m

muthoot
CAPITAL
MCSL/SEC/19-20 /32 May 20, 2019

BSE Limited National Stock Exchange of India Limited

Phiroze Jeejeebhoy Towers Exchange Plaza, C-1, Block G,
Dalal Street, Sandra Kurla Complex,
Mumbai - 400 001 Sandra (E), Mumbai - 400 051

Scrip Code· 511766 Trading Symbol· MUTHOOTCAP

Dear Sir/Madam,

Sub: z5t1i AGM Notice and Annual Report of Muthoot Capital Services Limited for the FY

2018-2019

This is to inform you that the 25th Annual General Meeting (AGM) of the shareholders of the

Company will be held on Monday, June 17, 2019 at 10.30 a.m. at The International Hotel,
Veekshanam Road, Kochi - 682 035. Pursuant to the Regulation 34 (1) (a) of the
provisions of
SEBI (LODR) Regulations, 2015, the Notice calling the 25th AGM along with the Annual Report of
the Company for the FY 2018 2019, are attached - herewith for your information and records.

The Board of Directors of the Company at their meeting held on Wednesday, April 24, 2019, had
fixed June 10, 2019 as the cut-off for the purpose of determination of eligibility of Members to

exercise the remote e-voting on the resolutions being placed before the 25th AGM of the
Company. The remote e-votingwill commence on 9.00 a.m. on June 14, 2019 and will end on 5.00

p.m. on June 16, 2019.

We request you to kindly take the same on your records.

Thanking you,

Yours faithfully,

For Muthoot Capital Services Limited

Ab?an
Company Secretary & Compliance Officer

CC To:
1. Central Depository Services (India) Limited
2. National Securities Depository Limited
3. Integrated Registry Management Services Private Limited

Muthoot Capital Services Ltd Registered office: 3rd Floor. MuthootTowers, M.G. Road, Kochi-682035, Kerala, India.
..

P: +91-484-6619600, 6613450, Email:mail@[Link],[Link]

CIN. L67120KL1994PLC007726
I
 MUTHOOT CAPITAL SERVICES LIMITED
(CIN: L67120KL1994PLC007726)
rd
Regd. Office: 3 Floor, Muthoot Towers, M.G. Road, Kochi - 682 035
Tel: +91 - 484 - 6619600 / 6613450, Fax: +91 - 484 - 2381261
Web: [Link], Email: mail@[Link]

NOTICE TO SHAREHOLDERS
NOTICE is hereby given that the 25th Annual General Meeting (AGM) of the Members of “Muthoot Capital Services
Limited” will be held on Monday, 17th day of June 2019, at 10.30 a.m. at The International Hotel, Veekshanam Road,
Kochi - 682 035, to transact the following businesses:
ORDINARY BUSINESS:
1. To receive, consider and adopt the Audited Statement of Profit and Loss for the financial year ended March 31,
2019, the Audited Balance Sheet as at that date, together with the Cash Flow Statement, the Reports of the Board
of Directors and Independent Auditors, thereon.

2. To appoint a Director in place of Mr. Thomas John Muthoot (DIN: 00011618), who retires by rotation in terms of
Section 152 (6) of the Companies Act, 2013 and Article 97 of the Articles of Association, and being eligible, offers
himself for re-appointment.
SPECIAL BUSINESS:
3. Revision in remuneration of Mr. Thomas George Muthoot (DIN: 00011552), Managing Director of the Company
To consider and if thought fit, to pass with or without modification(s), the following resolution as an Ordinary
Resolution:
“RESOLVED THAT pursuant to the provisions of Section 197 read with Part I and Section I of Part II of Schedule V
and other applicable provisions, if any, of the Companies Act, 2013 (including any statutory modification or re-
enactment thereof), applicable clauses of the Articles of Association of the Company and recommendation of
Nomination and Remuneration Committee and the Board, approval of the Company be and is hereby accorded
for revision in the remuneration of Mr. Thomas George Muthoot (DIN: 00011552), Managing Director of the
Company, on the terms and conditions including remuneration as mentioned below:
Salary & Perquisites:

1 Salary: ₹ 4,20,00,000/- per annum (Rupees Four Crores Twenty Lakhs only) w.e.f. April 01, 2019 till the
expiry of his term i.e., July 11, 2021 (including perquisites).

2 Perquisites: Total perquisites shall be limited to ₹ 15,00,000/- per annum (Rupees Fifteen Lakhs only).
Note: Perquisites includes benefits and allowances like accommodation (furnished or otherwise) or house
rent allowance in lieu thereof, reimbursement of expenditure or allowance in respect of maintenance,
utilities such as gas, electricity, water, furnishings and house repairs, medical reimbursement for himself
and his family, medical insurance for himself and his family, and leave on full pay, leave travel concession
for himself and his family, personal accident insurance, club fees, etc. and such other allowances,
perquisites and benefits in accordance with the rules of the Company or as may be allowed by the Board
from time to time.
Car, Telephone, Cell Phone, PC shall be provided and their maintenance and running expenses shall be met
by the Company. The use of above at residence, for official purpose, shall not be treated as perquisites.
He shall also be entitled to reimbursement of all entertainment and other expenses properly incurred for
the business of the Company.
For the purpose of above monetary limits, the following perquisites shall not be included:

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 a) Contribution to Provident Fund, Superannuation Fund or Annuity Fund to the extent these either singly
or put together are not taxable under the Income Tax Act, 1961.
b) Gratuity payable in terms of the provisions of the Payment of Gratuity Act, 1972 and the Gratuity
Scheme adopted by the Company.
c) Encashment of leave at the end of the tenure as per the leave encashment policy adopted by the
Company.

3 Remuneration in the event of loss or inadequacy of profits

Where, in any financial year, the Company has no profits or its profits are inadequate, the Managing
Director shall be paid minimum remuneration by way of salary and perquisites as per the provisions of
proviso to Section IIA, Part II of Schedule V to the Companies Act, 2013.

Other Terms and Conditions:

The terms and conditions of appointment of Managing Director may be altered and varied from time to time by
the Board in such manner as may be mutually agreed, subject to such approvals as may be required and within
applicable limits of the Companies Act, 2013.
No sitting fees shall be paid to the Managing Director for attending meeting of the Board of Directors or any
Committee thereof.
Total remuneration of Mr. Thomas George Muthoot, in any financial year, shall not exceed 5% of the net profit of
the Company during that year.
The appointment may be terminated by either party by giving three months’ notice of such termination or salary
in lieu thereof or by mutual consent.
RESOLVED FURTHER THAT any Director or the Company Secretary be and are hereby severally authorised to take
such steps and to do all such acts, deeds, matters and things as may be required to give effect to the foregoing
resolution.”

4. Issue of Non - Convertible Debentures (NCDs) on Private Placement basis

To consider and if thought fit, to pass, with or without modification(s), the following resolution as a Special
Resolution:
“RESOLVED THAT pursuant to the provisions of Section 42 and 71 of the Companies Act, 2013 (“the Act”), read
with Rule 14 of Companies (Prospectus and Allotment of Securities) Rules, 2014 and other applicable provisions,
if any, of the Act (including any statutory modification(s) or re-enactment(s) thereof, for the time being in force)
and in accordance with the provisions of SEBI (Issue and Listing of Debt Securities) Regulations, 2008 as amended
and other applicable SEBI regulations and guidelines, the provisions of the Memorandum and Articles of
Association of the Company, RBI Notification No. DNBR (PD) CC No. 021/03.10.001/2014-15 dated 20th February,
2015, such other terms/requirements laid down by the Reserve Bank of India in this regard, and/or any other
concerned statutory/regulatory authority, as may be necessary, the consent of the Members of the Company be
and is hereby accorded to the Board of Directors (hereinafter referred to as the ‘Board’ which term shall be
deemed to include any Committee thereof) to create, offer, issue and allot Redeemable Non-Convertible
Debentures (the “NCDs”) in the aggregate amount of up to Rs. 200.00 crores (Rupees Two Hundred Crores Only),
in one or more tranches on private placement basis during the FY 2019 - 2020 to the eligible investors (the “Issue”)
(whether residents and/or non-residents and/or institutions/incorporated bodies and/or individuals and/or
trustees and/or banks or otherwise, in domestic and/or one or more international markets) including Non-resident
Indians, Foreign Institutional Investors (FIIs), Venture Capital Funds, Foreign Venture Capital Investors, State
Industrial Development Corporations, Insurance Companies, Provident Funds, Pension Funds, Development
Financial Institutions, Bodies Corporate, Companies, private or public or other entities, authorities and to such

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 other persons in one or more combinations (the “Issue”) within the overall borrowing limits of the Company on
such terms and conditions as the Board may from time to time determine proper and beneficial.
RESOLVED FURTHER THAT for the purpose of giving effect to any offer, invitation, issue or allotment through
private placement of NCDs, the Board be and is hereby authorised on behalf of the Company to do all such acts,
deeds, matters and things as it may, in absolute discretion, deem necessary or desirable for such purpose,
including without limitation, the determination of the terms thereof, finalizing the form/placement
documents/offer letter, timing of the issue(s), including the class of investors to whom the NCDs are to be allotted,
number of NCDs to be allotted in each tranche, issue price, redemption, rate of interest, redemption period,
allotment of NCDs, appointment of lead managers, arrangers, debenture trustees and other agencies, entering
into arrangements for managing the issue, issue placement documents and to sign all deeds, documents and
writings and to pay any fees, remuneration, expenses relating thereto and for other related matters and with
power on behalf of the Company to settle all questions, difficulties or doubts that may arise in this regard to such
offer(s) or issue(s) or allotment(s) as it may, in its absolute discretion, deem fit.
RESOLVED FURTHER THAT the Board be and is hereby authorised to further delegate all or any of the powers in
aforesaid matters to the Committee/officials of the Company, in such manners as the Board may in its absolute
discretion deem fit.”

5. Re-appointment of Mr. A.P. Kurian (DIN: 00008022) as an Independent Director of the Company
To consider and if thought fit, to pass with or without modification(s), the following resolution as a Special
Resolution:
“RESOLVED THAT pursuant to recommendation of the Nomination and Remuneration Committee and approval
of the Board of Directors in their respective meetings held on April 24, 2019 and pursuant to the provisions of
Sections 149, 150, 152 read with Schedule IV and any other applicable provisions, if any, of the Companies Act,
2013 and the Companies (Appointment and Qualification of Directors) Rules, 2014 and the applicable provisions
of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred as “SEBI
(LODR) Regulations, 2015”) (including any statutory modification(s) or re-enactment thereof for the time being in
force), the approval of the Members of the Company be and is hereby accorded for re-appointment of Mr. A P
Kurian (DIN: 00008022) as the Non-Executive Independent Director of the Company whose current period of office
is expiring on September 02, 2019 and who has submitted a declaration confirming the criteria of Independence
under Section 149 (6) of the Companies Act, 2013 read with the SEBI (LODR) Regulations, 2015, as amended from
time to time and who is eligible for re-appointment for the second term under the provisions of the Companies
Act, 2013, Rules made thereunder and SEBI (LODR) Regulations, 2015 and in respect of whom the Company has
received a notice in writing from a Member proposing his candidature for the office of Director pursuant to Section
160 of the Companies Act, 2013, as a Non-Executive Independent Director of the Company, whose term shall not
be subject to retirement by rotation, to hold office for five (5) consecutive years on the Board of the Company for
a term w.e.f. September 03, 2019 upto September 02, 2024.
RESOLVED FURTHER THAT pursuant to the provisions of Regulation 17 (1A) SEBI (LODR) Regulations, 2015 as
amended from time to time and other applicable provisions if any, of the Companies Act, 2013 and subject to such
other approvals as may be necessary in this regard, the approval of the members be and is hereby accorded to
Mr. A.P. Kurian (DIN: 00008022) to hold the directorship as the Non-Executive Independent Director of the
Company, who has attained age above 75 years, from September 03, 2019 till the expiry of his second term i.e.,
September 02, 2024.
RESOLVED FURTHER THAT the Board of Directors of the Company be and are hereby authorised to do and perform
all such acts, deeds, matters or things as may be considered necessary, appropriate, expedient or desirable to give
effect to the above resolution.”

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6. Re-appointment of Mrs. Radha Unni (DIN: 03242769) as an Independent Director of the Company
To consider and if thought fit, to pass with or without modification(s), the following resolution as a Special
Resolution:
“RESOLVED THAT pursuant to recommendation of the Nomination and Remuneration Committee and approval
of the Board of Directors in their respective meetings held on April 24, 2019 and pursuant to the provisions of
Sections 149, 150, 152 read with Schedule IV and any other applicable provisions, if any, of the Companies Act,
2013 and the Companies (Appointment and Qualification of Directors) Rules, 2014 and the applicable provisions
of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred as “SEBI
(LODR) Regulations, 2015”) (including any statutory modification(s) or re-enactment thereof for the time being in
force), the approval of the Members of the Company be and is hereby accorded for re-appointment of Mrs. Radha
Unni (DIN: 03242769) as the Non-Executive Independent Director of the Company whose current period of office
is expiring on September 02, 2019 and who has submitted a declaration confirming the criteria of Independence
under Section 149(6) of the Companies Act, 2013 read with the SEBI (LODR) Regulations, 2015, as amended from
time to time, and who is eligible for re-appointment for the second term under the provisions of the Companies
Act, 2013, Rules made thereunder and SEBI (LODR) Regulations, 2015and in respect of whom the Company has
received a notice in writing from a Member proposing her candidature for the office of Director pursuant to
Section 160 of the Companies Act, 2013, as a Non-Executive Independent Director of the Company, whose term
shall not be subject to retirement by rotation, to hold office for five (5) consecutive years on the Board of the
Company for a term w.e.f. September 03, 2019 upto September 02, 2024.
RESOLVED FURTHER THAT the Board of Directors of the Company be and are hereby authorised to do and perform
all such acts, deeds, matters or things as may be considered necessary, appropriate, expedient or desirable to give
effect to the above resolution.”

7. Appointment of Mr. K.M. Abraham (DIN: 05178826) as Non-Executive Independent Director

To consider and if thought fit, to pass with or without modification(s), the following resolution as an Ordinary
Resolution:
“RESOLVED THAT pursuant to the provisions of Sections 149, 150, 152 and any other applicable provisions of the
Companies Act, 2013 and rules made thereunder (including any statutory modification(s) or re-enactment thereof
for the time being in force) read with Schedule IV of the Companies Act, 2013, approval of the members of the
Company be and is hereby accorded to the appointment of Mr. K.M. Abraham (DIN: 05178826), who was
appointed by the Board of Directors as an Additional Non-Executive Independent Director of the Company with
effect from January 18, 2019 pursuant to the provisions of Section 161(1) of the Companies Act, 2013 and pursuant
to the applicable Articles of Association of the Company, and who holds office upto the date of this Annual General
Meeting of the Company in terms of Section 161 of the Companies Act, 2013 and who has submitted a declaration
that he meets the criteria of Independence as provided in section 149(6) of the Act and he is not debarred from
holding the office of director by virtue of any SEBI order or any other such authority, who is eligible for
appointment, on recommendation of the Nomination and Remuneration Committee, be and is hereby appointed
as Non-Executive Independent Director of the Company, who shall hold office for a period of five consecutive
years from the date of this Annual General Meeting and whose office shall not, henceforth, be liable to retire by
rotation.
RESOLVED FURTHER THAT to give effect to this resolution, the Board of Directors of the Company be and are
hereby authorised to do all the acts, deeds, matters and things as they may in their absolute discretion deem
necessary, proper or desirable and to settle any question, difficulty or doubt that may arise in this regard and to
sign and execute all necessary documents, applications, returns and writings as may be necessary, proper,
desirable or expedient.”

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8. Appointment of Mr. Thomas Mathew (DIN: 01277149) as Non-Executive Independent Director
To consider and if thought fit, to pass with or without modification(s), the following resolution as an Ordinary
Resolution:
“RESOLVED THAT pursuant to the provisions of Sections 149, 150, 152 and any other applicable provisions of the
Companies Act, 2013 and rules made thereunder (including any statutory modification(s) or re-enactment thereof
for the time being in force) read with Schedule IV of the Companies Act, 2013, approval of the members of the
Company be and is hereby accorded to the appointment of Mr. Thomas Mathew (DIN: 01277149), who was
appointed by the Board of Directors as an Additional Non-Executive Independent Director of the Company with
effect from April 01, 2019 pursuant to the provisions of Section 161(1) of the Companies Act, 2013 and pursuant
to the applicable Articles of Association of the Company, and who holds office upto the date of this Annual General
Meeting of the Company in terms of Section 161 of the Companies Act, 2013 and who has submitted a declaration
that he meets the criteria of Independence as provided in section 149(6) of the Act and he is not debarred from
holding the office of director by virtue of any SEBI order or any other such authority, who is eligible for
appointment, on recommendation of the Nomination and Remuneration Committee, be and is hereby appointed
as Non-Executive Independent Director of the Company, who shall hold office for a period of five consecutive
years from the date of this Annual General Meeting and whose office shall not, henceforth, be liable to retire by
rotation.
RESOLVED FURTHER THAT to give effect to this resolution, the Board of Directors of the Company be and are
hereby authorised to do all the acts, deeds, matters and things as they may in their absolute discretion deem
necessary, proper or desirable and to settle any question, difficulty or doubt that may arise in this regard and to
sign and execute all necessary documents, applications, returns and writings as may be necessary, proper,
desirable or expedient.”
On behalf of the Board of Directors
Sd/-
Kochi Thomas George Muthoot
April 24, 2019 Managing Director

NOTES
1. The statement pursuant to Section 102 (1) of the Companies Act, 2013, in respect of the special business as set
out above is annexed hereto.
2. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE ON A
POLL ONLY INSTEAD OF HIMSELF/HERSELF AND THE PROXY NEED NOT BE A MEMBER OF THE COMPANY.
Pursuant to Section 105 of the Companies Act, 2013, a person can act as a proxy on behalf of not more than fifty
members and holding in the aggregate not more than 10% of the total share capital of the Company carrying
voting rights. Members holding more than 10% of the total share capital of the Company carrying voting rights
may appoint single person as proxy who shall not act as a proxy for any other person or shareholder. Instrument
of proxy, in order to be effective, must be duly filled, signed, stamped and received at the Company’s Registered
Office, not less than 48 hours before the meeting. Proxies submitted on behalf of Limited Companies, Societies,
etc. must be supported by appropriate resolution/authority, as applicable, issued on behalf of the nominating
organization. A proxy form (Form MGT - 11) is annexed to this notice.
3. Shareholders may note that the Company or its Registrars cannot act on any request received directly from the
shareholders holding shares in electronic form for any change of bank particulars or bank mandates. Such changes
are to be advised only to the Depository Participant of shareholders.
4. Shareholders holding shares in physical form are requested to inform the Company and those holding shares in
demat form to inform the Depository Participant about any changes in their mailing address and also to quote
Folio Number/Client ID/DP ID, in all their correspondence with the Company/Depository Participant.
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5. Transfer of Unclaimed/Unpaid dividends to the Investor Education and Protection Fund (IEPF):
The shareholders who have not yet encashed their dividend warrants relating to the financial year 2011 - 2012
and subsequent years are requested to contact the Company/Registrar and Share Transfer Agents. The
unpaid/unclaimed dividend for the financial year 2011 - 2012, if not claimed by the shareholders on or before
September 05, 2019, will be transferred to IEPF thereafter.
6. Pursuant to the provisions of Section 124 (6) of the Companies Act, 2013 read with IEPF (Accounting, Audit,
Transfer and Refund) Rules, 2016 the equity shares of the Company, in respect of which the dividend(s) remained
unpaid or unclaimed for a period of 7 consecutive years, are liable to be transferred to the IEPF Authority. As per
the provisions of IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (as amended), the
shareholder may lodge the claim to the IEPF Authority for such dividends and shares by submitting an online
application in Form IEPF-5 available on the website [Link]. In case you have any queries or issues
regarding unclaimed dividends or shares, you may refer to the Nodal Officer and can be contacted at 0484 -
6619689 or mail to mail@[Link] or investorgrievance@[Link]
7. Members/Proxies are requested to bring the attendance slip (annexed to this notice) duly filled in for attending
the meeting.
8. As a measure of economy, copies of the Annual Report will not be distributed at the venue of AGM. Members are
requested to bring their copies of the Annual Report to the meeting.
9. Members seeking any information with regard to the accounts are requested to write to the Company at an early
date, so as to enable the management to keep the information ready at the meeting.
10. The route map and prominent landmark of the venue of the meeting is provided in this Notice.
11. a) Pursuant to Section 108 of the Companies Act, 2013, read with Rule 20 of the Companies (Management and
Administration) Rules, 2014 and Regulation 44 of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, the Company is pleased to provide the facility to members to exercise the right to vote by
electronic means. The Company has arranged this facility in the CDSL platform. The Members whose names
appear in the Register of Members/List of Beneficiary Owners as on June 10, 2019 (cut-off date) i.e., a date
not earlier than seven days before the date of general meeting shall only be allowed to vote.
b) Shareholders who have acquired shares after the dispatch of notice and before the cut-off date may approach
the Company for issuance of User ID and Password for exercising their votes by electronic means.
c) The remote e-voting period will commence at 9.00 a.m. on June 14, 2019 and will end on 5.00 p.m. on June
16, 2019. At the end of the remote e-voting period, the said facility shall forthwith be blocked. The Company
has appointed CS Nikhil George Pinto, Partner, M/s. CaesarPintoJohn & Associates LLP, Company Secretaries,
5, Puthussery House, Edanad, Chowara P.O., Aluva, Ernakulam - 683 571, to conduct the scrutiny of votes cast
in the remote e-voting process and poll at the venue of the AGM of the Company.
d) Once the vote on a Resolution is cast by the shareholder, he shall not be allowed to change it subsequently.
e) The facility for voting through ballot paper shall be made available at the meeting and the members attending
the meeting, who have not already casted their vote by remote e-voting shall be able to exercise their right
at the meeting.
f) The members who had cast their vote by remote e-voting prior to the meeting may also attend the meeting
but shall not be entitled to vote again at the meeting.
g) The results of the remote e-voting and poll in the AGM shall be declared within 48 hours of conclusion of the
AGM on the website of the Company and will also be intimated to the Stock Exchanges.
h) Shareholders who are not members as on the cut-off date shall treat this notice for information purposes only.

