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Muthoot Finance Ltd.-இன் இயக்குநர் அறிக்கை

Mar 31, 2022

Your Board of Directors is pleased to share with you the 25th Annual Report of Muthoot Finance Limited ("Company") enumerating the business performance along with the Audited Financial Statements (standalone and consolidated) for the financial year ended March 31, 2022.

1. Financial Summary

The summarized standalone and consolidated results for the Company with the previous year''s figures are given in the table below:

'' in Millions

Standalone

Consolidated

Particulars

Year Ended March 31, 2022

Year Ended March 31, 2021

Year Ended March 31, 2022

Year Ended March 31, 2021

Total Income

1,10,983.93

1,05,743.59

1,22,374.62

1,15,701.96

Total Expenses

57,890.39

55,678.46

68,272.75

64,387.16

Profit Before Tax

53,093.54

50,065.13

54,101.87

51,314.80

Tax expense

13,550.50

12,843.35

13,788.64

13,126.10

Profit for the year

39,543.04

37,221.78

40,313.23

38,188.70

Equity

1,83,445.72

1,52,388.93

1,87,857.24

1,55,750.25

Total Liabilities

5,22,101.16

4,82,260.31

5,75,307.50

5,30,664.10

Total Assets

7,05,546.88

6,34,649.24

7,63,164.74

6,86,414.35

2. Dividend

Your Board has declared an interim dividend at '' 20 per equity share (200% of face value) for the financial year 2021-22 on April 18, 2022. The dividend payout amounted to '' 8,026.90 million representing 20.30% of profit after tax for the year. The Board has decided to plow back the remaining profit after tax for business activities during the Financial Year.

The Dividend distribution policy in terms of Regulation 43 A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015 ("SEBI Listing Regulations") is available on the website of the Company at https://www.muthootfinance.com/sites/default/ files/2020-08/Policy%20on%20Dividend%20 Distribution.pdf The list of unpaid dividend is available on the Company’s website at https://www. muthootfinance.com/transfer-of-shares. Shareholders are requested to check the said list and if any dividend due to them is remaining unpaid in the said list. Shareholders can approach the Company or Registrar and Transfer Agent of the Company for the release of unclaimed dividends.

3. Transfer to Reserves

Your Board of Directors has transferred an amount of '' 7,908.62 millions to the statutory reserve maintained under Section 45 IC of the Reserve Bank of India Act, 1934. Post transfer of profits to reserves, your Board proposes to retain '' 85,359.55 millions in the Retained Earnings.

4. Company''s Performance

During the Financial Year, Company achieved 6.24% increase in its profitability with a net profit of '' 39,543.04 millions for the year ended March 31, 2022 as compared to '' 37,221.78 millions for the year ended March 31, 2021. Profit before tax increased by 6.05% to '' 53,093.54 millions. Total Income has increased from '' 1,05,743.59 millions for the year ended March 31,2021 to '' 1,10,983.93 millions for the year ended March 31, 2022, which is mainly due to the increase in Interest Income of the Company. Interest income of the Company increased to '' 1,09,560.28 millions from the previous year''s interest income of '' 1,03,285.29 millions.

Loan Assets Portfolio of the Company increased by '' 54,308.39 millions during the year reaching '' 5,80,531.76 millions as on March 31, 2022, as against

'' 5,26,223.37 millions as on March 31, 2021. The Return on Average Loan Asset stood at 7.24% in FY 2021-22 as against 7.99% in FY 2020-21. Interest yield was 20.06% as compared to 22.17% in FY2020-21. Net Interest Margin was 13.04 % as compared to 14.24% in FY 202021. The Company remitted to exchequer '' 15,547.23 millions as taxes.

5. Share Capital

During the financial year, no preferential issue of shares with differential rights as to dividend, voting as otherwise was carried out by the Company. The Company has also not carried out any buyback of its equity shares during the financial year under review.

Employee Stock Options

During the financial year, your Company allotted

1.49.410 equity shares of the face value of '' 10/- each under Muthoot ESOP 2013 pursuant to the exercise of

1.49.410 stock options at an exercise price of '' 50/- each by the employees.

The disclosures as required under Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 read with SEBI Circular CIr/cFD/POLICY CELL/2/2015 dated 16th June 2015 is attached to this report as Annexure 1 and is also available on the website of the Company at https:// www.muthootfinance.com/esop-disclosure. Please refer note 46 of Notes forming part of Standalone Financial Statements for further disclosures on ESOPs. The Company does not have any scheme to fund its employees for the purchase of shares of the Company.

Your Company has received the certificate from the Secretarial Auditor of the Company certifying that the ESOP scheme is implemented in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations,

2021 and is in accordance with the resolution passed by the members of the Company. The certificate would be placed at the Annual General Meeting for inspection by members.

The Employee Stock Option Scheme is in compliance with the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and there have been no material changes to this plan during the Financial Year 2021-22.

Investor Education and Protection Fund

During the financial year 2021-22, the Company has transferred the unclaimed dividends of '' 6,06,782 to Investor Education and Protection Fund ("IEPF"). Further, 1,185 equity shares on which the dividends were unclaimed for seven consecutive years were transferred to IEPF during the financial year 2021-22 as per the requirements of IEPF Rules.

No claim will lie on Company on account of the dividend after the dividend is transferred to IEPF.

6. Resource Mobilization(a) Non-Convertible Debentures:

Your Company has successfully completed the 25th Issue of Non-Convertible Debentures through Public Issue during FY 2021-22 raising '' 17,000 million. The company has raised '' 15,318 millions through Private Placement of Non-Convertible Debentures during the financial year.

Subordinated Debts represent long-term source of funds for the Company and the amount outstanding as on 31st March, 2022 stood at ''1,430.79 millions. Subordinated Debts qualify as Tier II capital under the Non-Banking Financial Company- Systemically Important Non- Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016.

(b) Bank Finance

Bank Finance remains an important source of funding for your Company. Commercial Banks continued their support to your Company during Financial Year. As of 31st March, 2022, borrowings from banks stood at '' 2,73,870.92 millions as against '' 1,95,567.63 millions in the previous year.

(c) External Commercial Borrowings

Your Company has outstanding Senior Secured Notes of 6.125% USD 450 millions issued in October 2019 for a period of 3 years and 4.40% USD 550 millions issued in March 2020 for a period of 3 % years falling under Regulation 144A / Regulation S of the US Securities Act, 1933. These Notes are listed in the International Securities Market of the London Stock Exchange.

7. Credit Rating

The Company has debt credit ratings as below:

Domestic Credit Ratings:

Credit Rating Agency

Instruments

Ratings

CRISIL

Commercial Paper

CRISIL A1

Subordinated Debts

CRISIL AA /Stable

Non-Convertible Debentures

CRISIL AA /Stable

ICRA

Commercial Paper

[ICRA] A1

Short Term Bank Borrowings

[ICRA] A1

Long Term Bank Borrowings

ICRA AA (Stable)

Subordinated Debts

ICRA AA (Stable)

Non-Convertible Debentures

ICRA AA (Stable)

International Credit Ratings:

Credit Rating Agency

Ratings

Fitch Ratings

BB(Stable)

S&P Global Ratings

BB(Negative)

Moody’s Investor Service

Ba2(Stable)

8. Internal Audit and Internal Financial Control

Over the years Company has evolved a robust, proper, and adequate internal audit system in keeping with the size of the Company and its business model. Your Company has developed well documented internal audit and control system for meticulous compliance from all layers of the Company. The control system ensures that the Company''s assets are safeguarded and protected. The audit system also takes care to see that revenue leakages and losses to the Company are prevented and our income streams are protected. The control system enables reliable financial reporting.

The Company has a well-structured Audit &

Inspection department to perform timely and frequent internal audits to evaluate the adequacy of systems and procedures and also to evaluate the status of compliance with the Company’s guidelines and other statutory requirements. The department is manned by a team of over 1000 dedicated personnel who are constantly engaged in safeguarding your Company''s assets, ensuring the quality of assets pledged, and also evaluates the adequacy of risk management systems at its operating units. In keeping with the huge network and geographic outreach of the operating units spread across the length and breadth of the country, the audit functions have been decentralized through the setting up of Regional Audit offices in important Regional centers. The Regional Audit Offices exercise field-level control over the branches through onsite visits and online audit systems. The field-level Auditors report to Regional Audit offices who in turn share their findings with the Audit & Inspection Department at the Registered Office of the Company.

The Audit Committee of the Board of Directors is the apex Audit Authority of the Company. Under the present Audit Architecture, the Internal Audit Department reports to the Audit Committee regarding significant audit findings and also preventive and corrective measures to protect the interests of the Company.

The audit committee undertakes an evaluation of the adequacy and effectiveness of internal control systems. It also oversees the implementation of audit recommendations especially involving risk management measures.

In addition to reviewing the internal control systems put in place by the Audit & Inspection Department, the Audit Committee also imparts guidance and crucial directions for the up-gradation of systems and controls on an ongoing basis.

At present, the Audit system prevalent in the Company is a completely autonomous function and built on the best corporate governance framework.

Reference is invited to Note 50 of Notes forming part of the standalone financial statements contained in the annual report regarding frauds committed by employees/customers of the Company which are dealt with according to Reserve Bank of India guidelines and are in nature of operation related frauds due to nature of business of the Company. The company has taken or is in the process of taking disciplinary/ legal action against such employees/customers.

9. Human Resources

As on March 31, 2022, the Company had 26,716 employees on its rolls at various levels of organizational structure. Our employees remain one of the company''s greatest assets. We at Muthoot, believe in recognizing and appreciating employees for their valuable contribution and loyalty. We offer equal opportunities to all our employees irrespective of gender to learn and grow in the organization. For the convenience of our employees and bringing new ways of working, we are promoting digitalization for our employees as well as our customers.

We at Muthoot, focus on creating a performance-Focus and future-ready workplace which offers our people various opportunities to learn, grow and win together. We ensure the productivity of our people and their operational compliance through our best-inClass learning & Development Function. The Program delivers training primarily through two channels i.e a) in-person (Classroom) & b) E-learning (Online). We use the E-learning channel to transfer microlearning units directly to people at regular intervals.

a. Haathi Pe Bharosa Karogey Toh Pakka Jeetogey Campaign

The marketing campaign titled "Haathi Pe Bharosa Karogey Toh Pakka Jeetogey!" is all about having belief and trust in the brand, which has two elephants in its logo which was anchored by the brand''s ambassador, Shri. Amitabh Bachchan;

b. "Muthoot Finance Sunheri Soch Season-2”

"Muthoot Finance Sunheri Soch Season-2" (golden thoughts) is a compilation of 5 truly inspiring real-life stories of common men & women, who realized their dreams by availing a gold loan from Muthoot Finance. These are people from humble backgrounds who transformed their lives & became self-reliant & successful business persons with timely help from us.

c. "Loan At Home” Integrated Marketing Campaign

The "Loan at Home "service launched in 2020, was actively supported by campaigns across media in FY 2021-22 also. After a strong "need" was established in the commercial films of Loan at Home, our brand ambassador Shri Amitabh Bachchan presented the brand message. The campaign showed the convenience and ease offered by our "Loan at Home" service, which allows our customers to avail of Gold Loan from Muthoot Finance, now from the comfort and safety of their homes

d. Chennai Nandanam Metro Station Branding

The semi-naming rights branding at Nandanam Metro Station in Chennai was renewed, extending the partnership with Chennai Metro Rail Limited. The partnership has aided us by establishing our brand presence in a key location in Chennai

Awards & Recognitions:

During the year, your company has received the following awards and recognitions as hereunder:

a. Exchange4media Indian Marketing Awards - Gold loan is good

b. Most Trusted Financial Services Brand for the year 2022 By TRA''s Brand Trust Report 2022

c. Best use of TV - FSI "Gold Unlocker" TV campaign

d. Best use of Integrated Marketing - BFSI "Loan at Home " Campaign

e. Recognised as one of the ''Iconic Brands of India 2021’ by #ETIconicBrands

To equip the young and dynamic fresh graduates with practical knowledge and skills required in their field of work, your Company has initiated a thoughtfully designed 6 month training program called "Pathshala" in line with the National Apprenticeship Promotion Scheme. These Graduates were deployed as "Interns " for practical training purposes in the branches. Upon successful completion of the training program, Letters of proficiency are issued to them by the Company and they are posted to branches as Jr. Relationship Executive after proper assessment in each case.

At Muthoot, we encourage our employees to take up managerial positions internally through fast-track promotion. Our philosophy is to give growth opportunities to our top performers, who exhibit potential and possess the behavioral competencies to take up new challenges. This helps employees progress in their careers and take on higher roles in the organization. It enables us to place role-fit resources who exhibit our core performance values. This is a very high point to motivate employees and provide them with opportunities to aim higher and move up the ladder faster. This also ensures that we get internally trained, quality candidates who are experts in our internal processes and performance requirements and fit for promotion to the next level.

We have been going through some of the toughest challenges ever faced by humanity owing to the outbreak of Covid 19. Your Company continues to support all its employees in all possible ways and means in these tough times. To encourage vaccination among all the employees, a one-time payment of '' 1500/- was given to all the eligible employees on completion of 2 doses of vaccination. Awareness Campaign on COVID-19 Hygiene and Precautions was also carried out during the year. As assistance to families of employees who passed away due to Covid-19, your Company provided financial support through a monthly fixed amount to the affected families for up to 2 years.

10. Marketing & Promotion Initiatives

In partnership with such leading celebrities the Brand has launched many tailor-made marketing communications with the primary objectives of growing the Gold Loan Category as a whole and creating significant business impact to the brand in terms of new customer acquisition; besides creating substantial brand awareness and brand recall.

Few of the notable marketing initiatives undertaken by the Company during the financial year 2021-22 include:

11. Capital Adequacy

Your Company''s Capital Adequacy Ratio as of March 31, 2022, stood at 29.97% of the aggregate risk-weighted assets on the balance sheet and risk-adjusted value of the off-balance sheet items, which is well above the regulatory minimum of 15%. Out of the above, the Tier I capital adequacy ratio stood at 29.10% and the Tier II capital adequacy ratio stood at 0.87%.

12. Public Deposits

The Company is a Systemically Important Non-Deposit Taking NBFC and has not accepted any public deposits.

13. RBI Guidelines

Your Company has complied with all the applicable regulations prescribed by the Reserve Bank of India from time to time. Please refer note 52, 53, 54, and 55 of Notes forming part of Standalone Financial Statements for additional disclosures required under RBI Guidelines applicable to the Company.

14. Subsidiaries/ Associates/ Joint Ventures

As on March 31, 2022, your Company had seven subsidiaries namely Asia Asset Finance PLC, Muthoot Homefin (India) Limited, Muthoot Insurance Brokers Private Limited, Belstar Microfinance Limited, Muthoot Money Limited, Muthoot Asset Management Private Limited, and Muthoot Trustee Private Limited. Your Company’s subsidiaries have been contributing to the overall growth of your Company during the year.

As required under Section 136 of the Act, the audited financial statements, including the consolidated financial statements of your Company are available on the website of the Company. The audited financial statements of each of its subsidiaries are also available on the website of the Company at https://www.muthootfinance.com/ subsidiaries. The above documents will also be available for inspection at the Registered Office of the Company during business hours.

During the year under review, the Board of Directors reviewed the affairs of the subsidiaries. In accordance with Section 129 (3) of the Act, we have prepared the consolidated financial statements of the Company which forms part of the Annual Report. The statement containing the salient features of the financial statement of your Company''s Subsidiaries in Form AOC 1 is annexed to Standalone Financial Statements of the Company as required under Rule 5 of The Companies (Accounts) Rules, 2014.

There are no other companies that have become or ceased to be Subsidiaries/ Associates/ Joint Ventures of the Company during the Financial Year 2021-22.

There has been no material change in the nature of business of subsidiary companies during the financial year 2021-22.

The Board of Directors of your Company has formulated a policy on material subsidiary, which is displayed on the website of the Company at https:// www.muthootfinance.com/sites/default/files/2020-08/1472561568policy%20on%20material%20 subsidiary.pdf

As on March 31, 2022, Company did not have any material subsidiary.

Financial Performance & position of Subsidiaries

a. Asia Asset Finance PLC:

Asia Asset Finance PLC, (AAF), a Company listed in Colombo Stock Exchange, is a subsidiary of your Company from December 31, 2014. AAF, where your Company holds 72.92% of equity capital, is a registered Financial Company with Central Bank of Sri Lanka and is mainly engaged in Vehicle Finance and Hire Purchase Activities. The Company which has also started a business relating to lending against the collateral of gold jewellery and

microfinance is presently contributing a significant part of loan portfolio and income. AAF has operations across Sri Lanka with 59 branches as on March 31, 2022, AAF has made considerable progress in its business.

Its major financial parameters for Financial Year 2021-22 are as follows:

Parameters

Total Income

Profit Before Tax

Profit After Tax

Equity

Total Assets

Total Outside Liabilities

Amount in INR (in millions)LKR/ INR as on 31.03.2022 - 0.2570685 ; Average Exchange Rate of Financial Year 2021-22 - 0.365634

1,163.35

73.96

43.14

708.35

4,972.16

4,263.81

Amounts in LKR (in millions)

3,181.73

202.28

118.00

2,755.51

19,341.79

16,586.28

AAF increased its loan portfolio during the year by 23.87% at LKR 17,345.01 millions. Total Income for FY 22 stood at LKR 3,181.73 millions as against previous year total income of LKR 2,952.34 millions. It generated a profit after tax of LKR 118.00 millions during FY22 as against previous year profit after tax of LKR 45.20 millions.

b. Muthoot Homefin (India) Ltd:

M/s. Muthoot Homefin (India) Ltd (MHIL), a registered Housing Finance Company licensed by National Housing Bank is a wholly owned subsidiary of your Company. Its major financial parameters for Financial Year 2021-22 are as follows:

Parameters

Total Income

Profit Before Tax

Profit After Tax

Equity

Total Assets

Total Outside Liabilities

Amount in INR (in millions)

2,136.84

100.97

84.04

4,470.76

12,825.97

8,355.21

MHIL''s loan portfolio stood at '' 14,698.72 millions, a decrease of 14% during the year mainly on account of the cautious approach taken by the management on fresh disbursement due to uncertainities arising out of pandemic.. Total income for Financial Year 2021-22 stood at '' 2,136.84 millions as against previous year total income of '' 2,446.42 millions. It achieved a profit after tax of ''84.04 millions in Financial Year 2021-22 as against previous year profit of '' 125.51 millions.

c. Muthoot Insurance Brokers Private Limited:

Muthoot Insurance Brokers Private Limited (MIBPL), is an unlisted Private Limited Company holding a license to act as Direct Broker from Insurance Regulatory and Development Authority of India (IRDA) since 2013. MIBPL is a Wholly- Owned Subsidiary Company of your Company. Its major financial parameters for Financial Year 2021-22 are as follows:

Parameters

Total Income

Profit Before Tax

Profit After Tax

Equity

Total Assets

Total Outside Liabilities

Amount in INR (in millions)

450.12

371.62

276.44

1,123.21

1,145.30

22.09

MIBPL generated a First year premium collection amounting to ''3,268.99 millions during Financial Year 2021-22 as against '' 2,641.70 in the previous year. It generated a Profit after Tax of '' 276.44 millions during Financial Year 2021-22 as against '' 316.37 millions in the previous year.

d. Belstar Microfinance Limited:

M/s. Belstar Microfinance Limited (BML) is a micro finance Company. At end of the Financial Year 2021-22, your Company holds 60.69% of the equity capital of BML. Its major financial parameters for Financial Year 2021-22 are as follows:

Parameters

Total

Profit Before

Profit

Equity

Total Assets

Total

Income

Tax

After Tax

Outside Liabilities

Amount in INR (in millions)

7,284.31

561.46

451.29

8,559.33

45,602.86

37,043.53

BML grew its loan portfolio during Financial Year 2021-22 by 32.30% reaching '' 43,657.79 millions. It achieved a profit after tax of '' 451.29 millions during Financial Year 2021-22 as against previous year profit after tax of '' 466.51 millions.

e. Muthoot Money Limited

M/s. Muthoot Money Ltd (MML), a registered Non-Banking Finance Company licensed by Reserve Bank of India is a Wholly- Owned Subsidiary Company of your Company. Its major financial parameters for Financial Year 2021-22 are as follows:

Parameters

Total

Income

Profit Before Tax

Profit After Tax

Equity

Total Assets

Total

Outside Liabilities

Amount in INR (in millions)

455.58

(88.46)

(65.72)

1,035.21

2,268.08

1,232.87

MML''s loan portfolio stood at '' 2,070.54 millions, a decrease of 44% during the year mainly on account of the cautious approach taken by the management on fresh disbursement due to uncertainities arising out of pandemic. Total

income for Financial Year 2021-22 stood at '' 455.58 millions as against previous year total income of '' 697.31 millions. It had loss of '' 65.72 millions in Financial Year 2021-22 as against previous year profit of '' 37.47 millions mainly on account of decrease in interest income consequent to post covid impact.

f. Muthoot Asset Management Private Limited

Your Company has incorporated a wholly owned subsidiary Muthoot Asset Management Private Limited ("MAMPL") which is yet to commence commercial operations. Its major financial parameters for Financial Year 2021-22 are as follows:

Parameters

Total Income

Profit Before Tax

Profit After Tax

Equity

Total Assets

Total Outside Liabilities

Amount in INR (in millions)

41.48

30.28

22.55

1,094.81

1,095.10

0.29

g. Muthoot Trustee Private Limited

Your Company has incorporated a wholly owned subsidiary Muthoot Trustee Private Limited ("MTPL") which is yet to commence commercial operations. Its major financial parameters for Financial Year 2021-22 are as follows:

Parameters

Total Income

Profit Before Tax

Profit After Tax

Equity

Total Assets

Total Outside Liabilities

Amount in INR (in thousands)

324.35

225.90

169.05

9,946.54

9,973.54

27.00

15. Particulars of Loans, Guarantees, or Investments Under Section 186 of the Act

Pursuant to Section 186(11) (a) of the Act read with Rule 11(2) of the Companies (Meetings of Board and its Powers) Rules, 2014, the loan made, guarantee given or security provided in the ordinary course of business by a Non- Banking Financial Company (NBFC) registered with Reserve Bank of India are exempt from the applicability of provisions of Section 186 of the Act. As such the particulars of loans and guarantees have not been disclosed in this Report. The details of the Investments of the Company are furnished under Note 9 of Notes forming part of the Standalone Financial Statements for the year ended March 31, 2022.

16. Annual Return

In accordance with the provisions of Section 92(3) read with Section 134(3) (a) of the Act, the Annual Return of the Company is hosted on the website of the Company at https://www.muthootfinance.com/themes/bartik/pdf/ Annual-Return-2022.pdf

17. Consolidated Financial Statements

The audited consolidated financial statements of the Company along with its subsidiaries AAF, MHIL, BML, MML, MAMPL, MTPL and MIBPL prepared in accordance with the IndAS to comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Act, is provided in the Annual Report.

18. Risk Management

The Board of Directors of the Company has formed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The Committee is responsible for monitoring and reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The development and implementation of risk management policy has been covered in the Management Discussion and Analysis, which forms part of this report. The Company has adopted and implemented a Risk Management Policy framework within the organization.

19. Corporate Social Responsibility

The Company''s CSR policy is committed towards CSR activities as envisaged in Schedule VII of the Act. The Details of CSR policy of the Company are available on the website of the Company at https:// www.muthootfinance.com/sites/default/files/pdf/ CSR_Policy_May_2021.pdf. The Annual Report on CSR activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 is attached to this report as Annexure 2.

Details of the Corporate Social Responsibility and Business Responsibility Committee are provided separately in the Report on Corporate Governance annexed to the Board’s Report.

20. Business Responsibility Report

Regulation 34 of the SEBI Listing Regulations mandates the inclusion of the Business Responsibility Report ("BRR") as part of the Annual Report for top 1000 listed entities based on their market capitalization. The BRR is attached to this report as Annexure 3.

21. Particulars of Contracts or Arrangements made with Related Parties

The Board of Directors of your Company has put in place a policy for related party transactions, (Policy on Related Party Transactions and Materiality of Related Party Transactions), which has been approved by the Board of Directors. The policy provides for identification of RPTs, necessary approvals by the Audit Committee/ Board /Shareholders, reporting and disclosure requirements in compliance with the Act and provisions of the SEBI Listing Regulations. Policy is available on the website of the Company at https:// www.muthootfinance.com/sites/default/files/2022-02/ muthoot-finance-rpt-policy-v5_0.pdf.

All contracts executed by the Company during the financial year, with related parties, were on arm''s length basis and in the ordinary course of business.

All such related party transactions were entered into in accordance with the Policy on Related Party Transactions and Materiality of Related Party Transactions of the Company.

Prior omnibus approval was obtained for related party transactions, under Section 188 (1) of the Act, which are of repetitive nature and entered in the ordinary course of business and at arm’s length. All related party transactions were placed before the Audit Committee for review and approval.

All transactions or arrangements with related parties referred to in Section 188 (1) of the Act, entered into during the year were on arm''s length basis or were in the ordinary course of business or with approval of the Audit Committee. During the year, your Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the Policy on Related Party Transactions and Materiality of Related Party Transactions. Further, there were no material related party transactions that required approval of shareholders as required under Chapter IV of SEBI Listing Regulations. The disclosure of related party transactions as required under Section 134(3) (h) of the Act in Form AOC 2 is attached to this report as Annexure 4.

The details of related party transactions with the related parties entered into during the financial

year are disclosed in Notes to Standalone Financial Statements of the Company.

22. Audit Committee

Your Company has constituted an Audit Committee in accordance with the requirements of the Companies Act, 2013, RBI directions, and SEBI Listing Regulations. Details on Audit committee, terms of reference and meetings appear on the Report on Corporate Governance annexed to this report. All recommendations of Audit Committee were accepted by your Board during the financial year 2021-22.

23. Vigil Mechanism

The Company has established a Vigil Mechanism/ Whistle Blower policy to enable Directors, and Stakeholders, including individual employees and their representative bodies to report, in good faith, unethical, unlawful or improper practices, acts, or activities. The said mechanism ensures that the whistleblowers are protected against victimization/ any adverse action and/ or discrimination as a result of such a reporting and provides direct access to the Chairman of the Audit Committee in exceptional cases. The Company hereby affirms that none of its personnel have been denied access to the Audit Committee. The whistle blower policy is available at website of the Company at https:// www.muthootfinance.com/vigil-mechanism.

24. Listing

Equity Shares of your Company are listed on National Stock Exchange of India Ltd and BSE Limited. NonConvertible Debentures issued by the Company through public issues and Private Placements are listed on BSE Ltd. Your Company has paid applicable listing fees to Stock Exchanges.

Senior Secured Notes issued by the Company are listed on the International Securities Market of London Stock Exchange.

25. Changes in Directors and Key Managerial PersonnelAppointments

Mr. Abraham Chacko was appointed as Independent Director of the Board effective September 18, 2021 pursuant to the resolution passed by the shareholders of the Company at the 24th Annual General Meeting. Further, Mr. George Muthoot George, Mr. George Muthoot Jacob, and Mr. George Alexander were appointed as Whole Time Directors on the Board with effect from December 15, 2021.

In order to comply with the Corporate Governance requirements of SEBI Listing Regulations and the Act, your Board proposes to appoint Mr. Chamacheril Abraham Mohan as Independent Director of the Company subject to approval of the shareholders in the upcoming Annual General Meeting. Mr. Chamacheril Abraham Mohan is a senior finance professional and a Chartered Accountant who has diversified experience for many years in the fields of finance and chartered accountancy. Detailed profile of Mr. Chamacheril Abraham Mohan is provided in the Notice of the AGM.

Cessation

The term of office of Mr.Pratip Chaudhuri as Independent Director on the Board of the Company is expiring at the ensuing Annual General Meeting. The Board places on record its sincere appreciation and gratitude to Mr.Pratip Chaudhuri for the guidance and support extended during the two consecutive term of directorship in the Company.

Directors Liable to retire by rotation

Mr. Alexander George and Mr. George Thomas Muthoot, Directors of the Company retire by rotation at the ensuing Annual General Meeting and being eligible, offers themselves for reappointment.

Your Board and the Nomination and Remuneration Committee has evaluated the eligibility criteria under RBI guidelines, the Act and Listing Regulations, of all directors seeking appointment / re-appointment at the ensuing Annual General Meeting and has recommended the appointment / re-appointments.

Your Board believes that the proposal for appointment / re-appointment of Directors will have the support of shareholders. Necessary disclosures as required under the SEBI Listing Regulations and the Act are provided in the notice calling the Annual General Meeting.

The brief profiles of Directors seeking re-appointment are also available on the website of the Company at https://www.muthootfinance.com/our-directors

All the Directors of the Company have confirmed that they satisfy the ''Fit and Proper'' Criteria as prescribed under Chapter XI of Reserve Bank of India Master Direction- Non-Banking Financial Company- Systemically Important Non-Deposit taking Company and Deposit Taking Company (Reserve Bank) Directions, 2016, as amended, and that they are not disqualified from being appointed/continuing as Directors in terms of Section 164(2) of the Act.

During the year under review, there were no changes in the Key Managerial Personnel appointed pursuant to Section 203 of the Companies Act, 2013.

26. Meetings of the Board

During the Financial Year 2021-22, your Board of Directors met six times on April 12, 2021, June 02,

2021, August 06, 2021; November 04, 2021, November 19, 2021 and February 12, 2022. Details of various meetings of the Board are given in the Report on Corporate Governance which is a part of this report.

27. Declaration from Independent Directors

The Independent Directors have submitted necessary disclosures that they meet the criteria of independence as provided under Section 149(6) of the Act and Regulation 16 (1) (b) of the SEBI Listing Regulations.

A statement by Managing Director confirming receipt of this declaration from Independent Directors is annexed to this report as Annexure 5. In the opinion of the Board, there has been no change in the circumstances which may affect their status as Independent Directors of the Company and the Board is satisfied of the integrity, expertise, and experience (including proficiency in terms of Section 150(1) of the Act and applicable rules thereunder) of all Independent Directors on the Board. Further, in terms of Section 150 read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, as amended, Independent Directors of the Company have included their names in the data bank of Independent Directors maintained with the Indian Institute of Corporate Affairs.

During the year under review, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company other than the sitting fees, commission, if any and reimbursement of expenses incurred for the purpose of attending the meetings of the Board or Committees of the Company.

28. Policy on Appointment and Remuneration of Directors and Performance evaluation of Board, Committees and Directorsa) Policy on Appointment and Remuneration of Directors

Board of Directors of your Company, on the recommendation of Nomination and Remuneration Committee, has formulated a policy for selection, appointment and remuneration of the directors, senior management personnel as required under Section 178(3) of the Act. The policy is available on the Company’s website at the weblink https:// www.muthootfinance.com/sites/default/ files/2020-08/1452753862Nomination%20and%20 Remuneration%20Policy.pdf

Terms of reference of the Nomination and Remuneration Committee and other relevant details of Nomination and Remuneration Committee are provided in the Report on Corporate Governance circulated along with this report.

b) Performance evaluation of Board, Committees and Directors

In compliance with the regulatory requirements, the Board carried out an annual evaluation of its own performance, its Committees, and of the individual Directors based on criteria and framework adopted by the Board and in accordance with regulations.

The details of training, appointment, resignation, and retirement of Directors, if any, are dealt with in the report on Corporate Governance. Brief details of profile of each director appear in the Annual Report of the Company.

c) Independent Directors Meeting

During the year, a meeting of Independent Directors was held on March 30, 2022 as required under the Act and in compliance with the requirements under Schedule IV of the Act and SEBI Listing Regulations, and discussed and deliberated matters specified therein.

29. Report on Corporate Governance

Your Company has complied with the Corporate Governance norms as stipulated in Chapter IV of SEBI Listing Regulations. As per Regulation 34 of SEBI Listing Regulations, the detailed report on Corporate Governance is attached to this Report as Annexure 6.

30. Management Discussion and Analysis Statement

Management Discussion and Analysis detailing the industry developments, segment wise/ product wise performance and other matters is attached to this Report as Annexure 7.

31. Environmental, Social, and Governance ("ESG”)

The Board has instituted an Environmental, Social and Governance Committee ("ESG Committee") to discharge its oversight responsibility on matters related to organization-wide ESG initiatives, priorities, and leading ESG practices. Details of the constitution of the ESG Committee and its terms of reference are provided in the Report on Corporate Governance.

32. Conservation of energy, technology absorption, foreign exchange earnings and outgo:

The information pursuant to Section 134(3) (m) of the Act read with the Companies (Accounts) Rules, 2014 is as follows:

a) Conservation of energy

Your Company being a Non-Banking Finance Company, has no activities involving conservation of energy. However, your Company has taken adequate measures for conservation of energy and usage of alternative source of energy, wherever required.

b) Technology Absorption

Your Company being a Non-Banking Finance Company, has no activities involving adoption of any specific technology. However, your Company has been in the forefront in implementing latest information technology and tools towards enhancing our customer convenience.

Initiatives taken by the Company in information technology for improved business efficiency, ease of operation, improved risk management practice and for providing best stakeholders experience:

The Company continued its focus on various digital transformation initiatives during the year providing a great customer experience, improved business efficiencies, ease of operations, and effective risk management.

A few of the digital initiatives undertaken by the Company include:

Digital Channels and Digital Footprints

As the pioneer and leader in gold loan business, we at Muthoot Finance believe in extending the digital interface to our customers through various channels for better reach and convenience. Zero touch and transact hassle free is the vision for spreading our digital channels. Customers can perform the KYC creation process now using Video KYC, pledge the ornaments from the comfort of their homes using the Loan @Home option, top-up or repay using different digital channels and through Loan@ Home option to close the active loans. We have added BBPS (Bharath Bill Payment System) interface for allowing the customer to transact with us using any platform integrated with BBPS or even allowing cash transactions through various Agents of BBPS.

AI-powered Chat engine integrated with our core system to enhance the chat experience for the customers and allow them to do real time transactions through the WhatsApp interface. This intuitive option allows customers with just basic digital experience also be part of our digital journey. We have enabled our communication of reminders using Whatsapp/E-mail/SMS. Initiatives like "Deep Link" allow customers to make repayment with a single click from our reminder SMS links.

Gold Unlocker

This new intuitive product facilitate our customers to use the power of plastic card for all e-commerce transactions or even for ATM cash withdrawals. Partnered with Yes bank and e-Wire, we have launched this product for better customer convenience.

KYC Data refinement and customer data protection

At Muthoot Finance, the privacy and security of our customer data is of utmost importance and we constantly strengthen our applications to enhance the veracity of customer data attributes. For ensuring the accuracy of customer bank accounts, we have added multiple bank account verification channels, Digital KYC verification interfaces, Customer biometric Authentication used to ensure the customer data updates are genuine and authentic. Through our agent mobile application, we continually enhance the customer address updates.

iMuthoot application

The revamped version of iMuthoot mobile App Version 3.0 a ''One App for All Loan Application & Repayment'' offers the facility to customers to request for Gold loan, Personal Loan, from the comfort of their own homes. This enhanced version of the mobile application is a stepping stone to provide an enriched Omni channel experience to our customers. The users of the iMuthoot mobile App are offered a significant convenience of interoperability of all their digital transactions without having to visit the branch.

Loan@Home application

The loan at home is an app-based digital service, with which a customer can apply for a gold loan through the ‘Loan@Home’ mobile app and web portal. As soon as the inquiry is verified and accepted, an agent gets assigned instantly. An appointment is made by the Muthoot Finance agent to visit the customer’s home. The customer can avail of a gold loan from the comfort of their home without having to visit the branch at any stage of the procedure. Using loan at home application, an agent can perform loan initiation till the disbursement of the loan by sitting at customer premises.

Muthoot online

The Online payment system is an extension portal of Muthoot Core Banking System that can act independently as an online payment system as well. It is a dynamic, independent delivery channel which can be plugged in to any Core Banking System.

c) Foreign exchange earnings and outgo

Particulars

'' in Million

Total Foreign Exchange earned

Nil

Total Foreign Exchange expended

4,705.65


33. Auditsa) Statutory Audit under Section 139 of the Act

Reserve Bank of India issued guidelines on appointment of statutory auditor(s) by Non-Banking Financial Company ("NBFC") vide Circular RBI/2021-22 /25 Ref. No. DoS. CD.ARG/SEC.01/ 08.91.001/2021-22 dated April 27, 2021 ("RBI Auditor Guidelines"). Pursuant to RBI Auditor Guidelines, the Audit Firms completing a tenure of three financial years in the NBFC were not eligible to continue to hold office as Statutory Auditors of the NBFC. Since the RBI Guidelines were being implemented for the first time for NBFCs from Financial Year 2021-22 and in order to ensure that there is no disruption, the RBI had given flexibility to NBFCs to appoint new Statutory Auditors in the second half of the financial year ending March 31, 2022.

Pursuant to the RBI Auditor Guidelines, M/s Varma & Varma, Chartered Accountants, statutory auditors of the Company resigned with effect from November 10, 2021, owing to their ineligibility to continue as auditors of the Company as they have already exceeded the maximum tenure of three financial years stipulated therein for the statutory auditors of the Company.

M/s Elias George & Co (FRN: 000801S) and M/s Babu A. Kallivayalil & Co. (FRN: 05374S), Chartered Accountants, were appointed as Joint Statutory Auditors of the Company effective November 19, 2021, in compliance with the Guidelines for Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs) (the "Guidelines"/ "Circular"). As per the Provisions of Section 139 (8) (i) of the Companies Act, 2013, the Shareholders of the Company had also approved the Appointment of Joint Statutory Auditors vide their Ordinary resolution passed through postal ballot dated December 27, 2021.

The Joint Statutory Auditors were appointed to hold their first term of office from November 19, 2021, till the conclusion of the 25th Annual General Meeting of the Company. The Board has recommended for the approval of the Members for the re-appointment of of M/s Elias George & Co (FRN: 000801S) and M/s Babu A. Kallivayalil & Co. (FRN: 05374S), Chartered Accountants as the Joint Statutory Auditors for a further period of 2 years commencing from the conclusion of the 25th Annual General Meeting till the conclusion of the 27th Annual General Meeting of the Company to be held in the year 2024. The Audit Committee of the Company has evaluated the eligibility criteria of the Joint Statutory Auditors and has also recommended their re-appointment for conducting the statutory audits for the financial year 2022-23 and financial year 2023-24.

34. Reporting on Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at workplace as per the requirement of the Sexual Harassment of Women at workplace (Prevention, Prohibition & Redressal) Act, 2013 (''POSH Act'') and Rules made thereunder.

With the objective of providing a safe environment, the Company has constituted Internal Committee to redress complaints received regarding sexual harassment. All employees - permanent, contractual, temporary and trainees are covered under this Policy.

Details of cases reported to Internal Complaints Committee during the financial year 2021-22 are as under:

Number of complaints pending at the beginning of the financial year 2021-22

0

Number of complaints filed during the financial year 2021-22

3

Number of complaints disposed of during the financial year 2021-22

3

Number of complaints pending as on end of the financial year 2021-22

0

The Statutory Audit Report issued by M/s Elias George & Co (FRN: 000801S) and M/s Babu A. Kallivayalil & Co. (FRN: 05374S), Joint Statutory Auditors of the Company, on the financial statements of the Company for the year 2021-22 forms part of the Annual Report.

b) Secretarial Audit under Section 204 of the Act

M/s KSR & Co., Company Secretaries LLP, Coimbatore was appointed as Secretarial Auditors of the Company for the financial year 2021-22 pursuant to Section 204 of the Act. The Secretarial Audit report issued by the Secretarial Auditors is annexed to this report as Annexure 8.

c) Annual Secretarial Compliance Report

The Company has undertaken an audit for the financial year 2021-22 for all applicable compliances as per SEBI Regulations and Circulars/ Guidelines issued thereunder.

The Annual Secretarial Compliance Report was submitted to the stock exchanges within 60 days from the end of the financial year.

d) Cost records and Cost Audit

Maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Act are not applicable for the business activities carried out by the Company.

e) Auditors'' certificate on Corporate Governance

The Auditors'' certificate confirming compliance with the conditions of corporate governance as stipulated under the SEBI Listing Regulations for financial year 2021-22 is provided along with the Report on Corporate Governance.

f) Secretarial Auditors'' certificate on ESOP

The secretarial auditors’ certificate on the implementation of share based schemes in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, will be made available at the AGM for inspection electronically.

g) Certificate on Non-Disqualification of Directors

Certificate on Non-Disqualification of Directors issued by M/s Sunil Sankar & Associates, Practising Company Secretaries is enclosed along with the Report on Corporate Governance.

h) Explanations or comments by the Board on qualification, reservation or adverse remark or disclaimer on audits for financial year 2021-22

There are no qualifications, reservation or adverse remark or disclaimer in the audit reports issued under Section 139 and Section 204 of the Act for financial year 2021-22.

35. Personnel

The Disclosure required under the provisions of Section 197 of the Act read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to this report as Annexure 9. The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of the Director''s Report. Further, the Director''s Report and the Accounts are being sent to the Members excluding the aforesaid statement. In terms of Section 136 of the Act, the said statement will be open for inspection upon request by the Members. Any Member interested in obtaining such particulars may write to the Company Secretary.

36. Significant and material Orders passed by Regulators or Courts or Tribunals

There are no significant and material orders passed by the regulators or courts or tribunals, which would impact the going concern status of your Company and its future operations.

37. Material Changes and Commitments affecting the financial position of the Company between the end of the financial year to which Financial Statements relate and the date of the report

No material changes and commitments affecting the financial position of your Company occurred between the end of the financial year to which Financial Statements relate and the date of this report.

38. Directors'' Responsibility Statement

Pursuant to Section 134(5) of the Act, the Board of Directors, to the best of its knowledge and ability, confirm that -

(a) in the preparation of the annual accounts, the applicable Indian Accounting Standards had been followed. There were no material departures from applicable Indian Accounting Standards;

(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

(c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) they have prepared the annual accounts on a going concern basis;

(e) they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively.

(f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

39. Disclosure pursuant to Part A of Schedule V of SEBI Listing Regulations

Disclosure pursuant to Part A of Schedule V read with Regulation 34(3) and 53(f) of SEBI Listing Regulations is attached as Annexure 10 of this report.

40. Others

• The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings, Annual General Meetings and Dividend.

• The Company, in the capacity of Financial Creditor, has not filed any application with National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016 during the financial year 2021-22 for recovery of outstanding loans against any customer being Corporate Debtor.

• The details of difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof- Not Applicable.

• There has been no material change in the nature of business of the Company during the year under review.

• During the year under review, there were no instances of any frauds reported by the Statutory Auditors under section 143(12) of the Act.

41. Acknowledgement

Your Directors thank the Company''s stakeholders including investors, customers, banks, financial institutions, rating agencies, debenture holders, debenture trustees and well-wishers for their continued support during the year. Your Directors place on record their appreciation of the contribution made by the employees of your Company and its subsidiaries at all levels. Your Board reassures that in these challenging times, your Company will continue to support you and your family at all levels. Your Company’s consistent growth was made possible by their hard work, solidarity, cooperation and support. The Board sincerely expresses its gratitude to Reserve Bank of India, Securities and Exchange Board of India, Ministry of Corporate Affairs, and Stock Exchanges including various officials there at for the guidance and support received from them from time to time.

Your Directors mourn the loss of life due to COVID-19 pandemic and are deeply grateful and have immense respect for every person who risked their safety and life to fight this pandemic.

42. Forward Looking Statements

This Report(s) contains certain forward-looking statements within the provisions of listing agreements and hence reasonable caution is to be exercised by stakeholders while relying on these statements.

