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Notes to Accounts of Muthoot Capital Services Ltd.

Mar 31, 2019

1. CORPORATE INFORMATION

Muthoot Capital Services Limited (âthe Companyâ) is a public company domiciled in India, governed by the Companies Act 2013 and is a Systemically Important Deposit Accepting Non-Banking Financial Company (âNBFCâ) registered with Reserve Bank of India. The shares of the Company are listed on the Bombay Stock Exchange and the National Stock Exchange. During the year, the Company was primarily engaged in the business of financing for purchase of automobiles, mainly two wheelers against hypothecation of the vehicles and granting of personal/business loans etc.

2. NOTES ON ACCOUNTS FOR THE YEAR ENDED 31st MARCH, 2019

Amounts in the financial statements are presented in thousands, except for per share data and as otherwise stated.

The Company has only one class of shares referred to as equity shares having a par value of Rs.10. Each holder of equity share is entitled to one vote per share.

In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

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

Terms of Repayment of Bank Loans:

Security and Rate of Interest of Term Loans from Banks

The term loans from banks are secured by charge on the entire current assets including loans receivable of the company. The rate of interest varies from 9.30% to 11.00% as on the Balance Sheet date.

These loans are repayable in equal monthly/ quarterly instalments which are spread over period up to 36 months.

Security and Rate of Interest of Term Loans from Financial Institution

The term loans from Mahindra & Mahindra Financial Services Ltd is secured by creating a paripassu hypothecation charge together with other term loan & working capital lenders of the borrower, over receivables/ loan assets/book debts.

The Company has taken one Term Loans from Mahindra & Mahindra Financial Services Ltd in in two tranches of Rs.50 00 00 thousand each with interest rates being 9.5% and 10.75%. The loan is repayable in six equal quarterly installments over a period of 18 months.

2.1.1 Subordinated Term Loans/Debts (Sub Debts):

A. Northern Arc Capital Limited (Formerly known as IFMR Capital Finance Private Limited) -

The Company has taken two Subordinated Unsecured Term Loans from Northern Arc Capital Ltd. of Rs.15 00 00 thousand each on 29th June, 2016 and 30th March, 2017 respectively, with interest rates being 12.5% and 11.95%. The loans will be repaid only on maturity i.e. after 66 months from the date of availing the loan.

B. The Company has also accepted subordinated debts from public under three schemes, namely Monthly, Annual and Maturity interest payment with interest rates ranging from 9% to 13.4%. The maturity period of the loan ranges from 60 months to 96 months. The subordinated debts issued under each scheme will be repaid only on maturity.

The Unsecured Term loans / Subordinated Debts of the Company qualify as Tier II Capital under Master Directions - Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016 issued by Reserve Bank of India.

2.1.2 Public Deposits:

The Company has accepted Public Deposits under three schemes, namely Monthly, Annual and Maturity interest payment. The deposits issued under each scheme will be repaid only on maturity, unless claimed by the depositor earlier and, if permissible, to be repaid as per the regulations issued in this regard by the Reserve Bank of India. The rate of interest on these deposits ranges from 7.0 % to 11.75% per annum. The repayment period ranges from 12 months to 60 months

2.1.3 Current portion of interest accrued, but not due on the above borrowings amounting to Rs.3 51 47 thousand (Rs.5 14 07 thousand) is shown in Note No. 2.8 under Other Current Liabilities .

2.1.4 The liability towards Unrealized Gain appears in the financial statements in the manner given below:

2.1.5 Loans from Banks - Working Capital Demand Loans and Cash Credits Guaranteed Loans

The Working Capital Demand Loans, Cash Credits and Term Loans obtained from Banks have been personally guaranteed by the Promoter Directors of the Company, namely, Mr. Thomas John Muthoot, Mr. Thomas George Muthoot and Mr. Thomas Muthoot.

Security and Rate of Interest of Working Capital Demand Loans and Cash Credits from Banks

The Cash Credits and Working Capital Demand Loan facilities have been obtained from the banks by creating First Charge by way of hypothecation of the entire current assets, including business loans, hypothecation loans and all other loan receivables, ranking pari-passu with other banks and Debenture Holders.

Interest on these loans varies between 8.4% to 11.2% per annum as on the Balance Sheet date.

These loans are repayable within a period upto 12 months from the date of sanction.

2.1.6. Loans and Advances from Related Parties

The Company has entered into transactions with Promoter Director of the Company. The Company pays interest @ 12% p.a in respect of interest bearing loans(Balance outstanding as at 31st March, 2019 was ? 7 55 00 thousand (? 3 05 00 thousand)). The total balance outstanding (interest and non-interest bearing loan) as at 31st March 2019 is Rs.10 24 34 thousand (Rs.5 78 06 thousand)

2.1.7. Inter Corporate Deposits

The Company has taken an Inter Corporate Deposit from Adtech Systems Ltd. This is repayable after a period of 3 months with an effective rate of interest of 9% per annum. The balance Outstanding as on 31st March, 2019: Rs.1 62 47 thousand (Rs.1 49 95 thousand)

Trade Payables includes amounts payable to related parties amounting to Rs.2 85 17 thousand (Rs.2 47 26 thousand)

2.1.8 Amount Payable to Micro, Small and Medium Enterprises

There are no Micro, Small and Medium Enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006 to whom the Company owes dues on account of Principal amount together with interest and accordingly no additional disclosures have been made.

The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

2.1.9 Debentures:

The Company has issued Redeemable Non-Convertible Debentures on Private Placement basis in various series. The debentures issued under each series have a repayment period depending on the scheme it falls under. The debentures are repayable within a period of 1 to 6 years, depending on the schemes. The schemes range from Monthly, Annual and Maturity Interest payment. The rate of interest of matured debentures ranges from 11% to 14.19% per annum.

2.1.10 Investment in PMS is represented by the following-

(a) Nil (7 750) shares of Rs.2/- each in Manappuram Finance Ltd - Rs. Nil (Rs.764 thousand)

(b) 9 260 (10 526) shares of Rs.10/- each in Muthoot Finance Ltd-Rs.41 94 thousand (Rs.48 57thousand)

(d) Balance with PMS Rs. Nil (Rs.4 thousand)

2.1.11 Aggregate amount of quoted investment is Rs.6 83 65 thousand (Rs.14 81 15 thousand) and market value is Rs.725 07 thousand (Rs.15 60 91 thousand), aggregate amount of unquoted investment is ?3 45 00 thousand (?3 05 04 thousand). Aggregate provision for diminution in value of investment is Nil.

2.1.12 In accordance with the guidelines given in the Master Direction - Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016 issued by Reserve Bank of India, the Company has created floating charge on the statutory liquid assets comprising of Investment in Government Securities of face value of Rs.14 88 00 thousand (Cost- Rs.14 24 94 thousand) and bank deposits of Rs.2 00 00 thousand in favor of trustees representing the deposit holders of the Company.

Deferred Tax Asset and Deferred Tax Liabilities have been set off wherever the Company has legally enforceable right to set off current tax assets against current tax liabilities and the Deferred Tax Assets and Deferred Tax Liabilities relating to the same taxation authority.

2.1.13 Aggregate amount of quoted investment is ?8 35 63 thousand (Rs.19 thousand) and market value is ?8 8961 thousand (Rs.27 thousand).

2.1.14 Deposits disclosed above, have a maturity period of less than 12 months as at the end of reporting period, except for deposits offered as collateral security against securitization transaction amounting to Rs.45 78 34 thousand (Nil)

2.1.15 The Company has repossessed assets worth Rs. 3 84 thousand on 31st March, 2019 (Rs.15 19 thousand). The same has been fully provided for and charged to statement of Profit and Loss as on the date of the Balance Sheet and the realizable value is shown as Nil.