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 i) Documents/Papers relating to the items contained in the Notice may be perused on any working day during
business hours at the Registered Office of the Company and the copies shall also be made available for
inspection at the Meeting.
The members desiring to vote through electronic mode may refer to the detailed procedure on remote e-voting as
given below:
12. INSTRUCTIONS FOR REMOTE E-VOTING
The instructions for shareholders to vote electronically are as under:
(i) The voting period commences on 9.00 a.m. on June 14, 2019 and will end on 5.00 p.m. on June 16, 2019. During
this period shareholders of the Company, holding shares either in physical form or in dematerialized form as on
the cut-off date June 10, 2018 may cast their vote electronically. The remote e-voting module shall be disabled by
CDSL and the remote e-voting shall not be allowed beyond the said date and time.
(ii) The shareholders should log on to the e-voting website [Link].
(iii) Click on “Shareholders”.
(iv) Now Enter your User ID
a) For CDSL: 16 digits beneficiary ID,
b) For NSDL: 8 character DP ID followed by 8 digits Client ID,
c) Members holding shares in physical form should enter folio number registered with the Company.
(v) Next, enter the image verification as displayed and click on “Login”.
(vi) If you are holding shares in demat form and had logged on to [Link] and voted on an earlier voting
of any Company, then your existing password is to be used.
(vii) If you are a first time user follow the steps given below:

For Members holding shares in Demat Form and Physical Form

PAN Enter your 10 digit alpha-numeric *PAN issued by Income Tax Department (Applicable for both
demat shareholders as well as physical shareholders)
• Members who have not updated their PAN with the Company/Depository Participant are
requested to use the first two letters of their name and the 8 digits of the sequence number
in the PAN field.
• In case the sequence number is less than 8 digits enter the applicable number of 0’s before
the number after the first two characters of the name in CAPITAL letters. Eg. If your name
is Ramesh Kumar with sequence number 1 then enter RA00000001 in the PAN field.
Dividend Bank Enter the dividend bank details or date of birth (in dd/mm/yy format) as recorded in your demat
Details or Date of account or in the Company records in order to login.
Birth (DOB) • If both the details are not recorded with the Depository or Company, please enter the
member id/folio number in the dividend bank details field as mentioned in instruction (iv)

(viii) After entering these details appropriately, click on “SUBMIT” tab.

(ix) Shareholders holding shares in physical form will then directly reach the Company selection screen. However,
members holding shares in demat form will now reach ‘Password Creation’ menu wherein they are required to
mandatorily enter their login password in the new password field. Kindly note that this password is to be also
used by the demat holders for voting for resolutions of any other Company on which they are eligible to vote,
provided that Company opts for e-voting through CDSL platform. It is strongly recommended not to share your
password with any other person and take utmost care to keep your password confidential.
(x) For Members holding shares in physical form, the details can be used only for remote e-voting on the resolutions
contained in this Notice.

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(xi) Click on the EVSN for the relevant <MUTHOOT CAPITAL SERVICES LIMITED> on which you choose to vote.
(xii) On the voting page, you will see “RESOLUTION DESCRIPTION” and against the same the option “YES/NO” for
voting. Select the option “YES” or “NO” as desired. The option “YES” implies that you assent to the Resolution
and option “NO” implies that you dissent to the Resolution.
(xiii) Click on the “RESOLUTIONS FILE LINK” if you wish to view the entire Resolution details.
(xiv) After selecting the Resolution you have decided to vote on, click on “SUBMIT”. A confirmation box will be
displayed. If you wish to confirm your vote, click on “OK”, else to change your vote, click on “CANCEL” and
accordingly modify your vote.
(xv) Once you “CONFIRM” your vote on the resolution, you will not be allowed to modify your vote.
(xvi) You can also take out print of the voting done by you by clicking on “Click here to print” option on the Voting
page.
(xvii) If demat account holder has forgotten the changed password, then enter the User ID and the image verification
code and click on “Forgot Password” and enter the details as prompted by the system.
(xviii) Note for Non - Individual Shareholders and Custodians

• Non - Individual shareholders (i.e. other than Individuals, HUF, and NRI etc.) and Custodian are required to
log on to [Link] and register themselves as Corporates.
• A scanned copy of the Registration Form bearing the stamp and sign of the entity should be emailed to
[Link]@[Link].
• After receiving the login details a “Compliance User” should be created using the admin login and password.
The Compliance User would be able to link the account(s) for which they wish to vote on.
• The list of accounts should be mailed to [Link]@[Link] and on approval of the accounts
they would be able to cast their vote.
• A scanned copy of the Board Resolution and Power of Attorney (POA) which they have issued in favour of
the Custodian, if any, should be uploaded in PDF format in the system for the scrutinizer to verify the same.
(xix) In case you have any queries or issues regarding remote e-voting, you may refer the Frequently Asked Questions
(“FAQs”) and remote e-voting manual available at [Link], under help section or write an email
to [Link]@[Link]. The official designated to address the grievances in this regard will be Mr.
Rakesh Dalvi, Manager and can be contacted at 022-2305 8542 or mail to [Link]@[Link].
On behalf of the Board of Directors
Sd/-
Kochi Thomas George Muthoot
April 24, 2019 Managing Director

STATEMENT PURSUANT TO SECTION 102 (1) OF THE COMPANIES ACT, 2013

The following statement sets out all material facts relating to the Special Business mentioned in the accompanying
Notice:
Item No. 3:
The Members of the Company, at the 22nd Annual General Meeting held on June 06, 2016, had approved the
appointment of Mr. Thomas George Muthoot as the Managing Director (MD) of the Company for a period of five years
w.e.f. July 12, 2016. The terms of appointment includes the payment of remuneration of ₹ 1,80,00,000/- p.a. including
perquisites for a period of three years w.e.f. April 01, 2016. In these circumstances, the remuneration paid to Mr.
Thomas George Muthoot for his services as MD needs to be revised and approved by the Members of the Company.
The Company has grown tremendously in the recent years under the supervision of Mr. Thomas George Muthoot as
MD and has now become a Company with All India operations, being now present in 20 States and also the profits have
8
gone up substantially. Between the time of the last appointment the Asset under Management (AUM) increased from
₹ 1038.79 crores to ₹ 2741.05 crores as on March 31, 2019, a growth of 264%. The Profit After Tax (PAT) of the Company
increased to ₹ 82.42 crores as on March 31, 2019 from ₹ 22.85 crores as on March 31, 2016, a growth of 360%. His
guidance and vision has been one of the main reasons for this kind of performance that the Company has shown.
Considering, the remuneration payable to him as MD is considered for revision and approval.
The Company has also carried out a peer company review through an external firm to determine the remuneration
payable to the MD and the same was reviewed by the Nomination and Remuneration Committee. The Committee inter
alia considered the peer company review report and recommended the proposed remuneration to the Board.
Further, on the recommendation of the Nomination and Remuneration Committee, the Board of Directors of the
Company, at its meeting held on April 24, 2019, recommended the revised remuneration payable to Mr. Thomas
George Muthoot w.e.f. April 01, 2019, till the expiry of his appointment i.e., July 11, 2021, as follows:
1. Salary: ₹ 4,20,00,000/- per annum (Rupees Four Crores Twenty Lakhs only) w.e.f. April 01, 2019 till the expiry of
his term i.e., July 11, 2021 (including perquisites).
2. Perquisites: Total perquisites shall be limited to ₹ 15,00,000/- per annum (Rupees Fifteen Lakhs only).
Perquisites includes benefits and allowances like accommodation (furnished or otherwise) or house rent allowance
in lieu thereof, reimbursement of expenditure or allowance in respect of maintenance, utilities such as gas,
electricity, water, furnishings and house repairs, medical reimbursement for himself and his family, medical
insurance for himself and his family, and leave on full pay, leave travel concession for himself and his family,
personal accident insurance, club fees, etc. and such other allowances, perquisites and benefits in accordance with
the rules of the Company or as may be allowed by the Board from time to time.
Car, Telephone, Cell Phone, PC shall be provided and their maintenance and running expenses shall be met by the
Company. The use of above at residence for official purpose shall not be treated as perquisites.
He shall also be entitled to reimbursement of all entertainment and other expenses properly incurred for the
business of the Company.
3. Where in any financial year, the Company has no profits or its profits are inadequate, the Managing Director shall
be paid minimum remuneration by way of salary and perquisites as per the provisions of proviso to Section IIA,
Part II of Schedule V to the Companies Act, 2013.
All other terms and conditions of his appointment remain unchanged.
The terms of the proposed remuneration are in conformity with the provisions of Sections 196, 197, 198 & 203 read
with Schedule V and other applicable provisions of the Companies Act, 2013.
Details of Mr. Thomas George Muthoot as required to be given pursuant to the SEBI (LODR) Regulations, 2015 and
Secretarial Standard on General Meetings (“SS-2”), issued by the Institute of Company Secretaries of India is attached
to this Notice as “Annexure 1”.
Copy of documents relating to the items, are available for inspection, without any fee to the members, at the Registered
Office of the Company during normal business hours on any working day.
Thomas John Muthoot, Chairman (holding DIN: 00011618) and Mr. Thomas Muthoot (holding DIN: 00082099), Director,
being brothers of Mr. Thomas George Muthoot, are interested in the resolution. Save and except the above, none of
the other Directors/Key Managerial Personnel and/or their relatives are interested in this resolution.
The Board recommend the Ordinary Resolution set out in Item No. 3 of the Notice for approval of the Members who
are not related party(s).
Item No. 4:
In order to provide necessary flexibility regarding borrowings of the Company in an optimal manner depending on the
market conditions, the Company proposes to offer, issue and allot Redeemable Non-Convertible Debentures (‘NCDs’)
9
upto an amount of ₹ 200 crores in such manner and on such terms and conditions as may be deemed appropriate by
the Board of Directors of the Company (hereinafter referred to as the ‘Board’ which term shall be deemed to include
any Committee thereof). The Board has, at its meeting held on April 24, 2019, resolved to seek approval of Members
to issue NCDs upto an amount of ₹ 200 crores on private placement basis, on such terms and conditions and at such
price(s) as may be determined by the Board.
Section 42 of the Companies Act, 2013 read with Rule 14 of the Companies (Prospectus and Allotment of Securities)
Rules, 2014, provides that a Company offering or making an invitation to subscribe NCDs on private placement basis
shall obtain prior approval of the Members by way of a special resolution. The special resolution shall be valid for a
period of one year for all the offers or invitations for such NCDs made during the year. The Company may offer or invite
subscription for NCDs, in one or more series/tranches on private placement basis to persons who may or may not be
shareholders of the Company. NCDs may be secured by mortgage/charge on the assets of the Company and may be
listed on one or more stock exchanges. The proposed borrowings along with the existing borrowings of the Company
(apart from temporary loans obtained from the Company’s bankers in the ordinary course of business) would not
exceed the borrowing limit approved by the shareholders from time to time. The Company shall further comply with
the provisions of Notification No. DNBR (PD) CC No. 021/03.10.001/2014-15 dated 20 February 2015 issued by the
Reserve Bank of India.
Approval of the Members is, therefore, sought for the proposed issue of NCDs and for authorizing the Board to issue
NCDs on such terms and conditions as may be deemed appropriate by the Board.
None of the Directors or Key Managerial Personnel of the Company and their relatives are concerned or interested,
financially or otherwise, in the Special Resolution.
The Board recommends the Special Resolution set out in Item No. 4 of this Notice for the approval of the Members.
Item Nos. 5 & 6:
Mr. A.P. Kurian (DIN: 00008022) and Mrs. Radha Unni (DIN: 03242769) were appointed as Independent Directors on
the Board of the Company pursuant to the provisions of Section 149 of the Companies Act, 2013 read with the
Companies (Appointment and Qualification of Directors) Rules, 2014 and the erstwhile Clause 49 of the Listing
Agreement with the Stock Exchanges at the 20th Annual General Meeting held on September 03, 2014 for a period of
five consecutive years, i.e., for a term upto September 02, 2019 (“first term” in line with the explanation to Sections
149 (10) and 149 (11) of the Act).
The Nomination and Remuneration Committee of the Board of Directors, on the basis of the report of performance
evaluation of Independent Directors, has recommended reappointment of Mr. A.P. Kurian and Mrs. Radha Unni as
Independent Directors for a second term of 5 (five) consecutive years, on the Board of the Company.
The Board, based on the performance evaluation of Independent Directors and as per the recommendation of the
Nomination and Remuneration Committee, considers that, given their background and experience and contributions
made by them during their tenure, the continued association of Mr. A.P. Kurian and Mrs. Radha Unni would be beneficial
to the Company and it is desirable to continue to avail their services as Independent Directors. Accordingly, it is
proposed to re-appoint Mr. A.P. Kurian and Mrs. Radha Unni as Independent Directors of the Company, not liable to
retire by rotation and to hold office for a second term of 5 (five) consecutive years on the Board of the Company.
Section 149 of the Act and provisions of the SEBI (LODR) Regulations, 2015 inter alia prescribe that an Independent
Director of a Company shall meet the criteria of independence as provided in Section 149 (6) of the Act.
Section 149 (10) of the Act provides that an Independent Director shall hold office for a term of up to five consecutive
years on the Board and shall be eligible for re-appointment on passing a Special Resolution by the company and
disclosure of such appointment in its Board’s report. Section 149 (11) provides that an Independent Director may hold
office for up to two consecutive terms.
Mr. A.P. Kurian and Mrs. Radha Unni are not disqualified from being appointed as Directors in terms of Section 164 of
the Act and have given their consent to act as Directors. The Company has received notices in writing from a member

10
Section 160 of the Act proposing the candidature of Mr. A.P. Kurian and Mrs. Radha Unni for the office of Independent
Directors of the Company.
The Company has also received declarations from Mr. A.P. Kurian and Mrs. Radha Unni that they meet with the criteria
of independence as prescribed both under Section 149 (6) of the Act and under the SEBI (LODR) Regulations, 2015.
Further, it may also be noted that Mr. A.P. Kurian has exceeded the age limit of 75 years as prescribed under SEBI (LODR)
Regulations, 2015. Hence, the Board seeks specific approval of the Members through Special Resolution for the
appointment of Mr. A.P. Kurian.
In the opinion of the Board, Mr. A.P. Kurian and Mrs. Radha Unni fulfil the conditions for appointment as Independent
Directors as specified in the Act and the SEBI (LODR) Regulations, 2015. Mr. A.P. Kurian and Mrs. Radha Unni are
independent of the management.
Details of Directors whose re-appointment as Independent Directors is proposed at Item Nos. 5 and 6, are provided in
the “Annexure 1”to this Notice pursuant to the provisions of (i) the SEBI (LODR) Regulations, 2015 and (ii) Secretarial
Standard on General Meetings (“SS-2”), issued by the Institute of Company Secretaries of India.
Copy of documents relating to the items are available for inspection without any fee by the members at the Registered
Office of the Company during normal business hours on any working day.
Mr. A.P. Kurian and Mrs. Radha Unni are interested in the resolutions set out respectively at Item Nos. 5 & 6 of the
Notice with regard to their respective re-appointments. The relatives of Mr. A.P. Kurian and Mrs. Radha Unni may be
deemed to be interested in the respective resolutions to the extent of their shareholding interest, if any, in the
Company.
Save and except the above, none of the other Directors/Key Managerial Personnel and/or their relatives are interested
in these resolutions.
The Board recommends the Special Resolutions set out in Item Nos. 5 & 6 of this Notice for the approval of the
Members.
Item Nos. 7:
Mr. K.M. Abraham (DIN: 05178826) was appointed by the Board of Directors as an Additional Independent Director on
the Board w.e.f. January 18, 2019.
Mr. Abraham is a Chartered Financial Analyst having PhD in Technology Planning from University of Michigan, USA. He
is currently handling the various positions such as Chief Executive Officer in Kerala Infrastructure Investment Fund Board
(KIIFB), Chairman of Kerala Development and Innovation Strategic Council (KDISC) and the Chairman of Implementation
Committee - Rebuilding Kerala Initiative. He has held various prestigious positions such as Chief Secretary of
Government of Kerala and Senior and Middle Level Administrative Positions in the Indian Administrative Service. Mr.
Abraham was a Whole Time Member of Securities and Exchange Board of India (SEBI) during the period from 2008 -
2011. He has been selected by India Today among the top 10 bureaucrats in the States of Kerala during the year 2014
and one of the top 10 Personality Brand Names selected by Dhanam Magazine in the year 2018.
Pursuant to the provisions of Section 161 of the Companies Act, 2013, Mr. K.M. Abraham shall hold office up to the
date of the ensuing Annual General Meeting. The Company has received a notice from a member signifying the intention
to propose his appointment as a Director of the Company. Since the appointment of Mr. K.M. Abraham is recommended
by the Nomination and Remuneration Committee and the Board, the requirement of deposit fee is not applicable.
Details of Mr. K.M. Abraham are provided in the “Annexure 1”to this Notice pursuant to the provisions of (i) the SEBI
(LODR) Regulations, 2015 and (ii) Secretarial Standard on General Meetings (“SS-2”), issued by the Institute of Company
Secretaries of India.
None of the Directors or Key Managerial Personnel or their relatives, except Mr. K.M. Abraham are in any way
concerned or interested financially or otherwise in the proposed resolution as set out in the Notice.

