Manappuram Finance Ltd. இன் கணக்கு குறிப்புகள்
Mar 31, 2023
Note 17.1 Hedging activities and derivatives
The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed using derivative instruments are foreign currency risk.
The Company''s risk management strategy and how it is applied to manage risk are explained in Note 45.
Note 17.2 Derivatives designated as hedging instruments
The company is exposed to foreign currency risk arising from its fixed rate foreign currency borrowing amounting to USD 88.31 million. Interest on the borrowing is payable at 8.62 % p.a. and the principal amount is repayable in August 2023. The Company
economically hedged the foreign currency risk arising from the loan with Cross Currency Interest Rate swaps of equivalent amount. The Cross Currency Interest Rate Forward converts the cash outflows of the foreign currency fixed rate borrowing of USD 88.31 million to cash outflows in Indian Rupees with a notional amount of '' 7,270 Million
There is an economic relationship between the hedged item and the hedging instrument as the terms of the forward currency contract match that of the foreign currency borrowing (notional amount, principal repayment date etc.). The company has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the forward currency contract are identical to the hedged risk components. For the purpose of calculating hedge effectiveness, the company uses a qualitative features to determine the hedge effectiveness.
Commercial papers carry interest rates of Nil (31st March, 2022 :4.85 % p.a) and their tenure ranges from Nil (31st March, 2022 : 145 days to 155days)
US Dollar Bonds carry interest rates of Nil (31st March, 2022:5.90% p.a) and their tenure is for Nil (31st March, 2022 : 3 years).
Debentures are secured by a floating charge on the book debts of the Company on gold and other unencumbered assets. The Company shall maintain 100% security cover on the outstanding balance of debenture with accrued interest any time. Debentures are offered for a period of 1 year to 10 years. US Dollar Bonds are secured by way of floating charge on the book debts of the Company on gold and other unencumbered assets.
The Company has not defaulted in repayment of principal and interest during the year and as at balance sheet date 31st March, 2023.
Indian rupee loan from banks (secured): These are secured by an exclusive charge by way of hypothecation of book debts pertaining to loans granted against gold and margin/cash collateral as per the agreement. Further, the loan has been guaranteed by personal guarantee of Mr. V.P Nandakumar, Managing Director and CEO to the extent of Nil (31st March, 2022: '' 6733.37Mn)
Foreign currency Term Loan /ECB from Banks (secured):
1) Nil (31st March, 2022: '' 975.7Mn) which carries interest @ 3 month LIBOR plus 280bps. The loan is repayable after 3 years from the date of its origination, viz., July 25, 2019. The loans are secured against the first pari passu charge on current assets, book debts and receivables including gold loans & advances of the Company.
2) Foreign currency loan: '' 727 million as at 31st March, 2023 (31st March, 2022''1,000 Million) which carries interest @ 6 month SOFAR plus 120 bps. The loan is repayable after 3 years from the date of its origination, viz., March 17,2022.
Term Loan from other parties (secured):
Third party rupee term loan is secured where Interest payments are made quarterly at 6.75 % - 10.75% pa. The loans is secured against the first pari passu charge on current assets, book debts and receivables including gold loans & advances of the Company as per the agreement.
Term Loan from other parties (unsecured):
Third party rupee term loan is unsecured where interest payments are made quarterly at Nil.
Loans repayable on demand
Cash credit / Overdraft facilities from banks (secured):
These loans are secured against the first pari passu charge on current assets, book debts and receivables including gold loans & advances of the Company as per the agreement. Further, the loan has been guaranteed by personal guarantee of Mr. V.P Nandakumar, Managing Director and CEO to the extent of Nil (31 March 2022: '' 3072.00Mn)
Working Capital demand loan from banks (secured):
These Loans are secured against the first pari passu charge on current assets, book debts and receivables including gold Loans & advances of the Company as per the agreement. Further, the loan has been guaranteed by personal guarantee of Mr. V.P Nandakumar, Managing Director and CEO to the extent of Nil (31st March, 2022: '' 22000.00Mn)
Other loans
Vehicle Loans: The loans are secured by hypothecation of the respective vehicles against which the loan has been availed- Nil
Terms/ rights attached to equity shares
The Company has only one class of equity shares having a par value of '' 2/- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.During the year ended 31 March 2023, the amount of per share dividend recognized as distributions to equity shareholders was '' 3/- per share (31 March 2022: '' 3/- per share) In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
Aggregate number of shares issued for consideration other than cash during the period of five years immediately preceding the reporting date:
The Company has issued 3,858,967 equity shares (31st March, 2022: 4,495,093) during the period of five years immediately preceding the reporting date on exercise of options granted under the employee stock option plan (ESOP) wherein part consideration was received in the form of employee services.
For details of shares reserved for issue under the employee stock option plan(ESOP) of the Company, refer note 37
The primary objectives of the Company''s capital management policy are 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. No changes have been made to the objectives, policies and processes from the previous years. However, they are under constant review by the Board.
Nature and purpose of Reserves
Statutory reserve (Statutory Reserve pursuant to Section 45-IC of The RBI Act, 1934): Section 45IC of Reserve Bank of India Act, 1934 ("RBI Act, 1934â) defines that every non banking finance institution which is a Company shall create a reserve fund and transfer therein a sum not less than twenty percent of its net profit every year as disclosed in the statement of profit and loss before any dividend is declared. The Company has transferred an amount of '' 2532.53Mn (2021-22''2609.07 Mn) to Statutory reserve pursuant to Section 45-IC of RBI Act, 1934
Securities premium: Securities premium reserve is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.
Hedge reserve: The Company uses hedging instruments as part of its management of foreign currency risk and interest rate risk associated on borrowings as described within note 45. For hedging foreign currency and interest rate risk, the Company uses foreign currency forward contracts, cross currency swaps, foreign currency option contracts and interest rate swaps. To the extent these hedges are effective, the change in fair value of the hedging instrument is recognised in the hedge reserve. Amounts recognised in the hedge reserve is reclassified to the statement of profit or loss when the hedged item affects profit or loss (e.g. interest payments).
(1) Pursuant to Section 71 of the Companies Act, 2013 and circular 04/2013, read with notification issued date June 19, 2016 issued by Ministry of Corporate Affairs, the Company is required before 30th day of April of each year to deposit or invest, as the case may be, a sum which shall not be less than 15% of the amount of its debenture issued through public issue maturing within one year from the balance sheet date.
(2) Pursuant to notification issued by Ministry of Corporate Affairs on 16th August, 2019 in exercise of the powers conferred by sub-sections (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government amend the Companies (Share Capital and Debentures) Rules, 2014. In the principal rules, in rule 18, for sub-rule (7), the limits with respect to adequacy of Debenture Redemption Reserve and investment or deposits for listed companies (other than All India Financial Institutions and Banking Companies as specified in sub-clause (i)), Debenture Redemption Reserve is not required to maintain in case of public issue of debentures as well as privately placed debentures for NBFCs registered with Reserve Bank of India under section 45-IA of the RBI Act, 1934.
(3) By complying with the above notification, the Company has transferred back '' 1,115.33 Millions from DRR to Retained earnings in the financial year ended 31 March 2020 and in respect of the debentures issued during the current year, the Company is not required to create DRR.
General reserve: Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution
is less than the total distributable results for that year. 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.
Share option outstanding account (ESOP reserve): The share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to employees, including key management personnel, as part of their remuneration. Refer to Note 37 for further details of these plans.
Other comprehensive income: Other items of other comprehensive income consist of re-measurement of net defined benefit liability/ asset and fair value changes on derivatives designated as cash flow hedge, net.
The NBFCs will have to compute two types of provisions or loss estimations, ECL as per Ind AS 109 & its internal ECL model and parallelly provisions as per the RBI prudential norms. A comparison between the two is required to be disclosed by the NBFC in the annual financial statements. Where the ECL computed as per the ECL methodology is lower than the provisions computed as per the IRAC norms, then the difference between the two should be parked in "Impairment Reserveâ. Allocation to Impairment Reserve should be made out of Retained earnings and there are certain restrictions towards utilization of this reserve amount.
Reason for shortfall in CSR expenditure: The amount remains unspent is pertaining to the ongoing projects and the same have been transferred to CSR unspent account. There were procedural delays in getting permission from statutory authorities to complete the projects which lead to extend the projects more than one year. The amount so transferred will be spend with in a period of 3 years.
Nature of CSR expenditure: CSR projects of Manappuram Finance Ltd are focused on promotion of quality education, promotion of healthcare, Rural development projects, women empowerment, environment sustainability etc which includes both ongoing and one year projects.
Details of related party trasactions with respect to CSR expenditure are showed under note 42.
The Company has computed the tax expense of the current financial year as per the tax regime announced under section 115BAA of the lncome Tax Act, 1961. Accordingly, (a) the provision for current and deferred tax has been determined at the rate of 25.17% and (b) the deferred tax assets and deferred tax liabilities as on April 01, 2019 have been restated at 25.17%.
The Company has adopted ESOS 2016 as per SEBI(Share Based Employee Benefits) Regulation, 2014 and has recorded a
compensation expense using the fair value method as set out in those regulations.
The Company has granted 13,750,466 options at an exercise price of 86.45 on 08 August 2016 which will vest over a period of three years from the grant date (08 August 2016) and the vesting of options shall be at 30% each in the first and second year and the balance 40% in the third year from the date of grant.
The expected volatility of the stock has been determined based on historical volatility of the stock. The period over which volatility has been considered is the expected life of the option.
Note 38: Retirement Benefit Plan Defined Contribution Plan
The Company makes Provident Fund and Employee State Insurance Scheme contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized ? 627.13Mn (31st March, 2022: '' 509.74 Mn) for Provident Fund contributions and
'' 131.18 Mn (31st March, 2022: '' 111.78Mn) for Employee State Insurance Scheme contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the Schemes.
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation of India and Kotak Life Insurance.
Update on the Code on Social Security, 2020 (''Code'')
The Code on Social Security , 2020 (''Code'') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period when the Code becomes effective.
The weighted average duration of the defined benefit obligation as at 31st March, 2023 is 4 years (2022: 5.5years)
The fund is administered by Life Insurance Corporation of India ("LICâ) and Kotak Life Insurance. The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.
The estimates of future salary increases, considered in actuarial valuation, take account of infiation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The defined benefit plans expose the Company to a number of actuarial risks as below:
Investment Risks - The company''s performance is directly affected by the over- or under-performance of the investment assets of the gratuity plan. Inadequate performance could, among others, increase the future employer contributions.
Interest Rate Risk - This is the risk associated with a rise or fall in the interest rate which could affect liability and asset values. The plan is exposed to the interest rate risk toward its liability and asset values.
Regulatory Risk - The gratuity plan is exposed to multiple regulatory risks e.g., increase in the statutory benefit definition for gratuity. Higher costs from regulatory oversight of organisation pensions or from compliance toward existing trust and funding-related obligations (e.g., minimum funding requirements) contribute to the regulatory risks.
Salary and earnings inflation Risk - The Salary growth rate assumption is the company''s estimate of future salary increases take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. In a ''final salary'' gratuity plan, the risk of higher earnings-inflation and merit-related salary growth could outweigh the assumptions employed for the valuation and increase the company''s future defined benefit obligation.
Note 41: Contingent liabilities, commitments and leasing arrangementsNote 41 (i): Contingent Liabilities
(a) Applicability of Kerala Money Lenders'' Act
The Company has challenged in the Hon''ble Supreme Court the order of Hon''ble Kerala High Court upholding the applicability of Kerala Money Lenders Act to NBFCs. The Hon''ble Supreme Court has directed that a status quo on the matter shall be maintained and the matter is currently pending with the Hon''ble Supreme Court. The Company has taken legal opinion on the matter and based on such opinion the management is confident of a favourable outcome. Pending the resolution of the same, no adjustments have been made in the financial statements for the required license fee and Security deposits.
|
Particulars |
As at 31st March, 2023 |
As at 31st March, 2022 |
|
i) Income Tax Demand under Appeal before The Commissioner of Income Tax (Appeals) for the Assessment Year 2015-16 |
307.20 |
307.20 |
|
ii) Income Tax Demand under Regular Assessment for the Assessment Year 2018-19 |
1.38 |
1.38 |
|
iii) Kerala Value Added Tax demands under appeal pending before The Deputy Commissioner for the Assessment Years 2009-10, 2010-11, 2011-12, 2012-13 and 2014-15 (Excluding Penalty and Interest, if any) |
44.94 |
44.94 |
|
iv) An additional demand of '' 462.7 Million has arisen because of the taxing of MTM gain of '' 145.75 Cr and Substandard Asset Provision '' 350.9 Million in AY 2020-21. Out of '' 350.9 Million- Sub standard provision, '' 346.8 Million has been allowed as a deduction in the subsequent AY 2021-22 |
462.70 |
|
|
v) The pobable tax demand on profit relating to the sale of SBI mutual Funds. Income involved being '' 106.6 Miilion (506.5 Millions less 400 Millions). FY 2015-16 and AY 2016-17 |
36.90 |
|
|
Total |
853.12 |
353.52 |
b) The company has some labour cases pending against it in various courts and with labour commissioners of various states. The company''s liability for these cases are not disclosed since actual liability to be provided is unascertainable.
(i) Estimated amount of contracts remaining to be executed on capital account, net of advances as on 31st March, 2023 is '' 93.44 Mn (31st March, 2022: '' 77.51 Mn).
(ii) The Company has entered into an agreement for outsourcing of Information Technology support in August 2020 for a period
of 5 years with a total expense of '' 520 Mn.
Note 41 (iii): Lease Disclosures (entity as a lessee)
(a) Leases of Branch Premises
(i) Ind AS 116 "Leasesâ is applied to all Lease contracts. The company recorded the Lease Liability at the present value of the Lease payments discounted at the incremental borrowing rate of the company and the right of use (ROU) asset at measured at the amount of the initial measurement of the lease liability.
(ii) The following is the summary of practical expedients elected on initial application:
1. Applied a single discount rate to a portfolio of leases of similar assets in similar economic environment with a similar end date. Discount rate has been taken as the Incremental Borrowing rate of borrowings with similar tenure.
2. Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term on the date of initial application.
3. Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application.
Note 43: Capital Capital Management
The primary objectives of the Company''s capital management policy are 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 according to changes in economic conditions and the risk characteristics of its activities. 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.
The Company''s debt equity ratio as on 31st March, 2023 stands at 2.14 times (2.26 times as at 31st March, 2022).
Note 44: Fair Value Measurement44.1 Valuation principles
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 , 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.
The Company''s process to determine fair values is part of its periodic financial close process. The Audit Committee exercises the overall supervision over the methodology and models to determine the fair value as part of its overall monitoring of financial close process and controls. The responsibility of ongoing measurement resides with business units . Once submitted, fair value estimates are also reviewed and challenged by the Risk and Finance functions.
44.4 Valuation techniques Equity instruments
Equity instruments in non-Listed entities are initially recognised at transaction price and re-measured (to the extent information is available) and valued on a case-by-case and classified as Level 3. The Company uses prices from prior transactions without adjustment to arrive at the fair value. Prior transaction represents the price at which same investment was sold in the deal transaction.
Interest rate derivatives include interest rate swaps, cross currency interest rate swaps, basis swaps and interest rate forwards (FRAs). The most frequently applied valuation techniques include forward pricing and swap models, using present value calculations by estimating future cash flows and discounting them with the appropriate yield curves incorporating funding costs relevant for the position. These contracts are generally Level 2 unless adjustments to yield curves or credit spreads are based on significant non-observable inputs, in which case, they are Level 3.
Interest rate derivatives include interest rate swaps, cross currency interest rate swaps, basis swaps and interest rate forwards (FRAs). The most frequently applied valuation techniques include forward pricing and swap models, using present value calculations by estimating future cash flows and discounting them with the appropriate yield curves incorporating funding costs relevant for the position. These contracts are generally Level 2 unless adjustments to yield curves or credit spreads are based on significant non-observable inputs, in which case, they are Level 3.
Foreign exchange contracts include open spot contracts, foreign exchange forward and swap contracts and over the-counter foreign exchange options. These instruments are valued by either observable foreign exchange rates, observable or calculated forward points
and option valuation models. With the exception of contracts where a directly observable rate is available which are disclosed as Level 1, the Company classifies foreign exchange contracts as Level 2 financial instruments when no unobservable inputs are used for their valuation or the unobservable inputs used are not significant to the measurement (as a whole).
Movements in Level 3 Financial instruments measured at Fair value
There are no Level 3 financial assets and liabilities which are recorded at fair value.
The management assessed that cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
Valuation methodologies of Financial instruments not measured at Fair value
Below are the methodologies and assumptions used to determine fair values for the above financial instruments which are not recorded and measured at fair value in the financial statements. These fair values were calculated for disclosure purposes only.
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 balances, balances other than cash and cash equivalents, trade payables and other financial liabilities without a specific maturity. Such amounts have been classified as Level 2 on the basis that no adjustments have been made to the balances in the balance sheet.
Loans and advances to customers
Fair value of Loans estimated using a discounted cash flow model on contractual cash flows using actual/estimated yields.
The floating rate loans are fair valued on the basis of MCLR spread. For fixed rate loans, the carrying values are a reasonable approximation of their fair value.
Risk is an integral part of the Company''s business and sound risk management is critical to the success. As a financial institution, the
Company is exposed to risks that are particular to its lending and the environment within which it operates and primarily includes Credit, Liquidity, Market and Operational Risks. Company''s goal in risk management is to ensure that it understands measures and monitors the various risks that arise and the organization adheres strictly to the policies and procedures which are established to
address these risks. The Company has a risk management policy which covers risks associated with the financial assets and liabilities. The Board of Directors of the company are responsible for the overall risk management approach, approving risk management
strategies and principles. Risk Management Committee of the Board reviews credit, operations and market risks faced by MAFIL periodically.Company has appointed a Chief Credit Officer who reports to MD & CEO and presenting risk related matters to Risk Management Committee and the Board.
The Company has implemented comprehensive policies and procedures to assess, monitor and manage risk throughout the Company. The risk management process is continuously reviewed, improved and adapted in the changing risk scenario and the agility of the risk management process is monitored and reviewed for its appropriateness in the changing risk landscape. The process of continuous evaluation of risks includes taking stock of the risk landscape on an event-driven basis.
The Company has an elaborate process for risk management. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.
Credit risk is the risk that a customer or counterparty will default on its contractual obligations resulting in financial loss to the Company. As the company predominantly lend against gold jewellery, which are liquid securities, its credit risks are comparatively lower. Its other verticals, Micro Finance, Vehicle Finance, Micro loans etc have significant credit risk.
Appraisal Risk: The borrowers are awarded risk grades and only eligible borrowers are financed. Besides continuous training of employees through digital media, Credit officers are imparted on the job and class room training on a continuous basis. Credit appraisal processes are being reviewed regularly by Credit Monitoring teams and credit auditors and more risk filters are added whenever necessary.
Collection risk: As the gold ornaments are liquid, collection in gold portfolio attaches minimal risks. We have developed a team of trained Relationship Managers and sales staff for continuous engagement with the borrowers under verticals like Micro Finance, Vehicle Finance, Housing loans, Micro loans etc to ensure timely payment of their dues. Collection efficiency of verticals are being monitored closely by the Senior Management.
Concentration risk: As on 31/03/2023, our gold loan portfolio is 79% of our consolidated AUM. Gold loans are granted against liquid
securities for short period which substantially insulates from credit risk and liquidity risk. We have already diversified into Micro Finance, Home Finance, Commercial Vehicles and budget to grow the new verticals so as to contain our exposure to gold to 50% of the total AUM in ten years.
Our geographical presence is largely in the southern India. We are now giving thrust for opening new branches in north and north eastern states which have high growth potentials. A geographical exposure limit will be fixed when operations of the new branches are stabilised.
The credit risk management policy of the Company seeks to have following controls and key metrics that allows credit risks to be
identified, assessed, monitored and reported in a timely and efficient manner in compliance with regulatory requirements.
- Standardize the process of identifying new risks and designing appropriate controls for these risks.
- Maintain an appropriate credit administration and loan review system.
