listing Agreement, a report on Corporate Governance together
with Auditors' Certificate on compliance with the conditions of the
said clause is also provided as an annexure to this Report.
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.
Changes to Share Capital
During the year under review, the Company had made a Rights Issue of
65,00,000 Equity Shares at an issue price of Rs. 10 each for cash at a
price of Rs. 80 (including a share premium of Rs. 70) per equity share
aggregating Rs. 52,00,00,000. The Rights Issue raised Rs. 47,78,06,000.
The issue was made for the following purposes namely:
a. Repayment of unsecured loans taken from one of the promoters
b. For general corporate purposes of the Company
c. To meet the expenses of the issue.
Out of the Rs.47,78,06,000 raised, Rs. 5,97,25,750 was credited to
Share Capital and Rs. 41,80,80,250 was credited to Securities Premium
account. Out of the proceeds of the issue Rs. 42,72,78,494 was utilized
for repayment of loan from one of the promoters, Rs.36,82,608 utilized
for meeting the rights issue expenses and the remaining amount of
Rs.4,68,44,898 utilised for general corporate purposes. The Rights
Issue opened for subscription on Monday, 11th July, 2011 and closed on
Monday, 25th July, 2011. The Basis of Allotment was finalized on
Wednesday, 3rd August, 2011 in consultation with the Bombay Stock
Exchange Limited ("BSE"). The eligible shareholders were allotted
equity shares on Thursday, August 04, 2011. Subsequent to the Rights
Issue the Subscribed capital of the Company has increased from Rs.
6,50,00,000 to Rs. 12,47,25,750.
The Board of Directors of the Company wishes to thank all the investors
for their response to the Issue. The proceeds from the Issue has helped
the Company to reduce its debts and cost of funds and to increase its
profitability.
Dividend
Your Directors have recommended a dividend of Rs.3.50 per Equity Share
of Rs.10/- for the financial year ended 31.03.2012. The dividend, if
approved at the forthcoming AGM, will be paid to members whose name
appear in the Register of Members as on 24.07.2012. in respect of
shares held in dematerialized form, it will be paid to members whose
names are furnished by National Securities Depository Limited and
Central Depository Services (India) Limited, as beneficial owners.
An unclaimed dividend of Rs. 120936/- pertaining to the year 2003 - 04
was transferred to Investor Education and Protection Fund during the
year 2011 - 2012.
Directors
Directors, Mr. Thomas John Muthoot and Mr. R.K.Nair, retire by rotation
at the forthcoming AGM, and being eligible offer themselves for
re-appointment.
Auditors
The auditors of the Company, M/s K. Venkitachalam Aiyer & Co.,
Chartered Accountants, are eligible for re-appointment.
Reply to Auditor's Report
The Auditor's Report to the members does not contain any qualification
or adverse remarks on the financial reporting and disclosure of the
Company. The Notes to Accounts forming part of the financial statements
are self-explanatory and need no further explanation.
Personnel
The particulars of employees as required under the 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.
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 as required
to be provided under Section 217(1)(e) of the Companies Act 1956, read
with the Companies (Disclosure of Particulars in the Report of the
Board of Directors) Rules 1988.
Foreign Exchange earnings and outgo
There were no foreign exchange earnings or outgo during the period
under review.
Acknowledgements
The Directors take this opportunity to thank the customers,
shareholders, debenture 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 sincere co-operation and assistance
provided to us. The Directors also thank the employees for their
commitment, dedication and co-operation.
For and on behalf of Board of Directors
Kochi à 35 Thomas John Muthoot
11.06.2012 Chairman
Mar 31, 2011
The Directors are pleased to present the 17th Annual Report along with
the Balance Sheet as on 31-03-2011 and the Profit and Loss Account for
the year ended on that date.
Financial Results
The financial performance of the Company for the year ended 31st March,
2011, is summarized below:
PARTICULARS Year Ended 31.03.2011 Year Ended 31.03.2010
Amount (Rs.) Amount (Rs.)
TOTAL INCOME 377292259 224755727
TOTAL EXPENDITURE 224949020 114854613
PROFIT BEFORE DEPRECIATION
AND OTHER PROVISIONS 152343239 109901114
Depreciation 1433299 918821
Provision & Write offs 5848652 240302
PROFIT BEFORE TAX 145061288 108741991
Provision for taxation
Current tax 50700000 37220000
Deferred Tax (2317200) (174000)
Income Tax adjustment for
earlier years 24593 (32628)
PROFIT AFTER TAX 96653895 71728619
Add:Balance brought forward
from previous year 100432855 62115936
AMOUNT AVAILABLE FOR
APPROPRIATIONS 197086750 133844555
Less:Appropriations
Transfer to Statutory Reserve 19400000 14400000
Proposed Dividend 19500000 16250000
Dividend Tax 3163400 2761700
Surplus carried to Balance Sheet 155023350 100432855
Results Of Operations
During the financial year the income from operation amounted to
Rs.3772.92 lakhs as against Rs.2247.56 lakhs during the previous year,
recording a growth of 67.87%. The profit after tax increased from
Rs.717.29 lakhs to Rs.966.54 lakhs recording an impressive growth of
34.75 %, compared to last year figures. The Management is continuing
their efforts for the future performance also by adopting proactive
strategies.
