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Notes to Accounts of Muthoot Finance Ltd.

Mar 31, 2023

22.1 Nature and purpose of reserve

(a) Statutory reserve

Statutory Reserve represents the Reserve Fund created under Section 45 IC of the Reserve Bank of India Act, 1934. Accordingly an amount representing 20% of Profit for the period is transferred to the fund for the year.

(b) Securities Premium

This Reserve represents the premium on issue of equity shares and can be utilized in accordance with the provisions of the Companies Act, 2013.

(c) Debenture Redemption Reserve

Pursuant to Rule 18(7)(b)(iii) of the Companies (Share Capital and Debentures) Rules, 2014, as amended vide the Companies (Share Capital and Debentures) Amendment Rules dated August 16, 2019, the Company, being an NBFC registered with the Reserve Bank of India under Section 45 IA of the RBI Act, 1934, is not required to create a Debenture Redemption Reserve, in respect of public issue of debentures and debentures issued by it on a private placement basis.

(d) General Reserve

Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of profit for the period at a specified percentage in accordance with applicable regulations. Consequent to introduction

of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of Companies Act, 2013.

(e) Share Options outstanding account

The fair value of equity settled share based payments transactions is recognised in the Statement of Profit and Loss with corresponding credit to Share option outstanding account.

(f) Retained earnings

This Reserve represents the cumulative profits of the Company. This Reserve can be utilized in accordance with the provisions of the Companies Act, 2013.

(g) Other Comprehensive Income

Equity instruments through Other Comprehensive Income

The Company has elected to recognise changes in the fair value of certain investments in equity securities in other comprehensive income. These changes are accumulated in the FVOCI equity investments reserve. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.

Effective portion of Cash Flow Hedges and Cost of Hedging Reserve

Effective portion of cash flow hedges represents the cumulative gains/(losses) arising on changes in fair value of the derivative instruments designated as cash flow hedges through OCI. The amount recognized as effective portion of Cash flow hedge is reclassified to profit or loss when the hedged item affects profit or loss. The company designates the spot element of foreign currency forward contracts as hedging instruments. The changes in the fair value of forward element of the forward contract on reporting date is deferred and retained in the cost of hedging reserve.

Remeasurement of defined benefit plans

It represents the gain/(loss) on remeasurement of Defined Benefit Obligation and of Plan assets

22.2 Dividend proposed to be distributed to equity shareholders for the period

Dividend proposed to be distributed to equity shareholders for the period (not recognised as liability)

Interim dividend for 2022-23 @ ^22/- per

equity share 8,831.86

Date of declaration of interim dividend for

the period April 06, 2023

Note 35: Retirement Benefit Plan Defined Contribution Plan

The Company makes contributions to Provident Fund which are defined contribution plan for qualifying employees. The Company recognized ^434.13 millions (March 31, 2022: ^404.44 millions) for Provident Fund contributions in the Statement of Profit and Loss.

Defined Benefit Plan

The Company has a defined benefit gratuity plan. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Every employee who has completed five years or more of service gets a gratuity on leaving the service of the company at 15 days salary (last drawn salary) for each completed year of service.

Gratuity liability is funded through a Gratuity Fund managed by Kotak Mahindra Old Mutual Life Insurance Limited and ICICI Prudential Life Insurance Company Limited.

The following tables summarise the components of net benefit expense recognized in the Statement of Profit and Loss and the funded status and amounts recognized in the Balance Sheet for the gratuity plan.

The sensitivity is performed on the DBO at the respective valuation date by modifying one parameter whilst retaining other parameters constant. There are no changes from the previous period to the methods and assumptions underlying the sensitivity analyses. The weighted average duration of the defined benefit obligation as at March 31, 2023 is 5 years (2022: 5 years).The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

Description of Asset Liability Matching (ALM) Policy

The Company primarily deploys its gratuity investment assets in insurer-offered debt market-linked plans. As investment returns of the plan are highly sensitive to changes in interest rates, the liability movement is broadly hedged by asset movement if the duration is matched.

Description of funding arrangements and funding policy that affect future contributions

The liabilities of the fund are funded by assets. The company aims to maintain a close to full-funding position at each Balance Sheet date. Future expected contributions are disclosed based on this principle.

The principal assumptions used in determining leave encashment obligations for the Company''s plans are shown below:

The discount rate is based on the prevailing market yields of Government of India securities as at the balance sheet date for the estimated term of the obligations. The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments, mortality, withdrawals and other relevant factors.

Note 38: Contingent liabilities, commitments and leasing arrangements

(A) Contingent Liabilities

Particulars

As at

March 31, 2023

A s at

March 31, 2022

(a) Claims against the company not acknowledged as debt

(i) Income Tax Demands

53.66

56.24

(ii) Service Tax Demands

4,995.05

4,995.05

(iii) Others

426.97

426.97

(iv) Disputed claims against the company under litigation

not acknowledged as debts

89.77

71.26

(b) Guarantees - Counter Guarantees Provided to Banks

88.01

88.19

(c) Corporate Guarantee issued in favour of National Housing Bank for loan availed by wholly owned subsidiary M/s Muthoot Homefin (India) Limited [Amount of Guarantee 12750 million (12250 million as at March 31,2022)]

1,940.91

1,466.41

(d) Others

-

-

('' in millions, except for share data and unless otherwise stated)

(B) Commitments

Particulars

As at

March 31, 2023

A s at

March 31, 2022

Estimated amount of contracts remaining to be executed on capital account, net of advances and not provided for

223.46

324.02

Commitments related to loans sanctioned but undrawn

9,549.28

18,461.96

(C) Lease Disclosures

Finance Lease :

The Company has not taken or let out any assets on financial lease.

Operating Lease :

Lease disclosures under Ind AS 116

All operating lease agreements entered into by the Company are cancellable in nature. Consequently, the Company has not recognised any right-of-use asset and lease liability during the year.

Lease rentals received for assets let out on operating lease ^6.76 millions (^3.73 millions for the year ended March 31, 2022) are recognized as income in the Statement of Profit and Loss under the head ''Other Income'' and lease rental payments for assets taken on an operating lease ^2,486.92 millions (^2,349.54 millions for the year ended March 31, 2022) are recognized as ‘Rent’ in the Statement of Profit and Loss.

Note 40: Capital Capital Management

The primary objective of the Company''s capital management policy is to ensure that the Company complies with externally imposed capital requirements and maintains strong credit ratings and healthy capital ratios in order to support its business and to maximise shareholder value.

Regulatory capital consists of CET1 capital, which comprises share capital, share premium, statutory reserve, share option outstanding account, retained earnings including current year profit less accrued dividends. Certain adjustments are made to Ind AS-based results and reserves, as prescribed by the Reserve Bank of India. The other component of regulatory capital is other Tier 2 Capital Instruments.

Note 41: Fair Value Measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e., an exit price), regardless of whether that price is directly observable or estimated using a valuation technique. In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques.

Valuation methodologies of financial instruments measured at fair value

Fair values of financial assets, other than those which are subsequently measured at amortised cost, have been arrived at as under:

Investments at fair value through profit or loss

For investments at fair value through profit and loss, valuation is done using quoted prices from active markets at the measurement date. The equity instruments which are actively traded on public stock exchanges with readily available active prices on a regular basis are classified as Level 1.

Derivative Financial Instruments (assets/liabilities) at fair value through other comprehensive income

The financial assets/liabilities on derivative contracts have been valued at fair value through other comprehensive income using closing rate and is classified as Level 2.

Investments at fair value through other comprehensive income

Equity instruments in non-listed entities are initially recognised at transaction price and re-measured as per fair valuation report on a case-by-case basis and classified as Level 2. The equity instruments which are actively traded on public stock exchanges with readily available active prices on a regular basis are classified as Level 1.

Financial instruments not measured at fair value

Set out below is a comparison, by class, of the carrying amounts and fair values of the Company''s financial instruments that are initially measured at fair value and subsequently carried at amortised cost in the financial statements. This table does not include the fair values of investments in subsidiaries measured at cost.

Valuation methodologies of financial instruments not measured at fair value Short-term financial assets and liabilities

For financial assets and financial liabilities that have a short-term maturity (less than twelve months), the carrying amounts, which are net of impairment, are a reasonable approximation of their fair value. Such instruments include cash and cash equivalents, trade receivables, balances other than cash and cash equivalents and trade payables without a specific maturity.

Loans and advances to customers

The fair values of loans and receivables are estimated by discounted cash flow models that incorporate assumptions for credit risks, probability of default and loss given default estimates. Since comparable data is not available, Credit risk is derived using historical experience, management view and other information used in its collective impairment models.

Fair values of portfolios are calculated using a portfolio-based approach, grouping loans as far as possible into homogenous groups based on similar characteristics i.e., type of loan. The Company then calculates and extrapolates the fair value to the entire portfolio using effective interest rate model that incorporate interest rate estimates considering all significant characteristics of the loans. The credit risk is applied as a top-side adjustment based on the collective impairment model incorporating probability of defaults and loss given defaults. Hence, the carrying amount of such financial assets at amortised cost net of impairment loss allowance is of reasonable approximation of their fair value.

Investments- at amortised cost

For Government Securities, the market value of the respective Government stock as on the date of reporting has been considered for fair value computations.

Debt Securities

The fair value of debt securities is estimated by a discounted cashflow model incorporating interest rate estimates from market observable data such as secondary prices for its traded debt itself.

Financial liabilities at amortised cost

The fair values of financial liabilities held-to-maturity (financial liabilities other than trade payables and debt securities) are estimated using effective interest rate model based on contractual cash flows using actual yields. Since the cost of borrowing on the reporting date is not expected to be significantly different from the actual yield considered under effective interest rate model, the carrying value of such financial liabilities at amortised cost is considered a reasonable approximation of their fair value.

Note 42: Risk Management

The Company addresses credit risk through

following processes:

a) Credit risk on Gold loan is considerably reduced as collateral is in the form of Gold ornaments which can be easily liquidated and there is only a distant possibility of losses due to adequate margin of 25% or more retained while disbursing the loan. Credit risk is further reduced through a quick but careful collateral appraisal and loan approval process. Hence overall, the Credit risk is normally low.

b) Sanctioning powers for Gold Loans is delegated to various authorities at branches/controlling offices. Sanctioning powers are used only for granting loans for legally permitted purposes. The maximum Loan to Value does not exceed the limit stipulated by the Reserve Bank of India under any circumstances.

c) Gold ornaments brought for pledge is the primary responsibility of Branch Manager. Branch executives should enquire with the customers about the ownership of the ornaments being pledged for loan and the loan should be granted only after they are convinced about the genuineness of the customer and his capacity to own that much quantity of gold. In addition to the above, customers are also required to sign a declaration of ownership of ornaments offered as security for the loan. Extra care is taken if the gold jewellery brought for pledge by any customer at any one time or cumulatively is more than 20 gm. The declaration should also contain an explanation specifically as to how the ownership was vested with the customer.

d) Auctions are conducted as per the Auction Policy of the Company and the guidelines issued by Reserve Bank of India. Auction is generally conducted before loan amount plus interest exceeds realizable value of gold. After reasonable time is given to the customers for release after loan becomes overdue and on exhausting all efforts for persuasive recovery, auction is resorted to as the last measure in unavoidable cases. Company has the right to recover dues remaining evenafter set off of amount received on auctions from the customer. Any excess amount received on auctions over and above the dues are refunded to the customer.

The Company''s principal financial liabilities comprise borrowings and trade and other payables. The main purpose of these financial liabilities is to finance and support the Company''s operations. The Company''s principal financial assets include loans, investments, cash and cash equivalents and other receivables that are derived directly from its operations. As a financial lending institution, Company is exposed to various risks that are related to lending business and operating environment. The principal objective in Company''s risk management processes is to measure and monitor the various risks that Company is subject to and to follow policies and procedures to address such risks.

The Company’s Risk Management Committee of the Board of Directors constituted in accordance with the Reserve Bank of India regulations has overall responsibility for overseeing the implementation ofthe Risk Management Policy. The committee meets at least twice in a year to review the Risk Management practices. Risk Management department periodically places its report to the committee for review. The committee’s suggestions for improving the Risk Management Practices are implemented by the Risk Management department.

Risk Management department shall be responsible for the following:

a) Identifying the various risks associated with the activities of the Company and assessing their impact on the business.

b) Measuring the risks and suggesting measures to effectively mitigate the risks.

However, the primary responsibility for managing the various risks on a day to day basis will be with the heads of the respective business units of the Company."

The Company is generally exposed to credit risk, liquidity risk, market risk and operational risk.

I) Credit Risk

Credit Risk arises from the risk of loss that may occur from the default of Company''s customers under loan agreements. Customer defaults and inadequate collateral may lead to loan losses.

e) In case of loans other than Gold Loan, loans are given whether with primary/collateral security, like secured loans or without any primary/ collateral security like unsecured loans, more than ordinary care is taken such that loans are granted only to persons/firms/companies of repute with credit worthiness, future cash flows to repay the loan and track record.

Impairment Assessment

The Company is mainly engaged in the business of providing gold loans. The tenure of the loans generally is for 12 months.

The Company also provides unsecured personal loans to salaried individuals and unsecured loans to traders and self employed. The tenure of the loans ranges from 12 months to 60 months.

The Company also provides loans to corporate entities which are secured/ unsecured for periods upto 3 years.

The Company''s impairment assessment and

measurement approach is set out in this note. It should be read in conjunction with the Summary of significant accounting policies.

The Company considers a financial instrument as defaulted and therefore Stage 3 (credit-impaired) for Expected Credit Loss (ECL) calculations in all cases when the borrower becomes 91 days past due including the due date on its contractual payments.

As a part of a qualitative assessment of whether a customer is in default, the Company also considers a variety of instances that may indicate unlikeness to pay. When such events occur, the Company carefully considers whether the event should result in treating the customer as defaulted and therefore assessed as Stage 3 for ECL calculations.

It is the Company’s policy to consider a financial instrument as ''cured'' and therefore re-classified out of Stage 3 only when none of the default criteria have been present . The decision whether to classify an asset as Stage 2 or Stage 1 once cured depends on the updated credit grade, at the time of the cure, and whether this indicates there has been a significant increase in credit risk compared to initial recognition.

Exposure at Default (EAD)

The Exposure at Default is an estimate of the exposure at a future default date, considering expected changes in the exposure after the reporting date, including repayments of principal and interest, whether scheduled by contract or otherwise, expected drawdowns on committed facilities, and accrued interest.

The Probability of Default is an estimate of the likelihood of default over a given time horizon. For Stage 1 financial assets, the Company assesses the possible default events within 12 months for the calculation of the 12 month ECL. For Stage 2 and Stage 3 financial assets, the exposure at default is considered for events over the lifetime of the instruments. The Company uses historical information wherever available to determine PD. PD is calculated using Incremental 91 DPD approach considering fresh slippage using historical information. Where historical information is not available, the PD/ default rates as stated by external reporting agencies is considered.

Based on its review of macro-economic developments and economic outlook, the Company has assessed that no adjustment is required for temporary overlays to determine qualitative impact on its PD''s as at March 31, 2023 and March 31, 2022. Reference is drawn to Note 65 which explains the impact of COVID-19 pandemic.

Loss Given Default (LGD)

LGD is the estimated loss that the Company might suffer if the borrower defaults. The Company determines its recovery (net present value) by analysing the recovery trends, borrower rating, collateral value and expected proceeds from sale of asset/collateral.

LGD Rates have been computed internally based on the discounted recoveries in defaulted accounts that are closed/ written off/ repossessed and upgraded during the year.

When estimating ECLs on a collective basis for a group of similar assets, the Company applies the same principles for assessing whether there has been a significant increase in credit risk since initial recognition.

Company has adopted 65% as the LGD which is the rate drawn reference from Internal Rating Based (IRB) approach guidelines issued by Reserve Bank of India for Banks to calculate LGD where sufficient past information is not available.

III) Market risk

Market Risk is the risk that the fair value or the future cash flows of a financial instrument will fluctuate because of changes in market factor. Such changes in the values of financial instruments may result from changes in the interest rates, credit, liquidity, and other market changes. The objective of market risk management is to avoid excessive exposure of our earnings and equity to loss and reduce our exposure to the volatility inherent in financial instruments. The Company is exposed to four types of market risk as follows:

a) Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is subject to interest rate risk, primarily since it lends to customers at fixed rates and for maturity periods shorter than the funding sources. Majority of our borrowings are at fixed rates . However, borrowings at floating rates gives rise to interest rate risk. Interest rates are highly sensitive to many factors beyond control, including the monetary policies of the Reserve Bank of India, domestic and international economic and political conditions, inflation and other factors. In order to manage interest rate risk, the Company seek to optimize borrowing profile between short-term and long-term loans. The Company adopts funding strategies to ensure diversified resource-raising options to minimize cost and maximize stability of funds. Assets and liabilities are categorized into various time buckets based on their maturities and Asset Liability Management Committee supervise an interest rate sensitivity report periodically for assessment of interest rate risks. The Interest Rate Risk is mitigated by availing funds at very competitive rates through diversified borrowings and for different tenors.

b) Price risk

Sudden fall in the gold price and fall in the value of the pledged gold ornaments can result in some of the customers to default if the loan amount and interest exceeds the market value of gold. This risk is in part mitigated by a minimum 25% margin retained on the value of gold jewellery for the purpose of calculation of the loan amount. Further, we appraise the gold jewellery collateral solely based on the weight of its gold content, excluding weight and value of the stone studded in the jewellery. In addition, the sentimental value of the gold jewellery to the customers may induce repayment and redemption of the collateral even if the value of gold ornaments falls below the value of the repayment amount. An occasional decrease in gold prices will not increase price risk significantly on account of our adequate collateral security margins. However, a sustained decrease in the market price of gold can additionally cause a decrease in the size of our loan portfolio and our interest income.

Equity price risk is the risk that the fair value of equities decrease as the result of changes in level of equity indices and individual stocks. The trading equity price risk exposure arises from equity securities classified at FVTPL and the non-trading equity price risk exposure arises from equity securities classified at FVOCI.

c) Foreign currency risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Foreign currency risk for the Company arises majorly on account of foreign currency borrowings. The Company''s foreign currency exposures are managed in accordance with its Foreign Exchange Risk Management Policy which has been approved by its Board of Directors. The Company has hedged its foreign currency risk on its foreign currency borrowings as on March 31, 2023 by entering into forward contracts with the intention of covering the entire term of foreign currency exposure . The counterparties for such hedge transactions are banks.

Since the foreign currency exposure is completely hedged by equivalent derivative instrument, there will not be any significant impact on sensitivity analysis due to the possible change in the exchange rates where all other variables are held constant. On the date of maturity of the derivative instrument, considering the hedging for the entire term of the foreign currency exposure, the sensitivity of profit and loss to changes in the exchange rates will be Nil.

d) Prepayment risk

Prepayment risk is the risk that the Company will incur a financial loss because its customers and counterparties repay or request repayment earlier than expected, such as fixed rate loans when interest rates fall.

IV) Operational and business risk

Operational risk is the risk of loss arising from systems failure, human error, fraud or external events. When controls fail to operate effectively, operational risks can cause damage to reputation, have legal or regulatory implications, or lead to financial loss. The Company cannot expect to eliminate all operational risks, but it endeavours to manage these risks through a control framework and by monitoring and responding to potential risks. Controls include effective segregation of duties, access, authorisation and reconciliation procedures, staff education and assessment processes including the use of internal audit.

Note 43: Disclosure with regard to dues to Micro Enterprises and Small Enterprises

Based on the information available with the Company and which has been relied upon by the auditors, none of the suppliers have confirmed to be registered under "The Micro, Small and Medium Enterprises Development (‘MSMED’) Act, 2006". Accordingly, no disclosures relating to principal amounts unpaid as at the period ended March 31, 2023 together with interest paid /payable are required to be furnished.

Note 44: Dividend remitted in foreign currency

There was no dividend remitted in foreign currency during the year ended March 31, 2023 and March 31, 2022.

Note 45: Segment reporting

The Company is engaged in the business segment of Financing, whose operating results are regularly reviewed by the entity''s chief operating decision maker to make decisions about resources to be allocated and to assess its performance, and for which discrete financial information is available. Further other business segments do not exceed the quantitative thresholds as defined by the Ind AS 108 on "Operating Segment". Hence, there are no separate reportable segments, as required by the Ind AS 108 on "Operating Segment".

Note 46: Share based payments

Pursuant to approval by the shareholders at their meeting held on September 27, 2013, the Company has established "Muthoot ESOP 2013" scheme administered by the ESOP Committee of Board of Directors. The following options were granted as on March 31, 2023. The fair value of the share options is estimated at the grant date using a Black-Scholes pricing model, taking into account the terms and conditions upon which the share options were granted. However, the above performance condition is only considered in determining the number of instruments that will ultimately vest.

Note 47: Utilization of proceeds of Public Issue of Non - Convertible Debentures

The Company has during the year raised through public issue ^13,233.59 millions of Secured Redeemable Non-Convertible Debentures. As at March 31, 2023, the company has utilised the entire proceeds of the public issue, net of issue expenses in accordance with the objects stated in the offer documents.

Note 48: Corporate Social Responsibility (CSR)

The Company has constituted CSR Committee and has undertaken CSR activities in accordance with Schedule VII to the Companies Act, 2013. The gross amount required to be spent by the Company as per Section 135 of the Companies Act, 2013 for the year ended March 31,2023 was ^957.45 millions (March 31, 2022: ^808.68 millions) and the Company has spent ^964.40 millions during the year (March 31, 2022: ^811.40 millions).The Board of Directors has passed a resolution to carry forward the excess amount spent of 16.95 million for utilisation in future years upto a period of three years. Details are as below:

There is no shortfall in the CSR amount required to be spent by the Company as per section 135(5) of the Act for the financial year ended March 31, 2023 and March 31, 2022.

CSR activities include activities for employment enhancing vocational skills, social business projects, promotion of education, promoting and supporting technology and innovations, promoting sports activities, medical assistance to poor patients, environmental protection activities and activities for sustainable development, and various other activities including assistance and support in disaster management activities which are specified under Schedule VII of Companies Act, 2013.

Note 49: Investments in Subsidiaries

During the financial year 2022-23, the Company has acquired 1,47,060 equity shares of the face value of 110 each in Belstar Microfinance Limited for a total consideration of 150.00 millions.

Note 50: Frauds during the year

During the year, frauds committed by employees and customers of the company amounted to 152.16 millions (March 31, 2022: 113.30 millions) which has been recovered /written off / provided for. Of the above, fraud by employees of the company amounted to 139.47 millions (March 31,2022: 16.35 millions).

(vi) Institutional set-up for Liquidity Risk Management

The Board shall have the overall responsibility for management of liquidity risk. The Board shall decide the strategy, policies and procedures to manage liquidity risk in accordance with the liquidity risk tolerance/limits decided by it from time to time.

The ALM Committee of the Board of Directors shall be responsible for evaluating the liquidity risk.