11
The Board recommends the Ordinary Resolution set out in Item No. 7 of this Notice for the approval of the Members.
Item Nos. 8:
Mr. Thomas Mathew (DIN: 01277149) was appointed by the Board of Directors as an Additional Independent Director
on the Board w.e.f. April 01, 2019.
Mr. Thomas Mathew is a Fellow Member of the Institute of Chartered Accountants of India (ICAI) and was a member
of the Research Committee of ICAI. He was appointed as the Consumer and Industrial Products (CIP) Industry Leader of
PricewaterhouseCoopers (PwC) India. He was also a member of the CIP Global Leadership Team. He served as the leader
of the Compliance and Risk Management (CRM) group of the Indian practice and focused on Corporate Governance,
Ethics and Compliance. He was the National Leader of the Pharmaceuticals & Life Sciences Industry practice and a
member of the Global Pharmaceutical & Life Sciences Leadership Team of PwC.
Pursuant to the provisions of Section 161 of the Companies Act, 2013, Mr. Thomas Mathew shall hold office up to the
date of the ensuing Annual General Meeting. The Company has received a notice from a member signifying the intention
to propose his appointment as a Director of the Company. Since the appointment of Mr. Thomas Mathew is
recommended by the Nomination and Remuneration Committee and the Board, the requirement of deposit fee is not
applicable.
Details of Mr. Thomas Mathew are provided in the “Annexure 1”to this Notice pursuant to the provisions of (i) the SEBI
(LODR) Regulations, 2015 and (ii) Secretarial Standard on General Meetings (“SS-2”), issued by the Institute of Company
Secretaries of India.
None of the Directors or Key Managerial Personnel or their relatives, except Mr. Thomas Mathew are in any way
concerned or interested financially or otherwise in the proposed resolution as set out in the Notice.
The Board recommends the Ordinary Resolution set out in Item No. 8 of this Notice for the approval of the Members.
Annexure 1: Information required to be furnished under Regulation 36 (3) of the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 and Secretarial Standard on General Meetings (“SS-2”), issued by the
Institute of Company Secretaries of India
Name of the Mr. Thomas John Mr. Thomas Mr. A.P. Kurian Mrs. Radha Unni Mr. K.M. Mr. Thomas
Director Muthoot George Muthoot Abraham Mathew
DIN 00011618 00011552 00008022 03242769 05178826 01277149

Age 56 years 56 years 85 years 70 years 61 years 68 years

Date of Birth June 07, 1962 June 07, 1962 June 20, 1933 December 04, December 30, February 20, 1951
1948 1957
Nationality Indian Indian Indian Indian Indian Indian

Date of first February 18, February 18, April 06, 1994 June 28, 2014 January 18, 2019 April 01, 2019
appointment 1994 1994
on the Board
Relationship Bothers of Mr. Thomas Muthoot. Not related to any Director
with other Promoter Director
Directors
Qualification B. Com, Alumni B. Com M.A. (Economics & M.A., [Link]., CAIIB CFA, IAS FCA
of the Harvard Statistics)
Business School
Expertise in Retail financial Exposure in all Securities market, Banking & Government and Accounts, Audit
specific services, more facets of Non- banking and non- finance sector administration and Risk
functional particularly in the Banking Financial banking financial Management
areas micro retail Services sectors
lending portfolio

12
Number of 3134094; 3131430; Nil Nil Nil Nil
shares & % of 19.06% 19.04%
holding
List of 1. Muthoot 1. Muthoot 1. Muthoot 1. Nitta Gelatin Nil 1. The Catholic
Directorships Fincorp Limited Fincorp Fincorp Limited Limited Syrian Bank
held in other 2. Muthoot Limited 2. Sundaram Limited
Public Housing 2. Muthoot BNP Paribas
Limited Finance Housing Home
Companies Company Finance Finance
Limited Company Limited
3. Muthoot Limited 3. Royal
Microfin 3. Muthoot Sundaram
Limited Microfin General
4. Muthoot APT Limited Insurance
Ceramics 4. Muthoot APT Company
Limited Ceramics Limited
5. Muthoot Limited 4. V-Guard
Equities 5. Muthoot Industries
Limited Pappachan Limited
Technologies 5. Axles India
Limited Limited
6. Finance
Companies'
Association
(India)
Chairmanships 1. Muthoot 1. Muthoot 1. Muthoot 1. Nitta Gelatin Nil 1. The Catholic
/Memberships Housing Fincorp Fincorp Limited Limited - AC Syrian Bank
of Committees Finance Limited: - AC Member Chairman Limited - AC
in other Public Company AC Member 2. Sundaram Chairman
Limited Limited - AC SRC Member BNP Paribas
Companies Member Home
(Includes Audit 2. Muthoot Finance
Committee Microfin Limited - AC
[AC] and Limited - SRC Member
Stakeholders Chairman 3. Royal
Relationship Sundaram
Committee General
[SRC]) Insurance
Company
Limited - AC
Member

Number of Held - 7 Held - 7 Held - 7 Held - 7 Held - 1 Held - 0

Board Attended - 7 Attended - 7 Attended - 7 Attended - 5 Attended - 0 Attended - 0
meetings
attended
during the FY
2018 - 2019

On behalf of the Board of Directors

Sd/-
Kochi
Thomas George Muthoot
April 24, 2019
Managing Director

13
ANNUAL REPORT IS BEING
SENT SEPARATELY

14
 MUTHOOT CAPITAL SERVICES LIMITED
(CIN: L67120KL1994PLC007726)
Regd. Office: 3rd Floor, Muthoot Towers, M.G. Road, Kochi - 682 035
Tel: +91 - 484 - 6619600/6613450, Fax: +91 - 484 - 2381261
Web: [Link], Email: mail@[Link]

PROXY FORM
(Form MGT - 11)
(Pursuant to Section 105 (6) of the Companies Act, 2013 and Rule 19 (3) of the Companies (Management and
Administration) Rules, 2014)

Name of the member(s): Registered address:

E-mail Id: Folio. No/DP ID & Client ID:
I/We, being the holder(s) of …………………………………shares of the above-named Company hereby appoint
1. Name: ……………………........................2. Name: ………………….….….................... 3. Name: …………….……….……………………….
Address: ………………………..………..……..… Address: ………………………………………..… Address: ……..……………………..………..……..
Email Id: ……………………………………….……Email Id: ……………..…………………….…….. Email Id: ……………..………….….…………………
Signature: …………………….……… or failing him/her Signature: ……………..….……. or failing him/her Signature……….…..………
as my/our proxy to attend and vote (on a poll) for me/us and on my/our behalf at the 25th Annual General Meeting of
the Company, to be held on Monday, 17th day of June, 2019, at 10.30 a.m. at The International Hotel, Veekshanam
Road, Kochi - 682 035, and at any adjournment thereof in respect of such resolutions as are indicated below:

Resolution Particulars of Business

Numbers
Ordinary Business For Against
1. Adoption of Audited Statement of Profit and Loss for the financial year ended March 31,
2019, the Audited Balance Sheet as at that date, together with the Cash Flow Statements,
the Report of the Board of Directors and Independent Auditors thereon.
2. To appoint a Director in the place of Mr. Thomas John Muthoot (DIN: 00011618) who
retires by rotation.
Special Business
3. Revision in remuneration of Mr. Thomas George Muthoot (DIN: 00011552), Managing
Director of the Company
4. Issue of Non - Convertible Debentures (NCDs) on Private Placement basis
5. Re-appointment of Mr. A.P. Kurian (DIN: 00008022) as an Independent Director of the
Company
6. Re-appointment of Mrs. Radha Unni (DIN: 03242769) as an Independent Director of the
Company
7. Appointment of Mr. K.M. Abraham (DIN: 05178826) as Non-Executive Independent
Director
8. Appointment of Mr. Thomas Mathew (DIN: 01277149) as Non-Executive Independent
Director

Signed this ………. day of …………………………………… 2019. Affix One

Rupee Revenue
Stamp
____________________ _______________________
Signature of Shareholder Signature of proxy holder (s)
Note:
1) This form of proxy in order to be effective, should be duly completed and deposited at the Registered Office of the
Company, not less than 48 hours before the commencement of the meeting.

2) It is optional to put ‘X’ in the appropriate column against the Resolutions indicated in the Box. If you leave the ‘for’ or ‘against’
column blank against any or all Resolutions, your proxy will be entitled to vote in the manner as he/she thinks appropriate.

15
 MUTHOOT CAPITAL SERVICES LIMITED
(CIN: L67120KL1994PLC007726)
rd
Regd. Office: 3 Floor, Muthoot Towers, M.G. Road, Kochi - 682 035
Tel: +91 484 - 6619600/6613450, Fax: +91 - 484 - 2381261
Web: [Link], Email: mail@[Link]

ATTENDANCE SLIP
(Please complete this attendance slip and hand it over at the entrance of the Hall)

I hereby record my presence at the 25th Annual General Meeting of the Company, to be held on
Monday, 17th day of June, 2019, at 10.30 a.m. at The International Hotel, Veekshanam Road, Kochi -
682 035.

Folio No/DP ID/Client ID..........................................................................................................................

Full Name of the Shareholder in Block Letters: .......................................................................................
No. of Shares held: ..................................................................................................................................
Name of Proxy (if any) in Block Letters: .........................................................................................……….

Signature of the Shareholder/Proxy/Representative*

* Strike out whichever is not applicable.

Note:

Electronic copy of the Annual Report for the FY 2018 - 2019 and Notice of the 25th AGM along with
Attendance Slip and Proxy Form is being sent to all the Members whose email address is registered
with the Company/Depository Participant unless any Member has requested for the hard copy of the
same. Members receiving electronic copy and attending the AGM can print copy of this Attendance
Slip.
Route Map - Venue of AGM

16
ANNUAL REPORT 2018 - 19

3
ANNUAL REPORT 2018 - 19

4
ANNUAL REPORT 2018 - 19

5
ANNUAL REPORT 2018 - 19

INSIDE THIS REPORT

CORPORATE OVERVIEW
1 Board of Directors .................................................. 05
Corporate Information ............................................ 06
Message from the Managing Director .................... 08
Message from the Chief Operating Officer ............. 09
List of Branches ...................................................... 10
Key Events & Milestones ........................................ 12
Our CSR Activities .................................................. 13
Growth over last 5 years at a Glance ..................... 14

STATUTORY REPORTS
2 Board’s Report ...................................................... 19
Management Discussion and Analysis Report ..... 40
Report on Corporate Governance ........................ 54
Auditors Certificate on Corporate Governance..... 86

FINANCIAL STATEMENTS
3 Independent Auditor’s Report ............................. 87
Balance Sheet ..................................................... 99
Statement of Profit & Loss .................................. 100
Cash Flow Statement .......................................... 101
Notes to Financial Statements ............................ 103

6
 ANNUAL REPORT 2018 - 19

About Muthoot Pappachan Group

“A journey of a thousand miles begins with a single step”, true to this

adage, the Muthoot Pappachan Group (MPG), the much-diversified
business conglomerate has been providing solutions, services and
expertise to millions of customers across the country in various domains
like Financial Services, Automotive, Realty, Hospitality, IT Services,
Healthcare, Precious Metals, Global Services and Alternate Energy.
Over the years, MPG has grown to become a significant entity in the
Indian business landscape. MPG, in fact is one of the largest employees
in the country, across industries, providing employment to over 20,000
people and endeavouring to give them a family-like work environment.
The group’s customer-centric approach and innovation in terms of new
products that cater to changing customer needs, have helped in gaining
the loyalty of innumerable customers, as well as attracting new ones.
The Group adopts the latest technology and new ways of catering to the
needs of customers, coupled with an uncompromising stand on values,
principles and ethics.

About Muthoot Capital Services Limited

Established in 1994, Muthoot Capital Services Limited (MCSL) is

one of India’s Most Progressive Automobile Finance Companies.
With an aspiration to empower Indians and human ambition, MCSL
offer fund and non-fund based financial services to retail, corporate
and institutional customers through the wide network of branches of
Muthoot Fincorp Limited. MCSL also offer vital advice along with
funds so you can give wheels to your dreams!

MCSL promoted by the Muthoot Pappachan Group is a Non-Banking

Finance Company (NBFC) registered with the Reserve Bank of
India and its equity shares listed in BSE Limited and National Stock
Exchange of India (NSE).

Our portfolio includes retail finance products such as Two-Wheeler

Loans, Used Car Loans, Consumer Durable Loans, Corporate Loans
and investment product in the form of Fixed Deposits.

7
ANNUAL REPORT 2018 - 19

BOARD OF DIRECTORS

Mr. Thomas John Muthoot Mr. Thomas George Muthoot Mr. Thomas Muthoot
Chairman Managing Director Director

Mr. A. P. Kurian Mr. K. M. Abraham Mrs. Radha Unni

Independent Director Independent Director Independent Woman Director

Mr. Thomas Mathew

Independent Director

8
 ANNUAL REPORT 2018 - 19

CORPORATE INFORMATION
Chief Operating Officer
Mr. Madhu Alexiouse

Chief Finance Officer

Mr. Vinodkumar M. Panicker

Company Secretary & Compliance Officer

Mr. Ravi Oruganti (April 18, 2018 - March 28, 2019)

Statutory Auditors
M/s. Varma & Varma, Chartered Accountants
Sreeraghavam, Kerala Varma Tower,
Bldg. No. 53/2600 B, C, D & E,
Off. Kunjanbava Road, Vyttila, P.O., Kochi - 682 019

Secretarial Auditors
M/s. SVJS & Associates, Company Secretaries,
65/2364A, Ponoth Road, Kaloor, Kochi, Ernakulam - 682 017

Internal Auditors
M/s. PKF Sridhar & Santhanam LLP, Chartered Accountants,
KRD GEE GEE Crystal, 7th Floor, 91-92,
Dr. Radhakrishnan Salai, Mylapore, Chennai - 600 004

Registrar and Transfer Agents

Integrated Registry Management Services Private Ltd.
2nd Floor, “Kences Towers”, No.1, Ramakrishna Street,
North Usman Road, T. Nagar, Chennai - 600 017

Debenture Trustee
Mr. A. Gopalakrishnan
M/s. K. Venkatachalam Aiyer & Co.
Chartered Accountants,
Building No. 41/3647 B,
Providence Road, North End,
Kochi - 682 018

Public Deposits Trustee

IDBI Trusteeship Services Ltd.
Asian Building, Ground Floor,
17, R, Kamani Marg, Ballard Estate,
Mumbai - 400 001

9
ANNUAL REPORT 2018 - 19

Our Financiers
Andhra Bank Limited Karnataka Bank Limited
AU Small Finance Bank Limited Kotak Mahindra Bank Limited
Axis Bank Limited Lakshmi Vilas Bank Limited
Canara Bank Mahindra and Mahindra Financial Services Limited
Central Bank of India Punjab National Bank
City Union Bank Limited State Bank of India
Corporation Bank Syndicate Bank
Dhanlaxmi Bank Limited Tamilnad Mercantile Bank Limited
Equitas Small Finance Bank Limited The Federal Bank Limited
HDFC Bank Limited The Karur Vysya Bank Limited
ICICI Bank Limited The South Indian Bank Limited
IDBI Bank Limited Union Bank of India
Indian Bank Vijaya Bank
Indian Overseas Bank Yes Bank Limited
IndusInd Bank Limited

Key Company Info

Registered Office : 3rd Floor, Muthoot Towers,
M.G. Road, Kochi - 682 035
Ph: +91 484 6619600 / 6613450
Fax: +91 484 2381261
Email: mail@[Link]
Website: [Link]
CIN : L67120KL1994PLC007726
ISIN : INE296G01013
BSE Code : 511766
NSE Code : MUTHOOTCAP

10
 ANNUAL REPORT 2018 - 19

MESSAGE FROM THE MANAGING DIRECTOR

Dear Valued Members,
I am glad to present to you with Muthoot Capital Services Limited’s (MCSL) Annual Report at
a time when your company marks its silver jubilee year. It is also with great delight and indeed,
its a matter of pride for us, that MCSL has been recognized with ‘India’s Best Company of the
Year Award 2018’ in Automobile Financing, which has been instituted by Berkshire Media. It
is noteworthy that we were selected after a detailed analysis of 500+ companies across services
and infrastructure sector in the areas of innovation, workplace culture, leadership, business
ethics, governance, corporate social responsibility and company reputation.
As part of the annual report, I am happy to present to you the financial and operational results of
MCSL for the year 2018-19. As you are aware, that the Banking and NBFC industries have been
going through challenging times and auto industry too, has been facing challenges in growth due
to multiple headwinds. However, it is remarkable that MCSL has closed the 25th year on a high.
The Company has achieved a milestone disbursement of ₹ 2000 + Crores of ₹ 2135.04 Crores in FY 2018-19, and a total AUM
of ₹ 2741.05 Crores (including sold portfolio of ₹ 656.85 Crores), as compared to ₹ 1969.69 Crores of disbursement and ₹ 2238.02
Crores of gross AUM in the previous year. The Company has earned a net profit after tax of ₹ 82.42 Crores during the year FY 2018-19,
which is 53.57% increase from the previous year.
It is heartening to mention that in the very last month of the year, the company was able to ink its single largest- securitization deal
for ₹ 236.00 Crores, which reflects the confidence in our two-wheeler portfolio. Moreover, the Company has raised new sanctions of
₹ 505 Crores from Banks / NBFC in the current year besides sanctions of ₹ 912 Crores from securitization transactions. We have ended
the year with a Gross NPA of ₹ 113.14 Crores, on which we are maintaining a provision coverage of 45%, which not only provides
sufficient cushion, but also reflects our strategy in ensuing confidence among our stakeholders.
MCSL has been ramping up its presence in non-southern states. The share of business from North and East has increased to 24% from
13% in the last one year. This geographical diversification especially helped MCSL during the temporary impact it faced at the time
of the calamity in Kerala. MCSL has also completed the piloting of its used-car business and would soon be moving in top gear into
the states of Kerala, Karnataka and Tamil Nadu. MCSL has also been increasingly harnessing digital process, and analytics for its loan
processes with a view to have best of the portfolio quality and be the best in the industry in terms of service delivery to its end customer.
At the same time, Muthoot Pappachan Group, of which the Company is a part of, also embarked upon the journey of enhancing its
Brand Image and Equity and renowned actor, Padma Shri Ms. Vidya Balan has been signed up as the brand ambassador, wherein she
would endorse the products and services of the Company, as well. It is indeed a matter of repute and honour for the Company to be
associated with such a personality.
MCSL has continued to invest in the society it functions in through its social responsibility initiatives such as rehabilitation of persons
who have suffered spinal cord trauma, renovation of orphanages for children and working with reputed organizations to fight the
menace of substance abuse.
The Company has come a long way since its humble beginnings 25 years ago. At this juncture, I express my heartfelt gratitude to
you and all those who have supported the growth of the Company and trusted us over the years - our esteemed shareholders, bankers,
regulatory authorities, customers, investors and all our employees. We will strive to continue to stand up for those values which have
been our strength over the last twenty-five years and will continue to work towards changing the lives of the common man empowering
them with our easy and simple products.