For and On Behalf of the Board of Directors

Sd/- Sd/-

George Jacob Muthoot George Alexander Muthoot

Chairman & Whole Time Director Managing Director

Place: Kochi

Date: August 06, 2022

Registered Office:

2nd Floor, Muthoot Chambers,

Opposite Saritha Theatre Complex,

Banerji Road,

Kochi - 682 018


Mar 31, 2021

Your Board of Directors is pleased to share with you the 24th Annual Report of Muthoot Finance Limited ("Company") enumerating the business performance along with the Audited Financial Statements (standalone and consolidated) for the financial year ended March 31, 2021.

1. Financial Summary

The summarized standalone and consolidated results for the Company with previous year''s figure are given in the table below:

'' in millions

Particulars

Standalone

Consolidated

Year Ended March 31, 2021

Year Ended March 31, 2020

Year Ended March 31, 2021

Year Ended March 31, 2020

Total Income

105,743.59

87,227.91

115,664.19

97,072.67

Total Expenses

55,678.46

46,653.81

64,349.39

54,468.76

Profit Before Tax

50,065.13

40,574.10

51,314.80

42,603.91

Tax expense

12,843.35

10,391.10

13,126.10

10,917.10

Profit for the year

37,221.78

30,183.00

38,188.70

31,686.81

Equity

152,388.93

115,718.13

155,750.25

118,292.10

Total Liabilities

482,260.31

388,878.41

530,664.10

430,524.82

Total Assets

634,649.24

504,596.54

686,414.35

548,816.92

2. Dividend

Your Board has declared an interim dividend at ''20 per equity share (200% of face value) for the financial year 2020-21 on April 12, 2021. The dividend payout amounted to ''8,023.92 million representing 21.56% of profit after tax for the year. The Board has decided to plough back the remaining profit after tax for business activities during the Financial Year.

The Dividend distribution policy in terms of Regulation 43 A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015 ("SEBI Listing Regulations") of the Company is available on the website at https://www. muthootfinance.com/sites/default/files/2020-08/ Policy%20on%20Dividend%20Distribution.pdf The list of unpaid dividend is available on the Company’s website at https://www.muthootfinance.com/transfer-of-shares. Shareholders are requested to check the said list and if any dividend due to them is remaining unpaid in the said list. Shareholders can approach the Company or Registrar and Transfer Agent of the Company for release of unclaimed dividend.

3. Transfer to Reserves

Your Board of Directors has transferred an amount of ''7,444.35 millions to the Statutory Reserve maintained under Section 45 IC of the RBI Act, 1934. Post transfer of profits to reserves, your Board proposes to retain ''61,749.04 millions in the Retained Earnings.

4. Company''s Performance

During the Financial Year, Company achieved 23% increase in its profitability with a net profit of ''37,221.78 millions for the year ended March 31, 2021 as compared to ''30,183.00 millions for the year ended March 31, 2020. Profit before tax increased by 23% to ''50,065.13 millions. Total Income has increased from ''87,227.91 millions for the year ended March 31,2020 to ''1,05,743.59 millions for the year ended March 31, 2021 which is mainly due to increase in Interest Income of the Company. Interest income of the Company increased to ''1,03,285.29 millions from previous year’s interest income of ''85,644.00 millions. Loan Assets Portfolio of the Company increased by ''110,117.32 millions during the year reaching ''526,223.37 millions as on March 31, 2021 as against ''416,106.05 millions as on March 31, 2020. The Return on Average Loan Asset stood at 7.99% in FY 2020-21 as against 8.11%in FY 2019-20. Interest yield was 22.17% as compared to 23.03% in FY 2019-20. Net Interest Margin was 14.24% as compared to 15.52% in FY 201920. The Company remitted to exchequer ''13,057.03 millions as taxes.

5. Share Capital

During the Financial year, no preferential issue of shares with differential rights as to dividend, voting as otherwise was exercised by the Company. The Company has also not carried out any buy back of its equity shares during the year under review.

Employee Stock Options

During the year, your Company has allotted 1,58,530 equity shares of face value of ''10/- each under Muthoot ESOP 2013 pursuant to exercise of 1,58,330 options of ''50/- each for Growth Options and 200 options of ''10/-each for Loyalty Options by employees of the Company.

The disclosures as required under Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 read with SEBI Circular CIR/CFD/POLICY CELL/2/2015 dated 16th June 2015 is attached to this report as Annexure 1 and is also available on the website of the Company at https:// www.muthootfinance.com/esop-disclosure. Please refer note 46 of Notes forming part of Standalone Financial Statements for further disclosures on ESOPs. The Company does not have any scheme to fund its employees to purchase the shares of the Company.

Your Company has received the certificate from the Statutory Auditors of the Company certifying that the ESOP scheme is implemented in accordance with the applicable SEBI Regulations and is in accordance with the resolution passed by the members of the Company. The certificate would be placed at the Annual General Meeting for inspection by members.

The Employee Stock Option Schemes is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and there have been no material changes to these plans during the Financial Year 2020-21.

Investor Education and Protection Fund

During the financial year 2020-21, the Company has transferred the unclaimed dividends of ''12,87,375 to Investor Education and Protection Fund. Further, 2,309 corresponding equity shares on which the dividends were unclaimed for seven consecutive years were transferred to Investor Education and Protection Fund ("IEPF") during the financial year 2020-21 as per the requirements of IEPF rules.

No claim will lie on Company on account of dividend after the dividend is transferred to IEPF.

6. Resource Mobilization(a) Non-Convertible Debentures:

Your Company successfully completed 23rd and 24th Issue of Non-Convertible Debentures through Public Issue during FY 2020-21 raising ''22,929.86 millions. Company has raised ''36,455.00 millions through Private Placement of Non-Convertible Debentures during the financial year.

Subordinated Debts represents long term source of funds for the Company and the amount outstanding as

on 31st March, 2021 was ''2,106.48 millions. It qualifies as Tier II capital under the Non-Banking Financial Company- Systemically Important Non- Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016.

(b) Bank Finance

Bank Finance remains an important source of funding for your Company. Commercial Banks continued their support to your Company during Financial Year. As of 31st March, 2021, borrowings from banks were ''195,567.63 million as against ''143,756.21 millions in the previous year.

(c) External Commercial Borrowings

Your Company has outstanding Senior Secured Notes of 6.125% USD 450 million issued in October 2019 for a period of 3 years and 4.40% USD 550 million issued in March 2020 for a period of 3 % years falling under Regulation 144A / Regulation S of the US Securities Act, 1933. These Notes are listed in the International Securities Market of London Stock Exchange.

7. Credit Rating

The Company has debt credit ratings as below:

Domestic Ratings:

Credit

Rating

Agency

Instruments

Ratings

CRISIL

Commercial Paper

CRISIL A1

Subordinated Debts

CRISIL AA /Stable

Non-Convertible Debentures

CRISIL AA /Stable

ICRA

Commercial Paper

[ICRA] A1

Short Term Bank Borrowings

[ICRA] A1

Long Term Bank Borrowings

ICRA AA (Stable)

Subordinated Debts

ICRA AA (Stable)

Non-Convertible Debentures

ICRA AA (Stable)

International Credit Ratings:

Credit Rating Agency

Ratings

Fitch Ratings

BB(Stable)

S&P Global Ratings

BB(Negative)

Moody’s Investor Service

Ba2(Stable)

8. Internal Audit and Internal Financial Control

Over the years Company has evolved a robust, proper and adequate internal audit system in keeping with the size of the Company and its business model. Your Company has developed well documented internal audit and control system for meticulous compliance from all layers of the Company. The control system ensures that the Company’s assets are safeguarded and protected. The audit system also takes care to see that revenue leakages and losses to the Company are

prevented and our income streams are protected. The control system enables reliable financial reporting.

Company has a well-structured Audit & Inspection department to perform timely and frequent internal audit to evaluate the adequacy of systems and procedures and also to evaluate the status of compliance to Company''s guidelines and other statutory requirements. The department is manned by a team of over 900 dedicated personnel who constantly engaged in safeguarding your Company’s assets, ensures the quality of assets pledged and also evaluates the adequacy of risk management systems at its operating units. In keeping with the huge network and geographic outreach of the operating units spread across the length and breadth of the country, the audit functions have been decentralized through setting up of Regional Audit offices in important Regional centers. The Regional Audit Offices exercise field level control over the branches through onsite visits and online audit systems. The field level Auditors report to Regional Audit offices who in turn shares their findings with the Audit & Inspection Department at the Registered Office of the Company.

Audit Committee of Board of Directors is apex Audit Authority of the Company. Under the present Audit Architecture, the Internal Audit Department reports to the Audit Committee regarding significant audit findings and also preventive and corrective measures to protect the interests of the Company.

The audit Committee undertakes an evaluation of the adequacy and effectiveness of internal control systems. It also oversees the implementation of audit recommendations especially involving the risk management measures.

In addition to reviewing the internal control systems put in place by the Audit & Inspection Department, the Audit Committee also imparts guidance and crucial directions for upgradation of systems and controls on ongoing basis.

At present the Audit system prevalent in the Company is completely autonomous function and built on best corporate governance framework.

Reference is invited to Note 50 of Notes forming part of the standalone financial statements contained in the annual report regarding frauds committed by employees/customers of the Company which are dealt with according to Reserve Bank of India guidelines and are in nature of operation related frauds due to nature of business of the Company. Company has taken or is in the process of taking disciplinary/ legal action against such employees/customers.

9. Human Resources

As on March 31, 2021, the Company had 25,911 employees in its rolls at various level of organizational structure. Our employees remain one of the company''s greatest assets. We at Muthoot, believe in recognizing and appreciating employees for their valuable contribution and loyalty. We offer equal opportunities to all our employees irrespective of gender to learn and grow in the organization. For the convenience of our employees and bringing new ways of working, we are promoting digitalization for our employees as well as customers.

Recognizing the employee friendly efforts that we have put in, our Company is certified as Great Place to work for the year 2021-22. The 2021-22 certification is an indication of how well Muthoot Finance has adapted to the challenges brought about by the COVID-19 pandemic.

Since the onset of the pandemic, your Company has carried out various employee welfare measures such as providing additional paid COVID leaves to employees, salaries to employees during lockdown period to ensure their well-being. Also, during the period of pandemic, your company has ensured that no job loss occurred. We have automated various HRMS modules to bring in efficiency in practices. Your Company has committed to hiring and retaining the best talent and being among the industry''s leading employers have accelerated hiring offering them various roles in addition to promotion of existing employees during the financial year 2020-21.

During the COVID times, all the classroom training programs were moved to the virtual environment and the trainings were conducted online using video conferencing tools.

10. Major Marketing & Promotion Initiatives

As a leader in the business segment, it is incumbent upon us to take the lead in creating new consumer segments and growing the gold loan category by reinforcing and encouraging people to unlock the potential of their household gold ornaments by availing Gold Loans. And what better way to achieve this other than demonstrating inspiring stories of real men and women who had chosen to take a Gold Loan from Muthoot Finance and move ahead in life.

Our association with Shri. Amitabh Bachchan continued as we found strong relevance, correlation and fitment between the brand and Mr Bachchan''s values, pedigree, poise, respect, leadership, acceptability, association, success, philanthropy, and more attributes. The initiatives during the year were focussed on impressing upon people the prudence of

opting for Gold Loans, telling great stories of people who''ve overcome challenges with a little help from us in the form of Gold Loans and for the first time consciously communicating and reaching out to high value customers.

(a) "Gold Loan Is Good” - Integrated Marketing Campaign

This campaign sought to dispel common fears and apprehensions in people''s minds about Gold Loans, as also a few things that they probably did not know about Gold Loan from Muthoot Finance. The campaign captured facilities or features unique to Gold Loan from Muthoot Finance, and also assured potential and current users about the long standing pedigree of Muthoot Finance in the category. The campaign garnered a tremendous response from all quarters, including prospective customers, media and other stakeholders.

(b) "Sunheri Soch” - Radio & Digital Marketing Campaign

This campaign captured testimonials of people who’ve benefited from Muthoot Finance Gold Loans. It brought to life extraordinary success stories of real-life people, men & women from different walks of life, across locations, economic background and other diversities. The campaign received an overwhelming response from our target customers and new loan seekers, as it inspired millions of other Indians to unlock the true potential of their emotional currency (household gold) and move ahead in life.

(c) "The Muthoot Group - Greater Kailash Metro Station” Branding

We extended our association with Delhi Metro Rail Corporation by renewing our semi- naming rights branding at Greater Kailash Metro Station in Delhi.

Over the least 3 years, this association helped us leverage a prominent and strategic location located on an arterial road in South Delhi; in the form of seminaming and complete branding of Greater Kailash Metro Station. The station branding beautifully showcases our Group''s impeccable corporate credentials and key products and service offerings such as our 5000 widespread branch network, 2.5 Lac customers served every day, Muthoot Big Business Loan, Muthoot Loan@Home facility.

(d) "Ayush Gold Loan” - Integrated Marketing Campaign

The unique product created as response to the pandemic situation, was created and launched in quick time, in Q2 FY 20-21, and was followed by an integrated marketing campaign.. The campaign featured Shri Amitabh Bachchan and the IPL franchisee Chennai Super Kings. The scheme provided a double benefit to customers, as they could now avail a Gold Loan and

take care of all their financial needs and at the same time we tied up with a reputed insurance company and along with our Gold Loan product, COVID insurance was also offered. An integrated marketing campaign across Print, Digital, TV, Outdoor and BTL media was executed. Full Page newspaper ads, were released in the most prominent regional papers to spread awareness on our unique scheme.

(e) Trust Only Muthoot Finance - CSK TVC Campaign

The Muthoot Group was the Principal Team Partner of Chennai Super Kings during FY 20-21, and launched three special TVC''s during IPL 2020 (UAE), featuring Chennai Super Kings cricketing stars. Former Indian captain MS Dhoni took the lead in the these TVC''s that highlighted how in three very important aspects of the game, some chances can be taken, but not when it comes to Gold Loan, pitching in the trusted name and No. 1 status of Muthoot Finance.

(f) The Muthoot Group - Chennai Nandanam Metro Station Branding

The association with Chennai Metro Rail Limited was extended, by renewing the semi-naming rights branding at Nandanam Metro Station in Chennai. The association has helped the brand, by making our brand presence felt in a very prominent location of Chennai. The station branding includes our Group''s impeccable corporate credentials and key products and services offering such as our widespread branch network, our Loan at home facility and the unique Gold Unlocker.

(g) "Loan at Home” Integrated Marketing Campaign

The "Loan at Home " service was actively supported by a campaign across media. Our brand ambassador Shri Amitabh Bachchan delivers the brand message powerfully, after a strong "need" is established in the multiple commercial films. The campaign showed the convenience and ease offered by our "Loan at Home" service, which allows our customers to avail Gold Loan from Muthoot Finance, now from the comfort and safety of their homes.

Loan at Home expands the services of India''s No 1 Most Trusted Financial Services Brand - Muthoot Finance, to beyond the 4632 branch network, to almost every customer''s doorstep.

(h) "Gold Unlocker” Integrated Marketing Campaign

Muthoot Finance Gold Unlocker campaign was launched in Q4 FY 20-21, featuring Revathy, the well known star from the film and now television industry. The campaign was focused on announcing the key nature and feature of this gold loan product, it being a

24x7 Credit Line that allows access to funds - Anytime, Anywhere. This campaign was targeted at prospects who would want to plan their expenses better, and be ready for any eventuality. Through imuthoot app, Gold Unlocker customers could have easy access to this credit line, whenever they needed it.

An integrated marketing campaign was executed across Print, TV, Digital, Outdoor and BTL media. The campaign on digital alone created a footprint of 12Cr views. The product is slowly getting accepted and changing the way people manage their finances.

(i) Awards & Recognitions

a. ''Sunehri Soch'' Radio Campaign was honoured with the Best Radio Campaign of the Year by Global Marketing Excellence Awards, 2020.

b. "Gold Loan is Good" Campaign was adjudged the Best Integrated Campaign and also for the Best Use of Celebrity / Influencer by Global Marketing Excellence Awards, 2020.

c. Extremely humbled to share that our hugely successful "Soch Badaliye" integrated marketing campaign that aimed at creating an attitudinal transformation in the way people perceive Gold Loans was awarded at the recently concluded Exchange4Media''s Indian Content Marketing Awards 2020 in the Best Branded Content Marketing on TV Category

d. Muthoot Finance Limited was awarded India''s No. 1 Most Trusted Financial Services Brand for the 5th year in a row by Brand Trust Report 2020.

e. Our "Soch Badaliye aur Life Mein Aagey Badhiye" Campaign also won the prestigious Primetime Award

2020 for one of the Best Creative Campaigns in the BFSI Sector.

11. Capital Adequacy

Your Company’s Capital Adequacy Ratio as of March 31,

2021 stood at 27.39% of the aggregate risk weighted assets on balance sheet and risk adjusted value of the off-balance sheet items, which is well above the regulatory minimum of 15%. Out of the above, Tier

I capital adequacy ratio stood at 26.31% and Tier II capital adequacy ratio stood at 1.08%.

12. Public Deposits

The Company is a Systemically Important Non-Deposit Taking NBFC and has not accepted any public deposits. Hence, disclosure regarding details of deposits covered under Chapter V of the Companies Act, 2013 ("Act") are not applicable.

13. RBI Guidelines

Your Company has complied with all the applicable regulations prescribed by the Reserve Bank of India from time to time. Please refer note 52, 53, 54, 55, and 56 of Notes forming part of Standalone Financial Statements for additional disclosures required under RBI Guidelines applicable to the Company.

14. Subsidiaries/ Associates/ Joint Ventures

As on March 31, 2021, your Company had seven subsidiaries namely Asia Asset Finance PLC, Muthoot Homefin (India) Limited, Muthoot Insurance Brokers Private Limited, Belstar Microfinance Limited,

Muthoot Money Limited, Muthoot Asset Management Private Limited and Muthoot Trustee Private Limited. Your Company''s subsidiaries have been contributing to the overall growth of your Company during the year. As required under Section 136 of the Act, the audited financial statements, including the consolidated financial statements of your Company are available on the website of the Company. The audited financial statements of each of its subsidiaries are also available on the website of the Company at https:// www.muthootfinance.com/subsidiaries. The above documents will also be available for inspection at the Registered Office of the Company during business hours.

During the year under review, the Board of Directors reviewed the affairs of the subsidiaries. In accordance with Section 129 (3) of the Act, we have prepared the consolidated financial statements of the Company which form part of the Annual Report. The statement containing the salient features of the financial statement of your Company''s Subsidiaries in Form AOC 1 is annexed to Standalone Financial Statements of the Company as required under Rule 5 of The Companies (Accounts) Rules, 2014.

There are no other Companies which have become or ceased to be Subsidiaries/ Associates/ Joint Ventures ol the Company during the Financial Year 2020-21.

There has been no material change in the nature of business of subsidiary companies during the financial year 2020-21.

The Board of Directors of your Company has formulated a policy on material subsidiary, which is displayed on the web site of the Company https:// www.muthootfinance.com/sites/default/files/2020-08/1472561568policy%20on%20material%20 subsidiary.pdf.

As on March 31, 2021, Company did not have any material subsidiary.

a. Asia Asset Finance PLC:

Asia Asset Finance PLC, (AAF), a Company listed in Colombo Stock Exchange, is a subsidiary of your Company from December 31, 2014. AAF, where your Company holds 72.92% of equity capital, is a registered Financial Company with Central Bank of Sri Lanka and is mainly engaged in Vehicle Finance and Hire Purchase Activities. The Company which has also started business relating to lending against collateral of gold jewellery and micro finance is presently contributing a significant part of loan portfolio and income. AAF has operations across Sri Lanka with 48 branches as on March 31, 2021, AAF has made considerable progress in its business. Its major financial parameters for Financial Year 2020-21 are as follows:

Parameters

Total

Income

Profit Before Tax

Profit After Tax

Equity

Total

Assets

Total

Outside

Liabilities

Amount in INR (in millions) LKR/INR as on 31.03.2021 -0.3677855; Average Exchange Rate of Financial Year 2020-21 - 0.393785

1,162.59

34.16

17.80

817.25

5,645.67

4828.42

Amounts in LKR (in millions)

2,952.34

86.75

45.20

2,222.08

15,350.43

13,128.35

AAF increased its loan portfolio during the year by 1.18% at LKR 14002.23 millions. Total Income for FY 21 stood at LKR 2,952.34 millions as against previous year total income of LKR 3,332.62 millions. It generated a profit after tax of LKR 45.20 millions during FY21 as against previous year profit after tax of LKR 70.15 millions.

b. Muthoot Homefin (India) Ltd:

M/s. Muthoot Homefin (India) Ltd (MHIL), a registered Housing Finance Company licensed by National Housing Bank is a wholly owned subsidiary of your Company. Its major financial parameters for Financial Year 2020-21 are as follows:

Parameters

Total

Income

Profit Before Tax

Profit After Tax

Equity

Total

Assets

Total

Outside

Liabilities

Amount in INR (in millions)

2,408.65

168.66

125.51

4,386.59

16,783.92

12,397.33

MHIL''s loan portfolio stood at ''17,041.70 millions. Total income for Financial Year 2020-21 stood at ''2,408.65 millions as against previous year total income of ''2,876.10 millions. It achieved a profit after tax of ''125.51 millions in Financial Year 2020-21 as against previous year profit of ''317.77 millions.

c. Muthoot Insurance Brokers Private Limited:

Muthoot Insurance Brokers Private Limited (MIBPL), is an unlisted Private Limited Company holding a license to act as Direct Broker from Insurance Regulatory and Development Authority of India (IRDA) since 2013. MIBPL is a Wholly- Owned Subsidiary Company of your Company. Its major financial parameters for Financial Year 2020-21 are as follows:

Parameters

Total

Income

Profit Before Tax

Profit After Tax

Equity

Total

Assets

Total

Outside

Liabilities

Amount in INR (in millions)

467.38

424.09

316.37

846.99

863.82

16.83

MIBPL generated a First year premium collection amounting to ''2,641.70 millions during Financial Year 2020-21 as against ''2,059.02 in the previous year. It generated a Profit after Tax of ''316.37 millions during Financial Year 2020-21 as against ''103.98 millions in the previous year.

d. Belstar Microfinance Limited:

M/s. Belstar Microfinance Limited (BML) is a micro finance Company. At end of the Financial Year 2020-21, your Company holds 70.01% of the equity capital of BML. Its major financial parameters for Financial Year 2020-21 are as follows:

Parameters

Total

Income

Profit Before Tax

Profit After Tax

Equity

Total

Assets

Total

Outside

Liabilities

Amount in INR (in millions)

5,531.59

570.12

466.51

5,417.16

34,672.88

29,255.72

BML grew its loan portfolio during Financial Year 2020-21 by 25% reaching ''32,998.59 millions. It achieved a profit after tax of ''466.51 millions during Financial Year 2020-21 as against previous year profit after tax of ''989.99 millions.

e. Muthoot Money Limited

M/s. Muthoot Money Ltd (MML), a registered Non-Banking Finance Company licensed by Reserve Bank of India is a subsidiary of your Company. Its major financial parameters for Financial Year 2020-21 are as follows:

Parameters

Total

Income

Profit Before Tax

Profit After Tax

Equity

Total

Assets

Total

Outside

Liabilities

Amount in INR (in millions)

697.31

41.29

37.47

1,099.43

3,888.86

2,789.43

MML''s loan portfolio stood at ''3,668.13 millions. Total income for Financial Year 2020-21 stood at ''697.31 millions as against previous year total income of ''703.62 millions. It achieved a net profit of ''37.47 millions in Financial Year 2020-21 as against previous year profit of ''26.90 millions.

f. Muthoot Asset Management Private Limited

Your Company has incorporated a wholly owned subsidiary M/s. Muthoot Asset Management Private Limited ("MAMPL") which is yet to commence commercial operations. Its major financial parameters for Financial Year 2020-21 are as follows:

Parameters

Total

Income

Profit Before Tax

Profit After Tax

Equity

Total

Assets

Total

Outside

Liabilities

Amount in INR (in millions)

38.91

27.23

19.15

1,072.26

1,092.32

20.06

g. Muthoot Trustee Private Limited

Your Company has incorporated a wholly owned subsidiary M/s. Muthoot Trustee Private Limited ("MTPL") which is yet to commence commercial operations. Its major financial parameters for Financial Year 2020-21 are as follows:

Parameters

Total

Income

Profit Before Tax

Profit After Tax

Equity

Total

Assets

Total

Outside

Liabilities

Amount in INR

523.22

(95.28)

(95.00)

9,777.49

9,803.24

25.75

15. Particulars Of Loans, Guarantees Or Investments Under Section 186 of Act

Pursuant to Section 186(11)(a) of the Act read with Rule 11(2) of the Companies (Meetings of Board and its Powers) Rules, 2014, the loan made, guarantee given or security provided in the ordinary course of business by a Non- Banking Financial Company (NBFC) registered with Reserve Bank of India are exempt from the applicability of provisions of Section 186 of the Act. As such the particulars of loans and guarantee have not been disclosed in this Report. The details of the Investments of the Company are furnished under Note 9 of Notes forming part of the Standalone Financial Statements for the year ended March 31, 2021.

16. Annual Return

In accordance with the provisions of Section 92(3) read with Section 134(3) (a) of the Act, Annual Return of the Company is hosted on website of the Company at https://www.muthootfinance.com/themes/bartik/uploads/Annual_ Return_FY21.pdf

17. Consolidated Financial Statements

The audited consolidated financial statements of the Company along with its subsidiaries AAF, MHIL, BML, MML, MAMPL, MTPL and MIBPL prepared in accordance with the IndAS to comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Act, is provided in the Annual Report.

18. Risk Management

The Board of Directors of the Company has formed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The Committee is responsible for monitoring and reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls.

The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The development and implementation of risk management policy has been covered in the Management Discussion and Analysis, which forms part of this report.

19. Corporate Social Responsibility

The Company''s CSR policy is committed towards CSR activities as envisaged in Schedule VII of the Act. The Details of CSR policy of the Company are available on the website of the Company at https:// www.muthootfinance.com/sites/default/files/pdf/ CSR_Policy_May_2021.pdf. The Annual Report on CSR activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 is attached to this report as Annexure 2.

The details of Corporate Social Responsibility and Business Responsibility Committee is provided in the annual report on Corporate Social Responsibility annexed to this Report.

During the year under review, the Committee met four times on June 16, 2020, August 18, 2020, November 2, 2020 and February 08, 2021 respectively.

20. Business Responsibility Report

Regulation 34 of the SEBI Listing Regulations mandates the inclusion of the Business Responsibility Report ("BRR") as part of the Annual Report for top 1000 listed entities based on their market capitalization. The BRR is attached to this report as Annexure 3.

21. Particulars Of Contracts or Arrangements made with Related Parties

The Board of Directors of your Company has put in place a policy for related party transactions, (Policy on Related Party Transactions and Materiality of Related Party Transactions), which has been approved

by the Board of Directors. The policy provides for identification of RPTs, necessary approvals by the Audit Committee/ Board /Shareholders, reporting and disclosure requirements in compliance with the Act and provisions of the SEBI Listing Regulations. Policy is available on the website of the Company at https:// www.muthootfinance.com/sites/default/files/2020-08/1472561629related-party-transaction%20policy. pdf

All contracts executed by the Company during the financial year, with related parties, were on arm’s length basis and in the ordinary course of business.

All such related party transactions were entered into in accordance with the Policy on Related Party Transactions and Materiality of Related Party Transactions of the Company.

Prior omnibus approval was obtained for related party transactions, under Section 188 (1) of the Act, which are of repetitive nature and entered in the ordinary course of business and at arm’s length. All related party transactions were placed before the Audit Committee for review and approval.

All transactions or arrangements with related parties referred to in Section 188 (1) of the Act, entered into during the year were on arm''s length basis or were in ordinary course of business or with approval of the Audit Committee. During the year, your Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the Policy on Related Party Transactions and Materiality of Related Party Transactions. Further, there were no material related party transactions which required approval of shareholders as required under Chapter IV of SEBI Listing Regulations. The disclosure of related party transactions as required under Section 134(3) (h) of the Act in Form AOC 2 is attached to this report as Annexure 4.

The details of related party transactions with the related parties entered into during the financial year are disclosed in Notes to Standalone Financial Statements of the Company.

22. Audit Committee

Details on Audit committee, terms of reference and meetings appear on the Report on Corporate Governance annexed to this report. All recommendations of Audit Committee were accepted by your Board during the financial year 2020-21.

23. Vigil Mechanism

The Company has established a Vigil Mechanism/ Whistle Blower policy to enable Directors, Stakeholders, including individual employees and their representative bodies to report, in good faith,

unethical, unlawful or improper practices, acts or activities. The said mechanism ensures that the whistle blowers are protected against victimization/ any adverse action and/ or discrimination as a result of such a reporting and provides a direct access to the Chairman of the Audit Committee in exceptional cases. The Company hereby affirms that none of its personnel have been denied access to the Audit Committee. The whistle blower policy is available at website of the Company at https://www.muthootfinance.com/vigil-mechanism.

24. Listing

Equity Shares of your Company are listed on National Stock Exchange of India Ltd and BSE Limited. NonConvertible Debentures issued by the Company through public issues are listed on BSE Ltd. Your Company has paid applicable listing fees to Stock Exchanges.

Senior Secured Notes issued by the Company are listed on the International Securities Market of London Stock Exchange.

25. Changes in Directors and Key Managerial PersonnelCessation

Mr. M G George Muthoot, Chairman of the Company ceased to be a Director due to his demise on March 05, 2021. Mr. George Jacob Muthoot has been appointed as the Chairman of the Company effective June 02, 2021.

Appointments - Independent Directors

Ms. Usha Sunny was appointed as an additional and Independent Director effective November 30, 2020 for a period of three consecutive years to the Board of the Company subject to the approval of the shareholders at the ensuing Annual General Meeting. Your Board recommends the appointment of Ms. Usha Sunny as an Independent Director on the Board of Directors of the Company. The notice convening the 24th AGM sets out the detailed profile of Ms. Usha Sunny. In the opinion of the Board, Ms. Usha Sunny brings experience, integrity, proficiency and expertise in the domain of finance that will provide valuable insights in improving overall business and governance functions of the Company.

In order to comply with the Corporate Governance requirements of SEBI Listing Regulations and the Act, your Board proposes to appoint Mr. Abraham Chacko as Independent Director of the Company subject to approval of the shareholders in the upcoming Annual General Meeting. Mr. Abraham is an experienced banker by profession and had held senior most positions in various banks in the past including Executive Director in Federal Bank Limited, a BSE &

NSE listed and one of the oldest private sector bank in India. Detailed profile of Mr. Abraham Chacko is provided in the Notice of the AGM.

Appointments - Whole Time Directors

Your Board, on the recommendation of the Nomination and Remuneration Committee, proposes the appointment of Mr. George Muthoot George, Mr George Muthoot Jacob, and Mr George Alexander as Directors liable to retire by rotation and Whole Time Directors in the Board of Directors with effect from October 01, 2021. The proposed appointment will bring in more youthful energy and experience into the Board of Directors of the Company.

As per the provisions contained in Circular DNBR (PD) CC. No. 065/03.10.001/2015-16 dated July 09, 2015, approval of the Reserve Bank of India is required for the appointment of the three whole time directors on the Board of the Company since such appointment results in change in more than 30 percent of the directors excluding the independent directors. Currently, your Board has 4 non-independent directors on the Board and the appointment of 3 new directors on the Board would result in more than 30 percent change in the Board of Directors as mentioned in the said circular. Your Company has made applications to the Reserve Bank of India seeking its approval for the proposed appointment on the Board of Directors. Hence, the appointment of Mr. George Muthoot George, Mr. George Alexander and Mr. George Muthoot Jacob as Whole Time Directors on the Board of Directors of the Company would be subject to receipt of approval from the Reserve Bank of India and will be effective from October 01, 2021 or such other date Reserve Bank of India provide its approval, whichever is later.

Necessary resolutions seeking shareholders'' approval for the proposed appointments are provided in the notice calling the Annual General Meeting.

Directors Liable to retire by rotation

Mr. George Jacob Muthoot, Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, offer himself for reappointment.

Your Board and the Nomination and Remuneration Committee has evaluated the eligibility criteria under RBI guidelines, the Act and Listing Regulations, of all directors seeking appointment/ re-appointment at the ensuing Annual General Meeting and recommends the respective appointment/ re-appointments. Your Board believes that the proposal for appointment/ re-appointment will have the support of shareholders. Necessary disclosures as required under the SEBI

Terms of reference of the Nomination and Remuneration Committee and other relevant details of Nomination and Remuneration Committee are provided in the Corporate Governance Report circulated along with this report.

b) Performance evaluation of Board, Committees and Directors

The SEBI Listing Regulations and the Act require the evaluation of the performance of the Board, its Committees and the individual directors. The Board carried out an annual evaluation of its own performance, its Committees and individual Directors based on criteria and framework adopted by the Board and in accordance with existing regulations.

The details of training, appointment, resignation and retirement of Directors, if any, are dealt with in the report of Corporate Governance. Brief details of profile of each Directors appear in Annual Report of the Company.

c) Independent Directors Meeting

During the year, a meeting of Independent Directors was held on February 9, 2021 as required under the Act and in Compliance with requirement under Schedule IV of the Act and as per requirements of SEBI Listing Regulations and discussed matters specified therein.

29. Corporate Governance Report

Your Company has complied with the Corporate Governance norms as stipulated in Chapter IV of SEBI Listing Regulations. As per Regulation 34 of SEBI Listing Regulations, the detailed report on Corporate Governance is attached to this Report as Annexure 6.

30. Management Discussion and Analysis Statement

Management Discussion and Analysis detailing the industry developments, segment wise/ product wise performance and other matters is attached to this Report as Annexure 7.

31. Environmental, Social, and Governance ("ESG”)

The Board instituted an Environmental, Social and Governance Committee ("ESG Committee"), with effect from August 06, 2021, to discharge its oversight responsibility on matters related to organization-wide ESG initiatives, priorities, and leading ESG practices. Details of the constitution of the ESG Committee and its terms of reference are provided in the Report on Corporate Governance.

Listing Regulations and the Act are provided in the notice calling the Annual General Meeting.

The brief profiles of Directors are available on the website of the Company at https://www. muthootfinance.com/our-directors

Pursuant to Clause C(2)(i) of Schedule V read with Regulation 34(3) of SEBI Listing Regulations, in the opinion of the Board the independent directors fulfill the conditions as specified in the Listing Regulations and are independent of the management.

26. Meetings of the Board

During the Financial Year 2020-21, your Board of Directors met eight times on June 17, 2020, July 18, 2020, August 19, 2020; September 05, 2020; November 03, 2020, November 30, 2020, February 09, 2021 and February 19, 2021. Details of various meetings of the Board are given in the Corporate Governance Report which is a part of this report.

27. Declaration from Independent Directors

The Independent Directors have submitted necessary disclosures that they meet the criteria of independence as provided under Section 149(6) of the Act and Regulation 16 (1) (b) of the SEBI Listing Regulations.

A statement by Managing Director confirming receipt of this declaration from Independent Directors is annexed to this report as Annexure 5. There has been no change in the circumstances affecting their status as independent directors of the Company.

During the year under review, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company other than the sitting fees, commission, if any and reimbursement of expenses incurred for the purpose of attending the meetings of the Board or Committees of the Company.

28. Policy on Appointment and Remuneration Of Directors and Performance evaluation of Board, Committees and Directorsa) Policy on Appointment and Remuneration of Directors

Board of Directors of your Company, on the recommendation of Nomination and Remuneration Committee, has formulated a policy for selection, appointment and remuneration of the directors, senior management personnel as required under Section 178(3) of the Act. The policy is available on the Company''s website at the weblink https:// www.muthootfinance.com/sites/default/ files/2020-08/1452753862Nomination%20and%20 Remuneration%20Policy.pdf

32. Conservation of energy, technologyabsorption, foreign exchange earnings and outgo:

The information pursuant to Section 134(3)(m) of the Act read with the Companies (Accounts) Rules, 2014 is as follows:

a) Conservation of energy

Your Company being a Non-Banking Finance Company, has no activities involving conservation of energy. However, your Company has taken adequate measures for conservation of energy and usage of alternative source of energy, wherever required.

b) Technology Absorption

Your Company being a Non-Banking Finance Company, has no activities involving adoption of any specific technology. However, your Company has been in the forefront in implementing latest information technology and tools towards enhancing our customer convenience.

Initiatives taken by the Company in information technology for improved business efficiency, ease of operation, improved risk management practice and for providing best stakeholders experience:

The Company successfully implemented many digital transformation initiatives during the year providing great customer experience, improved business efficiencies, ease of operations and effective risk management.

A few of the IT initiatives undertaken are given below.

Seamless Integration with Multiple Partner Systems through APIs

The Company established application programming interface (API) enabling seamless and secure exchange of data between various internal and external systems. More than 150 APIs were developed and deployed by the Company for providing customers seamless experience on a real-time basis.

Despite the ferocity with which the pandemic are now hitting us, the Company was able to provide uninterrupted services to its stakeholders thereby exhibiting harmonious business continuity. With work from home becoming the new normal, utmost care was taken in ensuring that our employees enjoy a seamless work environment while working remotely. The implementation of Google Work Space across the organization has contributed tremendously to build a more tech savant environment to communicate and collaborate.

Digital Initiatives

The in-house IT team could integrate the widely used WhatsApp platform with CBS backend for reaching

out to customers through alert mechanism like, SMS, e-mail, Click-to-Call, etc for doing transactions. This has been found widely used by customers across.

KYC Data Capture & Validation

The Company has been a forerunner in using video KYC solution by integrating with its core banking and in Loan@home customer-facing application, obviating the need for them to visit the branch physically for onboarding. Other initiatives such as Digital KYC and customer bank account verification using the Penny Drop integration was completed as part of the KYC data enrichment programme.

AI Driven Development Initiative

Considering the vast array of possibilities of Artificial Intelligence (AI), your Company has initiated its usage in various areas and processes. As part of first step, signature verification in the pledge process has been performed successfully. Inception of RPA (Robotics Process Automation) in various money transfer transactions reconciliation has been a crucial step undertaken by the Company, resulting in all daily transactions reconciled with the vendor systems automatically now.

Security Surveillance System

Taking into consideration the necessity of physical security in our branches, a powerful video surveillance system was developed and implemented with central monitoring capabilities. The Smart Eye software solution has the AI and advanced computer vision technologies for effective protection of the valuable assets stored in the branches.

Mobile Applications Development and Roadmap

Mobile applications developed in-house enabled Muthoot Finance to engage with the customers in a more prudent way and identify appropriate customer touchpoints to create and enhance personalized experience. We have built a suite of mobility applications ranging from lead creation, loan repayment, loan top-up, customer onboarding, customer engagements, collections, and various add-on apps that can act as extensions of our Core Banking Software (CBS). Widely used payment channels such as PhonePe, PayTM and BBPS (Bharath Bill Payment) channels could be added for better customer convenience.

Enhancements in Intranet Portal MINE A new module was enrooted in the knowledge management intranet portal MINE for the continual updation of employees on various operational areas, new products and services. This has a dedicated facility for learning and online tests done by the HR

33. Audits

a) Statutory Audit under Section 139

On recommendation of Board of Directors of the Company, members of the Company appointed M/s. Varma & Varma, Chartered Accountants, Kochi (Firm Reg No. 004532 S) as Statutory Auditor of the Company at the 20th Annual General Meeting of the Company for a term of 5 consecutive years i.e. till the conclusion of 25th Annual General Meeting pursuant to Section 139 of the Act.

The Report given by M/s. Varma & Varma, Chartered Accountants, Statutory Auditors, on the financial statement of the Company for the FY 2020-21 is part of the Annual Report.

Reserve Bank of India on April 27, 2021 vide notification no. DoS.CO.ARG/SEC.01/08.91.001/2021-22 issued Guidelines for Appointment of Statutory Central Auditors /Statutory Auditors of Commercial Banks (excluding RRBs), UCBs and NBFCs, (including HFCs). In compliance with the guidelines, the Company is required to appoint two new statutory Auditors as "Joint Auditors" in the second half of the financial year 2021-22. In compliance with the FAQs on the above notification published by RBI, the existing statutory Auditors M/s Varma & Varma, Chartered Accountants will continue as the statutory auditor of the Company till the appointment of new statutory Auditors in the second half of the financial year 2021-22. Your Board will appoint the new Statutory Auditors in the second half of the financial year 2021-22 in due compliance with the provisions of the said guidelines issued by RBI and the relevant provisions of the Companies Act, 2013.

b) Secretarial Audit under Section 204

M/s KSR & Co., Company Secretaries LLP, Coimbatore was appointed as Secretarial Auditors of the Company for the financial year 2020-21 pursuant to Section 204 of the Act. The Secretarial Audit report submitted by them is annexed to this report as Annexure 8.

Department. Learning materials are regularly posted and updated on the platform prior to and conduct of tests. Individual scores are arrived at by the system automatically which are used by HR department for their various reviews.

c) Foreign exchange earnings and outgo

Particulars

'' in Million

Total Foreign Exchange earned

Nil

Total Foreign Exchange expended

4,776.35

c) Annual Secretarial Compliance Report

The Company has undertaken an audit for the financial year 2020-21 for all applicable compliances as per SEBI Regulations and Circulars/ Guidelines issued thereunder.

The Annual Secretarial Compliance Report has been submitted to the stock exchanges within 60 days of the end of the financial year.

d) Cost records and Cost Audit

Maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Act are not applicable for the business activities carried out by the Company.

e) Auditors'' certificate on Corporate Governance

The Auditors'' certificate confirming compliance with the conditions of corporate governance as stipulated under the SEBI Listing Regulations for financial year 2020-21 is enclosed as an annexure to the Board’s report.

f) Auditors'' certificate on ESOP

The auditors'' certificate on the implementation of share based schemes in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, will be made available at the AGM for inspection electronically.

g) Explanations or comments by the Board on qualification, reservation or adverse remark or disclaimer on audits for financial year 2020-21

There are no qualifications, reservation or adverse remark or disclaimer on audits under Section 139 and Section 204 of the Act for financial year 2020-21.

34. Reporting on Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at workplace as per the requirement of the Sexual Harassment of Women at workplace (Prevention, Prohibition & Redressal) Act, 2013 (''POSH Act'') and Rules made thereunder.

With the objective of providing a safe environment, the Company has constituted Internal Committee to redress complaints received regarding sexual harassment. All employees - permanent, contractual, temporary and trainees are covered under this Policy.

Details of cases reported to Internal Complaints Committee during the financial year 2020-21 are as under

Number of complaints pending at the beginning of the financial year 2020-2021

1

Number of complaints filed during the financial year 2020-2021

2

Number of complaints disposed of during the financial year 2020-2021

3

Number of complaints pending as on end of the financial year 2020-2021

0

35. Personnel

The Disclosure required under the provisions of Section 197 of the Act read with Rule 5 (1) & Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to this report as Annexure 9.

36. Significant and material Orders passed by Regulators or Courts or Tribunals

There are no significant and material orders passed by the regulators or courts or tribunals, which would impact the going concern status of your Company and its future operations.

37. Material Changes and Commitments affecting the financial position of the Company between the end of the financial year to which Financial Statements relate and the date of the report

No material changes and commitments affecting the financial position of your Company occurred between the end of the financial year to which Financial Statements relate and the date of this report.