The Asset-Liability Management Committee (ALCO) consisting of the NBFC''s top management shall be responsible for ensuring adherence to the risk tolerance/limits set by the Board as well as implementing the liquidity risk management strategy of the NBFC. The Managing Director heads the Committee. The role of the ALCO with respect to liquidity risk include, inter alia, decision on desired maturity profile and mix of incremental assets and liabilities, sale of assets as a source of funding, the structure, responsibilities and controls for managing liquidity risk, and overseeing the liquidity positions of the Company.

The ALM Support Group headed by Chief Financial Officer and consisting of operating staff who will be responsible for analysing, monitoring and reporting the liquidity risk profile to the ALCO.

8. Details of the Auctions conducted with respect to Gold Loan

The Company auctioned 4,60,267 loan accounts (Previous Year: 9,51,143 accounts) during the financial year. The outstanding dues on these loan accounts were 132,244.91 millions (March 31, 2022: 174,405.94 millions) till the respective date of auction. The Company realised 129,419.12 millions (March 31, 2022: 165,370.15 millions) on auctioning of gold jewellery taken as collateral security on these loans. Company confirms that none of its sister concerns participated in the above auctions.

Disclosures on risk exposures of derivatives Qualitative disclosures

The Company has a Board approved policy in dealing with derivative transactions.The Company undertakes derivative transactions for hedging its foreign currency exposures to mitigate the foreign currency risk and interest rate risk on certain domestic currency exposures linked to external benchmark. During the year, the company has hedged its foreign currency borrowings through foreign exchange forward contracts and Cross Currency Swaps and interest rate risk on certain domestic currency exposures linked to external benchmark through Interest Rate Swaps . The Asset Liability Management Committee monitors such transactions and reviews the risks involved.

The aggregate impairment loss on application of expected credit loss method (ECL) as per lnd AS, as stated above, is more than the provisioning required under IRACP norms (including standard asset provisioning). Further, as stated in Note 19.1 the company has retained provision in excess of ECL in the books of account as a matter of prudence.

Note 54: Disclosure on Liquidity Coverage Ratio

Disclosure as per the circular no. RBI/2019-20/88 DOR.NBFC (PD) CC. No.102/03.10.001/2019-20 dated November 04, 2019 issued by Reserve Bank of India regarding Liquidity Coverage Ratio (LCR)

Maintenance of Liquidity Coverage Ratio (LCR)

Reserve Bank Of India vide its notification no. RBI/2019-20/88 DOR.NBFC (PD) CC. No.102/03.10.001/ 2019-20 dtd November 04,2019 introduced Liquidity Coverage Ratio for certain categories of NBFCs w.e.f December 01,2020 . All non-deposit taking NBFCs with asset size of ^10,000 crore and above, and all deposit taking NBFCs irrespective of their asset size, shall maintain a liquidity buffer in terms of LCR which will promote resilience of NBFCs to potential liquidity disruptions by ensuring that they have sufficient High Quality Liquid Asset (HQLA) to survive any acute liquidity stress scenario lasting for 30 days. The stock of HQLA to be maintained by the NBFCs shall be minimum of 100% of total net cash outflows over the next 30 calendar days. The LCR requirement shall be binding on NBFCs from December 1, 2020 with the minimum HQLAs to be held being 50% of the LCR, progressively reaching up to the required level of 100% by December 1, 2024, as per the time-line given below:

From

December 1, 2020

December 1, 2021

December 1, 2022

December 1, 2023

December 1, 2024

Minimum LCR

50%

60%

70%

85%

100%

B) Qualitative Disclosure

The Company has adopted Liquidity Risk Management (LRM) framework on liquidity standards as prescribed by the RBI guidelines and has put in place requisite systems and processes to enable periodical computation and reporting of the Liquidity Coverage Ratio (LCR). The mandated regulatory threshold is embedded into the Liquidity Risk Management framework of the Company thus subjecting LCR maintenance to Board oversight and periodical review. The Company computes the LCR and reports the same to the Asset Liability Management Committee (ALCO) as well as to the ALM Committee of the Board.

The Company follows the criteria laid down by RBI for calculation of High Quality Liquid Assets (HQLA), gross cash outflows and inflows within the next 30-day period. HQLA predominantly comprises unencumbered Cash and Bank balances, Government securities (viz., Treasury Bills, Central and State Government securities, Investments in TREPs (Triparty Repo trades in Government Securities provided by The Clearing Corporation of India)).

All significant outflows and inflows determined in accordance with RBI guidelines are included in the prescribed LCR computation template.

The Company monitors the concentration of funding sources from significant counterparties, significant instruments/ products as part of the LRM framework. The Company follows internal limits on short term borrowings which form part of the LRM framework. The Company''s funding sources are fairly dispersed across sources and maturities.

The Board shall have the overall responsibility for management of liquidity risk. The Board shall decide the strategy, policies and procedures to manage liquidity risk in accordance with the liquidity risk tolerance/limits decided by it from time to time.

The ALM Committee of the Board of Directors shall be responsible for evaluating the liquidity risk.

The Asset-Liability Management Committee (ALCO) consisting of the NBFC’s top management shall be responsible for ensuring adherence to the risk tolerance/limits set by the Board as well as implementing the liquidity risk management strategy of the NBFC. The Managing Director heads the Committee. The role of the ALCO with respect to liquidity risk include, inter alia, decision on desired maturity profile and mix of incremental assets and liabilities, sale of assets as a source of funding, the structure, responsibilities and controls for managing liquidity risk, and overseeing the liquidity positions of the Company.

The ALM Support Group headed by Chief Financial Officer and consisting of operating staff will be responsible for analysing, monitoring and reporting the liquidity risk profile to the ALCO.

Note 56: Details of Benami Property Held

No proceedings have been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder in the financial years ended March 31, 2023 and March 31, 2022.

Note 57: Wilful Defaulter

The Company has not been declared as a wilful defaulter by any bank or financial institution or other lender in the financial years ended March 31, 2023 and March 31, 2022.

Note 58: Relationship with struck off Companies

The company has no transaction with the companies struck off under section 248 of Companies Act, 2013 or section 560 of Companies Act, 1956.

Note 59: Registration of Charges or satisfaction with Registrar of Companies (ROC)

All charges or satisfaction are registered with ROC within the statutory period for the financial years ended March 31, 2023 and March 31, 2022. No charges or satisfactions are yet to be registered with ROC beyond the statutory period.

Note 60: Compliance with number of layers of companies

The number of layers prescribed under section 2(87) of the Companies Act 2013 read with the Companies (Restriction on number of Layers) Rules, 2017, is not applicable to the company

Note 61: Compliance with approved Scheme(s) of Arrangements

The Company has not entered into any Scheme of Arrangements which requires the approval of the Competent Authority in terms of sections 230 to 237 of the Companies Act,2013 for the financial years ended March 31, 2023 and March 31, 2022.

Note 62: Utilisation of Borrowed funds and Share premium

The Company, as part of its normal business, grants loans and advances, makes investment, accept non-convertible debentures from its customers, other entities and persons and borrows money from banks, financial institutions, other entities and persons. These transactions are part of Company''s normal non-banking finance business, which is conducted ensuring adherence to all regulatory requirements.

We state that no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to any other persons or entities, including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall directly, or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.

The Company has not received any funds from any other persons or entities, including foreign entities (Funding Party) with the understanding whether recorded in writing or otherwise, that the Company shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

Note 63: Undisclosed Income

The company does not have any transaction that are not recorded in the books of account but has been surrendered or disclosed as income during the year in tax assessments under the Income tax Act, 1961 (such as search or survey or any other relevant provision under Income Tax Act 1961) and there was no instance of previously unrecorded income as above to be recorded in the books of accounts during the year.

Note 64: Details of Crypto Currency or Virtual Currency

The Company has not traded or invested in Crypto currency or Virtual currency during the financial years ended March 31, 2023 and March 31, 2022.

Note 65: Impact of COVID-19

The global outbreak of Coronavirus (COVID-19) pandemic has not caused any significant impact on the operations and financial position of the Company for the year and previous year.

Hence in the opinion of the management the impairment loss as stated in Note 8 and provision as stated in Note 19.1 are considered adequate.

Note 66: Other Developments

The Code on Social Security, 2020 (the Code) has been enacted, which would impact contribution by the Company towards Provident Fund and Gratuity. The impact of changes if any arising on enactment of the Code will be assessed by the company after the effective date of the same and the rules thereunder are notified.

Note 67: Previous year''s figures have been regrouped/rearranged, wherever necessary to conform to current year’s classifications/disclosure.

Notes on accounts form part of standalone financial statements As per our report of even date attached


Mar 31, 2022

22.1 Nature and purpose of reserve

(a) Statutory reserve

Statutory Reserve represents the Reserve Fund created under Section 45 IC of the Reserve Bank of India Act, 1934. Accordingly an amount representing 20% of Profit for the period is transferred to the fund for the year.

(b) Securities Premium

This Reserve represents the premium on issue of equity shares and can be utilized in accordance with the provisions of the Companies Act, 2013.

(c) Debenture Redemption Reserve

Pursuant to Rule 18(7)(b)(iii) of the Companies (Share Capital and Debentures) Rules, 2014, as amended vide the Companies (Share Capital and Debentures) Amendment Rules dated August 16, 2019, the Company, being an NBFC registered with the Reserve Bank of India under Section 45 IA of the RBI Act, 1934, is not required to create a Debenture Redemption Reserve, in respect of public issue of debentures and debentures issued by it on a private placement basis.

(d) General Reserve

Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of profit for the period at a specified percentage in accordance with applicable regulations. Consequent to introduction of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of Companies Act, 2013.

(e) Share Options outstanding account

The fair value of equity settled share based payments transactions is recognised in the Statement of Profit and Loss with corresponding credit to Share option outstanding account.

(f) Retained earnings

This Reserve represents the cumulative profits of the Company. This Reserve can be utilized in accordance with the provisions of the Companies Act, 2013.

(g) Other Comprehensive Income Equity instruments through Other Comprehensive Income

The Company has elected to recognise changes in the fair value of certain investments in equity securities in other comprehensive income. These changes are accumulated in the FVOCI equity investments reserve. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.

Effective portion of Cash Flow Hedges and Cost of Hedging Reserve

Effective portion of cash flow hedges represents the cumulative gains/(losses) arising on changes

('' in millions, except for share data and unless otherwise stated)

in fair value of the derivative instruments designated as cash flow hedges through OCI. The amount recognized as effective portion of Cash flow hedge is reclassified to profit or loss when the hedged item affects profit or loss. The company designates the spot element of foreign currency forward contracts as hedging instruments. The changes in the fair value of forward element of the forward contract on reporting date is deferred and retained in the cost of hedging reserve.

Remeasurement of defined benefit plans

It represents the gain/(loss) on remeasurement of Defined Benefit Obligation and of Plan assets

22.2 Dividend proposed to be distributed to equity shareholders for the period Dividend proposed to be distributed to equity shareholders for the period (not recognised as liability)

Interim dividend for 2021-22: ^20/- 8,026.91

per share

Date of declaration of interim April 18, 2022

dividend for the period

Defined Benefit Plan

The Company has a defined benefit gratuity plan. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Every employee who has completed five years or more of service gets a gratuity on leaving the service of the company at 15 days salary (last drawn salary) for each completed year of service.

Gratuity liability is funded through a Gratuity Fund managed by Kotak Mahindra Old Mutual Life Insurance Limited and ICICI Prudential Life Insurance Company Limited.

The following tables summarise the components of net benefit expense recognized in the Statement of Profit and Loss and the funded status and amounts recognized in the Balance Sheet for the gratuity plan.

The sensitivity is performed on the DBO at the respective valuation date by modifying one parameter whilst retaining other parameters constant. There are no changes from the previous period to the methods and assumptions underlying the sensitivity analyses. The weighted average duration of the defined benefit obligation as at March 31, 2022 is 5 years (2021:

5 years).The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

Description of Asset Liability Matching (ALM) Policy

The Company primarily deploys its gratuity investment assets in insurer-offered debt market-linked plans. As investment returns of the plan are highly sensitive to changes in interest rates, liability movement is broadly hedged by asset movement if the duration is matched.

Description of funding arrangements and funding policy that affect future contributions

The liabilities of the fund are funded by assets. The company aims to maintain a close to full-funding position at each Balance Sheet date. Future expected contributions are disclosed based on this principle.

The principal assumptions used in determining leave encashment obligations for the Company''s plans are shown below:

The discount rate is based on the prevailing market yields of Government of India securities as at the balance sheet date for the estimated term of the obligations. The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments, mortality, withdrawals and other relevant factors.

Regulatory capital consists of CET1 capital, which comprises share capital, share premium, statutory reserve, share option outstanding account, retained earnings including current year profit. Certain adjustments are made to Ind AS-based results and reserves, as prescribed by the Reserve Bank of India. The other component of regulatory capital is other Tier 2 Capital Instruments.

Note 41: Fair Value Measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e., an exit price), regardless of whether that price is directly observable or estimated using a valuation technique. In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques.

Valuation methodologies of financial instruments measured at fair value

Fair values of financial assets, other than those which are subsequently measured at amortised cost, have been arrived at as under:

Investments at fair value through profit or loss

For investments at fair value through profit and loss, valuation is done using quoted prices from active markets at the measurement date. The equity instruments which are actively traded on public stock exchanges with readily available active prices on a regular basis are classified as Level 1. Units held in mutual funds are measured based on their published net asset value (NAV), taking into account redemption and/or other restrictions are generally Level 1.

Derivative Financial Instruments (assets/liabilities) at fair value through other comprehensive income

The financial assets/liabilities on derivative contracts have been valued at fair value through other comprehensive income using closing rate and is classified as Level 2

Investments at fair value through other comprehensive income

Equity instruments in non-listed entities are initially recognised at transaction price and re-measured as per fair valuation report on a case-by-case basis and classified as Level 2 . The equity instruments which are actively traded on public stock exchanges with readily available active prices on a regular basis are classified as Level 1.

Financial instruments not measured at fair value

Set out below is a comparison, by class, of the carrying amounts and fair values of the Company''s financial instruments that are initially measured at fair value and subsequently carried at amortised cost in the financial statements. This table does not include the fair values of investments in subsidiaries measured at cost.

Valuation methodologies of financial instruments not measured at fair value Short-term financial assets and liabilities

For financial assets and financial liabilities that have a short-term maturity (less than twelve months), the carrying amounts, which are net of impairment, are a reasonable approximation of their fair value. Such instruments include cash and cash equivalents, trade receivables, balances other than cash and cash equivalents and trade payables without a specific maturity.

Loans and advances to customers

The fair values of loans and receivables are estimated by discounted cash flow models that incorporate assumptions for credit risks, probability of default and loss given default estimates. Since comparable data is not available, Credit risk is derived using historical experience, management view and other information used in its collective impairment models.

Fair values of portfolios are calculated using a portfolio-based approach, grouping loans as far as possible into homogenous groups based on similar characteristics i.e., type of loan. The Company then calculates and extrapolates the fair value to the entire portfolio using effective interest rate model that incorporate interest rate estimates considering all significant characteristics of the loans. The credit risk is applied as a top-side adjustment based on the collective impairment model incorporating probability of defaults and loss given defaults. Hence, the carrying amount of such financial assets at amortised cost net of impairment loss allowance is of reasonable approximation of their fair value.

Investments- at amortised cost

For Government Securities,the market value of the respective Government stock as on the date of reporting has been considered for fair value computations.

Debt Securities

The fair value of debt securities is estimated by a discounted cashflow model incorporating interest rate estimates from market observable data such as secondary prices for its traded debt itself.

Financial liabilities at amortised cost

The fair values of financial liabilities held-to-maturity (financial liabilities other than trade payables and debt securities) are estimated using effective interest rate model based on contractual cash flows using actual yields. Since the cost of borrowing on the reporting date is not expected to be significantly different from the actual yield considered under effective interest rate model, the carrying value of such financial liabilities at amortised cost is considered a reasonable approximation of their fair value.

Note 42: Risk Management

The Company''s principal financial liabilities comprise borrowings and trade and other payables. The main purpose of these financial liabilities is to finance and support the Company’s operations. The Company''s principal financial assets include loans, investments, cash and cash equivalents and other receivables that are derived directly from its operations.

As a financial lending institution, Company is exposed to various risks that are related to lending business and operating environment. The principal objective in Company''s risk management processes is to measure and monitor the various risks that Company is subject to and to follow policies and procedures to address such risks.

The Company''s Risk Management Committee of the Board of Directors constituted in accordance with the Reserve Bank of India regulations has overall responsibility for overseeing the implementation of the Risk Management Policy. The committee meets at least twice in a year to review the Risk Management practices. Risk Management department periodically places its report to the committee for review. The committee''s suggestions for improving the Risk Management Practices are implemented by the Risk Management department.

Risk Management department shall be responsible for the following:

a) Identifying the various risks associated with the activities of the Company and assessing their impact on the business.

b) Measuring the risks and suggesting measures to effectively mitigate the risks.

The Company is generally exposed to credit risk, liquidity risk, market risk and operational risk.

I) Credit Risk

Credit Risk arises from the risk of loss that may occur from the default of Company''s customers under loan agreements.

Customer defaults and inadequate collateral may lead to loan losses.

The Company addresses credit risk through following processes:

a) Credit risk on Gold loan is considerably reduced as collateral is in the form of Gold ornaments which can be easily liquidated and there is only a distant possibility of losses due to adequate margin of 25% or more retained while disbursing the loan. Credit risk is further reduced through a quick but careful collateral appraisal and loan approval process. Hence overall, the Credit risk is normally low.

b) Sanctioning powers for Gold Loans is delegated to various authorities at branches/controlling offices. Sanctioning powers are used only for granting loans for legally permitted purposes. The maximum Loan to Value does not exceed the limit stipulated by the Reserve Bank of India under any circumstances.

c) Gold ornaments brought for pledge is the primary responsibility of Branch Manager. Branch executives should enquire with the customers about the ownership of the ornaments being pledged for loan and the loan should be granted only after they are convinced about the genuineness of the customer and his capacity to own that much quantity of gold. In addition to the above, customers are also required to sign a declaration of ownership of ornaments offered as security for the loan. Extra care is taken if the gold jewellery brought for pledge by any customer at any one time or cumulatively is more than 20 gm. The declaration should also contain an explanation specifically as to how the ownership was vested with the customer.

d) Auctions are conducted as per the Auction Policy of the Company and the guidelines issued by Reserve Bank of India. Auction is generally conducted before loan amount plus interest exceeds realizable value of gold. After reasonable time is given to the customers for release after loan becomes overdue and on exhausting all efforts for persuasive recovery, auction is resorted to as the last measure in unavoidable cases. Loss on account of auctions are recovered from the customer. Any excess received on auctions are refunded to the customer.

e) In case of loans other than Gold Loan, loans are given whether with primary/collateral security, like secured loans or without any primary/collateral security like unsecured loans, more than ordinary care is taken such that loans are granted only to persons/firms/companies of repute with credit worthiness, future cash flows to repay the loan and track record.

Impairment Assessment

The Company is mainly engaged in the business of providing gold loans. The tenure of the loans generally is for 12 months.

The Company also provides unsecured personal loans to salaried individuals and unsecured loans to traders and self

employed. The tenure of the loans ranges from 12 months to 60months.

The Company’s impairment assessment and measurement approach is set out in this note. It should be read in

conjunction with the Summary of significant accounting policies.

Definition of default and cure

"The Company considers a financial instrument as defaulted and therefore Stage 3 (credit-impaired) for Expected

Credit Loss (ECL) calculations in all cases when the borrower becomes 91 days past due including the due date on its

contractual payments.

As a part of a qualitative assessment of whether a customer is in default, the Company also considers a variety of instances that may indicate unlikeness to pay. When such events occur, the Company carefully considers whether the event should result in treating the customer as defaulted and therefore assessed as Stage 3 for ECL calculations."

It is the Company''s policy to consider a financial instrument as ‘cured’ and therefore re-classified out of Stage 3 when none of the default criteria have been present for at least three consecutive months. The decision whether to classify an asset as Stage 2 or Stage 1 once cured depends on the updated credit grade, at the time of the cure, and whether this indicates there has been a significant increase in credit risk compared to initial recognition.

Exposure at Default (EAD)

The Exposure at Default is an estimate of the exposure at a future default date, considering expected changes in the exposure after the reporting date, including repayments of principal and interest, whether scheduled by contract or otherwise, expected drawdowns on committed facilities, and accrued interest.

Probability of Default (PD)

The Probability of Default is an estimate of the likelihood of default over a given time horizon. To calculate the ECL for a Stage 1 loan, the Company assesses the possible default events within 12 months for the calculation of the 12 month ECL. For Stage 2 and Stage 3 financial assets, the exposure at default is considered for events over the lifetime of the instruments. The Company uses historical information wherever available to determine PD. PD is calculated using Incremental 91 DPD approach considering fresh slippage using historical information.

LGD Rates have been computed internally based on the discounted recoveries in defaulted accounts that are closed/ written off/ repossessed and upgraded during the year.

When estimating ECLs on a collective basis for a group of similar assets, the Company applies the same principles for assessing whether there has been a significant increase in credit risk since initial recognition.

Company has adopted 65% as the LGD which is the rate drawn reference from Internal Rating Based (IRB) approach guidelines issued by Reserve Bank of India for Banks to calculate LGD where sufficient past information is not available.

III) Market risk

Market Risk is the risk that the fair value or the future cash flows of a financial instrument will fluctuate because of changes in market factor. Such changes in the values of financial instruments may result from changes in the interest rates, credit, liquidity, and other market changes. The objective of market risk management is to avoid excessive exposure of our earnings and equity to loss and reduce our exposure to the volatility inherent in financial instruments. The Company is exposed to four types of market risk as follows:

a) Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is subject to interest rate risk, primarily since it lends to customers at fixed rates and for maturity periods shorter than the funding sources. Majority of our borrowings are at fixed rates . However, borrowings at floating rates gives rise to interest rate risk. Interest rates are highly sensitive to many factors beyond control, including the monetary policies of the Reserve Bank of India, domestic and international economic and political conditions, inflation and other factors. In order to manage interest rate risk, the Company seek to optimize borrowing profile between short-term and long-term loans. The Company adopts funding strategies to ensure diversified resource-raising options to minimize cost and maximize stability of funds. Assets and liabilities are categorized into various time buckets based on their maturities and Asset Liability Management Committee supervise an interest rate sensitivity report periodically for assessment of interest rate risks. The Interest Rate Risk is mitigated by availing funds at very competitive rates through diversified borrowings and for different tenors.