- Establish metrics for portfolio monitoring.
- Minimize losses due to defaults or untimely payments by borrowers.
- Design appropriate credit risk mitigation techniques.
In order to mitigate the impact of credit risk in the future profitability, the company makes reserves basis the expected credit Loss (ECL) model for the outstanding loans as balance sheet date.
The below discussion describes the Company''s approach for assessing impairment as stated in the significant accounting policies. The Company considers a financial instrument defaulted and therefore Stage 3 (credit impaired) for 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 or whether Stage 2 is appropriate.
The outstanding balance at the reporting date adjusted for subsequent realisations in the case of Gold Loan, is considered as EAD by the Company. Considering that the PD determined above factors in amount at default, there is no separate requirement to estimate EAD.
The Company uses historical information where available to determine PD. Considering the different products and schemes, the Company has bifurcated its loan portfolio into various pools. For certain pools where historical information is available, the PD is calculated using Incremental NPA approach considering fresh slippage of past 6 years. For those pools where historical information is not available, the PD rates as stated by external reporting agencies is considered.
4 Onlending, Corporate Finance and Project and Industrial Finance Loan, external ratings or internal evaluation with a management overlay for each customer.
5) Personal Loans and other verticals, external ratings or internal evaluation with a management overlay for each customer industry segment.
* Excluding restructured loans, where in Vehicle loan Stage II restructured loans for CV-63% ,BUS -55% and CAR - 93% as at 31st March, 2023. ** Excludes portfolio where PD has been considered at 100%
In case of Gold loans, incremental NPA is considered after taking into account auctions during the year since such cases are auctioned and total dues are recovered even before the account turns NPA.
The Company determines its recovery rates by analysing the recovery trends over different periods of time after a loan has defaulted. Based on its analysis of historical trends, homogenous nature of the loans etc, the Company has assessed that significant recoveries happen in the year in which default has occurred.Recoveries from all the phases like normal collections, auction collections,
repossession sale as well as expected realization from collateral are considered while computing the LGD rates for each Loan portfolio. For different stages such as stage 1,stage 2 & stage 3 portfolios, we are applying same LGD rate except in case of loss assets and unsecured loans in stage 3 which is at 100%.
*In case of Gold Loan the Loan To Value(LTV), at the time of disbursement is below 75% (As per the RBI norms) and the remaining value (25%) of asset held by the company acts as a margin of safety , protecting the company against volatility in asset price.LTV is one of the factor for gradation of risk. Also it reflects in the fixing of interest rates of each type of loans/ schemes. Normally fixing higher interest rate for loans having higher LTV% and vice versa.
LGD Rates have been computed internally based on the discounted recoveries in NPA accounts that are closed/ written off/ repossessed and upgraded during the year. LGD rates for SME, corporate loans and other loans is considered based on proxy FIRB
rates for secured loans.
In estimating LGD, the company reviews macro-economic developments taking place in the economy. Based on internal evaluation, company has provided a management overlay in LGD computed for Vehicle and SME portfolios.
The Company has applied management overlays to the ECL Model to consider the impact of the Covid-19 pandemic on the provision. The adjustment to the probability of default has been assessed considering the likelihood of increased credit risk and consequential default due to the pandemic. The impact on collateral values is also assessed for determination of adjustment to the loss given default and reasonable haircuts are applied wherever necessary. The number of days past due shall exclude the moratorium period for the purposes of asset classification as per the Company''s policy
As per the RBI guidelines , the ECL policy has been approved by Audit Committe and the Board.Modifications to the ECL model, if any, is approved by the Board. As part of the management overlays, as per the approved ECL policy, the management has adjusted the underlying PD as mentioned above and in case of corporate loan by downgrading the ratings to one level lower) and LGD as computed by ECL Model as mentioned above depending on the nature of the portfolio/borrower, the management''s estimate of the future stress and risk and available market information. Refer note 5.2(vii) to the financial statements.
Asset and Liability Management (ALM) is defined as the practice of managing risks arising due to mismatches in the asset and liabilities.
Company''s funding consists of both long term as well as short term sources with different maturity patterns and varying interest rates. On the other hand, the asset book also comprises of loans of different duration and interest rates. Maturity mismatches are therefore common and has an impact on the liquidity and profitability of the company. It is necessary for Company''s to monitor and manage the assets and liabilities in such a manner to minimize mismatches and keep them within reasonable limits.
The objective of this policy is to create an institutional mechanism to compute and monitor periodically the maturity pattern of the various liabilities and assets of Company to (a) ascertain in percentage terms the nature and extent of mismatch in different maturity buckets, especially the 1-30/31days bucket, which would indicate the structural liquidity (b) the extent and nature of cumulative mismatch in different buckets indicative of short term dynamic liquidity and © the residual maturity pattern of repricing of assets and
Liabilities which would show the Likely impact of movement of interest rate in either direction on profitability. This policy will guide the ALM system in Company.
The scope of ALM function can be described as follows:
- Liquidity risk management
- Management of market risks
- Others
Liquidity risk refers to the risk that the Company may not meet its financial obligations. Liquidity risk arises due to the unavailability of adequate funds at an appropriate cost or tenure. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company consistently generates sufficient cash flows from operating and financial activities to meet its financial obligations as and when they fall due. Our resource mobilisation team sources funds from multiple sources, including from banks, financial institutions and capital markets to maintain a healthy mix of sources. The resource mobilisation team is responsible for diversifying fund raising sources, managing interest rate risks and maintaining a strong relationship with banks, financial institutions, mutual funds, insurance companies, other domestic and foreign financial institutions and rating agencies to ensure the liquidity risk is well addressed.
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 Company is exposed to three types of market risk as follows:
Foreign Exchange Risk(FX Risk)
Forex Risk is a risk that exists when a financial transaction is denominated in a currency other than the domestic currency of the company. Any appreciation/depreciation of the base currency or the depreciation/appreciation of the denominated currency will affect the cash flows emanating from that transaction. The company has fully hedged the forex risk by derivative instruments.
Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
We are subject to interest rate risk, principally because we lend to clients at fixed interest rates and for periods that may differ from our funding sources, while our borrowings are at both fixed and variable interest rates for different periods. We assess and manage our interest rate risk by managing our assets and liabilities. Our Asset Liability Management Committee evaluates asset liability management, and ensures that all significant mismatches, if any, are being managed appropriately.
The Company has Board Approved Asset Liability Management (ALM) policy for managing interest rate risk and policy for determining
the interest rate to be charged on the loans given.
The Company''s exposure to price risk is not material. The drop in gold prices is unlikely to have a significant impact on asset quality of the company since the disbursement LTV is below 75% and average portfolio LTV as on the reporting period was 62% to 65% only.However the sustained decrease in market price may cause for decrease in the size of our Gold Loan Portfolio and the interest income.Management monitors the gold prices and other loans on regular basis.
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, such as the use of internal audit. A Risk Management Committee comprising representatives of the Senior Management, reviews matters relating to operational and business risk, including corrective and remedial actions as regards people and processes.
(v) Top 20 Large Deposits (Guidelines on Liquidity Risk Management Framework For Non-Banking Financial Companies and Core Investment Companies on November 04, 2019)Not Applicable(Vi) Institutional set up for liquidity risk management (Guidelines on Liquidity Risk Management Framework for Non-Banking Financial Companies and Core Investment Companies on November 04, 2019)
The Board of Directors of the Company has an overatt responsibility and oversight for the management of all the risks, including Liquidity risk. The Board approves the governance structure, policies, strategy and the risk tolerance limit for the management of liquidity risk. The Board of Directors approves the constitution of Risk Management Committee (RMC) for the effective supervision and management of various aspects including liquidity risks faced by the company. The meetings of RMC are held at quarterly interval The Board of Directors also approves constitution of Asset Liability Committee (ALCO), consisting of the Company''s top management which functions as the strategic decision-making body for the asset-liability management of the Company from risk-return perspective and within the risk appetite and tolerance limits approved by the Board. The role of the ALCO also includes periodic revision of interest rates, diversification of source of funding and its mix, maintenance of enough liquidity and investment of surplus funds. ALCO meetings are held once in a quarter or more frequently as warranted from time to time. The minutes of ALCO meetings are placed before the RMC and the Board of Directors in its next meeting for its perusal/ approval/ratification.
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 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 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/limitsdecided by itfrom time to time.The ALM Committee of the Board of Directors shall be responsible for evaluating the liquidity risk.Further details regarding management responsibilities on Liquidity Risk Management is disclosed under note 56(vi).
Note 64:Disclosure as per amended Schedule III to the Companies Act,201364A:Disclosure on the following matters required under Schedule III as amended not being or applicable in case of the company,same are not covered such as
a) No proceedings have been initiated or are pending against the Company for holding any Benami property under the Benami Property (Prohobition) Act ,1988 (45 of 1988)and the rules made thereunder.
b) The company has not been declared willful defaulter by any bank or financial institution or government or any government authority.
c) No registration or satisfaction of charges are pending to be filed with ROC
d) The company has not entered into any scheme of arrangement.
e) There are no transactions which have not been recorded in the books.
f) The company has not traded or invested in crypto currency or virtual currency during the financial year.
64B:Utilisation of Borrowed funds or share premium
(i) 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 person(s) or entity(ies),including foreign entities("Intermediariesâ),with the understanding,whether recorded in writing or otherwise,that the Intermediary shall,whether, directly or indirectly lend to or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(ii) No funds have been received by the Company from any person(s) or entity(ies),including foreign entities("Funding Partiesâ),with the understanding,whether recorded in writing or otherwise,that the Company shall,whether, directly or indirectly lend to or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party("Ultimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
64E:Standards issued but not yet effective
On March 24,2021,the Ministry of Corporate Affairs(''MCA'')through a notification,amended Schedue III of the Conpanies Act,2013.
The amendments revise Division 1,11 and III of Schedue III and are applicable from April1,2021The Company has evaluated the same for reporting.
During the year there have been certain instances of fraud on the Company by officers and employees where gold loan related misappropriations / cash embezzlements /burglaries have occurred for amounts aggregating an amount of '' 100.42 Mn
(31st March, 2022''252.61Mn) of which the Company has recovered '' 31.04 Mn (31st March, 2022''42.83 Mn). The Company has taken insurance cover for such Losses and has filed insurance claims in this regard. Further, the Company is in the process of recovering these amounts from the employees and taking legal actions, where applicable. The Company has created provision/written off aggregating to '' 69.37 Mn (31st March, 2022 - '' 209.78 Mn) towards these losses based on its estimate.
Note 66: Breaches in terms of covenants in respect of loans availed by the NBFC or debt securities issued by the NBFC including incidence/s of default.
There is no Breaches in terms of covenants in respect of loans availed by NBFC or debts securities issued by the NBFC -NiLL FY 2022-23 (PY 2021-22-NiU)
Note 67: Unhedged foreign currency exposure
The company has Unhedged foreign currency amount of '' 1.80 Mn (FY 2021-22 - '' 1.54 Mn) (Please refer to Note 45 Risk Management for the Company policies to manage currency induced risk)
Note 69:Disclosure under covid resolution plans
Detail of resolution plans implemented under the "Resolution framework for COVID-19-reLated Stressâ as per the RBI notification no. RBI/2020-21/16 D0R.N0.BP.BC/3/21.04.048/2020-21 dated August 06, 2020 and RBI/2021-22/31 DOR.STR. REC.11/21.04.048/2021-22 dated May 05, 2021 as at 31st March, 2022 are given beLow.The resolution plans were based on the parameters Laid down in the resolution policy approved by the Board of Directors of the Company and in accordance with the guidelines issued by the Reserve Bank of India.
Terms of Reference: -
1. Oversee the Company''s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.
2. Recommending to the Board the appointment, reappointment, and if required, the replacement or removal of the statutory auditor and the fixation of the audit fee.
3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors.
4. Reviewing with management the annual financial statements before submission to the Board for approval with particular reference to:
a) Matters required to be included in the Directors Responsibility Statement to be included in the board''s report in terms of clause© of Sub-section 3 of section 134 of the Companies Act, 2013.
b) Changes if any in accounting policies and practices and reasons for the same.
c) Major accounting entries involving estimates based on the exercise of judgment by management.
d) Significant adjustments made in the financial statement arising out of audit findings.
e) Compliance with listing and other legal requirements relating to the financial statements.
f) Disclosure of any related party transactions.
g) Qualifications in the draft audit report.
5. Reviewing with the management the quarterly financial statements before submission to the board for approval.
6. Reviewing, with the management, the statement of uses/ application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document/ prospectus/ notice and the report submitted by the monitoring agency monitoring the utilization of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter;
7. Review and monitor the auditor''s independence and performance, and the effectiveness of the audit process;
8. Approval or any subsequent modification of transactions of the company with related parties;
9. Scrutiny of inter-corporate loans and investments;
10. Valuation of undertakings or assets of the company, wherever it is necessary;
11. Evaluation of internal financial controls and risk management systems;
12. Reviewing the management performance of the statutory and internal auditors and the adequacy of the internal control system.
13. Reviewing the adequacy of the internal audit function if any including the structure of internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.
14. Discussion with internal auditors regarding any significant findings and follow-up thereon.
15. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board.
16. Discussion with statutory auditors before the audit commences about the nature and scope of the audit as well as post-audit discussions to ascertain any area of concern.
17. To Look into the reasons for substantial defaults in the payments to the depositors, debenture - holders, shareholders (in case of non-payment of declared dividends) and creditors.
18. To review the function of whistle blower mechanism in case the same exists.
19. Approval of appointment of CFO (i.e., the whole-time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience and background, etc. of the candidate;
20. Monitoring the end use of funds raised through public offers and related matters.
21. Carrying out any other function as mentioned in the terms of reference
Mar 31, 2022
NOTE 17.1 HEDGING ACTIVITIES AND DERIVATIVES
The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed using derivative instruments are foreign currency risk.
The Company''s risk management strategy and how it is applied to manage risk are explained in Note 45.
NOTE 17.2 DERIVATIVES DESIGNATED AS HEDGING INSTRUMENTS
The company is exposed to foreign currency risk arising from its fixed rate foreign currency denominated bond amounting to USD 300 million. Interest on the borrowing is payable at 5.9% p.a. at half yearly intervals, and the principal amount is repayable in January 2023. The Company economically hedged the foreign currency risk arising from the bond with Forward Rate Agreement and Cross Currency Interest Rate swaps of equivalent amount. The Cross Currency Interest Rate Swaps and the Forward rate instruments converts the cash outflows of the foreign currency fixed rate borrowing of USD 300 Mn to cash outflows in Indian Rupees with a notional amount of '' 21,288 Mn.
The company is exposed to foreign currency risk arising from its fixed rate foreign currency borrowing amounting to USD 14.10 million. Interest on the borrowing is payable at 3-6% p.a. and the principal amount is repayable in July 2022. The Company economically hedged the foreign currency risk arising from the loan with Cross Currency Interest Rate swaps of equivalent amount. The Cross Currency Interest Rate Swaps converts the cash outflows of the foreign currency fixed rate borrowing of USD 14.10 million to cash outflows in Indian Rupees with a notional amount of '' 975.72 Mn.
The company is exposed to foreign currency risk arising from its fixed rate foreign currency borrowing amounting to USD 131.51 Mn. Interest on the borrowing is payable at 6.40 % p.a. and the principal amount is repayable in Sepetmber 2022. The Company economically hedged the foreign currency risk arising from the loan with Cross Currency Interest Rate swaps of equivalent amount. The Cross Currency Interest Rate Forward converts the cash outflows of the foreign currency fixed rate borrowing of USD 131.51 Mn to cash outflows in Indian Rupees with a notional amount of '' 10,000 Mn.
There is an economic relationship between the hedged item and the hedging instrument as the terms of the forward currency contract match that of the foreign currency borrowing (notional amount, principal repayment date etc.). The company has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the forward currency contract are identical to the hedged risk components. For the purpose of calculating hedge effectiveness, the company uses a qualitative features to determine the hedge effectiveness.
Commercial papers carry interest rates of 4.85%p.a (31 March 2021 :3.45% to 9% p.a) and their tenure ranges from 145 to 155 days (31 March 2021 : 71days to 364 days).
US Dollar Bonds carry interest rates of 5.90% p.a (31 March 2021:5.90% p.a) and their tenure is for 3 years (31 March 2021 : 3 years). NATURE OF SECURITY
Debentures are secured by a floating charge on the book debts of the Company on gold and other unencumbered assets. The Company shall maintain 100% security cover on the outstanding balance of debenture with accrued interest any time. Debentures are offered for a period of 1 year to 10 years.
US Dollar Bonds are secured by way of floating charge on the book debts of the Company on gold and other unencumbered assets.
Indian rupee Loan from banks (secured): These are secured by an exclusive charge by way of hypothecation of book debts pertaining to loans granted against gold and margin/cash collateral as per the agreement. Further, the loan has been guaranteed by personal guarantee of Mr. V.P Nandakumar, Managing Director and CEO to the extent of '' 6,733.37Mn (31 March 2021: '' 16,816.50Mn)
Foreign currency ECB from Banks (secured):
1) '' 975.7 (31 March 2021: '' 975.7) which carries interest @ 3 month LIBOR plus 280bps. The loan is repayable after 3 years
from the date of its origination, viz., July 25, 2019.
The loans are secured against the first pari passu charge on current assets, book debts and receivables including gold loans & advances of the Company.
Term loan from other parties (secured):
Third party rupee term loan is secured where Interest payments are made quarterly at 6.75 % - 9.20 % pa. The loans is secured against the first pari passu charge on current assets, book debts and receivables including gold loans & advances of the Company as per the agreement. Further, the loan has been guaranteed by personal guarantee of Mr. V.P Nandakumar, Managing Director and CEO.
Term loan from other parties (unsecured):
Third party rupee term loan is unsecured where interest payments are made quarterly at Nil.
Finance lease obligation is secured by hypothecation of Computers taken on lease. The interest rate implicit in the lease is 11% p.a. The gross investment in lease, i.e., lease obligation plus interest, is payable in 12 quarterly instalments of approx. '' Nil (31 March 2021: '' 15.04Mn).
Cash credit / Overdraft facilities from banks (secured):
These Loans are secured against the first pari passu charge on current assets, book debts and receivables including gold Loans & advances of the Company as per the agreement. Further, the loan has been guaranteed by personal guarantee of Mr. V.P Nandakumar, Managing Director and CEO to the extent of '' 3072.00 (31 March 2021: '' 244.70).
Working Capital demand loan from banks (secured):
These loans are secured against the first pari passu charge on current assets, book debts and receivables including gold loans & advances of the Company as per the agreement. Further, the loan has been guaranteed by personal guarantee of Mr. V.P Nandakumar, Managing Director and CEO to the extent of '' 22,000.00 (31 March 2021: '' 17,800.00).
Other loans
Vehicle Loans: The loans are secured by hypothecation of the respective vehicles against which the loan has been availed.
Terms/ rights attached to equity shares
The Company has only one class of equity shares having a par value of '' 2/- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. During the year ended 31 March 2022, the amount of per share dividend recognized as distributions to equity shareholders was '' 3/- per share (31 March 2021: '' 1.25/- per share).In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
Aggregate number of shares issued for consideration other than cash during the period of five years immediately preceding the reporting date:
The Company has issued 4,495,093 equity shares (31 March 2021: 5,342,593) during the period of five years immediately preceding the reporting date on exercise of options granted under the employee stock option plan (ESOP) wherein part consideration was received in the form of employee services.
For details of shares reserved for issue under the employee stock option plan ( ESOP) of the Company, refer note 37
The primary objectives of the Company''s capital management policy are 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. No changes have been made to the objectives, policies and processes from the previous years. However, they are under constant review by the Board.
Nature and purpose of Reserves
Statutory reserve (Statutory Reserve pursuant to Section 45-IC of The RBI Act, 1934): Section 45IC of Reserve Bank of India Act, 1934 ("RBI Act, 1934â) defines that every non banking finance institution which is a Company shall create a reserve fund and transfer therein a sum not less than twenty percent of its net profit every year as disclosed in the statement of profit and loss before any dividend is declared. The Company has transferred an amount of '' 2609.07Mn (2020-21''3406.69 Mn) to Statutory reserve pursuant to Section 45-IC of RBI Act, 1934.