38. Directors'' Responsibility Statement

Pursuant to Section 134(5) of the Act, the Board of Directors, to the best of its knowledge and ability, confirm that -

(a) in the preparation of the annual accounts, the applicable Indian Accounting Standards had been followed. There are no material departures from applicable Indian Accounting Standards;

(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

(c) they have taken proper and sufficient care for the maintenance of adequate accounting records

in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) they have prepared the annual accounts on a going concern basis;

(e) they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively.

(f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

39. Disclosure pursuant to Part A of Schedule V of SEBI Listing Regulations

Disclosure pursuant to Part A of Schedule V read with Regulation 34(3) and 53(f) of SEBI Listing Regulations is attached as Annexure 10 of this report.

40. Others

• The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings, Annual General Meetings and Dividend.

• The Company, in the capacity of Financial Creditor, has not filed any application with National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016 during the financial year 2020-21 for recovery of outstanding loans against any customer being Corporate Debtor.

• The details of difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof- Not Applicable.

41. Acknowledgement

Your Directors place on record its respect and homage to Late Chairman Mr. M G George Muthoot. Mr. M G George Muthoot was the Mentor and Visionary leader who played pivotal leadership role through his long career in building one of the most trusted financial powerhouses in the Country.

Your Directors thank the Company''s stakeholders including investors, customers, banks, financial institutions, rating agencies, debenture holders, debenture trustees and well-wishers for their continued support during the year. Your Directors

place on record their appreciation of the contribution made by the employees of your Company and its subsidiaries at all levels. Your Board reassures that in these challenging times, your Company will continue to support them and their family at all levels. Your Company''s consistent growth was made possible by their hard work, solidarity, cooperation and support. The Board sincerely expresses its gratitude to Reserve Bank of India, Securities and Exchange Board of India, Ministry of Corporate Affairs, and Stock Exchanges including various officials thereat for the guidance and support received from them from time to time.

Your Directors mourn the loss of life due to COVID-19 pandemic and are deeply grateful and have immense respect for every person who risked their safety and life to fight this pandemic.

42. Forward Looking Statements

This Report(s) contains certain forward-looking statements within the provisions of listing agreements and hence reasonable caution is to be exercised by stakeholders while relying on these statements.

For and on behalf of the Board of Directors

Sd/- Sd/-

George Jacob Muthoot George Alexander Muthoot

Chairman & Whole Time Director Managing Director

Place: Kochi

Date: August 06, 2021

Registered Office:

2nd Floor, Muthoot Chambers,

Opposite Saritha Theatre Complex,

Banerji Road,

Kochi - 682 018


Mar 31, 2019

REPORT OF THE BOARD OF DIRECTORS

Dear Stakeholders,

Directors of your Company have pleasure in presenting the 22nd Annual Report of the Company together with the audited financial statements (standalone and consolidated) for the year ended March 31, 2019.

1. Financial Summary

Your Company has adopted Indian Accounting Standards (Ind AS') notified under section 133 of the Companies Act 2013 ('the Act') read with the Companies (Indian Accounting Standards) Rules, 2015 from April 01, 2018 and the effective date of such transition is April 01, 2017. Such transition has been carried out from the erstwhile Accounting Standards notified under the Act, read with relevant rules issued thereunder and guidelines issued by the Reserve Bank of India ('RBI'). The financial statements have been prepared in accordance with the format prescribed for a Non-Banking Financial Company (NBFC) in compliance of the Companies (Indian Accounting Standards) Rules, 2015, in Division 111 of Notification No. GSR 1022 (E) dated October 11, 2018, issued by the Ministry of Corporate Affairs, Government of India. The financial results along with the comparatives have been prepared in accordance with the recognition and measurement principles stated in Ind AS.

The financial performance of your Company for the year ended March 31, 2019 are summarized below:

 

 

 

 

Rs. in Millions

Particulars

Standalone

 

Consolidated

 

 

Year Ended March 31, 2019

Year Ended March 31, 2018

Year Ended March 31, 2019

Year Ended March 31, 2018

Total Income

68,806.30

63,331.52

76,010.49

67,816.85

Total Expenses

38,038.14

34,884.66

43,415.21

38,396.07

Profit Before Tax

30,768.16

28,446.86

32,595.28

29,420.78

Tax expense

11,046.74

10,671.26

11,565.67

10,983.26

Profit for the year

19,721.42

17,775.60

21,029.61

18,437.52

Equity

97,927.19

78,120.21

99,312.00

78,565.75

Total Liabilities

282,759.81

229,802.34

318,035.99

258,152.23

Total Assets

380,687.00

307,922.55

417,347.99

336,717.98

2. Dividend

Your Board has declared an interim dividend at Rs. 12 per equity share (120% of face value) only after the end of financial year in its meeting dated April 05, 2019 for the financial year 2018-19. The dividend payout amount including the dividend distribution tax will be Rs. 5796.22 millions representing 29.39% of profit after tax for the year. Directors of your Company decided to plough back the remaining profit after tax for business activities during the Financial Year.

The Dividend Distribution Policy required as per Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and approved by the Board is available on the website of the Company at www.muthootfinance.com/policy/policy-investor and is attached to this report as Annexure 1.

The list of unpaid dividend is available on the Company's website www.muthootfinance.com. Shareholders are requested to check the said list and if any dividend due to them is remaining unpaid in the said list, then  shareholders can approach the Company or Registrar and Transfer Agent of the Company for release of unpaid dividend.

As per Section 124(5) of the Companies Act, 2013, the Company shall transfer the dividend that remained unclaimed for a period of seven years from the date of transfer to unpaid dividend account to the Investor Education and Protection fund (1EPF). Further as per Section 124(6) of the Companies Act, 2013, the Company shall transfer all shares in respect of which the unclaimed dividend has been transferred to 1EPF. No claim will lie on Company on account of dividend after the dividend is transferred to 1EPF.

3. Transfer to Reserves

Your Board of Directors has transferred an amount of Rs. 3,944.29 millions to the Statutory Reserve maintained under Section 451C of the RBI Act, 1934. An amount of Rs. 9,776.16 millions has been transferred to Debenture Redemption Reserve. Post transfer of profits to reserves and distribution of dividend, your Board proposes to retain Rs. 20,870.83 millions in the Retained Earnings

4. Company's Performance

During the Financial Year, Company saw 11% increase in its profitability with a net profit of Rs. 19,721.42 millions for the year ended March 31, 2019 as compared to Rs. 17,775.60 millions for the year ended March 31, 2018. Profit before tax increased by 8% to Rs. 30,768.16 millions. Total Income has increased from Rs. 63,331.52 millions for the year ended March 31, 2018 to Rs. 68,806.30 millions for the year ended March 31, 2019 which is mainly due to increase in Interest Income of the Company. Interest income of the Company increased to Rs. 67,570.12 millions from previous year's interest income of Rs. 62,021.30 millions. Loan Assets Portfolio of the Company increased by Rs. 51,041.00 millions during the year reaching Rs. 342,461.20 millions as on March 31, 2019 as against Rs. 291,420.20 millions as on March 31, 2018. The Return on Average Loans stood at 6.31% in FY 2018-19 as against 6.36% in FY 201 7-18. Interest yield was 21.63% as compared to 22.21% in FY 2017-18.Net Interest Margin was 14.47% as compared to 15.29% in FY 2017-18. The Company remitted to exchequer Rs. 11287.83 millions as taxes.

5. Resource Mobilization

(a) Non-Convertible Debentures:

Your Company successfully completed 18th and 19th Issue of Non-Convertible Debentures through Public Issue during FY 2018-19 raising Rs. 37,094.57 millions. Company has raised Rs. 5,750.00 millions through Private Placement of debentures.

Directors of your Company are thankful to all investors who have subscribed the debentures and shown their trust towards your Company.

Subordinated Debts represents long term source of funds for the Company and the amount outstanding as on 31st March, 2019 was Rs. 4,307.48 millions. It qualifies as Tier 11 capital under the Non-Banking Financial Company- Systemically Important Non- Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016.

(b) Bank Finance:

Bank Finance remains an important source of funding for your Company. Commercial Banks continued their support to your Company during Financial Year. As of 31st March, 2019, borrowings from banks were Rs. 129,781.58 millions as against Rs. 111,831.91 millions in the previous year.

6. Credit Rating

The Company has debt credit ratings as below:

Credit Rating Agency

Instruments

Ratings

CR1SIL

Commercial Paper

CR1SIL A1 +

Subordinated Debts

CRISlL AA/Stable

Non-Convertible Debentures

CRISlL AA/Stable

1CRA

Commercial Paper

[1CRA] A1 +

Short Term Bank Borrowings

[1CRA] A1 +

Long Term Bank Borrowings

[1CRA] AA/(Stable)

Subordinated Debts

[1CRA] AA/(Stable)

Non-Convertible Debentures

[1CRA] AA/(Stable)

7. Equity Sbare Issuances Employee Stock Options Schemes

During the year, your Company has allotted 620,077 equity shares of face value of Rs. 101- each under Muthoot ESOP 2013 pursuant to exercise of 7,287 options of Rs. 10/- each for Loyalty Options and 612,790 options of Rs. 50/- each for Growth Options by Employees of the Company.

The disclosures as required under SEB1 (Share Based Employee Benefits) Regulations, 2014 read with SEB1 Circular C1R/CFD/POL1CY CELL/2/2015 dated 16th June 2015 is attached to this report as Annexure 2. The same disclosure is available at Company's website www.muthootfinance.com/investors/disclosure-esop. Please refer note 46 of Notes forming part of Standalone Financial Statements for further disclosures on ESOP. The Company does not have any scheme to fund its employees to purchase the shares of the Company.

Your Company has received the certificate from the Statutory Auditors of the Company certifying that the ESOP scheme is implemented in accordance with the applicable SEB1 Guidelines/Regulations and is in accordance with the resolution passed by the members of the Company. The certificate would be placed at the Annual General Meeting for inspection by members.

The stock option schemes are in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and there have been no material changes to these plans during the Financial Year 2018-19.

8. Internal Audit and Financial Control

Over the years Company has evolved a robust, proper and adequate internal audit system in keeping with the size of the Company and its business model. Your Company has developed well documented internal audit and control system for meticulous compliance from all layers of the Company. The control system ensures that the Company's assets are safeguarded and protected. The audit system also takes care to see that revenue leakages and losses to the Company are prevented and our income streams are protected. The control system enables reliable financial reporting.

Company has a well-structured Audit & Inspection department to perform timely and frequent internal audit to evaluate the adequacy of systems and procedures and also to evaluate the status of compliance to Company's guidelines and other statutory requirements. The department is manned by a team of above 900 dedicated personnel who constantly engaged in safeguarding your Company's assets, ensures the quality of assets pledged and also evaluates the adequacy of risk management systems at its operating units. In keeping with the huge network and geographic outreach of the operating units spread across the length and breadth of the country, the audit functions have been decentralized through setting up of Regional Audit offices in important Regional centers. The Regional Audit Offices exercise field level control over the branches through onsite visits and online audit systems. The field level Auditors report to Regional Audit offices who in turn shares their findings with the Audit & Inspection Department at the Registered Office of the Company.

Audit Committee of Board of Directors is apex Audit Authority of the Company. Under the present Audit Architecture, the Internal Audit Department reports to the Audit Committee regarding significant audit findings and also preventive and corrective measures to protect the interests of the Company. The audit Committee undertakes an evaluation of the adequacy and effectiveness of internal control systems. It also oversees the implementation of audit recommendations especially involving the risk management measures.

In addition to reviewing the internal control systems put in place by the Audit & Inspection Department, the Audit Committee also imparts guidance and crucial directions for upgradation of systems and controls on ongoing basis.

At present the Audit system prevalent in the Company is completely autonomous function and built on best corporate governance framework.

Reference is invited to Note 51 of Notes forming part of the standalone financial statements contained in the annual report regarding frauds committed by employees/customers of the Company which are dealt with Reserve Bank of India guidelines and are in nature of operation related forms due to nature of business of the Company. Company has taken or is in the process of taking disciplinary/ legal action against such employees/customers.

9. Human Resources

As on March 31, 2019, the Company had 24,224 employees in its rolls at various level of organizational structure. Your Company is always committed in providing employees with ample opportunities to learn and advance in career.

Based on performance of the employees, management has introduced new means of payouts and increased the percentage of payout for existing incentives. The management is also rewarding employees with foreign trips to exquisite locations based on their achievement.

Exclusive Staff Welfare Officer were positioned in Regional Offices to support our employees to draw the benefits offered under statutory provisions - ESI, Medi-claim etc. Regional HR Managers were positioned in selected Regional Offices and they will act as a link between the employee and the management to represent any grievances / discomforts of employees pertaining to human resource related matters. These officers also arranges staff engagement programs to create unity among our employee community.

Your Company has offered multiple training programs to employees to help in their development. The programs includes product/process related trainings, soft skill trainings, leadership trainings and certification trainings for different group of employees. Company imparts training through two premium training establishments of the Company and 74 Regional Learning Centers.

Your Company has robust mechanism for identifying performers and Performance Score card method of performance assessment has been implemented for a structured and unbiased performance assessment model. Company has taken steps to promote eligible employees to the next level based on the above performance assessment model. .

Your Company offers various other benefits to employees including Employee Stock Options and various Statutory and Non Statutory Staff Welfare Measures. All eligible employees are covered under statutory provisions namely EPF, ESI, Maternity Benefits, Gratuity etc. Employees were enrolled under the National Pension System (NPS) with Company also making contribution along with their contribution.

10. Major Marketing & Promotion Initiatives

i) AB-CSK Marketing Campaign

During the year 2018-19 company continued its association with the biggest and legendary superstar of Bollywood and entertainment industry, Padma Vibhushan Shri Amitabh Bachchan who has a huge fan following not just in India but all over the world.

Company has also continued its association with the one of the most successful IPL teams of all times -Chennai Super Kings, led by the legendary former Indian

Captain Padma Bhushan Shri Mahendra Singh Dhoni as "Prinicipal Team Partner". This association allowed us to reach closer to our customers as well as to the huge cricket fans of this country and even abroad, in a more exciting & acceptable manner more especially in the southern part of India.

ii) Muthoot Vishwas Ki Tijori:

Kumbh 2019 was the largest congregation of human beings on planet Earth with more than 24 Crore people converging at Prayaagraj. It was observed that often people coming for Kumbh find it a major challenge to keep their valuables safely, before they could have a holy dip. They often leave their personal belongings unattended on the banks of the river and find it hard to focus or enjoy in having a peaceful holy dip. Identifying this problem, Muthoot Finance decided to leverage on its core asset of "Trust" and offer a unique solution. This is for the first time in the history of Kumbh that locker services were being offered to all visitors to keep their personal belongings safe before they proceeded to have their holy dip.

'Muthoot Vishwaas Ki Tijori' (free locker service for all pilgrims) was powered by a specially designed mobile App, online e-KYC was done while availing this service, photographs of the visitors' belongings were taken and a physical confirmation document along with the photograph of their belongings was also given to them, providing them an added layer of assurance. The lockers were also equipped with 24x7 CCTV surveillance systems, security guards, metal detectors, alarm systems, fire extinguishers and other essentials to ensure their belongings are absolutely safe and secure. On their return, their belongings and identity were re-verified and handed over to them in the same pristine condition with utmost respect. To sweeten their experience, all their belongings were returned in Muthoot branded biodegradable non-plastic bags along with some interesting goodies.

In addition to the above, innovative Muthoot Boat Services were also introduced for ferrying people from the river bank to the Sangam and back. Free transit shelter homes (Rein Basera Camps) were also organised at multiple city locations for countless devotees to have a peaceful overnight stay at no cost. And for those overseas visitors who converged at Prayag for experiencing the divinity & largeness of Kumbh, there was Muthoot Forex helping them with instant foreign exchange services.

During the activation, more than 10,000 beneficiaries availed this free service, thereby letting more than 50,000 family members have a peaceful holy dip during their Kumbh visit. Furthermore, countless number of pilgrims availed the Muthoot Boat Services, and millions of them were benefitted by the Free Transit Shelter Homes (Rein Basera Camps).

This Kumbha campaigns were Awarded Silver at ABBY Awards 2019, awarded Gold at Golden Mikes Award 2019 and awarded Gold at Flame Awards Asia 2019, for Best Experiential Marketing Campaign of the Year

iii) Jaipur Pink Panther, Pro Kabbadi League Season 6 Association:

Your Company partnered with the Jaipur Pink Panthers team of the Pro Kabaddi League as its associate sponsor for the League's Season 6, for the second consecutive year.

Your Company has always supported sports and celebrated the spirit of sportsmanship, while in the past we have been associated with several other sports like cricket and football, Kabaddi is particularly significant to us owing to its rural appeal as your company has more than 60% of its branch network in rural and semi urban areas of the country. The association further helped us realise our aim of supporting aspirations of the rural population of the country while promoting a spirit of sportsmanship and fair play.

iv) Association with Wheel Chair Cricket India as a Title Sponsor:

This initiative particularly was an important part of Muthoot Finance's larger vision of contributing back to the society. Acknowledging the notable work being done by Wheelchair Cricket India, your company decided to support a noble cause by sponsoring an international tri-nation cricket series being played at Dubai. This association and financial support helped the players fly to Dubai and play Cricket against the Wheelchair Cricket teams from Pakistan and Bangladesh and come back with pride after winning the trophy. Your Company values and salutes the spirit of committed players who in spite of being differently-abled, believed in pursuing their dream and emerge victorious.

11. Capital Adequacy

Your Company's Capital Adequacy Ratio as of March 31, 2019 stood at 26.05% of the aggregate risk weighted assets on balance sheet and risk adjusted value of the off-balance sheet items, which is well above the regulatory minimum of 15%. Out of the above, Tier 1 capital adequacy ratio stood at 25.61% and Tier 11 capital adequacy ratio stood at 0.44%.

12. Public Deposits

The Company is a Systemically Important Non-Deposit Taking NBFC and hence has not accepted any public deposits.

13. RBI Guidelines

Your Company has complied with all the applicable regulations prescribed by the Reserve Bank of India from time to time. Please refer note 52 and 53 of Notes forming part of Standalone Financial Statements for  additional disclosures required under RBI Guidelines applicable to the Company.

14. Subsidiaries/ Associates/ Joint Ventures

As on March 31, 2019 your Company has seven subsidiaries namely M/s. Asia Asset Finance PLC, M/s. Muthoot Homefin (India) Limited, M/s. Muthoot Insurance Brokers Private Limited, M/s. Belstar Investment and Finance Private Limited, M/s. Muthoot Money Limited, M/s. Muthoot Asset Management Private Limited and M/s. Muthoot Trustee Private Limited. Your Company's subsidiaries have considerably contributed to the overall growth of your  Company during the year. As per Section 136 of the Companies Act, 2013 the audited financial statements, including the consolidated financial statements of your Company and the audited accounts of each of its subsidiaries are available on the website of the Company at www.muthootfinance.com/corporate/our_subsidary. The above documents will also be available for inspection at the Registered Office of the Company during business hours.

The Board of Directors of your Company has formulated a policy on material subsidiary, which is displayed on the web site of the Company at www.muthootfinance.com/policy/policy-investor.

Financial Performance & position of Subsidiaries a. Asia Asset Finance PLC:

Asia Asset Finance PLC, (AAF), a Company listed in Colombo Stock Exchange, is a subsidiary of your Company from December 31, 2014. AAF, where your Company holds 69.17% of equity capital, is a registered Financial Company with Central Bank of Sri Lanka and is mainly engaged in Vehicle Finance and Hire Purchase Activities. The Company which has also started business relating to lending against collateral of gold jewellery and micro finance is presently contributing a significant part of loan portfolio and income. AAF has operations across Sri Lanka with 23 branches as on March 31, 2019. AAF has made considerable progress in its business. Its major financial parameters for Financial Year 2018-19 are as follows:

Parameters

Total Income

Profit Before Tax

Profit After Tax

Equity

Total Assets

Total Outside Liabilities

Amount in INR (in millions) LKR/lNR as on 31.03.2019-0.395775 /Average Exchange Rate -0.40657*

1,166.35*

38.18*

41.04*

772.91

5,501.07

4,728.17

Amounts in LKR (in millions)

2,868.76

93.91

100.93

1,952.89

13,899.49

11,946.61

AAF increased its loan portfolio during the year by 26% at LKR 12,568.87 millions. Total Income for FY19 stood at LKR 2,868.76 millions as against previous year total income of LKR 2,572.37 millions. It generated a profit after tax of LKR 100.93 millions during FY19 as against previous year profit after tax of LKR 178.23 millions.

b. Muthoot Homefin (India) Ltd:

M/s. Muthoot Homefin (India) Ltd (MH1L), a registered Housing Finance Company licensed by National Housing Bank is a wholly owned subsidiary of your Company. Its major financial parameters for Financial Year 2018-19 are as follows:

Parameters

Total Income

Profit Before Tax

Profit After Tax

Equity

Total Assets

Total Outside Liabilities

Amount in INR (in millions)

2,257.29

511.45

362.65

3941.78

19,472.45

15,530.67

MHIL increased its loan portfolio by Rs. 4,486.40 millions at Rs. 19,075.01 millions during the year. Total income for Financial Year 2018-19 stood at Rs. 2,257.29 millions as against previous year total income of Rs. 1170.61 millions. It achieved a profit after tax of Rs. 362.65 millions in Financial Year 2018-19 as against previous year profit of Rs. 222.56 millions.

c. Muthoot Insurance Brokers Private Limited:

Muthoot Insurance Brokers Private Limited (MIBPL), is an unlisted Private Limited Company holding a license to act as Direct Broker from Insurance Regulatory and Development Authority of India (1RDA) since 2013. MIBPL is

Wholly- Owned Subsidiary Company of your Company. Its major financial parameters for Financial Year 2018-19 are as follows:

Parameters

Total Income

Profit Before Tax

Profit After Tax

Equity

Total Assets

Total Outside Liabilities

Amount in INR (in millions)

251.16

215.45

150.46

426.62

446.05

19.42

MIBPL generated a First year premium collection amounting to Rs. 1,737.66 millions during Financial Year 2018-19 as against Rs. 1,106.53 in the previous year. It generated a Profit after Tax of Rs. 150.46 millions during Financial Year 2018-19 as against Rs. 105.39 millions in the previous year.

d. Belstar Investment and Finance Private Limited:

M/s. Belstar Investment and Finance Private Limited (B1FPL) is a micro finance Company. At end of the Financial Year 2018-19, your Company holds 70.01% of the equity capital of BIFPL. Its major financial parameters for Financial Year 2018-19 are as follows:

Parameters

Total Income

Profit Before Tax

Profit After Tax

Equity

Total Assets

Total Outside Liabilities

Amount in INR (in millions)

3,680.68

1,030.98

728.53

4,001.75

20,438.71

16,436.96

B1FPL grew its loan portfolio during Financial Year 2018-19 by 62% reaching Rs. 18,419.36 millions. It achieved a profit after tax of ? 728.53 millions during Financial Year 2018-19 as against previous year profit after tax of Rs. 270.50 millions. Its Stage 111 Asset on Gross Loan Asset % as on March 31, 2019 stood at 1.15%.

e. Muthoot Money Limited

M/s. Muthoot Money Ltd (MML), a registered Non-Banking Finance Company licensed by Reserve Bank of India is a subsidiary of your Company. During the Financial Year 2018-19, your Company acquired 100% of the equity capital making it wholly owned subsidiary. Its major financial parameters for Financial Year 2018-19 are as follows:

Parameters

Total Income

Profit Before Tax

Profit After Tax

Equity

Total Assets

Total Outside Liabilities

Amount in INR (in millions)

156.19

7.20

2.82

1,034.93

3,352.29

2,317.36

MML increased its loan portfolio by Rs. 3,042.69 millions at Rs. 3,107.49 millions during the year. Total income for Financial Year 2018-19 stood at Rs. 156.19 millions as against previous year total income of Rs. 11.15 millions It achieved a net profit of ? 2.83 millions in Financial Year 2018-19 as against previous year profit of Rs..2.37 millions

f. Muthoot Asset Management Private Limited

Your Company has incorporated a wholly owned subsidiary M/s. Muthoot Asset Management Private Limited which is yet to commence commercial operations. Its major financial parameters for Financial Year 2018-19 are as follows:

Parameters

Total Income

Profit Before Tax

Profit After Tax

Equity

Total Assets

Total Outside Liabilities

Amount in INR (in millions)

8.27

3.27

2.23

512.23

513.71

1.47

g. Muthoot Trustee Private Limited

Your Company has incorporated a wholly owned subsidiary M/s. Muthoot Trustee Private Limited which is yet to commence commercial operations. Its major financial parameters for Financial Year 2018-19 are as follows:

Parameters

Total Income

Profit Before Tax

Profit After Tax

Equity

Total Assets

Total Outside Liabilities

Amount in INR (in thousands)

7.74

4.01

2.76

1,002.76

1,004.62

1.86

The statement containing the salient features of the financial statement of your Company's Subsidiaries is attached as Annexure to Standalone Financial Statements of the Company as required under Rule 5 of The Companies (Accounts) Rules 2014.

There are no other Companies which have become or ceased to be Subsidiaries/ Associates/ Joint Ventures of the Company during the Financial Year 2018-19.

15. Particulars of Loans, Guarantees or Investments Under Section 186 of The Companies Act, 2013

Pursuant to Section 186(11)(a) of the Companies Act, 2013 (the 'Act') read with Rule 11 (2) of the Companies (Meetings of Board and its Powers) Rules, 2014, the loan made, guarantee given or security provided in the ordinary course of business by a Non- Banking Financial Company (NBFC) registered with Reserve Bank of India are exempt from the applicability of provisions of Section 186 of the Act. As such the particulars of loans and guarantee have not been disclosed in this Report. The details of the Investments of the Company are furnished under Note 8 of Notes forming part of the Standalone Financial Statements for the year ended March 31, 2019.

16. Extract of Annual Return

Extract of Annual Return as required under Companies Act, 2013 is annexed as Annexure 3.

17. Consolidated Financial Statements

The audited consolidated financial statements of the Company along with its subsidiaries AAF, MHIL, BIFPL, MML, MAMPL, MTPL and MIBPL prepared in accordance with the IndAS to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 , is provided in the Annual Report.

18. Risk Management and Risk Management Policy

Your Company has a Board approved Risk Management Policy which has laid down a framework for identifying, assessing, measuring various elements of risk involved in the business and formulation of procedures and systems for mitigating such risks.

Risk Management Committee of the Board of Directors of your Company constituted in accordance with the Reserve Bank of India guidelines has overall responsibility for overseeing the risk management activities of the Company, approving measurement methodologies and appropriate risk management procedures across the organization.

The Risk Management Committee comprises of:

Risk Management Department periodically places its report on risk management to the Risk Management and Audit Committee of the Board of Directors. During the year, your Company has incorporated various practices and suggestion as directed by the Risk Management and Audit Committee which helped the Company in attaining an improved vigilance and security system, improved security of gold jewellery and cash, improved system of grading of branches, Regional Offices etc. IT based risk management initiatives are discussed in section related to 'Technology Absorption' in this report of Board of Directors.

Your company has aligned function of Risk Management committee which was originally constituted under Reserve Bank of India guidelines to the requirements of SEB1 LODR 2015 as well. Your Board believes this will help company in more robust Risk Management system.

19. Corporate Social Responsibility

Your Board has constituted a Corporate Social Responsibility (CSR) & Business Responsibility Committee to support the Company in achieving the CSR objectives of the Company. The CSR and Business Responsibility Committee of the Board of Directors comprises of the following:

Name of the Director

Designation in the Committee

Nature of Directorship

Jose Mathew

Chairman

Independent Director

John K Paul

Member

Independent Director

George Alexander Muthoot

Member

Managing Director

George Joseph

Chairman

Independent Director

Jose Mathew

Member

Independent Director

George Alexander Muthoot

Member

Managing Director

 

The Company's CSR policy is committed towards CSR activities as envisaged in Schedule Vll of the Companies Act, 2013. The Details of CSR policy of the Company are available on the website of the Company atwww.muthootfinance.com/policy/policy-investor. The Annual Report on CSR activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 is attached to this report as Annexure 4.

In terms of Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility) Rules, 2014 as amended ("CSR Rules") and in accordance with CSR Policy, during the year, the Company has spent Rs. 282.92 millions towards CSR projects/ programs.

20. Business Responsibility Report

The Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) Regulations,

2015 mandates the inclusion of the Business Responsibility Report (BRR) as part of the Annual Report for top 500 listed entities based on their market capitalization. The BRR is attached to this report as Annexure 5.

21. Particulars Of Contracts or Arrangements made with Related Parties

The Board of Directors of your Company has formulated a policy on related party transactions, which is displayed on the web site of the Company atwww.muthootfinance.com/policy/policy-investor. This policy deals with review of the related party transactions and regulates all transactions between the Company and its Related Parties.

Prior omnibus approval is obtained for related party transactions which are of repetitive nature and entered in the ordinary course of business and at arm's length. All related party transactions are placed before the Audit Committee for review and approval.

All transactions or arrangements with related parties referred to in Section 188 (1) of the Act, entered into during the year were on arm's length basis or were in ordinary course of business or with approval of the Audit Committee. During the year, your Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. Further, there were no material related party transactions which required approval of shareholders as required under Chapter IV of SEB1 (Listing Obligations and Disclosure Requirements) Regulations, 2015. The disclosure of related party transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC 2 is attached to this report as Annexure 6.

The details of related party and transactions with the related parties as required under chapter IV of SEB1 (Listing Obligations and Disclosure Requirements) Regulations, 2015 appears on the Note no. 38 of the Notes forming part of the Standalone Financial Statements of the Company.

22. Audit Committee

The Audit Committee comprises of:

Name of the Director

Designation in the Committee

Nature of Directorship

George Joseph

Chairman

Independent Director

John K Paul

Member

Independent Director

Jose Mathew

Member

Independent Director

George Alexander Muthoot

Member

Managing Director

All recommendations of Audit Committee are accepted by your Board and details on Audit committee appear on the report on Corporate Governance.

23. Vigil Mechanism

To conduct affairs of your Company and its various constituents in a fair and transparent manner and as part of Vigil Mechanism, and providing whistle blowers

a safe and reliable way of sharing information, your Company has formulated a Whistle Blower Policy in compliance with Companies Act, 2013 and SEB1 (Listing Obligations and Disclosure Requirements) Regulations, 2015. There is graded reporting structure under the Policy and also provides provision for direct access to Chairman of Audit Committee. The whistle blower policy is available at website of the Company at www.muthootfinance.com/policy/policy-investors.

24. Listing

Equity Shares of your Company are listed on National Stock Exchange of India Ltd. and BSE Ltd. Your company has paid required listing fees to Stock Exchanges.

25. Changes in Directors and Key Managerial Personnel

The term of Mr. George Joseph and Mr. John K Paul, as Independent Directors is getting completed at the ensuing 22nd Annual General Meeting and hence they are retiring at the Annual General Meeting this year.

Mr. K George John passed away following a brief illness on June 30, 2019. He was due to retire as Independent Director in forthcoming Annual General meeting to be held this year, after completion of his tenure. Board of Directors and employees of Muthoot Finance Limited pay respectful homage to the departed soul.

Mrs. Pamela Anna Mathew, Mr. Jose Mathew and Mr. Jacob Benjamin Koshy were appointed as Independent Directors and hence shall not be liable to retire by rotation.

Mr. M G George Muthoot, Whole- time Director and Mr. George Jacob Muthoot, Whole Time Directors of the Company retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

On recommendation of Nomination and Remuneration committee, your Board has considered induction of three directors - Mr. Ravindra Pisharody, Mr. V A George and Mr. Pratip Chaudhuri in the Board as Independent Directors to be appointed by members in the ensuing 22nd Annual General Meeting. Board has recommended the re-appointment of Mr. Pratip Chaudhuri as Independent Director for a second term.

Mr. Ravindra Pisharody is a corporate business leader and management professional with over 35 years of experience across diverse industries. Currently, he is a Non- Executive Director on the Boards of 3 companies, and is an advisor to 2 other companies. He also undertakes Coaching and Mentoring assignments. Ravi is a graduate engineer from 11T Kharagpur and did his MBA from the Indian Institute of Management (11M), Calcutta. His expertise is in sales and marketing, as well as Business

Strategy. He has also been active in industry bodies- he has been a member of the Advertising Standards Council of India (ASCI), a council member and subsequently Chairman of the Audit Bureau of Circulation (ABC), and Vice President of the Society of Indian Automobiles Manufacturers (S1AM) in 2016-17. Your Board believes that his appointment will benefit your Company through his role as Independent Director.

Mr. V A George is a certified Director in Corporate Governance by INSEAD, Paris. He has more than 4 decades experience in the corporate world, both Public and Private sectors. He was the past Chairman of Equipment Leasing Association of India and also a Member of the Advisory Committee of Reserve Bank of India. Alumni of 1MD Lausanne and INSEAD France, Mr. V A George has participated in the Management Programmes of Business Schools of Harvard and Stanford. An Adjunct Faculty at Loyola Institute of Business Administration, Chennai and Rajagiri Business School, Kochi. Currently, Mr. V A George is the Managing Director of Thejo Engineering Limited, Chennai. Your Board believes his appointment will benefit the Company through his role as Independent Director.

Mr. Pratip Chaudhuri is the former Chairman of State Bank of India. He held several important positions during his 38 years career in SBI. Your Board believes his appointment will benefit the Company through his role as Independent Director.

After evaluating the eligibility criteria under Reserve Bank of India guidelines, Companies Act, 2013 and SEB1 LODR Regulations 2015, your Board recommends appointment of Mr. Ravindra Pisharody, Mr. V A George and Mr. Pratip Chaudhuri as Independent Directors of the Company. Detailed profile of proposed Directors as required under SEB1 LODR is annexed to the notice calling Annual General Meeting of members of the Company.

Mr George Alexander Muthoot was appointed as Managing Director for a period of 5 years with effect from 01.04.2015 and his present term is getting completed on March 31, 2020. Mr. George Alexander Muthoot is a Key contributor in overall Management of the Company. His vast experience and his association would be of immense benefit to the Company and it is desirable to continue to avail his services as Managing Director. Your Board believes his re- appointment will benefit the Company through his role as Managing Director.

Mr. M. G. George Muthoot, Mr. George Thomas Muthoot, Mr. George Jacob Muthoot were appointed as Whole Time Directors for a period of 5 years with effect from 01.04.2015 and their present term is getting completed on March 31, 2020. Mr. M. G. George Muthoot, Mr. George Thomas Muthoot and Mr. George Jacob Muthoot are Key contributors in overall Management of the Company. Their vast experience and their association would be of immense benefit to the Company and it is desirable to continue to avail their services as Whole-time Directors of the Company. The Board of Directors considers that their appointment as Whole Time Directors will be beneficial to the Company.

After evaluating the eligibility criteria under Reserve Bank of India guidelines, Companies Act, 2013 and SEB1 LODR Regulations 2015, your Board recommends re-appointment of George Alexander Muthoot as Managing Director and M G George Muthoot, George Jacob Muthoot and George Thomas Muthoot as Whole-time directors of the Company. Detailed profile of the above Directors is annexed to the notice calling Annual General Meeting of members of the Company.

26. Meeting of the Board

During the Financial Year 2018-19, your Board of Directors met Eight times on 16.05.2018, 30.06.2018, 30.07.2018,14.08.2018,04.09.2018,10.11.2018, 06.12.2018 and 06.02.2019.

27. Declaration from Independent Directors

The Independent Directors have submitted disclosure that they meet the criteria of independence as provided under Section 149(6) of Companies Act, 2013 and SEB1 Regulations. A statement by Managing Director confirming receipt of this declaration from Independent Directors is annexed to this report as Annexure 7.

28. Policy on Appointment and Remuneration Of Directors and Performance evaluation of Board, Committees and Directors

a) Policy on Appointment and Remuneration Of Directors Board of Directors of your Company, on recommendation of Nomination and Remuneration Committee, has formulated a policy for selection, appointment and remuneration of the directors, senior management personnel as required under Section 1 78(3) of Companies Act, 2013. Details of the said Policy is annexed to this report as Annexure 8.

The Nomination and Remuneration Committee which was reconstituted on April 05, 2019 comprises of the following directors:

Name of the Director

Designation in the Committee

Nature of Directorship

John K Paul

Chairman

Independent Director

Jacob Benjamin Koshy

Member

Independent Director

Jose Mathew

Member

Independent Director

Terms of reference of trie Nomination and Remuneration Committee include the following:

1. Identifying persons who are qualified to become Directors and who may be appointed in Senior Management in accordance with Criteria as laid down and recommend to Board their appointment and removal.

2. Ensure persons proposed to be appointed on the Board do not suffer any disqualifications for being appointed as a director under the Companies Act, 2013.

3. Ensure that the proposed appointees have given their consent in writing to the Company;

4. Review and carry out every Director's performance, the structure, size and composition including skills, knowledge and experience required of the Board compared to its current position and make recommendations to the Board with regard to any changes;

5. Plan for the succession planning for directors in the course of its work, taking into account the challenges and opportunities facing the Company, and what skills and expertise are therefore needed on the Board in the future;

6. Be responsible for identifying and nominating for the approval of the Board, candidates to fill board vacancies as and when they arise;

7. Keep under review the leadership needs of the organization, both executive and non-executive, with a view to ensuring the continued ability of the organization to compete efficiently in the market place; and

8. Ensure that on appointment to the Board, non-executive directors receive a formal letter of appointment setting out clearly what is expected of them in terms of committee services and involvement outside board meetings.

9. Determine and agree with the Board the framework for broad policies for criteria for determining qualifications, positive attitudes and independence of a director and recommend to the Board policies, relating to remuneration for the Directors, Key Managerial Personnel and other employees.

10. Review the on-going appropriateness and relevance of the remuneration policy.

11. Ensure that contractual terms of the agreement that Company enters into with Directors as part of their employment in the Company are fair to the individual and the Company.

12. Ensure that all provisions regarding disclosure of remuneration and Remuneration Policy as required under the Companies Act, 2013 or such other acts, rules, regulations or guidelines are complied with.

13. Formulate ESOP plans and decide on future grants.

14. Formulate terms and conditions for a suitable Employee Stock Option Scheme and to decide on followings under Employee Stock Option Schemes of the Company:

(i) the quantum of option to be granted under ESOP Scheme(s) per employee and in aggregate;

(ii) the condition under which option vested in employees may lapse in case of termination of employment for misconduct;

(iii) the exercise period within which the employee should exercise the option and that option would lapse on failure to exercise the option within the exercise period;

(iv) the specified time period within which the employee shall exercise the vested options in the event of termination or resignation of an employee;

(v) the right of an employee to exercise all the options vested in him at one time or at various points of time within the exercise period;

(vi) the procedure for making a fair and reasonable adjustment to the number of options and to the exercise price in case of rights issues, bonus issues and other corporate actions;

(vii) the grant, vest and exercise of option in case of employees who are on long leave; and

(viii) the procedure for cashless exercise of options.

15. Any other matter, which may be relevant for administration of ESOP Scheme including allotment of shares pursuant to exercise of options from time to time.

b) Performance evaluation of Board, Committees and Directors

The SEB1 (Listing Obligations and Disclosures Requirements) Regulations, 2015 and the Companies Act, 2013 require the evaluation of the performance of the Board, its Committees and the individual directors. The Board carried out annual evaluation of its own performance, its Committees and individual Directors based on criteria and framework adopted by trie Board and in accordance with existing regulations. The details of training, appointment, resignation and retirement of Directors, if any, are dealt with in the report of Corporate Governance. Brief details of profile of each Director appear in Annual Report of the Company.

c) Independent Directors Meeting

During the year, a meeting of Independent Directors was held as required under Companies Act, 2013 and in Compliance with requirement under Schedule IV of the Act and as per requirements of SEB1 (Listing Obligations and Disclosure Requirements) Regulations, 2015 and discussed matters specified therein.

29. Corporate Governance Report

Your Company has complied with the Corporate Governance norms as stipulated in Chapter IV of SEB1 (Listing Obligations and Disclosure Requirements) Regulations, 2015. As per Regulation 34 of SEB1 (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Detailed report on Corporate Governance is attached to this Report as Annexure 9.

30. Management Discussion and Analysis Statement

Management Discussion and Analysis on the business of the Company is attached to this Report as Annexure 10.

31. Conservation of energy, technology absorption, foreign exchange earnings and outgo:

The information pursuant to Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is as follows:

a) Conservation of energy

Your Company being a Non-Banking Finance Company, its activities are not energy intensive. However, your Company has taken adequate measures for conservation of energy and usage of alternative source of energy, wherever required.

b) Technology Absorption

Your Company being a Non-Banking Finance Company, its activities do not require adoption of any specific technology. However, your Company has been in the forefront in implementing latest information technology and tools towards enhancing our customer convenience.

Few of the initiatives taken by the company in information technology for improved business efficiency, ease of operation, improved risk management practice and for providing best stakeholders experience based are as follows: Leveraging the power of information technology, we have been continuing our digital transformation initiatives across all areas of operations to provide better customer experience as also to increase our operational efficiency, control and productivity. The powerful Core Banking Solution (CBS) has been continually enhanced and seamlessly integrated with independent external systems through suitable APIs, enabling straight through processing for better service speed and accuracy of data. The large customer data being built through the CRM system has been churned to cross sell and upsell our varied products& services fine-tuned to suit the needs of the customer.

A number of user friendly mobile apps have been developed and deployed for the customers to access necessary information and doing transactions online on a 24 by 7 basis.

A few of our key digital initiatives focusing the customer convenience are given below.

a) iMuthoot Mobile App on Android and loS Platforms

The iMuthoot mobile App is testimony to our commitment to provide world-class products and services combined with cutting edge technology. Muthoot customers can login to iMuthoot App with their username and password. Customers who are not registered with may register a new account on the mobile app and avail all the features and functionalities available. Some of the services that can be availed from the iMuthoot App are: View Gold Loan details; Remit Interest and Principal repayments on loans; Online Gold Loan (OGL) facility to Withdraw / Top-up enhanced eligible amount and Renew loans. Useful information required by customers such as latest Gold Loan schemes, Gold Loan Calculator, Al powered Chatbot are made available. Helpline and FAQ are provided for clarifying customer queries Currently more than one million customers have downloaded the App and around 5 lakh customers have registered for availing of gold loan services through the iMuthoot channel.

b) Smart Eye

Securing large amount of gold in the remote Branches has been a challenge where we have been exploring the latest technology tools and advances continually. Smart Eye application software has been developed and implemented for this which will enable effective surveillance management centrally and cost effectively too.

The system is facilitated with a Dashboard that displays the health of all the DVRs connected at the branches of the Company. The health of the DVRs is continuously monitored every 5 seconds automatically by the system.

c) API Integrations with Service Providers and Business Verticals

AP1 integration has been enabled in Core Banking Solution during last year for Gold Loan disbursement with MFIN Associated Banks Outward Remittance & Inward Remittance API's, International Money Transfers, Domestic Money Transfers, Health Insurance, Vehicle Insurance, Traditional Insurance Products, etc.

d) Virtual Bank Account for Gold Loans

This facilitates customers to remit their Gold Loan repayments through various payment channels such as IMPS, NEFT, RTGS etc with their Virtual bank account number provided in the Gold Loan pledge form.

e) Online Gold Loan (OGL) Integration with C-DAC & NSDL eSign Functionality OGL has been enabled for 24x7 availability for all Gold Loan customers through iMuthoot Mobile App and Muthoot Online portal. Customers can map their Bank Accounts to their Gold Loan Account without visiting MFIN Branches using more secured Aadhaar enabled eSign from NSDL.

f) Internal Credit Rating platform

The existing CBS computing engine has been enhanced to generate Credit Scores of customers. Accordingly, the system can also allocate loyalty points to the customers.

g) Mobile App Development

The inhouse Mobile App development team has been developing various Apps in both in Android and loS platforms for B2C and B2E Enterprise Mobility Platforms and internal process automations. A few of the features of the Apps are given below.