The following table demonstrates the sensitivity to a reasonably possible change in the interest rates on the portion of borrowings affected. With all other variables held constant, the profit before taxes affected through the impact on floating rate borrowings are as follows:

Impact on Profit before taxes

As at

March 31, 2022

As at

March 31, 2021

On Floating Rate Borrowings

1% increase in interest rates

2400.21

1,817.50

1% decrease in interest rates

(2,400.21)

(1,817.50)

b) Price risk

Sudden fall in the gold price and fall in the value of the pledged gold ornaments can result in some of the customers to default if the loan amount and interest exceeds the market value of gold. This risk is in part mitigated by a minimum 25% margin retained on the value of gold jewellery for the purpose of calculation of the loan amount. Further, we appraise the gold jewellery collateral solely based on the weight of its gold content, excluding weight and value of the stone studded in the jewellery. In addition, the sentimental value of the gold jewellery to the customers may induce repayment and redemption of the collateral even if the value of gold ornaments falls below the value of the repayment amount. An occasional decrease in gold prices will not increase price risk significantly on account of our adequate collateral security margins. However, a sustained decrease in the market price of gold can additionally cause a decrease in the size of our loan portfolio and our interest income.

Equity price risk is the risk that the fair value of equities decrease as the result of changes in level of equity indices and individual stocks. The trading equity price risk exposure arises from equity securities classified at FVTPL and the non-trading equity price risk exposure arises from equity securities classified at FVOCI.

c) Foreign currency risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Foreign currency risk for the Company arises majorly on account of foreign currency borrowings. The Company''s foreign currency exposures are managed in accordance with its Foreign Exchange Risk Management Policy which has been approved by its Board of Directors. The Company has hedged its foreign currency risk on its foreign currency borrowings as on March 31, 2022 by entering into cross currency swaps and forward contracts with the intention of covering the entire term of foreign currency exposure . The counterparties for such hedge transactions are banks.

The Company’s exposure on account of Foreign Currency Borrowings at the end of the reporting period expressed in Indian Rupees are as follows:

Particulars

Foreign currency

As at

March 31, 2022

A s at

March 31, 2021

External Commercial Borrowings - Senior Secured Notes (principal amount and interest accrued but not due on reporting date)

USD

76,815.78

74,097.06

Since the foreign currency exposure is completely hedged by equivalent derivative instrument, there will not be any significant impact on sensitivity analysis due to the possible change in the exchange rates where all other variables are held constant. On the date of maturity of the derivative instrument, considering the hedging for the entire term of the foreign currency exposure, the sensitivity of profit and loss to changes in the exchange rates will be Nil.

d) Prepayment risk

Prepayment risk is the risk that the Company will incur a financial loss because its customers and counterparties repay or request repayment earlier or later than expected, such as fixed rate loans when interest rates fall.

IV) Operational and business risk

Operational risk is the risk of loss arising from systems failure, human error, fraud or external events. When controls fail to operate effectively, operational risks can cause damage to reputation, have legal or regulatory implications, or lead to financial loss. The Company cannot expect to eliminate all operational risks, but it endeavours to manage these risks through a control framework and by monitoring and responding to potential risks. Controls include effective segregation of duties, access, authorisation and reconciliation procedures, staff education and assessment processes including the use of internal audit.

Note 43: Disclosure with regard to dues to Micro Enterprises and Small Enterprises

Based on the information available with the Company and which has been relied upon by the auditors, none of the suppliers have confirmed to be registered under "The Micro, Small and Medium Enterprises Development (''MSMED'') Act, 2006". Accordingly, no disclosures relating to principal amounts unpaid as at the period ended March 31, 2022 together with interest paid /payable are required to be furnished.

There was no dividend remitted in foreign currency during the year ended March 31, 2022 and March 31, 2021.

Note 45: Segment reporting

The Company is engaged in the business segment of Financing, whose operating results are regularly reviewed by the entity''s chief operating decision maker to make decisions about resources to be allocated and to assess its performance, and for which discrete financial information is available. Further other business segments do not exceed the quantitative thresholds as defined by the Ind AS 108 on "Operating Segment". Hence, there are no separate reportable segments, as required by the Ind AS 108 on "Operating Segment".

Note 46: Share based payments

Pursuant to approval by the shareholders at their meeting held on September 27, 2013, the Company has established "Muthoot ESOP 2013" scheme administered by the ESOP Committee of Board of Directors. The following options were granted as on March 31, 2022. The fair value of the share options is estimated at the grant date using a Black-Scholes pricing model, taking into account the terms and conditions upon which the share options were granted. However, the above performance condition is only considered in determining the number of instruments that will ultimately vest.

Note 47: Utilization of proceeds of Public Issue of Non - Convertible Debentures

The Company has during the year raised through public issue ^17,000.00 millions of Secured Redeemable Non-Convertible Debentures. As at March 31, 2022, the company has utilised the entire proceeds of the public issue, net of issue expenses in accordance with the objects stated in the offer documents.

There is no shortfall in the CSR amount required to be spent by the company as per section 135(5) of the act for the financial years ended March 31, 2022 and March 31, 2021.

CSR activities include activities for employment enhancing vocational skills, social business projects, promotion of education, promoting and supporting technology and innovations, promoting sports activities, medical assistance to poor patients, environmental protection activities and activities for sustainable development, and various other activities including assistance and support in disaster management activities which are specified under Schedule VII of companies act, 2013.

Note 49: Investments in Subsidiaries

During the financial year 2021-22, the Company has acquired 14,11,765 equity shares of the face value of H 10 each in Belstar Microfinance Limited for a total consideration of H 480.00 millions

During the financial year 2021-22, the Company has acquired 3,96,87,516 convertible irredeemable five (05) year preference shares of the face value of LKR. 10 each in Asia Asset Finance PLC, Sri Lanka for a total consideration of LKR 396.87 millions

Note 50: Frauds during the year

During the year, frauds committed by employees and customers of the company amounted to ^ 13.30 millions (March 31, 2021: ^35.73 millions) which has been recovered /written off / provided for. Of the above, fraud by employees of the company amounted to ^6.35 millions (March 31,2021: ^31.41 millions).

a) Public Fund represents Debt Securities, Borrowings (other than debt securities) and Subordinated Liabilities and excludes Loan from Directors and Relatives

b) Total Liabilities represent Total Liabilities and Equity as per Balance Sheet less Equity.

c) Other Short Term Liabilities represent all liabilities (excluding Commercial Paper) maturing within a year.

(vi) Institutional set-up for Liquidity Risk Management

The Board shall have the overall responsibility for management of liquidity risk. The Board shall decide the strategy, policies and procedures to manage liquidity risk in accordance with the liquidity risk tolerance/limits decided by it from time to time.

The ALM Committee of the Board of Directors shall be responsible for evaluating the liquidity risk.

The Asset-Liability Management Committee (ALCO) consisting of the NBFC''s top management shall be responsible for ensuring adherence to the risk tolerance/limits set by the Board as well as implementing the liquidity risk management strategy of the NBFC. The Managing Director heads the Committee. The role of the ALCO with respect to liquidity risk include, inter alia, decision on desired maturity profile and mix of incremental assets and liabilities, sale of assets as a source of funding, the structure, responsibilities and controls for managing liquidity risk, and overseeing the liquidity positions of the Company.

The ALM Support Group headed by Chief Financial Officer and consisting of operating staff who will be responsible for analysing, monitoring and reporting the liquidity risk profile to the ALCO.

8. Details of the Auctions conducted with respect to Gold Loan

The Company auctioned 9,51,143 loan accounts (Previous Year: 49,915 accounts) during the financial year. The outstanding dues on these loan accounts were H74,405.94 millions (March 31, 2021: H 3,852.66 millions) till the respective date of auction. The Company realised H65,370.15 millions (March 31, 2021: H 3,254.80 millions) on auctioning of gold jewellery taken as collateral security on these loans. Company confirms that none of its sister concerns participated in the above auctions.

Disclosures on risk exposures of derivatives Qualitative disclosures

"The Company has a Board approved policy in dealing with derivative transactions. The Company undertakes derivative transactions for hedging foreign currency exposures to mitigate the foreign currency risk. During the year, the company has hedged its foreign currency borrowings through forward exchange contracts and Cross Currency Swaps. The Asset Liability Management Committee monitors such transactions and reviews the risks involved.

The derivative transactions are accounted in accordance with Ind AS 109 and the accounting policy for recording hedge and non-hedge transactions and valuation of outstanding contracts is detailed in Note 3.7.

The aggregate impairment loss on application of expected credit loss method (ECL) as per lnd AS, as stated above, is more than the provisioning required under IRACP norms (including standard asset provisioning). Further, as stated in Note 19.1 the company has retained provision in excess of ECL in the books of account as a matter of prudence.

Note 54: Disclosure on Liquidity Coverage Ratio

Disclosure as per the circular no. RBI/2019-20/88 DOR.NBFC (PD) CC. No.102/03.10.001/2019-20 dated November 04, 2019 issued by Reserve Bank of India regarding Liquidity Coverage Ratio (LCR)

Maintenance of Liquidity Coverage Ratio (LCR)

Reserve Bank Of India vide its notification no. RBI/2019-20/88 DOR.NBFC (PD) CC. No.102/03.10.001/ 2019-20 dtd November 04,2019 introduced Liquidity Coverage Ratio for certain categories of NBFCs w.e.f December 01 ,2020 . All non-deposit taking NBFCs with asset size of ^ 10,000 crore and above, and all deposit taking NBFCs irrespective of their asset size, shall maintain a liquidity buffer in terms of LCR which will promote resilience of NBFCs to potential liquidity disruptions by ensuring that they have sufficient High Quality Liquid Asset (HQLA) to survive any acute liquidity stress scenario lasting for 30 days. The stock of HQLA to be maintained by the NBFCs shall be minimum of 100% of total net cash outflows over the next

1) Unweighted values are calculated as outstanding balances maturing or callable within 30 days (for Cash inflows and Cash outflows).

2) Weighted values are calculated after the application of respective haircuts (for HQLA) and stress factors (on cash inflow/cash outflow) as per RBI guidelines.

3) ''Average'' for all the quarters for the year ended March 2022 is computed as simple averages of daily observations for the quarter.

4) ''Average'' for the quarter ended March 2021 is computed as simple averages of monthly observations for the quarter (ie. January 2021, February 2021 and March 2021).

5) *LCR was implemented w.e.f December 01 ,2020 and consequently, disclosure as at December 31 ,2020 is based on relevant data as on December 31 ,2020.

6) The figures used for the quantitative disclosure are based on the estimates and assumptions of the management, which have been relied upon by the auditors.

B) Qualitative Disclosure

"The Company has adopted Liquidity Risk Management (LRM) framework on liquidity standards as prescribed by the RBI guidelines and has put in place requisite systems and processes to enable periodical computation and reporting of the Liquidity Coverage Ratio (LCR). The mandated regulatory threshold is embedded into the Liquidity Risk Management framework of the Company thus subjecting LCR maintenance to Board oversight and periodical review.

The Company computes the LCR and reports the same to the Asset Liability Management Committee (ALCO) as well as to the ALM Committee of the Board.

The Company follows the criteria laid down by RBI for calculation of High Quality Liquid Assets (HQLA), gross cash outflows and inflows within the next 30-day period. HQLA predominantly comprises unencumbered Cash and Bank balances, Government securities (viz., Treasury Bills, Central and State Government securities, Investments in TREPs (Triparty Repo trades in Government Securities provided by The Clearing Corporation of India)).

All significant outflows and inflows determined in accordance with RBI guidelines are included in the prescribed LCR computation template.

The Company monitors the concentration of funding sources from significant counterparties, significant instruments/ products as part of the LRM framework. The Company follows internal limits on short term borrowings which form part of the LRM framework. The Company’s funding sources are fairly dispersed across sources and maturities."

"The Board shall have the overall responsibility for management of liquidity risk. The Board shall decide the strategy, policies and procedures to manage liquidity risk in accordance with the liquidity risk tolerance/limits decided by it from time to time.

The ALM Committee of the Board of Directors shall be responsible for evaluating the liquidity risk.

The Asset-Liability Management Committee (ALCO) consisting of the NBFC''s top management shall be responsible for ensuring adherence to the risk tolerance/limits set by the Board as well as implementing the liquidity risk management strategy of the NBFC. The Managing Director heads the Committee. The role of the ALCO with respect to liquidity risk include, inter alia, decision on desired maturity profile and mix of incremental assets and liabilities, sale of assets as a

source of funding, the structure, responsibilities and controls for managing liquidity risk, and overseeing the liquidity positions of the Company.

The ALM Support Group headed by Chief Financial Officer and consisting of operating staff who will be responsible for analysing, monitoring and reporting the liquidity risk profile to the ALCO.The Asset-Liability Management Committee (ALCO) consisting of the NBFC''s top management shall be responsible for ensuring adherence to the risk tolerance/ limits set by the Board as well as implementing the liquidity risk management strategy of the NBFC. The Managing Director heads the Committee. The role of the ALCO with respect to liquidity risk include, inter alia, decision on desired maturity profile and mix of incremental assets and liabilities, sale of assets as a source of funding, the structure, responsibilities and controls for managing liquidity risk, and overseeing the liquidity positions of the Company."

Note 56: Details of Benami Property Held

No proceedings have been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder in the financial years ended March 31, 2022 and March 31, 2021.

Note 57: Wilful Defaulter

The Company has not been declared as a wilful defaulter by any bank or financial institution or other lender in the financial years ended March 31, 2022 and March 31, 2021

Note 58: Relationship with struck off Companies

The company has no transaction with the companies struck off under section 248 of Companies Act, 2013 or section 560 of Companies Act, 1956.

Note 59: Registration of Charges or satisfaction with Registrar of Companies (ROC)

All charges or satisfaction are registered with ROC within the statutory period for the financial years ended March 31, 2022 and March 31, 2021. No charges or satisfactions are yet to be registered with ROC beyond the statutory period.

Note 60: Compliance with number of layers of companies

The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017 for the financial years ended March 31, 2022 and March 31, 2021.

Note 61: Compliance with approved Scheme(s) of Arrangements

The Company has not entered into any Scheme of Arrangements which requires the approval of the Competent Authority in terms of sections 230 to 237 of the Companies Act,2013 for the financial years ended March 31, 2022 and March 31, 2021.

Note 62: Utilisation of Borrowed funds and Share premium

The Company, as part of its normal business, grants loans and advances, makes investment, accept non-convertible debentures from its customers, other entities and persons and borrows money from banks financial institutions , other entities and persons. These transactions are part of Company''s normal non-banking finance business, which is conducted ensuring adherence to all regulatory requirements.

We state that no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other persons or entities, including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall directly, or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the ultimate beneficiaries.

The Company has also not received any fund from any other persons or entities, including foreign entities (Funding Party) with the understanding whether recorded in writing or otherwise, that the Company shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

Note 63: Undisclosed Income

The company does not have any transaction which is not recorded in the books of account but has been surrendered or disclosed as income during the year in tax assessments under the Income tax Act, 1961.

Note 64: Details of Crypto Currency or Virtual Currency

The Company has not traded or invested in Crypto currency or Virtual currency during the financial years ended March 31, 2022 and March 31, 2021.

Note 65: Impact of COVID-19

The global outbreak of Coronavirus (COVID-19) pandemic has not caused any significant impact on the operations and financial position of the Company for the year. Due to the uncertainties caused by the pandemic, the management is continuously monitoring the situation, including the economic factors affecting the operations of the Company.

In the opinion of the management the impairment loss as stated in Note 8 and provision as stated in Note 19.1 is considered adequate to cover any future uncertainties on account of the above.

Note 66: Other Developments

a) The Code on Social Security, 2020 (the Code) has been enacted, which would impact contribution by the Company

towards Provident Fund and Gratuity. The impact of changes if any arising on enactment of the Code will be assessed by the company after the effective date of the same and the rules thereunder are notified.

Note 67: Previous year''s figures have been regrouped/rearranged, wherever necessary to conform to current year’s classifications/disclosure.


Mar 31, 2021

Note 5.2.1: Fixed deposits with banks under lien

Fixed Deposits with bank include fixed deposits given as security for borrowings ^8.39 millions (March 31, 2020: ^8.32 millions) , fixed deposits given as security for guarantees ^67.04 millions (March 31, 2020: ^14.76 millions) and fixed deposits on which lien is marked for other purposes ^381.75 millions (March 31, 2020: ^1,119.77 millions).

Note 5.3: The amount of Fixed deposits and Investment in TREPS in Notes 5.1 and 5.2 above does not include interest accrued aggregating to ^78.08 millions (March 31, 2020: ^52.26 millions) disclosed separately under Other financial assets in Note 10. Details of such interest accrued is as follows:

Trade receivables are non-interest bearing and are short-term in nature. These consist of receivable from government and other parties, and does not involve any credit risk.

There are no dues from directors or other officers of the Company or any firm or private company in which any director is a partner, a director or a member

9.2 : The Company holds 2,163,000 equity shares of Nepalese Rupee 100/- each in United Finance Limited, Nepal as at March 31, 2021. The management does not have significant influence over the entity as specified in Ind AS-28 - Investments in Associates and Joint Ventures; and has elected to recognise and measure the investment at fair value through OCI as per the requirements of Ind AS 109 - Financial Instruments.

17.1 Subordinated Debt

Subordinated Debt is subordinated to the claims of other creditors and qualifies as Tier II capital under the Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions,2016. The principal amount of outstanding privately placed subordinated debt stood at ^26.99 millions (March 31,2020: ^57.12 millions)

19.1 Provision in excess of ECL represents the provision created on loan assets (including in prior years), which is in excess of the amounts determined and adjusted against such assets as impairment loss on application of expected credit loss method as per lnd AS 109 (''Financial Instruments''), and retained in the books of account as a matter of prudence.

21.2 Terms/ rights attached to equity shares

The Company has only one class of equity shares having a par value of ^10/- per share. All these shares have the same rights and preferences with respect to the payment of dividend, repayment of capital and voting. The Company declares and pays dividends in Indian rupees. The interim dividend is declared and approved by Board of Directors.

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

(a) Statutory reserve

Statutory Reserve represents the Reserve Fund created under Section 45 IC of the Reserve Bank of India Act, 1934. Accordingly an amount representing 20% of Profit for the period is transferred to the fund for the year.

(b) Securities Premium

This Reserve represents the premium on issue of equity shares and can be utilized in accordance with the provisions of the Companies Act, 2013.

(c) Debenture Redemption Reserve

Pursuant to Rule 18(7)(b)(iii) of the Companies (Share Capital and Debentures) Rules, 2014, as amended vide the Companies (Share Capital and Debentures) Amendment Rules dated August 16, 2019, the Company, being an NBFC registered with the Reserve Bank of India under Section 45 IA of the RBI Act, 1934, is not required to create a Debenture Redemption Reserve, in respect of public issue of debentures and debentures issued by it on a private placement basis.

(d) General Reserve

Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of profit for the period at a specified percentage in accordance with applicable regulations. Consequent to introduction of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of Companies Act, 2013.

(e) Share Options outstanding account

The fair value of equity settled share based payments transactions is recognised in the Statement of Profit and Loss with corresponding credit to Share option outstanding account.

(f) Retained earnings

This Reserve represents the cumulative profits of the Company. This Reserve can be utilized in accordance with the provisions of the Companies Act, 2013.

(g) Other Comprehensive Income

Equity instruments through Other Comprehensive Income

The Company has elected to recognise changes in the fair value of certain investments in equity securities in other comprehensive income. These changes are accumulated in the FVOCI equity investments reserve. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.

Effective portion of Cash Flow Hedges and Cost of Hedging Reserve

Effective portion of cash flow hedges represents the cumulative gains/(losses) arising on changes in fair value of the derivative instruments designated as cash flow hedges through OCI. The amount recognized as effective portion of Cash flow hedge is reclassified to profit or loss when the hedged item affects profit or loss. The company designates the spot element of foreign currency forward contracts as hedging instruments. The changes in the fair value of forward element of the forward contract on reporting date is deferred and retained in the cost of hedging reserve.

Remeasurement of defined benefit plans

It represents the gain/(loss) on remeasurement of Defined Benefit Obligation and of Plan assets

Defined Contribution Plan

The Company makes contributions to Provident Fund which are defined contribution plan for qualifying employees. The Company recognized ^347.59 millions (March 31, 2020: ^387.22 millions) for Provident Fund contributions in the Statement of Profit and Loss.

Defined Benefit Plan

The Company has a defined benefit gratuity plan. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Every employee who has completed five years or more of service gets a gratuity on leaving the service of the company at 15 days salary (last drawn salary) for each completed year of service.

Gratuity liability is funded through a Gratuity Fund managed by Kotak Mahindra Old Mutual Life Insurance Limited and ICICI Prudential Life Insurance Company Limited.

The following tables summarise the components of net benefit expense recognized in the Statement of Profit and Loss and the funded status and amounts recognized in the Balance Sheet for the gratuity plan.

The sensitivity is performed on the DBO at the respective valuation date by modifying one parameter whilst retaining other parameters constant. There are no changes from the previous period to the methods and assumptions underlying the sensitivity analyses. The weighted average duration of the defined benefit obligation as at March 31, 2021 is 5 years (2020:

5 years).The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

Description of Asset Liability Matching (ALM) Policy

The Company primarily deploys its gratuity investment assets in insurer-offered debt market-linked plans. As investment returns of the plan are highly sensitive to changes in interest rates, liability movement is broadly hedged by asset movement if the duration is matched.

Description of funding arrangements and funding policy that affect future contributions

The liabilities of the fund are funded by assets. The company aims to maintain a close to full-funding position at each Balance Sheet date. Future expected contributions are disclosed based on this principle.

The principal assumptions used in determining leave encashment obligations for the Company''s plans are shown below:

The discount rate is based on the prevailing market yields of Government of India securities as at the balance sheet date for the estimated term of the obligations. The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments, mortality, withdrawals and other relevant factors.

Note 36: Maturity analysis of assets and liabilities

The table below shows the maturity analysis of assets and liabilities according to when they are expected to be recovered or settled and considering contractual terms. For Loans and advances to customers, maturity analysis is based on expected repayment behaviour.

Operating Lease :

Lease disclosures under Ind AS 116

All operating lease agreements entered into by the Company are cancellable in nature. Consequently, the Company has not recognised any right-of-use asset and lease liability during the year.

Lease rentals received for assets let out on operating lease ^3.23 millions (^7.35 millions for the year ended March 31, 2020) are recognized as income in the Statement of Profit and Loss under the head ''Other Income'' and lease rental payments for assets taken on an operating lease ^2,188.50 millions (^2,157.77 millions for the year ended March 31, 2020) are recognized as ‘Rent’ in the Statement of Profit and Loss.

Compensation of key management personnel of the Company:

Key management personnel are those individuals who have the authority and responsibility for planning and exercising power to directly or indirectly control the activities of the Company and its employees. The Company considers the members of the Board of Directors which include independent directors (and its sub-committees) to be key management personnel for the purposes of IND AS 24 Related Party Disclosures.

Capital Management

The primary objective of the Company''s capital management policy is to ensure that the Company complies with externally imposed capital requirements and maintains strong credit ratings and healthy capital ratios in order to support its business and to maximise shareholder value.

The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and requirements of the financial covenants. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividend payment to shareholders, return capital to shareholders or issue capital securities. No changes have been made to the objectives, policies and processes from the previous years. However, they are under constant review by the Board.