Securities premium: Securities premium reserve is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.
Hedge reserve: The Company uses hedging instruments as part of its management of foreign currency risk and interest rate risk associated on borrowings as described within note 45. For hedging foreign currency and interest rate risk, the Company uses foreign currency forward contracts, cross currency swaps, foreign currency option contracts and interest rate swaps. To the extent these hedges are effective, the change in fair value of the hedging instrument is recognised in the hedge reserve. Amounts recognised in the hedge reserve is reclassified to the statement of profit or loss when the hedged item affects profit or loss (e.g. interest payments).
(1) Pursuant to Section 71 of the Companies Act, 2013 and circular 04/2013, read with notification issued date June 19, 2016 issued by Ministry of Corporate Affairs, the Company is required before 30th day of April of each year to deposit or invest, as the case may be, a sum which shall not be less than 15% of the amount of its debenture issued through public issue maturing within one year from the balance sheet date.
(2) Pursuant to notification issued by Ministry of Corporate Affairs on 16th August, 2019 in exercise of the powers conferred by sub-sections (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government amend the Companies (Share Capital and Debentures) Rules, 2014.
In the principal rules, in rule 18, for sub-rule (7), the Limits with respect to adequacy of Debenture Redemption Reserve and investment or deposits for listed companies (other than All India Financial Institutions and Banking Companies as specified
in sub-clause (i)), Debenture Redemption Reserve is not required to maintain in case of public issue of debentures as well as privately placed debentures for NBFCs registered with Reserve Bank of India under section 45-IA of the RBI Act, 1934.
(3) By complying with the above notification, the Company has transferred back '' 1,115.33 Millions from DRR to Retained earnings in the financial year ended 31 March 2020 and In respect of the debentures issued during the current year, the Company is not required to create DRR.
General reserve: Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable results for that year. 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.
Share option outstanding account (ESOP reserve): The share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to employees, including key management personnel, as part of their remuneration. Refer to Note 37 for further details of these plans.
Other comprehensive income: Other items of other comprehensive income consist of re-measurement of net defined benefit liability/asset and fair value changes on derivatives designated as cash flow hedge, net.
The NBFCs will have to compute two types of provisions or loss estimations, ECL as per Ind AS 109 & its internal ECL model and parallelly provisions as per the RBI prudential norms. A comparison between the two is required to be disclosed by the NBFC in the annual financial statements. Where the ECL computed as per the ECL methodology is lower than the provisions computed as per the IRAC norms, then the difference between the two should be parked in "Impairment Reserveâ. Allocation to Impairment Reserve should be made out of Retained earnings and there are certain restrictions towards utilization of this reserve amount.
Reason for shortfall in CSR expenditure: The amount remains unspent is pertaining to the ongoing projects and the same have been transferred to CSR unspent account. There were procedural delays in getting permission from statutory authorities to complete the projects which lead to extend the projects more than one year. The amount so transferred will be spend with in a period of 3 years.
Nature of CSR expenditure: CSR projects of Manappuram Finance Ltd are focused on promotion of quality education, promotion of healthcare, Rural development projects, women empowerment, environment sustainability etc which includes both ongoing and one year projects.
Details of related party trasactions with respect to CSR expenditure are showed under note 42.
NOTE 35: INCOME TAX
The Company has computed the tax expense of the current financial year as per the tax regime announced under section 115BAA of the lncome Tax Act, 1961. Accordingly, (a) the provision for current and deferred tax has been determined at the rate of 25.17% and (b) the deferred tax assets and deferred tax liabilities as on April 01, 2019 have been restated at 25.17%.
The Company has adopted ESOS 2016 as per SEBI(Share Based Employee Benefits) Regulation, 2014 and has recorded a
compensation expense using the fair value method as set out in those regulations.
The Company has granted 13,750,466 options at an exercise price of 86.45 on 08 August 2016 which will vest over a period of three years from the grant date (08 August 2016) and the vesting of options shall be at 30% each in the first and second year and the balance 40% in the third year from the date of grant.
NOTE 38: RETIREMENT BENEFIT PLAN Defined Contribution Plan
The Company makes Provident Fund and Employee State Insurance Scheme contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized '' 509.74Mn (31 March 2021: '' 364.88Mn) for Provident Fund contributions and
'' 111.78Mn (31 March 2021: '' 88.63Mn) for Employee State Insurance Scheme contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the Schemes.
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation of India and Kotak Life Insurance.
Update on the Code on Social Security, 2020 (''Code'')
The Code on Social Security , 2020 (''Code'') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020 . The Code has been published in the Gazette of India . However , the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period when the Code becomes effective.
The weighted average duration of the defined benefit obligation as at 31 March 2022 is 5.5 years (2021: 5.5years)
The fund is administered by Life Insurance Corporation of India ("LICâ) and Kotak Life Insurance. The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.
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. The defined benefit plans expose the Company to a number of actuarial risks as below:
Investment Risks - The company''s performance is directly affected by the over- or under-performance of the investment assets of the gratuity plan. Inadequate performance could, among others, increase the future employer contributions.
Interest Rate Risk - This is the risk associated with a rise or fall in the interest rate which could affect liability and asset values. The plan is exposed to the interest rate risk toward its liability and asset values.
Regulatory Risk - The gratuity plan is exposed to multiple regulatory risks e.g., increase in the statutory benefit definition for gratuity. Higher costs from regulatory oversight of organisation pensions or from compliance toward existing trust and funding-related obligations (e.g., minimum funding requirements) contribute to the regulatory risks.
Salary and earnings inflation Risk - The Salary growth rate assumption is the company''s estimate of future salary increases take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. In a ''final salary'' gratuity plan, the risk of higher earnings-inflation and merit-related salary growth could outweigh the assumptions employed for the valuation and increase the company''s future defined benefit obligation.
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 and other relevant factors.
NOTE 41: CONTINGENT LIABILITIES, COMMITMENTS AND LEASING ARRANGEMENTS NOTE 41 (I): CONTINGENT LIABILITIES
(a) Applicability of Kerala Money Lenders'' Act
The Company has challenged in the Hon''ble Supreme Court the order of Hon''ble Kerala High Court upholding the applicability of Kerala Money Lenders Act to NBFCs. The Hon''ble Supreme Court has directed that a status quo on the matter shall be maintained and the matter is currently pending with the Hon''ble Supreme Court. The Company has taken legal opinion on the matter and based on such opinion the management is confident of a favourable outcome. Pending the resolution of the same, no adjustments have been made in the financial statements for the required license fee and Security deposits.
|
Particulars |
31 March 2022 |
31 March 2021 |
|
i) Income Tax Demand under Appeal before The Commissioner of Income Tax (Appeals) for the Assessment Year 2015-16 |
307.20 |
307.20 |
|
ii) Income Tax Demand under Regular Assessment for the Assessment Year 2018-19 |
1.38 |
1.38 |
|
ii) Kerala Value Added Tax demands under appeal pending before The Deputy Commissioner for the Assessment Years 2009-10, 2010-11, 2011-12, 2012-13 and 2014-15 (Excluding Penalty and Interest, if any) |
44.94 |
43.69 |
|
Total |
353.52 |
352.27 |
b) The company has some Labour cases pending against it in various courts and with Labour commissioners of various states. The company''s liability for these cases are not disclosed since actual liability to be provided is unascertainable.
NOTE 41 (II): COMMITMENTS
(i) Estimated amount of contracts remaining to be executed on capital account, net of advances as on 31st March 2022 is '' 77.51Mn(31 March 2021: '' 188.60Mn).
(ii) The Company has entered into an agreement for outsourcing of Information Technology support in August 2020 for a period
of 5 years with an total expense of '' 520Mn.
NOTE 41 (III): LEASE DISCLOSURES (ENTITY AS A LESSEE)
(a) Leases of Branch Premises
(i) Ind AS 116 "Leasesâ is applied to all lease contracts. The company recorded the lease liability at the present value of the lease payments discounted at the incremental borrowing rate of the company and the right of use (ROU) asset at measured at the amount of the initial measurement of the lease liability.
(ii) The following is the summary of practical expedients elected on initial application:
1. Applied a single discount rate to a portfolio of leases of similar assets in similar economic environment with a similar end date. Discount rate has been taken as the Incremental Borrowing rate of borrowings with similar tenure.
2. Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term on the date of initial application.
3. Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application.
a) Related parties have been identified on the basis of the declaration received by the management and other records available.
b) Loans given to related parties are repayable on demand. These loans carry interest @ 11.15%.
c) The loans have been utilised by the Manappuram Home Finance Limited for lending Home Loan and meeting the working capital requirements.
d) Manappuram Home Finance Limited has used the loan for meeting the working capital requirements.
e) The remuneration to the key managerial personnel does not include the provisions made for gratuity and leave benefits, as they are determined on an actuarial basis for the company as a whole.
CAPITAL MANAGEMENT
The primary objectives of the Company''s capital management policy are 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 according to changes in economic conditions and the risk characteristics of its activities. 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.
The Company''s debt equity ratio as on 31st March 2022 stands at 2.26 times (2.56 times as at 31 March 2021).
NOTE 44: FAIR VALUE MEASUREMENT
44.1 VALUATION PRINCIPLES
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 , 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.
44.2 VALUATION GOVERNANCE
The Company''s process to determine fair values is part of its periodic financial close process. The Audit Committee exercises the overall supervision over the methodology and models to determine the fair value as part of its overall monitoring of financial close process and controls. The responsibility of ongoing measurement resides with business units . Once submitted, fair value estimates are also reviewed and challenged by the Risk and Finance functions.
44.4 VALUATION TECHNIQUES Equity instruments
Equity instruments in non-Listed entities are initially recognised at transaction price and re-measured (to the extent information is available) and valued on a case-by-case and classified as Level 3. The Company uses prices from prior transactions without adjustment to arrive at the fair value. Prior transaction represents the price at which same investment was sold in the deal transaction.
Interest rate derivatives include interest rate swaps, cross currency interest rate swaps, basis swaps and interest rate forwards (FRAs). The most frequently applied valuation techniques include forward pricing and swap models, using present value calculations by estimating future cash flows and discounting them with the appropriate yield curves incorporating funding costs relevant for the position. These contracts are generally Level 2 unless adjustments to yield curves or credit spreads are based on significant nonobservable inputs, in which case, they are Level 3.
Interest rate derivatives include interest rate swaps, cross currency interest rate swaps, basis swaps and interest rate forwards (FRAs). The most frequently applied valuation techniques include forward pricing and swap models, using present value calculations by estimating future cash flows and discounting them with the appropriate yield curves incorporating funding costs relevant for the position. These contracts are generally Level 2 unless adjustments to yield curves or credit spreads are based on significant nonobservable inputs, in which case, they are Level 3.
Foreign exchange contracts include open spot contracts, foreign exchange forward and swap contracts and over the-counter foreign exchange options. These instruments are valued by either observable foreign exchange rates, observable or calculated forward points and option valuation models. With the exception of contracts where a directly observable rate is available which are disclosed as Level 1, the Company classifies foreign exchange contracts as Level 2 financial instruments when no unobservable inputs are used for their valuation or the unobservable inputs used are not significant to the measurement (as a whole).
The management assessed that cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
Valuation methodologies of Financial instruments not measured at fair value
Below are the methodologies and assumptions used to determine fair values for the above financial instruments which are not recorded and measured at fair value in the financial statements. These fair values were calculated for disclosure purposes only.
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 balances, balances other than cash and cash equivalents, trade payables and other financial liabilities without a specific maturity. Such amounts have been classified as Level 2 on the basis that no adjustments have been made to the balances in the balance sheet.
Loans and advances to customers
Fair value of Loans estimated using a discounted cash flow model on contractual cash flows using actual/estimated yields.
The floating rate loans are fair valued on the basis of MCLR spread. For fixed rate loans, the carrying values are are a reasonable approximation of their fair value.
NOTE 45: RISK MANAGEMENT
Risk is an integral part of the Company''s business and sound risk management is critical to the success. As a financial institution, the Company is exposed to risks that are particular to its lending and
the environment within which it operates and primarily includes Credit, Liquidity, Market and Operational Risks. Company''s goal in risk management is to ensure that it understands measures and monitors the various risks that arise and the organization adheres strictly to the policies and procedures which are established to address these risks. The Company has a risk management policy which covers risks associated with the financial assets and liabilities. The Board of Directors of the company are responsible for the overall risk management approach, approving risk management strategies and principles. Risk Management Committee of the Board reviews credit, operations and market risks faced by MAFIL periodically.Company has appointed a Chief Credit Officer who reports to MD & CEO and presenting risk related matters to Risk Management Committee and the Board.
The Company has implemented comprehensive policies and procedures to assess, monitor and manage risk throughout the Company. The risk management process is continuously reviewed, improved and adapted in the changing risk scenario and the agility of the risk management process is monitored and reviewed for its appropriateness in the changing risk landscape. The process of continuous evaluation of risks includes taking stock of the risk landscape on an event-driven basis.
The Company has an elaborate process for risk management. Major risks identified by the businesses and functions are
systematically addressed through mitigating actions on a continuing basis.
Credit Risk
Credit risk is the risk that a customer or counterparty will default on its contractual obligations resulting in financial loss to the Company. As the company predominantly lend against gold jewellery, which are liquid securities, its credit risks are comparatively lower. Its other verticals, Micro Finance, Vehicle Finance, Micro loans etc have significant credit risk.
Appraisal Risk: The borrowers are awarded risk grades and only eligible borrowers are financed. Besides continuous training of employees through digital media, Credit officers are imparted on the job and class room training on a continuous basis. Credit appraisal processes are being reviewed regularly by Credit Monitoring teams and credit auditors and more risk filters are added whenever necessary.
Collection risk: As the gold ornaments are liquid, collection in gold portfolio attaches minimal risks. We have developed a team of trained Relationship Managers and sales staff for continuous engagement with the borrowers under verticals like Micro Finance, Vehicle Finance, Housing loans, Micro loans etc
to ensure timely payment of their dues. Collection efficiency of verticals are being monitored closely by the Senior Management.
Concentration risk: As on 31/03/2022, our gold loan portfolio is 89% of our consolidated AUM. Gold loans are granted
against liquid securities for short period which substantially insulates from credit risk and liquidity risk. We have already diversified into Micro Finance, Home Finance, Commercial Vehicles and budget to grow the new verticals so as to contain our exposure to gold to 50% of the total AUM in ten years. Our geographical presence is largely in the southern India. We are now giving thrust for opening new branches in north and north eastern states which have high growth potentials. A geographical exposure limit will be fixed when operations of the new branches are stabilised.
The credit risk management policy of the Company seeks to have following controls and key metrics that allows credit risks to be identified, assessed, monitored and reported in a timely and efficient manner in compliance with regulatory requirements.
- Standardize the process of identifying new risks and designing appropriate controls for these risks.
- Maintain an appropriate credit administration and loan review system.
- Establish metrics for portfolio monitoring.
- Minimize losses due to defaults or untimely payments by borrowers.
- Design appropriate credit risk mitigation techniques.
In order to mitigate the impact of credit risk in the future profitability, the company makes reserves basis the expected credit loss (ECL) model for the outstanding loans as balance
sheet date.
The below discussion describes the Company''s approach for assessing impairment as stated in the significant accounting policies.
The Company considers a financial instrument defaulted and therefore Stage 3 (credit impaired) for 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 ow whether Stage 2 is appropriate.
The outstanding balance at the reporting date adjusted for subsequent realisations in the case of Gold Loan, is considered as EAD by the Company. Considering that the PD determined above factors in amount at default, there is no separate requirement to estimate EAD.
The Company uses historical information where available to determine PD. Considering the different products and schemes, the Company has bifurcated its loan portfolio into various pools. For certain pools where historical information is available, the PD is calculated using Incremental NPA approach considering fresh slippage of past 6 years. For those pools where historical information is not available, the PD 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 there are certain adjustments on account of impact of COVID 19 are required in the form of temporary overlays. Post management overlay, the PD percentages are mentioned below:
4) Onlending, Corporate Finance and Project and Industrial Finance Loan, external ratings or internal evaluation with a management overlay for each customer.
5) Personal Loans and other verticals, external ratings or internal evaluation with a management overlay for each customer industry segment.
* Excluding restructured loans, where in Vehicle loan Stage II restructured loans for CV -49% ,BUS -34% and CAR - 47% as at March 31, 2022.
** Excludes portfolio where PD has been considered at 100%.
In case of Gold loans, incremental NPA is considered after taking into account auctions during the year since such cases are auctioned and total dues are recovered even before the account turns NPA.
The Company determines its recovery rates by analysing the recovery trends over different periods of time after a loan has defaulted. Based on its analysis of historical trends, homogenous nature of the loans etc, the Company has assessed that significant recoveries happen in the year in which default has occurred. Recoveries from all the phases like normal collections, auction collections, repossession sale as well as expected realization from collateral are considered while computing the LGD rates for each loan portfolio. For different stages such as stage 1,stage 2 & stage 3 portfolios, we are applying same LGD rate except in case of loss assets and unsecured loans in stage 3 which is at 100%.
*In case of Gold Loan the Loan To Value(LTV), at the time of disbursement is below 75% (As per the RBI norms) and the remaining value (25%) of asset held by the company acts as a margin of safety, protecting the company against volatility in asset price.LTV is one of the factor for gradation of risk. Also it reflects in the fixing of interest rates of each type of loans/ schemes. Normally fixing higher interest rate for loans having higher LTV% and vice versa.
LGD Rates have been computed internally based on the discounted recoveries in NPA accounts that are dosed/ written off/ repossessed and upgraded during the year. LGD rates for SME, corporate loans and other loans is considered based on proxy FIRB
rates for secured loans.
In estimating LGD, the company reviews macro-economic developments taking place in the economy. Based on internal evaluation, company has provided a management overlay in LGD computed for Vehicle and SME portfolios.
The Company has applied management overlays to the ECL Model to consider the impact of the Covid-19 pandemic on the provision. The adjustment to the probability of default has been assessed considering the likelihood of increased credit risk and consequential default due to the pandemic. The impact on collateral values is also assessed for determination of adjustment to the loss given default and reasonable haircuts are applied wherever necessary. The number of days past due shall exclude the moratorium period for the purposes of asset classification as per the Company''s policy.
As per the RBI guidelines , the ECL policy has been approved by Audit Committe and the Board.Modifications to the ECL model, if any, is approved by the Board. As part of the management overlays, as per the approved ECL policy, the management has adjusted the underlying PD as mentioned above and in case of corporate loan by downgrading the ratings to one level lower) and LGD as computed by ECL Model as mentioned above depending on the nature of the portfolio/borrower, the management''s estimate of the future stress and risk and available market information. Refer note 7 to the financial statements.
Asset and Liability Management (ALM) is defined as the practice of managing risks arising due to mismatches in the asset and liabilities.
Company''s funding consists of both long term as well as short term sources with different maturity patterns and varying interest rates. On the other hand, the asset book also comprises of loans of different duration and interest rates. Maturity mismatches are therefore common and has an impact on the liquidity and profitability of the company. It is necessary for Company''s to monitor and manage the assets and liabilities in such a manner to minimize mismatches and keep them within reasonable limits.
The objective of this policy is to create an institutional mechanism to compute and monitor periodically the maturity pattern of the various liabilities and assets of Company to (a) ascertain in percentage terms the nature and extent of mismatch in different maturity buckets, especially the 1-30/31days bucket, which would indicate the structural liquidity (b) the extent and nature of cumulative mismatch in different buckets indicative of short term dynamic liquidity and © the residual maturity pattern of repricing of assets and liabilities which would show the likely impact of movement of interest rate in either direction on profitability. This policy will guide the ALM system in Company.