2.1.16 Loans Buyout

The company has entered into arrangements with other NBFCs for the buyout of receivables of Four Wheeler Portfolio, Two Wheeler Portfolios and Micro Finance Portfolio. The rate of interest receivable on the loan buyouts ranges between 13.7% to 16% per annum on the diminishing balance. The tenure of the loans ranges between 21 months and 37 months.

2.1.17 Term Loans

The company has advanced Term Loans to other Companies / NBFCs secured by way of first charge/pari-passu charge on the loan portfolio created out of the lending by the Company. The rate of interest receivable on the term loans ranges between 12.4% to 16% per annum on the diminishing balance. The tenure of the loans ranges between 15 and 48 months.

2.1.18 Other receivables include amounts receivable from related parties amounting to Rs.748 thousand (Rs.3 87 thousand).

2.1.19 It comprises of Companyâs share of future interest strip receivables in case of par structure of securitisation.

2.1.20 Prepaid expense includes expense paid to related parties amounting to Rs.14 08 thousand (Nil).

2.1.21 An amount of Rs.7 75 77 thousand (Rs.1 60 35 thousand) has been written off against the nonperforming hypothecation assets. (Refer significant accounting policy No 1.19)

3.Employee Benefit Plans

3.1 Defined Benefit Plans - Gratuity

The Company has entered into an arrangement with the LIC of India to cover the liability payable to the employees towards the gratuity under a Gratuity Trust Scheme based on Group Gratuity Cum Assurance Scheme of the LIC of India which is a defined benefit scheme and the company has to make contributions under such scheme.

4.1.1 As per the terms of appointment approved by the Board of Directors, remuneration of Mr. Ravi Oruganti is being paid to Muthoot Fincorp Limited.

4.2 Provisions for doubtful debts due from related parties at the balance sheet date-Nil (Nil)

4.3 Amounts written off or written back of debts due from or to related parties-Nil (Nil)

The operating lease arrangements are renewable on a periodical basis and relates to rented premises. The lease agreements have lease escalation clauses.

5. GENERAL

5.1 Particulars showing maturity pattern of secured privately placed Redeemable Non Convertible Debentures

Secured by charge on all movable assets, book debts, receivables and advances in the books of the company.

5.2 Cost Insurance Freight (CIF) value of imports - NIL

5.3 Expenditure in foreign currency

5.4 Earnings in Foreign Currency - NIL

6. Reporting of Fraud - No cases of frauds were reported during the financial year 2018-19

7. Disclosures required in Master Directions - Non-Banking Financial Company - Systemically Important Non-Deposit taking company and Deposit taking company (Reserve Bank) Directions, 2016 issued by Reserve Bank of India.

Note 1: Only the SPVs relating to outstanding securitization transactions are reported here Note 2: Based on the information duly certified by SPVâs auditors on which reliance is placed by Auditors.

Note 1: The above maturity profile has been compiled from the internal records and system reports maintained by the management on which reliance is placed by the auditors.

Note 2: Above includes Interest accrued.

Note 3: In accordance with the revised ALM policy of the management, Non-Performing Assets as at 31st March 2019 have been categorized under the maturity pattern of â Over 1 year upto 3 yearsâ for the above disclosure.

iii. Details of financing of parent company products - NIL

iv. Details of Single Borrower Limit (SBL) / Group Borrower Limit (GBL) exceeded by the company - NIL

v. Unsecured Advances

The unsecured Loans against Demand Promissory Notes (DPN) executed by the borrowers and outstanding as at 31.03.2019 is Rs.14 50 13 thousand (as at 31.03.2018 Rs.8 11 43 thousand).

A. Registration obtained from other financial sector regulators - NIL

B. Disclosure of Penalties imposed by Reserve Bank of India and other regulators - NIL

C. Ratings Assigned by Credit Rating Agencies and migration of ratings during the year

D. Provisions and Contingencies

Break up of âProvisions and Contingenciesâ shown under the head Expenditure in the Statement of Profit and Loss

E. Drawn Down from Reserves-Nil

F. Concentration of Deposits, Advances, Exposures and NPAs

G. Concentration of Deposits (for deposit taking NBFCs)

Note vi.(i): Additions/Reductions to NPA do not include accounts classified as NPA and regularized during the same financial year.

Note vi.(ii): Provisions made during the year includes additional provision amounting to Rs.14 09 10 thousand (Rs.4 00 00 thousand) created over and above the minimum levels specified by RBI in accordance with the accounting policy as stated in 1.19 (i)(b) and does not include loans written off during the year as stated in Note 2.26.1.

H. Overseas Assets (for those with joint ventures and subsidiaries abroad) - NIL

I. Off-balance sheet SPVs sponsored (which are required to be consolidated as per accounting norms) - NIL

The above particulars have been compiled from the internal registers maintained by the management on which reliance is placed by the auditors.

8 Additional disclosures as required in terms of Para 18 of Master Directions - Non-Banking Financial Company - Systemically Important Non-Deposit taking company and Deposit taking company (Reserve Bank) Directions, 2016 issued by Reserve Bank of India.

Liabilities side:

8.1 Loans and advances availed by the NBFC, inclusive of interest accrued thereon but not paid:

Note 1 - Overdues for a sum of Rs.6 21 thousand in respect of Secured Debentures represents debentures for which payments could not be made as claims were not received from debenture holders.

Note 2 - Overdue of Rs.2 89 16 thousand in respect of Public Deposits includes deposits for a sum of Rs.1 00 85 thousand pending renewal and deposits for a sum of Rs.1 88 31 thousand for which payments could not be made as claims were not received from deposit holders.

Note 3- Overdue of Rs.49 thousand in respect of Subordinated Debt represents debts for which payments could not be made as claims were not received from Subordinated Debt holders.

Note 4 - Balance outstanding against amounts borrowed from banks is inclusive of interest accrued, but not due.

8.2 The value of repossessed assets is shown net of provision/diminution amounting to Rs. 3 84 thousand as on 31^st March 2019.

9. Previous year figures unless otherwise stated, are given within brackets and have been reworked, re-grouped, re-arranged and re-classified to conform to the current year presentation. The figures are rounded off to the nearest thousands.

Mar 31, 2018

Refer Note No. 2.16 âCash and Cash Equivalents.

2.17.1 The Company has repossessed assets worth Rs, 15 19 thousand on 31^st March, 2018 (Rs, 85 thousand). The same has been fully provided for and charged to statement of Profit and Loss as on the date of the Balance Sheet and the realizable value is shown as Nil.

2.17.2 Loans Buyout

The company has entered into arrangements with other NBFCs for the buyout of receivables against Four Wheeler Portfolio and Two Wheeler Portfolios. The rate of interest receivable on the loan buyouts ranges between 15% to 16% per annum on the diminishing balance. The tenure of the loans ranges between 20 months and 37 months.

2.17.3 Term Loans

The company has advanced Term Loans to other Companies / NBFCs secured by way of first charge on the loan portfolio created out of the lending by the Company. The rate of interest receivable on the term loans ranges between 12% to 16% per annum on the diminishing balance. The tenure of the loans ranges between 12 and 48 months.

Compiled based on information maintained by the Company on which reliance has been placed by the Auditor.

The operating lease arrangements are renewable on a periodical basis and relates to rented premises. The lease agreements have lease escalation clauses.

The earnings per share for the current period and previous periods have been restated in the manner required by Accounting Standard-20 âEarnings Per Shareâ in respect of 12,47,258 bonus shares allotted by the Company in accordance with the resolution of the shareholders of the Company passed at the Annual General Meeting held on 6th June 2017.

Note 1 - Overdues for a sum of Rs,18 00 thousand in respect of Secured Debentures represents debentures for which payments could not be made as claims were not received from debenture holders.