Regulatory capital consists of CET1 capital, which comprises share capital, share premium, statutory reserve, share option outstanding account, retained earnings including current year profit. Certain adjustments are made to Ind AS-based results and reserves, as prescribed by the Reserve Bank of India. The other component of regulatory capital is other Tier 2 Capital Instruments.

Note 41: Fair Value Measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e., an exit price), regardless of whether that price is directly observable or estimated using a valuation technique. In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques.

Fair values of financial assets, other than those which are subsequently measured at amortised cost, have been arrived at as under:

Investments at fair value through profit or loss

For investments at fair value through profit and loss, valuation is done using quoted prices from active markets at the measurement date. The equity instruments which are actively traded on public stock exchanges with readily available active prices on a regular basis are classified as Level 1. Units held in mutual funds are measured based on their published net asset value (NAV), taking into account redemption and/or other restrictions are generally Level 1.

Derivative Financial Instruments (assets/liabilities) at fair value through other comprehensive income

The financial assets/liabilities on derivative contracts have been valued at fair value through other comprehensive income using closing rate and is classified as Level 2

Investments at fair value through other comprehensive income

Equity instruments in non-listed entities are initially recognised at transaction price and re-measured as per fair valuation report on a case-by-case basis and classified as Level 2 . The equity instruments which are actively traded on public stock exchanges with readily available active prices on a regular basis are classified as Level 1.

Valuation methodologies of financial instruments not measured at fair value Short-term financial assets and liabilities

For financial assets and financial liabilities that have a short-term maturity (less than twelve months), the carrying amounts, which are net of impairment, are a reasonable approximation of their fair value. Such instruments include cash and cash equivalents, trade receivables, balances other than cash and cash equivalents and trade payables without a specific maturity.

Loans and advances to customers

The fair values of loans and receivables are estimated by discounted cash flow models that incorporate assumptions for credit risks, probability of default and loss given default estimates. Since comparable data is not available, Credit risk is derived using historical experience, management view and other information used in its collective impairment models.

Fair values of portfolios are calculated using a portfolio-based approach, grouping loans as far as possible into homogenous groups based on similar characteristics i.e., type of loan. The Company then calculates and extrapolates the fair value to the entire portfolio using effective interest rate model that incorporate interest rate estimates considering all significant characteristics of the loans. The credit risk is applied as a top-side adjustment based on the collective impairment model incorporating probability of defaults and loss given defaults. Hence, the carrying amount of such financial assets at amortised cost net of impairment loss allowance is of reasonable approximation of their fair value.

Financial liabilities at amortised cost

The fair values of financial liabilities held-to-maturity (financial liabilities other than trade payables) are estimated using effective interest rate model based on contractual cash flows using actual yields. Since the cost of borrowing on the reporting date is not expected to be significantly different from the actual yield considered under effective interest rate model, the carrying value of financial liabilities at amortised cost is considered a reasonable approximation of their fair value.

The Company''s principal financial liabilities comprise borrowings and trade and other payables. The main purpose of these financial liabilities is to finance and support the company’s operations. The Company''s principal financial assets include loans, investments, cash and cash equivalents and other receivables that are derived directly from its operations.

As a financial lending institution, Company is exposed to various risks that are related to lending business and operating environment. The principal objective in Company''s risk management processes is to measure and monitor the various risks that Company is subject to and to follow policies and procedures to address such risks.

The Company''s Risk Management Committee of the Board of Directors constituted in accordance with the Reserve Bank of India regulations has overall responsibility for overseeing the implementation of the Risk Management Policy. The committee meets at least twice in a year to review the Risk Management practices. Risk Management department periodically places its report to the committee for review. The committee''s suggestions for improving the Risk Management Practices are implemented by the Risk Management department.

Risk Management department shall be responsible for the following:

a) Identifying the various risks associated with the activities of the Company and assessing their impact on the business.

b) Measuring the risks and suggesting measures to effectively mitigate the risks.

However, the primary responsibility for managing the various risks on a day to day basis will be with the heads of the respective business units of the Company.

The Company is generally exposed to credit risk, liquidity risk, market risk and operational risk.

I) Credit Risk

Credit Risk arises from the risk of loss that may occur from the default of Company''s customers under loan agreements.

Customer defaults and inadequate collateral may lead to loan losses.

The Company addresses credit risk through following processes:

a) Credit risk on Gold loan is considerably reduced as collateral is in the form of Gold ornaments which can be easily liquidated and there is only a distant possibility of losses due to adequate margin of 25% or more retained while disbursing the loan. Credit risk is further reduced through a quick but careful collateral appraisal and loan approval process. Hence overall, the Credit risk is normally low.

b) Sanctioning powers for Gold Loans is delegated to various authorities at branches/controlling offices. Sanctioning powers are used only for granting loans for legally permitted purposes. The maximum Loan to Value does not exceed the limit stipulated by the Reserve Bank of India under any circumstances.

c) Gold ornaments brought for pledge is the primary responsibility of Branch Manager. Branch executives should enquire with the customers about the ownership of the ornaments being pledged for loan and the loan should be granted only after they are convinced about the genuineness of the customer and his capacity to own that much quantity of gold. In addition to the above, customers are also required to sign a declaration of ownership of ornaments offered as security for the loan. Extra care is taken if the gold jewellery brought for pledge by any customer at any one time or cumulatively is more than 20 gm. The declaration should also contain an explanation specifically as to how the ownership was vested with the customer.

d) Auctions are conducted as per the Auction Policy of the Company and the guidelines issued by Reserve Bank of India. Auction is generally conducted before loan amount plus interest exceeds realizable value of gold. After reasonable time is given to the customers for release after loan becomes overdue and on exhausting all efforts for persuasive recovery, auction is resorted to as the last measure in unavoidable cases. Loss on account of auctions are recovered from the customer. Any excess received on auctions are refunded to the customer.

e) In case of loans other than Gold Loan, loans are given whether with primary/collateral security, like secured loans or without any primary/collateral security like unsecured loans, more than ordinary care is taken such that loans are granted only to persons/firms/companies of repute with credit worthiness, future cash flows to repay the loan and track record.

Impairment Assessment

The Company is mainly engaged in the business of providing gold loans. The tenure of the loans generally is for 12 months.

The Company also provides unsecured personal loans to salaried individuals and unsecured loans to traders and self employed. The tenure of the loans ranges from 12 months to 36 months.

The Company''s impairment assessment and measurement approach is set out in this note. It should be read in conjunction with the Summary of significant accounting policies.

Definition of default and cure

The Company considers a financial instrument as defaulted and therefore Stage 3 (credit-impaired) for Expected Credit Loss (ECL) calculations in all cases when the borrower becomes 90 days past due on its contractual payments.

As a part of a qualitative assessment of whether a customer is in default, the Company also considers a variety of instances that may indicate unlikeness to pay. When such events occur, the Company carefully considers whether the event should result in treating the customer as defaulted and therefore assessed as Stage 3 for ECL calculations.

It is the Company’s policy to consider a financial instrument as ''cured'' and therefore re-classified out of Stage 3 when none of the default criteria have been present for at least three consecutive months. The decision whether to classify an asset as Stage 2 or Stage 1 once cured depends on the updated credit grade, at the time of the cure, and whether this indicates there has been a significant increase in credit risk compared to initial recognition.

Exposure at Default (EAD)

The Exposure at Default is an estimate of the exposure at a future default date, considering expected changes in the exposure after the reporting date, including repayments of principal and interest, whether scheduled by contract or otherwise, expected drawdowns on committed facilities, and accrued interest.

Probability of Default (PD)

The Probability of Default is an estimate of the likelihood of default over a given time horizon. To calculate the ECL for a Stage 1 loan, the Company assesses the possible default events within 12 months for the calculation of the 12 month ECL.

For Stage 2 and Stage 3 financial assets, the exposure at default is considered for events over the lifetime of the instruments. The Company uses historical information wherever available to determine PD. PD is calculated using Incremental 91 DPD approach considering fresh slippage using historical information.

Collateral and other credit enhancements

The amount and type of collateral required depends on an assessment of the credit risk of the counterparty. Guidelines are in place covering the acceptability and valuation of each type of collateral.

The tables on the following pages show the maximum exposure to credit risk by class of financial asset. They also shows the total fair value of collateral, any surplus collateral (the extent to which the fair value of collateral held is greater than the exposure to which it relates), and the net exposure to credit risk.

III) Market risk

Market Risk is the risk that the fair value or the future cash flows of a financial instrument will fluctuate because of changes in market factor. Such changes in the values of financial instruments may result from changes in the interest rates, credit, liquidity, and other market changes. The objective of market risk management is to avoid excessive exposure of our earnings and equity to loss and reduce our exposure to the volatility inherent in financial instruments. The Company is exposed to four types of market risk as follows:

a) Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The company is subject to interest rate risk, primarily since it lends to customers at fixed rates and for maturity periods shorter than the funding sources. Majority of our borrowings are at fixed rates . However , borrowings at floating rates gives rise to interest rate risk. Interest rates are highly sensitive to many factors beyond control, including the monetary policies of the Reserve Bank of India, domestic and international economic and political conditions, inflation and other factors. In order to manage interest rate risk, the company seek to optimize borrowing profile between short-term and long-term loans. The company adopts funding strategies to ensure diversified resource-raising options to minimize cost and maximize stability of funds. Assets and liabilities are categorized into various time buckets based on their maturities and Asset Liability Management Committee supervise an interest rate sensitivity report periodically for assessment of interest rate risks. The Interest Rate Risk is mitigated by availing funds at very competitive rates through diversified borrowings and for different tenors.

The following table demonstrates the sensitivity to a reasonably possible change in the interest rates on the portion of borrowings affected. With all other variables held constant, the profit before taxes affected through the impact on floating rate borrowings are as follows:

b) Price risk

Sudden fall in the gold price and fall in the value of the pledged gold ornaments can result in some of the customers to default if the loan amount and interest exceeds the market value of gold. This risk is in part mitigated by a minimum 25% margin retained on the value of gold jewellery for the purpose of calculation of the loan amount. Further, we appraise the gold jewellery collateral solely based on the weight of its gold content, excluding weight and value of the stone studded in the jewellery. In addition, the sentimental value of the gold jewellery to the customers may induce repayment and redemption of the collateral even if the value of gold ornaments falls below the value of the repayment amount. An occasional decrease in gold prices will not increase price risk significantly on account of our adequate collateral security margins. However, a sustained decrease in the market price of gold can additionally cause a decrease in the size of our loan portfolio and our interest income.

Equity price risk is the risk that the fair value of equities decrease as the result of changes in level of equity indices and individual stocks. The trading equity price risk exposure arises from equity securities classified at FVTPL and the non-trading equity price risk exposure arises from equity securities classified at FVOCI.

c) Foreign currency risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Foreign currency risk for the Company arises majorly on account of foreign currency borrowings. The Company''s foreign currency exposures are managed in accordance with its Foreign Exchange Risk Management Policy which has been approved by its Board of Directors. The Company has hedged its foreign currency risk on its foreign currency borrowings as on March 31, 2021 by entering into cross currency swaps and forward contracts with the intention of covering the entire term of foreign currency exposure . The counterparties for such hedge transactions are banks.

Since the foreign currency exposure is completely hedged by equivalent derivative instrument, there will not be any significant impact on sensitivity analysis due to the possible change in the exchange rates where all other variables are held constant. On the date of maturity of the derivative instrument, considering the hedging for the entire term of the foreign currency exposure, the sensitivity of profit and loss to changes in the exchange rates will be Nil.

d) Prepayment risk

Prepayment risk is the risk that the Company will incur a financial loss because its customers and counterparties repay or request repayment earlier or later than expected, such as fixed rate loans when interest rates fall.

IV) Operational and business risk

Operational risk is the risk of loss arising from systems failure, human error, fraud or external events. When controls fail to operate effectively, operational risks can cause damage to reputation, have legal or regulatory implications, or lead to financial loss. The Company cannot expect to eliminate all operational risks, but it endeavours to manage these risks through a control framework and by monitoring and responding to potential risks. Controls include effective segregation of duties, access, authorisation and reconciliation procedures, staff education and assessment processes including the use of internal audit.

Note 43: Disclosure with regard to dues to Micro Enterprises and Small Enterprises

Based on the information available with the Company and has been relied upon by the auditors, none of the suppliers have confirmed to be registered under "The Micro, Small and Medium Enterprises Development (''MSMED'') Act, 2006". Accordingly, no disclosures relating to principal amounts unpaid as at the period ended March 31, 2021 together with interest paid /payable are required to be furnished.

Note 44: Dividend remitted in foreign currency

There was no dividend remitted in foreign currency during the year ended March 31, 2021 and March 31, 2020.

Note 45: Segment reporting

The Company is engaged in the business segment of Financing, whose operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated and to assess its performance, and for which discrete financial information is available. Further other business segments do not exceed the quantitative thresholds as defined by the Ind AS 108 on "Operating Segment". Hence, there are no separate reportable segments, as required by the Ind AS 108 on "Operating Segment".

Note 46: Share based payments

Pursuant to approval by the shareholders at their meeting held on September 27, 2013, the company has established "Muthoot ESOP 2013" scheme administered by the ESOP Committee of Board of Directors. The following options were granted as on March 31, 2021. The fair value of the share options is estimated at the grant date using a Black-Scholes pricing model, taking into account the terms and conditions upon which the share options were granted. However, the above performance condition is only considered in determining the number of instruments that will ultimately vest.

(vi) Institutional set-up for Liquidity Risk Management

The Board shall have the overall responsibility for management of liquidity risk. The Board shall decide the strategy, policies and procedures to manage liquidity risk in accordance with the liquidity risk tolerance/limits decided by it from time to time.

The ALM Committee of the Board of Directors shall be responsible for evaluating the liquidity risk.

The Asset-Liability Management Committee (ALCO) consisting of the NBFC''s top management shall be responsible for ensuring adherence to the risk tolerance/limits set by the Board as well as implementing the liquidity risk management strategy of the NBFC. The Managing Director heads the Committee. The role of the ALCO with respect to liquidity risk include, inter alia, decision on desired maturity profile and mix of incremental assets and liabilities, sale of assets as a source of funding, the structure, responsibilities and controls for managing liquidity risk, and overseeing the liquidity positions of the Company.

The ALM Support Group headed by Chief Financial Officer and consisting of operating staff who will be responsible for analysing, monitoring and reporting the liquidity risk profile to the ALCO.

8. Details of the Auctions conducted with respect to Gold Loan

The Company auctioned 49,915 loan accounts (Previous Year: 202,330 accounts) during the financial year. The outstanding dues on these loan accounts were ^3,852.66 millions (March 31, 2020: ^9,132.46 millions) till the respective date of auction. The Company realised ^3,254.80 millions (March 31, 2020: ^8,547.79 millions) on auctioning of gold jewellery taken as collateral security on these loans. Company confirms that none of its sister concerns participated in the above auctions.

Disclosures on risk exposures of derivatives Qualitative disclosures

The Company has a Board approved policy in dealing with derivative transactions. The Company undertakes derivative transactions for hedging foreign currency exposures to mitigate the foreign currency risk. During the year, the company has hedged its foreign currency borrowings through forward exchange contracts and Cross Currency Swaps. The Asset Liability Management Committee monitors such transactions and reviews the risks involved.

The derivative transactions are accounted in accordance with Ind AS 109 and the accounting policy for recording hedge and non-hedge transactions and valuation of outstanding contracts is detailed in Note 3.7.

1) Unweighted values calculated as outstanding balances maturing or callable within 30 days (for Cash inflows and Cash outflows)

2) Weighted values calculated after the application of respective haircuts (for HQLA) and stress factors (on Cash inflow/Cash outflow)

3) The average LCR for March 2021 is computed as simple averages of monthly observations over the previous quarter (i.e.. January 2021, February 2021 and March 2021).

4) *LCR was implemented w.e.f December 01, 2020 and consequently, disclosure as at December 31, 2020 is based on relevant data as on December 31, 2020.

5) The figures pertaining to the respective months used for the quantitative disclosure are based on the estimates and assumptions of the management, which have been relied upon by the auditors.

Qualitative Disclosure

The Company has adopted Liquidity Risk Management (LRM) framework on liquidity standards as prescribed by the RBI guidelines and has put in place requisite systems and processes to enable periodical computation and reporting of the Liquidity Coverage Ratio (LCR). The mandated regulatory threshold is embedded into the Liquidity Risk Management framework of the Company thus subjecting LCR maintenance to Board oversight and periodical review. The Company computes the LCR and reports the same to the Asset Liability Management Committee (ALCO) every month for review as well as to the ALM Committee of the Board.

The Company follows the criteria laid down by RBI for calculation of High Quality Liquid Assets (HQLA), gross outflows and inflows within the next 30-day period. HQLA predominantly comprises unencumbered Cash and Bank balances, Government securities viz., Treasury Bills, Central and State Government securities, Investments in TREPs (Triparty Repo trades in Government Securities provided by The Clearing Corporation of India).

The Company monitors the concentration of funding sources from significant counterparties, significant instruments/ products as part of the LRM framework. The Company follows internal limits on short term borrowings which form part of the LRM framework. The Company''s funding sources are fairly dispersed across sources and maturities.

The Board shall have the overall responsibility for management of liquidity risk. The Board shall decide the strategy, policies and procedures to manage liquidity risk in accordance with the liquidity risk tolerance/limits decided by it from time to time.

The ALM Committee of the Board of Directors shall be responsible for evaluating the liquidity risk.

The Asset-Liability Management Committee (ALCO) consisting of the NBFC’s top management shall be responsible for ensuring adherence to the risk tolerance/limits set by the Board as well as implementing the liquidity risk management strategy of the NBFC. The Managing Director heads the Committee. The role of the ALCO with respect to liquidity risk include, inter alia, decision on desired maturity profile and mix of incremental assets and liabilities, sale of assets as a source of funding, the structure, responsibilities and controls for managing liquidity risk, and overseeing the liquidity positions of the Company.

The ALM Support Group headed by Chief Financial Officer and consisting of operating staff who will be responsible for analysing, monitoring and reporting the liquidity risk profile to the ALCO.

Following the global outbreak of Coronavirus (COVID-19) pandemic including the current ''second wave'', prolonged lockdown restrictions were imposed by the Government during the year, which however has not caused any significant impact on the operations and financial position of the Company for the year. Due to the uncertainties caused by the pandemic, the management is continuously monitoring the situation, including the economic factors affecting the operations of the Company.

In accordance with the regulatory package announced by RBI, the Company offered an optional moratorium on payment of loan instalments falling due between March 1, 2020 and August 31, 2020, as per which the asset classification remained stand still during the period for which moratorium was granted. During the year, Hon''ble Supreme Court had issued an interim order directing that the accounts which were not declared Non-Performing Asset (NPA) till August 31, 2020 shall not be declared as NPA till further orders, which was vacated vide judgement of the said Hon''ble Court on March 23, 2021 and RBI circular was issued thereon. Accordingly, the Company has classified the borrower accounts in accordance with the provisions of Ind AS 109 (''Financial Instruments’) in the financial statements for the year ended March 31, 2021.

In the opinion of the management the impairment loss as stated in Note 8 and provision as stated in Note 19.1 is considered adequate to cover any future uncertainties on account of the above.

Note 58: Other Developments

a) In accordance with the instructions in RBI circular dated April 07, 2021, and the Indian Banks'' Association (''IBA'') advisory letter dated April 19, 2021, the Company has put in place a Board approved policy to refund/ adjust the interest on interest charged during the moratorium period of March 01, 2020 to August 31, 2020 to the eligible borrowers. The Company has estimated the benefit to be extended to the eligible borrowers at ^19.00 millions and created a provision towards the estimated interest relief and reduced the same from the interest income.

b) The Code on Social Security, 2020 (the Code) has been enacted, which would impact contribution by the Company towards Provident Fund and Gratuity. The impact of changes if any arising on enactment of the Code will be assessed by the company after the effective date of the same and the rules thereunder are notified.

Note 59: Previous year''s figures have been regrouped/rearranged, wherever necessary to conform to current year''s classifications/disclosure.


Mar 31, 2019

NOTES forming part of Financial Statements

Note 47: Standard issued but not yet effective

Ind AS 116 Leases: On March 30, 2019, Ministry of Corporate Affairs has notified Ind AS 116,Leases. Ind AS 116 will replace the existing leases Standard, Ind AS 1 7 Leases, and related Interpretations. The effective date for adoption of Ind AS 116 is annual periods beginning on or after April 01, 2019. The Standard sets out the principles for recognition, measurement presentation and disclosure of leases for both parties to a contract i.e., the lessee and the lessor. Ind AS 116 requires a lessee to recognize assets and liabilities for all leases with a term of more than twelve months, unless the underlying asset is of low value. The Company is in the process of evaluating the impact on application of Ind AS 116 with respect to lease arrangements entered into on its financial statements.

Ind AS 12 Appendix C: Uncertainty over Income tax Treatments: On March 30, 2019,Ministry of Corporate Affairs has notified Ind AS 12 Appendix C, uncertainty over Income Tax Treatments which is to be applied while performing the determination of taxable profit, (or loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under Ind AS 12. According to the appendix, companies need to determine the profitability of the relevant tax authority accepting each tax treatment, or group of tax treatments, that the companies have used or plan to use in their income tax filing which has to be considered to compute the most likely amount or the expected value of the tax treatment when determining taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates. The effective date for the adoption of Ind AS 12 Appendix C is annual periods beginning on or after April 1, 2019. The Company is in the process of evaluating the impact on application of this standard on its financial statements.

Amendment to Ind AS 12- Income Taxes: On March 30, 2019, Ministry of Corporate Affairs issued amendments to the guidance in Ind AS 12 , ''Income Taxes'', in connection with accounting for dividend distribution taxes.

The amendment clarifies that an entity shall recognize the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognized those past transactions or events."

Effective date for application of this amendment is annual period beginning on or after April 01, 2019. The Company is in the process of evaluating the impact on application of this standard on its financial statements Amendment to Ind AS 19- plan amendment, curtailment or settlement- On March 30, 2019, Ministry of Corporate Affairs issued amendments to Ind AS 19, ''Employee Benefits'', in connection with accounting for plan amendments, curtailments or settlements. The amendments require an entity to use updated assumptions to determine current service cost and net interest for the remainder of the period after a plan amendment, curtailment or settlement; and to recognize in profit or loss as part of past service cost, or a gain or loss on settlement, any reduction in a surplus, even if that surplus was not previously recognized because of the impact of the asset ceiling. Effective date for application of this amendment is annual period beginning on or after April 01, 2019. The Company is in the process of evaluating the impact on application of this standard on its financial statements.

Note 48: Utilization of proceeds of Public Issue of Non - Convertible Debentures

The company has during the year raised through public issue Rs. 37,094.57 millions of Secured Redeemable Non-Convertible Debentures. As at March 31, 2019, the company has utilised the entire proceeds of the public issue, net of issue expenses in accordance with the objects stated in the offer documents.