The scope of ALM function can be described as follows:
- Liquidity risk management
- Management of market risks
- Others
Liquidity risk refers to the risk that the Company may not meet its financial obligations. Liquidity risk arises due to the unavailability
of adequate funds at an appropriate cost or tenure. The objective of Liquidity risk management is to maintain sufficient Liquidity and ensure that funds are available for use as per requirements. The Company consistently generates sufficient cash flows from
operating and financial activities to meet its financial obligations as and when they fall due. Our resource mobilisation team sources funds from multiple sources, including from banks, financial institutions and capital markets to maintain a healthy mix of sources. The resource mobilisation team is responsible for diversifying fund raising sources, managing interest rate risks and maintaining a strong relationship with banks, financial institutions, mutual funds, insurance companies, other domestic and foreign financial institutions
and rating agencies to ensure the liquidity risk is well addressed.
The table below provide details regarding the contractual maturities of significant financial assets and liabilities as on:
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 Company is exposed to three types of market risk as follows:
Foreign Exchange Risk(FX Risk)
Forex Risk is a risk that exists when a financial transaction is denominated in a currency other than the domestic currency of the
company. Any appreciation/depreciation of the base currency or the depreciation/appreciation of the denominated currency will affect the cash flows emanating from that transaction. The company has fully hedged the forex risk by derivative instruments.
Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
We are subject to interest rate risk, principally because we lend to clients at fixed interest rates and for periods that may differ from our funding sources, while our borrowings are at both fixed and variable interest rates for different periods. We assess and manage our interest rate risk by managing our assets and liabilities. Our Asset Liability Management Committee evaluates asset liability management, and ensures that all significant mismatches, if any, are being managed appropriately.
The Company''s exposure to price risk is not material. The drop in gold prices is unlikely to have a significant impact on asset quality of the company since the disbursement LTV is below 75% and average portfolio LTV as on the reporting period was 62% to 65% only.However the sustained decrease in market price may cause for decrease in the size of our Gold Loan Portfolio and the interest income.Management monitors the gold prices and other loans on regular basis.
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, such as the use of internal audit. A Risk Management Committee comprising representatives of the Senior Management, reviews matters relating to operational and business risk, including corrective and remedial actions as regards people and processes.
Top 20 Large Deposits (Guidelines on Liquidity Risk Management Framework For Non-Banking Financial Companies and Core Investment Companies on November 04, 2019)
Not Applicable
Institutional set up for liquidity risk management (Guidelines on Liquidity Risk Management Framework for Non-Banking Financial Companies and Core Investment Companies on November 04, 2019)
The Board of Directors of the Company has an overall responsibility and oversight lor the management of all the risks, including liquidity risk. The Board approves the governance structure, policies, strategy and the risk tolerance limit for the management of liquidity risk. The Board of Directors approves the constitution of Risk Management Committee (RMC) for the effective supervision and management of various aspects including liquidity risks faced by the company. The meetings of RMC are held at quarterly
interval The Board of Directors also approves constitution of Asset Liability Committee (ALCO), consisting of the Company''s top management which functions as the strategic decision-making body for the asset-liability management of the Company from risk-return perspective and within the risk appetite and tolerance limits approved by the Board. The role of the ALCO also includes periodic revision of interest rates, diversification of source of funding and its mix, maintenance of enough liquidity and investment of surplus funds. ALCO meetings are held once in a quarter or more frequently as warranted from time to time. The minutes of ALCO meetings are placed before the RMC and the Board of Directors in its next meeting for its perusat/approvat/ ratification.
NOTE 59: DERIVATIVES DISCLOSURES AS PER RBI
As at 31 March 2022, the Company has recognised a net Market to Market (MTM) Loss of '' 185.59 Mn (31 March 2021''225.64Mn Loss) relating to derivative contracts entered to hedge the foreign currency risk of future interest payment on fixed rate foreign currency denominated bond and foreign currency term loan, repayment of fixed rate foreign currency denominated bond and loans designated as cash flow hedges, in Hedging Reserve Account as part of the Shareholders'' funds. Refer to Note no. 17 '' Derivative Financial Instruments''.
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 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 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/limitsdecided by itfrom time to time.The ALM Committee of the Board of Directors shall be responsible for evaluating the liquidity risk.Further details regarding management responsibilities on Liquidity Risk Management is disclosed under note 56(vi).
64A: Disclosure on the following matters required under Schedule III as amended not being or applicable in case of the company,same are not covered such as
a) No proceedings have been initiated or are pending against the Company for holding any Benami property under the Benami Property (Prohibition) Act ,1988 (45 of 1988)and the rules made thereunder.
b) The company has not been declared willful defaulter by any bank or financial institution or government or any government authority.
c) No registration or satisfaction of charges are pending to be filed with ROC.
d) The company has not entered into any scheme of arrangement.
e) There are no transactions which have not been recorded in the books.
f) The company has not traded or invested in crypto currency or virtual currency during the financial year.
64B: Utilisation of Borrowed funds or share premium
(i) 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 person(s) or entity(ies),including foreign entities ("Intermediariesâ), with the understanding, whether recorded in writing or otherwise,that the Intermediary shall,whether, directly or indirectly lend to or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(ii) No funds have been received by the Company from any person(s) or entity(ies),including foreign entities ("Funding Partiesâ), with the understanding,whether recorded in writing or otherwise,that the Company shall,whether, directly or indirectly lend to or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
64E:Standards issued but not yet effective
On March 24,2021,the Ministry of Corporate Affairs(''MCA'')through a notification,amended Schedue III of the Companies
Act, 2013. The amendments revise Division I,II and III of Schedue III and are applicable from April1,2021.The Company has evaluated the same for reporting.
During the year there have been certain instances of fraud on the Company by officers and employees where gold Loan related misappropriations / cash embezzlements /burglaries have occurred for amounts aggregating an amount of '' 252.61Mn (31 March 2021 '' 142.24Mn) of which the Company has recovered '' 42.83Mn (31 March 2021''17.23Mn). The Company has taken insurance cover for such losses and has filed insurance claims in this regard. Further, the Company is in the process of recovering these amounts from the employees and taking legal actions, where applicable. The Company has created provision/ written off aggregating to '' 209.78Mn (31 March 2021 -'' 125Mn) towards these losses based on its estimate.
NOTE 66: UNDER RECOVERY OF INTEREST INCOME
The Company has disbursed some gold loans on which total amount receivable including principal and accumulated interest have exceeded the value of the underlying security and subsequently company has auctioned such loans. As at
March 31, 2022, the Company has not recognized interest income aggregating to '' Nil (31-March 2021- '' 1,045.46Mn) and made provision for doubtful debts to the extent of '' Nil (31 March 2021-'' 45.73Mn) relating to the said gold loans as a prudent measure.
NOTE 67:CODE OF SOCIAL SECURITY
The Indian Parliament has approved the Code on Social Security, 2020 which subsumes the Provident Fund and the Gratuity Act and rules thereunder. The Ministry of Labour and Employment
has also released draft rules thereunder on 13 November 2020, and has invited suggestions from stakeholders which are under active consideration by the Ministry. The Company will evaluate the rules, assess the impact, if any, and account for the same once the rules are notified and become effective.
NOTE 68:NEW IRAC NORMS ON INCOME RECOGNITION AND ASSET CLASSIFICATION
On November 12, 2021, the Reserve Bank of India ("RBIâ) had issued circular no. RBI/2021-2022/125 DOR.STR.
REC.68/21.04.048/2021-22, requiring changes to and clarifying certain aspects of Income Recognition, Asset Classification and Provisioning norms ("IRACP normsâ) pertaining to Advances. On February 15, 2022, the RBI had issued another circular no.
RBI/2021-2022/158 DOR.STR.REC.85/21.04.048/2021-22 providing time tiLL September 30, 2022. Accordingly, the Company wiLL implement the updated norms under IRACP w.e.f October 01, 2022.
Pursuant to the order passed by Honourable Supreme Court
read aLong with the instructions received from RBI circuLar dated ApriL 07,2021 and the Indian Bank''s Association ("IBAâ) advisory
Letter dated ApriL 19,2021 the company has put in pLace a Board approved poLicy and the methodoLogy for caLcuLation of the amount to be refunded/adjusted by way of interest on interest / penaL interest charged to borrowers during the moratorium period ie, March 01,2020 to August 31, 2020.However the company is in the process of refunding /adjusting the interest on interest / penaL interest to the borrowers and the baLance amount to be refunded /adjusted as on reporting period(ie, 31-03-2022) was '' 0.79Mn.
NOTE 70:DISCLOSURE UNDER COVID RESOLUTION PLANS
DetaiL of resoLution pLans impLemented under the "ResoLution framework for COVID-19-reLated Stressâ as per the RBI notification no. RBI/2020-21/16 DOR.NO.BP.BC/3/21.04.048/2020-21 dated August 06, 2020 and RBI/2021-22/31 DOR.STR. REC.11/21.04.048/2021-22 dated May 05, 2021 as at March 31, 2022 are given beLow.The resoLution pLans were based on the parameters Laid down in the resoLution poLicy approved by the Board of Directors of the Company and in accordance with the guideLines issued by the Reserve Bank of India.
NOTE 72: PREVIOUS YEAR FIGURES
Previous year figures have been regrouped/recLassified, where necessary, to conform current year''s classification.
Mar 31, 2021
Note 17.1 Hedging activities and derivatives
The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed using derivative instruments are foreign currency risk.
The Company''s risk management strategy and how it is applied to manage risk are explained in Note 45.
Note 17.2 Derivatives designated as hedging instruments
The Company is exposed to foreign currency risk arising from its fixed rate foreign currency denominated bond amounting to USD 300 million. Interest on the borrowing is payable at 5.9% p.a. at half yearly intervals, and the principal amount is repayable in January 2023. The Company economically hedged the foreign currency risk arising from the bond with forward rate agreement and cross currency interest rate swaps of equivalent amount. The cross currency interest rate swaps converts the cash outflows of the foreign currency fixed rate borrowing of USD 300 million to cash outflows in Indian Rupees with a notional amount of R 21,288 million.
There is an economic relationship between the hedged item and the hedging instrument as the terms of the forward currency contract match that of the foreign currency borrowing (notional amount, principal repayment date etc.). The Company has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the forward currency contract are identical to the hedged risk components. For the purpose of calculating hedge effectiveness, the Company uses a qualitative features to determine the hedge effectiveness.
Note 17.3 Derivatives not designated as hedging instruments
The Company is exposed to foreign currency risk arising from its fixed rate foreign currency borrowing amounting to USD 14.10 million. Interest on the borrowing is payable at 3-6% p.a. and the principal amount is repayable in July 2022. The Company economically hedged the foreign currency risk arising from the loan with cross currency interest rate swaps of equivalent amount. The cross currency interest rate swaps converts the cash outflows of the foreign currency fixed rate borrowing of USD 14.10 million to cash outflows in Indian Rupees with a notional amount of R 975.72 million (As at 31st March, 2020 - R 1,534.52 million)
Commercial papers carry interest rates of 3.45% to 9% p.a (31 March 2020 : 5.8% to 9.13% p.a.) and their tenure ranges from 71 to
364 days (31st March, 20 20 : 74 days to 365 days)
US Dollar Bonds carry interest rates of 5.9% p.a. (31st March, 2020 : 5.90% p.a.) and their tenure is for 3 years (31st March, 2020 : 3 years).
Debentures are secured by a floating charge on the book debts of the Company on gold and other unencumbered assets. The
Company shall maintain 100% security cover on the outstanding balance of debenture with accrued interest any time. Debentures are offered for a period of 1 year to 10 years. US Dollar Bonds are secured by way of floating charge on the book debts of the Company on gold and other unencumbered assets.
Indian rupee Loan from banks (secured): These are secured by an exclusive charge by way of hypothecation of book debts pertaining to loans granted against gold and margin/cash collateral as per the agreement. Further, the loan has been guaranteed by personal guarantee of Mr. V.P Nandakumar, Managing Director and CEO to the extent of R 16,816.50 (31st March, 2020: R 17,230)
Foreign currency term loans (ECB) from banks (secured):
1) R 975.7 (31st March, 2020: R 975.7) which carries interest @ 3 month LIBOR plus 280bps. The loan is repayable after 3 years from the date of its origination, viz., July 25, 2019. The loans are secured against the first pari passu charge on current assets, book debts and receivables including gold loans and advances of the Company.
Term loan from other parties (secured):
Third party rupee term loan is secured where Interest payments are made quarterly at 9.20 % - 9.90 % pa. The loans is secured against the first pari passu charge on current assets, book debts and receivables including gold loans & advances of the Company as per the agreement . Further, the loan has been guaranteed by personal guarantee of Mr. V.P Nandakumar, Managing Director and CEO.
Term loan from other parties (unsecured):
Third party rupee term loan is unsecured where interest payments are made quarterly at 7.75 % pa.
Finance Lease obligation is secured by hypothecation of Computers taken on Lease. The interest rate implicit in the Lease is 11% p.a. The gross investment in lease, i.e., lease obligation plus interest, is payable in 12 quarterly instalments of approx. R 15.04 (31st March, 2020: R 51.51) each.
Cash credit / Overdraft facilities from banks (secured):
These loans are secured against the first pari passu charge on current assets, book debts and receivables including gold loans and advances of the Company as per the agreement. Further, the loan has been guaranteed by personal guarantee of Mr. V.P Nandakumar, Managing Director and CEO to the extent of R 244.70 (31st March, 2020: R 8,004.5)
Working Capital demand loan from banks (secured):
These loans are secured against the first pari passu charge on current assets, book debts and receivables including gold loans and advances of the Company as per the agreement. Further, the loan has been guaranteed by personal guarantee of Mr. V.P Nandakumar, Managing Director and CEO to the extent of R 17,800 (31st March, 2020: R 44,650.00)
Vehicle Loans: The loans are secured by hypothecation of the respective vehicles against which the loan has been availed.
Terms/ rights attached to equity shares
The Company has only one class of equity shares having a par value of R 2/- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
During the year ended 31st March, 2021, the amount of per share dividend recognized as distributions to equity shareholders was R 1.25 per share (31st March, 2020: R 2.2 per share).
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
As per the records of the Company, including its register of shareholders / members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.
Aggregate number of shares issued For consideration other than cash during the period of five years immediately preceding the reporting date:
The Company has issued 5,342,593 equity shares (31st March 2020: 3,785,989) during the period of five years immediately preceding the reporting date on exercise of options granted under the employee stock option plan (ESOP) wherein part consideration was received in the form of employee services.
For details of shares reserved for issue under the employee stock option (ESOP) plan of the Company, refer note 37
The primary objectives of the Company''s capital management policy are 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. No changes have been made to the objectives, policies and processes from the previous years. However, they are under constant review by the Board.
Nature and purpose of Reserves
Statutory reserve (Statutory Reserve pursuant to Section 45-IC of The RBI Act, 1934): Section 45IC of Reserve Bank of India Act, 1934 ("RBI Act, 1934â) defines that every non banking finance institution which is a Company shall create a reserve fund and transfer therein a sum not less than twenty percent of its net profit every year as disclosed in the statement of profit and loss before any dividend is declared. The Company has transferred an amount of R 3,406.69 million (2019-20 R 2,449.77 million) to Statutory reserve pursuant to Section 45-IC of RBI Act, 1934
Securities premium: Securities premium reserve is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.
Hedge reserve: The Company uses hedging instruments as part of its management of foreign currency risk and interest rate risk associated on borrowings as described within note 45. For hedging foreign currency and interest rate risk, the Company uses foreign currency forward contracts, cross currency swaps, foreign currency option contracts and interest rate swaps. To the extent these hedges are effective, the change in fair value of the hedging instrument is recognised in the hedge reserve. Amounts recognised in the hedge reserve is reclassified to the statement of profit or loss when the hedged item affects profit or loss (e.g. interest payments).
Debenture redemption reserve:
(1) Pursuant to Section 71 of the Companies Act, 2013 and
circular 04/2013, read with notification issued date June 19, 2016 issued by Ministry of Corporate Affairs, the Company
is required before 30th day of April of each year to deposit or invest, as the case may be, a sum which shall not be less than 15% of the amount of its debenture issued through
public issue maturing within one year from the balance sheet date.
(2) Pursuant to notification issued by Ministry of Corporate Affairs on 16th August, 2019 in exercise of the powers conferred by sub-sections (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government amend the Companies (Share Capital and Debentures) Rules, 2014. In the principal rules, in rule 18, for sub-rule (7), the limits with respect to adequacy of Debenture Redemption Reserve and investment or deposits for listed companies (other than All India Financial Institutions and Banking Companies as specified in sub-clause (i)), Debenture Redemption Reserve is not required to maintain in case of public issue of debentures as well as privately placed debentures for NBFCs registered with Reserve Bank of India under section 45-IA of the RBI Act, 1934.
(3) By complying with the above notification, the Company has transferred back R 1,115.33 million from DRR to Retained earnings in the financial year ended 31st March, 2020 and In respect of the debentures issued during the current year, the Company is not required to create DRR.
General reserve: Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable results for that year. 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.
Share option outstanding account (ESOP reserve): The share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to employees, including key management personnel, as part of their remuneration. Refer to Note 37 for further details of these plans.
Other comprehensive income: Other items of other comprehensive income consist of re-measurement of net defined benefit liability/asset and fair value changes on derivatives designated as cash flow hedge, net.
Note 38: Retirement benefit plan
Defined contribution plan
The Company makes Provident Fund and Employee State insurance Scheme contributions which are defined contribution plans, for qualifying employees. Under the schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized R 364.88 million (31st March, 2020: R 332.44 million) for Provident Fund contributions and
R88.63 million (31st March, 2020: R 107.72 million) for Employee State insurance Scheme contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.
Defined benefit plan
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation of India and Kotak Life Insurance.
Update on the Code on Social Security, 2020 (''Code'')
The Code on Social Security, 2020 (the "Codeâ) has been enacted. The date of coming into force of the various provisions of the Code is to be notified and the rules thereunder are yet to be announced. The potential impact of the change will be estimated and accounted in the period of notification.
The following tables summaries 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 fund is administered by Life Insurance Corporation of India ("LICâ) and Kotak Life Insurance. The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.
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. The defined benefit plans expose the Company to a number of actuarial risks as below:
Investment Risks - The company''s performance is directly affected by the over- or under-performance of the investment assets of the gratuity plan. Inadequate performance could, among others, increase the future employer contributions.
Interest Rate Risk - This is the risk associated with a rise or fall in the interest rate which could affect liability and asset values. The plan is exposed to the interest rate risk toward its liability and asset values.
Regulatory Risk - The gratuity plan is exposed to multiple regulatory risks e.g., increase in the statutory benefit definition for gratuity. Higher costs from regulatory oversight of organisation pensions or from compliance toward existing trust and funding-related obligations (e.g., minimum funding requirements) contribute to the regulatory risks.
Salary and earnings inflation Risk - The Salary growth rate assumption is the company''s estimate of future salary increases take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. In a ''final salary'' gratuity plan, the risk of higher earnings-inflation and merit-related salary growth could outweigh the assumptions employed for the valuation and increase the company''s future defined benefit obligation.
(a) Applicability of Kerala Money Lenders'' Act
The Company has challenged in the Hon''ble Supreme Court the order of Hon''ble Kerala High Court upholding the applicability of Kerala Money Lenders Act to NBFCs. The Hon''ble Supreme Court has directed that a status quo on the matter shall be maintained and the matter is currently pending with the Hon''ble Supreme Court. The Company has taken legal opinion on the matter and based on such opinion the management is confident of a favorable outcome. Pending the resolution of the same, no adjustments have been made in the financial statements for the required license fee and Security deposits.
b) The company has some labour cases pending against it in various courts and with labour commissioners of various states. The Company''s liability for these cases are not disclosed since actual liability to be provided is unascertainable.
c) The Company has received order under section 263 of the Income Tax Act, 1961 ("the Actâ) dated 25th March 2021, wherein the PCIT has set aside the assessment of AY 2016-17 to do the assessment afresh by disallowing the amount of deduction claimed towards income considered under other heads from income from business after due verification. The company has preferred appeal before CIT(A) against the order.
(i) Estimated amount of contracts remaining to be executed on capital account, net of advances as on 31st March, 2021 is R 188.60 million (31st March, 2020: R 289.87 million).
(ii) The Company has entered into an agreement for outsourcing of Information Technology support in April 2011 for a period of 10
years with an total expense of R 2,700 million.