Note 2 - Overdue of Rs,3 39 62 thousand in respect of Public Deposits includes deposits for a sum of Rs,1 32 67 thousand pending renewal and deposits for a sum of Rs,2 06 95 thousand for which payments could not be made as claims were not received from deposit holders.

Note 3 - Balance outstanding against amounts borrowed from banks is inclusive of interest accrued, but not due.

Mar 31, 2017

1. NOTES ON ACCOUNTS FOR THE YEAR ENDED 31^st MARCH, 2017

Amounts in the financial statements are presented in thousands, except for per share data and as otherwise stated.

The Company has only one class of shares referred to as equity shares having a par value of Rs. 10. Each holder of equity share is entitled to one vote per share.

The Company do not propose to declare dividend and consequently the requirements of appropriation to the General Reserve out of the profit for the year are not applicable.

A. Subordinated Unsecured Term Loan -

The Company has taken two Subordinated Unsecured Term Loans from IFMR Capital Finance Private Limited of Rs. 15 00 00 thousand each on 29^th Jun 2016 and 30^th Mar 2017 respectively, with interest rates being 12.5% and 11.95%. The loans will be repaid only on maturity i.e. after 66 months from the date of availing the loan.

B Subordinated Debts (Sub debts) -

The Company has also accepted subordinated debts from public under three schemes, namely Monthly, Annual and Maturity schemes with interest rates ranging from 9.75% to 13.40%. The maturity period of the debts ranges from 60 months to 84 months. The subordinated debts issued under each scheme will be repaid only on maturity.

C The Subordinated Unsecured Term Loan and Subordinated Debts of the Company qualify as Tier II Capital under Master Directions - Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 dated 09^th March, 2017.

Public Deposits:

The Company has accepted Public Deposits under three schemes, namely Monthly, Annual and Maturity schemes. The deposits issued under each scheme will be repaid only on maturity, unless claimed by the depositor earlier and if permissible to be repaid as per the regulations issued in this regard by the Reserve Bank of India. The rate of interest on these deposits ranges from 7% to 12.5% per annum. The repayment period ranges from 12 months to 60 months

Grand Total A. Loans from Banks Guaranteed Loans

Security and Rate of Interest of Cash Credits and Working Capital Demand Loans from Banks

The Cash Credits and Working Capital Demand Loans facilities have been obtained from the banks by creating First Charge by way of hypothecation of the entire current assets, including business loans, hypothecation loans and all other loan receivables, ranking pari-passu with other banks and Debenture Holders.

Interest on these loans varies between 9.15% to 11.35% per annum as on the Balance sheet date.

These loans are repayable within a period upto 12 months from the date of sanction.

Security and Rate of Interest of Term Loans from Banks

The term loans from banks are secured by creating a first charge by way of hypothecation of entire current assets including hypothecation loans and all other loan and other current assets of the Company.

Rate of interest varies from 10.9% to 11.30% as on the Balance Sheet date.

These loans are repayable in equal monthly/quarterly installments spread over 10 months to 33 months.

B. Loans and Advances from Related Parties

The Company has entered into transactions with the Promoter Directors of the Company. The Company pays interest at 12% per annum. The balance outstanding as on March 31, 2017 was Rs. 13 64 06 thousand (March 31, 2016: Rs. 13 64 38 thousand).

C. Inter Corporate Deposits

The Company has taken an Inter Corporate Deposit from Adtech Systems Ltd. This is repayable after a period of 3 months with an effective rate of interest of 9% per annum. The balance outstanding as on March 31, 2017: Rs. 1 52 61 thousand (March 31, 2016: Rs. 1 40 85 thousand).

* There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.

** Unrealized Gain on Loan Transfer Transactions comprises of future interest receivable under par structure of securitization.

*** Expenses payable includes amounts payable to related parties amounting to Rs. 1 51 58 thousand (March 31, 2016: Rs. 1 23 66 thousand)

**** Others includes amounts payable to related parties amounting to Rs. 53 78 thousand (March 31, 2016: Rs. 20 04 thousand)

Debentures:

The Company has issued Redeemable Non-Convertible Debentures on Private Placement basis in various series. The debentures issued under each series have a repayment period depending on the scheme it falls under. The debentures are repayable within a period of 1 to 6 years, depending on the schemes. The schemes range from Monthly, Annual and Maturity Interest payment. The rate of interest of the Unmatured debentures range from 10.92% to 14.19% per annum and the rate of interest of matured debentures ranges from 9.5% to 13.4% per annum.

The issued debentures are secured by a pari-passu first charge with the banks against the loans, including cash credit, demand loans and term loans, taken from them, on all movable assets, book debts and receivables created by undertaking the business of Hypothecation Loan and all other types of Loans, both present and future, created by the Company.

** Loan Buyout

The Company has entered into arrangements with other NBFCs for the buyout of receivables against Micro Finance Portfolio and Two Wheeler Portfolios. The rate of interest receivable on the loan buyouts ranges between 15% to 16% per annum on the diminishing balance. The tenure of the loans ranges between 15 and 30 months.

***Term Loans

The company has advanced Term Loans to other Companies/NBFCs secured by way of first charge on the loan portfolio created out of the lending by the Company. The rate of interest receivable on the term loans ranges between 13.5% to 16% per annum on the diminishing balance. The tenure of the loans ranges between 12 and 48 months.

2. DEFINED BENEFIT PLANS- GRATUITY VALUATION

The Company has entered into an arrangement with the LIC of India to cover the liability payable to the employees towards the gratuity under a Gratuity Trust Scheme based on Group Gratuity Cum Assurance Scheme of the LIC of India which is a defined benefit scheme and the Company has to make contributions under such scheme.

3. RELATED PARTY DISCLOSURES

Related party disclosures as per AS 18 - ''Related Party Disclosures'' for the year ended 31^st March 2017, are given below:

4. LEASES

The Lease rentals charged during the period and the maximum obligation on operating leases payable as per the rentals stated in the respective agreements are as follows:

The operating lease arrangements are renewable on a periodical basis and relates to rented premises. The lease agreements have lease escalation clauses.

5. GENERAL

(i) Some of the Receivables and Payables, Loans and Advances, Hypothecation Loans, Deposits, Secured Debentures and Unsecured Loans are subject to confirmation/reconciliation due to non-receipt of the statement of accounts and confirmation letters. Necessary adjustments, if any, in the accounts will be made on completion of the reconciliation/receipt of confirmation letters/statement of accounts.

(ii) Amount Payable to Micro, Small And Medium Enterprises

(iii) Particulars showing maturity pattern of secured privately placed Redeemable Non-Convertible Debentures Secured by charge on all movable assets, book debts, receivables and advances in the books of the Company.

B. Details of Collection amounts directly remitted in the Company''s bank account

The Company collected its dues from the customers in the following ways:

6. Collection by way of direct remittance in the bank account of the Company by borrowers/collection agencies/ company executives, in cash

7. Collection by way of payment by borrowers/collection agencies and company executives in cash to the branches of Muthoot Fincorp Limited who are appointed as the authorized agents for collection of Hypothecation dues from the customers. Muthoot Fincorp Ltd transfers such amount collected from customers in cash through bank transfer to the account of the Company.

8. Collection by way of ECS/NACH

In all the cases mentioned above, the Company, in accordance with the practices and method of accounting regularly followed, accounted the receipt of cash/electronic mode collection by crediting the respective borrowers'' account and debiting the account of Muthoot Fincorp Limited/ Bank Account, as the case may be.

During the period from November 8, 2016 to December 30, 2016 an aggregate amount of ''1 38 88 thousand had been remitted in cash in the designated bank account with State Bank of India directly by certain customers and collection agents/ company executives through various branches of Muthoot Fincorp Ltd across the country against the hypothecation receivables. Such cash was not actually received in cash at offices of the Company. Hence such receipt of cash directly deposited in the bank account of the Company not routed through the cash account of the Company. Therefore those receipts of cash are not considered as movement of cash.