Note 49: Corporate Social Responsibility (CSR)

The company has constituted CSR Committee and has undertaken CSR activities in accordance with Schedule Vll to the Companies Act, 2013 mainly through the trusts, Muthoot M George Foundation and Muthoot M George Charitable Trust. Muthoot M George Foundation and Muthoot M George Charitable Trust are public charitable trusts formed under Indian Trust Act, 1882 having registration under section 12 AA of the Income Tax Act, 1961. The gross amount required to be spent by the company as per Section 135 of the Companies Act, 2013 is Rs. 405.49 millions (March 31,2018: Rs.284.37 millions) and the company has spent Rs. 282.92 millions (March 31, 2018: Rs. 197.28 millions).

Note 50: Equity Investments in Subsidiaries Muthoot Homefin (India) Limited

During the year, the company subscribed to 2,14,28,571 equity shares in Muthoot Homefin (India) Limited for a consideration of Rs. 1,499.99 millions. As at March 31, 2019, the total share holding in Muthoot Homefin (India) Limited is 119,155,843 equity shares (March 31, 2018: 97,727,272 equity shares) representing 100% (March 31, 2018: 100.00%) of their total equity share capital.

Belstar Investment and Finance Private Limited

During the year, the company subscribed to 87,27,755 equity shares for a consideration of Rs. 1,368.25 millions and acquired 11,21,366 equity shares of Rs. 173.81 millions of Belstar Investment and Finance Private Limited. As at March 31, 2019, the total shareholding in Belstar Investment and Finance Private Limited, is 2,62,66,580 equity shares (March 31, 2018: 16,417,459 equity shares) representing 70.01% (March 31, 2018: 66.61%) of their total equity share capital.

Asia Asset Finance Plc

During the year, the company subscribed to 25,113,1 79 equity shares of Asia Asset Finance Plc for a consideration of Rs. 100.45 millions increasing the shareholding to 69.17% (March 31, 2018: 60.00%) of their total equity share capital.

Muthoot Money Private Limited

During the year, the Company acquired Muthoot Money Private Limited (MMPL), a Non Deposit taking Non-Banking Financial Company (NBFC-ND) engaged in lending, primarily in vehicle finance business, by acquiring 5,625 equity shares of face value Rs. 1,000/- each at a price of Rs. 17,685/- per share aggregating to Rs. 99.48 millions from existing shareholders, thus making it a wholly owned subsidiary. It also subscribed to 56,545 fresh equity shares of face value of Rs. 1,000/- each at Rs. 17,685/- per share aggregating to Rs. 999.99 millions.

Muthoot Asset management Private Limited

During the year,the Company incorporated a wholly owned subsidiary Muthoot Asset Management Private Limited by infusing Rs. 510.00 millions.

Muthoot Trustee Private Limited

During the year, the Company incorporated a wholly owned subsidiary Muthoot Trustee Private Limited by infusing Rs. 1 million

Note 51: Frauds during the year

During the year , frauds committed by employees and customers of the company amounted to Rs. 38.31 millions (March 31, 2018: Rs. 35.06 millions) which has been recovered /written off / provided for. Of the above, fraud by employees of the company amounted to Rs. 33.52 millions (March 31, 2018: Rs. 25.85 millions).

Note 52: Disclosure required as per Reserve Bank of India Notification No. DNBS.CC.PD.NO. 265/03.10.01/2011-12 dated March 21, 2012

Particulars

As at March 31, 2019

As at March 31, 2018

Gold Loans granted against collateral of gold jewellery (principal portion)

335,852.95

288,483.85

Total assets of the Company

380,687.00

307,922.55

Percentage of Gold Loans to Total Assets

88.22%

93.69%

Note 53: Disclosures required as per Reserve Bank of India Master Direction - Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016

SI.

Particulars

Amount outstanding

Amount overdue

Amount outstanding

Amount overdue

No.

Liabilities :

1

Loans and advances* availed by the non-banking financial company inclusive of interest accrued thereon but not paid :-

As at March 31, 2019

As at March 31, 2018

(a) Debentures : Secured

86,237.69

Nil

56,548.36

Nil

: Unsecured

Nil

Nil

Nil

Nil

(other than falling within the meaning of public deposits)

: Perpetual Debt Instrument

Nil

Nil

Nil

Nil

(b) Deferred credits

Nil

Nil

Nil

Nil

(c) Term Loans

7,011.24

Nil

2,003.73

Nil

(d) Inter-corporate loans and borrowing

Nil

Nil

Nil

Nil

(e) Commercial Paper

48,083.89

Nil

28,340.11

Nil

(f) Other Loans (specify nature)

Loan from Directors/ Relatives of Directors

5,711.08

Nil

8,815.05

Nil

Subordinated Debt

7,119.99

Nil

19,385.09

Nil

Borrowings from Banks/Fl

124,183.21

Nil

110,026.23

Nil

Overdraft against Deposit with Banks

1.84

Nil

0.58

Nil

*Principal amounts of loans and advances availed

SI. No.

Assets :

As at March 31, 2019

As at March 31, 2018

2

Break-up of Loans and Advances including bills receivables (other than those included in (3) below) :-

(including interest accrued)

(a) Secured

349,189.81

298,244.77

(b) Unsecured

8,346.65

4,818.67

SI. No.

Assets :

As at March 31, 2019

As at March 31, 2018

3

Break-up of Leased Assets and stock on hire and other assets counting towards AFC activities:-

(i) Lease assets including lease rentals under sundry debtors:-

(a) Financial lease

Nil

Nil

(b) Operating lease

Nil

Nil

(ii) Stock on hire including hire charges under sundry debtors

(a) Assets on hire

Nil

Nil

(b) Repossessed Assets

Nil

Nil

(iii) Other loans counting towards AFC activities

(a) Loans where assets have been repossessed

Nil

Nil

(b) Loans other than (a) above

Nil

Nil

As at March 31, 2019

As at March 31, 2018

4

Break-up of Investments (net of provision for diminution in value) :-

Current Investments:-

1. Quoted:

(i) Shares : (a) Equity

Nil

Nil

(b) Preference

Nil

Nil

(ii) Debentures and Bonds

Nil

Nil

(iii) Units of mutual funds

Nil

Nil

(iv) Government Securities(net of amortisation)

Nil

10.21

(v) Others

Nil

Nil

(Rupees in millions, except for share data and unless otherwise stated)

As at March 31, 2019

As at March 31, 2018

2. Unquoted:

(i) Shares : (a) Equity

Nil

Nil

(b) Preference

Nil

Nil

(ii) Debentures and Bonds

Nil

Nil

(iii) Units of mutual funds

Nil

Nil

(iv) Government Securities

Nil

Nil

(v) Others

Nil

Nil

Long Term investments:-

1. Quoted:

(i) Shares : (a) Equity

493.34

392.89

(b) Preference

Nil

Nil

(ii) Debentures and Bonds

644.92

Nil

(iii) Units of mutual funds

Nil

300.31

(iv) Government Securities(net of amortisation)

50.94

50.92

(v) Others

Nil

Nil

2. Unquoted:

(i) Shares : (a) Equity

8,636.36

3,199.94

(b) Preference

Nil

Nil

(ii) Debentures and Bonds

Nil

Nil

(iii) Units of mutual funds

Nil

Nil

(iv) Government Securities

Nil

Nil

(v) Others - Investment in Pass Through Certificates

Nil

Nil

5 Borrower Group-wise Classification of Assets Financed* as in (2) and (3) above:-

As at March 31, 2019

Category

Amount (Principal, Net of provisioning)

Secured

Unsecured

Total

1. Related Parties

(a) Subsidiaries

Nil

5,000.00

5,000.00

(b) Companies in the same group

Nil

Nil

Nil

(c) Other related parties

Nil

Nil

Nil

2. Other than related parties

329,703.66

1,398.46

331,102.12

Total

329,703.66

6,398.46

336,102.12

*Principal amounts of assets financed

As at March 31, 2018

Category

Amount (Principal, Net of provisioning)

Secured

Unsecured

Total

1. Related Parties

(a) Subsidiaries

79.67

2,250.00

2,329.67

(b) Companies in the same group

Nil

Nil

Nil

(c) Other related parties

Nil

Nil

Nil

2. Other than related parties

282,579.32

419.93

282,999.25

Total

282,658.99

2,669.93

285,328.91

6 Investor group-wise classification of all investments (current and long term ) in shares and securities (both quoted and unquoted):-

Category

As at March 31, 2019

As at March 31, 2018

Market Value / Break up value or fair value or Net Asset Value

Book Value (Net of provisioning)

Market Value / Break up value or fair value or Net Asset Value

Book Value (Net of provisioning)

1. Related Parties

(a) Subsidiaries

7,928.12

8,182.49

3,330.86

3,429.50

(b) Companies in the same group

197.17

197.17

163.29

163.29

(c) Other related parties

Nil

Nil

Nil

Nil

2. Other than related parties

1,392.60

1,445.90

363.65

361.48

Total

9,517.89

9,825.56

3,857.80

3,954.27

7 Other information

Amount outstanding

Particulars

As at March 31, 2019

As at March 31, 2018

(i)

Gross Non-Performing Assets*

(a) With Related parties

Nil

Nil

(b) With Others

9,326.00

12,871.59

(ii)

Net Non-Performing Assets*

(a) With Related parties

Nil

Nil

(b) With Others

8,031.04

10,970.63

(iii)

Assets acquired in satisfaction of debt

(a) With Related parties

Nil

Nil

(b) With Others

Nil

Nil

* Stage 3 Loan assets under Ind AS

8. Details of the Auctions conducted with respect to Gold Loan

The Company auctioned 367,087 loan accounts (Previous Year: 540,858 accounts) during the financial year. The outstanding dues on these loan accounts were Rs. 15,184.51 millions (March 31, 2018: Rs. 27,168.03 millions) till the respective date of auction. The Company realised Rs. 14,000.47 millions (March 31, 2018: Rs. 25,1 76.78 millions) on auctioning of gold jewellery taken as collateral security on these loans. Company confirms that none of its sister concerns participated in the above auctions

9 a) Capital

Particulars

As at March 31, 2019

As at March 31, 2018

i) CRAR (%)

26.05

26.26

ii) CRAR-Tier 1 capital (%)

25.61

25.49

iii) CRAR-Tier II capital (%)

0.44

0.77

iv) Amount of subordinated debt raised as Tier-II capital

4,446.41

11,237.20

v) Amount raised by issue of Perpetual Debt Instruments

Nil

Nil

b) Investments

Particulars

As at March 31, 2019

As at March 31, 2018

1)

Value of Investments

(i) Gross Value of Investments

(a) In India

9,332.26

3,561.42

(b) Outside India

493.30

392.85

(ii) Provisions for Depreciation

(a) In India

Nil

Nil

(b) Outside India

Nil

Nil

(iii) Net Value of Investments

(a) In India

9,332.26

3,561.42

(b) Outside India

493.30

392.85

2)

Movement of provisions held towards

Depreciation on investments

(i) Opening balance

Nil

Nil

(ii) Add : Provisions made during the year

Nil

Nil

(iii) Less : Write-off / write-back of excess provisions during the year

Nil

Nil

(iv) Closing balance

Nil

Nil

9 c) Derivatives

Forward Rate Agreement / Interest Rate Swap

Particulars

As at March 31, 2019

As at March 31, 2018

(i)

The notional principal of swap agreements

Nil

Nil

(ii)

Losses which would be incurred if counterparties failed to fulfill their obligations under the agreements

Nil

Nil

(iii)

Collateral required by the NBFC upon entering into swaps

Nil

Nil

(iv)

Concentration of credit risk arising from swaps

Nil

Nil

(v)

The fair value of the swap book

Nil

Nil

Exchange traded interest rate (1R) derivatives

Particulars

As at March 31, 2019

As at March 31, 2018

Exchange traded interest rate (1R) derivatives

Nil

Nil

Disclosures on risk exposures of derivatives

Qualitative disclosures

The Company has a Board approved policy in dealing with derivative transactions.The Company undertakes derivative transactions for hedging on-balance sheet assets and liabilities. Such outstanding derivative transactions are accounted on accrual basis over the life of the underlying instrument. The Asset Liability Management Committee and Risk Management Committee closely monitors such transactions and reviews the risks involved.

Quantitative disclosures

As at March 31, 2019

As at March 31, 2018

Particulars

Currency derivatives

Interest rate derivatives

Currency derivatives

Interest rate derivatives

(i) Derivatives (Notional principal amount)

For hedging

Nil

Nil

Nil

Nil

(ii) Marked to market positions

a) Asset

Nil

Nil

Nil

Nil

b) Liability

Nil

Nil

Nil

Nil

(iii) Credit exposure

Nil

Nil

Nil

Nil

(iv) Unhedged exposures

Nil

Nil

Nil

Nil

9 d) Disclosure relating to securitisation

Particulars

As at March 31, 2019

As at March 31, 2018

i) Disclosure relating to securitisation

Nil

Nil

9 e) Asset Liability Management

Maturity pattern of certain items of assets and liabilities

As at 31. 03.2019

1 to 30/ 31 days

Over one month

Over 2 months

Over 3 months

Over 6 months

Over 1 year

Over 3 to 5

Over 5

Non sensitive to ALM **

Total

(one month)

to 2 months

to 3 months

to 6 months

to 1 year

to 3 year

years

years

Liabilities

Deposits

N.A

N.A

N.A

N.A

N.A

N.A

N.A

N.A

N.A

N.A

Borrowings

11,082.93

17,742.43

23,869.66

1,715.97

140,016.50

55,140.78

18,897.69

504.93

(639.37)

268,331.52

Foreign Currency Liabilities

-

-

Assets

-

-

Advances*

71,146.14

55,282.43

44,987.00

86,409.44

84,142.84

13,669.64

218.31

4.82

(6,531.32)

349,329.32

Investments (other than investment in foreign subsidiary)

20.34

30.60

9,281.32

9,332.26

Foreign Currency assets (Investment in foreign subsidiary)

493.30

493.30

*Contracted tenor of gold loan is maximum of 12 months. However, on account of high incidence of prepayment before contracted maturity, the above maturity profile has been prepared by the management on the basis of historical pattern of repayments. In case of loans other than gold loan, the maturity profile is based on contracted maturity. **represents adjustments on account of E1R/ECL

As at 31.03.2018

1 to 30/ 31 days

Over one month

Over 2 months

Over 3 months

Over 6 months

Over 1 year

Over 3 to 5

Over 5

Non sensitive to ALM **

Total

(one month)

to 2 months

to 3 months

to 6 months

to 1 year

to 3 year

years

years

Liabilities

Deposits

N.A

N.A

N.A

N.A

N.A

N.A

N.A

N.A

N.A

N.A

Borrowings

2,788.61

17,197.17

14,585.31

5,629.61

126,672.53

34,525.82

9,604.15

986.00

(318.83)

211,670.37

Foreign Currency Liabilities

-

-

_

-

Assets

-

-

_

-

Advances*

56,806.66

43,677.16

36,201.68

73,458.69

81,257.70

9,894.98

19.59

0.14

(6,248.57)

295,068.03

Investments (other than investment in foreign subsidiary)

10.21

300.31

30.58

3,220.32

3,561.42

Foreign Currency assets (Investment in foreign subsidiary)

392.85

392.85

*Contracted tenor of gold loan is maximum of 12 months. However, on account of high incidence of prepayment before contracted maturity, the above maturity profile has been prepared by the management on the basis of historical pattern of repayments. In case of loans other than gold loan, the maturity profile is based on contracted maturity. **represents adjustments on account of E1R/ECL

9 f) Exposures

i) Exposure to Real Estate Sector

Category

As at March 31, 2019

As at March 31, 2018

a)

Direct exposure (Net of Advances from Customers)

(i)

Residential Mortgages -Lending fully secured by mortgages on residential property that is or will be occupied by

Nil

Nil

the borrower or that is rented:

(ii)

Commercial Real Estate -

Lending secured by mortgages on commercial real estates (office buildings, retail space, multipurpose commercial premises, multi-family residential buildings, multi-tenanted commercial premises, industrial or warehouse space, hotels, land acquisition, development and construction, etc.). Exposure would also include non- fund based (NEB) limits;

Nil

135.26

(iii)

Investments in Mortgage Backed Securities (MBS) and other securitised exposures -

a. Residential,

Nil

Nil

b. Commercial Real Estate.

Nil

Nil

Total Exposure to Real Estate Sector

Nil

135.26

ii) Exposure to Capital Market

Particulars

As at March 31, 2019

As at March 31, 2018

i)

Direct investment in equity shares, convertible bonds, convertible debentures and units of equity-oriented mutual funds the corpus of which is not exclusively invested in corporate debt

0.04

300.35

ii)

Advances against shares / bonds / debentures or other securities or on clean basis to individuals for investment in shares (including IPOs / ESOPs), convertible bonds, convertible debentures, and units of equity-oriented mutual funds

Nil

Nil

iii)

Advances for any other purposes where shares or convertible bonds or convertible debentures or units of equity oriented mutual funds are taken as primary security

Nil

Nil

iv)

Advances for any other purposes to the extent secured by the collateral security of shares or convertible bonds or convertible debentures or units of equity oriented mutual funds i.e. where the primary security other than shares / convertible bonds /convertible debentures / units of equity oriented mutual funds does not fully cover the advances

Nil

Nil

v)

Secured and unsecured advances to stockbrokers and guarantees issued on behalf of stockbrokers and market makers

Nil

Nil

vi)

Loans sanctioned to corporates against the security of shares /bonds / debentures or other securities or on clean basis for meeting promoter''s contribution to the equity of new companies in anticipation of raising resources

Nil

Nil

vii)

Bridge loans to companies against expected equity flows /issues

Nil

Nil

viii)

All exposures to Venture Capital Funds (both registered and unregistered)

Nil

Nil

Total Exposure to Capital Markets

0.04

300.35

iii) Details of financing of parent company products

Not Applicable

iv) Details of Single Borrower Limit(SGL)/ Group Borrower Limit(GBL) exceeded by the Company

Nil

v) Total amount of advances for which intangible securities such as charge over the rights, licenses, authority etc has been taken and which is to be classified as Unsecured Advances

Nil

9 g) Registration obtained from financial sector regulators

Sl. No.

Regulator

Registration Number

1

Reserve Bank of India

Certificate of Registration No. N 16.00167

9 h) Penalties levied by the above Regulators- Nil 9 i) Ratings assigned by Credit rating Agencies

Sl. No

Particulars

As at March 31, 2019

As at March 31, 2018

1

Commercial paper

CR1S1LA1 ,ICRAA1

CR1S1LA1 ,1CRAA1

2

Bank Loans - Working Capita] Demand Loans

1CRAA1

1CRAA1

3

Bank Loans - Cash Credit

lCRA AA(Stable)

lCRAAA(Stable)

4

Bank Term Loans

lCRA AA(Stable)

lCRAAA(Stable)

5

Non Convertible Debentures- Long term

CRlSlL AA(Stable), lCRA AA(Stable)

CRlSlL AA(Stable), lCRA AA(Stable)

6

Subordinated Debt

CRlSlL AA(Stable), lCRA AA(Stable)

CRlSlL AA(Stable), lCRA AA(Stable)

During the year, there were no change in the above ratings . 9 j) Provisions and Contingencies

SI. No

Break up of Provisions and Contingencies shown under the head Expenses in the Statement of Profit and Loss

Year ended March 31, 2019

Year ended March 31, 2018

1

Provisions for depreciation on Investment

Nil

Nil

2

Provision towards NPA (Expected Credit Loss)

Nil

2,061.03

3

Provision made towards Income Tax

11,046.74

10,671.26

4

Other Provision and Contingencies (with details)

Provision for Leave Encashment

16.13

212.43

Provision for Gratuity

135.21

128.06

Provision for Other Assets

16.24

19.06

5

Provision for Standard Assets

Nil

Nil

9 k) Concentration of Advances

sl.

No

Particulars

As at March 31, 2019

As at March 31, 2018

1

Total Advances to twenty largest borrowers

5,380.79

2,724.72

2

Percentage of Advances to twenty largest borrowers to Total Advances of the NBEC

1.57%

0.94%

9 1) Concentration of Exposures

SI. No

Particulars

As at March 31, 2019

As at March 31, 2018

1

Total Exposures to twenty largest borrowers/customers

5,380.79

2,724.72

2

Percentage of Exposures to twenty largest borrowers/Customers to Total Exposures of the NBEC on borrowers/Customers.

1.57%

0.94%

9 m) Concentration of NPAs*

SI. No

Particulars

As at March 31, 2019

As at March 31, 2018

1

Total Exposures to top four NPA accounts

24.20

158.95

*Stage 3 loans assets under Ind AS

9 n) Sector-wise INPAs

SI. No

Sector

Percentage of NPAs to Total Advances in that sector as on March 31, 2019

Percentage of NPAs to Total Advances in that sector as on March 31, 2018

1

Agriculture & allied activities

Nil

Nil

2

MSME

Nil

Nil

3

Corporate borrowers

Nil

0.05%

4

Services

Nil

Nil

5

Unsecured personal loans

0.13%

0.15%

6

Auto loans (commercial vehicles)

Nil

Nil

7

Other loans

2.67%

4.37%

9 o) Movement of INPAs*

SI. No.

Particulars

As at March 31, 2019

As at March 31, 2018

(i)

Net NPAs* to Net Advances (%)

2.39%

3.84%

(ii)

Movement of NPAs* (Gross)

(a) Opening balance

12,871.59

7,612.23

(b) Additions during the year

8,404.10

12,071.92

(c) Reductions during the year

11,949.69

6,812.56

(d) Closing balance

9,326.00

12,871.59

(iii)

Movement of Net NPAs*

-

(a) Opening balance

10,970.63

6,380.31

(b) Additions during the year

8,404.10

11,402.88

(c) Reductions during the year

11,343.69

6,812.56

(d) Closing balance

8,031.04

10,970.63

(iv)

Movement of provisions for NPAs* (excluding Provisions on Standard Assets)

-

-

(a) Opening balance

1,900.96

1,231.92

(b) Provisions made during the year

-

669.04

(c) Write-off /write -back of excess provisions

606.00

(d) Closing balance

1,294.96

1,900.96

Additions/ Reductions to NPA (Gross and Net) stated above during the year are based on year end figures. * Stage 3 loan assets under Ind AS.

9 p) Overseas Assets as at March 31, 2019

Sl. No.

Name of the Subsidiary

Country

Total assets

1

Asia Asset Finance PLC, Sri Lanka

Sri Lanka

493.30

9 q) Off-balance Sheet SPVs sponsored

Sl.

No.

Name of the Subsidiary

As at March 31, 2019

As at March 31, 2018

a)

Domestic

Nil

Nil

b)

Overseas

Nil

Nil

9 r) Customer Complaints

Sl. No.