With regards,
Sd/-
THOMAS GEORGE MUTHOOT
Managing Director

11
ANNUAL REPORT 2018 - 19

MESSAGE FROM THE CHIEF OPERATING OFFICER

Dear Shareholders,
Warm greetings to all of you.
I am pleased to present the Muthoot Capital Services Limited’s (MCSL) Annual Report in our
Silver Jubilee year. MCSL continued its growth trajectory whereby our 3-year disbursement
CAGR was 26% which is 2.6x times the 3-year two-wheeler industry sales CAGR of 10%.
I am excited to report that we have accomplished significant milestones in the year 2018-19 in
spite of headwinds that challenged NBFC and two-wheeler industry. Your Company crossed
₹ 2000+ Crores milestone disbursement for the first time in the history of MCSL when we
disbursed ₹ 2135 Crores during the year 2018-19. Besides, the disbursement of ₹ 605.7 Crores
during Q4’ 2018-19 is the highest quarterly disbursement in any of the previous quarters.
Business from Non-South zones also achieved an important milestone by disbursing ₹ 551.91
Crores in FY 2018-19 as a result of our aggressive geographic expansion and de-risking strategy.
Our customer app ‘M-Power’ which was launched during last AGM was downloaded by over 70,000+ unique customer base and the
payment facility launched in October 2018 has seen a record transaction of more than 7,500.
Your Company was also recognized and awarded by external entities on various accomplishments. During the last financial year,
CRISIL upgraded its ratings on MCSL to “A (Stable)” which indicates adequate degree of safety regarding timely servicing of financial
obligations. MCSL also won India’s prestigious “Best Company of the Year” award in automobile financing sector awarded by
Berkshire Media, USA, for the innovation, workplace culture, leadership, business ethics, governance, corporate social responsibility
and reputation of the Company.
The financial year 2018 - 2019 was another successful year for MCSL following many years of steady business and profit growth.
Commensurate with the previous years, this year also shown a remarkable growth, with overall AUM increasing to ₹ 2741 Crores
compared to ₹ 2238 Crores at the end of last year, registering a growth of 22%. Disbursement for the current year stood at ₹ 2135.1
Crores compared to ₹ 1969.6 Crores during the previous year. Total revenue increased to ₹ 535.27 Crores from ₹ 398.09 Crores during
the FY 2017 - 2018, registering a growth of 34%. On a full year basis, MCSL achieved a Profit After Tax of ₹ 82.4 Crores as compared
to ₹ 53.7 Crores achieved for the FY 2017 - 2018, registering a tremendous growth of 54%.
MCSL has already disbursed more than ₹15 lakhs loans till date in the two-wheeler segment, the total live accounts as on March 31,
2019 stood at approximately ₹ 6.97 Lakhs as against ₹ 5.7 Lakhs as on March 31, 2018, an increase of 22%. Gross NPA stood at 5.4%
and Net NPA stood at 3.1%. Our provision stood at ₹ 51.2 Crores as on March 31, 2019, which includes an additional provision of
₹ 18.1 Crores.
True to the Muthoot Pappachan Group’s philosophy, MCSL aims to become a robust multi-product retail finance Company which
addresses the immediate financial needs of the common man at their doorstep. As part of strengthening the product bouquet for the
common man, MCSL has piloted its used car product in Kerala during FY 2018-19 and would now aggressively expand the used car
product offerings into 20 locations across the country.
We continue our digital transformation enabling digital process in our product offerings, besides aggressively working on expansion
plan to become a truly national player.
We are celebrating 25 years of trust, focusing on all the incredible work our employees have done for the past 25 years. I invite you all
to join us in celebrating this special occasion and please do extend your continued support for the years to come.

With regards,
Sd/-
MADHU ALEXIOUSE
Chief Operating Officer

12
 ANNUAL REPORT 2018 - 19

LIST OF BRANCHES
Sl. Branch
Branch Address
No. Location
KERALA
2nd Floor, Sivaram Building, NH 49, Adimaly P.O., Adimaly, Idukki
1 Adimaly
(Dist) - 685 561
2 Alappuzha 2nd Floor, Niza Center, East of General Hospital Junction, Alappuzha
Door No. 27/383/A-3, 2nd Floor, Soubhagya Shopping Complex, Nr.
3 Calicut
Aryadathupadam, Mavoor Road, Calicut
4 Kollam 1st Floor, S.M. Towers, Madan Nada, Kollam, Kerala - 691 016
Door No. 480, Vallabhasseri Building, Near Shalom Church,
5 Kottayam
Chingavanam P.O., Kottayam - 686 531
2nd Floor, Kainatty Arcade, Kainatty Junction, North Kalpetta Post,
6 Kalpetta
Wayanad - 673 121
RRK Towers, 1st Floor, Shornur Road, Pallipuram Post, Melamuri,
7 Palakkad
Palakkad - 678 006
1st Floor, PVK Complex, Opp. Amala Hospital, Amala Nagar, Thrissur
8 Thrissur
- 680 555
9 Tirur 1st Floor, Mundakkathu Building, Payyanangadi, Tirur
2nd Floor, Mansions Chelsma Heights, Chengalloor Junction,
10 Trivandrum
Poojappura, Trivandrum - 695 012
TAMIL NADU
1st Floor, Majestic Tower, Door No. 236, Choolaimedu High Road,
11 Chennai
Choolaimedu, Chennai - 94
Ground Floor, #62, Dr. N.R.N. Layout, Pappanaikenpalayam,
12 Coimbatore
Coimbatore
No. 41, Ravi’s Plaza, Gandhiadigal Salai, Near Raya Mahal,
13 Kumbakonam
Kumbakonam - 612 001
14 Salem 1st Floor, N.V. Arcade, 5/259A, Junction Main Road, Salem - 636 004
1st Floor, No. 5/163/4, Sorna Complex, Natarajapuram West, M C
15 Tanjore
Road, Tanjore - 613 004
Tharun Tower, 2nd Floor, Sriram Theatre Lane, Cumbum Road, Theni
16 Theni
- 625 531

13
ANNUAL REPORT 2018 - 19

No. 42, Vadivagam, TVM High Road, Near Palai Bus Stand,
17 Thirunelveli
Palayamkottai, Thirunelveli - 627 002
3rd Floor, United Arcade, Above Spencer Super Market, Karur Bye Pass
18 Trichy
Road, Trichy - 620 001
PUDUCHERRY
19 Karaikkal 1st Floor, Door No. 2, Kannadiar Street, Karaikkal - 609 602
KARNATAKA
No. 29, “Shree Krishna” Opp. Raheja Park Apartment, Magadi Main
20 Bangalore
Road, Vijayanagar, Bangalore - 560 040
1st Floor, Above Vijayalakshmi TVS Show Room, Gokul Road, Hubli
21 Hubli
- 580 030
1st Floor, No. 170/1, M 52, B N Street, Opp: Mandi Market, Mandi
22 Mysore
Mohalla, Mysore - 570 021
No. 44/44/44, Satish Arcade, 2nd Floor, Savalanga Road, Shimoga - 577
23 Shimoga
201
TELANGANA
Behind Muthoot Fincorp Limited, Door No. 2-3-692/ 13, Near Police
24 Amberpet
Line, Amberpet, Hyderabad - 500 013
Door No. 2-2-1130/24/D/1, 1st Floor, above Indian Bank, Shivam Road,
25 Hyderabad
Prasanthnagar, Hyderabad - 500 044
ANDHRA PRADESH
26 Guntur Door No. # 12-17-14, Somavari Street, Kothapet, Guntur - 522 002
D. No. 42/332-2, Vandana Complex, Ground Floor (Back Side), Bhagya
27 Kadapa
Nagar Colony, Opp. Shivalayam Temple, Kadapa - 516 001
Door No. 19-4-121/13/D1, First Floor, STV Nagar, Thirupathi -
28 Thirupathi
517 501
Door No. 31-11-1, Shriyans Plaza Hindu College Road, Maruthinagar,
29 Vijayawada
Vijayawada - 520 004
1st Floor, No. 47-15-4/1, Gurbanga Complex, Diamond Park Road,
30 Vizag
Dwaraka Nagar, Vizag - 530 016
GUJARAT
402, Ashoka Complex, Near Axis Bank Ltd. Sardar Patel Stadium
31 Ahmedabad
Road, Navrangpura, Ahmedabad - 380 009
First Floor, F 28-29, Millennium Market, Panchbatti, Bharuch -
32 Bharuch
392 001

14
 ANNUAL REPORT 2018 - 19

KEY EVENTS & MILESTONES

Started full fledged Crossed 50,000 loan

operations outside . disbursals.
Kerala. Shift from Gold Adopted Auto Loan
Crossed ₹ 25 Crores Loans to Auto Loans. as the major product.
AUM.

Listed on NSE. Crossed ₹ 1000

Started operations in Crores of AUM. .
North India.
₹ 500 Crores disb. for the
First QIP in November Launched Mobile App for
sourcing.
2017, ₹ 165 Crores.

.
Presence in 20 States.
Entered into Used Car financing.
Launched Customer App.

Muthoot Capital Services Ltd. is the proud recipient of India's 'Best Company of the
Year Award 2018' in Automobile Financing. The award was announced by Berkshire
Media, USA, after a detailed analysis and evaluation of over 500 companies across
services and infrastructure sector. It was a momentous occasion for the Company as
the announcement coincided with our Silver Jubilee year of inception.

15
ANNUAL REPORT 2018 - 19

OUR CSR ACTIVITIES

16
 ANNUAL REPORT 2018 - 19

GROWTH OVER LAST 5 YEARS

AT A GLANCE
(₹ In Lakhs except Key Indicators)

Financial year ended 31st March 2015 2016 2017 2018 2019

Operating Results
Disbursements 648 84 927 96 1297 82 1969 69 2135 05
Total Revenue 191 29 228 49 284 20 398 09 535 27
Profit Before Tax (PBT) 34 17 35 45 46 19 82 46 127 25
Profit After Tax (PAT) 22 29 22 85 30 09 53 68 82 42

Assets
Fixed Assets (including assets leased out) 2 04 1 83 2 59 2 48 1 95
Investments 13 54 13 75 14 75 17 86 18 64
Deferred tax asset 2 70 4 68 6 57 11 32 16 78
Net stock on hypothecation 799 01 932 31 1020 40 1647 50 1714 64
Other loans (including interest accrued) 46 11 106 48 183 28 268 50 369 56
Other assets 12 61 13 06 50 61 30 12 139 38
Total Assets 876 01 1072 11 1278 19 1977 79 2260 96

Liabilities
Equity 12 47 12 47 12 47 16 45 16 45
Reserves and Surplus 120 82 135 42 165 51 377 48 459 91
Borrowings (including interest accrued) 712 81 893 75 1000 82 1458 82 1572 27
Other liabilities 29 90 30 46 99 39 125 04 212 33
Total Liabilities 876 01 1072 11 1278 19 1977 79 2260 96

Key Indicators
Earnings Per Share (in ₹) 17.9 18.3 21.91 36.4 50.1
Dividend Per Share (in ₹) 5.0 5.5 -- -- --
Book Value Per Share (in ₹) 1 07.0 1 19.0 1 43.0 2 39.5 2 89.6
CRAR (%) 16.0 15.4 17.0 22.0 21.9
GNPA (%) 3.9 5.2 4
6.23
4.6 2
5.42
NNPA (%) 3.3 4.45 4.95 3.05 3.15
1
Earnings per Share of the year 2017 is restated for Bonus Issue.
2
3-month norm is followed for GNPA and NNPA for the year 2018 and 2019.
3
4-month norm is followed for GNPA and NNPA for the year 2017.
4
5-month norm is followed for GNPA and NNPA for the year 2016.
5
NNPA is calculated on AUM net of provisions for NPA.

17
ANNUAL REPORT 2018 - 19

ASSET UNDER MANAGEMENT (₹ IN LAKHS)

2741 05

2238 02

1439 68

1038 79
845 12

2015 2016 2017 2018 2019

(Year ended March)

REVENUE AND PAT (₹ IN LAKHS)

535 27

398 09

284 20
228 49
191 29

8242
5368
2229 2285 3009

2015 2016 2017 2018 2019

(Year ended March)

18
 ANNUAL REPORT 2018 - 19

EARNINGS PER SHARE (IN ₹)

50.1

36.4

21.9
17.80 18.3

2015 2016 2017 2018 2019

(Year ended March)

BOOK VALUE PER SHARE (IN ₹)

289.6

239.5

143
119
107

2015 2016 2017 2018 2019

(Year ended March)

19
ANNUAL REPORT 2018 - 19

NET WORTH (₹ IN LAKHS)

476 36
393 93

177 98
133 30 147 89

2015 2016 2017 2018 2019

(Year ended March)

DEBT EQUITY RATIO

6
6.0
5.3

3.7 3.5

2015 2016 2017 2018 2019

(Year ended March)

20
 ANNUAL REPORT 2018 - 19

CAPITAL ADEQUACY RATIO

22.04%
21.88%

16.98%
15.97% 15.40%

2015 2016 2017 2018 2019

(Year ended March)

RETURN ON ASSET (ROA) & RETURN ON EQUITY (ROE)

21.2%
18.5% 18.9%
17.7%
16.3%

3.6% 4.0%
2.9% 2.6% 2.9%

2015 2016 2017 2018 2019

(Year ended March)

ROA ROE

21
ANNUAL REPORT 2018 - 19

BOARD’S REPORT
Dear Members,
Your Directors are pleased to present the 25th Board’s Report on your Company’s business and operations,
together with audited financial statements of the Company for the financial year ended March 31, 2019.

1. PERFORMANCE HIGHLIGHTS

a) Financial Results
The summarized financial results of your Company for the FY 2018 - 2019 are given below:
(₹ in lakhs, except earnings per share)

Particulars 2018 - 2019 2017 - 2018

Total Income 535 27.42 398 08.56
Total Expenses 408 02.88 315 62.54
Profit Before Tax (PBT) 127 24.54 82 46.02
Tax Expense 44 82.07 28 78.30
Profit After Tax (PAT) 82 42.47 53 67.72
Basic Earnings Per Share (EPS) 50.11 36.39

b) Business Growth

During the Financial Year (FY) ended March 31, 2019, your Company was able to achieve an impressive
growth. The total Asset Under Management (AUM) (including sold portfolio) of your Company
increased by 22.48%. The AUM (including sold portfolio) of the Company as on March 31, 2019 stood
at ₹ 2741 04.67 lakhs, whereas the same as on March 31, 2018 was ₹ 2238 02.63 lakhs.

c) Profitability

The total income of the Company increased to ₹ 535 27.42 lakhs during the FY 2018 - 2019 as against ₹ 398 08.56
lakhs during the FY 2017 - 2018. The total expenditure for the FY 2018 - 2019 was at ₹ 408 02.88 lakhs.
The Company achieved an all-time high profit of ₹ 82 42.47 lakhs while the same was ₹ 53 67.72 lakhs in
FY 2017 - 2018. The Net Interest Margin (NIM) improved to 69.83% as against 69.15% in FY 2017 - 2018.

d) Asset Quality

As on March 31, 2019, the gross NPA and net NPA in the books of your Company stood at ₹ 113 13.80
lakhs and ₹ 61 90.43 lakhs respectively. The Provision Coverage Ratio stood at 45.28%. Your Company
has adopted new and aggressive methods to control delinquencies and the NPA figures and hence have
been able to achieve this in spite of the aftermath of the Kerala floods, which temporarily increased the
delinquency substantially.

22
 ANNUAL REPORT 2018 - 19

e) Net worth & Capital Adequacy Ratio

Based on the higher profitability of ₹ 82 42.47 lakhs, the net worth of your Company increased by 20.92% to
₹ 476 35.45 lakhs as against ₹ 393 92.98 lakhs in the previous year. The Company’s total Capital Adequacy
Ratio (CAR) as on March 31, 2019 stood at 21.88% of the aggregate risk weighted assets on the Balance
Sheet and risk adjusted value of the off - Balance Sheet items, which is above the statutory minimum of
15%. Out of the above, Tier I CAR stood at 21.17% and Tier II CAR stood at 0.71%. The CAR as on March
31, 2018, stood at 22.04%.

f) Earnings Per Share

Earnings Per Share of your Company has improved from ₹ 36.39 to ₹ 50.11 during the year under review.
Return on Equity reached 19.37% during the year.

2. DIVIDEND

In view of the business growth plans of the Company, the launch of new products and proposed investment
in IT/infrastructure in the forthcoming years, the Board of Directors of your Company decided to plough
back the profit after tax into the business and hence have not recommended any dividend for the FY 2018
- 2019.

3. RESERVES

Your Board of Directors has transferred an amount of ₹ 16 50.00 lakhs to the Statutory Reserve maintained
under Section 45-IC of the Reserve Bank of India Act, 1934. The Company has not transferred any amount
to the General Reserve for the FY ended March 31, 2019. Post transfer of profits to reserves, your Board
decided to retain ₹ 185 04.84 lakhs as surplus in the Profit and Loss Account.

4. RESOURCE MOBILISATION
a) Share Capital

The authorized share capital of the Company is ₹ 25 00.00 lakhs and the paid-up share capital of the
Company is ₹ 16 44.75 lakhs. The Company had not issued any equity shares either with or without
differential rights during the FY 2018 - 2019 and hence, the disclosure requirements under Section 43 of
the Companies Act, 2013 and Rule 4 (4) of the Companies (Share Capital and Debentures) Rules, 2014 is
not applicable.

b) Debentures

The Company has not issued any debentures during the FY 2018 - 2019. As on March 31, 2019, the residual
portion of secured redeemable non-convertible debentures under private placement during earlier years
along with interest accrued is ₹ 6.21 lakhs. The debentures issued are secured by way of floating charge on
the current assets of the Company. The non-convertible debentures of your Company is rated as “A/Stable”
by CRISIL.
Trustees for Debenture Holders: Mr. A Gopalakrishnan, Chartered Accountant, M/s. K. Venkatachalam
Aiyer & Co., Chartered Accountants, Building No. 41/3647 B, First Floor, Blue Bird Towers, Providence
Road, Kochi - 682 018, is the Debenture Trustee for ensuring and protecting the interests of debenture
holders.

23
ANNUAL REPORT 2018 - 19

c) Commercial Papers

During the year under review, your Company has raised funds for its working capital requirements by way
of issue of Commercial Papers and duly repaid the same on the maturity date(s). The Commercial Papers
of your Company are rated “A1” by CRISIL.

d) Fixed Deposits

Your Company is a Non - Banking Financial Company (NBFC), registered with Reserve Bank of India
(RBI) having a Deposit Taking License. The Company started accepting fixed deposits during FY 2013 -
2014. The fixed deposits of the Company are rated “FA+/Stable” by CRISIL.

The outstanding amount of fixed deposits as on March 31, 2019, received by the Company including
interest accrued at that date is ₹ 66 07.17 lakhs. As on March 31, 2019, there are 92 accounts of fixed
deposits amounting to ₹ 1 77.34 lakhs which have become due for payment but have not been claimed by
the depositors.

Being an NBFC registered with RBI, the provisions of Chapter V of the Companies Act, 2013, relating to
acceptance of deposits by Companies, is not applicable to the Company.

Communication to Deposit Holders: The Company has the practice of sending communication by
registered post to the deposit holders whose accounts are about to mature, two months prior to the date of
maturity. If the deposit holders are not responding to the communication, Company contacts the depositors
in person instructing them to surrender the fixed deposit certificate and claim the amount. In case, where
the depositors are not traceable due to change in address/phone numbers, another regular communication is
sent to the deposit holder and other modes to contact the deposit holders are also initiated till the deposits
are repaid.