9. REPORTING OF FRAUD - No cases of frauds were reported during the financial year 2016-17

10. SECURITISATION TRANSACTION

a. During the year the Company has securitized on "at Par" basis vide Pass Through Certificate route loan receivables of 1,32,550 contracts amounting to Rs. 349 5 5 74 thousand for a consideration of Rs. 349 55 74 thousand and de-recognized those assets of value Rs. 349 55 74 thousand from the books.

b. Interest Only Strip representing present value of interest spread receivable has been recognized and reflected under other current assets as "Interest Strip Retained on Securitization of Receivables" (Refer note no.2.18) and unrealized gains have been recognized as liability under other current liabilities as "Unrealized Gain on Loan Transfer Transactions" (Refer note no. 2.6).

Mar 31, 2015

CORPORATE INFORMATION

Muthoot Capital Services Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Muthoot Capital Services Limited was incorporated on February 18, 1994 as a public limited company. Its shares are listed on the Bombay Stock Exchange. The Company is registered as an A-category Deposit taking Non-Banking Financial Company (NBFC) with Reserve Bank of India. During the year the Company was mainly engaged in financing for purchase of automobiles, namely two wheelers against hypothecation of the respective vehicles and granting of personal/business loans against demand promissory notes. The Company also engaged itself in buying loan portfolios from other NBFCs financing the two wheelers /micro finance segment. The Company has a reasonably good presence in the non-banking financial sector in rural and semi-urban areas.

Amounts in the financial statements are presented in thousands, except for per share data and as otherwise stated. Previous year figures have been reworked, re-grouped, re-arranged and reclassified to conform to the current year presentation.

Debentures:

The Company has issued Redeemable Non-Convertible Debentures on Private Placement basis in various series. The debentures issued under each series have a repayment period depending on the scheme it falls under. The debentures are repaid within a period of 1 to 6 years, depending on the schemes. The schemes range from Monthly, Annual and Maturity Interest Payment. The rate of interest of the Unmatured Debentures range from 10.9% to 14.2% per annum and the rate of interest of Matured Debentures ranges from 9.5% to 13.1% per annum.

The issued debentures are secured by a Pari-passu First Charge on all movable assets, book debts and receivables created by undertaking the business of Loan against Gold Jewellery, Hypothecation Loan and all other types of Loans, both present and future, created by the company.

Subordinated Debts (Sub Debts):

The Company has accepted subordinated debts under three schemes namely Monthly, Annual and Maturity schemes with interest rates ranging from 12.25% to 13.40%. The subordinated debts issued under each scheme will be repaid only on maturity.

Public Deposits:

The Company has accepted Public Deposits under three schemes namely Monthly, Annual and Maturity schemes. The deposits issued under each scheme will be repaid only on maturity, unless claimed by the Depositor earlier and if permissible to be repaid as per the regulations issued in this regard by the Reserve Bank of India. The rate of interest on these deposits ranges from 9% to 12.5% per annum with monthly rest.

Guaranteed Loans

The Working Capital Demand Loans and Cash Credit obtained from Banks have been personally guaranteed by the Promoter Directors of the Company, namely, Mr.Thomas John Muthoot, Mr. Thomas George Muthoot and Mr. Thomas Muthoot.

Security of the Loans from Banks

The Working Capital Demand Loans and Cash Credit facility have been obtained from the banks by creating First Charge on the entire current assets including gold loan and hypothecation loan receivables ranking pari-passu with other Banks and Debenture Holders.

Rate of interest

Short-Term Borrowings from banks carries interest at the rate of 11.5% to 14% per annum during the year.

Term Loan from Banks:

The term loan from banks are secured by hypothecation of specific assets covered by Hypothecation Loan Receivables/ on entire current assets including hypothecation loan receivables, gold loan receivables and other current assets of the company. Rate of interest varies from 12% to 13%. The loan is repayable in equal monthly/ quarterly instalments spread over 24 months to 36 months.

Loan from Directors

The Company has entered into transactions involving receipts and payments of different amounts with the directors of the Company. The Company pays interest at 12% per annum. The balance outstanding as on March 31,2015 was RS. 2 73 05 thousand (March 31, 2014: RS. 8 21 30 thousand).

Inter Corporate Deposits

The Company has taken an Inter Corporate Deposit of RS. 1 30 00 thousand from Adtech Systems Ltd during the month of March 2015, which is repayable after a period of 3 months with an effective rate of interest of 9% per annum.

Expenditure against Corporate Social Responsibility Activities

(a) The Gross Amount required to be spent by the Company during the year is RS. 59 24 thousand

(b) Amount spent during the year on:

3. DEFINED BENEFIT PLANS- GRATUITY VALUATION

The Company has entered into an arrangement with LIC of India to cover the liability payable to the employees towards the gratuity under a Gratuity Trust Scheme based on Group Gratuity Cum Assurance Scheme of the LIC of India which is a defined benefit scheme and the company has to make contributions under such scheme.

5. RELATED PARTY DISCLOSURES

List of Related Parties as on March 31, 2015 is given below:

A. Particulars of Companies/ Firms/Limited Liability Partnerships/Trusts where control/significant influence exists:-

Sl No Name of the Company/Firm/LLP/Trusts

1 MPG Hotels and Infrastructure Ventures Private Limited

2 Muthoot Fincorp Limited

3 EMMEL Realtors and Developers Private Limited

4 Mariposa Agri Ventures and Hospitalities Private Limited

5 Finance Companies' Association (India)

6 Muthoot Pappachan Chits (India) Private Limited

7 The Thinking Machine Media Private Limited

8 Calypso Agri Development and Hospitalities Private Limited

9 Mandarin Agri Ventures and Hospitalities Private Limited

10 E L Toro Agri Projects and Hospitalities Private Limited

11 Fox Bush Agri Developement and Hospitalities Private Limited

12 Cinnamon Agri Development and Hospitalities Private Limited

13 Pine Pink Agri Ventures and Hospitalities Private Limited

14 L M Realtors Private Limited

15 Muthoot Dairies and Agri Ventures Private Limited

16 Jungle Cat Agri Development and Hospitalities Private Limited

17 Buttercup Agri Projects and Hospitalities Private Limited

18 Flame Agri Projects and Hospitalities Private Limited

19 Goblin Agri Projects and Hospitalities Private Limited

20 Alaska Agri Projects and Hospitalities Private Limited

21 Muthoot Holdings Private Limited

22 Muthoot APT Ceramics Limited

23 Muthoot Housing Finance Company Limited

24 Muthoot Automobile Solutions Private Limited

25 Muthoot Agri Development and Hospitalities Private Limited

26 Bamboo Agri Projects and Hospitalities Private Limited

27 Muthoot Automotive (India) Private Limited

28 Muthoot Land and Estates Private Limited

29 Muthoot Buildtech (India) Private Limited

30 Muthoot Properties (India) Limited

31 Muthoot Kuries Private Limited

32 Muthoot Equities Limited

33 Muthoot Hotels Private Limited

34 Muthoot Agri Projects and Hospitalities Private Limited

35 Muthoot Motors Private Limited

36 Muthoot Infrastructure Private Limited

37 The Right Ambient Resorts Private Limited

Sl No Name of the Company/Firm/LLP/Trusts

38 Muthoot Pappachan Technologies Limited

39 Muthoot Pappachan Medicare Private Limited

40 Muthoot Exim Private Limited

41 Palakkad Infrastructure Private Limited

42 Muthoot Risk Insurance and Broking Services Private Limited

43 Muthoot Bankers

44 Muthoot Cine Enterprise

45 Muthoot Estate Investments

46 Muthoot Finance Company

47 Muthoot Insurance Services

48 Muthoot Motors (Cochin)

49 MPG Apex Management LLP

50 MPG Automobiles LLP

51 MPG Land Developers LLP

52 Muthoot Pappachan Foundation

B. Promoters and Key Managerial Personnel (KMP)

Sl No Name of the Promoters and KMP Designation

1 Thomas John Muthoot Chairman

2 Thomas George Muthoot Managing Director

3 Thomas Muthoot Director

4 R. Manomohanan Chief Executive Officer

5 Vinodkumar M. Panicker Chief Finance Officer

6 Syam Kumar R. Company Secretary & Head-Governance

C. Relatives of Promoters and Key Managerial Personnel (KMP)

Sl No Promoters and KMP Name of Relatives Nature of Relationship

1 Thomas John Muthoot Mrs. Janamma Thomas Mother Mrs. Preethi John Spouse Ms. Susan John Muthoot Daughter Mr. Thomas M John Son