Note 41 (iii): Lease disclosures (entity as a lessee)
(a) Leases of Branch Premises
(i) Ind AS 116 "Leasesâ is applied to all lease contracts. The company recorded the lease liability at the present value of the lease payments discounted at the incremental borrowing rate of the company and the right of use (ROU) asset at measured at the amount of the initial measurement of the lease liability.
(ii) The following is the summary of practical expedients elected:
1. Applied a single discount rate to a portfolio of leases of similar assets in similar economic environment with a similar end date. Discount rate has been taken as the Incremental Borrowing rate of borrowings with similar tenure.
2. Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term on the date of initial application.
(iii) The entity takes branch premises and computers on lease. Below are the changes made during the year in the carrying value of:
Capital Management
The primary objectives of the Company''s capital management policy are 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 according to changes in economic conditions and the risk characteristics of its activities. 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.
The Company''s debt equity ratio as on 31st March, 2021 stands at 2.56 times (3.30 times as at 31st March, 2020).
During the year ended 31st March,2021, the Company has paid the interim dividend of R 1.25 per equity share for the year ended 31st March, 2021 amounting to R 1,057.70 million (R 2.75 per equity share amounting to R 2,321.75 million for the year ended 31st March,
2020.)
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 , 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.
The Company''s process to determine fair values is part of its periodic financial close process. The Audit Committee exercises the overall supervision over the methodology and models to determine the fair value as part of its overall monitoring of financial close process and controls. The responsibility of ongoing measurement resides with business units . Once submitted, fair value estimates are also reviewed and challenged by the Risk and Finance functions.
Equity instruments
Equity instruments in non-Listed entities are initially recognised at transaction price and re-measured (to the extent information is available) and valued on a case-by-case and classified as Level 3. The Company uses prices from prior transactions without adjustment to arrive at the fair value. Prior transaction represents the price at which same investment was sold in the deal transaction.
Cross Currency Swaps
Interest rate derivatives include interest rate swaps, cross currency interest rate swaps, basis swaps and interest rate forwards (FRAs). The most frequently applied valuation techniques include forward pricing and swap models, using present value calculations by estimating future cash flows and discounting them with the appropriate yield curves incorporating funding costs relevant for the position. These contracts are generally Level 2 unless adjustments to yield curves or credit spreads are based on significant nonobservable inputs, in which case, they are Level 3.
Interest rate derivatives
Interest rate derivatives include interest rate swaps, cross currency interest rate swaps, basis swaps and interest rate forwards (FRAs). The most frequently applied valuation techniques include forward pricing and swap models, using present value calculations by estimating future cash flows and discounting them with the appropriate yield curves incorporating funding costs relevant for the
position. These contracts are generally Level 2 unless adjustments to yield curves or credit spreads are based on significant non-observabte inputs, in which case, they are Level 3.
Foreign exchange contracts
Foreign exchange contracts include open spot contracts, foreign exchange forward and swap contracts and over the-counter foreign exchange options. These instruments are valued by either observable foreign exchange rates, observable or calculated forward points and option valuation models. With the exception of contracts where a directly observable rate is available which are disclosed as Level 1, the Company classifies foreign exchange contracts as Level 2 financial instruments when no unobservable inputs are used for their valuation or the unobservable inputs used are not significant to the measurement (as a whole).
Movements in Level 3 financial instruments measured at fair value
There are no Level 3 financial assets and liabilities which are recorded at fair value.
The management assessed that cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
Valuation methodologies of financial instruments not measured at fair value
Below are the methodologies and assumptions used to determine fair values for the above financial instruments which are not recorded and measured at fair value in the financial statements. These fair values were calculated for disclosure purposes only.
For Financial assets and Financial Liabilities that have a shortterm 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 balances, balances other than cash and cash equivalents, trade payables and other financial liabilities without a specific maturity. Such amounts have been classified as Level 2 on the basis that no adjustments have been made to the balances in the balance sheet.
Loans and advances to customers
Fair value of Loans estimated using a discounted cash flow model on contractual cash flows using actual/estimated yields.
Borrowings
The floating rate loans are fair valued on the basis of MCLR spread. For fixed rate loans, the carrying values are a reasonable approximation of their fair value.
Note 45: Risk Management
Risk is an integral part of the Company''s business and sound
risk management is critical to the success. As a financial institution, the Company is exposed to risks that are particular to its lending and the environment within which it operates and primarily includes Credit, Liquidity, Market and Operational
Risks. Company''s goal in risk management is to ensure that it understands measures and monitors the various risks that arise and the organization adheres strictly to the policies and procedures which are established to address these risks. The Company has a risk management policy which covers risks associated with the financial assets and liabilities. The Board of Directors of the company are responsible for the overall risk management approach, approving risk management strategies and principles. Risk Management Committee of the Board reviews credit, operations and market risks faced by MAFIL periodically. Company has appointed a Chief Credit Officer who reports to MD & CEO and presenting risk related matters to Risk Management Committee and the Board.
The Company has implemented comprehensive policies and procedures to assess, monitor and manage risk throughout the Company. The risk management process is continuously reviewed, improved and adapted in the changing risk scenario and the agility of the risk management process is monitored and reviewed for its appropriateness in the changing risk landscape. The process of continuous evaluation of risks includes taking stock of the risk landscape on an event-driven basis.
The Company has an elaborate process for risk management. Major risks identified by the businesses and functions are
systematically addressed through mitigating actions on a continuing basis.
Credit risk is the risk that a customer or counterparty will default on its contractual obligations resulting in financial loss to the Company. As the company predominantly lend against gold jewelry, which are liquid securities, its credit risks are comparatively lower. Its other verticals, Micro Finance, Vehicle Finance, Micro loans etc. have significant credit risk.
Appraisal Risk: The borrowers are awarded risk grades and only eligible borrowers are financed. Besides continuous training of employees through digital media, Credit officers are imparted on the job and class room training on a continuous basis. Credit
appraisal processes are being reviewed regularly by Credit Monitoring teams and credit auditors and more risk filters are added whenever necessary.
Collection risk: As the gold ornaments are liquid, collection in gold portfolio attaches minimal risks. We have developed a team of trained Relationship Managers and sales staff for continuous engagement with the borrowers under verticals like Micro Finance, Vehicle Finance, Housing loans, Micro loans etc. to ensure timely payment of their dues. Collection efficiency of verticals are being monitored closely by the Senior Management.
Concentration risk: As on 31st March, 2021, our gold loan portfolio is 94% of the total AUM (Asset Under Management).
Gold loans are granted against liquid securities for short period which substantially insulates from credit risk and liquidity risk. We have already diversified into Home Finance, Commercial Vehicles and budget to grow the new verticals so as to contain our exposure to gold to 50% of the total AUM in ten years.
Our geographical presence is largely in the southern India. We are now giving thrust for opening new branches in north and north eastern states which have high growth potentials. A geographical exposure limit will be fixed when operations of the new branches are stabilised.
The credit risk management policy of the Company seeks to have following controls and key metrics that allows credit risks to be identified, assessed, monitored and reported in a timely and efficient manner in compliance with regulatory requirements.
- Standardize the process of identifying new risks and designing appropriate controls for these risks.
- Maintain an appropriate credit administration and loan review system.
- Establish metrics for portfolio monitoring.
- Minimize losses due to defaults or untimely payments by borrowers.
- Design appropriate credit risk mitigation techniques.
In order to mitigate the impact of credit risk in the future profitability, the company makes reserves basis the expected credit Loss (ECL) model for the outstanding loans as balance sheet date.
The below discussion describes the Company''s approach for assessing impairment as stated in the significant accounting policies.
The Company considers a financial instrument defaulted and therefore Stage 3 (credit impaired) for 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 ow whether Stage 2 is appropriate.
Exposure at Default (EAD)
The outstanding balance at the reporting date (adjusted for subsequent realisations in the case of Gold Loan), is considered as EAD by the Company.
The Company uses historical information where available to determine PD. Considering the different products and schemes, the Company has bifurcated its loan portfolio into various pools. For certain pools where historical information is available, the PD is calculated using Incremental NPA approach considering fresh slippage of past 6 years. For those pools 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 there are certain adjustments on account of impact of COVID 19 are required in the form of temporary overlays (also Refer Note 7). Post management overLay, the PD percentages are mentioned beLow: * Excluding restructured loans, where in Vehicle loan Stage II restructured loans for CV - 24.79% and CAR - 32.49% as at 31st March, 2021.
4) Onlending, Corporate Finance and Project and Industrial Finance Loan, external ratings or internal evaluation with a management overlay for each customer.
5) Personal Loans and other verticals, external ratings or internal evaluation with a management overlay for each customer industry segment.
** ExcLudes portfoLio where PD has been considered at 100%
In case of Gold loans, incremental NPA is considered after taking into account auctions during the year since in such cases is auctioned and total dues are recovered even before the account turns NPA.
The Company determines its recovery rates by anaLysing the recovery trends over different periods of time after a Loan has defaulted. Based on its analysis of historical trends, homogenous nature of the loans etc., the Company has assessed that significant
recoveries happen in the year in which defauLt has occurred. Recoveries from aLL the phases Like normaL coLLections, auction
*In case of Gold Loan, the Loan To Value (LTV), at the time of disbursement is 75% or above (As per the RBI norms) based on the schemes, subsequently if its falls below 75% (due to changes in gold prices), the remaining value of asset held by the company acts as a margin of safety, protecting the company against volatility in asset price. LTV is one of the factor for gradation of risk. Also it reflects in the fixing of interest rates of each type of loans/schemes. Normally fixing higher interest rate for loans having higher LTV% and vice versa.
LGD Rates have been computed internally based on the discounted recoveries in NPA accounts that are closed/ written off/ repossessed and upgraded during the year. LGD rates for SME, corporate loans and other loans is considered based on proxy FIRB
rates for secured loans.
In estimating LGD, the company reviews macro-economic developments taking place in the economy. Based on internal evaluation, company has provided a management overlay in LGD computed for Vehicle and SME portfolios.
The Company has applied management overlays to the ECL Model to consider the impact of the COVID-19 pandemic on the provision. The adjustment to the probability of default has been assessed considering the likelihood of increased credit risk and consequential default due to the pandemic. The impact on collateral values is also assessed for determination of adjustment to the loss given default and reasonable haircuts are applied wherever necessary. Days past due has been computed after excluding the moratorium as specified in various RBI circulars, for the aforesaid classification into Stage I, Stage II and Stage III loans.
As per the RBI guidelines, the ECL policy has been approved by Audit Committee and the Board. Whenever any change happened in the ECL Model, the amended policy will be approved by the Board. As part of the management overlays, as per the approved ECL policy, the management has adjusted the underlying PD as mentioned above and in case of corporate loan by downgrading the ratings to one level lower) and LGD as computed by ECL Model as mentioned above depending on the nature of the portfolio/ borrower, the management''s estimate of the future stress and risk and available market information. Refer Note 7 to the financial statements.
Asset and Liability management
Asset and Liability Management (ALM) is defined as the practice of managing risks arising due to mismatches in the asset and liabilities. Company''s funding consists of both long term as well as short term sources with different maturity patterns and varying interest rates. On the other hand, the asset book also comprises of loans of different duration and interest rates. Maturity mismatches are therefore common and has an impact on the liquidity and profitability of the company. It is necessary for Company''s to monitor and manage the assets and liabilities in such a manner to minimize mismatches and keep them within reasonable limits.
The objective of this policy is to create an institutional mechanism to compute and monitor periodically the maturity pattern of the various liabilities and assets of Company to (a) ascertain in percentage terms the nature and extent of mismatch in different maturity
buckets, especially the 1-30/31days bucket, which would indicate the structural Liquidity (b) the extent and nature of cumulative mismatch in different buckets indicative of short term dynamic liquidity and © the residual maturity pattern of repricing of assets and Liabilities which would show the Likely impact of movement of interest rate in either direction on profitability. This policy wiLL guide the ALM system in Company.
The scope of ALM function can be described as foLLows:
- Liquidity risk management
- Management of market risks
- Others
Liquidity risk refers to the risk that the Company may not meet its financiaL obLigations. Liquidity risk arises due to the unavaiLabiLity of adequate funds at an appropriate cost or tenure. The objective of Liquidity risk management is to maintain sufficient Liquidity and ensure that funds are avaiLabLe for use as per requirements. The Company consistency generates sufficient cash fLows from operating and financiaL activities to meet its financiaL obLigations as and when they faLL due. Our resource mobiLisation team sources funds from muLtipLe sources, incLuding from banks, financiaL institutions and capitaL markets to maintain a heaLthy mix of sources. The resource mobiLisation team is responsibLe for diversifying fund raising sources, managing interest rate risks and maintaining a strong reLationship with banks, financiaL institutions, mutuaL funds, insurance companies, other domestic and foreign financiaL institutions and rating agencies to ensure the Liquidity risk is weLL addressed.
The tabLe beLow provide detaiLs regarding the contractuaL maturities of significant financiaL assets and LiabiLities as on:-
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 Company is exposed to three types of market risk as follows:
Foreign Exchange Risk (Forex Risk)
Forex risk is a risk that exists when a financial transaction is denominated in a currency other than the domestic currency of the company. Any appreciation/depreciation of the base currency or the depreciation/appreciation of the denominated currency will affect the cash flows emanating from that transaction. Company has fully hedged the forex risk by derivative instruments.
Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
Company is subject to interest rate risk, principally because Company lend to customers at fixed interest rates and for periods that may differ from our funding sources, while our borrowings are at both fixed and variable interest rates for different periods. Company assess and manage the interest rate risk by managing its assets and liabilities. Company''s Asset Liability Management Committee evaluates asset liability management, and ensures that all significant mismatches, if any, are being managed appropriately.
The Company has Board Approved Asset Liability Management (ALM) policy for managing interest rate risk and policy for determining the interest rate to be charged on the loans given.
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, as follows:
Price Risk
The Company''s exposure to price risk is not material. The drop in gold prices is unlikely to have a significant impact on asset quality of the company since the disbursement LTV is below 75% and average portfolio LTV as on the reporting period was 62% to 65% only. However the sustained decrease in market price may cause for decrease in the size of our Gold Loan Portfolio and the interest income. Management monitors the gold prices and other loans on regular basis.
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 endeavors 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, such as the use of internal audit. Risk Management Committee comprising representatives of the Senior Management, reviews matters relating to operational and business risk, including corrective and remedial actions as regards people and processes.
Note 47: Loans and advances in the nature of loans given to subsidiaries and associates and Firms/ companies in which directors are interested
Loan given to wholly owned subsidiary:
a) Manappuram Home Finance Limited
Balance as at 31st March, 2021 : R Nit (31st March, 2020: R 290 million)
Maximum amount outstanding during the year R 290 million (31st March, 2020: R 1,250 million)
Loan given to companies in which directors are interested:
a) Spandana Sphoorty Financial Limited
Balance as at 31st March,, 2021: R Nil (31st March, 2020: R 125 million)
Maximum amount outstanding during the year R 125 million (31st March, 2020: R 375 million)
(v) Top 20 Large Deposits (Guidelines on Liquidity Risk Management Framework For Non Banking Financial Companies and Core Investment Companies on November 04, 2019) - Not Applicable
(vi) Institutional set up for liquidity risk management (Guidelines on Liquidity Risk Management Framework for Non-Banking Financial Companies and Core Investment Companies on November 04, 2019)
The Board of Directors of the Company has an overall responsibility and oversight for the management of all the risks, including liquidity risk. The Board approves the governance structure, policies, strategy and the risk tolerance limit for the management of liquidity risk. The Board of Directors approves the constitution of Risk Management Committee (RMC) for the effective supervision and management of various aspects including liquidity risks faced by the company. The meetings of RMC are held at quarterly interval The Board of Directors also approves constitution of Asset Liability Committee (ALCO), consisting of the Company''s top management which functions as the strategic decision-making body for the asset-liability management of the Company from risk-return perspective and within the risk appetite and tolerance limits approved by the Board. The role of the ALCO also includes periodic revision of interest rates, diversification of source of funding and its mix, maintenance of enough liquidity and investment of surplus funds. ALCO meetings are held once in a quarter or more frequently as warranted from time to time. The minutes of ALCO meetings are placed before the RMC and the Board of Directors in its next meeting for its perusal/approval/ratification
Note 59: Derivatives disclosures as per RBI
As at 31st March, 2021, the Company has recognised a net Market to Market (MTM) Loss of R 225.64 (31st March, 2020 R 1,489.81 MTM Gain) relating to derivative contracts entered to hedge the foreign currency risk of future interest payment on fixed rate foreign currency denominated bond and foreign currency term loan, repayment of fixed rate foreign currency denominated bond and loans designated as cash flow hedges, in Hedging Reserve Account as part of the Shareholders'' funds. Refer to Note no. 17 '' Derivative Financial Instruments''.
During the year there have been certain instances of fraud on the Company by officers and employees where gold Loan related misappropriations / cash embezzlements /burglaries have occurred for amounts aggregating an amount of R 142.24 (31st March, 2020 R 78.33) of which the Company has recovered Rs.17.23 million (31st March, 2020 R 0.06 million). The Company has taken insurance cover for such losses and has filed insurance claims in this regard. Further, the Company is in the process of recovering these amounts from the employees and taking legal actions, where applicable. The Company has created provision aggregating to R 125 million (31st March, 2020 - R 73.30 million) towards these losses based on its estimate.
Note 64: Under recovery of interest income
During the financial year 2020-21, the Company has disbursed some gold loans on which total amount receivable including principal and accumulated interest have exceeded the value of the underlying security and subsequently company has auctioned such loans. As at 31st March, 2021, the Company has not recognized interest income aggregating to R 1,045.46 million and made provision for doubtful debts to the extent of R 45.73 million relating to the said gold loans as a prudent measure.
Note 67: Previous year figures
Previous year figures have been regrouped/recLassified, where necessary, to conform current year''s classification.
Mar 31, 2018
Employee Stock Option Scheme (ESOS), 2016
The details of the Employee Stock Option Scheme 2016 are as under:
Date of share holdersRs, approval July 05, 2016 Number of options approved 25,236,214 Date of grant August 08, 2016
Date of In principle Approval In principle approval of the BSE was obtained on December 20, 2016 and NSE on December 28, 2016. Number of options granted 13,750,466 Method of settlement Equity
Graded Vesting Graded vesting shall happen in a graded basis in three tranches over a period of three years.
a) The first tranche of 30% shall be vested when a period of 12 months would expire from the Date of grant;
b) The second tranche of 30% shall be vested when a period of 24 months would expire from the Date of grant;
c) The third tranche of 40% shall be vested when a period of 36 months would expire from the Date of grant. Exercisable period The vested options shall be allowed for exercise on and from the date of vesting. The vested options neec
to be exercised with in a period of one year and 30 days from the date of vesting of the respective tranche through the Exercise Window to apply for ESOS Shares against Options vested with the Eligible Employee in pursuance of the Scheme. However, the Eligible Employee has a right to exercise the Options vestec in the first tranche and second tranche on or before the expiry of the Exercise Period of the third tranche, utilising the exercise window which shall be a period of 30 days from the close of each half of the year counted from the date of vesting during the Exercise Period.
Vesting conditions Options shall vest essentially based on continuation of employment and apart from that the Board or
Committee may prescribe achievement of any performance condition(s) for vesting.
Source of shares Primary
Variation in terms of options No Variations made to the term of Scheme
The Company has adopted ESOS 2016 as per SEBI(Share Based Employee Benefits) Regulation, 2014 and has recorded a compensation expense using the fair value method as set out in those regulations.
The Company has granted 13750466 options at an exercise price of Rs, 86.45 on August 08, 2016 which will vest over a period of three years from the grant date (08.08.2016) and the vesting of options shall be at 30% each in the first and second year and the balance 40% in the third year from the date of grant.
The summary of the movements in options is given below: Independent Auditor''s Report
The expected volatility of the stock has been determined based on historical volatility of the stock. The period over which volatility has been considered is the expected life of the option.