Trustees for Deposit Holders: Subject to the RBI Guidelines for trustees of deposit holders of the NBFC,
your Company has appointed IDBI Trusteeship Services Limited, as trustees for protecting the interests of
deposit holders.

In compliance with the Master Circular - Miscellaneous Instruction to all NBFCs dated July 01, 2014,
your Company has created a floating charge on the Statutory Liquid Assets in favour of IDBI Trusteeship
Services Limited, as trustee on behalf of the depositors as required under the extant provisions.

e) Subordinated Debts

The Company has, in the current year, raised money through issue of subordinated debts. As of March 31,
2019, the total amount of outstanding subordinated debts, including accrued interest was ₹ 63 72.38 lakhs
as against ₹ 65 05.99 lakhs in the previous year.

The subordinated debts and public deposits consists of 8.26% of our total funding.

f) Bank Finance

The Company raised funds for its working capital resources mainly from banks. As on March 31, 2019, the
total outstanding amount of credit facilities from Banks were ₹ 1349 04.18 lakhs as against ₹ 1149 10.26
lakhs as on March 31, 2018 excluding interest accrued.

24
 ANNUAL REPORT 2018 - 19

Apart from the above, the Company has been sourcing funds through Securitization and Direct Assignment
transactions. During the year under review the Company has sourced ₹ 837 34.51 lakhs (net of MRR)
(previous year ₹ 439 76.23 lakhs). The same has been invested into by Banks / NBFCs / Mutual Funds and
the value remaining outstanding as on March 31, 2019 was ₹ 656 84.87 lakhs (previous year ₹ 322 02.37
lakhs).

5. DIRECTORS

The Board of your Company consists of the following seven Directors:

Category Name of Directors

Executive Director Mr. Thomas George Muthoot, Managing Director
Mr. Thomas John Muthoot, Chairman
Non - Executive - Non - Independent Directors
Mr. Thomas Muthoot
Mr. A.P. Kurian
Mr. R.K. Nair1
Non - Executive Independent Directors Mrs. Radha Unni
Mr. K M Abraham2
Mr. Thomas Mathew3
1
Resigned with effect from March 28, 2019
2
Appointed as Additional Independent Director with effect from January 18, 2019
3
Appointed as Additional Independent Director with effect from April 01, 2019

The composition of the Board is in line with the requirements of the Companies Act, 2013 and the
SEBI (Listing Obligations and Disclosure Requirements) (LODR) Regulations, 2015. All the Directors
are having vast knowledge and experience in their relevant fields and the Company had benefitted
immensely by their presence in the Board. The key Board qualifications, expertise, attributes are given
in details in the Report on Corporate Governance forming part of this Report.

Mr. Thomas John Muthoot, Director (DIN: 00011618) retires at the ensuing Annual General Meeting
(AGM) and being eligible, offers himself for re-appointment. The Board of Directors recommends the
re-appointment of Mr. Thomas John Muthoot as Director of the Company. The detailed profile of Mr.
Thomas John Muthoot recommended for re-appointment is enclosed with the Notice for the 25th AGM
of the Company.

Mr. A.P. Kurian (DIN: 00008022) and Mrs. Radha Unni (DIN: 03242769) were appointed as the
Independent Directors of the Company by the shareholders at the 20th Annual General Meeting held
on September 03, 2014 for a period of five consecutive years, i.e., for a term upto September 02, 2019.
Hence, Mr. A P Kurian and Mrs. Radha Unni will complete their initial term as per Companies Act, 2013
as an Independent Director of the Company on September 02, 2019. Since they are eligible, your Board
recommends the re-appointment of Mr. A.P. Kurian and Mrs. Radha Unni for one more term subject to
the approval of shareholders by way of special resolution. The detailed profile of Mr. A.P. Kurian and
Mrs. Radha Unni, recommended for re-appointment in the ensuing AGM is enclosed with the Notice for
the 25th AGM of the Company.

25
ANNUAL REPORT 2018 - 19

a) Changes in Directors and Key Managerial Personnel (KMP) during the FY 2018 - 2019

During the FY 2018 - 2019, Mr. K.M. Abraham (DIN: 05178826) has been appointed as the Additional
Independent Director on the Board with effect from January 18, 2019. The Board of your Company
recommends the regularization of appointment of Mr. K.M. Abraham in the ensuing AGM for a period of
five years.

The Board also appointed Mr. Thomas Mathew (DIN: 01277149) as the Additional Independent Director
of the Company at the Board meeting held on March 28, 2019. The appointment of Mr. Thomas Mathew is
effective from April 01, 2019. The Board of your Company recommends the regularization of appointment
of Mr. Thomas Mathew in the ensuing AGM for a period of five years.

The detailed profile of Mr. K.M. Abraham and Mr. Thomas Mathew recommended for re-appointment in
the ensuing AGM is enclosed with the Notice for the 25th AGM of the Company.

During the FY 2018 - 2019, Mr. R.K. Nair, Independent Director (DIN: 00631889), has resigned from
the Board with effect from March 28, 2019 due to compelling personal reasons and pre-occupation with
other professional commitments. The Board places on record their appreciation for the commendable
contribution made by Mr. R.K. Nair as Independent Director during his tenure in the Company. The Board
took on record the confirmation from Mr. R.K. Nair that there are no material reasons for resignation other
than those provided.

Mr. Ravi Oruganti, who was appointed as the Company Secretary & Compliance Officer at the Board
meeting held on April 17, 2018, has resigned with effect from the closing hours of March 28, 2019, due to
personal reasons.

Mr. Thomas George Muthoot, Managing Director and Mr. Vinodkumar M. Panicker, Chief Finance Officer
are the KMPs of the Company, as recorded by the Board, as on March 31, 2019.

b) Declaration by Independent Directors

On April 01, 2019, the Company has received declaration from each Independent Director of the Company
under Section 149 (7) of the Companies Act, 2013 that, they meet the criteria of independence as laid down
in Section 149 (6) of the Companies Act, 2013 and subsequently the same was placed at the Board Meeting
held on April 24, 2019.

A declaration by Managing Director confirming the receipt of this declaration from Independent Directors
is enclosed to this Report as Annexure 1.

c) Policy on Board Diversity

The Policy on Board Diversity approved and adopted by the Company are as follows:

(i) Diversity is ensured through consideration of a number of factors, including but not limited to skills,
regional and industry experience, background and other qualities.

(ii) The Company shall also take into account factors based on its own business model and specific needs
from time to time.

(iii) The Nomination & Remuneration Committee shall lead the process for Board appointment and for
identifying and nominating, for approval of the Board, candidates for appointment to the Board.

26
 ANNUAL REPORT 2018 - 19

(iv) The benefits of experience/knowledge in the areas relevant to the Company and diversity continue
to influence succession planning and continue to be the key criteria for the search and nomination of
Directors to the Board.

(v) Board appointments are based on merit and candidates will be considered against objective criteria,
having due regard for the benefits of diversity on the Board, including gender.

d) Policy on Nomination & Remuneration

The Company’s policy on Director’s appointment and remuneration including criteria for determining
qualifications, positive attributes, independence of a Director and other matters provided under Section 178
(3) of the Companies Act, 2013 is provided on the website of the Company and can be accessed on: https://
[Link]/admin/uploads/Policy_on_Nomination_and_Remuneration.pdf

The Policy on Nomination and Remuneration sets out the criteria for determining qualifications, positive
attributes and independence of Director and the norms for evaluation of the Board, its Committees and
individual Directors.

e) Formal Annual Evaluation of Board and its Committees

Based on the Policy on Nomination and Remuneration, the Board has carried out an annual evaluation of
its own performance, its Committees and Independent Directors, excluding the Director being evaluated.

The detailed note on the annual Board evaluation process undertaken in compliance with the provisions
of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015, is given in the Report on Corporate
Governance, which forms part of this Report.

f) Meetings of the Board

During the FY 2018 - 2019, your Board of Directors met seven times. More details about the meetings of
the Board is given the Report on Corporate Governance, forming part of this Report.

g) Committees of the Board

The details of the Committees of the Board, their composition, terms of reference and the activities during
the year are elaborated in the Report on Corporate Governance forming part of this Report.

6. SUBSIDIARIES/JOINT VENTURE/ASSOCIATE COMPANY

The Company has no subsidiary/joint venture/associate company and hence consolidation and the provisions
relating to the same under the Companies Act, 2013 and Rules made thereunder are not applicable to the
Company.

7. CHANGE IN THE NATURE OF BUSINESS, IF ANY

During the year under review, there was no change in the nature of business of the Company. The Company
is mainly into the business of providing two-wheeler loans, for which, during the year under review the
Company has disbursed loans to the extent of ₹ 1851 00.78 lakhs and as on March 31, 2019, the total
outstanding amount (including sold portfolio) was ₹ 2339 39.44 lakhs. The Company had disbursed
business/corporate loans to the extent of ₹ 225 43.50 lakhs and as on March 31, 2019, the outstanding
amount is ₹ 315 88.81 lakhs. Apart from the above, the Company has ventured into the disbursement of

27
ANNUAL REPORT 2018 - 19

used car loans and disbursed an amount of ₹ 4 12.22 lakhs during the year under review. As on March 31,
2019, the total outstanding amount was ₹ 3 45.85 lakhs.

The Company had entered into pool buyout arrangement of loan receivables amounting to ₹ 54 45.73 lakhs
(after deducting 5% / 10% for MRR requirement) during the year under review. The aggregate amount
outstanding under loan buyout, as on March 31, 2019, was ₹ 52 06.46 lakhs.

The sourcing of two-wheeler and used car business of the Company takes place mainly at the dealer points
for two wheelers and through branches of its group company, Muthoot Fincorp Limited. During the FY
2018 - 2019, the Company has also started sourcing through its mobile app which is in the nascent stage.

8. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL

POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF
THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS
RELATE AND THE DATE OF THE REPORT

There were no material changes and commitments affecting the financial position of the Company between
the end of financial year and the date of this Report.

9. SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS, COURTS AND

TRIBUNALS

Your Directors confirm that there were no significant and material orders passed by the regulators or courts
or tribunals impacting the going concern status and Company’s operations in future.

10. RISK MANAGEMENT

The Board oversees the enterprise wide risk management functions of the Company and a separate Risk
Management Committee of the Board supervises the risk management functions. Apart from these,
the Company has a separate Risk Management Department that co-ordinates and administers the risk
management functions to have a ‘top to down’ focus on the risk management.

The Company believes that risk resilience is key to achieving higher growth. To this effect, the Company
have a well-defined Risk Management Policy in place, to create and protect shareholder value, by
minimizing threats or losses and identifying and maximizing opportunities to ensure sustainable business
growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks
associated with the business. The policy lays down broad guidelines for timely identification, assessment,
and prioritization of risks affecting the Company in the short and foreseeable future. The Policy suggests
framing an appropriate response for the key risks identified, so as to make sure that risks are adequately
addressed or mitigated. The said policy is approved by the Board and reviewed from time to time.

The risk management framework in the Company is periodically reviewed by the Risk Management
Committee of the Board. The Internal Auditors are also having a complete review of risk assessments
and associated management action plans. All material risks of the Company emerging in the course of its
business are identified, assessed and monitored on a regular basis.

Detailed discussion on Risk Management forms part of Management Discussion & Analysis under the
section ‘Risks and Concerns’, which forms part of this Annual Report. At present, in the opinion of your
Board of Directors, there are no material risks which may threaten the existence of the Company.

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 ANNUAL REPORT 2018 - 19

11. ADEQUACY OF INTERNAL AUDIT AND FINANCIAL CONTROLS

The Company has in place a stabilized and effective Internal Audit and Financial Controls system, calibrated
to the risk appetite of the Company and aligned to the size, scale and complexity of the business operations
of the Company. The said financial controls of the Company are evaluated by the Audit Committee as per
Schedule II Part C of the SEBI (LODR) Regulations, 2015.

Apart from Statutory Audit and Concurrent Audit, your Company, in compliance with Section 138 of
the Companies Act, 2013, had engaged PKF Sridhar & Santhanam LLP as the Internal Auditors of the
Company for the FY 2018 - 2019. The scope and authority of the Internal Audit function is defined in the
Audit Policy of the Company, duly recommended by the Audit Committee of the Board and approved and
adopted by the Board of Directors. The Internal Audit function essentially validates and ensures that the
Company, has in place, adequate controls, procedures and policies, ensuring orderly and efficient conduct
of its business, including adherence to the Company’s policies, safeguarding of its assets, prevention and
detection of frauds and errors, accuracy and completeness of accounting records, and timely preparation of
reliable financial information. The Internal Audit function provides independent assurance to the Board of
Directors and Senior Management on the quality and effectiveness of the Company’s internal control, risk
management and governance systems and processes, thereby helping the Board and Senior Management to
protect the Company and its reputation.

The Audit Committee oversees and reviews the functioning of the entire audit team and the effectiveness of
internal control system at all levels and monitors the implementation of audit recommendations. During the
year, such control systems were assessed and no reportable material weaknesses in the design or operations
were observed. Accordingly, your Board, is of the opinion that the Company’s internal financial controls
were adequate and effective during FY 2018 - 2019.

12. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Corporate Social Responsibility activities at Muthoot Capital Services Limited encompasses much more
than social outreach programmes. Aligning with its vision, your Company has been continuing to increase
value in the community in which it operates, through its services and CSR initiatives, so as to stimulate
well-being for the community, in fulfillment of its role as a responsible corporate citizen. The Company has
undertaken a number of enriching and enlivening activities in the areas of Health, Education, Environment
and Livelihood.

The Board has constituted a Corporate Social Responsibility Committee (CSR Committee) to oversee and
monitor the CSR activities of the Company. The CSR Committee of the Company has formulated and
recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities
to be undertaken by the Company, which has been approved by the Board. The Company’s CSR Policy
is committed towards CSR activities as envisaged in Schedule VII of the Companies Act, 2013. The CSR
Policy is available on the website of the Company at [Link]
[Link]

During the year, the Company spent an amount of ₹ 131.21 lakhs towards its CSR activities. The details
of the CSR Policy and CSR Committee of the Company and the initiatives undertaken by the Company
on CSR activities during the year under review are set out in Annexure 2 to this Report in the format
prescribed as per the Companies (Corporate Social Responsibility Policy) Rules, 2014.

The composition and other details of the CSR Committee and its meetings are detailed in the Report on
Corporate Governance, forming part of this Report.

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ANNUAL REPORT 2018 - 19

13. AUDIT & AUDITORS

a) Statutory Auditors

M/s. Varma & Varma, Chartered Accountants (FRN: 004532S), Sreeraghavam, Kerala Varma Tower, Bldg.
No. 53/2600 B, C, D & E, Off. Kunjanbava Road, Vyttila, P.O., Kochi - 682 019 were appointed as the
Statutory Auditors of the Company during the 23rd AGM held on June 06, 2017, for a period of five years.

The Board has duly examined the Statutory Auditors’ Report to the accounts, which is self-explanatory.
Clarifications, wherever necessary, have been included in the Notes to the Accounts section of the Annual
Report. Further, your Directors confirm that there are no qualifications, reservations or adverse remarks or
disclaimers in the Independent Auditor’s Report provided by Statutory Auditors for the FY 2018 - 2019.

b) Secretarial Auditors

The Board, at its meeting held on April 17, 2018, appointed M/s. SVJS & Associates, Company Secretaries,
65/2364A, Ponoth Road, Kaloor, Kochi, Ernakulam - 682 017 to conduct the Secretarial Audit for the year
ended March 31, 2019 in compliance with the provisions of Section 204 of the Companies Act, 2013 and
the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

The Secretarial Audit Report in form MR-3, submitted by the Secretarial Auditors for the FY 2018 -
2019 is enclosed to this report as Annexure 3. The Directors of your Company confirms that there are no
qualifications, reservations or adverse remarks or disclaimers in Secretarial Audit Report for the period
under review.

14. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION, FOREIGN

EXCHANGE EARNINGS AND OUTGO

Considering the nature of activities, the provisions of Section 134 (3) (m) of the Companies Act, 2013, read
with Rule 8 (3) of the Companies (Accounts) Rules, 2014 relating to conservation of energy and technology
absorption does not apply to your Company. The Company is, however, constantly pursuing its goal of
technological upgradation in a cost-effective manner for delivering quality customer service.

15. WHISTLE BLOWER POLICY OR VIGIL MECHANISM FOR DIRECTORS AND

EMPLOYEES

Your Company, has in place, a comprehensive Whistle Blower Policy in compliance with Section 177 (9)
& 177 (10) of the Companies Act, 2013 and as per Regulation 4 (2) (d) (iv) & 34 (3) read with Para 10 of
Part C of Schedule V of the SEBI (LODR) Regulations, 2015.

A brief note on the highlights of the Whistle Blower Policy and compliance with the same is also provided
in the Report on Corporate Governance, which forms part of this Report.

16. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The Company has not given any loans or provided any guarantee or made any investments pursuant to
Section 186 of the Companies Act, 2013, during the period under review.

17. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

Your Directors confirm that all contracts/arrangements/transactions entered into by the Company during the
FY 2018 - 2019 with related parties were in compliance with the provisions of the Companies Act, 2013 and

30
 ANNUAL REPORT 2018 - 19

SEBI (LODR) Regulations, 2015. The Company had obtained prior approval of the Audit Committee
for all the related party transactions during the FY 2018 - 2019 as envisaged in Regulation 23 (2) of
the SEBI (LODR) Regulations, 2015. Further, the Audit Committee had given prior omnibus approval
under Regulation 23 (3) of the SEBI (LODR) Regulations, 2015, for related party transactions that are
foreseen and of repetitive nature during the period under review and the required disclosures are made
to the Committee on quarterly basis against the approval of the Committee.

In addition to the above, the Company had obtained the approval of the shareholders for related party
transactions with Muthoot Microfin Limited, Muthoot Fincorp Limited and Muthoot Bankers at the
AGMs held on August 21, 2015, June 06, 2017 and June 14, 2018 respectively for a period of five years
even though the said transactions were not material in nature.

All related party transactions that were entered into during the financial year ended March 31, 2019
were on an arm’s length basis and were in the ordinary course of business. Therefore, the provisions of
Section 188 of the Companies Act, 2013 were not attracted.

Also, there are no materially significant related party transactions during the year under review made
by the Company with Promoters, Directors, or other designated persons which may have a potential
conflict with the interest of the Company at large. Thus, disclosures as per Form AOC-2 under Section
134 (3) (h) of the Companies Act, 2013, read with Rule 8 (2) of the Companies (Accounts) Rules, 2014
is not required. However, the disclosure of transactions with related party for the year, as per Accounting
Standard-18 Related Party Disclosures is given in Notes to the Accounts section of the Annual Report.

The Company has in place, a Board approved Related Party Transaction Policy, which is available on the
website of the Company at [Link]

18. PARTICULARS OF EMPLOYEES

Disclosures relating to remuneration of Directors under Section 197 (12) of the Companies Act, 2013
read with Rule 5 (1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014 is enclosed to this Report as Annexure 4.

The information, as required to be provided in terms of Section 197 (12) of the Companies Act, 2013
read with Rule 5 (2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014 is enclosed to this Report as Annexure 5.

19. LISTING

Equity shares of your Company is listed on BSE Limited since April 24, 1995 and on National Stock
Exchange of India Limited since August 24, 2015. Your Company has paid the required listing fees to
both the Stock Exchanges for the FY 2019 - 2020.