Map Me 2: App is used to GeoCoding the entire Branches/Offices across India.

iMSecure: The application recognizes the existing customer of the branch there by reducing the fraudulent activities by the visitors. The security person who has been appointed should have a mobile app to verify the contact number of the customer with photo who comes to the branch.

SaleslNxt-Sales App: Application for Muthoot Finance loan sales team for generating instant leads. Sale team can create lead/ Customer through this app and follow-up it.

iMCollect -EMI collections ( Personal Loan):

Mobile application for personal loan Emi collection integrated with PL - Loan Management System ( LMS) .Collection agent need to remit money at branch before EOD.

h) Loan@Home for Customer/Enterprise

This provides flexibility to the customer to avail of gold loan without visiting a branch.

i) Data Loss/Leakage Prevention

With the growth in business and competition seen in the industry, we need to have a robust information security system in place to prevent any critical data loss/ leakage. DLP has been successfully rolled out for all our controlling offices and have enabled policies. The DLP support team do continuous monitoring of the connected systems so as to prevent leakage of data.

c) Total Foreign Exchange Earned : Nil

Total Foreign Exchange Used : Rs. 0.86 millions

32. Audits

a) Statutory Audit under section 139

On recommendation of Board of Directors of the Company, members of the Company appointed M/s. Varma & Varma, Chartered Accountants, Kochi (Firm Reg No. 004532 S) as Statutory Auditor of the Company at the 20th Annual General Meeting of the Company for a term of 5 consecutive years i.e. till the conclusion of 25th Annual General Meeting pursuant to Section 139 of the Companies Act, 2013.

Pursuant to notification issued by the Ministry of Corporate Affairs on May 07, 2018, amending section 139 of the Companies Act 2013, the mandatory requirements for ratification of appointment of auditors by the members at every AGM does not arise.

The Company has received a certificate from the above Auditors to the effect that they are eligible to continue as Auditors in accordance with the provisions of Section 141 of the Companies Act, 2013.

The Report given by M/s. Varma & Varma, Chartered Accountants, Statutory Auditors, on the financial statement of the Company for the year 2018-19 is part of the Annual Report.

b) Secretarial Audit under Section 204

The Board had appointed M/s KSR & Co., Company Secretaries LLP, Coimbatore to conduct Secretarial Audit for the Financial Year 2018-19. The Secretarial Audit report is annexed to this report as Annexure 11.

c) Explanations or comments by the Board on qualification, reservation or adverse remark or disclaimer on audits for financial year 2018-19

There are no qualifications, reservations or adverse remark or disclaimer on audits under section 139 and section 204 of Companies Act, 2013 except in one instance observation made in the Secretarial Audit Report relating to non-filing of Form MGT-14. The management has decided to file condonation of delay in this matter.

33 Reporting on Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Internal Complaints Committee constituted by your Company under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013 looks into the complaints of aggrieved women employees, if any, and is instrumental in:

• promoting gender equality and justice and the universally recognized human right to work with dignity

• prevention of sexual harassment of women at the workplace

There were 3 reported cases of sexual harassment in FY 2018-19, wherein lady officials had complained against harassment by the official in their Branch/Region. Action taken was prompt following investigation by the Internal Complaints Committee. Evidence was examined and the erring officials were heard. Where substance was found in the complaints, a Report was sent to HRD Department. Disciplinary action was initiated promptly based on the Report, against the officials concerned and disciplinary procedures were completed speedily.

34. Personnel

The Disclosure required under the provisions of Section 197 of the Companies Act, 2013 read with Rule 5 (1) and Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to this report as Annexure 12.

35. Significant and material Orders passed by Regulators or Courts or Tribunals

There are no significant and material orders passed by the regulators or courts or tribunals, which would impact the going concern status of your Company and its future operations.

36. Material Changes and Commitments affecting the financial position of the Company between the end of the financial year to which Financial Statements relate and the date of the report

No material changes and commitments affecting the financial position of your Company occurred between the end of the financial year to which this financial statements relate and the date of this report.

37. Directors' Responsibility Statement

In accordance with the provisions of Section 134(5) of the Companies Act, 2013 with regard to Director's Responsibility Statement, Directors state that: —

(a) in the preparation of the annual accounts, the applicable Indian Accounting Standards had been followed . There are no material departures from applicable Indian Accounting Standards;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis;

(e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

38. Disclosure pursuant to Part A of Schedule V of SEB1 LODR

Disclosure pursuant to Part A of Schedule V read with Regulation 34(3) and 53(f) of SEB1 is attached as Annexure 13 of this report.

39. Acknowledgement

Your Directors thank the Company's stakeholders in large including investors, customers, banks, financial institutions, rating agencies, debenture holders, debenture trustees and well-wishers for their continued support during the year. Your Directors place on record their appreciation of the contribution made by the employees of your Company and its subsidiaries at all levels.

Your Company's consistent growth was made possible by their hard work, solidarity, cooperation and support. The Board sincerely expresses its gratitude to Reserve Bank of India, Securities and Exchange Board of India and Ministry of Corporate Affairs for the guidance and support received from them including officials there at from time to time.

40. Forward Looking Statements

This Report(s) contains certain forward-looking statements within the provisions of Listing agreements and hence reasonable caution is to be exercised by stakeholders while relying on these statements.

For and on behalf of the Board of Directors

Sd/-

Sd/-

M.G. George Muthoot

George Alexander Muthoot

Chairman

Managing Director

Place: Kochi

 

Date: 12th August, 2019

 

Registered Office: 2nd Floor, Muthoot Chambers, Opposite Saritha Theatre Complex, Banerji Road, Kochi -682018

 

Annexure-1

MUTHOOT FINANCE LTD

 Policy for Distribution of Dividends

[Pursuant to Regulation 43A of the SEB1 (Listing Obligations and Disclosure Requirements) Regulations, 2015]

The Policy for Distribution of Dividends shall come into effect from the date it is approved by the Board of Directors.

The Policy is being framed in compliance with the requirement stipulated under Regulation 43A of the SEB1 (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) for distribution of dividends, based on the following parameters:

Objective

This Policy intents to create a framework for deciding distribution of profits created by the Company as dividend to its equity shareholders.

Timing of Dividend Declaration

The Board of Directors may declare one or more interim dividends any time during the financial year. The Board may recommend final dividend after approval of the audited financial statements by the Board and will be paid after approval of shareholders in the Annual General Meeting. Board will consider Financial and other parameters stated in the policy for declaring both interim dividend and also for recommending final dividend.

Financial Parameters to be Considered while Declaring Dividend

1. The Board of Directors may declare dividend after considering various financial parameters. Financial parameter will include but not limited to profit for the period, availability and need of liquidity in the Company, Capital to Risk Assets Ratio, Leverage ratio, Net Interest Margin , Operating Expenses Ratio , Return on Assets , requirement of maintaining reserves including statutory reserves prescribed by various regulators such as Debenture redemption reserve, fund requirement for future expansion etc.

2. Dividends shall generally be declared out of the Standalone Profit After Tax of the Company relating to the current financial year, subject to any other regulatory provisions that may be introduced from time to time. The consolidated performance will be not considered for declaration or recommendation of dividend.

3. The Board will generally endeavour to maintain an even dividend per share every year but this shall be subject to review by Board on various parameters including financial parameters at the time of declaration or recommendation of dividend.

Internal and External Factors to be Considered for Declaration of Dividend

The factors, internal and external, to be considered by the Board, for determining the declaration of dividend, will include the following:

a) Internal Factors

• Business growth

• Yield on Loans

• Cost of Borrowing

• Operating Expenses

• Quality of assets and NPA

• Profitability of the Company

• Asset-Liability Management Position

• Ability to raise or availability of Debt capital

• Future fund requirements in business

• Carried forward balance in P & L account

• Accumulated reserves

b) External Factors

• Macro-economic environment

• Overall retail credit growth in the economy.

• Liquidity position in the economy

• Performance and Outlook of the Gold Loan sector

• Monetary policy of Reserve Bank Of India

• Changes in government policies

• Regulatory changes

• Change in tax structure applicable on dividend both for the Company as well as Shareholders.

Circumstances Under Which The Shareholders Of The Company May Or May Not Expect Dividends

Shareholders of the Company may not expect declaration of dividend in below mentioned circumstances-

i) Expectation of growth opportunity in the existing business and capital is required to be conserved for meeting the growth

ii) In the event of an opportunity for acquisition and/or strategic investment in existing lines of business or new business where company may be required to allocate capital

iii) In the event of requirement of working capital in business

iv) In the event of inadequacy of cashflow available for distribution of dividend

v) In the event of absence or inadequacy of profits

Policy Guidelines on Utilization of the Retained Earnings

The retained earnings of the Company may be used, inter alia, for one or more of the following purposes:

i) Business Growth ;

ii) Capital expenditure;

iii) Working capital requirements;

iv) Acquisition of businesses/entities including new lines of business

v) Declaration of dividend vi) Buyback of shares

vii) Issue of Bonus Shares

viii) Investment in new lines of business

ix) Repayment of debt;

x) Meeting contingency plans; and

xi) Any other purpose as may be permitted by law

Parameters to be Adopted with Regard to Various Classes of Shares

Company has only one class of equity shares and hence there will be no differential treatment in dividend.

Review

The Board shall have right to modify or amend any or all of the clauses of this policy in accordance with the provisions of the applicable laws. In case of any change in applicable laws which make any of the clauses or provisions of this policy inconsistent with changes then such changes will prevail over this policy and policy shall deemed to be amended accordingly from the date of effect of change in applicable laws.

Disclosures

The Company shall make necessary disclosures in compliance with the provisions of the Listing Regulations, in particular disclosures required in Annual Report and website of the Company.

In case, Company proposes to declare dividend on the basis of parameters in addition those specified under this policy or proposes to change such additional parameters, it shall disclose such changes along with rationale for the same in its annual report and on its website.

Disclosure pursuant to the provisions of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 as at March 31, 2019.

 

ESOP 2013- Tranche 1

ESOP 2013 -Tranche 2

ESOP 2013 -Tranche 3

Particulars

Loyalty

Grant A

Grant B

Loyalty

Grant A

Grant B

Grant A

1

Date of shareholder's approval

27.09.2013

27.09.2013

27.09.2013

27.09.2013

27.09.2013

27.09.2013

27.09.2013

2

Number of options granted

1,571,075

3,711,200

1,706,700

6,100

456,000

380,900

325,000

3

Exercise price (Rs.)

10/-

50/-

50/-

10/-

50/-

50/-

50/-

4

Source of shares

Primary

Primary

Primary

Primary

Primary

Primary

Primary

5

Vesting period

1 -2 years

1 -5 years

2-6 years

1 -2 years

1 -5 years

2-6 years

1 -5 years

6

Vesting requirements

In a graded manner over a 2 year period with 50% vesting at the end of 1 2 months from the date of grant and the remaining 50% of the grants vesting at the end of 24 months from the date of grant

In a graded manner over a 5 year period with 10%,15%,20%,25% and 30% of the grants vesting in each year commencing from the end of 12 months from the date of grant

In a graded manner over a 6 year period with 10%,15%,20%,25% and 30% of the grants vesting in each year commencing from the end of 24 months from the date of grant

In a graded manner over a 2 year period with 50% vesting at the end of 1 2 months from the date of grant and the remaining 50% of the grants vesting at the end of 24 months from the date of grant

In a graded manner over a 5 year period with 10%,15%,20%,25% and 30% of the grants vesting in each year commencing from the end of 12 months from the date of grant

In a graded manner over a 6 year period with 10%,15%,20%,25% and 30% of the grants vesting in each year commencing from the end of 24 months from the date of grant

In a graded manner over a 5 year period with 10%, 15%, 20%, 25% and 30% of the grants vesting in each year commencing from the end of 12 months from the date of grant

7

Options outstanding at the beginning of the year

17,662

438,600

136,395

-

159,865

48,200

223,750

8

Options granted during the year

-

-

-

-

-

 

 

9

Options exercised during the year

4,400

352,380

48,490

-

70,505

8,755

70,000

10

Number of shares arising as a result of

4,400

352,380

48,490

 

70,505

8,755

70,000

 

exercise of option

 

 

 

 

 

 

 

11

Options vested during the year

 

396,210

55,700

 

70,525

11,660

81,250

12

Forfeited/Lapsed during the year

13,262

39,170

25,945

 

2,150

8,870

-

13

Options outstanding at the end of the year

-

47,050

61,960

-

87,210

30,575

153,750

14

Options exercisable

-

47,050

8,530

-

5,640

5,715

56,250

15

Money realised by exercise of options (Rs

44,000/-

17,619,000/-

2,424,500/-

 

3,525,250/-

437, 750/-

3,500,000/-

 

Particulars

ESOP 2013 -Tranche 4

ESOP 2013 -Tranche 5

Loyalty

Grant A

Grant B

Loyalty

Grant A

Grant B

1

Date of shareholders approval

27.09.2013

27.09.2013

27.09.2013

27.09.2013

27.09.2013

27.09.2013

2

Number of options granted

8,150

390,400

728,300

1,150

248,200

342,900

3

Exercise price (?)

10/-

50/-

50/-

10/-

50/-

50/-

4

Source of shares

Primary

Primary

Primary

Primary

Primary

Primary

5

Vesting period

1 -2 years

1 -5 years

2-6 years

1 -2 years

1 -5 years

2-6 years

6

Vesting requirements

In a graded manner over a 2 year period with 50% vesting at the end of 12 months from the date of grant and the remaining 50% of the grants vesting at the end of 24 months from the date of grant

In a graded manner over a 5 year period with 10%,15%,20%, 25% and 30% of the grants vesting in each year commencing from the end of 12 months from the date of grant

In a graded manner over a 6 year period with 10%,15%,20%,25% and 30% of the grants vesting in each year commencing from the end of 24 months from the date of grant

In a graded manner over a 2 year period with 50% vesting at the end of 12 months from the date of grant and the remaining 50% of the grants vesting at the end of 24 months from the date of grant

In a graded manner over a 5 year period with 10%,15%,20%,25% and 30% of the grants vesting in each year commencing from the end of 12 months from the date of grant

In a graded manner over a 6 year period with )10%, 15%, 20%, 25% and 30% of the grants vesting in each year commencing from the end of 24 months from the date of grant

7

Options outstanding at the beginning of the year

4,087

254,220

330,300

1,150.00

226,100.00

231,000.00

8

Options granted during the year

-

-

-

-

 

 

9

Options exercised during the year

2,512

32,890

11,180

375

18,590

 

10

Number of shares arising as a result of exercise of option

2,512

32,890

11,180

375

18,590

 

11

Options vested during the year

3,262

41,145

33,030

575

22,610

-

12

Forfeited/Lapsed during the year

200

32,085

145,890

-

8,610

64,900

13

Options outstanding at the end of the year

1,375

189,245

173,230

775

198,900

166,100

14

Options exercisable

1,375

9,620

7,990

200

3,510

-

15

Money realised by exercise of options (?)

25,120/-

1 ,644,500/-

559,000.00

3,750.00

929,500.00

-

Annexure- 2

Other details are as under :-

16

Directors and Employees to whom options were granted during the year :-

 

 

 

 

i) Director(s) including Managing Director and Senior Managerial personnel

Nil

 

 

 

ii) Other employee who receives a grant in any one year of option amounting to 5% or more of option granted during the year

None

 

 

 

iii) Identified employees who were granted option during the year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant

None

 

 

17

Variations of terms of Options

Nil

 

 

18

Diluted Earnings Per Share (EPS)

Rs.49.18/- per Share

 

 

19

i) Method of calculation of employee compensation cost

Fair value method

 

 

 

ii) Difference between the employee compensation and cost so computed at i) above and the employee compensation cost that shall have been recognised if it had used the fair value of the options

Not Applicable

 

 

 

iii) The impact of this difference on profits and on EPS of the company

Not Applicable

 

 

20

Weighted Average exercise price of options whose:-

Loyalty

Grant A

Grant B

 

i) Exercise price either equals market price (?) or

Nil

Nil

Nil

 

ii) Exercise price greater than market price (?) or

Nil

Nil

Nil

 

iii) Exercise price less than market price (?)

10/-

50/-

50/-

21

Weighted Average fair price of options whose:-

Loyalty

Grant A

Grant B

 

i) Exercise price either equals market price (?) or

Nil

Nil

Nil

 

ii) Exercise price greater than market price (?) or

Nil

Nil

Nil

 

iii) Exercise price less than market price (?)

 

 

 

 

Tranche 1

100.33/-

70.95/-

71.20/-

 

Tranche 2

164.23/-

128.48/-

126.92/-

 

Tranche 3

NA

159.37/-

NA

 

Tranche 4

259.93/-

220.05/-

217.46/-

 

Tranche 5

449.68/-

409.38/-

406.32/-

Impact of fair value method on net profit and on EPS :-

Particulars

As at 31.03.2019

Net Profit as reported (Rs. In lacs)

197,285.88

Proforma Net Profit based on fair value approach (Rs. In lacs)

197,285.88

Basic EPS as reported (?)

49.27/- per Share

Basic EPS ( Proforma) (Rs)

49.27/- per Share

Diluted EPS as reported (?)

49.18/-per Share

Diluted EPS ( Proforma) (Rs.)

49.18/- per Share

In computing the above information, certain estimates and assumptions have been made by the management which has been relied upon by the auditors.

22 Description of the method and significant assumptions used to estimate fair value: -

The Securities Exchange Board of India (SEB1) has prescribed two methods to account for employee stock options; (1)the intrinsic value method; (2) the fair value method. The company adopts the fair value method to account for the stock options it grants to the employees. Intrinsic value is the amount, by which the quoted closing market price of the underlying shares as on the date of grant exceeds the exercise price of the option. The fair value of the option is estimated on the date of grant using Black Scholes options pricing model with following assumptions:-

 

Year ended 31-03-2019

Particulars

ESOP 2013- Tranche 1

ESOP 2013 -Tranche 2

ESOP 2013-Tranche 3

 

Loyalty option

Grant A

Grant B

Loyalty option

Grant A

Grant B

Grant A

i) Exercise Price per share (?)

10/-

50/-

50/-

10/-

50/-

50/-

50/-

ii) Vesting Period (Years)

1-2

1-5

2-6

1-2

1-5

2-6

1-5

iii) Price of Share in market at the time of Grant of options (?)

117.30/-

117.30/-

117.30/-

184.30/-

184.30/-

184.30/-

219.05

iv) Weighted Average fair price of options (?)

100.33/-

70.95/-

71.20/-

164.23/-

128.48/-

126.92/-

159.37/-

v) Expected Volatility (%)

57.68

57.68

57.68

53.96

53.96

53.96

34.5

vi) Expected Life of the options granted ( years )

1.5-2.5

1.5-5.5

2.5-6.5

1.5-2.5

1.5-5.5

2.5-6.5

1.5-5.5

vii) Weighted Average Contractual Life of the options granted ( years )

2

4

5

2

4

5

4

viii) Average Risk Eree Interest rate (% p.a )

8.4-8.45

8.4-8.8

8.4-8.95

8.32-8.35

8.26-8.35

8.24-8.32

7.45-7.60

ix) Expected Dividend Yield (%)

3.84

3.84

3.84

3.26

3.26

3.26

2.74

 

 

 

 

Year ended 31-03-2019

Particulars

 

ESOP 2013 -Tranche 4

ESOP 2013

- Tranche 5

 

 

Loyalty option

Grant A

Grant B

Loyalty option

Grant A

Grant B

i) Exercise Price per share (?)

 

10/-

50/-

50/-

10/-

50/-

50/-

ii) Vesting Period (Years)

 

1-2

1-5

2-6

1-2

1-5

2-6

iii) Price of Share in market at the time of Grant of options (?)

 

280.35/-

280.35/-

280.35/-

473/-

473/-

473/-

iv) Weighted Average fair price of options (?)

 

259.93/-

220.05/-

217.46/-

449.68/-

409.38/-

406.32/-

v) Expected Volatility (%)

 

36.98

36.98

36.98

40.24

40.24

40.24

vi) Expected Life of the options granted ( years )

 

1.5-2.5

1.5-5.5

2.5-6.5

1.5-2.5

1.5-5.5

2.5-6.5

vii) Weighted Average Contractual Life of the options granted (years)

 

2

4

5

2

5

6

viii) Average Risk Eree Interest rate (% p.a )

 

6.91-7.08

6.91-7.41

7.08-7.47

6.16-6.27

6.16-6.59

6.27-6.67

ix) Expected Dividend Yield (%)

 

2.14

2.14

2.14

1.27

1.27

1.27

Annexure- 3

FORM NO. MGT 9

Pursuant to Section 92 (3) of the Companies Act, 2013 and Rule 12(1) of the Company (Management and Administration ) Rules, 2014.

Extract of Annual Return as on the Financial Year ended on 31st March, 2019

1

Registration and other Details:

 

i

C1N :

L65910KL1997PLC011300

ii

Registration Date :

14/03/1997

iii

Name of the Company :

MUTHOOT FINANCE LIMITED

iv

Category/ Sub-Category of the Company :

Company Limited by Shares/ Non-govt company

V

Address of the Registered office & contact details

 

 

Address :

2nd Floor, Muthoot Chambers, Opposite Saritha Theatre Complex, Banerji Road

 

Town / City :

Ernakulam -682018

 

State :

Kerala

 

Country Name :

India

 

Telephone (with STD Code) :

0484-2394712

 

Fax Number :

0484 2396506

 

Email Address :

[email protected]

 

Website, if any:

www.muthootfinance.com

vi

Whether listed company:

Yes

vii

Name and Address of Registrar & Transfer Agents ( RTA ):-

 

 

Name of RTA:

LINK INTIME INDIA PRIVATE LIMITED

 

Address :

Surya 35, Mayflower Avenue, Behind Senthil Nagar, Sowripalayam Road

 

Town /City :

Coimbatore

 

State :

Tamil Nadu

 

Pin Code:

641028

 

Telephone :

0422 2314792

 

Fax Number :

0422 2314792

 

Email Address :

[email protected]

11. Principal Business Activity of the Company

All the business activities contributing 10 % or more of the total turnover of the company shall be stated :-

SI.No.

Name and Description of main products / services

NIC Code of the Product / service

% to total turnover of the company

1

Loan (Financing) against collateral of Gold Jewellery

64-649

97.32%

111. Particulars of Holding, Subsidiary and Associate Companies -

No. of Companies for which information is being filled 7

SI.No.

NAME AND ADDRESS OF THE COMPANY

C1N/GLN

Holding/ Subsidiary / Associate

% of shares held

Applicable Section

1

ASIA ASSET FINANCE PLC No.76/1, Dharmapala Mawatha, Colombo 03, Sri Lanka

NA

FOREIGN SUBSIDIARY

69.1 7%

Section 2(87)

2

MUTHOOT HOMEF1N (INDIA) LIMITED, Muthoot Chambers, Kurians Tower, Banerji Road, Ernakulam, Kerala -682018, India

U65922KL2011PLC029231

SUBSIDIARY

100%

Section 2(87)

3

MUTHOOT INSURANCE BROKERS PRIVATE LIMITED, 3rd Floor, Muthoot Chambers, Kurians Tower, Banerji Road, Ernakulam, Kerala - 682018, India

U67200KL2002PTC015200

SUBSIDIARY

100%

Section 2(87)

4

MUTHOOT MONEY LIMITED, 41 4108 A 18 OPP Saritha Theatre Banerji Road, Ernakulam Kerala- 682018, India

U65910KL1994PTC008454

SUBSIDIARY

100%

Section 2(87)

5

MUTHOOT TRUSTEE PRIVATE LIMITED 206, 2ND FLOOR, SABAR1 SAMR1DDH1, MA1TR1 PARK, ST. BUS STAND, S T ROAD, CHEMBUR, MUMBA1, Mumbai City MH 400071 India

U67100MH2019PTC320254

SUBSIDIARY

100%

Section 2(87)

6

MUTHOOT ASSET MANAGEMENT PRIVATE LIMITED 206, 2ND FLOOR, SABAR1 SAMR1DDH1, MA1TR1 PARK, ST. BUS STAND, S T ROAD, CHEMBUR, MUMBAI, Mumbai City MH 400071 India.

U65990MH2019PTC319547

SUBSIDIARY

100%

Section 2(87)

7

BELSTAR INVESTMENT AND FINANCE PRIVATE LIMITED, New No. 33, Old No. 14, 48th Street, 9th Avenue, Ashok Nagar, Chennai, Tamil Nadu - 600083, India

U06599TN1988PTC081652

SUBSIDIARY

70.01%

Section 2(87)

IV. Share Holding Pattern (Equity Share Capital Breakup as percentage of Total Equity)

i. Category-wise Share Holding

Category of Shareholders

No. of Shares held at the beginning of the year

No. of Shares held at the end of the year

% Change during the year

Demat

Physical

Total

% of Total Shares

Denial

Physical

Total

% of Tolal Shares

A. Promoters

(1) Indian

 

 

 

 

 

 

 

 

 

a) Individual/ HUF

294463872

0

294463872

73.608%

294463872

0

294463872

73.494%

-0.114%

b) Central Govt

0

0

0

0.000%

0

0

0

0.000%

0.000%

c) State Govt(s)

0

0

0

0.000%

0

0

0

0.000%

0.000%

d) Bodies Corp.

0

0

0

0.000%

0

0

0

0.000%

0.000%

e) Banks / Fl

0

0

0

0.000%

0

0

0

0.000%

0.000%

f) Any other

0

0

0

0.000%

0

0

0

0.000%

0.000%

Sub Total (A)(1)

294463872

0

294463872

73.608%

294463872

0

294463872

73.494%

-0.114%

(2) Foreign

 

 

 

 

 

 

 

 

 

a) NRl - Individual

0

0

0

0.000%

0

0

0

0.000%

0.000%

b) Other - Individual

0

0

0

0.000%

0

0

0

0.000%

0.000%

c) Bodies Corp.

0

0

0

0.000%

0

0

0

0.000%

0.000%

d) Banks / Fl

0

0

0

0.000%

0

0

0

0.000%

0.000%

e) Any Others

0

0

0

0.000%

0

0

0

0.000%

0.000%

Sub Total (A)(2)

0

0

0

0.000%

0

0

0

0.000%

0.000%

Total shareholding of Promoter (A) = (A) (1) + (A) (2)

294463872

0

294463872

73.608%

294463872

0.00

294463872

73.494%

-0.114%

Annexure- 3

Category of Shareholders

No. of Shares held at the beginning of the year

No. of Shares held at the end of the year

% Change during the year

Demat

Physical

Total

% of Total Shares

Demat

Physical

Total

% of Total Shares

B. Public Shareholding

 

 

 

 

 

 

 

 

 

1. Institutions

 

 

 

 

 

 

 

 

 

a) Mutual Funds

41549925

0

41549925

10.386%

37473648

0

37473648

9.353%

-1.033%

b) Banks / Fl

35206

0

35206

0.009%

61169

0

61169

0.015%

0.006%

c) Centra] Govt

400546

0

400546

0.100%

0

0

0

0.000%

-0.100%

d) State Govt(s)

0

0

0

0.000%

0

0

0

0.000%

0.000%

e) Venture Capita] Funds

0

0

0

0.000%

0

0

0

0.000%

0.000%

f) Insurance Companies

0

0

0

0.000%

0

0

0

0.000%

0.000%

g) Foreign institutional Investors/ Foreign Portfolio Investor/ Foreign Companies

44395155

0

44395155

11.098%

49496330

0

49496330

12.354%

1.256%

h) Foreign Venture Capital Funds

0

0

0

0.000%

0

0

0

0.000%

0.000%

i) Others (specify)

0

0

0

0.000%

0

0

0

0.000%

0.000%

i) Alternate Investment Funds

1661809

0

1661809

0.415%

1825339

0

1825339

0.456%

0.041%

Sub-total (B)(1)

88042641

0

88042641

22.008%

88856486

0

88856486

22.178%

0.170%

2. Non-Institutions

 

 

 

 

 

 

 

 

 

a) Bodies Corp.

 

 

 

 

 

 

 

 

 

i) Indian

2900759

0

2900759

0.725%

2776719

0

2776719

0.693%

-0.032%

ii) Overseas

0

0

0

0.000%

0

0

0

0.000%

0.000%

b) Individuals

 

 

 

 

 

 

 

 

 

i) Individual shareholders holding nominal share capital upto Rs. 1 lakh

8183412

142

8183554

2.046%

7366530

142

7366672

1.839%

-0.207%

ii) Individual shareholders holding nominal share capital in excess of Rs. 1 lakh

4944584

0

4944584

1.236%

5449784

0

5449784

1.360%

0.124%

c) Others (specify)

 

 

 

 

 

 

 

 

 

i) Trusts

27555

0

27555

0.007%

25220

0

25220

0.006%

-0.001%

iii) Non Resident Indians (Non Repat)

253733

0

253733

0.063%

281741

0

281741

0.070%

0.007%

iv) Non Resident Indians (Repat)

379209

0

379209

0.095%

330839

0

330839

0.083%

-0.012%

v) Clearing Member

513116

0

513116

0.128%

898764

0

898764

0.224%

0.096%

vi) Hindu Undivided Family

328174

0

328174

0.082%

207896

0

207896

0.052%

-0.030%

vii) Foreign Nationals

4042

0

4042

0.001%

3323

0

3323

0.001%

0.000%

viii) Foreign Portfolio Investor (Individual)

0

0

0

0.000%

0

0

0

0.000%

0.000%

ix) Foreign Companies

0

0

0

0.000%

0

0

0

0.000%

0.000%

Sub-total (B)(2)

17534584

142

17534726

4.383%

17340816

142

17340958

4.328%

-0.055%

Total Public Shareholding

(B)=(B)(1) + (B)(2)

105577225

142

105577367

26.391%

106197302

142

106197444

26.506%

0.115%

 

 

 

 

 

 

 

 

 

 

C. Shares held by Custodian for GDRs & ADRs

0

0

0

0.000%

0.00

0

0

0.000%

0.000%

Grand Total (A+B+C)

400041097

142

400041239

100%

400661174

142

400661316

100%

-

ii Shareholding of Promoters

 

 

Shareholding at the beginning of the year 01.04.2018

Share holding at the end of the year 31.03.2019

% change in share holding during the year

SINo.

Shareholder's Name

No. of Shares

% of total Shares of the company

% of Shares Pledged / encumbered to total shares

No. of Shares

% of total Shares of the company

% of Shares Pledged / encumbered to total shares

1

M G George Muthoot

46551632

11.637%

0.000%

46551632

11.619%

0

-0.018%

2

George Alexander Muthoot

43630900

10.907%

0.000%

43630900

10.890%

0

-0.017%

3

George Jacob Muthoot

43630900

10.907%

0.000%

43630900

10.890%

0

-0.017%

4

George Thomas Muthoot

43630900

10.907%

0.000%

43630900

10.890%

0

-0.017%

 

TOTAL

177444332

44.358%

0.000%

177444332

44.289%

0

-0.069%

iii Change in Promoters' Shareholding

There are no changes in the Promoters' shareholding during the Financial Year 2018-19. The percentage change in the Promoters holding as on 31/03/2019 is due to increase in the paid up share capital of the Company.

iv Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs):

 

Shareholding at the beginning of the year

 

Increase/ Decrease in shareholding

 

Cumulative Shareholding during of the year

Sl. No. Shareholder's Name

No. of shares at beginning of year

% of total shares of the company at beginning of year

Date

Reason

No. of shares

% of total shares of the company

1 RELIANCE CAPITAL TRUSTEE COMPANY LIMITED A/C RELIANCE GROWTH FUND

11950677

2.9827

01 Apr 2018

 

 

11950677

2.9827

 

 

06 Apr 2018

(12)

 

11950665

2.9827

 

 

20 Apr 2018

(8)

 

11950657

2.9827

 

 

 

27 Apr 2018

9000

 

11959657

2.9850

 

 

 

04 May 2018

(9000)

 

11950657

2.9827

 

 

 

11 May 2018

139457

 

12090114

3.0175

 

 

 

18 May 2018

55730

 

12145844

3.0314

 

 

 

25 May 2018

32025

 

12177869

3.0394

 

 

 

01 Jun 2018

63338

 

12241207

3.0553

 

 

 

08 Jun 2018

265571

 

12506778

3.1215

 

 

 

15 Jun 2018

765025

 

13271803

3.3125

 

 

 

22 Jun 2018

(98100)

 

13173703

3.2880

 

 

 

30 Jun 2018

(350723)

 

12822980

3.2005

 

 

 

06 Jul 2018

(29252)

 

12793728

3.1932

 

 

 

13 Jul 2018

14485

 

12808213

3.1968

 

 

 

20 Jul 2018

6820

 

12815033

3.1985

 

 

 

27 Jul 2018

17300

 

12832333

3.2028

 

 

 

03 Aug 2018

3930

 

12836263

3.2038

 

 

 

10 Aug 2018

4754

 

12841017

3.2050

 

 

 

17 Aug 2018

12600

 

12853617

3.2081

 

 

 

31 Aug 2018

(10244)

 

12843373

3.2055

 

 

 

07 Sep 2018

(380200)

 

12463173

3.1107

 

 

 

14 Sep 2018

(405093)

 

12058080

3.0095

 

 

 

21 Sep 2018

(460)

 

12057620

3.0094

 

 

 

29 Sep 2018

(1)

 

12057619

3.0094

 

 

 

05 Oct 2018

239404

 

12297023

3.0692

 

 

 

12 Oct 2018

150293

 

12447316

3.1067

 

 

 

26 Oct 2018

222700

 

12670016

3.1623

 

 

 

02 Nov 2018

1

 

12670017

3.1623

 

 

 

09 Nov 2018

(100000)

 

12570017

3.1373

 

 

 

16 Nov 2018

(23200)

 

12546817

3.1315

 

 

 

23 Nov 2018

(100000)

 

12446817

3.1066

 

 

 

30 Nov 2018

(109839)

 

12336978

3.0792

 

 

 

14 Dec 2018

(1376500)

 

10960478

2.7356

Annexure- 3

 

 

Shareholding at the beginning of the year

 

Increase/ Decrease in shareholding

 

Cumulative Shareholding during of the year

SI. No.

Shareholder's Name

No. of shares at beginning of year

% of total shares of the company at beginning of year

Date

Reason

No. of shares

% of total shares of the company

 

 

 

 

21 Dec 2018

(1550000)

 

9410478

2.3487

 

 

 

 

28 Dec 2018

(331465)

 

9079013

2.2660

 

 

 

 

31 Dec 2018

(200000)

 

8879013

2.2161

 

 

 

 

04 Ian 2019

(126000)

 

8753013

2.1846

 

 

 

 

11 Ian 2019

(983000)

 

7770013

1.9393

 

 

 

 

18 Ian 2019

(7500)

 

7762513

1.9374

 

 

 

 

25 Ian 2019

(188000)

 

7574513

1.8905

 

 

 

 

01 Feb 2019

(718364)

 

6856149

1.7112

 

 

 

 

08 Feb 2019

750716

 

7606865

1.8986

 

 

 

 

15 Feb 2019

(296717)

 

7310148

1.8245

 

 

 

 

01 Mar 2019

(418362)

 

6891786

1.7201

 

 

 

 

08 Mar 2019

4944

 

6896730

1.7213

 

 

 

 

15 Mar 2019

(274063)

 

6622667

1.6529

 

 

 

 

22 Mar 2019

(199750)

 

6422917

1.6031

 

 

 

 

29 Mar 2019

(224102)

 

6198815

1.5471

 

 

 

 

 

 

 

12282189

3.0702

 

 

 

 

 

 

 

11950689

2.9874

 

 

 

 

 

 

 

11950677

2.9874

 

Shareholding at the end of the year

 

 

31 Mar 2019

 

 

11950677

2.9874

2

ICICI PRUDENTIAL BALANCED ADVANTAGE FUND

7372977

1.8402

01 Apr 2018

 

 

7372977

1.8402

 

 

 

11 May 2018

176

 

7373153

1.8402

 

 

 

25 May 2018

253811

 

7626964

1.9036

 

 

 

08 Iun 2018

23287

 

7650251

1.9094

 

 

 

15 Iun 2018

898692

 

8548943

2.1337

 

 

 

 

22 Jun 2018

445558

 

8994501

2.2449

 

 

 

 

30 Jun 2018

477158

 

9471659

2.3640

 

 

 

 

06 Jul 2018

26156

 

9497815

2.3705

 

 

 

 

13 Jul 2018

(127357)

 

9370458

2.3387

 

 

 

 

20 Jul 2018

60000

 

9430458

2.3537

 

 

 

 

27 Jul 2018

117627

 

9548085

2.3831

 

 

 

 

03 Aug 2018

(835283)

 

8712802

2.1746

 

 

 

 

07 Sep 2018

(656396)

 

8056406

2.0108

 

 

 

 

21 Sep 2018

(308886)

 

7747520

1.9337

 

 

 

 

29 Sep 2018

(1)

 

7747519

1.9337

 

 

 

 

05 Oct 2018

(120419)

 

7627100

1.9036

 

 

 

 

12 Oct 2018

(1104205)

 

6522895

1.6280

 

 

 

 

19 Oct 2018

(268922)

 

6253973

1.5609

 

 

 

 

26 Oct 2018

(62590)

 

6191383

1.5453

 

 

 

 

02 Nov 2018

(52962)

Transfer

6138421

1.5321

 

 

 

 

23 Nov 2018

(3160)

 

6135261

1.5313

 

 

 

 

30 Nov 2018

(57000)

 

6078261

1.5171

 

 

 

 

14 Dec 2018

(147680)

 

5930581

1.4802

 

 

 

 

21 Dec 2018

(67124)

 

5863457

1.4634

 

 

 

 

31 Dec 2018

(254237)

 

5609220

1.4000

 

 

 

 

04 Ian 2019

(40254)

 

5568966

1.3899

 

 

 

 

11 Ian 2019

(69836)

 

5499130

1.3725

 

 

 

 

18 Ian 2019

(123319)

 

5375811

1.3417

 

 

 

 

25 Ian 2019

(215742)

 

5160069

1.2879

 

 

 

 

01 Feb 2019

(186289)

 

4973780

1.2414

 

 

 

 

08 Feb 2019

(52942)

 

4920838

1.2282

 

 

 

 

15 Feb 2019

(105663)

 

4815175

1.2018

 

 

 

 

01 Mar 2019

(88531)

 

4726644

1.1797

 

 

 

 

08 Mar 2019

(219324)

 

4507320

1.1250

 

 

 

 

15 Mar 2019

(524694)

 

3982626

0.9940

 

 

 

 

22 Mar 2019

(100241)

 

3882385

0.9690

 

 

 

 

29 Mar 2019

(996627)

 

2885758

0.7202

 

Shareholding at the end of the year

 

 

31 Mar 2019

 

 

2885758

0.7202

 

 

 

Shareholding at the beginning of the year

Increase/ Decrease in shareholding

 

Cumulative Shareholding during of the year

SI. No.

Shareholder's Name

No. of shares at beginning of year

% of total shares of the company at beginning of year

Date

Reason

No. of shares

% of total shares of the company

3

ADITYA BIRLA SUN LIFE TRUSTEE PRIVATE LIMITED A/C ADITYA BIRLA SUN LIFE FRONTLINE EQUITY FUND

6346274

1.5839

01 Apr 2018

 

 

6346274

1.5839

 

 

18 May 2018

(213000)

 

6133274

1.5308

 

 

25 May 2018

(363400)

 

5769874

1.4401

 

 

08 Jun 2018

45000

 

5814874

1.4513

 

 

06 Jul 2018

(12000)

 

5802874

1.4483

 

 

20 Jul 2018

(6000)

 

5796874

1.4468

 

 

07 Sep 2018

(989589)

 

4807285

1.1998

 

 

14 Sep 2018

(172000)

Transfer

4635285

1.1569

 

 

29 Sep 2018

(325000)

 

4310285

1.0758

 

 

05 Oct 2018

(90000)

 

4220285

1.0533

 

 

01 Mar 2019

(56000)

 

4164285

1.0394

 

 

08 Mar 2019

(74000)

 

4090285

1.0209

 

 

15 Mar 2019

(130000)

 

3960285

0.9884

 

 

22 Mar 2019

(181000)

 

3779285

0.9433

 

Shareholding at the end of the year

 

 

31 Mar 2019

 

 

3779285

0.9433

4

SBI EQUITY HYBRID FUND

5637048

1.4069

 

 

 

5637048

1.4069

 

 

06 Apr 2018

235980

 

5873028

1.4658

 

 

13 Apr 2018

22270

 

5895298

1.4714

 

 

27 Apr 2018

146516

 

6041814

1.5080

 

 

04 May 2018

26250

 

6068064

1.5145

 

 

25 May 2018

(66718)

 

6001346

1.4979

 

 

15 Iun 2018

876

 

6002222

1.4981

 

 

22 Iun 2018

1400

 

6003622

1.4984

 

 

30 Jun 2018

2436908

 

8440530

2.1066

 

 

06 Jul 2018

346300

 

8786830

2.1931

 

 

20 Jul 2018

1172348

 

9959178

2.4857

 

 

27 Jul 2018

151620

 

10110798

2.5235

 

 

03 Aug 2018

1223698

 

11334496

2.8289

 

 

07 Sep 2018

54000

 

11388496

2.8424

 

 

05 Oct 2018

(154500)

 

11233996

2.8039

 

 

12 Oct 2018

(411000)

 

10822996

2.7013

 

 

19 Oct 2018

(54000)

Transfer

10768996

2.6878

 

 

26 Oct 2018

(161431)

 

10607565

2.6475

 

 

02 Nov 2018

(412569)

 

10194996

2.5445

 

 

09 Nov 2018

(12000)

 

10182996

2.5415

 

 

16 Nov 2018

(102629)

 

10080367

2.5159

 

 

23 Nov 2018

(454847)

 

9625520

2.4024

 

 

30 Nov 2018

165966

 

9791486

2.4438

 

 

07 Dec 2018

64500

 

9855986

2.4599

 

 

21 Dec 2018

(70000)

 

9785986

2.4425

 

 

04 Jan 2019

56000

 

9841986

2.4564

 

 

11 Ian 2019

(6000)

 

9835986

2.4549

 

 

18 Ian 2019

(69000)

 

9766986

2.4377

 

 

25 Ian 2019

154000

 

9920986

2.4762

 

 

01 Feb 2019

6510

 

9927496

2.4778

 

 

08 Mar 2019

(700)

 

9926796

2.4776

 

 

29 Mar 2019

(332000)

 

9594796

2.3947

 

Shareholding at the end of the year

 

 

31 Mar 2019

 

 

9594796

2.3947

Annexure- 3

SI.