Relationship Name of the party
Subsidiary company Manappuram Home Finance Company Limited
Asirvad Microfinance Limited (Formerly, Asirvad Microfinance Private Limited) Manappuram Insurance Brokers Limited Associates / Enterprises owned or significantly influenced by Manappuram Jewellers Limited key management personnel or their relatives Manappuram Agro Farms Limited
Manappuram Foundation
Manappuram Comptech and Consultant Limited
Manappuram Health Care Limited *
Manappuram Construction and Properties Limited*
Manappuram Chit Funds Company Private Limited *
MABEN Nidhi Limited*
Manappuram Asset Finance Limited *
Manappuram Chits (Karnataka) Private Limited *
Manappuram Chits India Limited *
Adlux Medicity and Convention Centre Private Limited*
MAFIN Enterprise *
Manappuram travels *
Manappuram Chits *
Key Management PersonnelMr. V P Nandakumar- Managing Director 8 CEO
Mr. B.N Raveendra Babu- Executive Director Mr. Kapil Krishan -Chief Financial Officer Mr.Ramesh Periasamy -Company Secretary Relatives of Key Management PersonnelMrs. Sushama Nandakumar (wife of Mr. V P Nandakumar)
Mr. Sooraj Nandan (son of Mr. V P Nandakumar)
Mrs Sumitha Jayshankar(daughter of Mr. V P Nandakumar)
Mr. Suhas Nandan (son of Mr. V P Nandakumar)
Ms. Biji Babu (daughter of Mr. B.N Raveendra Babu)
Mrs. Shelly Ekalavyan (sister of Mr. V P Nandakumar)
Mrs. Rajalakshmi Raveendra Babu (wife of Mr. B.N Raveendra Babu)
Note:
a) Related parties have been identified on the basis of the declaration received by the management and other records available.
b) Loans given to related parties are repayable on demand. These loans carry interest @ of 12% to 13% p.a.
c) The loans have been utilized by the Manappuram Home Finance Company Limited for lending Home Loan and meeting the working capital requirements.
d) Asirvad Microfinance Limited has used the loan for meeting the working capital requirements.
e The remuneration to the key managerial personnel does not include the provisions made for gratuity and leave benefits, as they are determined on an actuarial basis for the company as a whole.
NOTE: 1.EMPLOYMENT BENEFITS DISCLOSURES:
The Company makes Provident Fund and Employee State Insurance Scheme contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized Rs,379.27 ( March 31, 2017 Rs, 329.39) for Provident Fund contributions and Rs, 135.12 ( March 31, 2017 Rs, 86.02) for Employee State Insurance Scheme contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the Schemes.
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation of India anc Kotak Life Insurance.
The following tables summaries the components of net benefit expense recognized in the statement of profit and loss and the funded status anc amounts recognized in the balance sheet for the gratuity plan.
The fund is administered by Life Insurance Corporation of India ("LIC") and Kotak Life Insurance. The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.
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.
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 and other relevant factors. NOTE: 27 COMMITMENTS
(i) Estimated amount of contracts remaining to be executed on capital account, net of advances is Rs, 188.00 as at March 31, 2018 (March 31, 2017 - Rs, 82.99).
(ii) The Company has entered into an agreement for outsourcing of Information Technology support in April 2011 for a period of 10 years with an annual expense of Rs, 270.
NOTE: 2. CONTINGENT LIABILITIES
(a) Applicability of Kerala Money Lenders'' Act
The Company has challenged in the Hon''ble Supreme Court the order of Hon''ble Kerala High Court upholding the applicability of Kerala Money Lenders Act to NBFCs. The Hon''ble Supreme Court has directed that a status quo on the matter shall be maintained and the matter is currently pending with the Hon''ble Supreme Court. The Company has taken legal opinion on the matter and based on such opinion the management is confident of a favorable outcome. Pending the resolution of the same, no adjustments have been made in the financial statements for the required license fee and Security deposits.
# Represents working capital demand loans from others and commercial papers under Note 7 and vehicle loans under Note 5
These disclosures are given only for certain items of assets and liabilities from the Balance sheet as required by the above circular and is not a complete depiction of the asset liability maturity position of the Company as at March 31, 2018 and March 31, 2017.
@ The asset maturity pattern are based on expected collections pattern of the Company based on past experience.
NOTE: 3. LEASE DISCLOSURES
Operating Lease :
Office premises are obtained on operating lease which are cancellable in nature. Operating lease payments are recognized as an expense in the statement of profit and loss.
Exchange Traded interest rate (IR) derivatives : NIL Disclosures on risk exposure of derivatives Qualitative disclosures
The Company has a Board approved policy in dealing with derivative transactions. Derivative transaction consists of hedging of foreign exchange transactions, which includes interest rate and currency swaps, interest rate options and forwards. The Company undertakes forward contracts 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 Finance Resource Committee and Risk Management Committee closely monitors such transactions and reviews the risks involved.
NOTE: 4. (I) DISCLOSURES RELATING TO SECURITISATION
The Company has no securitization transaction during the current and previous year.
NOTE: 5.UNDER RECOVERY OF INTEREST INCOME
The Company disbursed some gold loans on which the total amount receivable including principal and accumulated interest have exceeded the value of the underlying security. As of March 31, 2018, the Company has not recognized interest income aggregating to Rs, 24.30 (March 31, 2017 - Rs,143.00).
NOTE: 6.
During the year there have been certain instances of fraud on the Company by officers and employees where gold loan related misappropriations / cash embezzlements /burglaries have occurred for amounts aggregating an amount of Rs,63.29 (March 31, 2017 Rs, 72.17) of which the Company has recovered Rs, 10.22(March 31, 2017 Rs, 54.71). The Company has taken insurance cover for such losses and has filed insurance claims in this regard. Further, the Company is in the process of recovering these amounts from the employees and taking legal actions, where applicable. The Company has created provision aggregating to Rs, 53.07 (March 31, 2017 - Rs,17.46) towards these losses based on its estimate.
NOTE:7. LOANS AND ADVANCES IN THE NATURE OF LOANS GIVEN TO SUBSIDIARIES AND ASSOCIATES AND FIRMS/ COMPANIES IN WHICH DIRECTORS ARE INTERESTED
Loan given to wholly owned subsidiary:
a) Manappuram Home Finance Limited
Balance as at March 31, 2018 NIL (March 31, 2017: NIL) Maximum amount outstanding during the year Rs, 245.00 (March 31, 2017 - Rs, 90.00)
b) Manappuram Insurance Brokers Limited
Balance as at March 31, 2018 Nil (March 31, 2017 - Rs,1.13) Maximum amount outstanding during the year Rs, 1.13 (March 31, 2017 - Rs,1.50) Loan given to other subsidiary:
a) Asirvad Microfinance Limited
Balance as at March 31, 2018 NIL (March 31, 2017: NIL) Maximum amount outstanding during the year NIL (March 31, 2017 - Rs,750.00)
NOTE: 8.
The comparative financial information of the Company for the year ended March 31, 2017 have been audited by the previous Auditor.
NOTE: 9.PREVIOUS YEAR FIGURES
Previous year figures have been regrouped/reclassified, where necessary, to conform current year''s classification.
Mar 31, 2017
Notes:
a) Pursuant to Section 71 of the Companies Act, 2013 and circular 04/2013, read with notification issued date 19th June 2016 issued by Ministry of Corporate Affairs, the Company is required to transfer 25% of the value of the outstanding debentures issued through public issue as per the present SEBI (Issue and Listing of Debt Securities) Regulation, 2008 to Debenture Redemption Reserve (DRR) and no DRR is required in case of privately placed debenture. Also the Company is required before 30th day of April of each year to deposit or invest, as the case may be, a sum which shall not be less than 15% of the amount of its debenture issued through public issue maturing within one year from the balance sheet date.
b) In respect of the debentures issued through public issue, the Company has created DRR of - 821.21 as at March 31, 2017(Previous Year March 31, 2016 - 718.95). The Company subsequent to the year-end has deposited a sum of - 291.20 (previous year March 31,2016 - 189.08) in the form of fixed deposits with scheduled banks, representing 15% of the debenture issued through public issue, which are due for redemption within one year from the balance sheet date net of redemption before April 30, 2017.
These are secured by an exclusive charge by way of hypothecation of book debts pertaining to loans granted against gold and margin/cash collateral as per the agreement. Further, the loan has been guaranteed by personal guarantee of Mr. V.P Nandakumar, Managing Director and CEO.
The loans are secured by hypothecation of the respective vehicles against which the loan has been availed.
D. Subordinate debt from banks as at March 31, 2017 aggregating - Nil (March 31, 2016 - 1,000) which carries an interest rate of (floating -BR 3.75%) is repayable at the end of five years and six months from the date of the loan viz. December 13, 2010, and - 500 as at March 31, 2017, (- 500 as at March 31, 2016) which carries an interest rate of (floating - BR 3.30%) is repayable at the end of five years and six months from the date of the loan viz. January 28, 2012.
E. Finance lease obligation is secured by hypothecation of Computers taken on lease. The interest rate implicit in the lease is 11% p.a. The gross investment in lease, i.e., lease obligation plus interest, is payable in 12 quarterly installments of approx. '' 9.88 (March 31, 2016 -'' 7.41) each.
F. Foreign currency loan:
1) - 1,000 as at March 31, 2017 which carries interest @ LIBOR plus 265bps. The loan is repayable after 3 years from the date of its origination, viz., 9 May 2016.
2) - 500 as at March 31, 2017 which carries interest @ LIBOR plus 215bps. The loan is repayable after 3 years from the date of its origination, viz., 22 December 2016. The loans are secured against the first pari passu charge on current assets, book debts and receivables including gold loans 8 advances of the Company. Further, the loan has been guaranteed by personal guarantee of Mr.
V.P Nandakumar, Managing Director and CEO.
Nature of Security
Secured by mortgage of the immovable property of the Company and a charge on all book debts and other current assets as fully described in the debenture trust deed except those receivables exclusively charged, on a first ranking pari passu basis with all other lenders to the Company holding pari passu charge over security. The Company shall maintain an asset cover of at least 1.10 times of the outstanding amount of debenture, at all times, till the debentures are completely redeemed.
Subsequent to the share split and bonus issue in an earlier year, the number of options has been adjusted to 8,295,000 options and the exercise price has been adjusted to - 33.12/- per share in accordance with the terms of the scheme. Further, subsequent to bonus issue in the earlier year, the exercise price has been adjusted to - 16.56 per share.
The Company has adopted the (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 issued by Securities and Exchange Board of India, and has recorded a compensation expense using the intrinsic value method as set out in those guidelines.
The Company has re-allotted the lapsed options, pursuant to the approval of the Board. The Company has granted 1,191,000 options at an exercise price of - 31.25 on November 03, 2014 which will vest over a period of two years from the grant date (50% of the eligible share on November 03, 2015 and balance 50% of the eligible share on November 03, 2016). The exercise period commences from the date of vesting and will expire not later than four years from the date of vesting.
The expected volatility of the stock has been determined based on historical volatility of the stock. The period over which volatility has been considered is the expected life of the option.
Employee Stock Option Scheme (ESOS), 2016
The details of the Employee Stock Option Scheme 2016 are as under:
Date of share holders'' approval July 05, 2016 Number of options approved 25,236,214 Date of grant August 08, 2016
Date of Inpricipal ApprovalIn principal approval of the BSE was obtained on December 20, 2016 and NSE on December 28, 2016. Number of options granted 13,750,466
Method of settlement Equity
Graded Vesting Graded vesting shall happen in a graded basis in three tranches over a period of three years.
a) The first tranche of 30% shall be vested when a period of 12 months would expire from the Date of grant;
b) The second tranche of 30% shall B28 be vested when a period of 24 months would expire from the Date of grant;
c) The third tranche of 40% shall be vested when a period of 36 months would expire from the Date of grant. Exercisable period The vested options shall be allowed for exercise on and from the date of vesting. The vested options need to be exercised with in a period of one year and 30 days from the date of vesting of the respective tranche through the Exercise Window to apply for ESOS Shares against Options vested with the Eligible Employee in pursuance of the Scheme. However, the Eligible Employee has a right to exercise the Options vested in the first tranche and second tranche on or before the expiry of the Exercise Period of the third tranche, utilizing the exercise window which shall be a period of 30 days
__from the close of each half of the year counted from the date of vesting during the Exercise Period.
Vesting conditions Options shall vest essentially based on continuation of employment and apart from that the Board or
Committee may prescribe achievement of any performance condition(s) for vesting.
Source of shares Primary
Variation in terms of options No Variations made to the term of Scheme
The Company has adopted ESOS 2016 as per SEBI(Share Based Employee Benefits) Regulation, 2014 and has recorded a compensation expense using the fair value method as set out in those regulations.
The Company has granted 13750466 options at an exercise price of '' 86.45 on August 08, 2016 which will vest over a period of three years from the grant date (08.08.2016) and the vesting of options shall be at 30% each in the first and second year and the balance 40% in the third year from the date of grant.
NOTE: 1. RELATED PARTY DISCLOSURES
Names of related parties
Relationship Name of the party
Subsidiary company Manappuram Home Finance Private Limited
Asirvad Microfinance Limited(Formerly, Asirvad Microfinance Private Limited)
Manappuram Insurance Brokers Private Limited
Associates / Enterprises owned or significantly Manappuram Jewellers Limited
influenced by key management personnel or Manappuram Agro Farms Limited_
their relatives Manappuram Foundation
Manappuram Comptech and Consultant Limited *
Manappuram Health Care Limited *
Manappuram Construction and Properties Limited Manappuram Chit Funds Company Private Limited *
MABEN Nidhi Limited Manappuram Asset Finance Limited Manappuram Chits (Karnataka) Private Limited *
Manappuram Chits (Andhra) Private Limited *
Adlux Medicity and Convention centre Private Limited*
MAFIN Enterprise *
Manappuram travels *
MAGRO Farms *
Manappuram Chits *
Key Management PersonnelMr. V P Nandakumar- Managing Director 8 CEO
Mr. B.N Raveendra Babu- Executive Director Mr. Kapil Krishan -Chief financial officer Mr.Ramesh Periasamy -Company Secretary
Relatives of key management personnel Mrs. Sushama Nandakumar (wife of Mr. V P Nandakumar)
Mr. Sooraj Nandan (son of Mr. V P Nandakumar)
Mrs Sumitha Jayshankar(daughter of Mr. V P Nandakumar)
Mr. Suhas Nandan (son of Mr. V P Nandakumar)
Ms. Biji Babu (daughter of Mr. B.N Raveendra Babu)
Mrs. Shelly Ekalavyan (sister of Mr. V P Nandakumar)
Mrs. Rajalakshmi Raveendra Babu (wife of Mr. B.N Raveendra Babu)
* No transactions with these related parties.
The fund is administered by Life Insurance Corporation of India ("LIC") and Kotak Life Insurance. The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.
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.
NOTE: 2 COMMITMENTS
(i) Estimated amount of contracts remaining to be executed on capital account, net of advances is '' 82.99 as at March 31, 2017 (March 31, 2016 - '' 20.08).
(ii) The Company has entered into an agreement for outsourcing of Information Technology support in April 2011 for a period of 10 years with an annual expense of '' 270.
NOTE: 3. CONTINGENT LIABILITIES
(a) Applicability of Kerala Money Lenders'' Act
The Company has challenged in the Hon''ble Supreme Court the order of Hon''ble Kerala High Court upholding the applicability of Kerala Money Lenders Act to NBFCs. The Hon''ble Supreme Court has directed that a status quo on the matter shall be maintained and the matter is currently pending with the Hon''ble Supreme Court. The Company has taken legal opinion on the matter and based on such opinion the management is confident of a favorable outcome. Pending the resolution of the same, no adjustments have been made in the financial statements for the required license fee and Security deposits.
(b) Litigations
Income tax demand - 325.17 (March 31, 2016 - 7.72) case is pending with Commissioner of Income tax (Appeals). The Company has filed an appeal with Commissioner of Income Tax - Appeals. Based on professional advice, the company strongly believe that the case will be decided in the their favour and hence no provision has been considered in the standalone financial statements..
Exchange Traded interest rate (IR) derivatives : NIL Disclosures on risk exposure of derivatives Qualitative disclosures
The Company has a Board approved policy in dealing with derivative transactions. Derivative transaction consists of hedging of foreign exchange transactions, which includes interest rate and currency swaps, interest rate options and forwards. The Company undertakes forward contracts 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 Finance Resource Committee and Risk Management Committee closely monitors such transactions and reviews the risks involved.
NOTE: 4 DISCLOSURES RELATING TO SECURITISATION
The Company has no securitisation transaction during the current and previous year.
NOTE: 5. MISCELLANEOUS
i) Registration obtained from other financial sector regulators
The Company is not registered with any other financial sector regulators.
ii) Disclosure of Penalties imposed by RBI and other regulators
No penalties have been imposed by RBI and other Regulators during the year ended March 31, 2017 and March 31, 2016.
NOTE: 6 UNDER RECOVERY OF INTEREST INCOME
The Company disbursed some gold loans on which the total amount receivable including principal and accumulated interest have exceeded the value of the underlying security. As of March 31, 2017, the Company has not recognized interest income aggregating to - 143.00 (March 31, 2016 - 0.71).
NOTE: 7. During the year there have been certain instances of fraud on the Company by officers and employees where gold loan related misappropriations / cash embezzlements / burglaries have occurred for amounts aggregating - 17.46 million (March 31, 2016 - 36.36) (net of recoveries of - 54.71 million (March 31, 2016 - 23.69)). The Company has taken or is in the processing of taking legal and other actions against such employees/third parties and making insurance claims for recoveries of these amounts from the respective insurance companies where applicable. The Company has created provision aggregating to - 17.46 (March 31, 2016 - 36.36) towards these losses based on its estimate.
Note:
8 The Company implemented the directions and issued circulars to all its branches on November 8, 2016 in order to strictly comply with the directions issued by the Reserve Bank of India via circular DCM (Plg) No.1226/10.27.00/2016-17 dated November 8, 2016 with regard to demonization of SBNs. In a majority of cases the Company and its branches have complied with the directions. In some cases where there have been noncompliances the Company has taken note of those and suitable action has been taken against any employee in accordance with its internal policy. All disclosures made are in accordance with the books of accounts and other records.
9. The Company has noted that certain SBNs have been exchanged for other denominations on November 8, 2017 in certain branches by employees/customers. The Company has taken suitable action against those employees.
10. Non-permitted receipts/payments presented in the table above represents cash collection/payments made from/to customers at the Company''s branches against settlement/disbursement of Gold loan principal and interest. All these receipts/payments have been deposited by the Company in the bank accounts as per normal operating policies and procedures.
11. As a part of its normal operating policies and procedures, the Company maintains denomination-wise details of closing cash as at end of every day based on which the opening and closing balance is disclosed. In the ordinary course of business, loan borrowers of the Company have directly deposited cash as part of their loan repayments in the collection bank accounts of the Company with various banks, aggregating to - 254.54 million during the period November 9, 2016 to December 30, 2016 the denomination wise details of which are currently not available with the Company and hence not included in the above table.
NOTE: 12 LOANS AND ADVANCES IN THE NATURE OF LOANS GIVEN TO SUBSIDIARIES AND ASSOCIATES AND FIRMS/ COMPANIES IN WHICH DIRECTORS ARE INTERESTED
Loan given to wholly owned subsidiary:
a) Manappuram Home Finance Private Limited
Balance as at 31 March 2017 NIL (31 March 2016: NIL) Maximum amount outstanding during the year - 90.00 (31 March 2016 - 405.00)
b) Manappuram Insurance brokers private limited
Balance as at 31 March 2017 - 1.13 (31 March 2016: NIL) Maximum amount outstanding during the year - 1.50 (31 March 2016 Nil)
Loan given to other subsidiary: a) Asirvad Microfinance Limited
Balance as at 31 March 2017 NIL (31 March 2016: NIL) Maximum amount outstanding during the year - 750.00 (31 March 2016 - 500.00)
Notes :
1 As defined in point xix of paragraph 3 of chapter 2 of these Directions.
2 Provisioning norms shall be applicable as prescribed in these Direction
3 All Accounting standards and Guidance note issued by ICAI are applicable including for valuation of investments and other assets as also assets acquired in satisfaction of debt. However market value in respect of quoted investment and break up/share value/ NAV in respect of unqouted investment shall be disclosed irrespective of whether they are classified as long term or current in (5) above
Mar 31, 2016
1) Nature of operations
Manappuram Finance Limited (''MAFIL'' or ''the Company'') was incorporated
on July 15, 1992 in Thrissur, Kerala. The Company is a Non-Banking
Finance Company (''NBFC''), which provides a wide range of fund based and
fee based services including gold loans, money exchange facilities,
etc. The Company currently operates through 3,293 branches spread
across the country. The Company is a Systemically Important Non-Deposit
taking NBFC.