20. CORPORATE GOVERNANCE REPORT

Your Company has taken adequate steps to adhere to all the stipulations laid down in Regulation 27
read with Part E of Schedule II and Schedule V of the SEBI (LODR) Regulations, 2015 on Corporate
Governance. The detailed Report on Corporate Governance along with certificate on Corporate
Governance from the Statutory Auditors forms part of this Report.

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ANNUAL REPORT 2018 - 19

21. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report for the year under review is included as a separate section
and forms part of this Report.

22. FAIR PRACTICE CODE (FPC)

The Company, has in place, a Fair Practice Code approved by the Board on April 02, 2012, in compliance
with the guidelines issued by the RBI, to ensure better service and provide necessary information to
customers to take informed decisions. The FPC is available on the website of the Company at: https://
[Link]/admin/uploads/Fair_Practice_Code-[Link]

The FPC is also reviewed by the Board at frequent intervals to ensure its level of adequacy and
appropriateness.

23. CUSTOMER GRIEVANCE

The Company has a dedicated Customer Grievance Redressal Cell for receiving and handling customer
complaints/grievances and ensuring that the customers are treated fairly and without bias at all times. All
issues raised by the customers are dealt with courtesy and redressed expeditiously.

24. EXTRACT OF ANNUAL RETURN

The extract of the annual return in form MGT-9 is placed on the website of the Company and can be
accessed at: [Link]

25. DIRECTORS’ RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134 (3) (c) and 134 (5) of the Companies Act, 2013, your
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) we 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) we 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) we had prepared the annual accounts on a going concern basis;
e) we had laid down internal financial controls to be followed by the Company and that such internal
financial controls are adequate and were operating effectively; and
f) we had devised proper systems to ensure compliance with the provisions of all applicable laws and
that such systems were adequate and operating effectively.

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 ANNUAL REPORT 2018 - 19

26. ACKNOWLEDGEMENTS

Your Directors wishes to place on record their appreciation and sincerely acknowledge the contribution
and support from shareholders, customers, depositors, debenture holders, Central and State Governments,
Bankers, Reserve Bank of India, Registrar of Companies, Kerala and Lakshadweep, Securities and
Exchange Board of India, BSE Limited, National Stock Exchange of India Limited, Registrar & Share
Transfer Agents, Credit Rating Agencies and other Statutory and Regulatory Authorities for the kind co-
operation and assistance provided to us.

Your Directors also extend their special appreciation to each Muthootians for their continuing support and
unstinting efforts in ensuring an excellent all-round operational performance and every well-wisher for
their continued commitment, dedication and co-operation.

For and on behalf of the Board of Directors

Sd/-
THOMAS JOHN MUTHOOT
Kochi Chairman
April 24, 2019 DIN: 00011618

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ANNUAL REPORT 2018 - 19

ANNEXURE 1

DECLARATION REGARDING RECEIPT OF CERTIFICATE OF

INDEPENDENCE FROM ALL INDEPENDENT DIRECTORS
I hereby confirm that the Company has received from all the Independent Directors namely Mr. A.P Kurian,
Mrs. Radha Unni, Mr. K.M. Abraham and Mr. Thomas Mathew, a certificate stating their Independence as
required under Section 149 (6) of the Companies Act, 2013.

Sd/-
THOMAS GEORGE MUTHOOT
Kochi Managing Director
April 24, 2019 DIN: 00011552

ANNEXURE 2

ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR)

ACTIVITIES

1. Brief Outline of the Company’s CSR Policy

The CSR Policy of the Company reflects the Company’s philosophy on its social commitment and mission
which is designed to portray its obligation to be a responsible corporate citizen and presents the strategies
and methods for undertaking social programs for well-being and sustainable development of the local
community in which it operates. The Policy applies to all CSR initiatives and activities taken up at the
various work centers and locations of the Company, for the benefit of various segments of the society, with
the emphasis on the under privileged.

Each CSR activity/project of the Company is undertaken/executed either directly by the Company or
channelized through implementing agencies. During the FY 2018 - 2019, the emphasis of CSR activities of
the Company was given for providing timely and effective medical service or support or relief to the needy.
More focus was given to extent support in case of critical illness that will have an effect of damaging the
entire family as a unit. The CSR efforts of the Company is also facilitated through Muthoot Pappachan
Foundation, which are bound by the theme - “HEEL: Health; Education; Environment and Livelihood”

The CSR Policy of the Company, as approved and adopted by the Board, is available on the website of the
Company at [Link]

2. The Composition of the CSR Committee

Name Designation Position in the Committee

Mr. Thomas Muthoot Director Chairman
Mr. R.K. Nair
1
Independent Director Member
Ms. Radha Unni Independent Director Member
Mr. K.M. Abraham 2
Independent Director Member
Mr. Thomas Mathew 3
Independent Director Member

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 ANNUAL REPORT 2018 - 19

1
Resigned with effect from March 28, 2019
2
Appointed as Additional Independent Director with effect from January 18, 2019
3
Appointed as Additional Independent Director with effect from April 01, 2019
(₹ in Lakhs)

3. Average net profit of the Company for the last three financial years 54 69.89
4. Prescribed CSR Expenditure (2% of the above) 1 10.00
Approved Budget for the FY 2018 - 2019 1 10.00
Amount bought forward from FY 2017 - 2018 including cash with Implementing Agency 58.87
Add: Round up 0.13
Total amount available for the CSR activities for the FY 2018 - 2019 1 69.00
5. Details of CSR spend for the FY 2018 - 2019
a) Total amount spent for the FY 2018 - 2019 1 31.21
b) Amount unspent during the FY 2018 - 2019 37.79

c) Manner in which the amount spent:

(₹ in Lakhs)
Sl. CSR project Sector in which Projects or Amount Amount spent Cumulative Amount spent:
No. or activity the project is programs outlay on the projects expenditure a) Direct or
identified covered (1) Local area or (budget) or Programs upto the b) through
other project or Sub¬heads: reporting implementing
(2) Specify the programs (1) Direct period agency
State and district wise (FY Expenditure
where projects 2018 - 2019) on projects or
or programs was programs
undertaken (2) Overheads:

Expenses Setting up of Direct/Through

1. for Aashiana homes and old Ernakulam, Kerala 35.00 18.96 40.74 implementing
Rehab Centre age homes agency
Promoting health
MOU with
care including
2. Lissie Ernakulam, Kerala 55.00 22.65 42.59 Direct
preventive health
Hospital
care
Promoting health
Medical care including Kerala and Tamil
3. 25.00 22.65 33.89 Direct
Support preventive health Nadu
care
Direct/Through
Educational Promotion of Kerala, Karnataka
4. 10.00 9.12 10.551 implementing
Support Education and Telangana
agency
Other
5. -- Kerala 44.00 57.833 60.034 Direct
Projects2
Magic Bus - Through
Promotion of
6. Training to Ernakulam, Kerala -- -- 42.305 implementing
Education
children agency
Total 169.00 131.21 230.10

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ANNUAL REPORT 2018 - 19

1
Cumulative expenditure for education support includes ₹ 1.43 lakhs spent during the FY 2017 - 2018.
2
Other projects includes:

a) Renovation of “Snehakoodu” Boys Home, Aluva through Guardians of Dreams - a Non-Profit Organization;
b) Renovation of houses for underprivileged families;
c) Rescue, relief and rehabilitation activities during the floods in Kerala;

d) Project VENDA, an initiative by Fourth Wave Foundation - a Non-Profit Organization, to contain and manage
the issue of substance abuse among children and teenagers by helping them to say “NO” (VENDA) to drugs;
e) distribution of sewing machine to the flood affected families working as tailors.
3
The Company has utilized an amount of ₹ 13.83 lakhs in addition to the approved budget of ₹ 44.00 lakhs for other
projects. This has been taken from the balance unutilized in the other approved projects.
4
Cumulative expenditure for other projects includes ₹ 2.20 lakhs spent during the FY 2017 - 2018.
5
The Company has spent ₹ 42.30 lakhs towards the program “Magic Bus” during the FY 2015 - 2016.

Implementing Agency: Muthoot Pappachan Foundation (MPF), Muthoot Centre, Punnen Road, Trivandrum
- 695 034

6. Reasons for not spending the prescribed 2% amount: As recommended by the CSR Committee,
the Board of Directors of the Company has decided to make payment for various approved projects
only on being satisfied that the project objectives are achieved. In certain cases where the desired
objectives were not achieved and in cases where cases with the desired criteria is not identified, the
payment has not been made. In view of the same, out of the total budget of ₹ 169.00 lakhs (including ₹
58.87 lakhs brought forward from the previous year) the Company had spent ₹ 131.21 lakhs only and
the balance amount of ₹ 37.79 lakhs has been carried forward to the FY 2019 - 2020 in addition to the
mandatory limit of 2%. The Company is looking for new avenues to implement its CSR programs with
the sole intention of benefiting maximum households/families across the spectrum thereby meeting the
wider economic, social and ecological objectives.

Declaration

The implementation and monitoring of CSR Policy is in compliance with CSR Objectives and Policy of
the Company.

Sd/- Sd/-
THOMAS GEORGE MUTHOOT THOMAS MUTHOOT
Managing Director Chairman, CSR Committee
DIN: 00011552 DIN: 00082099

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 ANNUAL REPORT 2018 - 19

ANNEXURE 3

Form No. MR - 3
SECRETARIAL AUDIT REPORT
FOR THE FINANCIAL YEAR ENDED MARCH 31, 2019

[Pursuant to Section 204 (1) of the Companies Act, 2013 and Rule 9 of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014]

To,
The Members,
Muthoot Capital Services Limited,
3rd Floor, Muthoot Towers,
M.G Road, Kochi,
Kerala - 682035

We, SVJS & Associates, Company Secretaries, have conducted the secretarial audit of the compliance
of applicable statutory provisions and the adherence to good corporate practices by Muthoot Capital
Services Limited [CIN: L67120KL1994PLC007726] (hereinafter called the “Company”). Secretarial
Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/
statutory compliances and expressing our opinion thereon.

Based on our verification of the Company’s books, papers, minute books, forms and returns filed and other
records maintained by the Company and also the information provided by the Company, its officers, agents
and authorized representatives during the conduct of Secretarial Audit, we hereby report that, in our opinion,
the Company has, during the audit period covering the financial year ended on March 31, 2019, complied
with the statutory provisions listed hereunder and also that the Company has proper Board processes and
compliance mechanism in place to the extent, in the manner and subject to the reporting made hereinafter.

We have examined the books, papers, minute books, forms and returns filed and other records maintained
by the Company for the financial year ended on March 31, 2019 according to the provisions of:
(i) The Companies Act, 2013 (the Act) as amended and the Rules made thereunder;
(ii) The Securities Contracts (Regulation) Act, 1956 (“SCRA”) and the Rules made thereunder;
(iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;
(iv) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of
India Act, 1992 (SEBI Act):
a. The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2009;
b. The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)
Regulations, 2011;
c. The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;
d. The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents)
Regulations, 1993 regarding the Companies Act and dealing with client;

37
ANNUAL REPORT 2018 - 19

e. The Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996
and The Securities and Exchange Board of India (Depositories and Participants) Regulations,
2018;
f. The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 2015.
(v) As informed to us, the following Regulations and Guidelines prescribed under the Reserve Bank of
India Act, 1934 applicable to Non-Banking Financial Companies (Deposit Taking) are specifically
applicable to the Company:
a. Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions,
2016;
b. Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve
Bank) Directions, 2007;
c. Non-Banking Financial Companies Auditor’s Report (Reserve Bank) Directions, 2016;
d. Guidelines for investment in unencumbered approved securities;
e. Non-Banking Financial Company Returns (Reserve Bank) Directions, 2016;
f. Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and
Deposit taking Company (Reserve Bank) Directions, 2016;
g. Guidelines for Asset Liability Management (ALM) system in Non-Banking Financial Companies;
h. Frauds- Future Approach towards monitoring of Frauds in Non-Banking Financial Companies and
Monitoring of Frauds in NBFCs (Reserve Bank) Directions, 2016;
i. Know Your Customer (KYC) Guidelines- Anti Money Laundering Standards and Know Your
Customer (KYC) Direction, 2016;
j. Fair Practices Code;
k. Non-Banking Financial Companies Corporate Governance (Reserve Bank) Directions, 2015;
l. Regulation of excessive interest charged by NBFCs;
m. Miscellaneous Instructions to all Non-Banking Financial Companies;
n. Revised Regulatory Framework for NBFC;
o. Reserve Bank Commercial Paper Directions, 2012
p. Guidelines for issue of Commercial Paper.

We have also examined compliance with the applicable clauses of the following:
(i) Secretarial Standards 1 and 2 issued by The Institute of Company Secretaries of India;
(ii) The Listing Agreements entered into by the Company with BSE Limited and the National Stock
Exchange of India Limited.

During the period under review, the Company has complied with the provisions of the Act, Rules,
Regulations, Guidelines, Standards, etc. mentioned above.

38
 ANNUAL REPORT 2018 - 19

We report that:

The Board of Directors of the Company is duly constituted with proper balance of Executive Directors,
Non-Executive Directors and Independent Directors. The changes in the composition of the Board of
Directors that took place during the period under review were carried out in compliance with the provisions
of the Act.

Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on
agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further
information and clarifications on the agenda items before the meeting and for meaningful participation at
the meeting.

All decisions of the Board were unanimous and the same was captured and recorded as part of the minutes.

We further report that there are adequate systems and processes in the Company commensurate with
the size and operations of the Company to monitor and ensure compliance with applicable laws, rules,
regulations and guidelines.

We further report that the Company during the reporting period:

a) Has redeemed 588 Non-Convertible Debentures having face value of Rs. 1,000/- aggregating to
Rs. 5,88,000/-.

We further report that during the audit period there were no other instances of:
(i) Public/ Right/ Preferential issue of shares/ debentures/ sweat equity;
(ii) Redemption/buy-back of securities;
(iii) Merger/amalgamation/reconstruction, etc.;
(iv) Foreign technical collaborations.

This Report is to be read with our letter of even date which is annexed as ‘Annexure A’ and forms an
integral part of this report.

For SVJS & Associates

Company Secretaries

Sd/-
P. SIVAKUMAR
Partner
Kochi Membership No. 3050
24.04.2019 CP. No. 2210

39
ANNUAL REPORT 2018 - 19

Annexure A

To,
The Members,
Muthoot Capital Services Limited,
3rd Floor, Muthoot Towers,
M.G Road, Kochi,
Kerala - 682035

Our Secretarial Audit Report of even date is to be read along with this letter.

1. Maintenance of the Secretarial records is the responsibility of the management of the Company. Our
responsibility as Secretarial Auditors is to express an opinion on these records, based on our audit.
2. During the audit, we have followed the practices and process as were appropriate, to obtain reasonable
assurance about the correctness of the contents of the Secretarial records. We believe that the process
and practices we followed provide a reasonable basis for our report.
3. The correctness and appropriateness of financial records and Books of Accounts of the Company have
not been verified.
4. We have obtained the Management representation about the Compliance of laws, rules and regulations
and happening of events etc., wherever required.
5. The compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards
etc. is the responsibility of management. Our examination was limited to the verification of the
procedures and compliances on test basis.
6. While forming an opinion on compliance and issuing the Secretarial Audit Report, we have also taken
into consideration the compliance related actions taken by the Company after March 31, 2019 but
before issue of the Report.
7. We have considered actions carried out by the Company based on independent legal/ professional
opinion as being in compliance with law, wherever there was scope for multiple interpretations.

For SVJS & Associates

Company Secretaries

Sd/-
P. SIVAKUMAR
Partner
Kochi Membership No. 3050
24.04.2019 CP. No. 2210

40
 ANNUAL REPORT 2018 - 19

ANNEXURE 4

Statement of Disclosure of Remuneration under Section 197 (12) of Companies Act,

2013 read with Rule 5 (1) of Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014

(i) The ratio of remuneration of Managing Director to the median remuneration of the employees
of the Company for the FY 2018 - 2019: 115:1

(ii) The percentage of increase in remuneration of Managing Director, Chief Executive Officer,
Chief Finance Officer and Company Secretary during the FY 2018 - 2019:

Remuneration % increase in
Sl. during the Remuneration
Name of Director/ KMP Designation
No. FY 2018 - 2019 during the
(₹ in Lakhs) FY 2018 - 2019
1. Mr. Thomas George Muthoot Managing Director 190.44 2.90%
2. Mr. Vinodkumar M. Panicker Chief Finance Officer 87.31 8.47%
3. Mr. Ravi Oruganti1 Company Secretary &
Compliance Officer 12.46 --
1
Mr. Ravi Oruganti was appointed as the Company Secretary & Compliance Officer at the Board meeting held on
April 17, 2018 and resigned w.e.f. March 28, 2019.

(iii) The percentage increase in the median remuneration of the employees in the FY 2018 - 2019:
There has been an increase of 12.61% in the median remuneration of the employees of the Company
in FY 2018 - 2019 as compared to FY 2017 - 2018.
(iv) The number of permanent employees on the rolls of the Company as on March 31, 2019: There
were 1864 permanent employees on the rolls of the Company.
(v) Average percentage increase already made in the salaries of employees other than the managerial
personnel in the last financial year and its comparison with the percentage increase in the
managerial remuneration and justification thereof and point out if there are any exceptional
circumstances for increase in the managerial remuneration:
The average increase in the remuneration of employees other than KMPs during FY 2018 - 2019 was
19.34% and the average increase in the remuneration of KMPs was 2.5%.
Justification for Increase: The increase is in line with the industry’s standards and the Company’s
performance.
(vi) Affirmation: It is hereby affirmed that the remuneration paid to KMPs and other employees are as
per the Policy on Nomination and Remuneration of the Company.

For and on behalf of the Board of Directors

Sd/-
THOMAS JOHN MUTHOOT
Kochi Chairman
April 24, 2019 DIN: 00011618

41
 ANNEXURE 5
Statement of particulars under Section 197 (12) of the Companies Act, 2013 read with Rule 5 (2) the Companies (Appointment and Remuneration of

42
Managerial Personnel) Rules, 2014 for the year ended March 31, 2019
Mr. Thomas George Mr. Vinodkumar M.
Name of Employee Mr. Madhu Alexiouse Mr. R. Balakrishnan Mr. Bimal Singh Rawat
Muthoot Panicker
Chief Operating Executive Vice
Designation Managing Director Chief Finance Officer GM - North
Officer President
Nature of employment On rolls On rolls On rolls On rolls On rolls
Age (in years) 56 53 47 54 48
Diploma in Mechanical
Qualification B. Com B. Com, ACA MBA MSc. Maths, PGDM
Engineering, MBA
ANNUAL REPORT 2018 - 19

Experience (in years) 35 30 23 27 26

Date of commencement of
12.07.2016 16.12.2013 01.02.2017 01.08.2008 07.07.2015
employment
Gross Remuneration (in lakhs) 190.44 87.31 70.44 59.88 54.14
% of Shareholding in the
19.038% 0.006% -- 0.0006% --
Company
Outlook Publishing (I) TVS Finance and
Last employment -- IIFL Saudi Finance
Pvt. Ltd. Services Ltd.
Brother of Mr. Thomas
Not related to any Not related to any Not related to any
Relationship with any Director John Muthoot and Mr. Not related to any Directors
Directors Directors Directors
Thomas Muthoot
Dr. Gopalakrishnan
Name of Employee Mr. Bijesh K. Mr. Vijayan T. Mr. Manish Dhar Mr. Sandeep Vellarikkat
J. Prakash
Designation VP - Collections VP - IT & Operations Head - HR AVP - Sales Head - Credit & Risk, Product
Nature of employment On rolls On rolls On rolls On rolls On rolls
Age (in years) 43 45 41 49 37
PhD in Organization
Qualification BSc. Maths, MBA B. Com, DCA PGDBA MBA
Behavior
Experience (in years) 20 19 18 18 15
Date of commencement of
07.07.2014 01.09.2008 22.06.2017 01.12.2015 03.07.2017
employment
Gross Remuneration (in lakhs) 27.90 22.41 19.65 18.34 18.26
% of Shareholding in the
-- -- -- -- --
Company
Origon Consultants TVS Finance and
Last employment Consultant Ample Technologies L & T Finance
Private Ltd Services Ltd
Not related to any Not related to any Not related to any Not related to any
Relationship with any Director Not related to any Directors
Directors Directors Directors Directors
Note: None of the employees of the Company are covered under Rule 5 (2) (i) and 5 (2) (ii) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014
 ANNUAL REPORT 2018 - 19

MANAGEMENT DISCUSSION AND

ANALYSIS REPORT
1. OVERVIEW

The Management Discussion and Analysis Report (MDA) is an integral part of the Company’s Annual
Report to the Shareholders, in which the management provides an overview of the previous year’s operations
and how the Company performed financially. The purpose of the MDA is to provide a narrative explanation,
through the eyes of the management, of how the Company has fared in the past, its financial condition, and
its future prospects. MDA represents the thoughts and opinions of the management and provides a forecast
of future operations. It also contains the discussions on forthcoming year by outlining future goals and
approaches to new projects which may involve risks and uncertainties, including but not limited to the risk
inherent to the Company’s growth strategy, change in regulatory norms, economic conditions and other
incidental and business factors. Actual results could differ materially from those expressed or implied.