No. Shareholder's Name

Shareholding at the beginning of the year

 

Increase/ Decrease in shareholding

 

Cumulative Shareholding during of the year

No. of shares at beginning of year

% of total shares of the company at beginning of year

Date

Reason

No. of shares

% of total shares of the company

5

TATA MUTUAL FUND-TATA EQUITY P/E FUND

4311600

1.0761

01 Apr 2017

 

 

4311600

1.0761

 

 

06 Apr 2018

155000

 

4466600

1.1148

 

 

13 Apr 2018

35000

 

4501600

1.1235

 

 

27 Apr 2018

59500

 

4561100

1.1384

 

 

04 May 2018

(25000)

 

4536100

1.1322

 

 

11 May 2018

35000

 

4571100

1.1409

 

 

18 May 2018

96000

 

4667100

1.1648

 

 

01 Jun 2018

225000

 

4892100

1.2210

 

 

08 Jun 2018

(200000)

 

4692100

1.1711

 

 

22 Jun 2018

15000

 

4707100

1.1748

 

 

30 Jun 2018

100000

 

4807100

1.1998

 

 

03 Aug 2018

(25000)

 

4782100

1.1936

 

 

31 Aug 2018

(6500)

 

4775600

1.1919

 

 

07 Sep 2018

(15000)

 

4760600

1.1882

 

 

21 Sep 2018

170000

 

4930600

1.2306

 

 

05 Oct 2018

100000

 

5030600

1.2556

 

 

26 Oct 2018

(24000)

 

5006600

1.2496

 

 

02 Nov 2018

24000

 

5030600

1.2556

 

 

14 Dec 2018

200000

 

5230600

1.3055

 

 

21 Dec 2018

100000

 

5330600

1.3305

 

 

04 Jan 2019

(11500)

 

5319100

1.3276

 

 

18 Ian 2019

(55000)

 

5264100

1.3139

 

 

15 Feb 2019

100000

 

5364100

1.3388

 

 

22 Mar 2019

(101900)

 

5262200

1.3134

 

Shareholding at the end of the year

 

 

31 Mar 2019

 

 

5262200

1.3134

6

GOLDMAN SACHS INDIA LIMITED

4291130

1.0710

01 Apr 2018

 

 

4291130

1.0710

 

 

22 Jun 2018

(45772)

 

4245358

1.0596

 

 

30 Jun 2018

(2417622)

Transfer

1827736

0.4562

 

 

18 Ian 2019

(303409)

 

1524327

0.3805

 

Shareholding at the end of the year

 

 

31 Mar 2019

 

 

1524327

0.3805

7

ACACIA

INSTITUTIONAL PARTNERS, LP

3360000

0.8386

01 Apr 2018

 

 

3360000

0.8386

 

Shareholding at the end of the year

 

 

31 Mar 2019

 

 

3360000

0.8386

8

ACACIA PARTNERS, LP

2852000

0.7118

01 Apr 2018

 

 

2852000

0.7118

 

Shareholding at the end of the year

 

 

31 Mar 2019

 

 

2852000

0.7118

9

L AND T MUTUAL FUND TRUSTEE LTD-L AND T INDIA VALUE FUND

2778404

0.6935

01 Apr 2018

 

 

2778404

0.6935

 

 

04 May 2018

30826

 

2809230

0.7011

 

 

15 Jun 2018

(777500)

 

2031730

0.5071

 

 

27 Jul 2018

69000

 

2100730

0.5243

 

 

10 Aug 2018

45000

Transfer

2145730

0.5355

 

 

14 Sep 2018

(344830)

 

1800900

0.4495

 

 

29 Sep 2018

(114000)

 

1686900

0.4210

 

 

07 Dec 2018

(437400)

 

1249500

0.3119

 

Shareholding at the end of the year

 

 

31 Mar 2019

 

 

1249500

0.3119

10

ACACIA CONSERVATION FUND LP

2400000

0.5999

01 Apr 2018

 

 

2400000

0.5999

 

Shareholding at the end of the year

 

 

31 Mar 2019

 

 

2400000

0.5999

 

 

 

Shareholding at the beginning of the year

 

Increase/ Decrease in shareholding

 

Cumulative Shareholding during of the year

SI. No.

Shareholder's Name

No. of shares at beginning of year

% of total shares of the company at beginning of year

Date

Reason

No. of shares

% of total shares of the company

11

UTI -MID CAP FUND

1351713

0.3374

01 Apr 2018

 

 

1351713

0.3374

 

 

06 Apr 2018

135354

 

1487067

0.3712

 

 

13 Apr 2018

8547

 

1495614

0.3733

 

 

27 Apr 2018

11500

 

1507114

0.3762

 

 

25 May 2018

100000

 

1607114

0.4011

 

 

08 Jun 2018

225000

 

1832114

0.4573

 

 

15 Jun 2018

25000

 

1857114

0.4635

 

 

20 Jul 2018

(10000)

 

1847114

0.4610

 

 

27 Jul 2018

49500

 

1896614

0.4734

 

 

17 Aug 2018

5077

 

1901691

0.4746

 

 

24 Aug 2018

(171854)

 

1729837

0.4317

 

 

31 Aug 2018

(22500)

 

1707337

0.4261

 

 

07 Sep 2018

(47000)

 

1660337

0.4144

 

 

14 Sep 2018

79896

 

1740233

0.4343

 

 

29 Sep 2018

598500

Transfer

2338733

0.5837

 

 

05 Oct 2018

374605

 

2713338

0.6772

 

 

19 Oct 2018

14176

 

2727514

0.6808

 

 

26 Oct 2018

215683

 

2943197

0.7346

 

 

02 Nov 2018

7000

 

2950197

0.7363

 

 

16 Nov 2018

12073

 

2962270

0.7393

 

 

30 Nov 2018

186822

 

3149092

0.7860

 

 

14 Dec 2018

148498

 

3297590

0.8230

 

 

21 Dec 2018

(5000)

 

3292590

0.8218

 

 

28 Dec 2018

200000

 

3492590

0.8717

 

 

18 Ian 2019

(2500)

 

3490090

0.8711

 

 

01 Mar 2019

77500

 

3567590

0.8904

 

 

08 Mar 2019

77873

 

3645463

0.9099

 

 

15 Mar 2019

(30000)

 

3615463

0.9024

 

Shareholding at the end of the year

 

 

31 Mar 2019

 

 

3615463

0.9024

12

MIRAE ASSET EMERGING BLUECHIP FUND

0

0.0000

01 Apr 2018

 

 

0

0.0000

 

 

21 Dec 2018

649791

 

649791

0.1622

 

 

28 Dec 2018

710000

 

1359791

0.3394

 

 

04 Jan 2019

162054

 

1521845

0.3798

 

 

11 Ian 2019

250078

 

1771923

0.4422

 

 

18 Ian 2019

100000

Transfer

1871923

0.4672

 

 

25 Ian 2019

117405

1989328

0.4965

 

 

01 Feb 2019

65000

 

2054328

0.5127

 

 

08 Feb 2019

100000

 

2154328

0.5377

 

 

15 Feb 2019

270000

 

2424328

0.6051

 

 

01 Mar 2019

(185000)

 

2239328

0.5589

 

Shareholding at the end of the year

 

 

31 Mar 2019

 

 

2239328

0.5589

v Shareholding of Directors and Key Managerial Personnel:

 

 

Shareholding at the beginning of the year

Cumulative Shareholding during the year

Shareholding at the end of the year *

SI. No.

Name of director/Key Managerial Personnel (KMP)

No. of shares

% of total shares of the company

No. of shares

% of total shares of the Company

No. of shares

% of total shares of the Company

 

A. DIRECTORS

 

 

 

 

 

1

M G George Muthoot Chairman & Whole time Director

46551632

11.637%

-

-

46551632

11.619%

2

George Alexander Muthoot Managing Director

43630900

10.907%

-

-

43630900

10.890%

3

George Jacob Muthoot Whole Time Director

43630900

10.907%

-

 

43630900

10.890%

4

George Thomas Muthoot Whole Time Director

43630900

10.907%

-

 

43630900

10.890%

5

Alexander M George Whole Time Director

6772500

1.693%

-

-

6772500

1.690%

6

George Joseph Independent Director

1134

0.000%

 

 

1134

0.000%

7

John K Paul Independent Director

-

 

-

 

-

 

8

K George John Independent Director

-

-

-

-

-

-

9

Jose Mathew Independent Director

-

-

-

-

-

-

10

Pamela Anna Mathew Independent Director

-

 

-

 

-

 

11

Jacob Benjamin Koshy Independent Director

-

 

-

 

-

 

 

B. KEY MANAGERIAL PERSON

 

 

 

 

 

1

Oommen K Mammen Chief Financial Officer

18734

0.005%

 

 

 

 

 

Increase of 20000 shares by way of ESOP Allotment on 15/05/2018

-

 

38734

0.010%

 

 

 

Increase of 14281 shares by way of market purchase on 10/07/2018 to 12/07/2018

-

 

53015

0.013%

-

 

Increase of 2000 shares by way of market purchase on 13/07/2018

-

-

55015

0.014%

 

 

 

Increase of 2400 shares by way of ESOP Allotment 18/12/2018

-

-

57415

0.014%

57415

0.014%

2

Maxin James Company Secretary

-

 

-

 

-

 

 

Increase of 670 shares by way of ESOP Allotment on 19/09/2018

-

 

670

0.00%

-

 

 

Decrease of 400 shared by way of market sale on 27/09/2018

-

-

(450)

0.00%

-

-

 

Decrease of 270 shared by way of market sale on 09/10/2018

-

-

(270)

0.00%

-

-

*The percentage change in the Promoters holding as on 31/03/2019 is due to increase in the paid up share capital of the Company.

V Indebtedness

Indebtedness of the Company including interest outstanding/accrued but not due for payment

VI. Remuneration of Directors and key Managerial Personnel

A. Remuneration to Managing Director, Whole-time Directors and/or Manager:

in Millions)

 

Secured Loans excluding deposits

Unsecured Loans

Deposits

Total Indebtedness

Indebtedness at the beginning of the financial year

 

 

 

 

i) Principal Amount

164,106.33

47,882.87

 

211,989.20

ii) Interest due but not paid -

 

iii) Interest accrued but not due

4,073.04

7,941.13

-

12,014.17

Total (i+ii+iii)

168,179.37

55,824.00

-

224,003.37

Change in Indebtedness during the financial year

 

 

 

 

* Addition

47,864.15

6,068.10

-

53,932.25

* Reduction

-

 

-

-

Net Change

47,864.15

6,068.10

-

53,932.25

Indebtedness at the end of the financial year

 

 

 

 

i) Principal Amount

210,177.36

58,793.52

 

268,970.88

ii) Interest due but not paid

 

 

 

 

iii) Interest accrued but not due

5,866.16

3,098.58

 

8,964.74

Total (i+ii+iii)

216,043.52

61,892.10

-

277,935.62

 

 

 

 

 

 

 

 

(Rs. in Millions)

SI.

 

Name of MD/WTD/ Manager

 

no. Particulars of Remuneration

M G George Muthoot

George Alexander Muthoot

George Thomas Muthoot

George Jacob Muthoot

Alexander M George

Total Amount

1

Gross salary

 

 

 

 

 

 

 

(a) Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961

133.19

133.19

133.19

133.19

14.64

547.40

 

(b) Value of perquisites u/s 17(2) Income-tax Act, 1961

0.04

0.04

0.04

0.04

0.04

0.20

(c) Profits in lieu of salary under section 17(3) Income- tax Act, 1961

 

 

 

 

2

Stock Option

-

-

 

 

-

 

3

Sweat Equity

-

-

 

 

-

 

4

Commission

-

-

 

 

-

 

- as % of profit

-

 

-

-

- others, specify

-

 

-

-

5

Others, please specify

-

-

 

-

-

-

 

Total (A)

133.23

133.23

133.23

133.23

14.68

547.60

 

 

Ceiling as per the Act

Rs. 3076.82 millions being 10% of the Net Profit of the Company calculated as per Section 198 of the Companies Act, 2013.

B.

Remuneration to other directors:

 

 

 

 

 

(Rs in Millions)

Sl. No.

Particulars of Remuneration

Name of Directors

Total Amount

George Joseph

John K Paul

K George John

Pamela Anna Mathew

Jose Mathew

Jacob Benjamin Koshy

1

Independent Directors

 

 

 

 

 

 

 

 

Fee for attending board committee meetings

0.72

0.70

0.50

0.40

0.82

0.58

3.72

 

Commission

1.00

1.00

1.00

1.00

1.00

1.00

6.00

Others, please specify

-

-

-

-

-

 

Total (1)

1.72

1.70

1.50

1.40

1.82

1.58

9.72

2

Other Non-Executive Directors

 

 

 

 

 

Fee for attending board committee meetings

-

 

-

-

-

Commission

-

 

-

-

 

Others, please specify

-

 

-

-

 

Total (2)

-

 

-

-

 

 

Total (B)=(1+2)

1.72

1.70

1.50

1.40

1.82

1.58

9.72

 

Ceiling as per the Act

Rs. 307.68 millions being 1% of the Net Profit of the Company calculated as per Section 198 of the Companies Act, 2013

 

Total Managerial Remuneration

-

-

 

-

-

 

557.32

 

Overall Ceiling as per the Act

Rs. 3384.50 millions being 11% of the Net Profit of the Company calculated as per Section 198 of the Companies Act, 2013

C. Remuneration to Key Managerial Personnel Other than MD/Manager/WTD

 

 

 

(In millions)

SI.

 

Key Managerial Personnel

no.

 

CFO

Company Secretary

1

Gross salary

 

 

 

(a) Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961

7.83

3.49

 

(b) Value of perquisites u/s 17(2) Income-tax Act, 1961 *

-

-

 

(c) Profits in lieu of salary under section 17(3) Income-tax Act, 1961

-

-

2

Stock Option**

8.83

0.24

3

Sweat Equity

-

 

4

Commission

-

 

 

- as % of profit

 

 

 

- others, specify...

 

 

5

Others, please specify

 

 

 

Total

16.66

3.73

*Excludes the value of perquisite on exercise of stock options **Value of perquisite on exercise of stock options

Vll. Penalties / Punishment/ Compounding of Offences:

Type

Section of the Companies Act

Brief Description

Details of Penalty / Punishment/ Compounding fees imposed

Authority [RD/NCLT/ COURT]

Appeal made, if any (give Details)

A.

Company

 

 

 

 

 

 

Penalty

 

 

 

 

 

 

Punishment

 

 

 

 

 

 

Compounding

 

 

 

 

 

B.

Directors

 

 

 

 

 

 

Penalty

 

 

 

 

 

 

Punishment

 

 

NIL

 

 

 

Compounding

 

 

 

 

 

C.

Other Officers in Default

 

 

 

 

 

 

Penalty

 

 

 

 

 

 

Punishment

 

 

 

 

 

 

Compounding

 

 

 

 

 

 

For and on behalf of the Board of Directors

For and on behalf of the Board of Directors

M G George Muthoot

George Alexander Muthoot

Chairman

Managing Director

(DIN: 00018201)

(D1N:00016787)

Kochi,

 

12th August, 2019

 

Annexure- 4

Annual Report on Corporate Social Responsibility (CSR) Activities

[Pursuant to clause (o) of sub-section (3) of section 134 of the Act and Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014]

1. CSR vision and policy of the Company is aimed to create a nationwide social impact by constantly giving back to the community by identifying and facilitating growth in areas which are less privileged. The Company has focused on women empowerment, health awareness, improving the quality of life and education initiatives and is in process of expanding its CSR activities at pan India Level.

Company have undertaken CSR activities through Muthoot M George Foundation, a charity foundation for CSR activities of the Company and through Muthoot M George Charitable Trust, Delhi. During the year the Company was mostly focused on disaster management, flood relief assistance to flood affected areas of Kerala, Educational support to under privileged and medical support given for healthcare like expenditure for treatments like cancer, dialysis, surgeries through a project called 'Snehasraya'.

The Company's CSR policy is committed towards CSR activities as envisaged in Schedule Vll of the Companies Act, 2013. The Details of CSR policy of the Company are available on the website of the Company at www.muthootfinance.com/policy/policy-investor

2. The CSR Committee was constituted by our Directors by a board resolution dated August 11, 2014 and further re-constituted as CSR and Business Responsibility Committee on April 05, 2019 and comprises of:

Name of the Director

Designation in the Committee

Nature of Directorship

Jose Mathew

Chairman

Independent Director

John K Paul

Member

Independent Director

George Alexander Muthoot

Member

Managing Director

3. Average net profit of the company for last three financial years: Rs. 20,274.70 millions

4. Prescribed CSR Expenditure: Rs. 405.49 millions

5. Details of CSR spent during the financial year.

(a) Total amount spent for the financial year: Rs. 282.92 millions

(b) Amount unspent, if any: Rs. 122.57 millions

(c) Manner in which the amount spent during the financial year is detailed below.

SI. No

CSR project or activity identified

Sector in which the project is covered

Projects or programs.

Amount outlay (budget) project or programs wise

Amount spent on the projects or programs

Cumulative expenditure up to the reporting period (Rs.)

Amount spent: Direct or through implementation agency

 

 

Local area or other

Specify the State and district where projects or programs was undertaken

Direct expenditure on projects or programs (Rs.)

overheads

1

Muthoot M George Excellence Award

(1000 schools in Kerala, Andhra Pradesh, Telengana, Karnataka states were covered under this program. Toppers of these schools are given cash award and a certificate signed by Government School authorities and Chairman Muthoot M. George Foundation. Majority of these children are coming from low income group or lower middle class families. This program is implemented with a clear vision to make progress in forming an equitable and sustainable society by uplifting the younger generation)

Promotion of Education

Local Area & Others

Kerala, Andhra Pradesh, Telengana, Karnataka

40,00,000

27,60,108

 

27,60,108

Muthoot M George Foundation, Implementation agency for CSR activities

2

Muthoot Higher Education Scholarship

(Muthoot Higher Education Scholarship is for supporting the students who are perusing their professional studies like MBBS, Engineering, Nursing, B Com, etc. Our support will continue till the completion of their courses which is normally for 3-4 years.

Promotion of Education

Kerala

Kerala

25,00,000

6,96,81,000

 

6,96,81,000

Muthoot M George Foundation, Implementation agency for CSR activities

3

Other Educational Assistance (Conducting motivational & personality development activities for economically deprived students of govt and aided schools)

Promotion of Education

All India

All India

6,00,000

45,27,800

 

45,27,800

Muthoot M George Foundation, & Muthoot M George Charitable Trust, Delhi Implementation agencies for CSR activities

4

YMCA Mumbai

(promotion of education and academic activities of students from schools and colleges of Mumbai

Promotion of Education

Others

Mumbai

15,00,000

500,000

 

500,000

Muthoot M George Foundation, Implementation agency for CSR activities

5

Muthoot Vivaha Sahayam project (The project is to assist widowed mothers to get their daughters married, their by assuring the families a secured life. For this purpose we render financial assistance depending on the requirement of these deprived families).

Improving quality of life

Kerala

Kerala

65,00,000

71,72,000

 

71,72,000

Muthoot M George Foundation, & Muthoot M George Charitable Trust, Delhi Implementation agencies for CSR activities

6

Skill Development programmes

Improving quality of life

All India

All India

50,00,000

20,00,000

 

20,00,000

Muthoot M George Foundation, & Muthoot M George Charitable Trust, Delhi Implementation agencies for CSR activities

7

Snehasraya & Anbin Nizhal (Muthoot Snehasraya' is a Mobile Laboratory intended for Prevention and early detection of Kidney related diseases, diabetes and Hyper tension ailments. The mobile ambulance is being operated across Tamil Nadu & Kerala and facilitates blood & urine tests and create awareness among people about the dreaded disease. Exclusive camps are held at various centres in Kerala & Tamil Nadu, where the blood sample of participants will be collected and tested for possible kidney related diseases. The camps are being organised with the help of local agencies, clubs, etc. The project in Kerala up to March 2019 have conducted 1400 camps touching the lives of 164114 people. The project in Tamil Nadu up to March 2018 have conducted 1173 camps touching the lives of 115162 people)

Improving Quality of life

Local area & Others

Kerala & Tamil Nadu

25,00,000

21,66,272

 

21,66,272

Muthoot M George Foundation, Implementation agency for CSR activities

8

Medical Assistance

(To needy and financially weak applicants. Cases processed through the applications received in MMGF & MMGCT through branches for Heart ailments, Liver ailments, Cancer ailments, chemotherapy, Kidney Transplantation, Renal, medicines)

Poverty Alleviation

All India

All India

11,35,00,000

14,56,05,434

 

14,56,05,434

Muthoot M George Foundation, & Muthoot M George Charitable Trust, Delhi Implementation agencies for CSR activities

9

Muthoot Snehasammanam Project (a

project introduced for supporting artists, who are struggling to take their life forward. The recipients of this support scheme are all artists and performers who have contributed immensely in their respective art forms)

Promotion of Traditional Arts & Crafts

Kerala

Kerala

11,25,011

14,48,000

 

14,48,000

Muthoot M George Foundation, Implementation agency for CSR activities

10

Chief Minister's Relief fund

 

Kerala

Kerala

150,00,000

150,00,000

 

150,00,000

Muthoot M George Foundation, Implementation agency for CSR activities

11

Muthoot Aashiyana house construction project

Disaster Management

Kerala

Kerala

10,00,000

1,39,48,852

 

1,39,48,852

Muthoot M George Foundation, & Muthoot M George Charitable Trust, Delhi Implementation agencies for CSR activities

12

Flood relief assistance

 

Kerala

Kerala

10,00,000

30,86,631

 

30,86,631

Muthoot M George Foundation, & Muthoot M George Charitable Trust, Delhi Implementation agencies for CSR activities

13

Stainless steel water bottle distibution (5000 stainless steel water bottles were distributed to the students of govt/aided schools)

Environmental protection

All India

All India

20,00,000

8,45,600

 

8,45,600

Muthoot M George Foundation, Implementation agency for CSR activities

14

Support given to old age homes, orphanages, etc

Poverty Alleviation

All India

All India

600,000

38,99,000

 

38,99,000

Muthoot M George Charitable Trust, Delhi Implementation agency for CSR activities

15

Others (support given to NGOs, & institution who take care of physically and mentally challenged special individuals)

Improving Quality of life

All India

All India

30,00,000

1,02,83,049

 

1,02,83,049

Muthoot M George Foundation, & Muthoot M George Charitable Trust, Delhi Implementation agencies for CSR activities

Total

 

25,88,25,011

28,29,23,746

 

28,29,23,746

 

 

 

 

 

 

 

6. The Company has spent Rs. 282.92 millions in promoting education, improving quality of life, management, flood relief assistance to flood affected areas of Kerala, medical aid and others. Amount spent in the previous year on CSR activities was Rs. 197.28 millions. There is a considerable increase in CSR expenditure in comparison to the previous year. However, the amount spent is short of amount required to be spend under Section 135 of Companies Act, 2013, as the Company was unable to identify suitable projects within its CSR Policy and in few instances Company was not able to fully utilise the budgeted amount due to specified standard of eligibility criteria, etc. Hence your Company was not able to spend entire Rs. 405.49 millions. Your Company is focused on creating sustainable and long term CSR model and hence your Company will be able to spend more amount for CSR expenditure in future.

7. CSR Committee of Board affirms that CSR activities are implemented in accordance with CSR objectives of Companies Act, 2013 and CSR Policy of your Company.

Date: August 12, 2019

George Alexander Muthoot

Jose Mathew

Place: Kochi

Managing Director

Chairman - CSR Committee

Annexure- 5

BUSINESS RESPONSIBILITY REPORT

Business Responsibility Report for the year ended on March 31, 2019 Muthoot Finance Ltd has embraced The Muthoot Group's core value of building ethical, inclusive, sutainable business by creating wealth for its stakeholders especially our customers and investors; improving lives of communities especially by way of extending loan to less privileged or not covered by formal banking system and by caring for society. Company has offered better line of financial products and services, practiced and established effective risk management capabilities, created improved system to check and control bad debts and non performing assets with better understanding of its customer segments especially segments neglected by banks, most importantly by accessible and affordable financial services which is not only complimenting the banking sector but many times substituting it. The Company has created a value based system and a responsible business with respect to all of its stakeholders and most important among them are customers and investors which placed their faith in responsible and financially inclusive business. Comany has continued its sustainable business model by sticking to its core values even in tough times and we endevour to continue our business in same spirit.

 

SECTION A: GENERAL INFORMATION ABOUT THE COMPANY

1

Corporate Identity Number (C1N) of the Company

L65910KL1997PLC011300

2

Name of the Company

Muthoot Finance Limited

3

Registered address

Muthoot Chambers, Opposite Saritha Theatre Complex, 2nd Floor, Banerji Road, Kochi 682018, India

4

Website

www.muthootfinance.com

5

E-mail id

[email protected]

6

Financial Year reported

2018-19

7

Sector(s) that the Company is engaged in (industrial activity code-wise)

NIC Code: 64-649

 

 

 

 

8

List three key products/services that the Company manufactures/ provides (as on March 31 , 2019)

Please refer section titled "Multiple Offerings" of Corporate Overview Page of this Annual Report

9

Total number of locations where business activity is undertaken by the Company (as on March 31 , 2019)

 

 

(a) Number of International Locations (Provide details of major 5)

Nil

 

(b) Number of National Locations (as on March 31, 2019)

4480 branches in 24 States and 5 Union Territories

10

Markets served by the Company - Local/State/ National/International

National

 

 

 

SECTION B: FINANCIAL DETAILS OF THE COMPANY

1

Paid up Capital (1NR in millions)

4006

2

Total Turnover (1NR in millions)

68,806 (Total Revenue)

3

Total profit after taxes (1NR in millions)

19,721

4

Total Spending on Corporate Social Responsibility (CSR) as percentage of profit after tax (%) (Standalone)

Rs. 282.92 millions representing 1.43% of standalone Profit After Tax.

5

List of activities in which expenditure in 4 above has been incurred:-

Promoting Education, Medical Aid and others. ( For more detail please refer to CSR Activities attached as part of Report of Board of Directors)

 

 

 

 

SECT1ON C: OTHER DETAILS

1

Does the Company have any Subsidiary Company/ Companies?

Yes

2

Do the Subsidiary Company/Companies participate in the BR Initiatives of the parent company? If yes, then indicate the number of such subsidiary company(s)

No

3

Do any other entity/entities (e.g. suppliers, distributors etc.) that the Company does business with, participate in the BR initiatives of the Company? If yes, then indicate the percentage of such entity/entities? [Less than 30%, 30-60%, More than 60%]

No

 

SECTION D: BR INFORMATION

1

Details of Director/Directors responsible for BR

DIN - 00016787

 

(a) Details of the Director/Directors responsible for implementation of the BR policy/policies

George Alexander Muthoot Managing Director

 

(b) Details of the BR head

Telephone number: 0484-2394712 [email protected]

2 Principle-wise (as per NVGs) BR Policy/policies (a) Details of compliance (Reply in Y/N)

SI

Questions

P1

P2

P3

P4

P5

P6

P7

P8

P9

1

Do you have a policy/ policies for...

Y

Y

Y

Y

Y

Y

Y

Y

Y

2

Has the policy being formulated in consultation with the relevant stakeholders?

Y

Y

Y

Y

Y

Y

Y

Y

Y

3

Does the policy conform to any national / international standards? If yes, specify? (50 words) *

N

N

N

N

N

N

N

N

N

4

Has the policy being approved by the Board? Is yes, has it been signed by MD/ owner/ CEO/ appropriate Board Director?

Y

Y

Y

Y

Y

Y

Y

Y

Y

5

Does the company have a specified committee of the Board/ Director/ Official to oversee the implementation of the policy?

Y

Y

Y

Y

Y

Y

Y

Y

Y

6

Indicate the link for the policy to be viewed online?

**

 

 

 

 

 

 

 

 

7

Has the policy been formally communicated to all relevant internal and external stakeholders?

Y

Y

Y

Y

Y

Y

Y

Y

Y

8

Does the company have in-house structure to implement the policy/ policies.

Y

Y

Y

Y

Y

Y

Y

Y

Y

9

Does the Company have a grievance redressal mechanism related to the policy/ policies to address stakeholders' grievances related to the policy/ policies?

Y

Y

Y

Y

Y

Y

Y

Y

Y

10

Has the company carried out independent audit/ evaluation of the working of this policy by an internal or external agency?

Y

Y

Y

Y

Y

Y

Y

Y

Y

 

(P1)

P2

P3

Businesses should conduct and govern themselves with Ethics, Transparency and Accountability

Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle

Businesses should promote the wellbeing of all employees

P4)

P5

P6

Businesses should respect the interests of, and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalized.

Businesses should respect and promote human rights

Business should respect, protect, and make efforts to restore the environment

P7

P8

P9

Businesses, when engaged in influencing public and regulatory policy, should do so in a responsible manner

Businesses should support inclusive growth and equitable development

Businesses should engage with and provide value to their customers and consumers in a responsible manner

(b) If answer to the question at serial number 1 against any principle, is 'No', please explain why: (Tick up to 2 options)

Not Applicable

* Some of the policies and principles have been put into practice by the Founder Late Shri. M. George Muthoot decades back. The Company has not tested the policies for adherence to any National or International Standards. However , these policies are now framed based on applicable regulations and general practices.

** http://www muthootfinance.com/policy/policy-investor

3 Governance related to BR

(a) Indicate the frequency with which the Board of Directors, Committee of the Board or CEO to assess the BR performance of the Company. Within 3 months, 3-6 months, Annually, More than 1 year. Annually

(b) Does the Company publish a BR or a Sustainability Report? What is the hyperlink for viewing this report? How frequently it is published?

Yes. BR is available at http://www.muthootfinance.com/investors/annual-reports. The report is published annually.

SECTION E: PRINCIPLE-WISE PERFORMANCE

Principle 1

1 Does the policy relating to ethics, bribery and corruption cover only the company? Yes/ No. Does it extend to the Group/Joint Ventures/ Suppliers/Contractors/NGOs /Others?

Yes. The policy covers only the company. It does not extend to the Group/Joint Ventures/ Suppliers/Contractors/NGOs /Others.

2 How many stakeholder complaints have been received in the past financial year and what percentage was satisfactorily resolved by the management? If so, provide details thereof, in about 50 words or so.

Nil

Principle 2

1 List up to 3 of your products or services whose design has incorporated social or environmental concerns, risks and/or opportunities.

Gold Loan - The flagship product of the Company ie., loan against security of gold jewellery provides access to credit within a reasonable time to a person who otherwise do not have access to credit or access to credit within a reasonable time. We service about 2 lakh customers per day. This supports social well being as well as business activities.

e-KYC - To facilitate easier compliance to KYC norms by customers, we launched 'e-KYC facility'. It is a customer-friendly and convenient digital KYC process based on Aadhaar with direct UlDAl link. The verification procedure is conducted by using customers' fingerprints.

This paperless and highly secure system enables faster loan processing and ensures 100% integrity in KYC verification. We are the first 'Gold Loan NBFC' to introduce this facility, with over 50% adoption rate in the first roll out.

iMuthoot- Mobile App - We developed a new mobile application called iMuthoot that allows customers to transact through their smartphones. This is our major initiative towards building a branch-less banking ecosystem for our customers. The app is available on Google Play and Apple Store. iMuthoot allows existing customers to view their loan statements and balance as well as Online Gold Loan facility. New customers can see our latest loan schemes, calculate loan eligibility, locate branches and fix appointments with their nearest branch officials and apply for gold loans. It is available in six languages. This app along with online payment facility has helped us a lot to move towards more and more digital transaction.

2 For each such product, provide the following details in respect of resource use (energy, water, raw material etc.) per unit of product(optional):

(a) Reduction during sourcing/production/ distribution achieved since the previous year throughout the value chain?

(b) Reduction during usage by consumers (energy, water) has been achieved since the previous year? Not Applicable

3 Does the company have procedures in place for sustainable sourcing (including transportation)?

(a) If yes, what percentage of your inputs was sourced sustainably? Also, provide details thereof, in about 50 words or so. Not Applicable

4 Has the company taken any steps to procure goods and services from local& small producers, including communities surrounding their place of work?

(a) If yes, what steps have been taken to improve their capacity and capability of local and small vendors? Not Applicable

5 Does the company have a mechanism to recycle products and waste? If yes what is the percentage of recycling of products and waste (separately as< 5%, 5-10%, >10%). Also, provide details thereof, in about 50 words or so.

Not Applicable

Principle 3

 

1

Please indicate the Total number of employees as on March 31, 2019

24224

2

Please indicate the Total number of employees hired on temporary/contractual/casual basis.

Nil

3

Please indicate the Number of permanent women employees.

4219

4

Please indicate the Number of permanent employees with disabilities

The company does not specifically track the information of employees with disability or make any discrimination on disability. Hence such an information is not available with the Company.

5

Do you have an employee association that is recognized by management.

No

6

What percentage of your permanent employees is members of this recognized employee association?

Not Applicable

7

Please indicate the Number of complaints relating to child labour, forced labour, involuntary labour, sexual harassment in the last financial year and pending, as on the end of the financial year.

 

 

SI

Category

No of complaints filed during the financial year

No of complaints pending as on end of the financial year

1

Child labour/forced labour/involuntary labour

Nil

Nil

2

Sexual harassment

3

0

3

Discriminatory employment

Nil

Nil

8

What percentage of your under mentioned employees were given safety & skill up-gradation training in the last year?

(a)

Permanent Employees

All employees with the Company are covered by skill upgradation training programmes conducted through our "Regional Learning Centers" and "Muthoot Management Academies"

(b)

Permanent Women Employees

All employees with the Company are covered by skill upgradation training programmes conducted through our "Regional Learning Centers" and "Muthoot Management Academies"

(c)

Casual/Temporary/Contractual Employees

Not Applicable

(d)

Employees with Disabilities

Please refer Sl.No.4 under Principle 3

1 Has the company mapped its internal and external stakeholders?

Yes

2 Out of the above, has the company identified the disadvantaged, vulnerable& marginalized stakeholders.

Yes

3 Are there any special initiatives taken by the company to engage with the disadvantaged, vulnerable and marginalized stakeholders. If so, provide details thereof, in about 50 words or so.

Though we have identified the above stakeholders , we have not created any product or services specifically for them. Since loan against security of gold jewellery provides access to credit within a reasonable time to a person who otherwise do not have access to credit or access to credit within a reasonable time , we believe that our services will address the needs of the above stakeholders. Our presence through 4480 branches in 24 States and 5 Union Territories again will address the needs of the above stakeholders. However , we have taken special initiatives to address the needs of the above stakeholders through our CSR activities details of which are available in the Annual Report on CSR activities in the Annual Report

Principle 5

1 Does the policy of the company on human rights cover only the company or extend to the Group/Joint Ventures/Suppliers/ Contractors/NGOs/Others?

The policy covers only the company

2 How many stakeholder complaints have been received in the past financial year and what percent was satisfactorily resolved by the management?

Nil

Principle 6

1 Does the policy related to Principle 6 cover only the company or extends to the Group/Joint Ventures/Suppliers/ Contractors/NGOs/others.

The policy covers only the company

2 Does the company have strategies/ initiatives to address global environmental issues such as climate change, global warming, etc? Y/N. If yes, please give hyperlink for webpage etc.

No

3 Does the company identify and assess potential environmental risks? Y/N No

4 Does the company have any project related to Clean Development Mecbanism? If so, provide details thereof, in about 50 words or so. Also, if Yes, wbether any environmental compliance report is filed?

No

5 Has the company undertaken any other initiatives on - clean technology, energy efficiency, renewable energy, etc. Y/N. If yes, please give hyperlink for web page etc.

We have three windmills installed in Tamilnadu with a combined power generation capacity of 3.75Megawatt

6 Are the Emissions/Waste generated by the company within the permissible limits given by CPCB/SPCB for the financial year being reported?

Not Applicable

7 Number of show cause/ legal notices received from CPCB/SPCB which are pending (i.e. not resolved to satisfaction) as on end of Financial Year.

Not Applicable

Principle 7

1 Is your company a member of any trade and chamber or association? If Yes, Name only those major ones that your business deals with:

(a). Kerala Chamber of Commerce & Industries

(b). Federation of Indian Chamber of Commerce & Industries

(c). Kerala Management Association

(d) Association of Gold Loan Companies

(e) Confederation Of Indian Industry

(f) Kerala Non-Banking Finance Companies Association

2. Have you advocated/lobbied through above associations for the advancement or improvement of public good? Yes/No; if yes specify the broad areas (drop box: Governance and Administration, Economic Reforms, Inclusive Development Policies, Energy security, Water, Food Security, Sustainable Business Principles, Others)-No

Principle 8

Does the company have specified programmes/initiatives/projects in pursuit of the policy related to Principle 8? If yes details thereof.

The flagship product of the Company ie., loan against security of gold jewellery provides access to credit within a reasonable time to a person who otherwise do not have access to credit or access to credit within a reasonable time.Hence this will support inclusive growth and equitable development. Our presence through 4480 branches in 24 States and 5 Union Territories again will address the needs of larger section Indian population. Please refer to Annual Report on CSR Activities attached in the Annual Report.

Are the programmes/projects undertaken through in-house team/own foundation/external NGO/government structures/any other organization?

Programmes/projects are undertaken primarily through the trust M/s. Muthoot M George Foundation and Muthoot M George Charitable

Trust. Please refer to Annual Report on CSR Activities attached in the Annual Report.Have you done any impact assessment of your initiative?

Programmes are reviewed periodically for its effectiveness and whether its desired objectives are met.

What is your company's direct contribution to community development projects- Amount in INR and the details of the projects undertaken.

Amount Spent on CSR activities is Rs. 282.92 millions. Please refer to Annual Report on CSR Activities attached in the Annual Report

Have you taken steps to ensure that this community development initiative is successfully adopted by the community? Please explain in 50 words, or so.

CSR activities are constantly monitored for implementation and fresh support is given only where adoptions are at a better level. Please refer to Annual Report on CSR Activities attached in the Annual Report.

Principle 9

1 What percentage of customer complaints/consumer cases are pending as on the end of financial year. 18%

2 Does the company display product information on the product label, over and above what is mandated as per local laws? Yes/ No/N.A. /Remarks(additional information)

Yes

3 Is there any case filed by any stakeholder against the company regarding unfair trade practices, irresponsible advertising and/or anti-competitive behaviour during the last five years and pending as on end of financial year. If so, provide details thereof, in about 50 words or so.

No

4 Did your company carry out any consumer survey/ consumer satisfaction trends? Yes. Done periodically at select geographies

Annexure- 6

AOC-2

Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014:

1. Details of contracts or arrangements or transactions not at arm's length basis: Nil

2. Details of material contracts or arrangement or transactions at arm's length basis:

Name(s) of the related party and nature of relationship

Nature of contracts/ arrangement/ transactions

Duration of the contracts / arrangements/ transactions

Salient terms of the contracts or arrangements or transactions including the value, if any:

Date(s) of approval by the Board, if any:

Amount paid as advances, if any:

 

 

 

 

 

 

 

 

NIL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For and on behalf of the Board of Directors

 

M G George Muthoot

George Alexander Muthoot

Chairman

Managing Director

(DIN: 00018201)

(D1N:00016787)

Ernakulam,

 

August 12, 2019

 

Annexure- 7

Declaration Regarding Receipt of Certificate of Independence from all Independent Directors

1 hereby confirm that the Company has received from all the independent directors namely Mr. George Joseph, Mr. John K Paul, Mr. K George John, Justice (Retd.) Jacob Benjamin Koshy, Mr. Jose Mathew and Ms. Pamela Anna Mathew, a certificate stating their independence as required under Section 149(6) of the Companies Act, 2013 and SEB1 (LODR) 2015.

Place: Kochi
Date: May 13, 2019

George Alexander Muthoot
Managing Director

Annexure- 8

Nomination and Remuneration Policy

Board of Directors of Muthoot Finance Limited ("the Company") in order to align with the provisions of the Companies Act, 2013 and the Listing Agreement with Stock Exchanges has constituted a Committee as "Nomination and Remuneration Committee."

Objective

The Nomination and Remuneration Committee (NRC) and this Policy are in compliance with the Companies Act, 2013, Reserve Bank of India Guidelines including read along with the applicable rules thereto and SEB1 (LODR) 2015 and Policy Guidelines of Muthoot Finance Limited.

The Key Objectives of the Committee would be:

a) to guide the Board in relation to appointment and removal of Directors, Key Managerial Personnel and Senior Management.

b) to evaluate the performance of the members of the Board and provide necessary report to the Board for further evaluation of the Board and recommending the Board on Remuneration payable to the Directors, Key Managerial Personnel and Senior Management.

c) to ensure that all provisions regarding Remuneration Policy and duties of Committee as required under the Companies Act, 2013, Reserve Bank of India guidelines, SEB1 (LODR) 2015 or such other applicable Acts, rules, regulations or guidelines are complied with.

Definitions

(a) Key Managerial Personnel: Chief Executive Officer, Executive Directors, Chief Financial Officer and Company Secretary or any other personnel as prescribed under Companies Act, 2013.

(b) Senior Management: Senior Management means personnel of the company who are members of its core management team excluding the Board of Directors. This would also include all members of management one level below the executive directors including all functional heads.

Role and Responsibilities

The role of the Committee inter alia will be the following:

a. Identifying persons who are qualified to become Directors and who may be appointed in Senior Management in accordance with Criteria as laid down and recommend to Board their appointment and removal.

b. Ensure persons proposed to be appointed on the Board do not suffer any disqualifications for being appointed as a director under the Companies Act, 2013.

c. Ensure that the proposed appointees have given their consent in writing to the Company;

d. Review and carry out every Director's performance, the structure, size and composition including skills, knowledge and experience required of the Board compared to its current position and

Annexure- 8

make recommendations to the Board with regard to any changes;

e. Plan for the succession planning for directors in the course of its work, taking into account the challenges and opportunities facing the Company, and what skills and expertise are therefore needed on the Board in the future;

f. Be responsible for identifying and nominating for the approval of the Board, candidates to fill board vacancies as and when they arise;

g. Keep under review the leadership needs of the organization, both executive and non-executive, with a view to ensuring the continued ability of the organization to compete efficiently in the market place; and

h. Ensure that on appointment to the Board, non-executive directors receive a formal letter of appointment setting out clearly what is expected of them in terms of committee services and involvement outside board meetings.

i. Determine and agree with the Board the framework for broad policy for criteria for determining qualifications, positive attitudes and independence of a director and recommend to the Board a policy, relating to remuneration for the Directors, Key Managerial Personnel and other employees.

j. Review the on-going appropriateness and relevance of the remuneration policy.

k. Ensure that contractual terms of the agreement that Company enters into with Directors as part of their employment in the Company are fair to the individual and the Company.

1. Ensure that all provisions regarding disclosure of remuneration and Remuneration Policy as required under the Companies Act, 2013, Reserve Bank of India Guidelines, provisions of SEB1 (LODR) 2015 or such other acts, rules, regulations or guidelines are complied with.

Constitution Members:

a. The Committee shall consist of a minimum 3 non-executive directors, majority of them being independent.

b. Minimum two (2) members shall constitute a quorum for the Committee meeting.

c. Membership of the Committee shall be disclosed in the Annual Report.

d. Term of the Committee shall be continued unless terminated by the Board of Directors.

Chairman:

a. Chairman of the Committee shall be an Independent Director.

b. Chairman of the Committee shall be decided by Board of Directors of the Company.

c. In the absence of the Chairman, the members of the Committee present at the meeting shall choose one amongst them to act as Chairman.

Frequency of Meetings

The meeting of the Committee shall be held at such regular intervals as may be required by the Committee or as directed by Board of Directors of the Company.

Guiding Principles

Committee while exercising its functions as described in ROLE AND RESPONSIBILITIES of the Committee in this policy, will be guided by following broad principles:

a. The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully;

b. The relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

c. The remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals.

d. In case, subject matter is related to appointment/remuneration of Independent Directors, the requirement under Code of Conduct of Independent Directors and other Statutory Requirements are met.

e. In case, subject matter is related to appointment/remuneration of Directors other than

Independent Directors, Key Managerial Persons, Senior Management, the requirement under Code of Conduct of Senior Management of the Company is met.