NOTE: 2
2) Basis of preparation
The financial statements of the company have been prepared in
accordance with the generally accepted accounting principles in India
(Indian GAAP). The company has prepared these financial statements to
comply in all material respects with the accounting standards notified
under section 133 of the Companies Act 2013, read together with
paragraph 7 of the Companies (Accounts) Rules 2014 and the guidelines
issued by the Reserve Bank of India as applicable to a non-deposit
accepting NBFC. The financial statements have been prepared under the
historical cost convention and on an accrual basis except for interest
and discounts on non- performing assets which are recognized on
realization basis.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year, except for the
change in accounting policy explained below.
Note: 3
Employment benefits disclosures:
The amounts of Provident fund contribution charged to the statement of
Profit and loss during the year aggregates to Rs. 307.05 for March 31,
2016 (March 31, 2015 Rs. 223.13)
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days salary (last drawn salary) for each completed year of service.
The scheme is funded with Life Insurance Corporation of India and Kotak
Life Insurance.
The following tables summaries 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.
Note 4:
Commitments
(i) Estimated amount of contracts remaining to be executed on capital
account, net of advances is Rs. 20.08 as at March 31, 2016 (March 31,
2015 - Rs. 4.70).
(ii) The Company has entered into an agreement for outsourcing of
Information Technology support in April 2011 for a period of 10 years
with an annual expense of Rs. 270.
Note 5:
Contingent liabilities
(a) Applicability of Kerala Money Lenders'' Act
The Company has challenged in the Hon''ble Supreme Court the order of
Hon''ble Kerala High Court upholding the applicability of Kerala Money
Lenders Act to NBFCs. The Hon''ble Supreme Court has directed that a
status quo on the matter shall be maintained and the matter is
currently pending with the Hon''ble Supreme Court. The Company has
taken legal opinion on the matter and based on such opinion the
management is confident of a favourable outcome. Pending the resolution
of the same, no adjustments have been made in the financial statements
for the required license fee and Security deposits.
(b) Litigations
i) Matters of litigation, if any, the outcome of which in the opinion
of Management is considered probable thereby requiring provision, have
been provided for under the requirement of Indian GAAP.
ii) Income tax demand related to Financial year 2012-13 on account of
disallowances of certain expenditure amounting to Rs. 7.72 including
interest. The Company has preferred an appeal against the order with
Commissioner of Income Tax (Appeals)
Note 6:
Lease Disclosures
Operating Lease :
Office premises are obtained on operating lease which are cancellable
in nature. Operating lease payments are recognized as an expense in the
statement of profit and loss.
Finance Leases:
The Company has finance leases for vehicles. These leases are
non-cancellable and has no escalation clause. Future minimum lease
payments (MLP) under finance leases together with the present value of
the net MLP are as follows:
Note 7:
Cash collateral deposits
Deposit with Banks includes Cash collaterals deposits aggregating Rs.
1020.00 (March 31, 2015 Rs. 940.00) towards approved facilities. Bank
/institution wise breakup of the same is as under :
Note 8:
Derivatives
There are no derivatives taken during the current and previous year.
Note 9:
Disclosures relating to Securitisation
The Company has no securitisation transaction during the current and
previous year.
Note 10:
Details of Single Borrower Limit (SGL) / Group Borrower Limit (GBL)
exceeded by the NBFC
The Company has not exceeded the Single borrower and group borrower
limits
Note 11:
Draw down from Reserves
Details of draw down from reserves, if any, are provided in Note 4 to
these financial statements.
Note 12:
Miscellaneous
i) Registration obtained from other financial sector regulators
The Company is not registered with any other financial sector
regulators.
ii) Disclosure of Penalties imposed by RBI and other regulators
No penalties have been imposed by RBI and other Regulators during the
year ended March 31, 2016 and March 31, 2015.
Note: 13:
Under Recovery of Interest Income
The Company disbursed some gold loans on which the total amount
receivable including principal and accumulated interest have exceeded
the value of the underlying security. As of March 31, 2016, the Company
has not recognized interest income aggregating to Rs. 0.71 (March 31,
2015 Rs. 773.90).
Note: 14
During the year there have been certain instances of fraud on the
Company by employees and others, where gold loan related
misappropriations / cash embezzlements have occurred for amounts
aggregating an amount of ''60.05 (March 31, 2015 Rs.69.23) of which the
Company has recovered Rs.23.69 (March 31, 2015 Rs.8.87). The Company
has taken insurance cover for such losses and has filed insurance
claims in this regard. Further, the Company is in the process of
recovering these amounts from the employees and taking legal actions,
where applicable. The Company has created provision aggregating to
Rs.36.36 (March 31, 2015 Rs.42.98) towards these losses based on its
estimate.
Note: 15
Utilisation of proceeds of public issue.
During the current year, the Company has raised Nil (March 31, 2015
Rs.2,785.52) by way of public issue of Secured Non Convertible
Debentures (public issue) to be utilised to meet its various financing
activities including lending and investment and towards business
operations including Capital expenditure and working capital
requirements. As at March 31, 2015, the Company has utilised the entire
proceeds of the public issue, net of issue expenses in accordance with
the objects stated in the offer document.
Note: 16
Loans and advances in the nature of loans given to subsidiaries and
associates and firms/ companies in which directors are interested
a) Manappuram Home Finance Private Limited Loan given to wholly owned
subsidiary:
"Balance as at 31 March 2016 NIL (31 March 2015: NIL)
Maximum amount outstanding during the year Rs.405 million (31 March
2015: NIL)"
b) Asirvad Microfinance Private Limited Loan given to other subsidiary:
"Balance as at 31 March 2016 NIL (31 March 2015: NIL)
Maximum amount outstanding during the year Rs.500 million (31 March
2015: NIL)"
Note: 17
Expenditure on Corporate Social Responsibility (CSR)
For the year ended March 31, 2016 the Company has incurred expenditure
of Rs.94.22(March 31, 2015 Rs.43.38) as compared to expenditure required
to be spent under section 135 of the Act of Rs.71.10 (March 31, 2015
Rs.101.78) resulting in an excess of Rs.23.12(March 31, 2015 shortfall
Rs.58.40). Refer to the Director''s report for details on the same.
Note: 18
Previous year figures
Previous year figures have been regrouped/reclassified, where
necessary, to conform current year''s classification.
Mar 31, 2014
1) Nature of operations
Manappuram Finance Limited (''MAFIL'' or ''the Company'') was incorporated
on July 15, 1992 in Thrissur, Kerala. The Company is a Non Banking
Finance Company (''NBFC''), which provides a wide range of fund based and
fee based services including gold loans, money exchange facilities,
etc. The Company currently operates through 3,293 branches spread
across the country. The Company is a Systemically Important
Non-Deposit taking NBFC.
2) Basis of preparation
The financial statements of the Company have been prepared in accordance
with generally accepted accounting principles in India (Indian GAAP).
The Company has prepared these financial statements to comply in all
material respects with the accounting standards notified under the
Companies Act, 1956, read with General Circular 8/2014 dated 4 April,
2014 issued by the Ministry of Corporate Affairs and the guidelines
issued by the Reserve Bank of India as applicable to a non deposit
accepting NBFC. The financial statements have been prepared under the
historical cost convention and on an accrual basis except for interest
and discounts on non performing assets which are recognised on
realisation basis. The accounting policies have been consistently
applied by the Company and are consistent with those used in the
previous year, except for certain changes in estimates discussed in
note 2.1(c) and note 38.
NOTE: 3
Employee Stock Option Scheme (ESOS), 2009
Subsequent to the share split and bonus issue in an earlier year, the
number of options has been adjusted to 8,295,000 options and the
exercise price has been adjusted to Rs. 33.12/- per share in accordance
with the terms of the scheme. Further, subsequent to bonus issue in the
earlier year, the exercise price has been adjusted to Rs. 16.56 per
share.
NOTE: 4
Employment benefits disclosures:
The amounts of Provident fund contribution charged to the statement of
Profit and loss during the year aggregates to Rs. 160.80 for March 31,
2014 (March 31, 2013 Rs. 173.20)
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days salary (last drawn salary) for each completed year of service.
The scheme is funded with Life Insurance Corporation of India and Kotak
Life Insurance.
The following tables summaries 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 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.
NOTE 5:
Commitments
(i) Estimated amount of contracts remaining to be executed on capital
account, net of advances is Rs. 4.32 as at March 31, 2014 (March 31, 2013
- Rs. 51.59).
(ii) The Company has entered into an agreement for outsourcing of
Information Technology support in April 2011 for a period of 10 years
with an annual expense of Rs. 270.
NOTE 6: Contingent liabilities
(a) Applicability of Kerala Money Lenders'' Act
The Company has challenged in the Hon''ble Supreme Court the order of
Hon''ble Kerala High Court upholding the applicability of Kerala Money
Lenders Act to NBFCs. The Hon''ble Supreme Court has directed that a
status quo on the matter shall be maintained and the matter is
currently pending with the Hon''ble Supreme Court. The Company has taken
legal opinion on the matter and based on such opinion the management is
confident of a favourable outcome. Pending the resolution of the same,
no adjustments have been made in the financial statements for the
required license fee and Security deposits.
(b) Show cause notice from Reserve Bank of India
The Company has received a show cause notice from the Reserve Bank of
India on May 7, 2012 with certain observations made pursuant to their
inspection of books and records of the Company. The Company has
submitted a detailed reply on May 21, 2012 to the Reserve Bank of India
b) Exposure to real estate sector
The Company does not have any significant direct exposure towards real
estate sector.
NOTE 7:
Lease Disclosures
Operating Lease :
Office premises are obtained on operating lease which are cancellable in
nature. Operating lease payments are recognized as an expense in the
statement of Profit and loss.
NOTE: 8
Under Recovery of Interest Income
The Company disbursed some gold loans on which the total amount
receivable including principal and accumulated interest have exceeded
the value of the underlying security. As of March 31, 2014, the Company
has not recognized interest income aggregating to Rs. 881.71 (March 31,
2013 Rs. 2,842.50) and has made a provision for doubtful debts to the
extent of Rs. Nil (March 31, 2013 Rs. 514.35) relating to the said gold
loans as a prudent measure.
NOTE: 9
During the year there have been certain instances of fraud on the
Company by employees and others, where gold loan related
misappropriations / cash embezzlements have occurred for amounts
aggregating an amount of Rs.127.66 (March 31, 2013 Rs. 56.34) of which
the Company has recovered Rs. 64.78 (March 31, 2013 Rs. 41.73). The
Company has taken insurance cover for such losses and has fled
insurance claims in this regard. Further, the Company is in the process
of recovering these amounts from the employees and taking legal
actions, where applicable. The Company has created provision
aggregating Rs. 52.97 (March 31, 2013 Rs. 14.61) towards these losses
based on its estimate.
NOTE 10
During the year ended March 31, 2014, the Company has decided to
consider average market price of gold that existed during the 90 days
period ending on the reporting date instead of average market price of
gold that prevailed subsequent to the balance sheet date till the date
of approval of the financial statements and also decided to include
loans which have completed six months tenure as against loans which
have completed twelve months tenure for the estimation of expected
recoverability of interest income. Had the Company followed the
previous practice, the Profit before tax for the year ended March 31,
2014 would have been higher by Rs. 39.43.
NOTE: 11
Utilisation of proceeds of public issue.
During the current year, the Company has raised Rs. 4,000 (including Rs.
2,000 representing application money towards redeemable non-
convertible debenture pending allotment) by way of public issue of
Secured Non Convertible Debentures (public issue) to be utilised to
meet its various financing activities including lending and investment
and towards business operations including Capital expenditure and
working capital requirements. As at March 31, 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 document.
NOTE: 12
Previous year figures
Previous year figures have been regrouped/reclassified , where necessary,
to conform current year''s classification.
Mar 31, 2013
NOTE: 1
Nature of operations
Manappuram Finance Limited (formerly Manappuram General Finance 8
Leasing Limited) (''MAFIL'' or ''the Company'') was incorporated on July
15, 1992 in Thrissur, Kerala. The Company is a non banking financial
Company (''NBFC''), which provides a wide range of fund based and fee
based services including gold loans, money exchange facilities, etc.
The Company currently operates through 3,295 branches spread across the
country. The Company is a Systemically Important Non-Deposit Taking
NBFC.
NOTE: 2
Basis of preparation
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The Company has prepared these financial statements to
comply in all material respects with the accounting standards notified
under the Companies (Accounting Standards) Rules, 2006, (as amended)
and the relevant provisions of the Companies Act, 1956 and the
guidelines issued by the Reserve Bank of India as applicable to a non
deposit accepting NBFC. The financial statements have been prepared
under the historical cost convention and on an accrual basis except for
interest and discounts on non performing assets which are recognised on
realisation basis. The accounting policies have been consistently
applied by the Company and are consistent with those used in the
previous year, except for certain change in estimates discussed in note
2(c).
NOTE: 3
Employment benefits disclosures:
The amounts of Provident fund contribution charged to the Profit and
loss account during the year aggregates to Rs. 173.20 (Previous year -
Rs. 173.97 ).
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days salary (last drawn salary) for each completed year of service.
The scheme is funded with Life Insurance Corporation of India and Kotak
Life Insurance.
The following tables summaries the components of net benefit expense
recognised in the profit and loss account and the funded status and
amounts recognised in the balance sheet for the gratuity plan.
NOTE: 4
Commitments
(i) Estimated amount of contracts remaining to be executed on capital
account, net of advances is Rs. 51.59 (Previous year - Rs. 127.90).
(ii) The Company has entered into an agreement for outsourcing of
Information Technology support in April 2011 for a period of 10 years
with an annual expense of Rs. 270.
NOTE: 5
March 31, 2013 March 31, 2012
Contingent liabilities
(a) The Company is contingently
liable to banks and other
financial institutions 1.94 2,600.72
with respect to assignment of gold
loans to the extent of the collateral
deposits/ guarantees. Management
does not expect the contingency to
dwell on the Company.
TOTAL 1.94 2,600.72
(b) Applicability of Kerala Money Lenders'' Act
The Company has challenged in the Hon''ble Supreme Court the order of
Hon''ble Kerala High Court upholding the applicability of Kerala Money
Lenders Act to NBFCs. The Hon''ble Supreme Court has directed that a
status quo on the matter shall be maintained and the matter is
currently pending with the Hon''ble Supreme Court. The Company has taken
legal opinion on the matter and based on such opinion the management is
confident of a favourable outcome. Pending the resolution of the same,
no adjustments have been made in the financial statements for the
required license fee and Security deposits.
(c) Show cause notice from Reserve Bank of India
The Company has received a show cause notice from the Reserve Bank of
India on May 7, 2012 with certain observations made pursuant to their
inspection of books and records of the Company. The Company has
submitted a detailed reply on May 21, 2012 to the Reserve Bank of India
and no further communication has been received from the Reserve Bank of
India in this matter.
(d) Provision for litigation claim
During the year the Company has made provision for the litigation claim
related to the civil and consumer cases amounting to Rs. 12.19 on
prudence basis.
NOTE: 6
Lease Disclosures
Operating Lease:
Office premises are obtained on operating lease which are cancellable
in nature. Operating lease payments are recognised as an expense in the
statement of profit and loss.
Finance Leases:
The Company has finance leases for vehicles. Future minimum lease
payments (MLP) under finance leases together with the present value of
the net MLP are as follows:
NOTE: 7
Assignment of Receivables
The Company has assigned a portion of its gold loans to banks and
financial institution. The aggregate amount of assignment as at March
31, 2013 is Rs. Nil (Previous year 19,163.62). These amounts have been
reduced from the gross loan and hypothecation loan balances. Bank/
Institution wise breakup of the same is as under.
NOTE: 8
Transactions with related parties
a) Remuneration to relatives of director
The Company had in the previous year filed an application to Central
Government for waiver of remuneration paid in earlier years to
relatives of director, holding office or place of profit in the Company
amounting to Rs. 4.87. During the year, the Company has received a
favourable order from the Central Government waiving the recovery of
remuneration paid to them in the earlier years except to the extent of
Rs. 0.43 and the Company has recovered the same.
b) Transactions under Section 297 of the Companies Act, 1956
During the year the Company has filed application to Central
Government/Company Law Board for Compounding certain non compliance
relating to earlier years under provision of section 297 of the
Companies Act, 1956 in connection with rendering/receiving certain
services to/from parties covered under Section 301 of the Companies
Act, 1956. The Company has received the compounding orders from the
respective authorities and paid the compounding fees.
NOTE: 9
Loan To Value (''LTV'') calculation:
The Reserve Bank of India vide its Notification No DNBS(PD).
241/CGM(US)-2012 dated March 21, 2012, requires NBFCs to maintain a
Loan to Value (LTV) ratio not exceeding 60% for loans granted against
the collateral of gold Jewellery.
The Company has adopted the rates prescribed by the Association of Gold
Loan Companies (AGLOC) that factors the making charges involved in the
manufacture of ornaments. Management of the Company has also discussed
the methology with the Reserve Bank of India and also communicated the
manner of arriving at the LTV to the Reserve Bank of India
NOTE: 10
Under recovery of interest income
During the FY 2011-12 the Company disbursed some gold loans on which
the total amount receivable including principal and accumulated
interest have exceeded the value of the underlying security. As at
March 31, 2013, the Company has not recognised interest income
aggregating to Rs. 2,842.5 and has made a provision for doubtful debts
to the extent of Rs. 514.35 relating to the said gold loans as a
prudent measure.
NOTE: 11
During the year there have been certain instances of fraud on the
Company by employees and others where gold loan related
misappropriations/cash embezzlements have occurred for amounts
aggregating an amount of Rs. 56.34 (net of recoveries of Rs.14.61).
The Company has fully provided for these amounts in the financial
statements and is in the process of recovering these amounts from the
employees and taking legal actions.
NOTE: 12
Previous year figures
Previous year figures have been regrouped/reclassified, where
necessary, to confirm to this year''s classification.
Mar 31, 2012
Nature of operations
Manappuram Finance Limited (formerly Manappuram Genera Finance &
Leasing Limited) ('MAFIL' or 'the Company') was ncorporated on July 15,
1992 in Thrissur, Kerala. The Company is a non banking financial
Company ('NBFC'), which provides a wide range of fund based and fee
based services including gold loans, money exchange facilities, etc.
The Company currently operates through 2,907 branches spread across the
country. The Company is a Systemically Important Non-Deposit Taking
NBFC.
NOTE :1
Basis of preparation
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The Company has prepared these financia statements to
comply in all material respects with the accounting standards notified
under the Companies (Accounting Standards) Rules, 2006, (as amended)
and the relevant provisions of the Companies Act, 1956 and the
guidelines issued by the Reserve Bank of India as applicable to a non
deposit accepting NBFC. The financia statements have been prepared
under the historical cost convention and on an accrual basis except for
interest and discounts on non performing assets which are recognised on
realisation basis. The accounting policies have been consistently
applied by the Company and are consistent with those used in the
previous year, except for certain change in estimates discussed in note
2(d).
a. Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of Rs.
2/- per share. Each holder of equity shares is entitled to one vote per
share. The Company declares and pays dividends in Indian rupees. The
dividend proposed by the Board of Directors is subject to the approval
of the shareholders in the ensuing Annual General Meeting.
During the year ended 31 March 2012, the amount of per share dividend
recognised as distributions to equity shareholders was Rs. 1.50/- (31
March 2011: Rs. 0.60/- per share, after considering bonus issue).