Particulars

As at March 31, 2019

As at March 31, 2018

(a)

No. of complaints pending as at the beginning of the year

18

16

(b)

No of complaints received during the year

351

322

(c)

No of complaints redressed during the year

365

320

(d)

No. of complaints pending as at the end of the year

4

18

Note 54: Previous year''s figures have been regrouped/rearranged, wherever necessary to conform to current year''s classifications/disclosure.

Notes on accounts form part of standalone financial statements

As per our report of even date attached

For Varma & Varma

For and on behalf of the Board of Directors

(FRN : 004532S)

Sd/-

Sd/-

Sd/-

V. Sattiyanarayanan

M.G. George Muthoot

George Alexander Muthoot

Partner

Chairman & Whole-time Director

Managing Director

Chartered Accountants

DIN: 00018201

DIN: 00016787

Membership No. 21941

Sd/-

Sd/-

Oommen K. Manimen

Maxin James

Chief Financial Officer

Company Secretary

Place: Kochi

Place: Kochi

Date: May 13, 2019

Date: May 13, 2019


Mar 31, 2018

1. Background

Muthoot Finance Limited was incorporated as a private limited Company on 14th March, 1997 and was converted into a public limited Company on November 18, 2008. The Company is promoted by Mr. M. G. George Muthoot, Mr. George Thomas Muthoot, Mr George Jacob Muthoot and Mr. George Alexander Muthoot collectively operating under the brand name of “The Muthoot Group”, which has diversified interests in the fields of Financial Services, Healthcare, Education, Plantations, Real Estate, Foreign Exchange, Information Technology, Insurance Distribution, Hospitality etc. The Company obtained permission from the Reserve Bank of India for carrying on the business of Non-Banking Financial Institutions on 13-11-2001 vide Regn No. N 16.00167. The Company is presently classified as Systemically Important Non-Deposit Taking NBFC (NBFC-ND-S1).

The Company made an Initial Public Offer of 51,500,000 Equity Shares of the face value Rs.10/- each at a price of Rs.175/- raising Rs.9,012,500,000.00 during the month of April 2011. The equity shares of the Company are listed on National Stock Exchange of India Limited and BSE Limited from May 6, 2011.

2.1 Terms and Rights attached to Equity Shares

The Company has only one class of equity share having face value Rs.10/- per share. All these shares have the same rights and preferences with respect to the payment of dividend, repayment of capital and voting.

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

2.2 The reconciliation of the number of shares outstanding and the amount of share capital as at March 31, 2018 and March 31, 2017 is set out below:-

2.3 Shares reserved for issue under Employee Stock Option Scheme

The Company has reserved 2,071,329 equity shares (Previous year: 2,837,904) for issue under the Employee Stock Option Scheme 2013. (Refer Note 26 d)

3.1 Debenture Redemption Reserve

During the year, the Company has transferred an amount of Rs.5,011,902,658.00 (Previous Year: Rs.4,818,119,028.50) to the Debenture Redemption Reserve. No appropriation was made from this Reserve during the year

3.2 Statutory Reserve

Statutory Reserve represents the Reserve Fund created under Section 45 1C of the Reserve Bank of India Act, 1934. An amount of Rs.3,440,532,079.00 representing 20% of Net Profit is transferred to the Fund for the year (Previous Year: Rs.2,359,663,297.00). No appropriation was made from the Reserve Fund during the year.

4.1 Secured Redeemable Non-Convertible Debentures

The Company had privately placed Secured Redeemable Non-Convertible Debentures for a maturity period of 60-120 months with an outstanding amount of Rs.8,769,477,000.00 (Previous Year: Rs.25,190,078,000.00).

Of the above, Rs.3,554,285,000.00 (Previous Year: Rs.5,269,448,000.00) is included in long-term borrowings and Rs.4,874,886,000.00 (Previous Year: Rs.19,195,613,000.00) is included in current maturities of long-term debt (Refer Note 7.1) and Rs.340,306,000.00 (Previous Year: Rs.725,017,000.00) is included in unpaid (unclaimed) matured debentures (Refer Note 7.2).

4.2 Secured Non-Convertible Debentures - Public Issue

The outstanding amount of Secured Redeemable Non-Convertible Listed Debentures raised through Public Issue stood at Rs.43,841,527,000.00 (Previous Year: Rs.37,098,153,000.00)

Out of the above, Rs.32,302,410,000.00 (Previous Year: Rs.24,341,527,000.00) is classified as Long-term borrowings and Rs.11,539,117,000.00 (Previous Year: Rs.12,756,626,000.00) is classified as Current maturities of Long-term Debt (Refer Note 7.1)

4.3 Subordinated Debt

Subordinated Debt is subordinated to the claims of other creditors and qualifies as Tier ll capital under the Non-Banking Financial Company - Systemically lmportant Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016. The outstanding amount of privately placed subordinated debt stood at Rs.7,388,228,000.00 (Previous year: Rs.15,457,562,000.00)

Out of the above, Rs.458,500,000.00 is classified as long-term borrowings (Previous year: Rs.7,037,976,000.00) and Rs.6,579,476,000.00 is classified as current maturities of long-term debt (Previous year: Rs.8,039,660,000.00) and Rs.350,252,000.00 (Previous year: Rs.379,926,000.00) is included in unpaid (unclaimed) matured debentures (Refer Note 7.2)

4.4 Subordinated Debt - Public Issue

The outstanding amount of Unsecured Redeemable Non-Convertible Listed Subordinated Debt which qualifies as Tier ll capital under the Non-Banking Financial Company - Systemically lmportant Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 issued through Public lssue stood at Rs.3,748,976,000.00 (Previous Year: Rs.3,561,807,000.00). This amount is classified as long-term borrowings.

4.5 Subordinated Debt - Listed

The privately placed Unsecured Redeemable Non-Convertible Listed Subordinated Debt which qualifies as Tier 11 capital under the Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 stood at Rs.100,000,000.00 (Previous Year: Rs.100,000,000.00). This amount is classified as long-term borrowings.

5.1 Movement of Provision for Standard and Non-Performing Assets

As per the Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016, Company has created provision for Standard Assets as well as Non-Performing Assets. Company has separately created General Standard Asset Provision and Gold Price Fluctuation Risk Standard Asset Provision over and above RBI Prudential norms, as estimated by the management. Details are as per the table below:-

Security Deposit includes Rs.1,770,000.00 (Previous Year: Rs.1,770,000.00) being rent deposit due by Promoter Directors and Rs.1,470,000.00 (Previous Year: Rs.1,470,000.00) being rent deposits due by firms in which Promoter Directors are partners.

Fixed Deposit balance include fixed deposits given as security for borrowings Rs.1,000,000.00 (Previous year: Rs.1,000,000.00), fixed deposits given as security for guarantees Rs.257,168.00 (Previous year: Rs.600,000.00) and fixed deposit on which lien is marked Rs.664,026.48 (Previous year: Rs.481,004.48)

6. Earnings Per Share

As per Accounting Standard 20, Earnings Per Share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The details of calculation of the basic and diluted earnings per share are stated below:-

7. Employee Benefits

a) Defined Contribution Plan

During the year, the Company has recognised the contribution to Provident Fund, in the Statement of Profit and Loss in Note 21 -Employee Benefits Expense as under:-

b) Long-Term Employee Benefits

Accumulated compensated absences

During the year, the Company has recognised provision for accumulated compensated absences, in the Statement of Profit and Loss in Note 21 Employee Benefits Expense under ‘Salaries and incentives’. Details are as under:

Out of the above, Rs.171,722,000.00 is classified as long-term provisions (Previous year: Nil) and Rs.40,703,000.00 as short-term provisions (Previous year: Nil)

c) Defined Benefit Plan

Gratuity Plan

Gratuity liability is funded through a Gratuity Fund managed by Kotak Mahindra Old Mutual Life Insurance Limited and 1C1C1 Prudential Life Insurance Company Limited.

The following table sets out the status of the Gratuity Plan as required under AS 15- ''Employee Benefits’ issued by The Institute of Chartered Accountants of India.

Reconciliation of opening and closing balances of the present value of the defined benefit obligation and plan assets:-

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. Discount rate is based on the prevailing market yields of the Government Bond as at Balance Sheet date for the estimated term of obligation.

The surplus in funding of gratuity Rs.55,616,077.53 has been grouped under Short-term Loans and Advances (Previous year (Deficit) Rs.5,273,000.00 was grouped as Long-Term provisions).

Estimated employer contribution for 2018-19 - Rs.100,000,000.00

8. Leases

The Company has not taken or let out any assets on financial lease.

All operating lease agreements entered into by the Company are cancellable in nature. Hence Company has debited/credited the lease rent paid/received to the Statement of Profit and Loss.

Consequently, disclosure requirement of future minimum lease payments in respect of non-cancellable operating lease as per AS 19 is not applicable to the Company.

Lease rentals received for assets let out on operating lease Rs.4,689,685.00 (Previous year: Rs.3,241,956.52) are recognised as income in the Statement of Profit and Loss under the head ‘Other lncome’ and lease rental payments for assets taken on an operating lease Rs.1,913,464,850.36 (Previous year: Rs.1,807,851,412.79) are recognised as ‘Rent’ in the Statement of Profit and Loss.

9. Corporate Social Responsibility (CSR)

The Company has constituted CSR Committee and has undertaken CSR activities in accordance with Schedule VII to the Companies Act, 2013 mainly through the trusts, Muthoot M George Foundation and Muthoot M George Charitable Trust. Muthoot M George Foundation and Muthoot M George Charitable Trust are public charitable trusts formed under Indian Trust Act, 1882 having registration under Section 12 AA of Income Tax Act, 1961. The gross amount required to be spent by the Company as per Section 135 of the Companies Act, 2013 is Rs.284,372,608.00 (Previous Year: Rs.235,877,834.00) and the Company has spent Rs.197,283,930.00 (Previous Year: Rs.149,997,000.00).

10. Dividend distributed to equity shareholders

The Board declared an interim dividend for the year 2017-18 of Rs.10/- per equity share (100% of face value of share at Rs.10/- each per equity share) at their meeting held on February 8, 2018.

11. Disclosure with regard to dues to Micro and Small Enterprises

Based on the information available with the Company and has been relied upon by the auditors, none of the suppliers have confirmed to be registered under ‘The Micro, Small and Medium Enterprises Development (‘MSMED’) Act, 2006’. Accordingly, no disclosures relating to principal amounts unpaid as at the period ended March 31, 2018 together with interest paid /payable are required to be furnished.

12. Utilisation of proceeds of Public Issue of Non-Convertible Debentures

The Company has during the year raised through public issue (a) Rs.19,500,000,000.00 of Secured Redeemable Non-Convertible Debentures and (b) Rs.187,169,000.00 of Unsecured Redeemable Non-Convertible Debentures in the nature of Subordinated Debt. As at March 31, 2018, the Company has utilised the entire proceeds of the public issue, net of issue expenses in accordance with the objects stated in the offer documents.

13. Loans from Directors and relatives

Reserve Bank of India (RB1) in its inspection report issued based on inspection of the Company under Section 45N of the RB1 Act, 1934 with reference to the financial position as on March 31, 2016, has noted that a loan accepted by the Company from a person is not covered under the definition of ‘relative’ under Non-Banking Financial Companies -Acceptance of Public Deposits (Reserve Bank) Directions, 2016 read with Companies Act, 2013 and hence has violated the RB1 directions regarding acceptance of public deposits. Company clarified to RB1 that para 3(xv)(j) of Non-Banking Financial Companies - Acceptance of Public Deposits (Reserve Bank) Directions, 2016 continue to define the term ‘relative’ as defined under Companies Act,1956. Hence, the said party falls within the definition of ‘Relative’ and there is no violation of the above said Directions. However, in accordance with the RB1 instructions, the Company has fully repaid the said loan amounting to Rs.61,170,000.00 (maximum amount outstanding during the year Rs.62,250,000.00) during the financial year ended March 31, 2018.

14. Segment Reporting

a) The Company is engaged in two segments of business - Financing and Power Generation.

b) ln the context of Accounting Standard 17 on Segment Reporting, issued by the lnstitute of Chartered Accountants of lndia, Company has identified business segment as the primary segment and geographical segment as secondary segment for the purpose of disclosure.

c) Company operates in a single geographical segment. Hence, secondary geographical segment information disclosure is not applicable.

15. Frauds during the year

During the year, frauds committed by employees and customers of the Company amounted to Rs.35,059,608.00 (Previous year: Rs.15,383,124.00) which has been recovered/ written off/ provided for. Of the above, fraud by employees of the Company amounted to Rs.25,848,608.00 (Previous year: Rs.12,827,281.00).

16. Investment in Muthoot Homefin (India) Limited

During the year, the Company acquired 31,527,272 equity shares in Muthoot Homefin (India) Limited for a consideration of Rs.1,387,199,968.00. As at March 31, 2018, the total share holding in Muthoot Homefin (India) Limited is 97,727,272 equity shares (Previous year: 66,200,000 equity shares) representing 100% (Previous year: 88.27%) of their total equity share capital.

17. Investment in Belstar Investment and Finance Private Limited

During the year, the Company made additional investment in 1,400,000 equity shares amounting to Rs.70,000,000.00 in Belstar Investment and Finance Private Limited. As at March 31, 2018, the total shareholding in Belstar Investment and Finance Private Limited is 16,417,459 equity shares (Previous year: 15,017,459 equity shares) representing 66.61% (Previous year: 64.60%) of their total equity share capital.

1. Details of the Auctions conducted with respect to Gold Loan

The Company auctioned 540,858 loan accounts (Previous Year: 255,852 accounts) during the financial year. The outstanding dues on these loan accounts were Rs.27,168,029,083.00 (Previous Year: Rs.12,994,357,734.00) till the respective date of auction. The Company realised Rs.25,176,784,739.00(Previous Year: Rs.11,846,996,934.00) on auctioning of gold jewellery taken as collateral security on these loans. Company confirms that none of its sister concerns participated in the above auctions.

Disclosures on risk exposure of derivatives Qualitative disclosures

The Company has a Board approved policy in dealing with derivative transactions. The Company undertakes derivative transactions for hedging on-balance sheet assets and liabilities. Such outstanding derivative transactions are accounted on accrual basis over the life of the underlying instrument. The Asset Liability Management Committee and Risk Management Committee closely monitors such transactions and reviews the risks involved.

18. Previous year’s figures have been regrouped/rearranged, wherever necessary to conform to current year’s classifications/disclosure.


Mar 31, 2017

1. LEASES

The Company has not taken or let out any assets on financial lease.

All operating lease agreements entered into by the Company are cancellable in nature. Hence Company has debited/credited the lease rent paid/received to the Statement of Profit and Loss.

Consequently, disclosure requirement of future minimum lease payments in respect of non-cancellable operating lease as per AS 19 is not applicable to the Company.

Lease rentals received for assets let out on operating lease Rs, 3,241,956.52 (Previous year: Rs, 1,011,051.00) are recognized as income in the Statement of Profit and Loss under the head ‘Other 1ncome’ and lease rental payments for assets taken on an operating lease Rs, 1,807,851,412.79 (Previous year:

Rs, 1,712,975,594.74) are recognized as ‘Rent Paid’ in the Statement of Profit and Loss.

b) Defined Benefit Plan Gratuity Plan

Gratuity liability is funded through a Gratuity Fund managed by Kotak Mahindra Old Mutual Life 1nsurance Limited and 1C1C1 Prudential Life 1nsurance Company Limited.

The following table sets out the status of the Gratuity Plan as required under AS 15.

Reconciliation of opening and closing balances of the present value of the defined benefit obligation and plan assets:-

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. Discount rate is based on the prevailing market yields of the Government Bond as at Balance Sheet date for the estimated term of obligation.

The deficit in funding of gratuity Rs, 5,273,000/-(rounded off in Rs,000) (Previous year Rs, 2,391,462.94) has been accounted as Long term provisions.

Estimated employer contribution for 2017-18 -Rs, 130,000,000/-

2. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The company has constituted CSR Committee and has undertaken CSR activities in accordance with Schedule V11 to the Companies Act, 2013 mainly through the trust, Muthoot M George Foundation. Muthoot M George Foundation is a public charitable trust formed under 1ndian Trust Act, 1882 which has registration under section 12 AA of 1ncome Tax Act, 1961. The gross amount required to be spent by the Company as per Section 135 of the Companies Act, 2013 is '' 235,877,834.00 (Previous Year : Rs, 248,857,253.00 ) and the Company has spent Rs, 149,997,000.00 (Previous Year: Rs, 146,187,500.00 ) towards various activities as below:-

3. DISCLOSURE OF RELATED PARTY TRANSACTION IN ACCORDANCE WITH ACCOUNTING STANDARD (AS18) “RELATED PARTY DISCLOSURES” ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA. (a) Names of Related Parties with whom transactions has taken place:-

Category Name of the Related Party

1. M. G. George Muthoot

2. George Thomas Muthoot Key Management Personnel 3. George Jacob Muthoot

4. George Alexander Muthoot

5. Alexander M. George s/o M. G. George Muthoot

1. Sara George w/o M. G. George Muthoot

2. Susan Thomas w/o George Thomas Muthoot

3. Elizabeth Jacob w/o George Jacob Muthoot

4. Anna Alexander w/o George Alexander Muthoot

5. George M. George s/o M. G. George Muthoot Relatives of Key Management Personnel 6. George M. Jacob s/o George Jacob Muthoot

7. Reshma Susan Jacob d/o George Jacob Muthoot

8. George Alexander (Jr.) s/o George Alexander Muthoot

9. Eapen Alexander s/o George Alexander Muthoot

10. Anna Thomas d/o George Thomas Muthoot

11. Valsa Kurien w/o George Kurien

1. Asia Asset Finance PLC, Sri Lanka

, . .. 2. Muthoot Homefin (1ndia) Limited.

Subsidiary Companies . . . . . . .

3. Belstar 1nvestment and Finance Private Limited

4. Muthoot 1nsurance Brokers Private Limited

1. Muthoot Vehicle & Assets Finance Limited

2. Muthoot Leisure And Hospitality Services Private Limited

3. MGM Muthoot Medical Centre Private Limited.

4. Muthoot Marketing Services Private Limited.

5. Muthoot Broadcasting Private Limited

6. Muthoot Forex Limited

7. Emgee Board and Paper Mills Private Limited

8. Muthoot Health Care Private Limited

9. Muthoot Precious Metals Corporation

10. GMG Associates

11. Muthoot Commodities Limited

Entities over which Key Management Personnel and their relatives are 12. Emgee Muthoot Benefit Funds (1ndia) Limited

able to exercise significant influence 13. Geo Bros Muthoot Funds (1ndia) Limited

14. Muthoot 1nvestment Advisory Services Private Limited

15. Muthoot Securities Limited

16. Muthoot M George Permanent Fund Limited

17. Muthoot Housing & 1nfrastructure

18. Muthoot Properties & 1nvestments

19. Venus Diagnostics Limited

20. Muthoot Systems & Technologies Private Limited

21. Muthoot 1nfotech Private Limited

22. Muthoot Anchor House Hotels Private Limited

23. Marari Beach Resorts Private Limited.

24. Muthoot M George Foundation

4. FRAUDS DURING THE YEAR

During the year, frauds committed by employees of the company amounted to Rs, 12,827,281.00 ( Previous year: Rs, 16,266,785.00) which has been recovered /written off / provided for.

For the purposes of this clause, the term ‘Specified Bank Notes’ shall have the same meaning provided in the notification of the Government of 1ndia, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407( E), dated 8th November, 2016.

5. INVESTMENT IN ASIA ASSET FINANCE PLC, SRI LANKA (AAF)

During the year, the company has made an additional investment in 2,493,574 equity shares (Previous year : 73,019,415 equity shares) amounting to Rs, 6,097,756.87 ( Previous year : Rs, 48,629,914.81 ) of its subsidiary company, Asia Asset Finance PLC, Sri Lanka. As at 31st March, 2017 , the total shareholding in Asia Asset Finance PLC, Sri Lanka, amounts to 503,524,700 equity shares ( Previous year : 501,031,126 equity shares ) representing 60.00% ( Previous year : 59.70%) of their total equity share capital.

6. INVESTMENT IN MUTHOOT HOMEFIN (INDIA) LIMITED

During the year, the company acquired 26,700,000 equity shares (Previous year : 39,500,000 equity shares) in Muthoot Homefin (1ndia) Limited for a consideration of Rs, 303,579,000.00 (Previous year : 449,115,000.00). As at 31st March, 2017, the total share holding in Muthoot Homefin (1ndia) Limited amounts to 66,200,000 equity shares (Previous year :

39,500,000 equity shares) representing 88.27% ( Previous year : 79%) of their total equity share capital.

7. INVESTMENT IN MUTHOOT INSURANCE BROKERS PRIVATE LIMITED

The company has during the year acquired 100% of equity shares of Muthoot 1nsurance Brokers Private Limited for a consideration of Rs, 200,000,000.00 and making it a wholly owned subsidiary.

8. INVESTMENT IN BELSTAR INVESTMENT AND FINANCE PRIVATE LIMITED

During the year, the company acquired 15,017,459 equity shares in Belstar 1nvestment and Finance Private Limited representing 64.60% of equity share capital of Belstar 1nvestment and Finance Pvt Ltd for a consideration of Rs, 626,752,450.80 and thus making it a subsidiary of the company.

(8) Details of the Auctions conducted with respect to Gold Loan

The Company auctioned 255,852 loan accounts (Previous Year: 905,056 accounts) during the financial year. The outstanding dues on these loan accounts were Rs, 12,994,357,734.00 (Previous Year: Rs, 46,910,938,525.00) till the respective date of auction. The Company realized Rs, 11,846,996,934.00 (Previous Year: Rs, 38,799,978,043.00) on auctioning of gold jewellery taken as collateral security on these loans. Company confirms that none of its sister concerns participated in the above auctions.

PART “B”: ASSOCIATES AND JOINT VENTURES

Statement pursuant to Section 129 (3) of the Companies Act, 2013 related to Associate Companies and Joint Ventures.


Mar 31, 2015

1. LEASES

The Company has not taken or let out any assets on fnancial lease.

All operating lease agreements entered into by the Company are cancellable in nature. Hence Company has debited/credited the lease rent paid/received to the Statement of Proft and Loss.

Consequently, disclosure requirement of future minimum lease payments in respect of non operating lease as per AS 19 is not applicable to the Company.

Lease rentals received for assets let out on operating lease Rs. 1,191,393.00 (Previous year: Rs. 821,905.00) are recognized as income in the Statement of Proft and Loss under the head ''Other Income'' and lease payments for assets taken on an operating lease Rs. 1,649,533,191.00 (Previous year: Rs. 1,541,703,632.45) are recognized as ''Rent Paid'' in the Statement of Proft and Loss.

c) Employee stock option

Pursuant to approval by the shareholders at their meeting held on 27th September, 2013, the company has established "Muthoot ESOP 2013" scheme administered by the ESOP Committee of Board of Directors. The following options were granted as on 31st March, 2015 :-

2. DEPRECIATION

The Company has recomputed depreciation based on the useful life of the fxed assets as prescribed in Schedule II of the Companies Act, 2013. This has resulted in additional charge of depreciation of Rs. 344,309,614.33 for the year ended March 31 2015. Further as per the transitional provisions, the Company has adjusted accumulated depreciation of Rs. 36,472,607.11 to the opening balance of Reserves and Surplus. The corresponding impact of Rs. 12,397,039.16 has also been given efect to in Deferred Tax.

3. CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT Rs. NOT PROVIDED FOR)

As at As at Particulars 31st March, 2015 31st March, 2014

(i) Contingent Liabilities

(a) Claims against the company not acknowledged as debt

i) Service Tax demand for the period 2003-2008, pending in appeal with 49,921,307.00 49,921,307.00

CESTAT, Bangalore (Net of amount already remitted).

Commissioner of Central Excise, Customs and Service Tax, Kochi has raised a demand of Rs. 52,007,698.00 (Previous year: Rs. 52,007,698.00) as Service tax liability and penalty. During the course of the proceedings

Company paid Rs. 2,086,391.00. The Appellate Authority admitted the Appeal preferred by the company and granted stay of recovery, on predeposit of Rs. 8,300,000.00 (Previous year: Rs. 8,300,000.00). Pending disposal of appeal, no provision has been made by the company during the year.

ii) Service Tax demand for the period from 2007-08 to 2011-12 as per 4,895,883,216.00 -

Order No.COC-EXCUS-000-COM- 035-14-15 DT.19.12.2014, served on 30.12.2014, pending in appeal with CESTAT, Bangalore.Commissioner of Central Excise, Customs and Service Tax, Kochi as per order mentioned above has raised a demand of Rs. 1,531,458,734.00 as service tax payable on securitisation transactions with banks for the period from 2007 to 2012, along with interest U/s.75, Penalty U/s.76, Penalty U/s.77 and Penalty U/s.78 (Total liability including tax, interest and penalty under various sections if confrmed is estimated approximately, till the end of fnancial year at Rs. 4,895,883,216.00). Pending disposal of appeal , no provision has been made by the company during the year.

iii) Service Tax demand for the fnancial year 2013-14 as per Order 790,046.00 -

No.03/2015-ST DT.20.01.2015, served on 23.01.2015, pending in appeal with Commissioner (Appeals), Kochi.

Deputy Commissioner of Central Excise & Customs, & Service Tax, Kochi, as per order mentioned above has raised a demand of Rs. 790,046.00 (including penalty under sections 77(2) and 78, of Chapter V, of The Finance Act, 1994) as service tax payable, on foreign payments during fnancial year 2013-14. The company has fled an appeal against the above order with Commissioner (Appeals), Kochi. Pending disposal no provision has been made by the company during the year.

iv) Income tax demand for the Assessment Year (A.Y) 2012-13, pending 27,120,000.00 5,099,103.00

rectifcation petition and in appeal with Commissioner of Income Tax (Appeals)-II, Kochi.

Earlier, the demand outstanding as per Intimation U/s.143(1) wasRs. 5,099,103.00.

Additional Commissioner of Income Tax, Corp. Range -1, Kochi has issued an Order U/s.143(3) dated 02.03.2015 superseding the earlier order by demanding tax of Rs. 29,230,000.00. Out of the above, the company has remitted Rs. 2,110,000.00 and the balance outstandingis Rs. 27,120,000.00. Appeal fled with CIT (A)-II, Kochi and rectifcation application with Addl. CIT are pending for disposal.Pending disposal no provision has been made by the company for the year.

v) Income Tax demand for Assessment Year 2010-11,pending in appeal with 14,563,505.00 14,563,505.00

Commissioner of Income Tax (Appeals) , Kochi.

Additional Commissioner of Income Tax, Range 1, Kochi has passed an order demanding Rs. 36,384,640.00 towards income tax due for the Assessment Year 2010-11 U/s.143(3). The Company has remitted Rs. 21,821,135.00 and the balance demand outstanding as on 31.03.2015 is Rs. 14,563,505.00.

vi) Draf order on proposed action U/s.13 of Prevention of Money Laundering 26,970,000.00 26,970,000.00

Act,2002 pending in appeal with Appellete Tribunal under Prevention of Money Laundering Act,2002.

vii) Disputed claims against the company under litigation not acknowledged 20,284,568.00 7,264,133.00 as debts (b) Guarantees - Counter Guarantees Provided to Banks 165,193,750.00 93,693,750.00

(ii) Commitments

Estimated amount of contracts remaining to be executed on capital account and not 31,659,000.00 129,867,000.00 provided for.

4. DIVIDENDS PROPOSED TO BE DISTRIBUTED TO EQUIT Y SHAREHOLDERS

The Board has recommended a fnal dividend for the year 2014-15 of Rs. 2/- (20%) per equity share of Rs. 10/- each, subject to the approval of shareholders in the ensuing Annual General Meeting. The Company has during the year paid interim dividend of Rs. 4/- (40%) per equity share of Rs. 10/- each. The total dividend for the year 2014-15 is Rs. 6/- (60%) per equity share of Rs. 10/- each (Previous year Rs. 6/- per (60%) per equity share of Rs. 10/- each)

5. UTILIZATION OF PROCEEDS OF PUBLIC ISSUE OF SECURED NON - CONVERTIBLE DEBENTURES

The company has during the year raised through public issue (a) Rs. 13,370,186,000.00 of Rated Secured Redeemable Non - Convertible Debentures and (b) Rs. 1,248,856,000.00 of Rated Unsecured Redeemable Non-Convertible Debentures in the nature of Subordinated Debt which qualifes as Tier II capital under the Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007. As at 31.03.2015, the Company has utilised the entire proceeds of the public issue, net of issue expenses in accordance with the objects stated in the ofer documents.

6. UTILIZATION OF PROCEEDS OF INSTITUTIONAL PL ACEMENT PROGR AMME OF EQUIT Y SHARES

The company has during the year allotted 2,53,51,062 shares of Rs. 10 each for cash at a premium of Rs. 155 per equity share aggregating to Rs. 4,182,925,230.00, pursuant to Institutional Placement Programme (IPP) under Chapter VIII A of the SEBI ICDR Regulations complying with the minimum public shareholding requirement under Rule 19 (2) (b) (ii) of the Securities Contract (Regulation) Rules, 1957. The proceeds from the Institutional Placement Programme have been utilised in accordance with the objects as set out in the ofer document. Share issue expenses in connection with the said issue has been adjusted against the share premium account.

7. INVESTMENT IN ASIA ASSET FINANCE PLC, SRI L ANKA (A AF)

The company has during the year acquired 428,011,711 shares in AAF representing 51 % of equity share capital of AAF for a consideration of Rs. 338,123,555.16 (including expenses incurred in connection with the acquisition) and thus becomes a subsidiary of the company as on 31st December, 2014.

8. (DISCLOSURE REQUIRED AS PER RESERVE BANK OF INDIA NOTIFICATION NO. DNBS(PD).263 /CGM (NSV)-2013 DATED SEPTEMBER 16 , 2013)

The Company auctioned 648,123 loan accounts (Previous Year: 714,014 accounts) during the fnancial year. The outstanding dues on these loan accounts were Rs. 32,043,293,613.00 (Previous Year: Rs. 37,347,285,075.00) till the respective date of auction. The Company realised Rs. 27,879,028,742.00 (Previous Year: Rs. 34,293,127,267.00) on auctioning of gold jewellery taken as collateral security on these loans. Company confrms that none of its sister concerns participated in the above auctions.

9. PREVIOUS YEAR''S FIGURES HAVE BEEN REGROUPED / REARR ANGED, WHEREVER NECESSARY TO CONFORM TO CURRENT YEAR''S CLASSIFICATIONS / DISCLOSURE.


Mar 31, 2014

1. BACKGROUND

Muthoot Finance Ltd. was incorporated as a private limited Company on 14th March, 1997 and was converted into a public limited Company on 18th November, 2008. The Company is promoted by Mr. M. G. George Muthoot, Mr. George Thomas Muthoot, Mr. George Jacob Muthoot and Mr. George Alexander Muthoot collectively operating under the brand name of ''The muthoot Group'', which has diversifed interests in the felds of Financial Services, Healthcare, Education, Plantations, Real Estate, Foreign Exchange, Information Technology, Insurance Distribution, Hospitality etc. The Company obtained permission from the Reserve Bank of India for carrying on the business of Non- Banking Financial Institutions on 13th November, 2001 vide Regn No. N 16.00167. The Company is presently classifed as Systemically Important Non Deposit Taking NBFC (NBFC- ND-SI).

The Company made an Initial Public Offer of 51,500,000 Equity Shares of the face value Rs. 10/- each at a price of Rs. 175/- raising Rs. 9,012,500,000.00 during the month of April 2011. The equity shares of the Company are listed on National Stock Exchange of India Limited and BSE Limited from 6th May, 2011.

2. Leases

The Company has not taken or let out any assets on financial lease.

All operating lease agreements entered into by the Company are cancellable in nature. Hence Company has debited/credited the lease rent paid/received to the Statement of Profit and Loss.

Consequently, disclosure requirement of future minimum lease payments in respect of non operating lease as per AS 19 is not applicable to the Company.

Lease rentals received for assets let out on operating lease Rs. 821,905.00 (Previous year: Rs. 981,832.00) are recognised as income in the Statement of Profit and Loss under the head ''Other Income'' and lease payments for assets taken on an operating lease Rs. 1,541,703,632.45 (Previous year: Rs. 1,309,254,514.55 ) are recognised as ''Rent Paid'' in the Statement of Profit and Loss.

3. Employee benefits

a) Defined Contribution Plan

During the year, the Company has recognised the contribution to Provident Fund, in the Statement of Profit and Loss in Note 20- Employee benefit Expenses as under:-

b) Defined benefit Plan

Gratuity Plan

Gratuity liability is funded through a Gratuity Fund managed by Kotak mahindra Old mutual Life Insurance Limited and ICICI Prudential Life Insurance Company Limited.

The following table set out the status of the Gratuity Plan as required under AS 15.

Reconciliation of opening and closing balances of the present value of the Defined benefit obligation and plan assets:

The defcit in funding of gratuity Rs. 18,733,086.00 has been accounted as Long term provisions. Estimated employer contribution for 2014-15 - Rs. 90,000,000.00

The estimates of rate of escalation in salary considered in actuarial valuation, take into account infation, seniority, promotion and other relevant factors including supply and demand in the employment market. Discount rate is based on the prevailing market yields of the Government Bond as at Balance Sheet date for the estimated term of obligation.

4. CONTINGENT LIABILITIES AND COMMITMENTS (to the extent not provided for):- Rs.

As at As at Particulars 31st March, 2014 31st March, 2013

(i) Contingent Liabilities

(a) Claims against the company not acknowledged as debt

i) Service Tax demand for the period 2003-2008, pending in appeal with 49,921,307.00 49,921,307.00 CESTAT (Net of amount already remitted) Commissioner of Central Excise, Customs and Service Tax, Cochin has raised a demand of Rs. 52,007,698.00 (Previous year: Rs. 52,007,698.00) as Service tax liability and penalty. During the course of the proceedings Company paid Rs. 2,086,391.00. The Appellate Authority admitted the Appeal preferred by the company and granted stay of recovery, on predeposit of Rs. 8,300,000.00 (Previous year: Rs. 8,300,000.00). Pending disposal of appeal, no provision has been made by the company during the year.

ii) Income Tax demand for Assessment Year 2012-13 issued by CPC 5,099,103.00 - Bangalore U/s. 143 (1) Intimation Rs. 52,829,853.00/-. Out of the above demand Rs. 47,730,750.00/- has already been paid and balance outstanding is Rs. 5,099,103.00/-

iii) Income Tax demand for Assessment Year 2010-11,pending in appeal 14,563,505.00 36,384,640.00 with Commissioner of Income Tax (Appeals) , Cochin. Additional Commissioner of Income Tax, Range 1, Kochi has passed an order demanding Rs. 3,63,84,640/- towards income tax due for the Assessment Year 2010-11 U/s. 143(3).The Company has remitted Rs. 2,18,21,135/- and the balance demand outstanding as on 31.03.2014 is Rs. 1,45,63,505/-.

iv) Income tax demand for Assessment Year 2009-10, pending in appeal - 11,071,240.00 with Commissioner of Income Tax (Appeals), Kochi Additional Commissioner of Income Tax, Range 1, Kochi has passed an order demanding Rs. 13,782,470.00/- towards income tax due for the Assessment Year 2009-10 and on rectifcation ,demand was reduced to Rs. 1,33,21,240.00/- . The Commissioner of Income Tax (Appeals), Kochi has partly allowed the appeal in favour of the company. Company has fled appeal with ITAT, Cochin against the disallowances. The Company has already remitted the entire demand of tax and the balance demand pending as on 31.03.2014 is Nil.

v) Income tax demand for Assessment Year 2006-07, appeal with - 907,625.00 CIT(Appeals) II ,Cochin not allowed. Appeal fled with ITAT Cochin is pending. Company has already remitted the entire demand of tax and the balance outstanding as on 31.03.2014 is Nil.

vi) Draft order on proposed action U/s.13 of Prevention of Money 26,970,000.00 26,970,000.00 Laundering Act,2002 pending in appeal with Appellete Tribunal under Prevention of Money Laundering Act,2002 .

vii) Disputed claims against the company under litigation not 7,264,133.00 6,477,221.00 acknowledged as debts

(b) Guarantees - Counter Guarantees Provided to Banks 93,693,750.00 83,873,750.00

(ii) Commitments

Estimated amount of contracts remaining to be executed on capital 129,867,000.00 148,744,000.00 account and not provided for.

5. Dividends proposed to be distributed to equity shareholders

The Board has recommended a final dividend for the year 2013-14 of Re.1/- (10%) per equity share of Rs. 10/- each , subject to the approval of shareholders in the ensuing Annual General Meeting. The Company has during the year paid interim dividends aggregating to Rs. 5/- (50%) per equity share of Rs. 10/- each ( Previous Year : Nil) . The total dividend for the year 2013-14 is Rs. 6/- (60%) per equity share of Rs. 10/- each ( Previous Year: Rs. 4.5/- (45%) per equity share of Rs. 10/- each ).

6. Disclosure with regard to dues to micro and Small Enterprises Based on the information available with the Company and has been relied upon by the auditors, none of the suppliers have confirmed to be registered under "The Micro, Small and Medium Enterprises Development (''MSMED'') Act, 2006". Accordingly, no disclosures relating to amounts unpaid as at the period ended 31st March, 2014 together with interest paid /payable are required to be furnished.

7. Utilisation of proceeds of Public Issue of Secured Non - Convertible Debentures

The company has during the year raised through public issue (a) Rs. 10,119,814,000.00 of Rated Secured Redeemable Non - Convertible Debentures and (b) Rs. 880,186,000.00 of , Rated Unsecured, Redeemable Non-Convertible Debentures which qualifies as Tier II capital under the Non-Banking Financial ( Non-Deposit Accepting or Holding) Companies Prudential Norms ( Reserve Bank) Directions, 2007 As at 31st March, 2014, the Company has utilised the entire proceeds of the public issue, net of issue expenses in accordance with the objects stated in the offer documents.

8. Disclosure of related party transaction in accordance with Accounting Standard (AS18) "Related Party Disclosures" issued by The Institute of Chartered Accountants of India.

(a) Names of Related Parties with whom transactions has taken place:

Category Name of the Related Party

Key management Personnel 1. M. G. George Muthoot

2. George Thomas Muthoot

3. George Jacob Muthoot

4. George Alexander Muthoot

Relatives of Key management Personnel 1. Sara George w/o M. G. George Muthoot

2. Susan Thomas w/o George Thomas Muthoot

3. Elizabeth Jacob w/o George Jacob Muthoot

4. Anna Alexander w/o George Alexander Muthoot

5. George M. George s/o M. G. George Muthoot

6. Alexander M. George s/o M. G. George Muthoot

7. George M. Jacob s/o George Jacob Muthoot

8. Reshma Susan Jacob d/o George Jacob Muthoot

9. George Alexander (Jr.) s/o George Alexander Muthoot

10. Eapen Alexander s/o George Alexander Muthoot

11. Anna Thomas d/o George Thomas Muthoot

12. Valsa Kurien w/o George Kurien

13. Georgie Kurien s/o George Kurien

Entities over which Key management Personnel and their relatives are able to exercise significant infuence

1. Muthoot Vehicle & Assets Finance Limited

2. Muthoot Leisure And Hospitality Services Pvt. Limited

3. MGM Muthoot Medical Centre Pvt. Limited.

4. Muthoot Marketing Services Pvt. Limited.

5. Muthoot Broadcasting Pvt. Limited

6. Muthoot Forex Ltd (Previously known as Muthoot Exchange Company Pvt. Limited)

7. Backdrop Advertising Pvt. Limited

8. Emgee Board and Paper Mills Pvt. Limited

9. Muthoot Health Care Private Limited (Previously known as mar Gregorios memorial muthoot medical Centre )

10. Muthoot Precious Metals Corporation

11. GMG Associates

12. Muthoot Insurance Brokers Private Limited

13. Emgee Muthoot benefit Funds (India) Limited

14. Geo Bros Muthoot Funds (India) Limited

15. Muthoot Investment Advisory Services Private Limited

16. Muthoot Securities Limited

17. Muthoot M George Permanent Fund Limited

18. Muthoot Housing & Infrastructure ( Previously known as muthoot Builders)

19. Muthoot Properties & Investments

20. Venus Diagnostics Limited

21. Muthoot Systems & Technologies Pvt Ltd

33. Segment Reporting

a) The Company is engaged in two segments of business – Financing and Power Generation.

b) In the context of Accounting Standard 17 on Segment Reporting, issued by the Institute of Chartered Accountants of India, Company has identified business segment as the primary segment for the purpose of disclosure. The segment revenues, results, assets and liabilities include the respective amounts identifable to each of the segment and amounts allocated on a reasonable basis.

c) Company operates in a single geographical segment. Hence, secondary geographical segment information disclosure is not applicable.

9. Frauds during the year

During the year , frauds committed by customer /staff of the company amounted to Rs. 19,701,706.00 (Previous year: Rs. 4,185,000.00) which has been recovered /written off / provided for.

10. Dividend remitted in foreign currency

The company has also remited Rs. 264,441,172.50 in Indian currency to 908 non resident shareholders holding 58,764,705 shares of Rs. 10/- each as final dividend for the F Y 2012-13 and the company has remited Rs. 174,697,074.00 in Indian currency to 980 non resident shareholders holding 58,232,358 shares of Rs. 10/- each as First Interim Dividend for the F Y 2013-14 and Rs. 101,637,018.00 in Indian currency to 915 shareholders holding 50,818,509 shares of Rs. 10/- each as Second Interim Dividend for the F Y 2013-14 (Previous year : The Company has remitted Rs. 150,220,372.00 in Indian currency to 1060 non-resident shareholders holding 37,555,093 shares of Rs. 10/- each ).

11. Previous year''s figures have been regrouped / rearranged, wherever necessary to conform to current year''s classifcations / disclosure.


Mar 31, 2013

1. BACKGROUND

Muthoot Finance Ltd. was incorporated as a private limited Company on 14th March, 1997 and was converted into a public limited Company on 18th November, 2008. The Company is promoted by Mr. M. G. George Muthoot,

Mr. George Thomas Muthoot, Mr. George Jacob Muthoot and Mr. George Alexander Muthoot collectively operating under the brand name of ''The Muthoot Group, which has diversified interests in the fields of Financial Services, Healthcare, Education, Plantations, Real Estate, Foreign Exchange, Information Technology, Insurance Distribution, Hospitality etc. The Company obtained permission from the Reserve Bank of India for carrying on the business of Non-Banking Financial Institutions on 13.11.2001 vide Regn No. N 16.00167. The Company is presently classified as Systemically Important Non- Deposit Taking NBFC (NBFC-ND-SI).

The Company made an Initial Public Offer of 51,500,000 Equity Shares of the face value Rs. 10/- each at a price of Rs. 175/- raising Rs. 9,012,500,000.00 during the month of April 2011. The equity shares of the Company are listed on National Stock Exchange of India Limited and BSE Limited from 6th May, 2011.

2. LEASES

The Company has not taken or let out any assets on financial lease.

All operating lease agreements entered into by the Company are cancellable in nature. Hence Company has debited/credited the lease rent paid/received to the Statement of Profit and Loss.

Consequently, disclosure requirement of future minimum lease payments in respect of non - operating lease as per AS 19 is not applicable to the Company.

Lease rentals received for assets let out on operating lease Rs. 981,832.00 (Previous year Rs. 856,845.00) are recognised as income in the Statement of Profit and Loss under the head ''Other Income'' and lease payments for assets taken on an operating lease Rs. 1,309,254,514.55 (Previous year Rs. 1,042,002,948.58 ) are recognised as ''Rent Paid'' in the Statement of Profit and Loss.

3. DISCLOSURE WITH REGARD TO DUES TO MICRO AND SMALL ENTERPRISES

Based on the information available with the Company and has been relied upon by the auditors, none of the suppliers have confirmed to be registered under "The Micro, Small and Medium Enterprises Development (''MSMED'') Act, 2006". Accordingly, no disclosures relating to amounts unpaid as at the year ended 31st March, 2013 together with interest paid /payable are required to be furnished.

4. UTILISATION OF PROCEEDS OF THE INITIAL PUBLIC OFFER OF EQUITY SHARES

The Company made an Initial Public Offer of 51,500,000 Equity Shares of face value of Rs. 10/- each at a price of Rs. 175/- raising Rs. 9,012,500,000.00 during the month of April 2011. As at 31st March, 2013, the Company has fully utilised the amount for extending retail loans of Rs. 8,721,009,554.96 and to meet issue expenses of Rs. 291,490,445.04, in accordance with the objects stated in the offer documents.

5. UTILISATION OF PROCEEDS OF PUBLIC ISSUE OF SECURED NON - CONVERTIBLE DEBENTURES

The Company has during the year raised Rs. 5,346,926,000.00 through public issue of Secured Non-Convertible Debentures and as at 31st March, 2013, the Company has utilised the entire proceeds of the public issue, net of issue expenses in accordance with the objects stated in the offer documents.

6. SEGMENT REPORTING

a) The Company is engaged in two segments of business - Financing and Power Generation.

b) In the context of Accounting Standard 17 on Segment Reporting, issued by the Institute of Chartered Accountants of India, Company has identified business segment as the primary segment for the purpose of disclosure. The segment revenues, results, assets and liabilities include the respective amounts identifiable to each of the segment and amounts allocated on a reasonable basis.

c) Company operates in a single geographical segment. Hence, secondary geographical segment information disclosure is not applicable

7. FRAUDS DURING THE YEAR

During the year , frauds committed by customer /staff of the Company amounted to Rs. 4,185,000.00 which has been recovered / written off / provided for.

The Company has also remitted Rs. 150,220,372.00 in Indian currency to 1060 non-resident shareholders holding 37,555,093 shares of Rs. 10/- each.