2 Thomas George Muthoot Mrs.Nina George Spouse Ms. Tina Suzanne George Daughter Ms. Ritu Elizabeth George Daughter Ms. Swetha Ann George Daughter

3 Thomas Muthoot Mrs. Remy Thomas Spouse Ms. Suzannah Muthoot Daughter Ms. Hannah Muthoot Daughter

4 R. Manomohanan Mrs. S. Krishnakumari Spouse Mr. Binu Mohan M. Son Mr. Ginu Mohan M. Son

5 Vinodkumar M. Panicker Mrs. Rashmi V Panicker Spouse Ms. Priyanka V Panicker Daughter Ms. Ananya V Panicker Daughter

6 Syam Kumar R. Mrs. Maya R. Unnithan Spouse Ms. Nandini Syamkumar Daughter Mr. Nandan Syamkumar Son

7. BASIS OF CLASSIFICATION OF ASSETS AND LIABILITIES

During this year, the receivables against financing activities have been treated as current assets following the principle that the operating cycle of the Company is 3 years, being the time required for realisation of the loans granted for the purchase of 2 wheelers/Other Assets.

Accordingly, the borrowings taken from the banks and other sources repayable within a period of the operating cycle of 3 years are also treated as current liabilities.

In the previous year, the receivables against financing activities beyond the period of 1 year were treated as non-current assets and the borrowings/ other liabilities due to the banks/other institutions beyond the period of 1 year were also treated as non-current liabilities.

The particulars of current and non-current assets/liabilities, following the method adopted during the previous year, are given below for the purpose of information and to know the effect of the change of method adopted with regard to classification of assets and liabilities:

10. EMPLOYEES DRAWING REMUNERATION IN EXCESS OF RS. 5 LAKHS PER MONTH FOR PART OR WHOLE OF THE YEAR

(i) Mr. Thomas George Muthoot, Managing Director, was paid Salary and allowances of RS. 160 62 thousand, during the year ended 31st March,2015 (2014: RS. 161 65 thousand).

(ii) Mr. R. Manomohanan, Chief Executive Officer, was paid salary, allowances and commission on profits of RS. 1 08 19 thousand during the year ended 31st March,2015. (2014: RS. 108 55 thousand).

12. CONTINGENT LIABILITIES NOT PROVIDED FOR

(RS. in '000) Particulars As at 31-Mar-15 31-Mar-14

Income Tax issues where the Company 23 58 23 58 is in appeal

The Company is of the opinion that the above demands are not sustainable and expects to succeed in its appeals / defense.

13. GENERAL

(i) Some of Receivables and Payables, Loans and Advances, Hypothecation Loans, Deposits, Secured Debentures and Unsecured Loans are subject to confirmation/reconciliation due to non receipt of the statement of accounts and confirmation letters. Necessary adjustments, if any, in the accounts will be made on completion of the reconciliation/ receipt of confirmation letters/statement of accounts.

(ii) Amount Payable To Micro, Small and Medium Enterprises

There is no Micro, Small and Medium Enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006 to whom the Company owes dues on account of Principal amount together with interest and accordingly no additional disclosures have been made.

The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

(iii) Particulars Showing Maturity Pattern of Secured Privately Placed Redeemable Non Convertible Debentures Secured by a charge on all movable assets, book debts, receivables and advances including loan against gold created by the Company.

14. REPORTING ON FRAUD

During the year there have been certain instances of fraud on the Company by employees, where in hypothecation loans related misappropriations or cash embezzlements have occurred for amounts aggregating to RS. 3 79 thousand. The Company recovered RS. 3 33 thousand. The Company is in the process of recovering the balance amounts also from the concerned employees and taking legal actions whereever possible.

(III) Unsecured Advances

The Unsecured Loans against Demand Promissory Notes (DPN) executed by the borrowers and outstanding amount is RS. 7 27 92 thousand (March 31,2014; RS. 1 34 51 thousand).

H. Details of financing of parent company products - NIL

I. Details of Single Borrower Limit (SBL) / Group Borrower Limit (GBL) exceeded by the company - NIL

J. Registration obtained from other financial sector - NIL regulators

K. Disclosure of Penalties imposed by Reserve Bank of India and other regulators - NIL

L. Ratings Assigned by Credit Rating Agencies and migration of ratings during the year

Sl No Name of the Rating Agency Rated Instrument Rating

1 CRISIL Short-Term Debts CRISIL A1

2 CRISIL Public Deposits FA Stable

3 CRISIL Bank Loan Facilities CRISIL A/Stable

(e ) Sector-wise NPAs Sl No Sector Percentage of NPAs to Total Advances in that sector

1 Agriculture & allied activities 100% (Against Gold Security)

2 MSME 0%

3 Corporate borrowers 0%

4 Services 0%

5 Unsecured personal loans 0.03%

6 Auto loans 4.16%

7 Other personal loans 0%

O. Overseas Assets (for those with joint ventures and subsidiaries abroad) - NIL

P. Off-balance sheet SPVs sponsored

(which are required to be consolidated as - NIL per accounting norms)

Q. Customer Complaints pertaining to the Financial Year

Mar 31, 2014

1. CONTINGENT LIABILITIES NOT PROVIDED FOR

(Rs.in ''000)

Particulars As at

31-Mar-14 31-Mar-13

Income Tax issues where the Company is in appeal 23 58 23 58

The Company is of the opinion that the above demands are not sustainable and expects to succeed in its appeals / defense.

Mar 31, 2013

CORPORATE INFORMATION

Muthoot Capital Services Limited (the company) is a public company domiciled in India and incorporated under the provisions ofthe Companies Act, 1956. Its shares are listed in the Mumbai stock exchange in India. The Company is registered as a Non Banking Financial Company (NBFC) with Reserve Bank of India. Duringthe yearthe Company is mainly engaged in asset financing activities, especially two wheelers and three wheelers.

The presentation in the Balance Sheet, Statement of Profit and Loss, Notes to Accounts is in terms of Revised Schedule VI of Companies Act, 1956 which has become mandatory with effect from Ia April, 201 I. The assets and liabilities are classified as Current and Non Current based on the twelve months of operations.

Amounts in the financial statements are presented in thousands, except for per share data and as otherwise stated. Previous yearfigures have been reworked, re-grouped, re-arranged and reclassified to conform to the current year presentation.

Guaranteed Loans

The Working Capital Demand Loans and Cash Credit obtained from Banks have been personally guaranteed by the Directors ofthe Company, namely, Thomas John Muthoot, Thomas George Muthoot and Thomas Muthoot.

Security ofthe Loan from Banks

The Working Capital Demand Loans and Cash Credit facility have been obtained from the banks by creating First Charge on the entire current assets including gold loan receivables, hypothecation loans receivables, loan against company''s own debentures, Loan against Demand Promissory Notes and Other Current Assets ranking paripassu with other working capital lenders and Debenture Holders.

Rate of interest

Short Term Borrowings from banks carries interest at the rate of 10.2% to 14% perannum.