A member of the Committee is not entitled to be present when his or her own remuneration is discussed at a meeting or when his or her performance is being evaluated. The Committee may invite such executives including Key Managerial Persons and Senior Management, as it considers appropriate, to be present at the meetings of the Committee.

'Fit and Proper Criteria as per guidelines of Reserve Bank of India, will be most fundamental guidelines for appointment of Directors and due diligence in this regard will be carried out. Committee will be required to carry out all functions/duties in compliance of Companies Act, 2013, SEB1 (LODR) 2015 and Reserve Bank of India Guidelines. procedures mentioned below are followed and minimum criteria fulfilled by the persons before they are appointed on the Boards:

(a) NRC should undertake a process of due diligence to determine the suitability of the person for appointment / continuing to hold appointment as a director on the Board, based upon qualification, expertise, track record, integrity and other 'fit and proper criteria.

(b) NRC should obtain necessary information and declaration from the proposed / existing directors for the purpose as prescribed by Reserve Bank of India.

(c) The process of due diligence should be undertaken at the time of appointment / renewal of appointment.

(d) NRCs to scrutinize the declarations and ensure necessary deeds of covenants as prescribed by Reserve Bank of India is executed by nominated/elected Directors.

(e) Based on the information provided in the signed declaration, Nomination Committees should decide on the acceptance or otherwise of the directors, where considered necessary.

Decision Making And Voting

a. Matters arising for determination at Committee meetings shall be decided by a majority of votes of Members present and voting and any such decision shall for all purposes be deemed a decision of the Committee.

b. In the case of equality of votes, the Chairman of the meeting will have a casting vote.

c. Committee may refer any matter for consideration and decision by full Board of Directors of the Company,

if majority of members deem the matter fit for the said purpose. Such matters which are referred by the Committee will be deemed to be agenda of the meeting of Board of Directors.

Minutes of Committee Meeting

Proceedings of all meetings must be minuted and signed by the Chairman of the Committee at the subsequent meeting. Minutes of the Committee meetings will be tabled at the subsequent meeting after circulation of the same.

Review and Alteration of Nomination and Remuneration Policy

The Nomination and Remuneration Committee of the Company will be guided by this policy and subject to the power granted to/ terms of reference of the Committee as decided by Board of Directors of Company from time to time and requirement under the Companies Act, 2013 or such other acts, rules, regulations or guidelines including Listing Agreement with Stock Exchanges. Nomination and Remuneration Committee of the Company may review this policy from time to time as it may deem fit. Any modification and Change in this policy will be subject to approval of Board of Directors based on recommendation of Nomination and Remuneration Committee of the Company. 


Mar 31, 2018

Dear Stakeholders,

Directors of your Company have pleasure in presenting the 21st Annual Report of the Company together with the audited financial statements (standalone and consolidated) for the year ended March 31, 2018.

1. Financial Summary

The financial performance of your Company for the year ended March 31, 2018 are summarized below:

(Rs. in Crores)

Particulars

Standalone

Consolidated

Year ended 31st March, 2018

Year ended 31st March, 2017

Year ended 31st March, 2018

Year ended 31st March, 2017

Total Revenue

6,243

5,747

6,705

5,938

Total Expenses

3,486

3,826

3,833

3,980

Profit Before Tax

2,757

1,921

2,872

1,958

Tax expense

1037

741

1,074

751

Profit for the year

1,720

1,180

1,799

1,207

Shareholders’ Funds

7,760

6,516

7,842

6,538

Total Liabilities

23,621

24,197

26,463

25,646

Total Assets

31,381

30,713

34,305

32,184

2. Dividend

Directors of your Company has during the year at their meeting dated February 8, 2018 had declared an interim dividend of Rs.10/- per equity share (100% of face value).

The dividend payout amount including the dividend distribution tax will be Rs.481Crs representing 27.97% of profit after tax for the year

Directors of your Company decided to plough back the remaining profit after tax for business activities and hence have not recommended any dividend for approval of shareholders in Annual General Meeting.

Directors of your Company has approved a Dividend Distribution Policy as per Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 .The Details of the policy is available on the website of the Company at www.muthootfinance.com/policy/policy-investor and is attached to this report as Annexure 1.

The list of unpaid dividend is available on the Company’s website www.muthootfinance.com. Shareholders are requested to check the said list and if any dividend due to them is remaining unpaid in the said list, then shareholders can approach the Company or Registrar and Transfer Agent of the Company for release of unpaid dividend.

As per Section 124(5) of the Companies Act, 2013, the Company shall transfer the dividend that remained unclaimed for a period of seven years from the date of transfer to unpaid dividend account to the Investor Education and Protection fund (1EPF). Further as per Section 124(6) of the Companies Act, 2013, the Company shall transfer all shares in respect of which the unclaimed dividend has been transferred to 1EPF. No claim will lie on Company on account of dividend after the dividend is transferred to 1EPF.

3. Transfer to Reserves

Your Board of Directors has transferred an amount of Rs.344 Crores to the Statutory Reserve maintained under Section 451C of the RB1 Act, 1934. An amount of Rs.501 Crores has been transferred to Debenture Redemption Reserve. Post transfer of profits to reserves and distribution of dividend, your Board proposes to retain Rs.1,449 Crores in the Profit and Loss Account.

4. Company’s Performance

During the Financial Year, Company saw 46% increase in its profitability with a net profit of Rs.1,720 Crores for the year ended March 31, 2018 as compared to Rs.1,180 Crores for the year ended March 31, 2017. Profit before tax increased by 44% to Rs.2,757 Crores. Total Income has increased from Rs.5,747 Crores for the year ended March 31, 2017 to Rs.6,243 Crores for the year ended March 31, 2018 which is mainly due to increase in Interest Income of the Company. Interest income of the Company increased to Rs.6,053 Crores from previous year’s interest income of Rs.5,654 Crores. Loan Assets Portfolio of the Company increased by Rs.1,860 Crores during the year reaching Rs.29,138 Crores as on March 31, 2018 as against Rs.27,278 Crores as on March 31, 2017. The Return on Average Loan Assets increased to 6.16% in FY 2017-18 as compared to 4.47% in FY 2016-17. The cost of funds declined to 6.95% compared to 8.69% in fiscal 2016-17. Interest yield increased to 21.70% as compared to 21.43% in FY 2016-17. On account of the above, the Net Interest Margin improved to 14.75% as against 12.74% in FY 2016-17. The Company remitted to exchequer Rs.1140 Crores as taxes.

5. Resource Mobilization

(a) Non-Convertible Debentures:

Your Company successfully completed 17th Issue of Non-Convertible Debentures through Public Issue during FY 2017-18 raising Rs.1,969 Crores.

Directors of your Company are thankful to all investors who have subscribed the debentures through Public Issue and shown their trust towards your Company.

Subordinated Debts represents long term source of funds for the Company and the amount outstanding as on 31st March, 2018 was Rs.1,124 Crores. It qualifies as Tier II capital under the Non-Banking Financial Company- Systemically Important Non- Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016.

(b) Bank Finance:

Bank Finance remains an important source of funding for your Company. Commercial Banks continued their support to your Company during Financial Year. As of 31st March, 2018, borrowings from banks were Rs.11,183 Crores as against Rs.9,202 Crores in the previous year

6. Equity Share Issuances

Employee Stock Options Schemes During the year, your Company has allotted 5,65,690 equity shares of face value of Rs.10/- each under Muthoot ESOP 2013 pursuant to exercise of 13,425 options of Rs.10/- each for Loyalty Options and 5,52,265 options of Rs.50/- each for Growth Options by Employees of the Company.

The disclosures as required under SEBI (Share Based Employee Benefits) Regulations, 2014 read with SEBI Circular CIR/CFD/POLICY CELL/2/2015 dated 16th June 2015 is attached to this report as Annexure 2. The same disclosure is available at Company’s website www. muthootfinance.com/investors/disclosure-esop. Please refer note 26(d) of Notes on Accounts in Standalone Financial Statements for further disclosures on ESOP The Company does not have any scheme to fund its employees to purchase the shares of the Company.

Your Company has received the certificate from the Statutory Auditors of the Company certifying that the ESOP scheme is implemented in accordance with the applicable SEBI Guidelines/Regulations and is in accordance with the resolution passed by the members of the Company. The certificate would be placed at the Annual General Meeting for inspection by members.

The stock option schemes are in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and there have been no material changes to these plans during the Financial Year 2017-18.

7. Credit Rating

Your Company’s debt instruments are rated by 1CRA and CR1S1L, two of the leading Credit Rating Agencies in the country.

The Credit Ratings assigned to various instruments of the Company as of now are as follows:

Credit Rating Instruments Agency

Ratings

Limit in Rs. in Crores

CR1S1L Commercial Paper

CR1S1L A1

4,000

Subordinated Debts

CR1S1L AA/Stable

100

Non Convertible Debentures

CR1S1L AA/Stable

2,000

1CRA Commercial Paper

1CRA A1

4,000

Short Term Bank Borrowings*

1CRA A1

13,213

Long Term Bank Borrowings*

1CRA AA/Stable

10,037

Subordinated Debts

1CRA AA/Stable

100

Non Convertible Debentures

1CRA AA/Stable

2,000

*subject to overall rating of Rs.14,115 Crores for line of credit.

8. Internal Audit and Financial Control

In keeping with the size of the Company and its business model, your Company has developed over the years, a proper, adequate and well documented internal audit and control system. The control system ensures that the Company’s assets are safeguarded and protected. The audit system also takes care to see that revenue leakages and losses to the Company are prevented and our income streams are protected. The control system enables reliable financial reporting.

Company has a well-structured Audit & Inspection department to perform timely and frequent internal audit to evaluate the adequacy of systems and procedures and also to evaluate the status of compliance to Company’s guidelines and other statutory requirements. The department has on its rolls around 960 dedicated personnel who relentlessly safeguard the safety of your Company’s assets, ensures the quality of assets pledged and also evaluates the adequacy of risk management systems at its operating units. In keeping with the huge network and geographic outreach of the operating units spread across the length and breadth of the country, the audit functions have been decentralized through setting up of Regional Audit offices in important Regional centers. The Regional Audit Offices exercise field level control over the branches through onsite visits and online audit systems. The field level Auditors report to Regional Audit offices who in turn shares their findings with the Audit & Inspection Department at the Registered Office of the Company.

Audit Committee of Board of Directors is apex Audit Authority of the Company. Under the present Audit Architecture, the Internal Audit Department reports to the Audit Committee regarding significant audit findings and also preventive and corrective measures to protect the interests of the Company. The audit Committee undertakes an evaluation of the adequacy and effectiveness of internal control systems. 1t also oversees the implementation of audit recommendations especially involving the risk management measures.

In addition to reviewing the internal control systems put in place by the Audit & Inspection Department, the Audit Committee also imparts guidance and crucial directions for upgradation of systems and controls on ongoing basis. The Audit system prevalent in the Company is reasonably autonomous function and built on best corporate governance framework.

Reference is invited to Note no.37 to the standalone financial statements contained in the annual report regarding frauds committed by employees of the Company. Company has taken or is in the process of taking disciplinary/ legal action against such employees.

9. Human Resources

As on March 31, 2018, the Company had 23,455 employees in its rolls at various level of organizational structure. Your Company is always committed in providing employees with ample opportunities to learn and advance in career.

Based on performance of the employees, management has introduced new means of payouts and increased the percentage of payout for existing incentives. The management is also rewarding employees with foreign trips to exquisite locations based on their achievement.

Your Company has offered multiple training programs to employees to help in their development. The programs includes product/process related trainings, soft skill trainings, leadership trainings and certification trainings for different group of employees. Company imparts training through two premium training establishments of the Company and 70 Regional Learning Centers .

Your Company has robust mechanism for identifying performers and Performance Score card method of performance assessment has been implemented for a structured and unbiased performance assessment model. Company has taken steps to promote eligible employees to the next level based on the above performance assessment model. .

Your Company offers various other benefits to employees including Employee Stock Options and various Statutory and Non Statutory Staff Welfare Measures. All eligible employees are covered under statutory provisions namely EPF, ES1, Maternity Benefits, Gratuity etc. Employees were enrolled under the National Pension System (NPS) with Company also making contribution along with their contribution.

10. Major Marketing & Promotion Initiatives AB-CSK Marketing Campaign

The year 2018 started with the grand association of The Muthoot Group with the biggest and legendary superstar of Bollywood and entertainment industry, Padma Vibhushan Shri Amitabh Bachchan who has a huge fan following not just in India but world over. He touches the heart and soul of one and all.

In yet another one of its kind partnership, The Muthoot Group has signed the one of the most successful 1PL teams of all times - Chennai Super Kings, led by the legendary former Indian Captain Padma Bhushan Shri Mahendra Singh Dhoni as “Prinicipal Team Partner”. Team CSK was coming back into 1PL after a gap of two years. This association allowed us to reach closer to our customers as well as the huge cricket fans of this country and even abroad, in a more exciting & acceptable manner more especially in the southern part of India.

These two major associations of the year with two mega stars - Shri Amitabh Bachchan and Chennai Super Kings, cover two of the most followed passions in our country -Bollywood and Cricket thereby giving us the opportunity to leverage these associations and touch the lives of millions of more Indians across North, East, West and South India.

11. Capital Adequacy

Your Company’s Capital Adequacy Ratio as of March 31, 2018 stood at 26.59% of the aggregate risk weighted assets on balance sheet and risk adjusted value of the off-balance sheet items, which is well above the regulatory minimum of 15%. Out of the above, Tier 1 capital adequacy ratio stood at 24.75% and Tier 11 capital adequacy ratio stood at 1.84%.

12. Public Deposits

The Company is a Systemically Important Non-Deposit Taking NBFC and hence has not accepted any public deposits.

13. RBI Guidelines

Your Company has complied with all the applicable regulations prescribed by the Reserve Bank of India from time to time. Please refer note 41 and 42 of Notes on Accounts in Standalone Financial Statements for additional disclosures required under RB1 Guidelines applicable to the Company.

14. Subsidiaries/ Associates/ Joint Ventures

As on March 31, 2018 your Company has four subsidiaries namely M/s. Asia Asset Finance PLC, M/s. Muthoot Homefin (India) Limited, M/s. Muthoot Insurance Brokers Private Limited and M/s. Belstar Investment and Finance Private Limited. Your Company’s subsidiaries have considerably contributed to the overall growth of your Company during the year. As per Section 136 of the Companies Act, 2013 the audited financial statements, including the consolidated financial statements of your Company and the audited accounts of each of its subsidiaries are available on the website of the Company at www.muthootfinance.com/ corporate/our_subsidary. The above documents will also be available for inspection at the Registered Office of the Company during business hours.

The Board of Directors of your Company has formulated a policy on material subsidiary, which is displayed on the web site of the Company at www.muthootfinance.com/ policy/policy-investor.

Financial Performance & position of Subsidiaries

a. Asia Asset Finance PLC:

Asia Asset Finance PLC, (AAF), a Company listed in Colombo Stock Exchange, is a subsidiary of your Company from December 31, 2014. AAF, where your Company holds 60% of equity capital, is a registered Financial Company with Central Bank of Sri Lanka and is mainly engaged in Vehicle Finance and Hire Purchase Activities. The Company which has also started business relating to lending against collateral of gold jewellery and micro finance is presently contributing a significant part of loan portfolio and income. AAF has operations across Sri Lanka with 17 branches as on March 31, 2018. AAF has made considerable progress in its business. 1ts major financial parameters for Financial Year 201718 are as follows:

Parameters

Total Income

Profit Before Taxation

Profit After Taxation

Shareholder’s Funds

Total Assets

Total Outside Liabilities

Amount in INR (in Crores)LKR/InR as on 31.03.2018-0.417365 / Average Exchange Rate -0.42017*

108*

11*

8*

78

513

435

Amounts in LKR (in Crores)

257

22

18

186

1173

987

AAF increased its loan portfolio during the year by 15% at LKR 995crs. Total revenue for FY18 stood at LKR 256crs as against previous year total revenue of LKR 213crs . 1t generated a profit after tax of LKR 18crs during FY18 as against previous year profit after tax of LKR 28crs.

b. Muthoot Homefin (India) Ltd:

M/s. Muthoot Homefin (India) Ltd (MH1L), a registered Housing Finance Company licensed by National Housing Bank is a subsidiary of your Company. During the Financial Year 2017-18, your Company increased its shareholding in MH1L to 100% of the equity capital making it wholly owned subsidiary. 1ts major financial parameters for Financial Year 2017-18 are as follows:

Parameters

Total Income

Profit Before Taxation

Profit After Taxation

Shareholder’s Funds

Total Assets

Total Outside Liabilities

Amount in INR (in Crores)

126

42

28

216

1587

1371

MHIL increased its loan portfolio by Rs.1024crs at Rs.1465crs during the year. Total revenue for Financial Year 2017-18 stood at Rs.126crs as against previous year total revenue of Rs.24cr. 1t achieved a net profit of Rs.28crs in Financial Year 2017-18 as against previous year profit of Rs.3crs.

c. Muthoot Insurance Brokers Private Limited:

Muthoot Insurance Brokers Private Limited (MIBPL), is an unlisted Private Limited Company holding a license to act as Direct Broker from Insurance Regulatory and Development Authority of India (1RDA) since 2013. MIBPL is a Wholly- Owned Subsidiary Company of your Company. 1ts major financial parameters for Financial Year 2017-18 are as follows:

Parameters

Total Income

Profit Before Taxation

Profit After Taxation

Shareholder’s Total Assets Funds

Total Outside Liabilities

Amount in INR (in Crores)

18

15

11

27 29

2

MIBPL generated a First year premium collection amounting to Rs.101crs during Financial Year 2017-18 as against Rs.70crs in the previous year. It generated a Profit after Tax of Rs.11crs during Financial Year 2017-18 as against Rs.6crs in the previous year

d. Belstar Investment and Finance Private Limited:

M/s. Belstar Investment and Finance Private Limited (BIFPL) is a micro finance Company. At end of the Financial Year 2017-18, your Company holds 66.61% of the equity capital of BIFPL. 1ts major financial parameters for Financial Year 2017-18 are as follows:

Parameters

Total Income

Profit Before Taxation

Profit After Taxation

Shareholder’s Funds

Total Assets

Total Outside Liabilities

Amount in INR (in Crores)

219

50

34

159

1342

1183

BIFPL grew its loan portfolio during Financial Year 201718 by 97% reaching Rs.1137crs. 1t achieved a profit after tax of Rs.34crs during Financial Year 2017-18 as against previous year profit after tax of Rs.10crs. 1ts Gross and Net NPA stood at 0.76% and 0.30% as on March 31,2018.

The statement containing the salient features of the financial statement of your Company’s Subsidiaries is attached as Annexure - A to Standalone Financial Statements of the Company as required under Rule 5 of The Companies (Accounts) Rules 2014.

There are no other Companies which have become or ceased to be Subsidiaries/ Associates/ Joint Ventures of the Company during the Financial Year 2017-18.

15. Particulars Of Loans, Guarantees Or Investments Under Section 186 of The Companies Act, 2013

Pursuant to Section 186(11)(a) of the Companies Act, 2013 (the ‘Act’) read with Rule 11(2) of the Companies (Meetings of Board and its Powers) Rules, 2014, the loan made, guarantee given or security provided in the ordinary course of business by a Non- Banking Financial Company (NBFC) registered with Reserve Bank of India are exempt from the applicability of provisions of Section 186 of the Act. As such the particulars of loans and guarantee have not been disclosed in this Report.

The details of the Current Investments and Non- Current Investments of the Company are furnished under Note no. 10 forming part of the Standalone Financial Statements for the year ended March 31, 2018.

16. Extract of Annual Return

Extract of Annual Return as required under Companies Act, 2013 is annexed as Annexure 3.

17. Consolidated Financial Statements

The audited consolidated financial statements of the Company along with its subsidiaries AAF, MH1L, BIFPL and MIBPL prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 is provided in the Annual Report.

18. Risk Management and Risk Management Policy

Your Company has a Board approved Risk Management Policy which has laid down a framework for identifying, assessing, measuring various elements of risk involved in the business and formulation of procedures and systems for mitigating such risks.

Risk Management Committee of the Board of Directors of your Company constituted in accordance with the Reserve Bank of India guidelines has overall responsibility for overseeing the Risk Management activities of the Company, approving measurement methodologies and appropriate risk management procedures across the organization.

The Risk Management Committee comprises of:

Name of the Director

Designation in the Committee

Nature of Directorship

George Joseph

Chairman

Independent Director

Jose Mathew

Member

Independent Director

George Alexander Muthoot

Member

Managing Director

Risk Management Department periodically places its report on risk management to the Risk Management and Audit Committee of the Board of Directors. During the year, your Company has incorporated various practices and suggestion as directed by the Risk Management and Audit Committee which helped the Company in attaining an improved vigilance and security system, improved security of gold jewellery and cash, improved system of grading of branches, Regional Offices etc. 1T based risk management initiatives are discussed in section related to ‘Technology Absorption’ in this report of Board of Directors.

19. Corporate Social Responsibility

Your Board has constituted a Corporate Social Responsibility (CSR) & Business Responsibility Committee to support the Company in achieving the CSR objectives of the Company. The CSR and Business Responsibility Committee of the Board of Directors comprises of the following:

Name of the Director

Designation in the Committee

Nature of Directorship

K. George John

Chairman

Independent Director

John K Paul

Member

Independent Director

George Alexander Muthoot

Member

Managing Director

The Company’s CSR policy is committed towards CSR activities as envisaged in Schedule V11 of the Companies Act, 2013. The Details of CSR policy of the Company are available on the website of the Company at www. muthootfinance.com/policy/policy-investor. The Annual Report on CSR activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 is attached to this report as Annexure 4.

In terms of Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility) Rules, 2014 as amended (“CSR Rules”) and in accordance with CSR Policy, during the year, the Company has spent Rs.20 Crores towards CSR projects/ programs.

20. Business Responsibility Report

The Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) Regulations, 2015 mandates the inclusion of the Business Responsibility Report (BRR) as part of the Annual Report for top 500 listed entities based on their market capitalization. The BRR is attached to this report as Annexure 5.

21. Particulars Of Contracts or Arrangements made with Related Parties

The Board of Directors of your Company has formulated a policy on related party transactions, which is displayed on the web site of the Company at www. muthootfinance.com/policy/policy-investor. This policy deals with review of the related party transactions and regulates all transactions between the Company and its Related Parties.

Prior omnibus approval is obtained for related party transactions which are of repetitive nature and entered in the ordinary course of business and at arm’s length.

All related party transactions are placed before the Audit Committee for review and approval.

All transactions or arrangements with related parties referred to in Section 188 (1) of the Act, entered into during the year were on arm’s length basis or were in ordinary course of business or with approval of the Audit Committee.

During the year, your Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. Further, there were no material related party transactions which required approval of shareholders as required under Chapter 1V of SEB1 (Listing Obligations and Disclosure Requirements) Regulations, 2015. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC 2 is not applicable to your Company.

The details of related party and transactions with the related parties as required under chapter IV of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 appears on the Note no. 35 of the Notes to Accounts of the Standalone Financial Statements of the Company.

22. Audit Committee

The Audit Committee of our Board was reconstituted vide board resolution dated November 08, 2017 pursuant to Section 177 of the Companies Act 2013. The Audit Committee comprises of:

Name of the Director

Designation in the Committee

Nature of Directorship

George Joseph

Chairman

Independent Director

John K Paul

Member

Independent Director

Jose Mathew

Member

Independent Director

George Alexander Muthoot

Member

Managing Director

All recommendations of Audit Committee are accepted by your Board and details on Audit committee appear on the report on Corporate Governance.

23. Vigil Mechanism

To conduct affairs of your Company and its various constituents in a fair and transparent manner and as part of Vigil Mechanism, and providing whistle blowers a safe and reliable way of sharing information, your Company has formulated a Whistle Blower Policy in compliance with Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. There is graded reporting structure under the Policy and also provides provision for direct access to Chairman of Audit Committee. The whistle blower policy is available at website of the Company at www.muthootfinance.com/ policy/policy-investors.

24. Listing

Equity Shares of your Company are listed on NSE India Ltd and BSE Ltd. Your company has paid required listing fees to Stock Exchanges.

25. Changes in Directors and Key Managerial Personnel

Mr. John K Mathew, Independent Director of your Company retired at the 20th Annual General Meeting of shareholders held during the Financial Year 2017-18.

Term of Ms. Pamela Anna Mathew as Independent Director expired at the 20th Annual General Meeting was re-appointed as Independent Director for a further period of three years.

On recommendation of Board, shareholders have inducted three new directors - Mr. Jacob Benjamin Koshy, Mr. Pratip Chaudhuri and Mr. Jose Mathew in the Board as Independent Directors in the 20th Annual General Meeting. However, Mr. Pratip Chaudhuri was unable to join Board of Directors of your Company post his induction by members and has submitted his resignation during the Financial Year 2017-18 and Board of Directors has accepted his resignation.

After evaluating the eligibility criteria under Reserve Bank of India guidelines, Companies Act, 2013 and SEBI LODR Regulations 2015, your Board recommends reappointment of George Alexander Muthoot and George Thomas Muthoot as Directors of the Company who are retiring by rotation and eligible for reappointment and has offered themselves for re-appointment. Detailed profile of the above Directors is annexed to the notice calling Annual General Meeting of members of the Company.

26. Meeting of the Board

During the Financial Year 2017-18, your Board of Directors met six times on 18.05.2017, 08.08.2017, 08.11.2017, 08.02.2018, 13.03.2018 and 31.03.2018.

27. Declaration from Independent Directors

The Independent Directors have submitted disclosure that they meet the criteria of independence as provided under Section 149(6) of Companies Act, 2013 and SEBI Regulations. A statement by Managing Director confirming receipt of this declaration from Independent Directors is annexed to this report as Annexure 6.

28. Policy on Appointment and Remuneration Of Directors and Performance evaluation of Board, Committees and Directors

a) Policy on Appointment and Remuneration Of Directors

Board of Directors of your Company, on recommendation of Nomination and Remuneration Committee, has formulated a policy for selection, appointment and remuneration of the directors, senior management personnel as required under Section 178(3) of Companies Act, 2013. Details of the said Policy is annexed to this report as Annexure 7.

The Nomination and Remuneration Committee which was reconstituted on November 08, 2017 comprises of the following directors:

Name of the

Designation in

Nature of

Director

the Committee

Directorship

John K Paul

Chairman

Independent Director

K. George John

Member

Independent Director

Jose Mathew

Member

Independent Director

Terms of reference of the Nomination and Remuneration Committee include the following:

1. Identifying persons who are qualified to become Directors and who may be appointed in Senior Management in accordance with Criteria as laid down and recommend to Board their appointment and removal.

2. Ensure persons proposed to be appointed on the Board do not suffer any disqualifications for being appointed as a director under the Companies Act, 2013.

3. Ensure that the proposed appointees have given their consent in writing to the Company;

4. Review and carry out every Director’s performance, the structure, size and composition including skills, knowledge and experience required of the Board compared to its current position and make recommendations to the Board with regard to any changes;

5. Plan for the succession planning for directors in the course of its work, taking into account the challenges and opportunities facing the Company, and what skills and expertise are therefore needed on the Board in the future;

6. Be responsible for identifying and nominating for the approval of the Board, candidates to fill board vacancies as and when they arise;

7. Keep under review the leadership needs of the organization, both executive and non-executive, with a view to ensuring the continued ability of the organization to compete efficiently in the market place; and

8. Ensure that on appointment to the Board, nonexecutive directors receive a formal letter of appointment setting out clearly what is expected of them in terms of committee services and involvement outside board meetings.

9. Determine and agree with the Board the framework for broad policies for criteria for determining qualifications, positive attitudes and independence of a director and recommend to the Board policies, relating to remuneration for the Directors, Key Managerial Personnel and other employees.

10. Review the on-going appropriateness and relevance of the remuneration policy.

11. Ensure that contractual terms of the agreement that Company enters into with Directors as part of their employment in the Company are fair to the individual and the Company.

12. Ensure that all provisions regarding disclosure of remuneration and Remuneration Policy as required under the Companies Act, 2013 or such other acts, rules, regulations or guidelines are complied with.

13. Formulate ESOP plans and decide on future grants.

14. Formulate terms and conditions for a suitable Employee Stock Option Scheme and to decide on followings under Employee Stock Option Schemes of the Company:

(i) the quantum of option to be granted under ESOP Scheme(s) per employee and in aggregate;

(ii) the condition under which option vested in employees may lapse in case of termination of employment for misconduct;

(iii) the exercise period within which the employee should exercise the option and that option would lapse on failure to exercise the option within the exercise period;

(iv) the specified time period within which the employee shall exercise the vested options in the event of termination or resignation of an employee;

(v) the right of an employee to exercise all the options vested in him at one time or at various points of time within the exercise period;

(vi) the procedure for making a fair and reasonable adjustment to the number of options and

to the exercise price in case of rights issues, bonus issues and other corporate actions;

(vii) the grant, vest and exercise of option in case of employees who are on long leave; and

(viii) the procedure for cashless exercise of options.

15. Any other matter, which may be relevant for administration of ESOP Scheme including allotment of shares pursuant to exercise of options from time to time.

b) Performance evaluation of Board, Committees and Directors

The SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015 and the Companies Act, 2013 require the evaluation of the performance of the Board, its Committees and the individual directors. The Board carried out annual evaluation of its own performance, its Committees and individual Directors based on criteria and framework adopted by the Board and in accordance with existing regulations. The details of training, appointment, resignation and retirement of Directors, if any, are dealt with in the report of Corporate Governance. Brief details of profile of each Director appear in Annual Report of the Company.

c) Independent Directors Meeting

During the year, a meeting of Independent Directors was held as required under Companies Act, 2013 and in Compliance with requirement under Schedule 1V of the Act and as per requirements of SEB1 (Listing Obligations and Disclosure Requirements) Regulations, 2015 and discussed matters specified therein.

29. Corporate Governance Report

Your Company has complied with the Corporate Governance norms as stipulated in Chapter 1V of SEB1 (Listing Obligations and Disclosure Requirements) Regulations, 2015. As per Regulation 34 of SEB1 (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Detailed report on Corporate Governance is attached to this Report as Annexure 8.

30. Management Discussion and Analysis Statement

Management Discussion and Analysis on the business of the Company is attached to this Report as Annexure 9.

31. Conservation of energy, technology absorption, foreign exchange earnings and outgo:

The information pursuant to Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is as follows:

a) Conservation of energy

Your Company being a Non-Banking Finance Company, its activities are not energy intensive. However, your Company has taken adequate measures for conservation of energy and usage of alternative source of energy, wherever required.

b) Technology Absorption

Your Company being a Non-Banking Finance Company, its activities do not require adoption of any specific technology. However, your Company has been in the forefront in implementing latest information technologies & tools towards enhancing our customer convenience.

Few of the initiatives taken by the company in IT for improved business efficiency, ease of operation, improved risk management practice and for providing best stakeholders experience based are as follows:

Through the implementation and continuous enhancement of the core banking solution (CBS) and customer relationship management(CRM) systems across our branches over the last couple of years, the Company could achieve substantially improved efficiency, control and customer convenience. With a view to leveraging technology and moving towards paperless systems for the preservation of the environment, the Company has transitioned to the digital platforms, mainly the Web and Android based, for automation of various processes involved in our business operations.

A few of the key initiatives that are strengthened our digital capabilities are given below.

a. API Integrations with Service Providers and Business Verticals: API integration has been enabled in Core Banking Solution during last year for International Money Transfers, Domestic Money Transfers, and other services etc.

b. Virtual Bank Account for Gold Loan: This facilitates Customer to remit their Gold Loan repayments through various banking channels such as 1MPS, NEFT, RTGS etc with their Virtual bank account number provided in the Gold Loan pledge form.

c. Online Gold Loan (OGL) Integration with C-DAC & NSDL eSign Functionality: OGL has been enabled for 24x7 availability of Gold Loan for customers through iMuthoot Mobile App and Muthoot Online portal.

d. eKYC: The eKYC project has been enabled for customer onboarding through the CRM Solution. Presently most of new KYCs are being created through eKYC.

e. B2C Self Service Platforms: Online Gold Loan through Customer Bank Account and 1VR based Gold-ATM facility has been provided. Using this facility, customers having difficulty in accessing Internet can withdraw the money from any 1MT enabled ATMs across India.

f. Internal Credit Rating platform: The existing CBS computing engine has been enhanced to generate Credit Scores of customers. Accordingly, the system can also allocate loyalty points to the customers.

g. Mobile App Development

The inhouse Mobile App development team has been developing various Apps in both in Android and 1oS platforms for B2C and B2E Enterprise Mobility Platforms and internal process automations. A few of the features of the Apps are given below.

- iMuthoot: Gold Loan customers can login to iMuthoot App with their existing web online username and password. Currently more than 5 lakh customers have downloaded the App and around 3 lakh have registered for availing gold loan services through the iMuthoot channel.

- Loan@Home for Customer/Enterprise: This provides flexibility to the customer to avail of gold loan without visiting a branch.

- MapMe: Branch GPS mapping for our branches for the convenience of customers.

- MIS: Business position and trend chart for managers and senior executives

- HRMS: E mployees can apply for leave through the Android App.

- CBS Transaction Approval: This help the mangers and approving authorities to approve the CBS transaction requests while on the move.

- DigiMuthoot Security Access: This is designed as a common Security framework for all individual modules of Muthoot mobile digital plat form ensuring access controls and management for all Muthoot digital platforms.

32. Audits

a) Statutory Audit under section 139

On recommendation of Board of Directors of the Company, members of the Company appointed M/s. Varma & Varma, Chartered Accountants, Kochi (Firm Reg No. 004532 S) as Statutory Auditor of the Company at the 20th Annual General Meeting of the Company for a term of 5 consecutive years i.e till the conclusion of 25th Annual General Meeting pursuant to Section 139 of the Companies Act, 2013.

Pursuant to notification issued by the Ministry of Corporate Affairs on May 07, 2018, amending section 139 of the Companies Act 2013, the mandatory requirement for ratification of appointment of auditors by the members at every AGM does not arise.

The Company has received a certificate from the above Auditors to the effect that they are eligible to continue as Auditors in accordance with the provisions of Section 141 of the Companies Act, 2013.

The Report given by M/s M/s. Varma & Varma, Chartered Accountants, Statutory Auditors on the financial statement of the Company for the year 2017-18 is part of the Annual Report.

b) Secretarial Audit under Section 204

The Board had appointed M/s KSR & Co., Company Secretaries LLP, Coimbatore to conduct Secretarial Audit for the Financial Year 2017-18. The Secretarial Audit report is annexed to this report as Annexure 10.

c) Explanations or comments by the Board on qualification, reservation or adverse remark or disclaimer on audits for financial year 2017-18

There are no qualifications, reservation or adverse remark or disclaimer on audits under Section 139 and Section 204 of Companies Act, 2013 for financial year 2017-18.

33. Reporting on Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Internal Complaints Committee constituted by your Company under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013 looks into the complaints of aggrieved women employees, if any, and is instrumental in:

- promoting gender equality and justice and the universally recognized human right to work with dignity

- prevention of sexual harassment of women at the workplace

There were 6 reported cases of sexual harassment, wherein lady officials had complained against harassment by their senior official in their Branch/Region. Action taken was prompt following investigation by the Internal Complaints Committee. Evidence was examined and the erring officials were heard. On finding truth in the complaints, a Report was sent to HRD Department. Disciplinary action was initiated based on the Report, against the officials concerned and disciplinary procedures were completed speedily.

34. Personnel

The Disclosure required under the provisions of Section 197 of the Companies Act, 2013 read with Rule 5 (1) and Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to this report as Annexure 11.

35. Significant and material Orders passed by Regulators or Courts or Tribunals

There are no significant and material orders passed by the regulators or courts or tribunals, which would impact the going concern status of your Company and its future operations.

36. Material Changes and Commitments affecting the financial position of the Company between the end of the financial year to which Financial Statements relate and the date of the report

No material changes and commitments affecting the financial position of your Company occurred between the end of the financial year to which this financial statements relate and the date of this report.

37. Directors’ Responsibility Statement

In accordance with the provisions of Section 134(5) of the Companies Act, 2013 with regard to Director’s Responsibility Statement, Directors state that: —

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis;

(e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

38. Disclosure pursuant to Part A of Schedule V of SEBI LODR

Disclosure pursuant to Part A of Schedule V read with Regulation 34(3) and 53(f) of SEBI is attached as Annexure 12 of this report.

39. Acknowledgement

Your Directors thank the Company’s stakeholders in large including investors, customers, banks, financial institutions, rating agencies, debenture holders, debenture trustees and well-wishers for their continued support during the year. Your Directors place on record their appreciation of the contribution made by the employees of your Company and its subsidiaries at all levels. Your Company’s consistent growth was made possible by their hard work, solidarity, cooperation and support. The Board sincerely expresses its gratitude to Reserve Bank of India, Securities and Exchange Board of India and Ministry of Corporate Affairs for the guidance and support received from them including officials there at from time to time.

40. Forward Looking Statements

This Report(s) contains certain forward looking statements within the provisions of Listing agreements and hence reasonable caution is to be exercised by stakeholders while relying on these statements.

For and on behalf of the Board of Directors

M. G. George Muthoot George Alexander Muthoot

Chairman Managing Director

Place: Kochi

Date: August 14, 2018

Registered Office:

2nd Floor, Muthoot Chambers,

Opposite Saritha Theatre Complex,

Banerji Road,

Kochi - 682 018


Mar 31, 2017

Dear Stakeholders,

Directors of your Company have pleasure in presenting the 20th Annual Report of the Company together with the audited financial statements (standalone and consolidated) for the year ended 31st March, 2017.

1. FINANCIAL SUMMARY

The financial performance of your Company for the year ended 31st March, 2017 are summarized below:

(Rs, in Crores)

Standalone

Consolidated

Particulars

Year ended 31st March, 2017

Year ended 31st March, 2016

Year ended 31st March, 2017

Year ended 31st March, 2016

Total Revenue

5,747

4,875

5,938

4,941

Total Expenses

3,826

3,558

3,980

3,614

Profit Before Tax

1,921

1,317

1,958

1,327

Tax expense

741

507

751

509

Profit for the year

1,180

810

1,207

818

Shareholders’ Funds

6,516

5,619

6,538

5,622

Total Liabilities

24,197

21,430

25,646

21,773

Total Assets

30,713

27,049

32,184

27,395

2. DIVIDEND

The Company has during the year 2016-17 paid an interim dividend of Rs, 6/- per equity share (60% of face value).

The dividend payout amount including the dividend distribution tax will be Rs, 288 crs representing 24.45% of profit after tax for the year

Directors of your Company decided to plough back the remaining profit after tax for business activities and hence have not recommended any final dividend.

Directors of your Company has approved a Dividend Distribution Policy as per Securities and Exchange Board of 1ndia (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Details of the policy is available on the website of the Company at www.muthootfinance.com/policy/policy-investor and is attached to this report as Annexure 1.

The list of unpaid dividend is available on the Company’s website www.muthootfinance.com. Shareholders are requested to check the said list and if any dividend due to them is remaining unpaid in the said list, then shareholders can approach the Company or Registrar and Transfer Agent of the Company for release of unpaid dividend.

As per Section 124(5) of the Companies Act, 2013, the Company shall transfer the dividend that remained unclaimed for a period of seven years from the date of transfer to unpaid dividend account to the 1nvestor Education and Protection fund (1EPF). Further as per Section 124(6) of the Companies Act, 2013, the Company shall transfer all shares in respect of which the unclaimed dividend has been transferred to 1EPF. No claim will lie on Company on account of dividend after the dividend is transferred to 1EPF.

3. TRANSFER TO RESERVES

Your Board of Directors has transferred an amount of Rs, 236 Crores to the Statutory Reserve maintained under Section 451C of the RB1 Act, 1934. An amount of Rs, 482 Crores has been transferred to Debenture Redemption Reserve. Post transfer of profits to reserves and distribution of dividend, your Board proposes to retain Rs, 1,056 Crores in the Profit and Loss Account.

4. ECONOMIC SCENARIO

The 1ndian economy has weathered many challenges successfully in recent times. Two important domestic policy developments in 1ndia: a constitutional amendment making way for the Goods and Service Tax (GST) and withdrawal of the highest denomination notes (Rs, 500 and Rs, 1000) which intends to curb black money and running of a parallel economy.

Demonetization is also very unusual in its monetary consequences. 1t has reduced sharply, the supply of one type of money—cash—while increasing almost to the same extent another type of money—demand deposits. This also helped in increasing transactions through digital money.

With a slow start in 2016, the economic momentum recovered towards the middle of the year. While this growth momentum was temporarily impacted with demonetization, the 1ndian economy appears to be recovering fast and will continue as one of the fastest growing nations. Fixed investment rate in the economy has consistently declined in the past few years, more so the private investment. Raising the growth rate of the economy will to a great extent depend on quickly reversing this downward trend in the investment. The economy is expected to grow by 7.7 per cent in the current year.

The Goods and Services Tax (GST) - constitution amendment bill, passed by the government, effective from July 1st, 2017 showed a significant impact on the taxation structure in the country. The GST will create a common 1ndian market, improve tax compliance and governance, and boost investment and growth; it is also a bold new experiment in the governance of 1ndia’s cooperative federalism. What will be critical is the efficiency in relation to its implementation. Your

Company believes that in the medium run it will lead to more digitalization and will help in effective governance.

5. COMPANY’S PERFORMANCE

During the Financial Year, Company saw 46% increase in its profitability with a net profit of Rs, 1,180 Crores for the year ended March 31, 2017 as compared to Rs, 810 Crores for the year ended March 31, 2016. Profit before tax increased by 46% to Rs,1,921 Crores. Total 1ncome has increased from Rs, 4,875 Crores for the year ended March 31, 2016 to Rs, 5,747 Crores for the year ended March 31, 2017 which is mainly due to increase in 1nterest 1ncome of the Company. 1nterest income of the Company increased to Rs, 5,655 Crores from previous year’s interest income of Rs, 4,813 Crores. Loan Portfolio of the Company increased by Rs, 2,899 Crores during the year reaching Rs, 27,278 crores as on March 31, 2017 as against Rs, 24,379 Crores as on March 31, 2016. The Return on Average Loan Assets increased to 4.47% in FY 2016-17 as compared to 3.32% in FY 2015-16. The cost of funds declined to 8.69% compared to 9.25% in fiscal 2015-16. 1nterest yield increased to 21.43% as compared to 19.72% in FY 2015-16. On account of the above, the Net 1nterest Margin improved to 12.74% as against 10.47% in FY 2015-16. The Company remitted to exchequer Rs, 804 crores as taxes.

6. RESOURCE MOBILIZATION

(a) Non-Convertible Debentures:

Your Company successfully completed 15th and 16th 1ssue of Non-Convertible Debentures through Public 1ssue during FY 2016-17 raising Rs, 1,832 Crores.

Directors of your Company are thankful to all investors who have subscribed the debentures through Public 1ssue and shown their trust towards your Company.

Subordinated Debts represents long term source of funds for the Company and the amount outstanding as on 31st March, 2017 was Rs, 1,912 Crores. 1t qualifies as Tier 11 capital under the Non-Banking Financial Company- Systemically 1mportant Non- Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016.

(b) Bank Finance:

Bank Finance remains an important source of funding for your Company. Commercial Banks continued their support to your Company during Financial Year. As of 31st March, 2017, borrowings from banks were Rs, 9,202 Crores as against Rs, 7,687 Crores in the previous year

7. EQUITY SHARE ISSUANCES Employee Stock Options Schemes

During the year, your Company has allotted 4,73,217 equity shares of face value of Rs, 10/- each under Muthoot ESOP 2013 pursuant to exercise of 36,307 options of Rs, 10/- each for Loyalty Options and 4,36,910 options of Rs, 50/- each for Growth Options by Employees of the Company.