8. Previous years figures have been regrouped / rearranged, wherever necessary to conform to current years classifications / disclosure.


Mar 31, 2012

1. BACKGROUND

Muthoot Finance Ltd. was incorporated as a private limited Company on 14th March 1997 and was converted into a public limited Company on 18th November 2008. The Company is promoted by Mr. M. G. George Muthoot, Mr. George Thomas Muthoot, Mr. George Jacob Muthoot and Mr. George Alexander Muthoot collectively operating under the brand name of ''The Muthoot Group'', which has diversified interests in the fields of Financial Services, Healthcare, Education, Plantations, Real Estate, Foreign Exchange, Information Technology, Insurance Distribution, Hospitality etc. The Company obtained permission from the Reserve Bank of India for carrying on the business of Non-Banking Financial Institutions on 13.11.2001 vide Regn No. N 16.00167. The Company is presently classified as Systemically Important Non-Deposit Taking NBFC (NBFC-ND-SI).

The Company made an Initial Public Offer of 5,15,00,000 Equity Shares of the face value Rs. 10/- each at a price of Rs. 175/- raising Rs. 9,012,500,000.00 during the month of April 2011. The equity shares of the Company are listed on National Stock Exchange of India Limited and BSE Limited from 6th May 2011.

2.1 Terms and Rights attached to Equity Shares

The Company has only one class of equity shares having face value Rs. 10/- per share. All these shares have the same rights and preferences with respect to the payment of dividend, repayment of capital and voting. The dividend proposed by your Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of 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.

3.1 Share Issue Expenses

The Company made an Initial Public Offer of 5,15,00,000 Equity Shares of Rs. 10/- each at a price of Rs. 175/- raising Rs. 9,012,500,000.00 during the month of April 2011. The expenses incurred for Initial Public Offer amounting to Rs. 291,490,445.04 has been written off against Securities Premium as per Section 78(2) of the Companies Act, 1956.

3.2 Transfer to General Reserve

In accordance with the Companies (Transfer of Profits to Reserves) Rules, 1975, Company has transferred an amount Rs. 892,024,022.00 (Previous Year: Rs. Nil) being 10% of the current profits to General Reserve.

3.3 Debenture Redemption Reserve

In accordance with Section 117C of the Companies Act, 1956, read with General Circular No. 9/2002 dated 18.04.2002 issued by the Ministry of Corporate Affairs and Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations 2008, Company is required to create a Debenture Redemption Reserve equal to the 50% of the value of debentures issued through public issue. Accordingly, Company has transferred an amount of Rs. 742,038,311.00 (Previous Year: Nil) to the Debenture Redemption Reserve. No appropriation was made from the Reserve Fund during the year.

3.4 Statutory Reserve

Statutory Reserve represents the Reserve Fund created under Section 45-IC of the Reserve Bank of India Act, 1934. An amount of Rs. 1,784,048,044.00 (Previous Year Rs. 988,352,855.00) representing 20% of Net Profit is transferred to the Fund for the year. No appropriation was made from the Reserve Fund during the year.

4.1 Secured Non-Convertible Debentures

The Company had privately placed Secured Non-Convertible Debentures under Non-Cumulative Scheme for a maturity period upto 5 years with an outstanding of Rs. 59,748,398,000.00 (Previous Year Rs. 34,892,443,000.00) and under Cumulative scheme for a maturity period ranging from 36 months to 90 months with an outstanding of Rs. 6,353,984,000.00 (Previous Year Rs. 49,39,824,000.00).

Out of the above Rs. 27,089,427,000.00 (Previous year Rs. 19,570,052,000.00) is included in long term borrowings, Rs. 38,944,570,000.00 (Previous year Rs. 20,216,528,000.00) is included in current maturities of long term debt ( Note 7.1) and Rs. 68,385,000.00 (Previous year Rs. 45,687,000.00) is included in unpaid matured debentures (note 7.2).

4.2 Subordinated Debt

Subordinated Debt is subordinated to the claims of other creditors and qualifies as Tier II capital under the Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007. As on 31st March 2012, out of Rs. 14,801,096,000.00 (Previous year Rs. 7,105,856,000.00) outstanding, Rs. 407,786,000.00 (Previous year Rs. 407,136,000.00) represents amounts raised from promoters and promoter group and remaining Rs. 14,393,310,000.00 (Previous year Rs. 6,698,720,000.00) raised from investors other than promoters and promoter group, raised through private placement.

5. CURRENT INVESTMENTS (VALUED AT LOWER OF COST AND FAIR VALUE) - NON TRADE - QUOTED

Current investments refers to investment in 9.90% Unsecured, Redeemable, Non-Convertible, Lower Tier II Subordinated Bonds issued by Yes Bank Limited Rs. 9,00,000,000.00 (Previous Year: Rs. Nil). The bonds were allotted on 28.03.2012 and are not listed as on the Balance Sheet date.

6. LEASES

The Company has not taken or let out any assets on financial lease.

All operating lease agreements entered into by the Company are cancellable in nature. Hence Company has debited/credited the lease rent paid/received to the Statement of Profit and Loss.

Consequently, disclosure requirement of future minimum lease payments in respect of non- operating lease as per AS 19 is not applicable to the Company.

Lease rentals received for assets let out on operating lease Rs. 856,845.00 (Previous year Rs. 588,981.00) are recognized as income in the Statement of Profit and Loss under the head ''Other Income'' and lease payments for assets taken on an operating lease Rs. 1,042,002,948.58 (Previous year Rs. 602,691,904.30) are recognized as ''Rent Paid'' in the Statement of Profit and Loss.

7. EMPLOYEE BENEFITS

a) Defined Contribution Plan

During the year, the Company has recognized in the Statement of Profit and Loss in Note 21 - Employee Benefit Expenses: (Amount in Rs.)

b) Defined Benefit Plan Gratuity Plan

Gratuity liability is funded through a Gratuity Fund managed by Kotak Mahindra Old Mutual Life Insurance Limited and ICICI Prudential Life Insurance Company Limited.

The following table set out the status of the Gratuity Plan as required under AS 15.

8. FOREIGN CURRENCY TRANSACTIONS

The exchange difference amounting to Rs. Nil (Previous Year Rs. 187,403.00 (net loss) ) arising on account of foreign currency transactions has been accounted in the Statement of Profit and Loss in accordance with Accounting Standard AS - 11 - Accounting for the effects of changes in foreign exchange rates.

9. CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR):

(Amount in Rs.)

As on As on 31.03.2012 31.03.2011

(a) Claims against the company not acknowledged as debt

i) Service Tax demand for the period -2003-2008, pending in appeal 49,921,307.00 49,921,307.00 with CESTAT (Net of amount already remitted)

Commissioner of Central Excise, Customs and Service Tax, Cochin has raised a demand of Rs. 52,007,698.00 (Previous year Rs. 52,007,698.00) as Service tax liability and penalty. During the course of the proceedings Company paid Rs. 20,86,391.00. The Appellate Authority admitted the Appeal preferred by the company and granted stay of recovery, on pre-deposit of Rs. 83,00,000.00 (Previous year Rs. 43,00,000.00). Pending disposal of appeal, no provision has been made by the company during the year.

ii) Income tax demand for Assessment Year 2004-05, pending in appeal - - with ITAT (Net of amount already remitted)

Assistant Commissioner of Income Tax, Circle 1(3), Ernakulam has filed an appeal before ITAT against the order of Commissioner of Income Tax (Appeals) - II, Cochin demanding Rs. 52.37 Lakhs (Previous year Rs. 52.37 Lakhs). The Company has already paid the demand by way of Advance Tax, Tax Deducted at Source and adjustment against refund due. No additional income tax liability is expected. Hence no provision is required to be made by the company during the year.

iii) Income tax demand for Assessment Year 2006-07, pending in appeal with ITAT (Net of amount already remitted) - -

Company has filed an appeal before ITAT against the order of Commissioner of Income Tax (Appeals) - II, Cochin demanding Rs. 15.21 Lakhs (Previous year Rs. Nil). The Company has already paid the demand by way of Advance Tax and Tax Deducted at Source. No additional income tax liability is expected. Hence no provision is required to be made by the company during the year.

iv) Income tax demand for Assessment Year 2009-10, pending in appeal with Commissioner of Income Tax (Appeals), Kochi 13,782,470.00 -

Additional Commissioner of Income Tax, Range - 1, Kochi has passed an order demanding Rs. 13,782,470.00 towards income tax due for the Assessment Year 2009-10. The Commissioner of Income Tax (Appeals) admitted the appeal preferred by the Company. Pending disposal of appeal, no provision has been made by the company during the year.

(b) Guarantees - Counter Guarantees Provided to Banks 218,493,750.00 32,543,750.00

(c) Other money for which the company is contingently liable

Cash collateral provided as credit enhancement for bilateral assignment of receivables 2,610,700,403.00 2,743,159,469.00

Over collateral provided as credit enhancement for bilateral assignment of receivables 25,000,000.00 63,572,430.00

Corporate guarantee provided as credit enhancement for bilateral assignment of receivables 1,571,430,939.94 751,548,454.56

(ii) Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for 189,802,675.27 24,726,183.84

10. DISCLOSURE WITH REGARD TO DUES TO MICRO AND SMALL ENTERPRISES

Based on the information available with the Company and has been relied upon by the auditors, none of the suppliers have confirmed to be registered under "The Micro, Small and Medium Enterprises Development (''MSMED'') Act, 2006". Accordingly, no disclosures relating to amounts unpaid as at the year ended 31st March, 2012 together with interest paid /payable are required to be furnished.

11. FRAUDS DURING THE YEAR

During the year, frauds committed by customer / staff of the Company amounted to Rs. 6,270,000.00 which has been recovered/written off / provided for.

12. SEGMENT REPORTING

a) The Company is engaged in two segments of business - Financing and Power Generation.

b) In the context of Accounting Standard 17 on Segment Reporting, issued by the Institute of Chartered Accountants of India, Company has identified business segment as the primary segment for the purpose of disclosure. The segment revenues, results, assets and liabilities include the respective amounts identifiable to each of the segment and amounts allocated on a reasonable basis.

c) Company operates in a single geographical segment. Hence, secondary geographical segment information disclosure is not applicable

13. The Revised Schedule VI which has come to effect from April 1, 2011 has significantly impacted the disclosure and presentation of financial statements. Previous year''s figures have been regrouped / rearranged, wherever necessary to conform to current year''s classifications / disclosure.


Mar 31, 2011

1. BACKGROUND

Muthoot Finance Ltd. was incorporated as a private limited company on 14th March 1997 and was converted into a public limited company on IB" November 2008. The company is promoted by Mr M. & George Muthoot, Mr. George Thomas Muthoot. Mr. George Jacob Muthoot and Mr. George Alexander Muthoot collectively operating under the brand name of The Muthoot Group1, which has diversified interests in the fields of Financial Services. Healthcare, Education, Plantations, Real Estate, Foreign Exchange, Information Technology, Insurance Distribution, Hospitality etc, The Company obtained permission from the Reserve Bank of India for carryirig on the business of Non-Bankig Financial Institutions on 13 11 2001 vids Regn No. N 16.00167. The company is presently classified as Systemically Important Non-Deposit Taking NBFC(NBFC-ND-SI).

The company made an Initial Public Offer of 5.15,00,000 Equity Shares of Rs. 10/- each at a price of Rs. 175/- raising Rs. 901.25 crores during the month of April 2011. The shares of the Company were listed on National Stock Exchange of India Limited and The Bombay Stock Exchange Limited on 6th May 2011.

2.1 Contingent liabilites not provided for; {Rs. in lakhs)

2010-11 2009-10

Claims against the Company, not acknowledged as debts

i) Service Tex demand for the period- 2003-2008. pending In appeal with CESTAT Commissioner of Central Excise, Customs and Service Tax, Cochin has raised a demand of Rs. 221.15 Lakhs [Previous year Rs.91 91 lakhs) as Service tax liability and equal amount as penalty. Curing the course of the proceedings Company paid Rs 20.86 Lakhs. The Appellate Authority admitted the Appeal preferred by the company and granted stay of recovery, on pre-deposit of Rs 43 00 Lakhs Pending disposal of appeal, no pro vision has been made by the company during the year. 157.29 157.29

ii) Income tax demand for Assessment Year 2004-05, pending in appeal with ITAT Assistant Commissioner of Income Tax, Circle 1(3), Ernakulam has filed an appeal before ITAT against The order of Commissioner of Income Tax (Appeals) 11, Cochin demanding Rs. 52.37 Lakhs (Previous year Rs. 52.37 Lakhs). The Company has already paid the demand by way of Advance Tax, Tax Deducted at Source and adjustment against refund due. No additional income tax liability is expected. Hence no provision is required to be made by the company during the year. Nil Nil

iii) Income tax demand for Assessment Year 2006-07, pending in appeal with ITAT Company has filed an appeal before ITAT against the order of Commissioner of Income Tax (Appeals) 11, Cochin demanding Rs. 15.21 Lakhs (Previous year Rs. Nil). The Company has already paid The demand by way of Advance Tax and Tax Deducted at Source. No additional income tax liability is expected. Hence no provision is requted to be made by the company during the year. Nil Nil

Estimated amount of contracts remaining to be executed an capital accounts and not provided for 247.26 269.00

Other money for which company is contingently liable:

i) Counter Guarantee provided to Banks 325,44 303.00

ii) Cash collateral provided as credit enhancement for bilateral assignment of receivables 27,431.59 10,371.10

iii) Over collateral provided as credit enhancement for bilateral assignment of receivables 635.72 801.21

iv) Corporate guarantee provided as credit enhancement for bilateral assignment of receivables 7.515.48 15,000.07

2.2 Disclosure with regard to dues to Micro and Small Enterprises

Based on the information available with the Company and has been relied upon by the auditors, none of the suppliers have confirmed to be registered under "The Micro. Small and Medium Enterprises Development (''MSMED''} Act, 2006". Accordingly, no disclosures relating to amounts unpaid as at the year ended 31st March. 2010 together with interest paid /payable are required to be furnished.

2.3 Segment Reporting

a) The Company is engaged in two segments of business Financing and Power Generation. (Previous Year: Financing, Power Generation and FM Radio)

b) In the context of Accounting Standard 17 on Segment Reporting, issued by the Institute of Chartered Accountants of India, company has identified business segment as the pnmary segment for the purpose of disclosure. The segment revenues, results, assets and liabilities include the respective amounts identifiable to each of the segment and amounts allocated on a reasonable basis.

a) Company operates in a single geographical segment. Hence, secondary geographical segment information disclosure is not applicable

2.4 Previous year''s figures have been regrouped / rearranged, wherever necessary to confirm to current year''s classifications.


Mar 31, 2010

1. BACKGROUND

Muthoot Finance Ltd. was incorporated as a private limited company on 14th March 1997 and was converted into a public limited company on 18th November 2008. The company is promoted by Mr. M. G. George Muthoot, Mr. George Thomas Muthoot, Mr. George Jacob Muthoot and Mr. George Alexander Muthoot collectively operating under the brand name of The Muthoot Group, which has diversified interests in the fields of Financial Services, Healthcare, Education, Plantations, Real Estate, Foreign Exchange, Information Technology, Insurance Distribution, Hospitality etc. The Company obtained permission from the Reserve Bank of India for carrying on the business of Non-Banking Financial Institutions on 13.11.2001 vide Regn No. N 16.00167. The company is presently classified as Systemically Important Non-Deposit Taking NBFC (NBFC-ND-SI).

2. BALANCE SHEET

2.1 Secured Non-Convertible Debentures

The Company had privately placed Secured Non-Convertible Debentures under Non- Cumulative Scheme for a maturity period upto 5 years with an outstanding of Rs. 234,995.11 Lakhs (Previous Year Rs. 161,695.57 Lakhs) and under Cumulative scheme for a maturity period ranging from 36 months to 90 months with an outstanding of Rs.36,930. lOLakhs (Previous Year Rs.28,502.89 Lakhs)

2.2 Unsecured Non-Convertible Debentures

The Unsecured Non-Convertible Debentures of Rs. 5,000.00 Lakhs (Previous Year : Rs. Nil) represents debentures issued to a Mutual Fund which is governed by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.

2.3 Subordinated Debt

Subordinated Debt is subordinated to the claims of other creditors and qualifies as Tier II capital under the Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions 2007. As on 31st March 2010, out of Rs. 32,466.81 Lakhs (Previous year Rs. 10,991.54 Lakhs) outstanding, Rs. 4,037.06 lakhs (Previous year Rs. 4,000.00 Lakhs) represents amounts raised from promoters and shareholders and remaining Rs.28,429.75 Lakhs (Previous year Rs.6991.54 lakhs) were raised from investors other than promoter group, both raised through private placement route.

2.4 FM Radio Station

The company had obtained license from Government of India for establishing and operating FM Radio Station in Chennai, Tamil Nadu (Radio Business). Radio Station commenced its operations on 1st January 2008.

In accordance with a Scheme of Arrangement and Demerger of Radio Business which was approved by the Honourable High Court of Kerala vide Order dated 09.04.2010, the Radio Business of the Company was demerged and became vested with M/s Muthoot Broadcasting Private Limited on a going concern basis with effect from the appointed date i.e. 01st January 2010.

Accordingly, assets and liabilities of demerged undertaking have been transferred to Muthoot Broadcasting Private Limited at book value and excess of assets over liabilities, Rs. 1,419.76 Lakhs was adjusted against Profit & Loss Account, as per the Scheme.

Necessary effects in respect of the above have been given in the books of accounts of the company during the year and the amount due from Muthoot Broadcasting Private Limited as on 31.03.2010, Rs. 75.39 Lakhs, have been shown under Other Loans and Deposits.

Licence Fee of Rs. 940.16 Lakhs was being amortized over a period of 10 years starting from 1st January 2008 on straight-line basis and the current year amortization was made for a period of nine months only, being amortization upto the appointed date.

2.5 Current Assets, Loans & Advances

In the opinion of the Board of Directors, Current Assets, Loans and Advances have a value as stated in the Balance Sheet, if realized in its ordinary course of business.

3. PROFIT AND LOSS ACCOUNT 4.1 Income

a) Interest income includes Interest on Bank Deposits (Gross) Rs. 779.59 Lakhs. (Previous year Rs. 786.61 Lakhs). Tax deducted at Source on above Rs. 81.76 Lakhs (Previous year Rs. 145.80 Lakhs).

b) Other income includes income from investments (Gross) Rs. 0.29 Lakhs (Previous year Rs. 105.44 Lakhs). Tax deducted at Source on above Rs. Nil (Previous year Rs. Nil).

c) Other income includes profit on sale of fixed assets Rs. 45.97 Lakhs (Previous year Rs. 1.85 Lakhs).

4.0 Leases

The Company has not taken or let out any assets on financial lease.

All operating lease agreements entered into by the Company are cancellable in nature. Hence Company has debited/credited the lease rent paid/received to the Profit and Loss Account.

Consequently, disclosure requirement of future minimum lease payments in respect of non- cancellable operating lease as per AS 19 is not applicable to the company.

Lease rentals received for assets let out on operating lease Rs. 5.22 Lakhs (Previous year Rs.3.75 Lakhs) are recognized as income in the Profit and Loss Account under the head Other Income and lease payments for assets taken on an operating lease Rs. 2,901.32 Lakhs (Previous year Rs. 1,307.22 Lakhs) are recognized as Rent Paid in the Profit and Loss Account.

4.1 Statutory Reserve

Statutory Reserve represents the Reserve Fund created under Section 45-IC of the Reserve Bank of India Act, 1934. An amount of Rs. 4,551.50 Lakhs (Previous Year Rs. 1,954.40 Lakhs) representing 20% of Net Profit is transferred to the Fund for the year. No appropriation was made from the Reserve Fund during the year.

4.2 Employee Benefits

b) Defined Benefit Plan

Gratuity liability is funded through a Gratuity Fund managed by ICICI Prudential Life Insurance Company Limited. Company has remitted Rs. 394.81 Lakhs (Previous 141.11 Lakhs).

5. GENERAL

5.1 Contingent liabilities not provided for:

31.03.2010 31.03.2009 Claims against the Company, not acknowledged as debts

i) Service Tax demand for the period- 2003-2008, pending in appeal with CESTAT Commissioner of Central Excise, Customs and Service Tax, Cochin has raised a demand of Rs. 221.15 Lakhs (Previous year Rs.91.91 lakhs) as Service tax liability and equal amount as penalty. During the course of the 157.29 91.91 proceedings Company paid Rs. 20.86 Lakhs. The Appellate Authority admitted the Appeal preferred by the company and granted stay of recovery, on pre-deposit of Rs. 43.00 Lakhs. Pending disposal of appeal, no provision has been made by the company during the year.

ii) Income tax demand for Assessment Year 2004-05, pending in appeal with IT AT Assistant Commissioner of Income Tax, Circle 1(3), Ernakulam has filed an appeal before ITAT against the order of Commissioner of Income Tax (Appeals) - II, Cochin demanding Rs. 52.37 Lakhs (Previous year Rs. Nil Nil 52.37 Lakhs). The Company has already paid the demand by way of Advance Tax, Tax Deducted at Source and adjustment against refund due. No additional income tax liability is expected. Hence no provision is required to be made by the company during the year.

iii) Income tax demand for Assessment Year 2006-07, pending in appeal with ITAT Company has filed an appeal before ITAT against the order of Commissioner of Income Tax (Appeals) - II, Cochin demanding Rs. 15.21 Lakhs (Previous year Rs. Nil Nil Nil). The Company has already paid the demand by way of Advance Tax and Tax Deducted at Source. No additional income tax liability is expected. Hence no provision is required to be made by the company during the year.

Estimated amount of contracts remaining to be executed 269.00 Nil on capital accounts and not provided for Other money for which company is contingently liable:

i) Counter Guarantee provided to Banks 303.00 333.68

ii) Cash collateral provided as credit enhancement for bilateral assignment 10,371.10 13,139.43 of receivables

iii) Over collateral provided as credit 801.21 775.07 enhancement for bilateral assignment of receivables

iv) Corporate guarantee provided as credit enhancement for 15,000.07 Nil bilateral assignment of receivables

5.2 Disclosure with regard to dues to Micro and Small Enterprises

Based on the information available with the Company and has been relied upon by the auditors, none of the suppliers have confirmed to be registered under "The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006". Accordingly, no disclosures relating to amounts unpaid as at the year ended 31st March, 2010 together with interest paid /payable are required to be furnished.

5.3 Segment Reporting

a) The Company is engaged in three segments of business - Financing, Power Generation and FM Radio.

b) In the context of Accounting Standard 17 on Segment Reporting, issued by the Institute of Chartered Accountants of India, company has identified business segment as the primary segment for the purpose of disclosure. The segment revenues, results, assets and liabilities include the respective amounts identifiable to each of the segment and amounts allocated on a reasonable basis.

e) Company operates in a single geographical segment. Hence, secondary geographical segment information disclosure is not applicable

5.4 Previous Years figures have been regrouped / rearranged, wherever necessary to conform to current years classifications.

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