Loan from Directors

The company has entered into transactions involving receipts and payments of different amounts with the directors ofthe company. The company pays interest at 12% per annum. The balance outstanding as on March 3 1,2013 was Rs.768.25 Lakhs inclusive of interest accrued there on(March 31,2012: Rs.917.4I Lakhs).

1. DEFINED BENEFIT PLANS-GRATUITY PLAN

The company has entered into an arrangement with the LIC of India to cover the liability payable to the employees towards the gratuity under a Gratuity Trust Scheme based on Group Gratuity Cum Assurance Scheme of the LIC of India which is a defined benefit scheme and the company has to make contributions under such scheme.

2. EMPLOYEES DRAWING REMUNERATION IN EXCESS OF RS. 5 LAKHS PER MONTH FOR PART OR WHOLE OF THE YEAR

(I) Mr. Thomas George Muthoot, Managing Director, was paid Salary and allowances of Rs. I 15.44 Lakhs duringthe year ended March 3 1,2013 (2012: Rs. 62.65 Lakhs).

(ii) Mr. R. Manomohanan, Chief Executive Officer, was paid salary, allowances and commission on profits of Rs. 88.49 Lakhs.

3. CONTINGENT LIABILITIES NOT PROVIDED FOR

(Rs.in ''000)

Particulars As at

31 -Mar-13 3I-Mar-I2

Income Tax issues where the Company is in appeal 23 58

Cases remanded back to assessing authority on the basis ofthe appeal filed before Income Tax Appellate Tribunal by the Income Tax department. 5 52

The Company is ofthe opinion that the above demands are not sustainable and expects to succeed in its appeals / defense.

4. GENERAL

(i) Some of Receivables and Payables, Loans and Advances, Hypothecation loan, Deposits, Secured Bonds and Unsecured Loans are subject to confirmation/reconciliation due to non receipt of the statement of accounts and confirmation letters. Necessary adjustments if any in the accounts will be made on completion ofthe reconciliation/receipt of confirmation letters/statement of accounts.

(ii) Amount payable to Micro, Small And Medium Enterprises

There is no Micro, Small and Medium Enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006 to whom the Company owes dues on account of principal amount together with interest and accordingly no additional disclosures have been made.

The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

Mar 31, 2012

CORPORATE INFORMATION

Muthoot Capital Services Limited (the company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed in the Mumbai stock exchange in India. The Company is registered as a Non Banking Financial Company (NBFC) with Reserve Bank of India. During the year the Company is mainly engaged in asset financing activities, especially two wheelers and three wheelers.

Amounts in the financial statements are presented in thousands, except for per share data and as otherwise stated.

Refer to Note 2.29 for details of basic and diluted shares.

The Company has only one class of shares referred to as equity shares having a par value of Rs. 10.

Each holder of equity share is entitled to one vote per share.

The Company declares and pays dividends in Indian rupees. The dividend proposed by the board of directors is subjected to the approval of the shareholders in the ensuing Annual General Meeting.

The Board of Directors in their meeting on June 11, 2012 proposed a final dividend of Rs 3.5 per equity share. The total dividend appropriation for the year ended March 31, 2012 amounted to Rs. 507 lakhs including corporate dividend tax of Rs.71 lakhs.

During the year ended March 31, 2011, the amount of per share dividend recognized as distributions to equity shareholders was Rs. 3/-. The total dividend appropriation for the year ended March 31, 2011 amounted to Rs 226.63 lakhs including corporate divided tax of Rs. 31.63 lakhs.

In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive balance if any of the remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

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

The Company has issued 59,72,575 number of equity shares of Rs. 10/- each at a premium of Rs. 70/- by way of right issue and money raised by right issue has been utilized for the repayment of unsecured loan obtained from one of the promoters, general corporate purpose and right issue expenses of Rs. 4,272.78 lakhs, Rs. 468.45 lakhs and Rs. 36.83 lakhs respectively, as intended for the purpose of the issue.

Debenture Redemption reserve

As per the clarification regarding Debenture Redemption Reserve given in general Circular no. 9/2002 dated 18-4-2002 issued by the Department of Company affairs, of NBFCs registered with RBI u/s. 45-IA of the RBI (Amendment) Act, 1997, Debenture Redemption Reserve is not required in the case of privately placed debentures. The directors confirm that the company issued only privately placed secured non convertible debenture and hence it is not required to create Debenture Redemption Reserve u/s 117C of the Companies Act 1956 and accordingly the company did not create Debenture Redemption Reserve during the year ended March 31, 2012 and the debenture redemption reserve created in the earlier year is transferred to surplus in the statement of Profit and Loss as the debentures against which the reserve created is fully redeemed.

Term Loan

The company had obtained Term Loans from HDFC bank for acquiring two motor vehicles, having an outstanding balance of Rs. 1,81,456 ( 2011: Rs. 3,45,438) and Rs. 1,27,959 (2011: Rs 3,66,382) respectively. Both the vehicles have been hypothecated as security for the purpose of the loan. The first loan had been obtained at an interest rate of 10.17% p.a, repayable in 60 equal monthly installments. The latter loan had been obtained at an interest rate of 9.52% p.a, repayable in 36 equal monthly installments. The current maturities of the above loans have been classified under the head "Other Current Liabilities" (Note 2.6)

Debentures

The Company has issued Redeemable non-convertible debentures on private placement basis in various series. The debentures issued under each series have a repayment period depending on the scheme it falls under. The debentures are repaid within a period of 1 year to 5.5 years, depending on the schemes. The schemes range from Monthly, Annual and Maturity Interest Payment. The rate of interest on these debentures range from 10% to 19.63% p.a.

The issued debentures are secured by a first charge on all movable assets, book debts and receivables acquired by undertaking the business of Loan against Gold Jewellery, Hypothecation Loan and any other type of Loans, both present and future, created by the company.

Current portion of the interest accrued but not due on debentures Rs.101.76 lakhs is shown in Note: 2.6

Guaranteed Loans

The Working Capital Demand Loans and Cash Credit borrowings obtained from Banks have been personally guaranteed by the Directors of the Company, namely, Mr. Thomas John Muthoot, Mr. Thomas George Muthoot and Mr. Thomas Muthoot.

Security of the Loans from Banks

The Working Capital Demand Loans and Cash Credit borrowings have been obtained from the banks by creating first charge on the entire current assets including gold loan receivables, hypothecation loan receivables, loan against company's own debentures, loan against demand promissory notes and other current assets ranking paripassu with other working capital lenders and Debenture Trustees.

Rate of interest

Cash credit borrowings from banks carries interest at the rate of 12.75% to 13.50% per annum.

Loan from Directors

The company has entered into frequent transactions involving receipts and payments of different amounts with the directors of the company. The company pays interest at the rate of 12% per annum. The balance outstanding as on March 31, 2012 was Rs 6,81,52,937/- inclusive of interest accrued thereon. (March 31, 2011: Rs. 24,96,54,115/-)

Provision for Income Tax represents the tax provision remaining as on the balance sheet date after setting off the advance tax paid during the year against the tax due for the assessment year 2012-13 (31st March 2011 for the assessment year 2011-12).

Deferred tax asset and deferred tax liabilities have been offset wherever the Company has legally enforceable right to set off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxation authority.

Cash and cash equivalents as of March 31, 2012 include restricted cash and bank balances of Rs. 26 lakhs. The restrictions are primarily on account of cash and bank balances held as margin money deposits against guarantees.

The deposits maintained by the Company with banks comprise of time deposits, which can be withdrawn by the Company at any point without prior notice or penalty on the principal.

Out of the above Hypothecation loan, as on 31 March, 2012, Rs Nil was receivable from Related Party (March 31, 2011: Rs. 64,364).