The disclosures as required under SEB1 (Share Based Employee Benefits) Regulations, 2014 read with SEB1 Circular C1R/CFD/POL1CY CELL/2/2015 dated 16th June 2015 is attached to this report as Annexure 2. The same disclosure is available at Company''s website www. muthootfinance.com/investors/disclosure-esop. Please refer note 24(c) of Notes on Accounts in Standalone Financial Statements for further disclosures on ESOP The Company does not have any scheme to fund its employees to purchase the shares of the Company.

Your Company has received the certificate from the Statutory Auditors of the Company certifying that the ESOP scheme is implemented in accordance with the applicable SEB1 Guidelines/Regulations and is in accordance with the resolution passed by the members of the Company. The certificate would be placed at the Annual General Meeting for inspection by members.

The Credit Ratings assigned to various instruments of the Company as of now are as follows:

Credit Rating Agency

Instruments

Ratings

Limit in '' in Crores

CR1S1L

Commercial Paper

CR1S1L A1

4000

Subordinated Debts

CR1S1L AA/Stable

100

Non Convertible Debentures

CR1S1L AA/Stable

500

1CRA

Commercial Paper

1CRA A1

200

Short Term Bank Borrowings*

1CRA A1

10,818

Long Term Bank Borrowings*

1CRA AA/Stable

9,337

Subordinated Debts

1CRA AA/Stable

100

Non Convertible Debentures

1CRA AA/Stable

200

*subject to overall rating of Rs, 12,760 Crores for line of credit.

The stock option schemes are in compliance with Securities and Exchange Board of 1ndia (Share Based Employee Benefits) Regulations, 2014 and there have been no material changes to these plans during the Financial Year 2016-17.

8. CREDIT RATING

Your Company’s debt instruments are rated by 1CRA and CR1S1L, two of the leading Credit Rating Agencies in the country. 1n July 2016 CR1S1L and in August 2016 1CRA upgraded your Company’s Long Term Debt rating from AA-/Stable to AA/Stable.

The rating upgrade is a reflection of consistent performance in spite of going through turbulent times in the last four years as well as improvement in financial performance. This upgrade is a recognition of the efforts of ‘Team Muthoot’. We believe that, under AA category, we enter a different league of credit rated companies. We hope this upgrade will enable us to get finer rates from financial institutions and banks enabling us to reduce our cost of borrowings.

9. INTERNAL AUDIT AND FINANCIAL CONTROL

1n keeping with the size of the Company and its business model, your Company has developed over the years, a proper, adequate and well documented internal audit and control system. The control system ensures that the Company’s assets are safeguarded and protected. The audit system also takes care to see that revenue leakages and losses to the Company are prevented and our income streams are protected. The control system enables reliable financial reporting .

A fully fledged Audit and 1nspection Department has been set up to conduct timely and frequent internal audit to evaluate the adequacy of systems and procedures and also to evaluate the status of compliance to Company’s guidelines and other statutory requirements. The department has on its rolls around 945 dedicated personnel who relentlessly safeguard the safety of your Company’s assets, ensures the quality of assets pledged and also evaluates the adequacy of risk management systems at its operating units. 1n keeping with the huge network and geographic outreach of the operating units spread across the length and breadth of the country, the audit functions have been decentralized through setting up of Regional Audit offices in important Regional centers. The Regional Audit Offices exercise field level control over the branches through onsite visits and online audit systems. The field level Auditors report to Regional Audit offices who in turn shares their findings with the Audit & 1nspection Department at the Registered Office of the Company.

Under the present Audit Architecture, the 1nternal Auditor(s) at the Registered Office reports to the Audit Committee regarding significant audit findings and also preventive and corrective measures to protect the interests of the Company. The audit Committee undertakes an evaluation of the adequacy and effectiveness of internal control systems. 1t also oversees the implementation of audit recommendations especially involving the risk management measures.

Apart from monitoring the internal control measures adopted by the Audit department, the Committee also imparts guidance and constructive suggestions for improvement of the audit function in the Company. The Audit architecture now prevalent in the Company enjoys independence in its functioning and embodies best Corporate Governance standards.

Reference is invited to Note no. 34 to the standalone financial statements contained in the annual report regarding frauds committed by employees of the Company. Company has taken or is in the process of taking disciplinary / legal action against such employees.

10. HUMAN RESOURCES

Your Company has always considered its employees as an important resource of the Company and is aimed at providing employee satisfaction, enabling them to deliver better results year over year.

As on March 31, 2017, the Company had 24,205 employees in its rolls at various level of organizational structure. Your Company is always committed in providing employees with ample opportunities to learn and advance in career. 1n quest for having a satisfied work force, your Company focused on four major areas for employee engagement during the last financial year

Rewards & Recognition

Based on performance of the employees, management has introduced new means of payouts and increased the percentage of payout for existing incentives. An ex-gratia payment along with Festival bonus, which is almost equal to One month pay of employees at each grade were paid to employees. Management also took steps to increase the payout of 1ncentive for Gold Loan Portfolio Growth and for 1nterest Collection. The management is also rewarding employees with foreign trips to exquisite locations based on their achievement.

Training and Development

Your Company has offered multiple training programs to employees to help in their development. The programs includes product/process related trainings, soft skill trainings, leadership trainings and certification trainings for different group of employees. Training imparted through two premium training establishments of the Company and 68 Regional Learning Centers, in the last financial year was to the tune of 63,088 mandays.

Promotions

Your Company has robust mechanism for identifying performers and has taken all steps to promote eligible employees to the next level.

Performance Management

Your Company had formulated a Performance Score card method of performance assessment for all employees in the branch model. A pre-defined score card was used to capture performance of employees on a quarterly basis and all related corrective measure and fine tuning of performance was done using this method. The company also encouraged low performing employees through well-defined performance growth programs. Use of Performance Score cards has helped in improving role clarity and objectiveness to performance assessment. Performance score is used as an important parameter for deciding the Annual 1ncrements of the employees.

Your Company offers various other benefits to employees including Employee Stock Options and various Statutory and Non Statutory Staff Welfare Measures. All eligible employees are covered under statutory provisions namely EPF, ES1, Maternity Benefits, Gratuity etc. Employees were enrolled under the National Pension System (NPS) with Company also making contribution along with their contribution .

11. MAJOR MARKETING & PROMOTION INITIATIVES Inbound Call Management System

Your Company introduced the 1nbound Call Management System designed to bring down the turnaround time while reaching out to customers.

This platform has enabled your Company to reach out to potential customers almost instantly. Once a customer observes our advertisement he/she attempts to contact Muthoot Finance by calling our Toll Free Number. He will be asked to feed the pincode of his location and thereafter he is directly connected to the nearest Muthoot Finance branch . This prompt response mechanism has helped your Company to upgrade its customer service levels.

Introduction of state-of-the-art CRM

Your Company launched the State of the art CRM Software in pan 1ndia. This has enabled to understand and profile our customers better and deliver increased value to them. This new system will help us evolve better schemes and products tailor-made for different customer groups.

Association with Indian Super League

Your Company continue its association with 1ndian Super League (1SL) as the Official Referee Partner and Fair Play Award Sponsor. Your Company have always been in the forefront to promote sports and celebrate sportsmanship. Association with 1ndian Super League has given the Muthoot brand an exposure to the young 1ndian diaspora. As soccer is gaining popularity in 1ndia, an association like this has further helped your Company present its fair and trustworthy credentials as a financial supermarket with a business legacy of over 130 years.

Mission Lead Demonetization

During the time of demonetization when customers were struggling with problems precipitated by the shortage of currency, your Company stepped up and launched an initiative across North, East and West 1ndia that entailed meeting and interacting with people while they were waiting in long serpentine queues. Objective was to educate them on the various modes of financial assistance that could be provided by Muthoot Finance across cash and cashless channels. These include various digital offerings like Muthoot WebPay, iMuthoot mobile app, utilization of Muthoot Finance DCB V1SA Card for availing gold loans directly on card, direct bank credits, use of POS machines for repayments, Aadhar enabled e-KYC. etc.

12. CAPITAL ADEQUACY

Your Company’s Capital Adequacy Ratio as of March 31, 2017 stood at 24.88% of the aggregate risk weighted assets on balance sheet and risk adjusted value of the off-balance sheet items, which is well above the regulatory minimum of 15%. Out of the above, Tier 1 capital adequacy ratio stood at 21.78% and Tier 11 capital adequacy ratio stood at 3.10%.

13. PUBLIC DEPOSITS

The Company is a Systemically 1mportant Non-Deposit Taking NBFC and hence has not accepted any public deposits.

14. RBI GUIDELINES

Your Company has complied with all the applicable regulations prescribed by the Reserve Bank of 1ndia from time to time. Please refer note 41 and 42 of Notes on Accounts in Standalone Financial Statements for additional disclosures required under RB1 Guidelines applicable to the Company.

15. SUBSIDIARIES/ ASSOCIATES/ JOINT VENTURES

As on March 31, 2017 your Company has four subsidiaries namely M/s. Asia Asset Finance PLC,

M/s. Muthoot Homefin (1ndia) Limited, M/s. Muthoot 1nsurance Brokers Private Limited and M/s. Belstar 1nvestment and Finance Private Limited. Your Company’s subsidiaries have considerably contributed to the overall growth of your Company during the year. As per Section 136 of the Companies Act, 2013 the audited financial statements, including the consolidated financial statements of your Company and the audited accounts of each of its subsidiaries are available on the website of the Company at www.muthootfinance.com/ corporate/our_subsidary. The above documents will also be available for inspection at the Registered Office of the Company during business hours.

The Board of Directors of your Company has formulated a policy on material subsidiary, which is displayed on the web site of the Company at www.muthootfinance.com/ policy/policy-investor.

Financial Performance & position of Subsidiaries

a. Asia Asset Finance PLC:

Asia Asset Finance PLC, (AAF), a Company listed in Colombo Stock Exchange, is a subsidiary of your Company from December 31, 2014. Company increased its shareholding in Asia Asset Finance PLC from 59.70% to 60% during the year. AAF is a registered Financial Company with Central Bank of Sri Lanka and is mainly engaged in Vehicle Finance and Hire Purchase Activities. The Company also started business relating to lending against collateral of gold jewellery and micro finance and is presently contributing a significant part of loan portfolio and income. AAF has operations across Sri Lanka with 15 branches as on March 31, 2017. AAF has made considerable progress in its business. 1ts major financial parameters for Financial Year 2016-17 are as follows:

Parameters

Total

Income

Profit Before Taxation

Profit After Taxation

Shareholder’s Funds

Total Assets

Total Outside Liabilities

Amount in Rs, (in Crores)LKR/'' as on 31.03.2017-0.42621

97*

14*

13*

74

444

370

/ Average Exchange Rate -0.45423*

Amounts in LKR (in crores)

213

31

28

174

1003

829

The total income of AAF has increased by 48% at Rs, 97crs, which has contributed to the overall improvement of its profitability by 51% reaching Rs,13crs. 1ts asset base grew by 25% reaching Rs,444crs. Directors of your Company are hopeful that AAF will be showing continuous growth in the coming years and will contribute significantly to consolidated profit of your Company.

b. Muthoot Homefin (India) Ltd:

M/s. Muthoot Homefin (1ndia) Ltd (MH1L), a registered Housing Finance Company licensed by National Housing Bank is a subsidiary of your Company. During the Financial Year 2016-17, your Company increased its shareholding in MH1L by acquiring 26,700,000 shares for a consideration of Rs, 30Crores. Post-acquisition your Company holds 88.27% of the equity capital of MH1L.

1ts major financial parameters for Financial Year 2016-17 are as follows:

During the year, its loan portfolio increased by Rs, 409crs at Rs, 441crs. Total revenue for FY17 stood at Rs, 24crs as against previous year total revenue of Rs,2crs. 1t achieved a profit after tax of Rs, 3crs during FY17 as against previous year profit after tax of Rs,0.01crs. We believe that housing finance sector is the next best secured lending opportunity after gold loan and with the central government making a major push for affordable housing , we expect your Subsidiary Company to tap this opportunity in the coming years and to contribute significantly to the consolidated profit of your Company.

c. Muthoot Insurance Brokers Private Limited:

Muthoot 1nsurance Brokers Private Limited (M1BPL), is an unlisted Private Limited Company holding a license to act as Direct Broker from 1nsurance Regulatory and Development Authority of 1ndia (1RDA) since 2013. During the Financial Year 2016-17, your Company acquired 100% equity shares of M1BPL from the existing shareholders for a consideration of Rs, 20 Crores. Post-acquisition M1BPL is a Wholly-Owned Subsidiary Company. 1ts major financial parameters for Financial Year 2016-17 are as follows:

Parameters

Total

Income

Profit Before Taxation

Profit After Taxation

ShareholderRs,s Funds

Total Assets

Total Outside Liabilities

Amount in Rs, (in Crores)

12

9

6

17

18

1

M1BPL generated a First year premium collection amounting to Rs, 70crs during FY17 as against Rs, 49 Crores during previous year. 1ts total revenue increased by 16% at Rs,12crs as against previous year. 1ts profit after tax increased by 18% at Rs,6crs as against previous year.

d. Belstar Investment and Finance Private Limited:

M/s. Belstar 1nvestment and Finance Private Limited (B1FPL) is a micro finance Company.

During the Financial Year 2016-17, your Company acquired 15,017,459 equity shares of B1FPL, by investing Rs, 63 Crores. Post-acquisition your Company holds 64.60% of the equity capital of B1FPL thus making it a Subsidiary Company.

1ts major financial parameters for Financial Year 2016-17 are as follows:

Parameters

Total

Income

Profit Before Taxation

Profit After Taxation

Shareholder’s Funds

Total Assets

Total Outside Liabilities

Amount in Rs, (in Crores)

103

16

10

90

763

673

During the year, its loan portfolio grew by 115% at Rs, 567crs. 1t achieved a profit after tax of Rs,10crs during the year as against previous year profit after tax of Rs,6crs. 1ts Gross and Net NPA stood at 0.09% and 0.02% respectively as on March 31, 2017.

The statement containing the salient features of the financial statement of your Company’s Subsidiaries is attached as Annexure - A to Standalone Financial Statements of the Company as required under Rule 5 of The Companies (Accounts) Rules, 2014.

There are no other Companies which have become or ceased to be Subsidiaries/ Associates/ Joint Ventures of the Company during the Financial Year 2016-17.

16. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013

Pursuant to Section 186(11)(a) of the Companies Act, 2013 (the ‘Act’) read with Rule 11(2) of the Companies (Meetings of Board and its Powers) Rules, 2014, the loan made, guarantee given or security provided in the ordinary course of business by a Non- Banking Financial Company (NBFC) registered with Reserve Bank of 1ndia are exempt from the applicability of provisions of Section 186 of the Act. As such the particulars of loans and guarantee have not been disclosed in this Report. The details of the Current 1nvestments and NonCurrent 1nvestments of the Company are furnished under Note no. 10 forming part of the Standalone Financial Statements for the year ended March 31, 2017.

17. EXTRACT OF ANNUAL RETURN

Extract of Annual Return as required under Companies Act, 2013 is annexed as Annexure 3.

18. CONSOLIDATED FINANCIAL STATEMENTS

The audited consolidated financial statements of the Company along with its subsidiaries AAF, MH1L, B1FPL and M1BPL prepared in accordance with the Generally Accepted Accounting Principles in 1ndia (1ndian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 is provided in the Annual Report.

19. RISK MANAGEMENT AND RISK MANAGEMENT POLICY

Your Company has a Board approved 1ntegrated Risk Management Policy which has laid down a framework for identifying, assessing, measuring various elements of risk involved in the business and formulation of procedures and systems for mitigating such risks. During the Financial Year, your Directors have approved the updated Risk Management Framework of the Company which has incorporated various new practices and risk control measures.

Risk Management Committee of the Board of Directors of your Company constituted in accordance with the Reserve Bank of 1ndia guidelines has overall responsibility for overseeing the Risk Management activities of the Company, approving measurement methodologies and appropriate risk management procedures across the organization.

The Risk Management Committee Comprises of:

Name of the Director

Designation in the Committee

Nature of Directorship

K. George John

Chairman

1ndependent

Director

Justice K John Mathew

Member

1ndependent

Director

George Jacob Muthoot

Member

Whole- time Director

Risk Management Department periodically places its report on risk management to the Risk Management and Audit Committee of the Board of Directors. During the year, your Company has incorporated various practices and suggestion as directed by the Risk Management and Audit Committee which helped the Company in attaining an improved vigilance and security system, improved security of gold jewellery and cash, improved system of grading of branches, Regional Offices etc.

1T based risk management initiatives are discussed in section related to ‘Technology Absorption’ in this report of Board of Directors.

20. CORPORATE SOCIAL RESPONSIBILITY

As per Section 135 of Companies Act, 2013, your Board has constituted a Corporate Social Responsibility (CSR) committee to support the Company in achieving the CSR objectives of the Company. The CSR committee of the Board of Directors comprises of the following:

Name of the Director

Designation in the Committee

Nature of Directorship

K. George John

Chairman

1ndependent

Director

John K. Paul

Member

1ndependent

Director

George Alexander Muthoot

Member

Managing Director

The Company’s CSR policy is committed towards CSR activities as envisaged in Schedule V11 of the Companies Act, 2013. The Details of CSR policy of the Company are available on the website of the Company at www. muthootfinance.com/policy/policy-investor. The Annual Report on CSR activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 is attached to this report as Annexure 4.

1n terms of Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility) Rules, 2014 as amended (“CSR Rules”) and in accordance with CSR Policy, during the year, the Company has spent '' 15 crores towards CSR projects/ programs.

21. BUSINESS RESPONSIBILITY REPORT

The Securities and Exchange Board of 1ndia (Listing Obligations and Disclosures Requirements) Regulations,

2015 mandates the inclusion of the Business Responsibility Report (BRR) as part of the Annual Report for top 500 listed entities based on their market capitalization. The BRR is attached to this report as Annexure 5.

22. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

The Board of Directors of your Company has formulated a policy on related party transactions, which is displayed on the web site of the Company at www. muthootfinance.com/policy/policy-investor. This policy deals with review of the related party transactions and regulates all transactions between the Company and its Related Parties.

Prior omnibus approval is obtained for related party transactions which are of repetitive nature and entered in the ordinary course of business and at arm’s length.

All related party transactions are placed before the Audit Committee for review and approval.

All transactions or arrangements with related parties referred to in Section 188 (1) of the Act, entered into during the year were on arm’s length basis or were in ordinary course of business or with approval of the Audit Committee.

During the year, your Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. Further, there were no material related party transactions which required approval of shareholders as required under Chapter 1V of SEB1 (Listing Obligations and Disclosure Requirements) Regulations, 2015. Accordingly, the disclosure of related party transactions as required under Section 134(3)

(h) of the Companies Act, 2013 in Form AOC 2 is not applicable to your Company.

The details of related party and transactions with the related parties as required under chapter 1V of SEB1 (Listing Obligations and Disclosure Requirements) Regulations, 2015 appears on the Note no. 32 of the Notes to Accounts of the Standalone Financial Statements of the Company.

23. AUDIT COMMITTEE

The Audit Committee of our Board was reconstituted vide board resolution dated May 26, 2014 pursuant to Section 177 of the Companies Act 2013. The Audit Committee comprises of:

Name of the Director

Designation in the Committee

Nature of Directorship

George Joseph

Chairman

1ndependent

Director

John K. Paul

Member

1ndependent

Director

George Alexander Muthoot

Member

Managing Director

All recommendations of Audit Committee are accepted by your Board and details on Audit committee appear on the report on Corporate Governance.

24. VIGIL MECHANISM

To conduct affairs of your Company and its various constituents in a fair and transparent manner and as part of Vigil Mechanism, and providing whistle blowers a safe and reliable way of sharing information, your Company has formulated a Whistle Blower Policy in compliance with Companies Act, 2013 and SEB1 (Listing Obligations and Disclosure Requirements) Regulations, 2015. There is graded reporting structure under the Policy and also provides provision for direct access to Chairman of Audit Committee. The whistle blower policy is available at website of the Company at www.muthootfinance.com/ policy/policy-investors.

25. LISTING

Equity Shares of your Company are listed on NSE 1ndia Ltd and BSE Ltd. Your Company has paid required listing fees to Stock Exchanges.

26. CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL

The term of Mr. John K Mathew as 1ndependent Director is expiring at the ensuing 20th Annual General Meeting and hence he is retiring at the Annual General Meeting this year

Mr. George Joseph, Mr. K George John, and Mr. John K Paul were appointed as 1ndependent Directors and hence shall not be liable to retire by rotation.

Term of Ms. Pamela Anna Mathew as 1ndependent Director is expiring at the ensuing 20th Annual General Meeting and Board recommends her re-appointment as 1ndependent Director for a further period of three years.

Mr. George Jacob Muthoot, Whole- time Director and Mr. Alexander M George, Whole Time Director of the Company retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

On recommendation of Nomination and Remuneration committee, your Board has considered induction of three new directors - Mr. Jacob Benjamin Koshy, Mr. Pratip Chaudhuri and Mr. Jose Mathew in the Board as 1ndependent Directors to be appointed by members in the ensuing 20th Annual General Meeting.

Mr. Jacob Benjamin Koshy is the retired Chief Justice of Patna High Court. He also served as the Acting Chief Justice Of High Court Of Kerala. He was also the Chairman of the Kerala State Human Rights Commission. Your Board believes that his appointment will benefit your Company through his role as 1ndependent Director.

Mr. Pratip Chaudhuri is the former Chairman of State Bank of 1ndia. He held several important positions during his 38 years career in SB1. Your Board believes his appointment will benefit the Company through his role as 1ndependent Director.

Mr. Jose Mathew is a Chartered Accountant by profession and is also a distinguished entrepreneur in the field of Tourism. He has served in various capacities like General Manager of Kerala State 1ndustrial Enterprises and Managing Director of Kerala State

Drugs and Pharmaceuticals Ltd. Your Board believes his appointment will benefit the Company through his role as 1ndependent Director.

After evaluating the eligibility criteria under Reserve Bank of 1ndia guidelines, Companies Act, 2013 and SEB1 LODR Regulations 2015, your Board recommends appointment of Mr. Jacob Benjamin Koshy, Mr. Pratip Chaudhuri and Mr. Jose Mathew as 1ndependent Directors of the Company. Detailed profile of proposed Directors as required under SEB1 LODR is annexed to the notice calling Annual General Meeting of members of the Company.

27. MEETING OF THE BOARD

During the Financial Year 2016-17, your Board of Directors met seven times on 12.04.2016, 27.05.2016,

28.07.2016, 23.08.2016, 11.11.2016, 13.02.2017 and

23.03.2017.

28. DECLARATION FROM INDEPENDENT DIRECTORS

The 1ndependent Directors have submitted disclosure that they meet the criteria of independence as provided under Section 149(6) of Companies Act, 2013 and SEB1 Regulations. A statement by Managing Director confirming receipt of this declaration from 1ndependent Directors is annexed to this report as Annexure 6.

29. POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS AND PERFORMANCE EVALUATION OF BOARD, COMMITTEES AND DIRECTORS

a) Policy on Appointment and Remuneration Of Directors

Board of Directors of your Company, on recommendation of Nomination and Remuneration Committee, has formulated a policy for selection, appointment and remuneration of the directors, senior management personnel as required under Section 178(3) of Companies Act, 2013. Details of the said Policy is annexed to this report as Annexure 7.

The Nomination and Remuneration Committee which was reconstituted on January 28, 2016 comprises of the following directors:

Name of the Director

Designation in the Committee

Nature of Directorship

John K Paul

Chairman

1ndependent

Director

Kariath George John

Member

1ndependent

Director

K John Mathew

Member

1ndependent

Director

Terms of reference of the Nomination and Remuneration

Committee include the following:

- 1dentifying persons who are qualified to become Directors and who may be appointed in Senior Management in accordance with Criteria as laid down and recommend to Board their appointment and removal.

- Review and carry out every Director’s performance, the structure, size and composition including skills, knowledge and experience required of the Board compared to its current position and make recommendations to the Board with regard to any changes;

- Determine and agree with the Board the framework for broad policy for criteria for determining qualifications, positive attitudes and independence of a director

and recommend to the Board a policy, relating to remuneration for the Directors, Key Managerial Personnel and other employees.

- Review the on-going appropriateness and relevance of the remuneration policy.

- Ensure that all provisions regarding disclosure of remuneration and Remuneration Policy as required under the Companies Act, 2013 or such other acts, rules, regulations or guidelines are complied with.

- To administrate Employee Stock Options of the Company.

b) Performance evaluation of Board, Committees and Directors

The SEB1 (Listing Obligations and Disclosures Requirements) Regulations, 2015 and the Companies Act, 2013 require the evaluation of the performance of the Board, its Committees and the individual directors. The Board carried out annual evaluation of its own performance, its Committees and individual Directors based on criteria and framework adopted by the Board and in accordance with existing regulations. The details of training, appointment, resignation and retirement of Directors, if any, are dealt with in the report of Corporate Governance. Brief details of profile of each Director appear in Annual Report of the Company.

c) Independent Directors Meeting

During the year, a meeting of 1ndependent Directors was held as required under Companies Act, 2013 and in Compliance with requirement under Schedule 1V of the Act and as per requirements of SEB1 (Listing Obligations and Disclosure Requirements) Regulations, 2015 and discussed matters specified therein.

30. CORPORATE GOVERNANCE REPORT

Your Company has complied with the Corporate Governance norms as stipulated in Chapter 1V of SEB1 (Listing Obligations and Disclosure Requirements) Regulations, 2015. As per Regulation 34 of SEB1 (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Detailed report on Corporate Governance is attached to this Report as Annexure 8.

31. MANAGEMENT DISCUSSION AND ANALYSIS STATEMENT

Management Discussion and Analysis on the business of the Company is attached to this Report as Annexure 9.

32. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

The information pursuant to Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is as follows:

a) Conservation of energy

Your Company being a Non-Banking Finance Company, its activities are not energy intensive. However, your Company has taken adequate measures for conservation of energy and usage of alternative source of energy, wherever required.

b) Technology Absorption

Your Company being a Non-Banking Finance Company, its activities do not require adoption of any specific technology. However, your Company has been in the forefront in implementing latest information technologies & tools towards enhancing our customer convenience.

Few of the initiatives taken by the company are as follows:

Core Banking Solution(CBS)

The in-house developed and maintained core banking solution(CBS) has been providing very high(99.99%) uptime which handles the transactions processing, back office and M1S for the Company’s entire branches and offices. The CBS has been continually updated so as to meet the varied business changes as also to comply with the operational and control requirements.

The critical CBS system is collocated at the high availability 1T1-Trimax data center in Bangalore. The disaster recovery(DR) systems are set up in 1nfopark, Kochi so as to ensure business continuity in case of a major disaster in Data Centre.

Online Payment Channel for Customers

As one of our digital initiative, the online facility for payment of 1nterest and principal has been widely accepted by the customers. This has immensely helped the company and the customers during the post-demonetization period. The online channel has become very popular among the customers due to its availability anywhere, on a 24 by 7 basis.

Customers can use any of the multiple options for payment such as Debit card, Direct debit through online banking, Prepaid cards, Mobile wallets, UP1, etc. Also POS machines are enabled in our Branches to enable our customers do cashless transactions. For loan amount payout to customer bank accounts, we have enabled 1MT, RTGS, NEFT, 1MPS.

Online Gold Loan (OGL)

Online Gold Loan is a convenient product launched to meet the urgent loan requirement of a customer who can avail of the same anytime, anywhere. The loan amount will be directly credited to the customer’s bank account and has facility to repay through online. The loan is disbursed on the basis of the value of gold already pledged at the branch.

Aadhaar-based Electronic KYC

The Company being an approved KYC User Agency (KUA) by U1DA1, it can accept customer Aadhaar number and complete KYC verification with Customer fingerprint image with high security . This e-KYC facility available across the Branches is found convenient to customers and helps us in ensuring the authenticity of the KYC data and effective risk management. Presently around 86% of New KYCs are through e-KYC.

Mobile App iMuthoot

We have developed and implemented a new Mobile Application in Android & iOS and enabled transactions through the convenient channel for customers. Multiple local language option also has been made available. Presently the 1nterest payment, availing Gold loans online, Live Chat with Support Desk & Helpline, Google Maps to locate nearest branch & Book Appointment with branch are made available in iMuthoot.

CRM System

The Company has implemented a functionally rich, highly scalable CRM solution across its Branches and offices. The CRM is tightly integrated with the core banking solution(CBS). AP1s are used for integrating CRM with the different business applications running in the Group.

With the 360-degree view of the customers provided by the CRM, we can manage their relationship more effectively. Also it is expected to help us in cross selling and upwelling the various products & services offered by the business divisions in the Group.

Auto Debit for EMI Products

Enabled NPC1’s automated debiting system of Gold Loan installment scheme. This channels electronic transactions which are repetitive and periodic in nature with a robust, secure and scalable are provided to customers on transaction updates. 1t is highly flexible and convenient to customers platform with end-to-end transaction processing capabilities.

API Integrations

We have developed a strong AP1 integration platform and integrated more than 100 AP1s for banking segments, money transfer, insurance providers and other external partners. This has taken care of multiple transaction concurrency and meets the needs of systems integration for other Divisions of the company.

CCTV Surveillance System

The solution enables live streaming of visuals from cameras installed at branches and offices from ROs/

HO. 1t provides a 360 degree dashboard on the data and KP1s of health of surveillance devices. Facilitates close monitoring of working status of surveillance devices and has instant data recording facility and playback options.

c) Total Foreign Exchange Earned : N1L

Total Foreign Exchange Used : '' 0.10 Crores

33. AUDITS

a) Statutory Audit under section 139

As per Section 139 of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules,

2014, the term of the Company’s auditors M/s Rangamani & Co. (Firm Reg No. 003050 S), Chartered Accountants, Alleppey as Statutory Auditors of the Company expires at the conclusion of the ensuing 20th Annual General Meeting of the Company and hence will be retiring at the Annual General Meeting.

The Board of Directors of the Company at its meeting held on 08th August, 2017, based on the recommendation of the Audit Committee, have recommended for appointment of M/s. Varma & Varma, Chartered Accountants, Kochi (Firm Reg No. 004532 S) as the Auditors of the Company by the Members at the 20th Annual General Meeting of the Company for a term of 5 consecutive years. Accordingly, a resolution proposing appointment of M/s Varma & Varma as the Auditors of the Company for a term of five year from the conclusion of 20th Annual General Meeting till the conclusion of 25th Annual General Meeting pursuant to Section 139 of the Companies Act, 2013, forms part of the Notice of the 20th Annual General Meeting of the Company.

The Company has received a certificate from the above Auditors to the effect that if they are appointed, it shall be in accordance with the provisions of Section 141 of the Companies Act, 2013.

The Report given by M/s Rangamani & Co., Statutory Auditors on the financial statement of the Company for the year 2016-17 is part of the Annual Report. The Board place on record its appreciation for the services rendered by M/s Rangamani & Co., as the Auditors of the Company.

b) Secretarial Audit under Section 204

The Board had appointed M/s KSR & Co., Company Secretaries LLP, Coimbatore to conduct Secretarial Audit for the Financial Year 2016-17. The Secretarial Audit report is annexed to this report as Annexure 10.

c) Explanations or comments by the Board on qualification, reservation or adverse remark or disclaimer on audits for financial year 2016-17

There are no qualifications, reservation or adverse remark or disclaimer on audits under Section 139 and Section 204 of Companies Act, 2013 for financial year 2016-17.

34. REPORTING ON SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The 1nternal Complaints Committee constituted by your Company under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013 looks into the complaints of aggrieved women employees, if any, and is instrumental in:

- promoting gender equality and justice and the universally recognized human right to work with dignity

- prevention of sexual harassment of women at the workplace

There were 8 reported cases of sexual harassment, wherein lady officials had complained against harassment by their senior official in their Branch/

Region. Action taken was prompt following investigation by the 1nternal Complaints Committee. Evidence was examined and the erring officials were heard. On finding truth in the complaints, a Report was sent to HRD Department. Disciplinary action was initiated based on the Report, against the officials concerned and disciplinary procedures were completed speedily.

35. PERSONNEL

The Disclosure required under the provisions of Section 197 of the Companies Act, 2013 read with Rule 5 (1) and Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to this report as Annexure 11.

36. SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNALS

There are no significant and material orders passed by the regulators or courts or tribunals, which would impact the going concern status of your Company and its future operations.

37. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

No material changes and commitments affecting the financial position of your Company occurred between the end of the financial year to which this financial statements relate and the date of this report.

38. DIRECTORS’ RESPONSIBILITY STATEMENT

1n accordance with the provisions of Section 134(5) of the Companies Act, 2013 with regard to Director’s Responsibility Statement, Directors state that: —

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made

judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis;

(e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

39. DISCLOSURE PURSUANT TO PART A OF SCHEDULE V OF SEBI LODR

Disclosure pursuant to Part A of Schedule V read with Regulation 34(3) and 53(f) of SEB1 is attached as Annexure 12 of this report.

40. ACKNOWLEDGEMENT

Your Directors thank the Company’s stakeholders in large including investors, customers, banks, financial institutions, rating agencies, debenture holders, debenture trustees and well-wishers for their continued support during the year. Your Directors place on record their appreciation of the contribution made by the employees of your Company and its subsidiaries at all levels. Your Company’s consistent growth was made possible by their hard work, solidarity, cooperation and support. The Board sincerely expresses its gratitude to Reserve Bank of 1ndia, Securities and Exchange Board of 1ndia and Ministry of Corporate Affairs for the guidance and support received from them including officials there at from time to time.

41. FORWARD LOOKING STATEMENTS

This Report(s) contains certain forward looking statements within the provisions of Listing agreements and hence reasonable caution is to be exercised by stakeholders while relying on these statements.

For and On Behalf of the Board of Directors

M G George Muthoot George Alexander Muthoot

Chairman Managing Director

Kochi,

08th August, 2017

Registered Office:

2nd Floor, Muthoot Chambers,

Opposite Saritha Theatre Complex,

Banerji Road,

Kochi - 682 018


Mar 31, 2014

Dear Shareholders,

The Directors have pleasure in presenting the 17th Annual Report of the Company together with the audited financial statements for the year ended 31st March, 2014.

1. Financial Results

The financial results of your company for the year ended 31st March, 2014 are summarised below:

Rs. in Crores

Particulars FY 2013-14 FY 2012-13

Income from Operations 4,928 5,359

Other Income 20 28

Total Expenditure 3,754 3,876

Profit Before Depreciation and Other Non Cash Charges 1,241 1,557

Depreciation and Other Non Cash Charges 47 45

Profit Before Tax 1,194 1,511

Tax Expenses 413 507

Profit After Tax 780 1,004

Share Capital and Reserves 4,265 3,736

Subordinated Debt 2,635 2,310

Secured Non-Convertible Debentures 10,631 11,247

Borrowings from Banks/FIs 5,803 10,136

Gross Retail Loan Assets under Management 21,862 26,387

2. Dividend

Based on Company''s performance, your Directors are pleased to recommend for approval of the shareholders a dividend of 10% for Equity Shares of face value of Rs. 10 each (T 1/- per share) of the Company for the financial year 2013-14 which is payable on obtaining the approval of the shareholders of the Company on the 17th Annual General Meeting.

The Company has during the year paid interim dividend aggregating to Rs. 5 per equity share (50% of face value). The total dividend declared for the year 2013-14 is ^ 6 per equity share (60% of face value). The dividend pay-out amount including dividend distribution tax will be Rs. 260.93 Crores.

The list of unpaid dividend is available on the Company''s website www.muthootfinance.com. Shareholders are requested to check the said list and if any dividend is due to them is remaining unpaid in the said list, they can approach the company for release of unpaid dividend.

3. Transfer to Reserves

Your Board proposes to transfer Rs. 78.01 Crores to the General Reserve in accordance with the Companies (Transfer of Profit to Reserves) Rules, 1975. Your Board also proposes to transfer Rs. 156.01 Crores to the Statutory Reserve maintained under Section 45 IC of the RBI Act, 1934. An amount of Rs. 663.70 Crores has been transferred to Debenture Redemption Reserve. Post transfer of Profits to reserves and distribution of dividend, your Board proposes to retain Rs. 990.18 Crores in the Profit and Loss Account.

4. Economic Scenario

The Global operating environment improved considerably in FY 2013-14, as economic activity strengthened and spending in most economies began to recover, however, in a sporadic manner. Whilst the advanced economies, particularly the US and UK, led the rebound, as growth became broader and more entrenched, Europe saw the frst tentative signs of recovery after a long and painful slowdown.

India''s economic growth rate in the current financial year remained weak at 4.7% (Previous Year: at 4.5%). The Industrial activity remained weak and the stagnation was broad based. Mining and manufacturing output remained negative and the economy witnessed decline in investment in new projects in line with slowdown in overall growth. Macroeconomic situation in 2013-14 had to balance the concerns of containing elevated infation and at the same time promoting growth. It also involved managing a volatile external situation characterised by a sharp depreciation of the Rupee witnessed till the second quarter of 2013-14. High interest rates, retail infation, lack of policy direction, combined with uncomfortably high fiscal and current account defcits, left the policy makers with very few options. RBI had to increase the repo rate by 75 bps during the year.

Your Board of Directors is hopeful that the new government will be able to accelerate reform process and remove various bottlenecks in implementation of various stalled projects and get back the economy on growth mode.

5. Company''s Performance

During the year, RBI further tightened the LTV cap of 60% by clarifying that LTV has to be calculated based on the gold price and not on the value of jewellery. This further impacted customer interest and we saw further erosion in our Customer base. Majority of the customers approached unorganised sector for better terms than us and some to banks. Since there were no LTV norms applicable to banks, absence of level playing feld created a disequilibrium in gold loan business. In whole, during the year, disbursements came down and our gold loan portfolio declined by 17% from Rs. 26000 Crores to Rs. 21618 Crores. Only 188 branches were added during the year as against 404 branches in the previous year. Total income declined by 8% to Rs. 4947 Crores. Profit Before Tax declined by 21% to Rs. 1194 Crores and Profit After Tax by 22% to Rs. 780 Crores. The Return on Average Retail Loans declined to 3.22% as compared to 4.05% in fiscal 2012-13. The cost of borrowed funds declined to 11.88% compared to 12.42% in fiscal 2012-13. Interest yield declined to 20.27% as compared to 21.66% in fiscal 2012-13. On account of the above, the Net Interest Margin declined to 9.42% as against 10.28% in fiscal 2012-13. The Company remitted to exchequer Rs. 458 Crores as taxes.

However, in January 2014, RBI relaxed the LTV cap to 75% of gold price as per the recommendations of the KUB Rao

Committee of RBI. Further, RBI made these regulations applicable for banks, regional rural banks and co-operative banks paving way for a level playing feld in the organised sector. We believe that these regulatory changes can positively impact our business in the future.

6. Resource Mobilisation

(a) Non Convertible Debentures:

Reserve Bank of India vide its circular RBI/2012- 13/560 DNBD(PD) CC No. 330/03.10.001/2012-13 dated June 27, 2013 and RBI/2013-14/115 DNBS(PD) CC No.349/03.10.001/2013-14 dated July 02, 2013 issued certain guidelines with respect to raising money through private placement by NBFCs in the form of non-convertible debentures. These guidelines include restrictions on number of investors in an issue to 49 investors, minimum subscription amount for a single investor of Rs. 25 Lakhs, prohibition on providing loan against own debentures etc. The above directions limits Company''s ability to mobilise resources through private placement as in the past for investments less than Rs. 25 Lakhs. Company is, hence, focusing on ensuring that upon maturity of existing privately placed debentures, holders subscribe to debentures issued through Public Issue route. Accordingly, Company has successfully completed Public Issue of 5th, 6th and 7th Issue of Non-Convertible Debentures during Financial Year 2013-14 raising Rs.1100 Crores. Your Company is thankful to all investors who have subscribed the debentures through Public Issue and endorsed their Trust towards the Company.

Subordinated Debts represents long term source of funds for the Company and the amount outstanding as on 31st March, 2014 was Rs. 2635 Crores. It qualifies as Tier II capital under the Non-Banking Financial (Non- Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank Directions), 2007.

(b) Bank Finance:

Commercial Banks continued their support to the Company during Financial Year. As of 31st March, 2014, borrowings from banks were Rs. 5803 Crores as against Rs. 10136 Crores in the previous year. The reduction in borrowings were on account of the decline in gold loan portfolio of Rs. 4383 Crores during the year.

Availment of these limits will increase as and when there is corresponding increase in the loan portfolio.

Your Company''s rated short term debt instruments were also placed with various institutions at competitive rates enabling the company to reduce the overall cost of liabilities.

7. Ratings

Your Company''s debt instruments are rated by ICRA and CRISIL, two of the leading Credit Rating Agencies in the country. The Credit Ratings assigned to various instruments of the Company are as follows:

Credit Rating Agency Instruments Ratings Limit in Rs. in Crores

CRISIL Commercial Paper CRISIL A1 4000

Subordinated Debts CRISIL AA-/ Stable 100

Non Convertible Debentures CRISIL AA-/Stable 500

ICRA Commercial Paper ICRAA1 200

Short Term Bank Borrowings* ICRAA1 5712

Subordinated Debts ICRA AA-/Stable 100

Non Convertible Debentures ICRA AA-/Stable 200

Long Term Bank Borrowings* ICRA AA-/Stable 7186

*subject to overall rating of Rs. 11,134 Crores for line of credit

8. Internal Control

The Company has a well placed proper and adequate internal control system commensurate with the size and nature of its business. The primary objective of the internal control system is to ensure that all its assets are safeguarded and protected and prevent any revenue leakage and losses to the Company.

The Company has an Audit and Inspection Department which conducts regular internal audits to examine the adequacy and compliance with policies, plans and statutory requirements. The Department through a team of 1124 personnel ensures quality of the assets pledged and adherence to various risk management practices at all the operating units. The audit functions are decentralised to match the requirements of exercising proper control over nationwide network of the Company.

The Internal Audit Team directly reports to the Audit Committee of the Company. significant audit observations and follow up actions thereon are reported to the Audit Committee. The Audit Committee reviews adequacy and effectiveness of the Company''s internal control environment and monitors the implementation of audit recommendations, including those relating to strengthening of the Company''s risk management policies and systems.

The Audit Committee oversees the functioning of the audit team and reviews the effectiveness of internal control at all levels apart from laying down constructive suggestions for improving the audit function in the Company. The present reporting structure ensures independence of the internal audit function and embodies best corporate governance practices.

9. Human Resources

The factor that makes an organisation to move from Good to Great is its "HUMAN CAPITAL"; and your company has realised this long ago and invests every year in building this human capital to greater heights. Your company''s focus area for the year was talent management, capability building, leadership development and employee engagement. The company quickened the dream of growth for many of the employees by automating the fast track promotion process, allowed them to move into a sales-oriented structure so that they can grow faster, encouraged lateral movements of employee so talent is managed within the group, became a proud organisation where 38% of the workforce is women, took quantum leap in providing state-of-art training centres so as to improve the quality of the training delivery. It also introduced the Employee Stock Option Plan (ESOP) to create a sense of ownership among employees and as recognition of their efforts towards the organisation growth and development.

