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Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn.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.
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 |
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 âRentâ 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.
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 Companyâs 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 committeeâs 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.
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 Companyâs 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.
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 (âMSMEDâ) 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.
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".
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 NBFCâs 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.
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.
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.
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.
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 yearâs 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.
This Reserve represents the premium on issue of equity shares and can be utilized in accordance with the provisions of the Companies Act, 2013.
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.
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.
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.
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 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.
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
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.
Fair values of financial assets, other than those which are subsequently measured at amortised cost, have been arrived at as under:
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.
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
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.
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.
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.
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.
For Government Securities,the market value of the respective Government stock as on the date of reporting has been considered for fair value computations.
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.
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.
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 Companyâs 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.
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.
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 Companyâs 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 âcuredâ 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.
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. 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.
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:
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) |
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.
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 Companyâs 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.
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.
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".
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.
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.
"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.
"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 Companyâs 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.
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.
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.
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.
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 yearâs classifications/disclosure.
Mar 31, 2021
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.
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.
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.
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.
This Reserve represents the premium on issue of equity shares and can be utilized in accordance with the provisions of the Companies Act, 2013.
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.
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.
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.
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 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.
It represents the gain/(loss) on remeasurement of Defined Benefit Obligation and of Plan assets
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.
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.
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 âRentâ in the Statement of Profit and Loss.
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.
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:
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.
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
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.
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.
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 companyâs 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.
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.
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.
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 Companyâs 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.
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. 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.
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.
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:
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:
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.
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.
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.
The Company is engaged in the business segment of Financing, whose operating results are regularly reviewed by the entityâs 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".
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.
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.
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.
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 NBFCâs 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 Instrumentsâ) 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.
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 âThe Muthoot Groupâ, 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 âSalaries and incentivesâ. 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 Benefitsâ 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 âOther lncomeâ 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 âRentâ 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 âThe Micro, Small and Medium Enterprises Development (âMSMEDâ) Act, 2006â. 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 ârelativeâ 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 ârelativeâ as defined under Companies Act,1956. Hence, the said party falls within the definition of âRelativeâ 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 yearâs figures have been regrouped/rearranged, wherever necessary to conform to current yearâs 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 âOther 1ncomeâ 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 âRent Paidâ 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) âRELATED PARTY DISCLOSURESâ 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 âSpecified Bank Notesâ 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 âBâ: 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.