Interest on hypothecation loans was recognized on accrual basis upto the current reporting date as against for the completed months upto the previous year. This resulted in an increase of interest on hypothecation loan by Rs.412.39 Lakhs for the year ended March 31, 2012

2.1 GRATUITY PLANS

The company has entered into an arrangement with the LIC of India to cover the liability payable to the employees towards the gratuity under a Gratuity Trust Scheme based on Group Gratuity Cum Assurance Scheme of the LIC of India which is a defined benefit scheme and the company has to make contributions under such scheme.

2.2 Related Party Disclosures

1. List of related parties as on March 31, 2012 is given below.

A. Particulars of companies/ Firms/Proprietorship where control / significant influence exists:

Sl. Name of the Company/Firm No.

1 Alaska Agri Projects And Hospitalities Private Limited

2 Bamboo Agri Projects And Hospitalities Private Limited

3 Buttercup Agri Projects And Hospitalities Private Limited

4 Calypso Agri Development And Hospitalities Private Limited

5 Cinnamon Agri Development And Hospitalities Pvt. Ltd.

6 Double Tails Agri Development And Hospitalities Private Limited

7 El Toro Agri Projects And Hospitalities Private Limited

8 Fireworks Agri Development And Hospitalities Private Limited

9 Flame Agri Projects And Hospitalities Private Limited

10 Fox Bush Agri Development And Hospitalities Private Limited

11 Goblin Agri Projects And Hospitalities Private Limited

12 Jungle Cat Agri Development And Hospitalities Private Limited

13 L. M. Realtors Private Limited

14 Linden Agri Ventures And Hospitalities Private Limited

15 Mandarin Agri Ventures And Hospitalities Private Limited

16 Mariposa Agri Ventures And Hospitalities Private Limited

17 Mpg Hotels And Infrastructure Ventures Pvt. Ltd.

18 Mpg Sports Academy Pvt Ltd.

19 Musk Agri Ventures And Hospitalities Private Limited

20 Muthoot Agri Development And Hospitalities Pvt. Ltd.

21 Muthoot Agri Projects And Hospitalities Pvt Ltd

22 Muthoot Agri Ventures And Hospitalities Pvt. Ltd.

23 Muthoot Apt Ceramics Ltd.

24 Muthoot Automobiles Solutions Private Ltd.

25 Muthoot Automotive (India) Pvt Ltd

26 Muthoot Buildtech (India) Private Limited

27 Muthoot Equities Ltd.

28 Muthoot Fincorp Ltd

29 Muthoot Holdings Private Limited

30 Muthoot Hotels Private Limited

31 Muthoot Housing Finance Company Ltd

32 Muthoot Infrastructure Ltd.

33 Muthoot Kuries Private Limited

34 Muthoot Land And Estates Private Limited

35 Muthoot Motors Private Ltd.

36 Muthoot Pappachan Medicare Private Limited

37 Muthoot Properties (India) Private Limited

38 Muthoot Risk Insurance And Broking Services Pvt Ltd

39 Palakkad Infrastructure Private Limited

40 Panchratna Securities Limited

41 Pine Pink Agri Ventures And Hospitalities Private Limited

42 The Right Ambeint Resorts Private Limited

43 Emmel Realtors And Developers Private Limited

44 Muthoot Exim Private Limited

45 Muthoot Bankers

46 Muthoot Cine Enterprises

47 Muthoot Estate Investments

48 Muthoot Finance Company

49 Muthoot Insurance Services

50 Muthoot Motors (Cochin)

51 MPG Asset Management Llp

52 MPG Land And Estate Llp

53 MPG Land Developers Llp

54 MPG Air Catering Llp

55 MPG Automobiles Llp

56 MPG Real Estate Llp

57 MPG Hospitality Llp

58 Muthoot Travel Online

2.3 LEASES

Obligation on Long Term Non cancellable operating leases

The operating lease arrangements are renewable on a periodic basis and relates to rented premises.The lease agreements have price escalation clauses.

2.4 CONTINGENT LIABILITIES NOT PROVIDED FOR (Rs. in '000)

Particulars As at 31-Mar-12 As at 31-mar-11

Contested claims not provided for : Cases remanded back to assessing authority on the basis of the appeal filed before Income Tax Appellate Tribunal By Income Tax department for the assessment years 2002-'03, 2003-'04 & 2005-'06 5 52 5 52

The Company is of the opinion that the above demands are not sustainable and expects to succeed in its appeals / defense.

2.5 GENERAL

2.5.1 Some of Receivables and Payables, Loans and Advances, Hypothecation loan, Deposits, Secured Bonds and Unsecured Loans are subject to confirmation/reconciliation due to non receipt of the statement of accounts and confirmation letters. Necessary adjustments if any in the accounts will be made on completion of the reconciliation/receipt of confirmation letters/statement of accounts.

2.5.2 Amount Payable To Micro,Small And Medium Enterprises

There is no Micro, Small and Medium Enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006 to whom the Company owes dues on account of Principal amount together with interest and accordingly no additional disclosures have been made.

The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

Note : Amount overdue Rs.43.48 lakhs in secured debentures represents debentures for which payments could not be made as claims were not received from debenture holders.

Mar 31, 2011

1. BALANCE SHEET

1.1 Debenture Redemption Reserve (DRR)

As per the clarification regarding Debenture Redemption Reserve given in general Circular no. 9/2002 dated 18-4-2002 issued by Department of Company Affairs, for NBFCs registered with RBI u/s. 45-IA of the RBI (Amendment) Act, 1997, Debenture Redemption Reserve is not required in the case of privately placed debentures. The Directors confirm that the Company issued only privately placed secured bonds and hence it is not required to create Debenture Redemption Reserve u/s 117C of the Companies Act, 1956, and accordingly the Company did not create Debenture Redemption Reserve during the year ended March 31, 2011.

1.2 Secured Loans

"Particulars of privately placed Secured Redeemable Bonds; Secured by a charge on all movable assets, book debts, receivables and advances including loans against security of gold created by the company"

Note:- The balance outstanding in respect of the secured redeemable debentures for which maturity attained on or before 31.03.2011 represents the amount not claimed by the Bondholders.

The year of redemption shown above is based on the maturity date of the bonds outstanding as on 31.03.2011.

1.3 Loans from Banks

a. ICICI Working Capital Demand Loan

The Company has availed a working capital loan of Rs.1,000 Lakhs from ICICI Bank Ltd as on the balance sheet date (31.03.2010 : Rs.2,000 Lakhs) by creating first charge on current assets of the Company ranking pari passu with other participating banks and debenture trustees and personal guarantee of the Chairman Mr. Thomas John Muthoot and the Directors Mr. Thomas George Muthoot and Mr. Thomas Muthoot.

b. Loans from State Bank of Travancore

As on the balance sheet date, the Company has availed a working capital demand loan of Rs.1,511.50 Lakhs (31.03.2010 : Rs.Nil) and cash credit of Rs.2,027.70 Lakhs (31.03.2010 : Rs.217.17 Lakhs) from State Bank of Travancore by creating first charge on the entire current assets including gold loan receivables, business loans receivables, vehicle loan receivables, loan against companys own bonds, DPN, ICD etc ranking pari passu with other working capital lenders and personal guarantee of the Chairman Mr. Thomas John Muthoot and the Directors Mr. Thomas George Muthoot and Mr. Thomas Muthoot.

c. Loan from HDFC Bank Ltd.

The Company has availed a working capital demand loan of Rs.1,511.59 Lakhs as on the balance sheet date (31.03.2010 : Rs.1,000 Lakhs) from HDFC Bank Ltd secured by first pari passu charge on the current assets of the Company including gold loan receivables and hire purchase receivable and personal guarantee of the Chairman Mr. Thomas John Muthoot and the Directors Mr. Thomas George Muthoot and Mr. Thomas Muthoot.

d. Loan From AXIS Bank Ltd.