Dividend
Your Directors have recommended a dividend of Rs.3.00 Per Equity Share
of Rs.10/- for the financial year ended 31.03.2011. The dividend will
be paid to members whose name appear in the Register of Members as on
11th July, 2011, in respect of shares held in dematerialized form, it
will be paid to members whose names are furnished by National
Securities Depository Limited and Central Depository Services (India)
Limited, as beneficial owners.
During the year 2010 - 2011, unclaimed dividend of Rs.1,15,713/-
pertaining to the year 2002 - 03 was transferred to Investor Education
and Protection Fund. The unclaimed dividend for the year 2003 - 04
shall be transferred to the Fund on 21st September, 2011. Shareholders
who have not received their dividends are requested to write to the
Company for revalidating their dividend warrants or issuing duplicate
warrants.
Share Capital
The Company has not issued any shares or any other security including
ADR/GDR/FCCB/Warrants/Bonds during the year.
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.
Corporate Governance
The Company has implemented all the stipulations prescribed under
Clause 49 of the Listing Agreement. A report on Corporate Governance
together with Auditors Certificate on compliance with the conditions
of the said clause is provided as an annexure to this report.
Rights Issue
The Company had obtained the consent of shareholders during the Annual
General Meeting held on 24th September, 2009, for making a rights issue
of equity shares ( 65 00 000 equity shares of Rs.10 each) in the ratio
of 1:1. The Company had filed the draft letter of offer with SEBI and
is awaiting the final approval. The Board has fixed the rights issue
price at Rs.80/- per share and the record date for the same was
25.05.2011. M/s Karvy Investor Services Limited have been appointed as
the Merchant Banker for the rights issue.
Directors
Mr. Philip Thomas, Director, and Mr. Thomas Muthoot, Director, are
liable to retire by rotation and being eligible offers themselves for
re-appointment at the ensuing Annual General Meeting. Your Board
recommends their re-election.
Directors Responsibility Statement
Pursuant to the requirement under section 217(2AA) of the Companies
Act, 1956, with respect to Directors Responsibility Statement, it is
hereby confirmed that :
1) In the preparation of the Annual Accounts for the year ended March
31, 2011, 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;
2) 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 as at March 31, 2011, and of the Profit of the Company
for that period.
3) 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
4) The Directors have prepared the Annual Accounts on a going concern
basis.
Auditors
M/s K. Venkatachalam Aiyer & Co., Chartered Accountants, Building No.
41/3647 B, Providence Road, M.G.Road North End, Ernakulam, Kochi - 682
018, Statutory Auditors of the Company will hold office until the
conclusion of the ensuing Annual General Meeting and are eligible for
reappointment.
The Company had received a letter from them that their appointment, if
made, would be within the prescribed limits under section 224(1B) of
the Companies Act, 1956, and that they are not disqualified for
re-appointment within the meaning of Section 226 of the said Act. The
Board recommends their re-appointment.
Reply to Auditors Report
The Auditors Report to the members does not contain any qualification
or adverse remarks on the financial reporting and disclosure of the
Company. The Notes to Accounts, forming part of the financial
statements, are self-explanatory and need no further explanation.
Personnel
None of the employees are in receipt of remuneration in excess of the
limits as laid down under provisions of Section 217(2A) of the
Companies Act, 1956, read with the Companies (Particulars of Employees)
Rules 1975, as amended.
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 as required
to be provided under Section 217(1)(e) of the Companies Act, 1956 read
with the Companies (Disclosure of Particulars in the Report of the
Board of Directors) Rules 1988.
Foreign Exchange earnings and outgo
There was no foreign exchange earnings or outgo during the period under
review.
Acknowledgments
Your Directors take this opportunity to thank the customers,
shareholders, debenture holders, Central and State Governments,
Bankers, Bombay Stock Exchange Limited, Merchant Banker, Share Transfer
Agents, Reserve Bank of India, Registrar of Companies, Kerala, SEBI and
other Government Authorities for the sincere co-operation and
assistance provided to us. Let us together thank our executives, staff
and other employees of the Company for their committed services which
has helped us in attaining this growth.
For and on behalf of the Board
Thomas John Muthoot
Chairman
Kochi à 35
Date : 01.06.2011
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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