As of 31st March, 2014, the company had 25012 employees in its rolls at various organisational levels. The company has also heavily invested in training its people assets by a humongous figure of 1,77,000 training man-days, which shows your company''s commitment towards its human resources

Apart from the statutory welfare measures like ESI, PF, Maternity benefits, many staff welfare benefits are provided to employees by the Company in the form of indirect compensation in order to motivate employees to perform better. Rs. 27.5 Lakhs was disbursed to 1351 employees by way of Awards & Presentations like Marriage Presentation, First Time Parent Presentation and Children''s Educational Award. 8327 Employees (outside the purview of ESI) are covered under a Group Mediclaim Insurance Policy which is of immense benefit to employees and their families for their hospitalisation needs. 1200 Senior Citizen employees were given Medical Reimbursements amounting to Rs. 30 Lakhs. A Onetime Compassionate Payment Scheme and a Personal Accident Compensation Scheme extended financial compensation of Rs. 31.5 Lakhs to the next of kin of employees who died while in harness.

The Details of ESOP is annexed to report of Board of Directors of the Company and is essential part of this report.

10. Public deposits

The Company has not accepted any public deposits and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of Balance Sheet.

11. Capital adequacy

Your Company''s Capital Adequacy Ratio as of 31st March, 2014 stood at 24.69% of the aggregate risk weighted assets on balance sheet and risk adjusted value of the off-balance sheet items, which is well above the regulatory minimum of 15%. Out of the above, Tier I capital ratio stood at 18.01%.

12. RBI Guidelines

Your Company has complied with all the applicable regulations prescribed by the Reserve Bank of India from time to time.

13. Directors

During the year under review, Mr. K. George John was appointed as Director of your Company in place of Mr. P George Varghese who retired at previous Annual General Meeting.

Mr. George Thomas Muthoot and Mr. George Jacob Muthoot are retiring at the ensuing Annual General Meeting and being eligible offers themselves for reappointment. Board of Directors of your company recommends their reappointment at the Annual General Meeting. Your Board of Directors recommend appointment of Mr. George Joseph , Justice K John Mathew, Mr. John K Paul and Mr. K. George John as Independent Directors in compliance with Section 149 of Companies Act, 2013 and clause 49 of listing agreement with Stock Exchange (s) for a period of two years continuing till second Annual General Meeting from date of appointment. Further, the existing term of appointment of Mr. M.G George Muthoot, Whole Time Director & Chairman ; Mr. George Thomas Muthoot ,Whole Time Director ; Mr. George Jacob Muthoot ,Whole Time Director and Mr. George Alexander Muthoot, Managing Director are expiring on 31st March, 2015. Your Board of Directors recommends their re-appointment for a further period of 5 years from 1st April, 2015.

14. Auditors

M/s Rangamani & Co., Chartered Accountants, [Firm Registration No: 003050S] the Statutory Auditor of the Company, hold office in accordance with the provisions of the Act upto the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment.

16. Directors'' Responsibility Statement

As required under the provisions contained in Section 217(2AA) of the Companies Act, 1956 ("the Act"), your Directors hereby confirm that:

1. In the preparation of Annual Accounts for the financial year 2013-14, the applicable Accounting Standards have been followed and there are no material departures;

2. They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the Profit of the Company for financial year;

3. They have taken proper and suffcient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Act. They confirm that there are adequate systems and controls for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; and

4. The annual accounts have been prepared on a going concern basis.

17. Corporate Governance Report and Management discussion and analysis Statement

Your Company has complied with the Corporate Governance norms as stipulated under Clause 49 of the Listing Agreements entered into with the Stock Exchanges. Detailed reports on Corporate Governance and Management Discussion and Analysis are attached to this Report.

18. Conservation of energy, technology absorption, foreign exchange earnings and outgo

Since your Company does not carry on manufacturing activities, disclosure requirements under Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1956 in this connection are not applicable. However, your Company, being a responsible corporate citizen, has been taking various measures for reducing the energy consumption.

Total Foreign Exchange Earned : NIL

Total Foreign Exchange Used : Rs. 1,25,93,695.27

19 Material Changes affecting the Company after 31st March, 2014

On 29th April, 2014, your Company allotted 2,53,51,062 shares of Rs. 10 each for cash at a premium of Rs. 155 per equity share aggregating to Rs. 41,829.25 Lakhs, pursuant to Institutional Placement Programme (IPP) under Chapter VIII A of the SEBIICDR Regulations complying with the minimum public shareholding requirement under Rule 19 (2) (b) (ii) of the Securities Contracts (Regulations) Rules, 1957.

On July 8, 2014 The ESOP committee of Board of Directors of your Company has granted second tranche of ESOP of 6100 options @ Rs. 10/- per option and 836900 options @ Rs. 50/- per option to the permanent employees of the Company as per ESOP 2013 scheme of the Company.

20. Acknowledgement

Your Directors thank the Company''s stakeholders in large including investors, customers, banks, financial institutions, rating agencies, debenture holders, debenture trustees and well-wishers for their continued support during the year. Your Directors place on record their appreciation of the contribution made by the employees of your Company at all levels. Your Company''s consistent growth was made possible by their hard work, solidarity, cooperation and support. The Board sincerely expresses its gratitude to Reserve Bank of India, Securities and Exchange Board of India and Ministry of Corporate Affairs for the guidance and support received from them including offcials there at from time to time.

For and On Behalf of the Board of Directors

M G George Muthoot

Chairman

Kochi, 11th August, 2014

Registered office:

2nd Floor, Muthoot Chambers,

Opposite Saritha Theatre Complex,

Banerji Road,

Kochi – 682 018


Mar 31, 2013

Dear Shareholder,

The Directors have pleasure in presenting the 16th Annual Report of the Company together with the audited financial statements for the year ended 31st March, 2013.

1. FINANCIAL RESULTS

The financial results for the year ended 31st March, 2013 are summarised below:

(Amount in Rs. Crore)

Particulars 2012-13 2011-12

Income from Operations 5,359 4,537

Other Income 28 12

Total Expenditure 3,876 3,218

Profit Before Depreciation and Other Non Cash 1,557 1,364 Charges

Depreciation and Other Non Cash Charges 45 33

Profit Before Tax 1,511 1,331

Tax Expenses 507 439

Profit After Tax 1,004 892

Share Capital and Reserves 3,736 2,926

Subordinated Debt 2,310 1,480

Secured Non-Convertible Debentures 11,247 7,863

Bank Borrowings 10,136 9,232

Gross Retail Loan Assets under Management 26,387 24,674

2. DIVIDEND

Based on Company''s performance, your Directors are pleased to recommend for approval of the shareholders a dividend of 45% for Equity Shares of face value of Rs. 10 each (Rs. 4.50 per share) of the Company for the financial year 2012-13 which is payable on obtaining the approval of the shareholders of the Company on the 16th Annual General Meeting. The dividend payout amount including dividend distribution tax will be Rs. 194 Crore The dividend payout ratio for the current year, inclusive of dividend distribution tax is 19%. The list of unpaid dividend is available on the Companies website www. muthootfinance.com. Shareholders are requested to check the said list and if any dividend is due to them is remaining unpaid in the said list, they can approach the Company for release of unpaid dividend.

3. TRANSFER TO RESERVES

Your Board proposes to transfer Rs. 100 Crore to the General Reserve in accordance with the Companies (Transfer of Profit to Reserves) Rules, 1975. Your Board also proposes to transfer Rs. 201 Crore to the Statutory Reserve maintained under Section 45 IC of the RBI Act, 1934. An amount of Rs. 97 Crore has been transferred for creation of Debenture Redemption Reserve Account as required under the Companies Act, 1956. Post transfer of profits to reserves and distribution of dividend, your Board proposes to retain Rs. 1,368 Crore in the Profit and Loss Account.

4. ECONOMIC SCENARIO

Global growth continues to remain uneven and slow. In Advanced Economies activity has weakened further adversely impacting growth in Emerging and Developing Economies.

The announcement by US Federal Reserve of tapering of Quantitative Easing has resulted in large sell-offs in the financial markets of these economies due to safe haven flight of capital and also on expectation of increase in real interest rates in the US. Consequent to it, there has been a rapid appreciation of the US Dollar and corresponding depreciation in Emerging and Developing Economies currencies.

The economic activity in the Indian Economy has further weakened in the first quarter of FY 2014. Industrial Production remained muted and Capital Goods production contracted reflecting deteriorating investment conditions. Growth in services and exports has remained sluggish on account of global slowdown. Though headline inflation measured by Wholesale Price Index declined from an average of 8.9 percent in 2011-12 and 7.3 percent in 2012-13 to 4.9 percent in first quarter of FY 2014, the retail inflation measured by Consumer Price Index remained high at average of 10.2 percent in 2012-13 and continuing at those levels in the first quarter of FY 2014. Though fiscal deficit has been contained at 5.2% of the GDP, Current Account Deficit of 5.1% poses serious challenge to the economy since it is much above the sustainable level of 2.5% of GDP. RBI has further revised its growth projections for the current year further from 5.7 percent to 5.5 percent. Though the government has taken several positive policy initiatives in the last few quarters, unless these policies are transformed to real actions removing various bottlenecks across various layers, achieving the above growth will be an insurmountable task.

5. COMPANY''S PERFORMANCE

In the wake of change in regulatory environment on account of 60% cap on Loan to Value ratio and resultant negative perceptions created in the market, to provide more comfort to the regulator as well as other stakeholders, Company consciously decided to reduce the pace of its growth and consolidate its operations during the year, focussing on improving customer service, staff training and internal controls while maintaining profitability. The branch network was increased only by 11% reaching 4082 branches compared to addition of 35% in the previous year. Though immediately after the regulatory change in March 2012, Retail Loan Asset Under Mangement declined by 5% in the first quarter of FY 2013, on account of the positive views expressed by the KUB Rao Committee on the role of the sector in the economy, Company achieved a marginal YOY growth of 7% reaching Rs. 26,386 Crore as of March 2013. Total income grew by 18% to Rs. 5,387 Crore . Profit Before Tax rose by 14% to Rs. 1,511 Crore and Profit After Tax by 13% to Rs. 1,004 Crore The Return on Average Retail Loans declined to 4.05% as compared to 4.40%in fiscal 2011-12. The cost of borrowed funds went upto 12.42% compared to 12.20% in fiscal 2011-12. On account of the above, the Net Interest Margin declined to 10.27% as against 10.65% in fiscal 2011-12. The Company remitted to the exchequer Rs. 517 Crore as income tax.

6. RESOURCE MOBILISATION

(a) Secured Debentures

With a view to diversify the funding profile of the Company, Your Company successfully completed third and fourth series of public issues of Secured Non-Convertible Debentures during the year and mobilised Rs. 535 Crore. NCDs offered in the public issue are listed in the BSE Limited and/or National Stock Exchange of India Limited. The Company raised Rs. 2,849 Crore net of repayments, through private placement of Secured Non-Convertible Debentures. Funds raised through this route continue to be a substantial resource base for the Company.

Reserve Bank of India vide its circular RBI/2012-13/560 DNBD(PD) CC No. 330/03.10.001/2012-13 dated 27th June, 2013 and RBI/2013-14/115 DNBS(PD) CC No.349/03.10.001/2013-14 dated 02 July, 2013 issued certain guidelines with respect to raising money through private placement by NBFCs in the form of non-convertible debentures. These guidelines include restrictions on number of investors in an issue to 49 investors, minimum subscription amount for a single investor of Rs. 25 Lakhs, prohibition on providing loan against own debentures etc. Though the above directions limits Company''s ability to mobilise resources through private placement like earlier for investments less than Rs. 25 Lakhs, Company intends to fill the gap through public issuance of listed and rated instruments primarily focusing on retail investors with investment of less than Rs. 25 Lakhs. The existing debentures already taken under private placement route will continue till its maturity.

(b) Bank Finance

Commercial Banks continued their support of the Company''s asset growth. As of 31st March, 2013, borrowings from banks were Rs. 10,136 Crore Your Company''s rated short term debt instruments were also placed with various mutual funds at competitive rates enabling the Company to reduce the overall cost of liabilities.

(c) Subordinated Debts

Subordinated Debts continue to be another source for funding the operations of your Company. Subordinated Debts represents long term source of funds for the Company and the amount outstanding as on 31st March, 2013 was Rs. 2,310 Crore. It qualifies as Tier II capital under the Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank Directions), 2007. The above includes privately placed Rated Unsecured Redeemable Non-Covertible Listed Subordinated Debt of Rs 10 Crore which is listed in the Debt Segment of BSE limited.

7. RATINGS

Your Company''s debt instruments are rated by ICRA and CRISIL, two of the leading Credit Rating Agencies in the country. The Credit Ratings assigned to various instruments of the Company are as follows:

Credit Rating Instruments Ratings Limit in Rs. in Crore Agency

Commercial Paper CRISIL A1 4,000

CRISIL Subordinated Debts CRISIL AA-/Negative 100

Non Convertible Debentures CRISIL AA-/Negative 500

Commercial Paper ICRA A1 200

Short Term Bank Borrowings* ICRA A1 4751

ICRA Subordinated Debts ICRA AA-/Negative 100

Non Convertible Debentures ICRA AA-/Negative 200

Long Term Bank Borrowings* ICRA AA-/Negative 6975

*subject to overall rating of Rs. 10428 Crore for line of credit

8. INTERNAL CONTROL

The Company has a well placed proper and adequate internal control system commensurate with the size and nature of its business .The primary objective of the internal control system is to ensure that all its assets are safeguarded and protected and prevent any revenue leakage and losses to the Company. The Company has an Audit and Inspection Department which conducts regular internal audits to examine the adequacy and compliance with policies, plans and statutory requirements. The Department through a team of 1119 personnel ensures quality of the assets pledged and adherence to various risk management practices at all the operating units. The audit functions are decentralised to match the requirements of exercising proper control over nation wide network of the Company.

The Internal Audit Team directly reports to the Audit Committee of the Company. Significant audit observations and follow up actions thereon are reported to the Audit Committee. The Audit Committee reviews adequacy and effectiveness of the Company''s internal control environment and monitors the implementation of audit recommendations, including those relating to strengthening of the Company''s risk management policies and systems. The Audit Committee oversees the functioning of the audit team and reviews the effectiveness of internal control at all levels apart from laying down constructive suggestions for improving the audit function in the Company. The present reporting structure ensures independence of the internal audit function and embodies best corporate governance practices.

9. HUMAN RESOURCES

Your Company understands the strength of Company''s workforce whose collective commitment and passion towards work has helped the organisation to scale new pinnacles. Your Company''s human capital agenda for the year was focused on two main areas: building a vigorous and varied talent pipeline and also invest in progressive employee relations practices and ensure building of capability at grass root level through continued training programmes. The Company aim to create and nourish the best and help in the inclusive growth of their individual and organisational career prospects. As of 31st March, 2013, your company had 24,881 employees on its rolls at various organisational levels. Employee training at all levels is a key priority. Major steps have been initiated to augment the capacity of the in house training system both quantitatively and qualitatively. A total of 79,245 staffs were trained cumulatively under various sessions during the year 2012-13. To recognise and provide opportunity to competent employees to reach higher cadres, opportunity is provided to participate in ''Fast Track Channel Promotion''. We have several staff welfare schemes like Group Mediclaim Insurance Cover, Personal Accident Insurance Cover, Contributory National Pension Scheme with 50% contribution by the Company, Educational Awards, Marriage Presentation, Presentation for First Time Parents, Compassionate payment to the kith and kin of employees who die in harness etc ., in addition to statutory benefits such as ESIC Scheme, Provident Fund, Maternity Benefits etc.

10. PUBLIC DEPOSITS

The Company has not accepted any public deposits and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of Balance Sheet.

11. CAPITAL ADEQUACY

Your Company''s Capital Adequacy Ratio as of 31st March, 2013 stood at 19.62% of the aggregate risk weighted assets on balance sheet and risk adjusted value of the off-balance sheet items, which is well above the regulatory minimum of 15%.Out of the above, Tier I capital ratio stood at 13.41%.

12. RBI GUIDELINES

Your Company has complied with all the applicable regulations prescribed by the Reserve Bank of India from time to time.

13. DIRECTORS

Pursuant to the Provisions of the Companies Act, 1956 and in accordance with the Article 110 of the Articles of Association of the Company, Mr. George Thomas Muthoot and Mr. P George Varghese retire by rotation at the ensuing Annual General Meeting.

At the Meeting of the Board of Directors of the Company held on 25th July, 2013, Mr. P George Varghese expressed his intention to relinquish his position as Director of the Company and requested the Board to accept his request and make his retirement effective at the Conclusion of the next Annual General Meeting. The Board Members placed on record their deep sense of gratitude and appreciation for the invaluable contribution and guidance provided by Mr. P George Varghese.

Mr. George Thomas Muthoot, being eligible, offers himself for reappointment at the Annual General Meeting.

14. AUDITORS

M/s Rangamani & Co., Chartered Accountants, [Firm Registration No: 003050 S] the Statutory Auditor of the Company, hold office in accordance with the provisions of the Act upto the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment.

15. PERSONNEL

Particulars of employees drawing remuneration beyond the monetary ceilings prescribed under Section 217 (2A) of the Companies Act, 1956 are as follows

16. DIRECTORS'' RESPONSIBILITY STATEMENT

As required under the provisions contained in Section 217(2AA) of the Companies Act, 1956 ("the Act"), your Directors hereby confirm that:

1. In the preparation of Annual Accounts for the financial year 2012-13, the applicable Accounting Standards have been followed and there are no material departures;

2. They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for financial year;

3. They have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Act. They confirm that there are adequate systems and controls for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; and

4. The annual accounts have been prepared on a going concern basis.

17. CORPORATE GOVERNANCE REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS STATEMENT

Your Company has complied with the Corporate Governance norms as stipulated under Clause 49 of the Listing Agreements entered into with the Stock Exchanges. Detailed reports on Corporate Governance and Management Discussion and Analysis are attached to this Report.

18. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Since the Company does not carry on manufacturing activities, disclosure requirements under Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1956 in this connection are not applicable. However, your Company, being a responsible corporate citizen, has been taking various measures for reducing the energy consumption.

Total Foreign Exchange Earned : NIL

Total Foreign Exchange Expended : Rs. 58,55,090.88

19. ACKNOWLEDGEMENT

Your Directors thank the Company''s share holders, investors, customers, banks, financial institutions, rating agencies, debenture holders, debenture trustees and well wishers for their continued support during the year. Your Directors place on record their appreciation of the contribution made by the employees at all levels. Your Company''s consistent growth was made possible by their hard work, solidarity, cooperation and support. The Board sincerely expresses its gratitude to Reserve Bank of India and Ministry of Corporate Affairs for the guidance and support received from them including officials thereat from time to time.

For and on Behalf of the Board of Directors

M G George Muthoot

Chairman

Kochi, 25th July, 2013

Registered Office:

2nd Floor, Muthoot Chambers,

Opposite Saritha Theatre Complex,B

anerji Road,

Kochi - 682 018


Mar 31, 2012

The Directors have pleasure in presenting the 15th Annual Report of the Company together with the audited financial statements for the year ended 31st March, 2012.

1. Financial Results

The financial results for the year ended 31st March, 2012 are summarized below:

(Amount in Rs. Lakhs)

Particulars 2011-12 2010-11

Income from Operations 454,906 231,587

Total Expenditure 314,289 150,238

Profit Before Depreciation 140,617 81,349

Depreciation and Other Non Cash Charges 7,492 5,228

Profit Before Tax 133,125 76,121

Provision for Tax/Deferred Taxes 43,922 26,703

Profit After Tax 89,202 49,418

Share Capital and Reserves 292,573 133,441

Subordinated Debt 148,011 71,059

Secured Non-Convertible Debentures 786,284 419,823

Bank Borrowings 923,197 605,283

Gross Retail Loan Assets under Management 2,467,360 1,586,845

2. Economic Scenario

The fall in values of investments triggered primarily by the deceleration in economic growth and high inflation characterized the economic scenario in the year gone by. The huge fiscal and current account deficits in the context of declining export growth led to substantial erosion in the exchange rate of Indian rupee and triggered a sovereign rating reduction by some of the rating agencies. These developments throw a dark shadow on the growth prospects of the country in the fiscal 2012-13 and despite a huge consumption demand, the nation's GDP growth reaching 8% looks improbable.

3. Business

Increase in foot print, aggressive marketing efforts and tweaking of products in response to market conditions enabled the Company to improve its loan book by 55% taking the outstanding to Rs. 2,467,360 Lakhs. The cost of borrowed funds went upto 12.20% compared to 8.87% in fiscal 2010-11. Despite this, we could, thanks to overall control on expenditure, efficient collection of interest and control on NPAs, retain the Net Interest Margin at 10.65%. Total income grew by a very creditable 96% to Rs. 454,906 lakhs. Profit Before Tax rose by 75% to Rs. 133,125 lakhs and Profit After Tax by 80% to Rs. 89,202 lakhs. The Return on Average Retail Loans rose to 4.40% as compared to 4.24% in fiscal 2010-11.

Financial Year 2011-12 flags a significant mile stone in the gold loan industry as it marks the beginning of a consolidation phase and your Company too has taken cautious steps in moving towards such a positive direction. The Gross Retail Loan Assets under Management as on 31st March, 2012 stood at Rs. 2,467,360 lakhs registering a year over year growth of 55%. While the total income grew by 96% to reach at Rs. 454,906 lakhs on 31st March, 2012, Profit After Tax stood at Rs. 89,202 lakhs as against a figure of Rs. 49,418 lakhs reported during the previous financial year.

945 new branches were opened during the financial year taking the branch network as on 31st March, 2012 to 3,678 branches spread across 21 states and 4 union territories. The average gold loan outstanding per branch has increased from Rs. 5.75 crores to Rs. 6.64 crores as on March 31, 2012.

4. Dividend

Based on Company's performance, your Directors are pleased to recommend a maiden dividend of 40% on the equity shares (Rs. 4 per Equity Share) of the Company which is payable on obtaining the approval of the shareholders of the Company in the 15th Annual General Meeting. The dividend payout amount for the current year inclusive of additional tax on dividend will be Rs. 172.81 Crores.

5. Appropriations

Your Board proposes to transfer Rs. 892,024,022/- to the General Reserve in accordance with the Companies (Transfer of Profit to Reserves) Rules, 1975. Your Board also proposes to transfer Rs. 1,784,048,044/- to the Statutory Reserve maintained under Section 45 IC of the RBI Act, 1 934. An amount of Rs. 742,038,311/- has been transferred for creation of Debenture Redemption Reserve Account as required under the Companies Act, 1956. Post transfer of profits to reserves and distribution of dividend, your Board proposes to retain Rs. 9,569,275,904/- in the Profit and Loss Account. The expenses incurred for Initial Public Offer amounting to Rs. 291,490,445/- have been written off against Securities Premium as per Section 78(2) of the Companies Act, 1956.

6. Regulatory Developments

The Reserve Bank of India vide circular no: DNBS.CC.PD.No. 265/03.10.01/2011-12 dated March 21, 2012 has directed all NBFCs engaged in lending against the security of gold jewellery to maintain a Loan To Value ratio not exceeding 60% of the value of Gold Jewellery. As a matter of abundant caution, we had been progressively reducing our lending rates per gram as a risk management measure, seeing the volatility in the gold prices during the last couple of months. We are complying to this direction from RBI. RBI also reduced the exposure ceiling of banks to a single NBFC having gold loans to the extent of 50% or more of its financial assets from 10% to 7.50% of the banks Total Capital Funds. The minimum Tier-I capital requirement of these NBFCs will be increased from 10% presently to 12% by 1st April, 2014.

7. Resource Mobilization

(a) Secured Debentures

With a view to diversify the funding profile of the Company, your Company successfully completed two public issues of Secured Non-Convertible Debentures during the year and moped up Rs. 115,260 lakhs. NCDs offered in the public issue are listed in the BSE Limited and/or National Stock Exchange of India Limited Company raised Rs. 661,024 Lakhs, net of repayments, through private placement of Secured Non-Convertible Debentures. Funds raised through this route continue to be a substantial resource base for the Company. Your Company has also privately placed Secured Non-Convertible Debentures to the tune of Rs. 10,000 Lakhs which are listed in the Wholesale Debt Segment of the National Stock Exchange of India Limited.

(b) Bank Finance

Commercial Banks continued their support of the Company's asset growth. As of 31st March, 2012, borrowings from banks were Rs. 923,197 lakhs. The company also raised resources through sale of gold loan portfolio and the outstanding amount of gold loan sold under such bilateral sales as of 31st March, 2012 was Rs. 333,521 lakhs. Your Company's rated short term debt instruments were also placed with various mutual funds at competitive rates enabling the company to reduce the overall cost of liabilities.

(c) Subordinated Debts

Subordinated Debts continue to be another source for funding the operations of Company. Subordinated Debts represents long term source of funds for the Company and the amount outstanding as on 31st March, 2012 was Rs. 148,011 lakhs. It will qualify as Tier II capital under the Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank Directions), 2007.

8. Ratings

Your Company's debt instruments are rated by ICRA and CRISIL, two of the leading Credit Rating Agencies in the country. The Credit Ratings assigned to various instruments of the Company are as follows:

Credit Rating Agency Instruments Ratings Limit in Rs.(Lakhs)

CRISIL Commercial Paper CRISIL A1 400,000

Subordinated Debts CRISIL AA-(Stable) 10,000

Non Convertible Debentures CRISIL AA-(Stable) 50,000

ICRA Commercial Paper ICRA A1 20,000

Short Term Bank Borrowings ICRA A1 480,300

Subordinated Debts ICRA AA-(Stable) 10,000

Non Convertible Debentures ICRA AA-(Stable) 20,000

Long Term Bank Borrowings ICRA AA-(Stable) 567,500

9. Internal Control

The Audit and Inspection Department of the Company through a team of 964 personnel ensures quality of the assets pledged and adherence to various risk management practices at all the operating units. The structure of the audit teams have been totally recast with decentralization of functions to match with the expansion in footprint without compromising control.

The Internal Audit Team directly reports to the Audit Committee of the Company. The Audit Committee oversees the functioning of the audit team and reviews the effectiveness of internal control at all levels apart from laying down constructive suggestions for improving the audit function in the Company. The present reporting structure ensures independence of the internal audit function and embodies best corporate governance practices.

10. Human Resources

Being a service oriented Company; your company considers human resource capital as its most valuable asset. As of March 31, 2012, your company had 25,351 employees on its rolls at various organizational levels. Your Company offers employees the opportunity to harness their inherent skills and to brave newer frontiers at every phase of their growth. Your management is committed to providing a wholesome work environment and support with excellent training programs and workshops. Your Company provides extensive training to branch employees through training programs that are tailored to acquiring and honing their skills in all operational matters. While every new employee is introduced to the business through an orientation program and through training programs covering job-relevent topics, experienced branch employees receive additional training for upgradation of skills on an ongoing basis.

As of date, your company has established two Staff Training Colleges, one each in Cochin and in New Delhi, and 57 Regional Learning Centers located at Regional Offices spread across the country.

11. Public Deposits

The Company has not accepted any public deposits and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of Balance Sheet.

12. Capital Adequacy

Your Company's Capital Adequacy Ratio as of March 31, 2012 stood at 18.29% of the aggregate risk weighted assets on balance sheet and risk adjusted value of the off-balance sheet items, which is well above the regulatory minimum of 15%.

13. RBI Guidelines

Your Company has complied with all the applicable regulations prescribed by the Reserve Bank of India from time to time.

14. Directors

In accordance with Article 110 of the Articles of Association of the Company, Mr. George Joseph and Mr. John K Paul retire by rotation at the ensuing Annual General Meeting. Both of them being eligible seek re-appointment at the Annual General Meeting.

15. Auditors

M/s Rangamani & Co., Chartered Accountants, [Firm Registration No: 003050S] the Statutory Auditor of the Company, hold office in accordance with the provisions of the Act upto the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment.

16. Personnel

Particulars of employees drawing remuneration beyond the monetary ceilings prescribed under Section 217 (2A) of the Companies Act, 1956 are as follows:

Sl Name of Employee Age Designation Date of No (yrs) Commencement of employment

1 Mr. M G George 62 Whole Time 28.07.2000 Muthoot Director & Chairman

2 Mr. George Alexander 56 Managing Director 28.07.2000 Muthoot

3 Mr. George Thomas 61 Whole Time Director 16.08.2005 Muthoot

4 Mr. George Jacob 59 Whole Time Director 16.08.2005 Muthoot

Name of Employee Gross Qualification Total Last Remuneration Experience employment (Rs.in Lakhs)

Mr M G George Rs. 480 B. Tech 38 years Muthoot Muthoot Bankers

Mr George Alexander Rs. 480 FCA 32 years Muthoot Muthoot Bankers

Mr George Thomas Rs. 480 Under 37 years Muthoot Muthoot Graduate Bankers

Mr George Jacob Rs. 480 B. Tech 35 years Muthoot Muthoot Bankers

17. Directors' Responsibility Statement

As required under the provisions contained in Section 217(2AA) of the Companies Act, 1956 ("the Act"), your Directors hereby confirm that:

1. In the preparation of Annual Accounts for the financial year 2011-12, the applicable Accounting Standards have been followed and there are no material departures;

2. They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for financial year;

3. They have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Act. They confirm that there are adequate systems and controls for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; and

4. The annual accounts have been prepared on a going concern basis.

18. Corporate Governance Report and Management Discussion and Analysis Statement

Your Company has complied with the Corporate Governance norms as stipulated under Clause 49 of the Listing Agreements entered into with the Stock Exchanges. Detailed reports on Corporate Governance and Management Discussion and Analysis are attached to this Report.

19. Conservation of energy, technology absorption, foreign exchange earnings and outgo

Since the Company does not carry on manufacturing activities, disclosure requirements under Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1956 in this connection are not applicable. However, your Company, being a responsible corporate citizen, has been taking various measures for reducing the energy consumption.

Total Foreign Exchange Earned : NIL

Total Foreign Exchange Expended : 20.96 Lakhs

20. Acknowledgement

Your Directors thank the Company's share holders, investors, customers, banks, financial institutions, rating agencies, debenture holders, debenture trustees and well wishers for their continued support during the year. Your Directors place on record their appreciation of the contribution made by the employees at all levels. Your Company's consistent growth was made possible by their hard work, solidarity, cooperation and support. The Board sincerely expresses its gratitude to Reserve Bank of India and Ministry of Corporate Affairs for the guidance and support received from them including officials thereat from time to time.

For and On Behalf of the Board of Directors

Kochi, M G George Muthoot

July 30, 2012 Chairman

Registered Office:

2nd Floor, Muthoot Chambers, Opposite Saritha Theatre

Complex, Banerji Road, Kochi - 682 018


Mar 31, 2011

To the Members

The Directors have pleasure in presenting the 14th Annual Report of the Company together with the audited financial statements for the year ended 31st March, 2011.

1. Financial Results

The financial results for the year ended 31st March. 2011 are summarized below:

(Amount in Rs. Lacs)

Particulars 2010-11 2009-10

Income from Operations 231,587 108,938

Total Expenditure 150,435 72,684

Profit Before Depreciation 81,152 36,254

Depreciation and Other Non Cash Charges 5,031 1,699

Profit Before Tax 76,121 34,555

Provision for Tax/Deferred Taxes 26,703 11,798

Profit After Tax 49,418 22,757

Share Capital and Reserves 133,441 58,455

Subordinated Debt 71,059 32,457

Secured Non-Convertible Debentures 419,823 271,925

Bank Borrowings 605,282 212,787

Gross Retail Loan Assets under Management 1586,845 743,815

2. Business

Financial Year 2010-11 has been a landmark year for your Company for the Gross Retail Loan Assets Under Management crossing the land mark figure of Rs. 1500000 lacs. Gross Retail Loan Assets Under Management stood at Rs. 1586045 lacs as of 31" March, 2011 registenng a growth of 113% as against Rs. 743815 lacs reported during the financial year ended 31" March, 2010. Interest Income registered a growth of 113% to reach at Rs 229834 lacs for the financial year 2010-11 as compared to Rs. 10774$ lacs reported during the previous financial year Profit Before Tax amounted to Rs. 76121 lacs for the financial year 2010- 11 as compared to Rs. 34555 lacs registering a growth of 120% as compared to the previous financial year.

1128 new branches were opened across the country during the year white efforts were put in ensuring deeper penetration into the rural heartlands of the Country. The average gold loan outstanding per branch has increased from Rs. 457.43 lacs to Rs. 575.49 lacs as on March 31,2011.

3. Dividend

Your Board of Directors has decided to plough back the entire profit for the year and retain the same in the Profit and Loss Account further strengthening your Company's net owned funds position.

4. Resource Mobilization

(a) Secured Debentures

During the year, Company raised Rs. 126397 Lacs, net of repayments, through private placement of Secured Non-Convertible Debentures. Funds raised through this routs continue to be a substantial resource base for the Company. Company has also privately placed Secured Non-Convertible Debentures to the tune of Rs. 21500 lacs which are listed in the Wholesale Debt Segment of the National Stock Exchange of India Limited.

(b) Bank Finance

Commercial Banks continued their support of the company's aggressive asset growth. As of 31" March. 2011, borrowings from banks held at Rs. 605282 lacs. The company also raised resources through sell down of gold loan portfolio such that the outstanding amount of gold loan sold under bilateral assignment as of 31' March. 2011 was Rs. 41G639 lacs. Your company's rated short term debt instruments were also placed with various mutual funds at competitive rates enabling the company to reduce the overall cost of liabilities.

(c) Subordinated Debts

Subordinated Debts continue to be another source for funding the operations of Company. Subordinated Debts represents long term source of funds for the Company and the amount outstanding as on 31* March, 2011 was Rs. 71050 lacs. It will qualify as Tier II capital under the Non- Ban king Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank Directions). 2007.

5. Ratings

The company is rated by CRISIL for Rs.4000 crones of Short Term Debt Programme with a rating of "CRISIL A1 " This is the highest credit quality rating assigned by CRISIL to short term debt instruments. "CRISIL A1 " rating indicates that the degree of safety with regard to timely payment of interest and principal is very strong. CRFSIL has also assigned the company with a long term rating of CRTSIL AA- / (stable)" for Rs.500 crores Non-Convertible Debenture issue and for Rs.100 crones Subordinated Debt issue. This rating Indicates high degree of safety with regard to timely payment of interest and principal on the Instrument.

The company is also rated by ICRA for Rs.200 crores of Short Term Debt Programme with a rating of "[ICRA] A1 ", This is the highest credit quality rating assigned by ICRA to short term debt instruments which indicates Lowest credit Risk and stronger credit quality. ICRA has also assigned the company for Rs.200crs Non-Convertible Debenture issue and for Rs.100crs Subordinated Debt issue with a long term rating of "[ICRA) AA-1 Stable*. Instruments rated in this category carry lowest credit risk and it indicates high quality credit rating. Further, ICRA has also assigned the company with Long Term/Short Term rating of "[ICRA] AA- '/"[ICRA] A1 ' respectively for Rs.6000 crones of Bank loans which indicates high quality credit rating and lowest credit risk / stronger credit quality and Lowest credit Risk respectively.

6. Initial Public Offer

During the month of April, 2011, your Company has completed an Initial Public Offer of 5.15.00,000 Equity Shares of Rs. 10/- each at a price of Rs. 175/- raising Rs. 901.25 crores. The issue had seen an overwhelming success with an oversubscription of 24.33 times. The shares of the Company were listed on National Stock Exchange of India Limited and Bombay Stock Exchange Limited on 6th May 2011.

7. Internal Control

The Audit and Inspection Department of the company through a team of 704 personnel ensures quality of the assets pledged and adherence to various risk management practices at the branch and regional office level. The structure of the audit teams has been totally recast with decentralization of functions to match with the expansion in footprint without compromising control.

The internal audit team directly reports to the Audit Committee of the Company The audit committee oversees the functioning of the audit team and reviews the effectiveness of internal control at all levels apart from laying down constructive suggestions for improving the audit function in the Company. The present reporting structure ensures independence of the internal audit function and embodies best corporate governance practices.

8. Human Resources

Being a service oriented Company, your company consider human resource capital as the biggest asset. As of March 31, 2011, your company has 16668 employees on payroll at various management levels, Your Company offer employees the opportunity to harness their Inherent skills and to brave newer frontiers at every phase of their growth. Your management is committed In providing a wholesome work environment and support with excellent training programs and workshops. Your Company provides extensive training to branch employees through training programs that are tailored to appraising the gold content in gold jewellery. Anew employee is introduced to the business through an orientation program and through training programs covering job-appropriate topics. The experienced branch employee receives additional training and an introduction to the fundamentals of management to acquire the skills necessary to move into management positions within the organization. Manager training involves a program that includes additional management principles and more extensive training in topics such as income maximization, business development, staff motivation, customer relations and cost efficiency.

As of date, your company has established two staff training colleges, one each in Cochin and in New Delhi, and three regional training centers located in Chennai, Hyderabad and in Bangalore, and is in the process of establishing staff training colleges at other region allocations as well

9. Public Deposits

The Company has not accepted any public deposits and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of Balance Sheet.

10. Capital Adequacy

As at 31st March. 2011. the capital adequacy of the company stood at 15.82% as against the statutory requirement of 15%.

11. RBI Guidelines

Your Company has complied with all the applicable regulations prescribed by the Reserve Bank of India from time to time.

12. Directors

Mr, George Joseph and Mr John K Paul have joined the Board of Directors as independent Directors during the year. Mrs. Anna Alexander and Mrs. Sana George have resigned from the Board of Directors effective July 21, 2010. Board place on record their deep sense of appreciation for the services rendered by them during their tenure in the Boa rd of Directors of the Company.

In accordance with Article 110 of the Articles of Association of the Company, Mr K John Mathew and Mr. George Jacob Muthoot retire by rotation at the ensuing Annual General Meeting. Both of them being eligible seek, re-appointment at the Annual General Meeting.

13. Auditors

M/s Rangamani & Co., Chartered Accountants, the Statutory Auditor of the Company, hold office in accordance with the provisions of the Act upto the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment.

14. Personnel

Particulars of employees drawing remuneration beyond the monetary ceilings prescribed under Section 217 (2A) of the Companies Act. 1956 are as follows:

SL Name of Employee Age Designation Date of Gross Qualifica -tion Total Last No: (yrs} Commenc -ement Remune ration Experie -nce employment of employ -ment (Re. In Lacs)

1 Mr.M G George Muthoot 61 Whole Time Director & Chairman 28.07. 2000 Rs.480 B.Tech 37 years Muthoot Bankers

2 Mr. George Aisaandar Managing Muthoot 55 Director 28.07. 2000 Rs.480 FCA 31 years Muthoot Bankers

3 Mr George Thomas Whole Under Muthoot 60 Time Director 16.08. 2005 Rs.480 Graduate 36 years Muthoot Bankers

4 Mr George Jacob 56 Whole Time 16.08. 2005 Rs.480 B.Tech 34 years Muthoot Bankers Muthoot Director

15. Directors' Responsibility Statement

As required under the provisions contained in Section 217(2AA) of the Companies Act, 1956 ("the Act"), your Directors hereby confirm that:

1. In the preparation of Annual Accounts for the financial year 2010-11, the applicable Accounting Standards have been followed and there are no material departures;

2. They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for financial year;

3. They have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Act. They confirm that there are adequate systems and controls for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; and

4. The annual accounts have been prepared on a going concern basis

16. Corporate Governance Report and Management Discussion and Analysis Statement

Your Company has complied with the Corporate Governance norms as stipulated under the Listing Agreement entered into with the Stock Exchanges. Detailed reports on Corporate Governance and Management Discussion and Analysis are annexed to this Report.

17. Conservation of energy, technology absorption, foreign exchange earnings and outgo

Since the Company does not carry on manufacturing activities, disclosure requirements under Companies [Disclosure of Particulars in the Report of Board of Directors) Rules, 1956 in this connection are not applicable. However, your Company, being a responsible corporate citizen, has been taking various measures for reducing the energy consumption.

Total Foreign Exchange Earned : NIL

Total Foreign Exchange Expended : NIL

18, Acknowledgement

Your Directors thank the Company's share holders, investors, customers, banks, financial institutions, rating agencies, debenture holders, debenture trustees and well wishers for their continued support during the year. Your Directors place on record their appreciation of the contribution made by the employees at all levels. Your Company's consistent growth was made possible by their hard work, solidarity, cooperation and support. The Board sincerely expresses its gratitude to Reserve Bank of India and Ministry of Corporate Affairs for the guidance and support received from them including staff officials thereat from time to time.

For and On Behalf of the Board of Directors

Sd/-

M G George Muthoot

Chairman

Kochi, July 27, 2011

Registered Office:

2nd Floor, Muthoot Chambers.

Opposite Saritha Theatre Complex,

Banerji Road,

Kochi 682 018


Mar 31, 2010

The Directors have pleasure in presenting the 13th Annual Report of the Company together with the audited financial statements for the year ended 31st March 2010.

Financial Results

The financial results for the year ended 31st March 2010 are summarized below:

(Amount in Rs. Lakhs)

Particulars Yr. ended Yr. ended 31.03.10 31.03.09

Income from Operations 108938 62,040

Total Expenditure 72684 46,167

Profit Before Depreciation 36254 15,873

Depreciation and Other Non Cash 1699 1,056 Charges

Profit Before Tax 34555 14,817

Provision for Tax/Deferred Taxes 11798 5,045

Profit After Tax 22757 9,772

Share Capital and Reserves 58455 37,117

Subordinated Debt 32467 10,991

Secured Non-Convertible Debentures 271925 190,198

Bank Borrowings 212787 110,676

Gross Retail Loan Assets under 743815 336,900 Management

Directors

In accordance with the provisions of Section 255 & 256 of the Companies Act, 1956, Mr. M. G. George Muthoot, Whole Time Director and Mr. P. George Varghese, Director retire by rotation at the ensuing Annual General Meeting and are eligible for re-appointment.

Auditors

M/s Rangamani & Co., Chartered Accountants, the Statutory Auditor of the Company retires at the conclusion of the ensuing Annual General Meeting and has expressed their willingness to be appointed as the Auditors for a further period of one year. The Company has received a letter from the Auditor to the effect that, if they are appointed, appointment will be within the statutory limits prescribed under the Companies Act, 1956.

Energy Conservation, Foreign Exchange Earnings and Outgo

Since the Company does not carry on manufacturing activities, disclosure requirements under Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1956 in this connection are not applicable. However, your Company, being a responsible corporate citizen, has been taking various measures for reducing the energy consumption.

Total Foreign Exchange Earned : NIL

Total Foreign Exchange Expended : Rs. 139.84 lakhs

Directors Responsibility Statement

As required under the provisions contained in Section 217(2AA) of the Companies Act, 1956, your Directors hereby confirm mat:

1. In the preparation of Annual Accounts, the applicable Accounting Standards have been followed and there have been no material departures;

2. They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

3. They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; and

4. The annual accounts have been prepared on a going concern basis.

Acknowledgement

Your Directors thank the Companys customers, banks, rating agency, debenture holders, debenture trustees and well wishers for their continued support during the year. Your Directors place on record their appreciation of the contribution made by the employees at all levels. Your Companys consistent growth was made possible by their hard work, solidarity, cooperation and support. The Board sincerely expresses its gratitude to Reserve Bank of India and Ministry of Corporate Affairs for the guidance and support received from them from time to time.

For and On Behalf of the Board of Directors

Sd/-

M G George Muthoot

Chairman

Kochi, 19th August, 2010

Registered Office:

2nd Floor, Muthoot Chambers,

Opposite Saritha Theatre Complex,

Banerji Road,

Kochi-682 018

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