2. GLOBAL ECONOMIC OVERVIEW

While the prospects for global growth were extremely positive at the same time last year, it appears that
moderating activity and heightened risks are clouding global economic prospects. International trade and
investments have softened, trade tensions remain elevated, and some large emerging market and developing
economies (EMDEs) have experienced substantial financial market pressures. Trade disputes could escalate
or become more widespread, denting activity in the involved economies, leading to negative global spill
overs. An immediate priority for EMDE policymakers is to brace for possible bouts of financial market
stress, rebuild macroeconomic policy buffers as appropriate, and tackle adverse debt dynamics, all while
sustaining historically low inflation. In the longer run, the need to foster more robust potential growth by
boosting human capital, removing barriers to investment, and promoting trade integration.

Despite ongoing negotiations, trade tensions among major economies remain elevated, which coupled with
concerns about softening global growth prospects, have affected investor sentiment and led to a decline in
global equity prices. Borrowing costs for EMDEs have increased. A strengthening U.S. dollar, heightened
financial market volatility, and rising risk premiums have intensified capital outflow and currency pressures
in some large EMDEs, with some vulnerable countries experiencing substantial financial stress. While
growth in advanced economies is estimated to have slightly decelerated to 2.2% last year, EMDE growth
edged down to an estimated 4.2% in 2018 - 0.3% point slower than previously projected - as a number
of countries with elevated current account deficits experienced substantial financial market pressures and
appreciable slowdowns in activity.

Central banks in many EMDEs have tightened policy to varying degrees to confront currency and inflation
pressures. In all, global growth is projected to moderate from a downwardly revised 3% in 2018 to 2.9%
in 2019 and 2.8% in 2020-21. Softening global trade and tighter financing conditions will result in a more
challenging external environment for EMDE economic activity. EMDE growth is projected to plateau at an
average of 4.6% in 2020-21. Amid a projected deceleration in potential growth, EMDEs face the pressing
challenge of ensuring sustained improvements in living standards. This will require investments in human
capital and skills development to raise productivity and take full advantage of technological changes.

Unemployment rates have continued to decline, and for many countries are below levels seen prior to the
global financial crisis.

43
ANNUAL REPORT 2018 - 19

Global Trade: Global trade slowed more rapidly than expected, alongside dampened industrial activity.
Trade policy uncertainty remains elevated, reducing global investment and trade. Borrowing costs have
generally tightened in developing markets following a broad-based appreciation of the U.S. dollar, spells of
investor risk aversion, and increased focus on country-specific vulnerabilities. External financing conditions
are expected to continue deteriorating in 2019, as monetary policy accommodation in advanced economies
is unwound. Global goods trade and industrial activity decelerated in 2018 amid trade tensions between
major economies like US and China.

Financial Markets and Foreign Currency: Divergent monetary policy among major economies also
contributed to a significant appreciation of the U.S. dollar in 2018. This, together with increased investor
risk aversion and renewed attention to external vulnerabilities, contributed to significant capital outflows
in many EMDEs. Since the U.S. dollar started strengthening in April 2018, EMDE currencies fell by an
average of about 10% - the most significant episode of sustained depreciation since early 2016. EMDE
sovereign credit ratings have continued to deteriorate, with some falling below investment grade, reflecting
concerns about rising debt and deteriorating growth prospects. Yields on EMDE debt issued in international
bond markets rose by 140 basis points in 2018 - the third largest increase over the last two decades. Demand
for cross-border bank loans has also weakened, with the appreciation of the U.S. dollar putting upward
pressure on dollar funding costs.

Simultaneous Slowdown in US and China: The probability of a U.S. recession in the short term is still low,
but has increased, and corporate debt vulnerabilities are growing. Private debt in China exceeds levels that
gave rise to significant adjustments in other EMDEs in the past. A simultaneous sharp slowdown in both the
United States and China could bring the global economy closer to a global recession.

3. INDIAN ECONOMY

South Asia remains the world’s fastest growing region. Growth in the region is projected to accelerate to
7.1% by December 2019 from 6.9% in the previous year. Over the medium term, robust domestic demand
will be a significant driver of growth, which is expected to average 7.1%. Private consumption spiked in
2018 while investment remained stable. Growth in South Asia accelerated to an estimated 6.9% in 2018
from 6.2% in the previous year.

According to the World Bank Report on Global Economic Prospects, India’s growth accelerated to an
estimated 7.3% in FY 2018 - 2019 and GDP is forecast to grow 7.5% after 2019. However, strong domestic
demand is envisioned to widen the current account deficit to 2.6% of GDP next year. Inflation is projected
to rise somewhat above the midpoint of the Reserve Bank of India’s target range of 2 to 6%, mainly owing
to energy and food prices.

Domestic vulnerabilities are being exacerbated by fiscal slippages and rising inflation, escalation in political
uncertainty, and the possibility of delays in the needed structural reforms to address weaknesses in balance
sheets of banks and non- financial corporates. Key external risks include a further deterioration in current
accounts and a faster-than-expected tightening of global financing conditions.

Aside from fiscal uncertainties, the political uncertainty is intensified by the upcoming general election
cycle. Non-performing assets (NPAs) are still high despite recent measures taken to improve the recognition
of these assets and address collection against them. Especially, public sector banks in India, which represent
roughly 70% of the banking sector assets, still report low profitability and high NPAs.

Consumer price index (CPI) based inflation hit a nineteen-month low of 1.57% in January 2019 against
2.17% in December 2018, as food prices continued to slide. The wholesale price index (WPI) data showed

44
 ANNUAL REPORT 2018 - 19

that wholesale price inflation decelerated to an eight-month low of 3.8% in December 2018 from 4.64%
the month before, on the back of softening inflation for fuel as well as manufactured items. In its February
2019 meeting, the Reserve Bank of India lowered its inflation forecasts to 2.8% for January-March 2019,
mentioning a deflation in food items and a sharp fall in fuel inflation.

India’s rating remained unchanged, but with a stable outlook.

The Reserve Bank in its most recent Monetary Policy meeting, lowered the benchmark interest rate by 0.25%
for the second time in a row, the last cut being in February 2019 with a need to spur private investment.
India’s forex reserves had touched a record high of $ 426.028 billion in April 2018 and fell sharply to less
than of $ 392.785 billion in November 2018. It has further picked up to over $ 410 billion in April 2019.

The year gone by has been a significant year, for the country witnessed unprecedented events in the
economic and judicial space.

Landmark Judgment: After many years of propagating the importance of the Aadhaar, the Apex Court made
a landmark judgment in September 2018 that private entities cannot insist on Aadhaar for KYC verification.
The verdict has had a major adverse impact on payment banks and financial technology (fintech) players,
including e-wallets, online loan givers, online brokerage houses, and peer-to-peer lending platforms. Non-
Aadhaar based KYC has also shot up the cost of acquiring new customers for these companies.

Rising NPAs and Credit Crunch: Another incident that shook the markets, particularly in the financial
services sector, was the IL & FS crisis. With one default and fears of further defaults, from IL & FS and
other entities, the lender confidence in financial services sector was utterly shattered. Banks which were
already reeling under the pressure of high-profile frauds, were imposed with Prompt Corrective Action
(PCA) norms and with a modified guideline for arriving at risk weightage and in several cases a ban on
any further disbursements. The commercial paper market had dried up, interest rates started reversing and
moving upwards and borrowers started looking for alternative sources of raising funds aside from just
mutual funds and banks. Large NBFCs with strong promoter background, vast retail capabilities and those
that satisfy priority sector lending norms were able to stand their ground and raise funds. But many of the
others in the mid-segment and smaller entities all were made to wait continuously for fresh sanctions /
disbursements from the lenders.

Aside from the above, the outcome in the elections, could trigger a knee-jerk reaction in the markets. The
long-term trajectory, however, is not likely to be impacted whatever the outcome is.

4. OUTLOOK OF THE INDUSTRY

Non-Banking Finance Companies (NBFCs) are an integral part of the Indian financial system. Their
importance has only grown over the years, with their innovative products, intelligent credit checks, quick
turn-around times and ability to reach the last mile customer, who generally do not have banking habits.

The self-employed in the Indian sub-continent and neighboring states, which account for about 80% of
informally employed, have limited access to financial resources that could finance growth - or productivity
- enhancing investment. Greater access to credit for the self - employed and household enterprises could
help them grow into formality. This in itself is promising for financial services in India.

The NBFC sector faced a hiccup in the last six months, which put a halt to a 5-year growing streak for
NBFCs. Interest rates had spiked, growth and margins had seen some strain and asset-liability mismatch
has been the point widely discussed. The opportunity for NBFCs however exists in the fact that retail credit
penetration in India remains low with roughly only 20% of the population having access to banking credit.

45
ANNUAL REPORT 2018 - 19

NBFCs have about 50% of the market share in servicing products such as gold loan, microfinance, small
business loans, vehicle and consumer durable financing.

Finance penetration for two-wheelers rose 50% in FY 2018 compared with 30% in FY 2014. NBFCs have
proved their mettle here with their rapid processing times and efficient collection system. NBFCs that have
relied less on bonds and those that have a diversified borrowing base through securitization and retail and
having a strong promoter backing have been able to tide over the asset liability mismatch issue.

The two-wheeler industry, which had been growing at unprecedented rates, faced multiple challenges in the
year gone by. The main factors were high commodity prices during the year which prompted companies
to hike vehicle prices which impacted demand. Further issues like compulsory 5-year insurance, liquidity
crunch in the economy leading to similar situation at finance companies, a rather subdued economy, all
impacted sales.

According to Society of Indian Automobile Manufacturers, the two-wheeler industry is expected to grow
at 5-7% in FY 2019 - 2020. It has grown by about 5% in FY 2018 - 2019, from 2.02 crore units to 2.12
crore units, as against a growth of 15% in FY 2017 - 2018 and a similar expectation for the FY 2018 - 2019.
However, motorcycles have overtaken scooters, particularly in the rural market where there has been an
increased demand for sub-125cc motorcycles.

5. OUTLOOK OF THE COMPANY

The southern state of Kerala, where the Company has an exposure of about 40%, witnessed one of the worst
natural calamity in the last 100 years. While the floods caused a temporary displacement, the Company’s
presence in other states, strong under-writing capabilities and effectual collection team has brought the
Company’s delinquency levels to almost the pre-flood numbers. While the collection efforts at additional
costs brought the delinquency levels lower, on the sales front there was a slight dampening as a result of
which the Company could not reach the levels that it had reached in the previous years immediately after
the festive season in August, both of which impacted profitability.

The Company had deepened its presence in various markets such as the Southern and Northern market
where it had a presence already and expanded to other markets in Eastern and Western India. Towards the
end of the financial year, the Company has also entered into newer markets such as Assam and Andaman.
The Company continues to leverage its pan-India presence through its group company, Muthoot Fincorp
Limited, for sourcing and collection and has also expanded to other channels of sourcing such as app-based
sourcing and franchisee model. The Company has already piloted its Used Car product in Kerala and is
planning to aggressively expand the product into various locations in South and West India and is exploring
entering into other asset-financing products for its own customers and customers of group companies, in
the current year. The Company has a healthy mix of a corporate loan book, which has also contributed to
the overall profitability of the Company.

On the process front, the Company has been adopting the use of technology to streamline the sanction and
disbursement process. The Company has successfully launched its customer app - MPower.

6. OPPORTUNITIES AND THREATS

Easy availability of funding combined with rising LTVs has been a key driver of two-wheeler volume and
finance growth in the past five years.

First, with the proposed introduction of BS-VI norms in the next year and compliance thereof, automotive
manufacturers will require higher investment in technology to upgrade vehicles in stock and making new

46
 ANNUAL REPORT 2018 - 19

vehicles. This will also mean fewer launches till the deadline. Since the cost of manufacturing BS-VI
compliant vehicles will increase, the additional costs will get passed on to the buyers. Fuel costs are also
expected to rise since BS-VI compliant fuel will be of a higher grade. In the recent past, two-wheelers
had already become dearer after the ruling of the Apex Court directing all insurance companies to provide
a five-year third-party liability insurance policy front loaded into the cost at the time of purchase of the
two-wheeler.

Also, increased costs and changes in models, such as when combined breaking system and anti-lock-
breaking system was introduced, has increased costs by ₹ 5000 to ₹ 25000 across models. The sudden
increase in the initial cost has deterred and will continue to deter a few purchases, as the two-wheeler buyer
segment is fairly price-conscious.

The opportunity, however, lies in the fact that the buyers with the limited resources at their disposal, would
require to borrow for purchase of the 2-Wheeler as this purchase, being a necessity cannot be kept pending
for long. This would lead to substantial demand for 2-Wheeler loans, which would lead to increased loan
book growth over a period of time. Optimistically speaking, deferring the purchase by the potential buyers
is temporary in nature and would get corrected over a period of time.

Further, the last year witnessed a lack of confidence in the NBFC debt market, as a result of which banks
and mutual funds were unwilling to lend to NBFCs. A regulatory imposition or another unfavourable
market sentiment against NBFCs could pose a threat to raising funds in a cost-effective manner.

Towards the end of the fourth quarter, financial services entities have resumed lending and providing
enhancements against existing sanctions. NBFCs being the last mile financier for the customer, can expand
in a robust fashion if funds are made available at their disposal. We hope that this trend will continue in
the coming quarters.

7. SEGMENT WISE OR PRODUCT WISE PERFORMANCE

The Company’s business activity primarily falls within a single segment, which is financing activities.
Hence, there are no additional disclosures required under “Accounting Standard - 17 Segment Reporting”.

The Company operates primarily in India; hence there is no other significant geographical segment that
requires disclosure.

8. RISKS AND CONCERNS

The Company performs a thorough due diligence of the background of the potential customer in order to
mitigate risks of fraud and default. This includes credit checks, tele-verification and field investigation. The
Company is in the process of developing score-based models to determine eligibility for loan sanctions to
reduce these risks.

About 70% of the Company’s disbursements are concentrated in south India. In order to mitigate this
geographical concentration risk, the Company has been diversifying into other geographies in the north,
west and east. The Company has also forayed into used-car financing aside from two-wheeler financing.
At the same time, the Company has a wholesale loan book, wherein the Company lends to other NBFCs
engaged in SME lending, three-wheeler, personal loan, microfinance and CV financing, which reduces the
product concentration risk.

A change in regulatory environment can also adversely affect the Company’s operations. The legal and
compliance team, together with external legal counsels, keep a track of applicable laws and regulations, so
that changes are administered appropriately and any necessary action is promptly taken.

47
ANNUAL REPORT 2018 - 19

In order to mitigate risks on the information technology front, the Company has placed a clear thrust on
systems safety and digitisation. While the digitisation makes the life easier for employees and the customer,
enabling transactions on their mobile itself, the Company has security devices like firewall and systems to
monitor internet traffic, and to detect and stop threats from the internet.

The Company’s operations are managed by its employees. Engaged employees work harder, are often
willing to take on extra responsibilities and are a positive influence on other employees. Employee morale
is boosted when employees feel that they are valued by their superiors. Trust amongst colleagues is also
hugely important to morale. The Company strives to encourage team work and collaboration to build trust
and ensure that employee productivity is optimum.

9. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Effective internal control reduces the risk of asset loss, helps to ensure that information is complete and
accurate, financial statements are reliable and reported accurately in a timely manner, and operations are
conducted in accordance with the provisions of applicable laws and regulations.

The Company has an in-house concurrent audit team, which is also assisted by an out sourced concurrent
audit team. The Company’s concurrent audit team performs a systematic examination of all financial
transactions/operations/security on a continuous basis to ensure accuracy, authenticity, and due adherence
with the statutory compliances as well as the internal systems, procedures and guidelines of the organization
issued from time to time. Any deviations are reported to the Management.

The concurrent audit report is reviewed by the Internal Auditors, M/s. PKF Sridhar & Santhanam LLP, a
reputed firm of practicing Chartered Accountants. Internal Auditors review systems and operations of the
Company and ensure that the Company is functioning in accordance with all the applicable statutes. Any
internal control weaknesses, non-compliance with statutes and suggestions for improvements in existing
practices are reported by the Internal Auditors.

The Internal Audit Report is reviewed by Statutory Auditors while performing audit functions to confirm
that there are no transactions conflicting with the interests of the Company and regulatory stipulations. The
Audit Committee reviews the Internal Audit Report and the quarterly Compliance Report placed before
the Committee and ensures that observations pointed out in these reports are addressed in a timely and
structured manner by the Management. The Audit Committee reviews an Action Taken Report (ATR)
which states the points needing correction and the action taken on the same.

10. FINANCIAL PERFORMANCE

The Company’s Assets Under Management (AUM) primarily comprise vehicle loans, of which two-
wheelers constitute the major portion. The Company also has a wholesale loan book.

AUM as on March 31, 2019 was ₹ 2741 05 lakhs (including securitized loan of ₹ 656 85 lakhs), as against, ₹
2238 02 lakhs (including securitized loan of ₹ 322 02 lakhs) at the end of the previous year. The disbursements
for the year ended March 31, 2019 was ₹ 2135 04 lakhs as against ₹ 1969 69 lakhs for the year ended March
31, 2018.

48
 ANNUAL REPORT 2018 - 19

The Company’s income comprises of both income from vehicle financing and corporate loans. The Company has
earned an income of ₹ 535 27 lakhs in the current year, compared to ₹ 398 09 lakhs the previous year. Expenses
comprise of various components of which finance costs constitute the major portion, totalling ₹ 161 51 lakhs, followed
by employee costs of ₹ 77 82 lakhs, other expenses of ₹ 118 85 lakhs and depreciation and amortization of ₹ 1 04 lakhs.