The Company has availed a cash credit/working capital demand loan of Rs.1,017.57 lakhs as on the balance sheet date (March 31, 2010 : Rs.996.36 lakhs) from Axis Bank Ltd., secured by pari pasu first charge on entire current assets including loan receivables and personal guarantee of the Chairman Mr, Thomas John Muthoot and the directors Mr. Thomas Goerge Muthoot and Mr. Thomas Muthoot

e. Vehicle Loans From HDFC Bank Ltd.

The Company has availed hypothecation loans from HDFC Bank Ltd. for the purchase of 3 cars. The amount outstanding as on 31.03.2011 is Rs.7.12 Lakhs (31.03.2010 : Rs.11.02 Lakhs).

1.4. Unsecured Loans

a. Loan From Directors

The Company has entered into frequent recurring and repetitive transactions involving receipts and payments of different amounts with the Directors of the Company. The balance outstanding as on March 31, 2011 was Rs.2,924.64 Lakhs, inclusive of interest accrued thereon. (March 31, 2010 : Rs.2,240.43 Lakhs)

b. Inter Corporate Deposit

During the year the Company accepted a short term inter corporate deposit of Rs.3,000 Lakhs from M/s ECL Finance Limited to meet the working capital requirement.

1.5. Loans and Advances

Loans and advances includes gold Loans, loan against bonds, DPNs, deposits and other advances. (Grouped under Schedule G)

1.6. Current Liabilities & Provisions

a. To the extent identified with available information the Company does not owe any amount to Micro, Small and Medium Enterprises.

b. The Company provided an amount of Rs.12.75 Lakhs (31.03.2010 : Rs. NIL) to meet the unforseen losses/contingent liabilities, if any as on the balance sheet date.

2. PROFIT AND LOSS ACCOUNT

2.1 Retirement benefits

The Company has entered into an arrangement with the LIC of India to cover the liability payable to the employees towards gratuity under a Gratuity Trust Scheme based on Group Gratuity Cum Assurance Scheme of the LIC of India. The Gratuity Trust Scheme is a defined benefit scheme and the Company has to make contributions under such scheme.

2.2 Financial Expenses

"Interest on Other Borrowings" includes Rs.550.88 Lakhs (2009-10 : Rs.159.41 Lakhs) being interest paid/credited to Directors in respect of unsecured loans received from them."

2.3 "During the year the Company made a Provision of Rs.43.56 Lakhs being 0.25% of its Standard Assets as Per Notification No. DNBS.222/CGM(US)-2011 issued by the Reserve Bank of India on January 17, 2011."

3. GENERAL

3.1 i. Expenditure in Foreign currency Nil

ii. Earning in Foreign currency Nil

iii. Remittances in Foreign currency on account of dividend Nil

iv. C I F value of imports Nil

3.2 Some of the balances under Sundry debtors, Sundry creditors, Loans and advances, Stock on hire, Deposits, Secured Bonds and Unsecured loans are subject to confirmation/reconciliation due to non-receipt of the statements of accounts and confirmation letters. Necessary adjustments if any, in the accounts will be made on completion of the reconciliation/receipt of confirmation letter/statement of accounts.

3.3 Earnings Per Share

Basic and Diluted earning per equity share has been computed by dividing net profit after tax by the weighted average number of equity shares outstanding as on 31.03.2011.

3.4 Related Party Disclosures

Related Party Disclosures as required by AS-18 "Related party disclosures" issued by ICAI are given below. The related Parties are being recognized/identified by the management and relied up on by the auditors.

1 List of related parties as on March 31, 2011 is given below.

A List of companies/Firms where control/significant influence exists;

1) Alaska Agri Projects and Hospitalities Private Limited

2) Bamboo Agri Projects and Hospitalities Private Limited

3) Buttercup Agri Projects and Hospitalities Private Limited

4) Calypso Agri Development and Hospitalities Private Limited

5) Cinnamon Agri Development and Hospitalities Private Limited

6) Double Tails Agri Development and Hospitalities Private Limited

7) El Toro Agri Projects and Hospitalities Private Limited

8) EMMEL Realtors & Developers (P) Ltd.

9) Fireworks Agri Development and Hospitalities Private Limited

10) Flame Agri Projects and Hospitalities Private Limited

11) Fox Bush Agri Development and Hospitalities Private Limited

12) Goblin Agri Projects and Hospitalities Private Limited

13) Jungle Cat Agri Development and Hospitalities Private Limited

14) L.M Realtors Pvt Ltd.

15) Linden Agri Ventures and Hospitalities Private Limited

16) Mandarin Agri Ventures and Hospitalities Private Limited

17) Mariposa Agri Ventures and Hospitalities Private Limited

18) MPG Sports Academy Pvt Ltd.

19) Musk Agri Ventures and Hospitalities Private Limited

20) Muthoot Agri Development and Hospitalities Private Limited

21) Muthoot Agri Projects and Hospitalities Pvt Ltd.

22) Muthoot Agri Ventures and Hospitalities Private Limited

23) Muthoot APT Ceramics Ltd.

24) Muthoot Automotive India (P) Ltd.

25) Muthoot Bankers

26) Muthoot Buildtech (India) Private Limited

27) Muthoot Cine Enterprises (Kripa Theatres)

28) Muthoot Equities Limited

29) Muthoot Estate Investments

30) Muthoot Exim Pvt Ltd.

31) Muthoot Financiers

32) Muthoot Fincorp Ltd.

33) Muthoot Holdings Private Limited

34) Muthoot Hotels (P) Ltd.

35) Muthoot Hotels & Infrastructure Ventures (P) Ltd.

36) Muthoot Housing Finance Company Ltd.

37) Muthoot Infrastructure Ltd.

38) Muthoot Insurance Services

39) Muthoot Kuries Private Limited

40) Muthoot Land and Estates Private Limited

41) Muthoot Motors (Cochin)

42) Muthoot Motors Private Ltd.

43) Muthoot Pappachan Medicare Pvt Ltd.

44) Muthoot Properties (India) Private Limited

45) Muthoot Risk Insurance & Broking Services Ltd.

46) Muthoot Travel Online

47) Palakkad Infrastructure Pvt Ltd.

48) Pine Pink Agri Ventures and Hospitalities Private Limited

49) The Right Ambient Resorts Pvt Ltd.

B Name of the Key Managerial persons;

Sl No Name of the Person Designation

1) Thomas John Muthoot Chairman

2) Thomas George Muthoot Managing Director

3) Thomas Muthoot Director

C Relative of Key Managerial Personnel;

Key Managerial person Name of Relative Nature of Relationship

Thomas John Muthoot Mrs. Janamma Thomas Mother

Mrs. Preethi John Spouse

Ms. Susan John Muthoot Daughter

Mr. Thomas M John Son

Thomas George Muthoot Mrs. Nina George Spouse

Ms. Tina Suzanne George Daughter

Ms. Ritu Elizabeth George Daughter

Ms. Swetha Ann George Daughter

Thomas Muthoot Mrs. Remy Thomas Spouse

Ms. Suzannah Muthoot Daughter

Ms. Hannah Muthoot Daughter

4 Borrower group-wise classification of all leased assets, stockÃonÃhire and loans and advances

4.1 Contingent Liabilities

Contested claims not provided for: (Rs. In Lakhs)

Particulars As at 31.03.2011 As at 31.03.2010

Income Tax issues where the Company is in appeal 23.15 -

Decided in the Companys favour by Appellate Authorities and for which the Department is in further appeal with respect to Income Tax with Income Tax Appellate Tribunal 5.52 -

Note: The Company is of the opinion that the above demands are not sustainable and expects to succeed in its appeals / defence.

4.2 Previous years figures have been regrouped and rearranged wherever considered necessary to confirm to current years classifications.

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