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
Nature of Security
Secured by mortgage of the immovable property of the Company and a
charge on all current asset, book debts, receivables as fully described
in the debenture trust deed except those receivables specifically
exclusively charged, on a first ranking pari passu basis with all other
lenders to the Company holding pari passu charge over security.
The Company shall maintain an asset cover of at least 1.10 times of the
outstanding amount of debenture, at all times, till the debentures are
completely redeemed.
(b) Applicability of Kerala Money Lenders' Act
The Company has challenged in the Hon'ble Supreme Court the order of
Hon'ble Kerala High Court upholding the applicability of Kerala Money
Lenders Act to NBFCs. The Hon'ble Supreme Court has directed that a
status quo on the matter shall be maintained and the matter is
currently pending with the Hon'ble Supreme Court. The Company has taken
legal opinion on the matter and based on such opinion the management is
confident of a favourable outcome. Pending the resolution of the same,
no adjustments have been made in the financial statements for the
required license fee and Security deposits.
(c) Show cause notice from Reserve Bank of india
The Company has received a show cause notice from the Reserve bank of
India on May 7, 2012 with certain observations made pursu- ant to their
inspection of books and records of the Company. The Company is in
process of responding to the show cause notice. Based on the internal
and external legal opinion, the Company believes that it can address
all observations to the satisfaction of the Reserve Bank of India.
Pending resolution of the matter by the Reserve Bank of India, no
adjustments, if any that may be required, have been made in these
financial statements.
NOtE: 2
transactions with related parties
a) Remuneration to relatives of director
The Company had in an earlier year made an application to Central
Government for approval of remuneration paid to relatives of director
holding office or place of profit in the Company. During the current
year, the application has been rejected by the Central Government.
Subsequently, the Company has made an application to the Central
Government to waive the amounts paid to the relatives in the earlier
years. Pending the receipt of the approval the entire amount paid ofRs.
4.87 is shown as receivable from them.
b) transactions under Section 297 of the Companies Act, 1956
The Company had shared common infrastructure facilities and performed /
received collection services from other companies covered under Section
301 of the Companies Act, 1956. The Company is in the process of
obtaining necessary approvals / condonations from the Central
Government, if any that may be required in respect of the various
classes of transactions entered into with parties covered under Section
297 of the Companies Act, 1956, including certain free of cost
transactions. The Company has also made provision for the probable
compounding fees payable.
Note : 3
Utilisation of proceeds of public issue
During the current year, the Company has raised Rs. 4,416.19 by way of
public issue of Secured Non Convertible debentures (public issue) to be
utilised to meet its various financing activities including lending and
investments and towards business operations including for capital
expenditure and working capital requirements. As at March 31, 2012, the
Company has utilised the entire proceeds of the public issue, net of
issue expenses in accordance with the objects stated in the offer
document.
Note : 4
During the year there have been certain instances of fraud on the
Company by employees where gold loan related misappropriations / cash
embezzlements have occurred for amounts aggregating Rs. 38.32 million.
The Company has fully provided for these amounts in the financial
statements and is in the process of recovering these amounts from the
employees and taking appropriate legal actions.
Note : 5 Comparatives
Till the year ended 31 March 2011, the Company was using pre-revised
Schedule VI to the Companies Act 1956, for preparation and presentation
of its financial statements. During the year ended 31 March 2012, the
revised Schedule VI notified under the Companies Act 1956, has become
applicable to the Company. The Company has reclassified previous year
figures to conform to this year's classification.
Mar 31, 2011
1. 0 NATURE OF OPERATIONS
Manappuram General finance and Leasing Limited (ÃMAGfIL' or Ãthe
Company') was incorporated on July 15, 1992 in Thrissur, Kerala. The
Company is a non banking financial company (ÃNBfC'), which provides a
wide range of fund based and fee based services including gold loans,
money exchange facilities etc. The Company currently operates through
more than 1,900 branches spread across the country.
The Board of Directors of the Company at its meeting held on february
25, 2011, decided to change the Category A (Deposit Taking)
registration of the Company with Reserve Bank of India (RBI) and made
an application for the change. RBI approved the same and issued a new
Certificate giving Category B (Non Deposit Taking) registration to the
Company. As per the new registration, the Company is a Systemically
Important Non-Deposit Taking NBfC.
1.2 SHARE CAPITAL
Issue of equity shares to promoters on preferential basis
During the current period, the Company has issued 13,210,039 shares to
its promoters on preferential basis at a price of Rs. 75.70/- per share
at a premium of Rs. 73.70/- per share. The approval of the Board of
Directors and shareholders has been taken and necessary regulatory
requirements have been complied with by the Company.
Bonus and share split
The shareholders of the Company have on April 22, 2010 through a
resolution, approved the sub-division of one fully paid equity share of
Rs. 10/- each of the Company into five equity shares of Rs. 2/- each
fully paid pursuant to Section 94 of the Act. further, the shareholders
of the Company have through a resolution passed on April 22, 2010
approved the issuance of equity shares of Rs. 2/-each, fully paid
up, as bonus shares (after considering the stock split as above) in
the ratio of 1:1 to the shareholders existing as on the record date.
These changes have been given effect to in the current period.
further, as per the requirements of paragraph 44 read with paragraph 24
of Accounting Standard 20 Ã Ãearnings per share' (AS-20), the number of
equity shares outstanding as at March 31, 2010 has been adjusted for
the amount of such bonus shares and sub-divided shares in the
computation of the weighted average number of shares for the
computation of ePS for the current year and previous year.
issue of equity shares through private placement to Qualified
institutional Buyers ("QiBs")
During the current year, the Company has issued 59,523,809 shares to
certain QIBs by way of a private placement at a price of Rs. 168/- per
share at a premium of Rs. 166/- per share. The issues of these shares
are for the purposes of augmenting the funding needs of the Company
and to meet capital adequacy norms. The Company raised a total amount
of Rs. 10,000 million from these QIBs and incurred an amount of
Rs. 230 million as share issues expenses which has been set off
against the share premium account.
employee Stock option Scheme (eSoS), 2009
The details of the employee Stock option Scheme 2009 are as under:
Date of share holders' approval August 1 7, 2009
Number of options approved 1,000,000
Date of grant August 1 7, 2009
Number of options granted 829,500
Method of settlement equity
Graded Vesting 50% after one year from the date of grant i.e. August
16, 2010 and balance 50% after two years from the date of grant i.e
August 16, 2011
exercisable period 4 years from vesting date
Vesting conditions on achievement of pre-determined performance
parameters in accordance with the Company Performance appraisal plans.
Subsequent to the share split and bonus issue, the number of options
has been adjusted to 8,295,000 options and the exercise price has been
adjusted to Rs. 33.12/- per share in accordance with the terms of the
scheme.
1. Names of related parties
enterprises owned or significantly influenced by key management
personnel or their relatives
Manappuram Benefit fund Limited
Manappuram Chits (India) Limited
Manappuram Asset finance Limited
Manappuram finance (sole proprietorship)
Manappuram Insurance Brokers Private Limited
Manappuram Jewellers Private Limited
Manappuram foundations (charitable trust)
Key Management Personnel
Mr. V P Nandakumar
Mr. I Unnikrishnan
Mr. B.N Raveendra Babu
Relatives of key management personnel
Mrs. Sushama Nandakumar
Mr. Sooraj Nandan
Mrs Sumitha Nandakumar
Mrs. Jyothi Prasannan
Mrs. Shelly ekalavyan
Mrs. Geetha Ravi
Mrs. Rajalakshmi Raveendra Babu
Mrs. Sathyalekshmy
2. Remuneration paid to directors is disclosed elsewhere in the
financial statements (Refer note 18.15(c))
1.3 EMPLOYMENT BENEFITS DISCLOSURES
The amounts of Provident fund contribution charged to the Profit and
loss account during the year aggregates to Rs. 96.51 (Previous year -
Rs.26.25).
The Company has a defined benefit gratuity plan. every employee who has
completed five years or more of service gets a gratuity on departure at
15 days salary (last drawn salary) for each completed year of service.
The scheme is funded with an insurance company in the form of a
qualifying insurance policy.
The following tables summarise the components of net benefit expense
recognised in the profit and loss account and the funded status and
amounts recognised in the balance sheet for the gratuity plan.
1.4 COMMITMENTS AND CONTINGENT LIABILITIES
(i) commitments
estimated amount of contracts remaining to be executed on capital
account, net of advances is Rs. 89.54 (Previous year - Rs. 1.53).
2011 2010
(ii) contingent liabilities
Particulars
The Company is contingently liable to
banks and other financial
institutions with 1,702.76 707.17
respect to assignment of gold loans
to the extent of the collateral
deposits / guarantees.
Total 1,702.76 707.17
(iii) Applicability of Kerala Money Lenders' Act
The Company has challenged in the Hon'ble Supreme Court the order of
Hon'ble Kerala High Court upholding the applicability of Kerala Money
Lenders Act to NBfCs. The Hon'ble Supreme Court has directed that a
status quo on the matter shall be maintained and the matter is
currently pending with the Supreme court. The Company has taken legal
opinion on the matter and based on such opinion the management is
confident of a favourable outcome. Pending the resolution of the same,
no adjustments have been made in the financial statements for the
required license fee and Security deposits.
1.5 charges created on assets of The company For Secured Loans
A. From banks
Cash credit, overdrafts and working capital loan accounts have been
availed from various banks and are secured by Gold Loan receivables.
1.6 During the year there have been certain instances of fraud on the
Company by employees where gold loan related misappropriations / cash
embezzlements have occurred for amounts aggregating Rs. 24.87 million.
The Company has fully provided for these amounts in the financial
statements and is in the process of recovering these amounts from the
employees and taking appropriate legal actions.
1.7 COMPARATIVES
Previous year's figures have been reclassified to conform to the
presentation of the current year.
Mar 31, 2010
1. Nature of operations
Manappuram General France are Leasing Limited {"MAGFill or the
Company) was incorporated on July 15,1992 in Thrissur, Kerala. The
Company is a non banting francial company {"NBFC}, which provides a
wide range of fund based and fee based services induding gold loans,
hypothecation loans, money exchange facilities etc, Tne Company
currently operates through more than 1.000 brancheis spred across the
country
1.2 Amalgamation of Manappuram Finance (Tamil Nadu) Limited (MAFIT)
with the Company
MA-IT is a non banking financial company (NBFC), which provides a
wide range of fund based services mcluding gold loans, etc
The Company had entered in to a Scheme of Amalgamate (Scheme) with
MAFIT or the amalgamation of MAFIT with the Company effective April
1 2008 ("Appointed Date)- The scheme was approved by the Honble High
Court of Judicature at Madras on December 8,2009, and Hontte High
Court of Judicature at Kerala on December 23,2009. Pursuant to an order
of the Honble Hlgn Court and consequent filing tnere of with the
Registrar of Companies, Colmbatore on December 23,2009 and Reglstrar
of Comanies, Keralla on January 7,2010, MAFIT without being wound up
The scheme has accordingly been given effect to in those financeial
statements with retrospective effect from April 1, 2008
In consideration of transfer of the urrdertaking of MAFIT the Company
has .on January 11, 2010 issued 11,677382 equity shares of Rs, 10/-
each, credited as fully paid up* in the ratio of 2:1 equity share of
the face value of Rs.10/-each in Company for every equity share of the
face value of Rs. 10/- (Rupees Ten only) each held in MAFIT.
The amalgamation has been accounted for under "pooling of interests"
method as prescribed by Accouning Stardard 14 "Accounting for
Amalgamations" issued by the Institute of Chartered Accountants of
India.
All tht assets and Liabilitles of MAFIT as of April 1,2008, were
transfer red to and vested in the Company at the carrying values as
appearing in the books of accounts. the summary of which is as below:
1.3 Acquisition of Manappuram Printers
Manappuram Printers, a sole proprietorship owned by the promoters of
the Company was engaged in the business of trading stationery items
Pursuant 10 a board resolution dated February 25,2009, the Company has
acquired at the assets and liabilities of Manappuram Printers with
effect from April 1,2009 on a slump sale basis based on an external
valuation. The Company has obtained the necessary approvals in ths
regard. The purchases of the assets and liabilities have been made at
cost for Rs 10.17
1.4 Share Capital
Conversion of wairants
During the current year, the Promoters of the Company have in termsof
the Warrant Subscription Agreement dated November 4. 2006 exercsed
their option to convert 1,564,892 conditionally convertible warrants
into 1,564392 equlity shares at a price of Rs 166,62/- In accordance
with the agreement and relevant SEBI (Securities and Exchange Board of
India regulations, the promoters have paid a sun of Rs 2307 towards the
balance amount due payable at the time of all otment of equity shares
upon conversion of the warrants.
Issued of equity shares through shdies through private pldccrrent to
Qualified Institutional Buyers (*QIBs")
During the current year, me Company has issued 3,540,420 shares to
certain QBs Dy way of a private placemen; at a price of Rs 69V- per
share at a premum of Rs 681/* per share. The issues of these shares are
for the purposes of augmenting the furring needs of the Company and to
meetcapital adequacy norms. The Company raised at total amount of Rs.
2,446 43 from thrsr QIBs and incurred an amount of Rs 76 as shore
issues expenses which has been set off against tine share premium
account
Bonus and share spit approved subsequent to Balance Sheet
The shareholders of the Company have on April 22,2010 through a
resolution approved the sub division of one fully paid equity share of
Rs 10/- each of the Company into five equity shares of Rs 2/ each fully
pad pursuant to Section 94 of the Act. farther, the shareholders of the
Company nave through a resolution passed on April 22.2010 approved the
issuance of equity shares of Rs2/-each fully paid up, as up as bonus
shares(after considering the stock spilt as abowe) in the ration of the
shareholders i*i*. existing as on the record dale- These changes will
be given effect lo in the folowing year except for the changes in the
Earrings Per Share discusseo below
As per the requrerrents of paragraph 44 read with paragraphs of
Accounting Standard 20 Earnings per Share AS-20,the number of equity
shares outstanding as at March 31,2010 has been adjusted for the amount
of such bonus shares and sub- divided shares in the computation of the
weighted average number of shares for the computation of EPS for all
periods presented.
Employee Stock Option Scheme (ESOSI, 2009
The shareholders al the Annual General Meeting he a on August 17, 2009,
have approved an Employee Stock Option Scheme 2009 (ESOS 2009) which
provides for an issue of 1,000.000 options lo the employees.
Consequently, the compensation cornmittee had granted the 829,500
options on August Vt 2009 at an exercise price of Rs 331.15/ per share.
1.5 Segment resorting
Primary Segment: Busiess Segment
The three identified reportable segments are:
1. Gold and other loans * Financing loans against pledging of gold and
gold ornaments
2. Asset financing - Financing of loans aganstst hypothecation of
vehicles3. Fee based activites Money transfer, foreign currency
exchange
1.6 Employment benefits disclosure*:
The amounts of Provident fund contribution charged to the Profit and
loss account during the year aggrcgatrs to Rs. 26.25 (Previous year *
Rs. 9.95)-
The Company has a defined benefit gratuity plan Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days salary (last drawn salary) for each completed year of service.
The scheme is funded with an Insurance company in the form of a
qualifying insurance polling.
The following tables summarise the components of net benefit expense
recognised in the profit and loss account and the funded status aro
amounts recognised in the balance sheet for the gratuity plan.
1 .7 Commitments and contingent liabilities
Commitments
Estimated amount of contracts remaining to be exeuted on capital
accounl,net of advances is Rs. 153(Prevlous Year - Rs. Nil) .
Contingent Liabilites 2010 2009
(I) Claims against the Company not
acknowledged as debts
Penalty urder Kerala General Sates
Tax Act and Kerala Money lenders Act - 0.72
pi) Others
The Company is contingently lable to
banks and other financial
institutions with respect to assignment
of gold / hypothecation loans
to the extent of the colateral cepost /
guarantees 70717 1,25838
Total [ (i) + {iii)] 707,17 1,239,10
(iii) Applicability of Kerala Morey Lenders Act
The Company has challenged in the Honble Supreme Court the order of
Honble Kerala High Court upholding the applicability of Kerala Money
Lenders Act to NBFCs. The Honble Supreme Court has directed that a
status quoon the matter shall be maintained and the matter is currently
pening with opinion the management witnihe Supwrccourt The Cort. The
Company has taken legal opinion on the matter and based on such opinion
the management is confident of a favourable outcome Pending the resolution
of the same, no adjustments have been made in the financial statements for
the required license fee and Security deposits
1.8 Assignment of receivables
The Campany has assigned a portion of its go d loans / hypothecations
loans to banks and financial Institutions during the year. The
aggregate amount assigned as as at March 31,2010 is Rs, 7,077,02
(Previous year-Rs 5.381421
These amounts have been reduced from the gross gold loan and
hypothecation loan balances.
1.9 Charges created on assets of the Company for Secured Loans
A Secured Non Convert We Debentures
Non convertible secured debentures are secured by floating cnarge on
the specifled hire purchase receivables. Gold loan Including
recelvables there on and olher unentumbered asselsboth prescnt and
future.
B. From banks
Overdraft/ Working Capital Loan accounts have been availed With the
following banks are sesured by Gold Loan receivables.
State Dank of India Syndicate Bank Limited
Corporation Bank Limited The Karur Vysya Bank Limited
South Indian Bank Limited Bank of Rajasihan Limited
Punjab National Bank Limited Axis Bank Limited
VFS Bar* Limited IDBI Bank Limited
Central Bank of India Limited Catholic Syrian Bank
IOFC Bank Limited ING Vysya Bark
Induslnd Bank Limited Lakshmi villas Bank
Dhhanalakshmi Bank Limited Kotak Mahindra Bank
Oriental Bank of Commerce United ICICI Bank United
union Bank of India Limited Allahabad Bank Limited
Indian Overseas Bank Limited Kotak Mahindra Limited
1.10 During the yeat there have been instances of fraudon the Company
by employees /third parties where gold loan and cash related
misappropriations have occurred for amounts aggregating Rs 8.47 The
Company has taken necessary action including claim from insurance
companles. Further, appropriate actions have been taken against such
employees/third parties,
1.11 Comparatives
As stated in Notes 3 and 4 of Schedue 18 in view of the amation of
MAFIT with the Company with effect from April 1, 2008 and acquisition
of Manappram Printers, the figures for the year ended March 31- 2010
are not comparable with those of the year ended March 31,2009. Further,
previous years figures have been reclassified to form to the
presentation of the current year.
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Manappuram Finance Ltd. குறித்த கூடுதல் தகவல்களை
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Manappuram Finance Ltd. டூல்ஸ்
- பல்க் டீல்ஸ்
- பிளாக் டீல்ஸ்
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Manappuram Finance Ltd. நிறுவன தகவல்கள்
- நிறுவன சுயவிவரம்
- நிறுவன வரலாறு
- நிர்வாக குழு
- மூலதன வடிவம்
- புராடெக்ட் மிக்ஸ்
- வங்கியாளர்/தணிக்கையாளர்/பதிவாளர்
-
நிறுவன வரலாறு
- போனஸ்
- உரிமை
- மும்பை பங்குச் சந்தையில் விலை வரலாறு
- என்எஸ்இ விலை வரலாறு
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Manappuram Finance Ltd. முக்கிய நிதியில் விகிதங்கள்
- விகிதங்கள்
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Manappuram Finance Ltd. முடிவுகள்
- காலாண்டு முடிவுகள்
- அரையாண்டு முடிவுகள்
- 9 மாத முடிவுகள்
- வருடாந்திர முடிவுகள்
-
Manappuram Finance Ltd. நிதியியல் தகவல்கள்
- தணிக்கை முடிவுகள்
- பணப்பாய்வு
- இருப்பு நிலைக்குறிப்பு
-
Manappuram Finance Ltd. அறிக்கை
- கணக்கியல் கோட்பாடுகள்
- தணிக்கையாளர்கள் அறிக்கை
- இயக்குநர்கள் அறிக்கை
- கணக்கு குறிப்புகள்
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Manappuram Finance Ltd. கார்ப்பரேட் அறிவிப்புகள்
- புத்தக முடிவு
- ஈவுத்தொகை
- நிர்வாகக் குழுக் கூட்டங்கள்
- பெயர் மாற்றம்