Year ended
(₹ in lakhs)
Financial Snapshot % Growth Reason for variance
March 31, March 31,
2019 2018
Disbursement during the year has been subdued due to
Disbursement (all
2135 04 1969 69 8.4% general market conditions and low demand in the 3rd and
Loans) [1]
4th quarter.
The securitised portfolio as on March 31, 2019 was
₹ 656 85 lakhs as against ₹ 322 02 lakhs at the end of
the previous year; including the securitised portfolio the
AUM at the end of the
2084 20 1916 00 8.8% overall book is ₹ 2741 05, which indicates a growth of
period (own-book) [2]
22.5 % in the overall loan book. If not, for the relatively
subdued disbursements in the last three quarters, the loan
book would have been significantly higher.
Average AUM
(own-book excluding 2042 64 1479 64 38.0% Based on the growth in disbursements
interest accrued) [3]
Total Debt [4] 1558 01 1444 53 7.9%
Net worth [5] 459 57 382 61 20.9%
Total Interest and Fee Higher Income on account of disbursements with optimum
535 27 398 09 34.5%
Income [6] rate of interest and processing fee.
This year’s overall finance expenses have been impacted
on account of overall increase in the interest costs in the
Finance Expenses [7] 161 51 122 83 31.5% market, higher processing fee charged on both renewals
and fresh sanctions and also on account of higher value of
securitisation transactions done.
Net Interest Income
373 76 275 26 35.8%
(NII) [8] = [7]-[6]
The Operating expenses have gone up on account of:
1. Higher employee costs on account of higher number
of employees
2. Increased cost of collection on account of higher
Operating amount collected through collection agencies and
197 70 159 21 24.2%
Expenses [9] additional effort put on collection post floods in Kerala.
3. The Company embarked on a large media campaign on
which it had made a reasonably large outlay.
4. Other general increase in expenses basis the increased
operations.

49
ANNUAL REPORT 2018 - 19

Loan Loss & A larger number of vehicles was repossessed and sold
Provisions [10] during the year and the loss on the same was charged off
to the P&L Account. Additionally, the Company has made
48 82 33 59 45.3%
an additional provision of ₹ 14 09 lakhs for NPA beyond
the regulatory requirement. The Company also wrote off
₹ 7 76 lakhs.
Profit Before Tax [11] 127 24 82 46 54.3%
Profit After Tax [12] 82 42 53 68 54.4%
Ratios
Total OPEX to NII Growth in Income at lower interest cost lead to a lower
[13] = [9] / [8] 52.9% 57.8% OPEX as a % of NII on a full year basis. But in view of the
interest costs rising, Q4 has seen this ratio going up.
Loan loss to average This ratio has seen an increase in view of the higher
AUM [14] = [10] / [3] 2.4% 2.3% provisioning done to improve the Provision Coverage
Ratio, mentioned above.
Return on average This ratio has been steadily increasing in view of the
4.03% 3.6%
AUM [15] = [12] / [3] increased loan book and profitability.
Interest Coverage
Ratio [16] = [11] + 1.79 1.67
[7] / [7]
Current Ratio 0.78 0.75
Debt-Equity Ratio
3.26 3.66
[17] = [4] / [5]
Operating Profit
Margin/ Net Interest
18.3% 18.6%
Margin on loan book
[18] = [8] / [3]
Net Profit Margin [19]
15.4% 13.5%
= [12] / [6]
Return on (Average)
18.9% 18.8%
Net Worth
Debtors Turnover
N.A. N.A.
Ratio
Inventory Turnover
N.A. N.A.
Ratio
Earnings Per Share
50.11 36.39
(in ₹)

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 ANNUAL REPORT 2018 - 19

a) Capital Adequacy Ratio (CAR)

As on March 31, 2019, the CAR was 21.9% of the aggregate risk weighted assets on the Balance Sheet,
which is comfortably above the regulatory minimum of 15%. Of the CAR, 21.2% was from Tier - 1
capital.

b) Borrowing Profile (excluding interest accrued)

March 31, 2019 March 31, 2018

Particulars Amount Amount
% of Total % of Total
(₹ in lakhs) (₹ in lakhs)
Bank Borrowings 1349 04 86.6 1149 10 79.5
Other Financial Institutions 76 84 4.9 - -
Commercial Paper - - 145 23 10.1
Public Deposit 61 55 3.9 82 28 5.7
Subordinated Debts 58 67 3.8 60 54 4.2
Loan from Directors 10 24 0.7 5 78 0.4
Others 1 67 0.1 1 60 0.1
Total 1558 01 100 1444 53 100

BORROWING PROFILE AS ON MARCH 31, 2019

4.9%
0.1%
0.7%

3.9%
Bank Loan
0.0% Other Financial Institutions
Subordinated Debts
3.8%
Public Deposit
Loan from Directors
Commercial Paper
Others
86.6%

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ANNUAL REPORT 2018 - 19

The Company’s total external borrowings increased from ₹1444 52 lakhs as of March 31, 2018 to ₹1558 00
lakhs as of March 31, 2019.

While there was a marginal increase in the overall borrowing costs from 9.3% in the last quarter of the
previous financial year to 10.1% at the end of the current financial year due to rising interest rates, the
Company has continued to explore avenues to raise funds to meet its disbursement requirement. The
Company has done total securitisation transactions of ₹ 1627 lakhs (net of MRR), including the largest
single securitization transaction during the year with HDFC AMC, all of which has helped to improve the
overall liquidity, which helps in increasing disbursements and thereby profitability. The Company is looking
at tapping into retail sources such as public deposits to raise funds, which it has commenced in the last
quarter of FY 2018 - 2019. The Company is also looking at raising funds through NCDs and other market
instruments, which would help to improve liquidity as well as Asset Liability Management.

On a full year basis, the borrowing cost was at 9.68% for the current year against 9.76% of the last year.

c) Asset Under Management (AUM)

The own-book AUM as on March 31, 2019 stood at ₹ 2084 20 lakhs (i.e., ₹ 2741 05 lakhs less securitized
portfolio of ₹ 656 85 lakhs) against own-book AUM of ₹ 1916 00 lakhs (i.e., ₹ 2238 02 lakhs less securitized
portfolio of ₹ 322 02 lakhs) as on March 31, 2018. The Company’s AUM has shown remarkable growth
over the last five years as depicted below:

ASSETS UNDER MANAGEMENT (GROSS)

300000
2741 05
250000
2238 02
200000
₹ in Lakhs

1439 68
150000
1038 79
845 12
100000

50000

0
2015 2016 2017 2018 2019
(Year ended March)

The Company hopes to maintain its growth momentum, in the future also.

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 ANNUAL REPORT 2018 - 19

Today, the Company has presence for auto loan financing in 20 States. The geographic distribution of
hypothecation loans (including securitized portfolio) is given below:
(₹ in Lakhs)

Zone Active Clients Regular (₹) NPA (₹) % of NPA

South India 5 23 750 1667 38.65 86 95.50 5.0%
Western India 53 753 161 85.99 14 63.14 8.3%
North India 78 325 242 29.38 12 27.58 4.8%
East India 41 546 155 03.24 2 45.97 1.6%
Total 6 97 374 2226 57.26 116 32.19 5.0%

The total loan portfolio of the Company has shown a growth of 22.5% from FY 2017 - 2018 to FY 2018
- 2019. The Company has further diversified its portfolio of vehicle financing in the used-car space,
aside from exploring other channels of distribution, and maintaining a nominal proportion of corporate
loan book.

Since inception, till March, 2018, the Company has disbursed close to 16 lakh loans, the majority of
which has been in the last 5 - 6 years. The disbursements of hypothecation auto loans, along with number
of loans, over the last 5 years is given in the chart below:

DISBURSEMENTS (HYPOTHECATION LOAN)

200000
1855 14
1758 38
180000
160000
140000
1135 04
120000
₹ in Lakhs

100000
780 02
80000
592 45
60000
40000
20000
0
2015 2016 2017 2018 2019
(Year ended March)

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ANNUAL REPORT 2018 - 19

DISBURSEMENTS (HYPOTHECATION LOAN)

3 36 548 3 29 301
200000

350000
2 32 524
300000
in Numbers

250000
1 67 204
1 38 832
200000

150000

100000

50000
2015 2016 2017 2018 2019
(Year ended March)
d) Cost & Profitability Analysis
The Company has been able to control most of its expenses to a large extent which has helped the Company
improve it ROA, OPEX to NII ratio and improve profitability. This has been in spite of the fact that the
Company, with a strategy to increase its Provision Coverage Ratio (PCR), making an additional provision
of ₹14 09 lakhs in the current financial year. The account heads where there has been increased expenses,
it has been on account of meeting specific objectives (e.g. Higher collection cost to ensure that NPAs do
not rise and there is improved collection is lower buckets) or on account of higher volume of operations.

e) Spread Analysis:
The Company has been able to maintain its gross and net spread at reasonable levels:

Particulars March, 2019 March, 2018

Daily Average Loan Book Size (₹ in Lakhs,
2042 64 1479 64
excluding interest accrued)
Income from Operations 535 27 26.2% 398 09 26.9%
Direct expense (including interest, brokerage,
dealer/MFL incentive, field investigation
charges) 193 25 9.5% 157 44 10.6%
Gross Spread 342 02 16.7% 240 65 16.2%
Personnel Expenses 77 82 3.8% 64 18 4.3%
OPEX (including depreciation etc.) 88 14 4.3% 60 42 4.1%
Total Expenses 165 96 8.1% 124 60 8.4%
Pre-Provision Profits 176 06 8.6% 116 05 7.8%
Loan Loss and provisions 48 82 2.4% 33 59 2.3%
Net Spread (before tax) 127 24 6.2% 82 46 5.5%

The Company hopes to maintain a spread (before tax) of around 6% in the coming years also.

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 ANNUAL REPORT 2018 - 19

11. MATERIAL DEVOLOPMENTS IN HUMAN RESOURCES

The Company recognizes that employees are its direct assets and their engagement contributes to lower
turnover and absenteeism, higher productivity and better customer service. The Company has increased its
workforce from 1626 in 2013 to 2315 in 2019. Over the last few years the Company has also been relying
on manpower that is off the Company’s rolls - through the recruitment of employees through employment
agencies and also in the form of marketing agents and collection agents/ agencies. This has helped to
maintain a low-cost strategy in relation to manpower, and also enabled working with people on a variable
cost basis.

Refer the chart given below to understand the growth in employee numbers:

2500
2315
2107 2153 2156 2139 2127
2000
1626
₹ in Lakhs

1500

1000

500

0
2013 2014 2015 2016 2017 2018 2019
(Year ended March)

The Company has structured employees’ salary comparable with industry standards and grants performance-
based incentives to retain talent and to enable the employee to develop a career in the Company. All
employees are provided a healthy work environment, suitable rewards and recognition, platform to express
ideas, requisite training to equip them to remain competent in their skills, and other employee engagement
activities. The Company continuously endeavours to ensure a high level of employee satisfaction, provide
opportunities for growth and recognize them for their accomplishments.

12. INVESTMENT PROPOSITION

The Company is at an inflection point with a huge potential for growth. The Two-Wheeler segment that
the Company is currently in, inspite of a temporary slowdown, due to large geographical spread possible,
promises a huge opportunity for growth. While the state of Kerala has seen some saturation levels from
the point of view of growth, the other southern states have vast opportunities for penetration. In the North,
East and Western India market, the Company has hardly penetrated which should be seen as a high growth
opportunity. Along with the East Indian markets, the Company also plans expansion into the North East
market, where the expected growth is huge. In all these locations, Muthoot Fincorp Limited is in the process
of expanding its infrastructure which would lead to smooth entry at lower costs for the Company. The large
network of the Muthoot Fincorp Limited branches provides ample opportunity to expand rapidly with
minimal incremental cost. Hence, there is a huge growth potential and opportunity of profitability in the
medium to long term.

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ANNUAL REPORT 2018 - 19

The Used Four-Wheeler, for which the Company has completed the pilot run and the other new products
that the Company proposes to enter into, at minimal incremental cost, would all lead to higher growth
and profitability in the medium to long term. In the Used Four-Wheeler segment, the Company plans to
increase its footprint in other states in FY 2019 - 2020 and expand rapidly thereafter. This will be achieved
using digital technology and analytics that would ensure quicker processing of accurate data to confirm the
correctness in the sourcing and speedy completion of disbursement. This would ensure that the operational
costs would be minimal.

The Company has diversified funding options and based on the past experience several lenders / investors
find comfort in the relationship. Hence, raising funds at reasonable cost would not be an issue. Also, the
trained staff and the well-knit sourcing and collection infrastructure would all make the growth plans
achievable. The reasonably high CAR of 21.9% and the low Debt Equity Ratio of 3.3 times all make it
attractive to any lender/investor to take an exposure in the Company.

13. CAUTIONARY STATEMENT

The statements made in this report describes the Company’s objectives and projections which may be
forward looking statements within the meaning of applicable laws and regulations and should be read in
conjunction with the financial statements included herein and the notes thereto. Important developments
that could affect the Company’s operations include a downtrend in the industry - global or domestic or both,
significant changes in the political and economic environment in India or abroad, tax laws, litigation, labour
relations, exchange rate fluctuations, interest and other factors. The actual result might differ materially
from those expressed or implied. The Company is not under any obligation to publicly amend, modify or
revise any forward-looking statements on the basis of any subsequent developments, information or events.

For and on behalf of the Board of Directors

Sd/-
THOMAS JOHN MUTHOOT
Kochi Chairman
April 24, 2019 DIN: 00011618

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 ANNUAL REPORT 2018 - 19

REPORT ON CORPORATE
GOVERNANCE
“Corporate Governance is to conduct the business in accordance with owner or shareholders’ desires,
which generally will be to make as much money as possible, while conforming to the basic rules of the
society embodied in law and local customs.”
- Milton Friedman

This Report on Corporate Governance reflects the ethos of Muthoot Capital Services Limited (MCSL / the
Company) and its commitment to ethical business principles across its operations which lays down the best
corporate practices and the procedures adopted by the Company in line with the Securities and Exchange
Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 [SEBI (LODR)
Regulations, 2015], Reserve Bank of India (RBI) directives and other guidelines under the Companies Act,
2013 (amended as on date).

1. COMPANY’S GOVERNANCE PHILOSOPHY

At MCSL, the Corporate Governance is a systemic process by which the Company is directed and controlled
to enhance its wealth-generating capacity besides meeting its social objectives. MCSL’s governance
philosophy reflects its commitment to disclose timely and accurate information regarding its financial and
operational performance, as well as its leadership and governance structure. It ensures the existence of
accountability, transparency and fairness in the conduct of business.

The Company believes that its business plans should be consistent with the above objective leading to
sustained corporate growth and long-term benefit to all. The Company follows this principle meticulously
in all its business dealings and decisions. Over the years, MCSL’s stakeholder commitment has enhanced
the respect and recall of its group’s brand - Muthoot Blue - across the nation. It has helped a lot to translate
its short-term and long-term strategies into a viable business blueprint.

Why Corporate Governance?

In the recent years, there has been a considerable concern in India and other countries about the standards of
Corporate Governance. According to Company Law, the Directors are obliged to act in the best interests of
shareholders, but there have been many instances where are contradictions to such obligation. There have
been many instances of excessive debt financing laced with fraud, disproportionate rise in payments for
executives, which have been less than transparent.

There is no “one size fits all” structure for Corporate Governance. Corporate Governance extends beyond
corporate law. Its fundamental objective is not the mere fulfilment of the requirements of law but in ensuring
commitment of the Board in managing the Company in a transparent manner for maximizing long term
shareholder value.

According to MCSL philosophy, Corporate Governance is focused on the allocation of power and duty
among the Board of Directors, management and shareholders. As the sole residual claimants on assets of
the Company, the shareholders were presumed to have the most incentive to maximize company value.
According to that perspective, the Board of Directors acted as the shareholders’ agent and management was
responsible for daily operations. The Board of Directors shape the long-term vision and policy approach to
steadily elevate the quality of governance in the organization.

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ANNUAL REPORT 2018 - 19

The Company’s Corporate Governance philosophy stems from our belief that for many stakeholders, it is
not enough that a Company to be merely profitable; it also needs to demonstrate good corporate citizenship
through environmental awareness, ethical behaviour and sound corporate governance practices. This idea
forms the base for further evolution of the structure of corporate governance in the Company in consonance
with the rapidly changing economic and industrial environment of the country.

The Board of Directors of the Company are pleased to present the Report on Corporate Governance for the
year ended March 31, 2019.

2. BOARD OF DIRECTORS

The Company’s Board have an optimum combination of Executive, Non-Executive Directors and
Independent Directors and conforms with the provisions of the Companies Act, 2013, SEBI (LODR)
Regulations, 2015, RBI Guidelines and other statutory provisions. The Board comprises of seven members
which includes a Non-Executive Chairman, a Managing Director, a Non-Executive Director and four
Independent Directors of which one is an Independent Woman Director. The detailed profile of each of the
Directors is available on the Company’s website at [Link] in ‘About’ section.

All the existing Directors are fit and proper to continue to hold the appointment as a Director on the Board as
per the Company’s Policy on the Fit and Proper Criteria in line with RBI Master Directions. The Company
has formulated a Policy on Board Diversity to have a competent and highly professional team of Board
members from diverse backgrounds with skills and experience in critical areas of business management
which would enable them to contribute effectively to the Company by providing valuable guidance and
expert advice to the Management and add value in the decision-making process in their capacity as Directors.

The day to day management of affairs is managed by Senior Management of your Company which includes
the Managing Director and the functional heads, who performs under the overall supervision and guidance
of Board of Directors. Thus, the Board of Directors of the Company plays the primary role as the trustees
to protect and enhance shareholder value through strategic supervision of the Company. The Board sets
strategic goals and seeks accountability for its fulfilment. The Board also provides direction and exercises
appropriate control to ensure that the Company is managed in a manner that fulfils stakeholders’ aspirations
and societal expectations.

The Board, as part of its functioning, annually reviews its role and also evaluates the performance of the
Directors and the Board Committees. The Board also reviews its strength and composition from time to
time in order to ensure that it remains aligned with the statutory, as well as business requirements.

None of the Directors on the Board hold directorships in more than twenty companies in which public
companies and listed entities not exceeding ten and eight respectively. None of the Independent Directors of
the Company are holding directorship in more than seven listed entities. Further, none of them is a member
of more than ten committees or chairman of more than five committees across all the listed entities in which
he/she is a Director. The certificate from the Managing Director confirming the compliance of the provisions
of Section 165 of the Companies Act, 2013 and Regulation 17A & 26 (1) of SEBI (LODR) Regulations,
2015 with regard to the directorships and committee memberships is enclosed herewith as Annexure 1.

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 ANNUAL REPORT 2018 - 19

a. Composition of the Board

The composition of the Board of Directors of the Company as on March 31, 2019 are as follows:

Percentage to total
Category No. of Directors
No. of Directors
Executive Directors 1 14.3
Non-Executive Independent Directors 4 57.1
Other Non-Executive Directors 2 28.6
Total 7 100.0

The category of the Directors of the Company during the FY 2018 - 2019 is given below:

Shareholding Nature of
Category Name of Director DIN as on
March 31, 2019 Relationship

Promoter & Mr. Thomas George

Executive Muthoot, Managing 00011552 3131430 Mr. Thomas John
Director Director Muthoot,
Promoter, Mr. Thomas John Mr. Thomas George
00011618 3134094 Muthoot and
Non-Executive Muthoot, Chairman
& Non - Mr. Thomas Muthoot
Independent are brothers
Mr. Thomas Muthoot 00082099 3076624
Directors
Mr. A.P Kurian 00008022 Nil
Non - Mr. R.K. Nair 1
00631889 Nil
Executive Not related to any
Mrs. Radha Unni 03242769 Nil
Independent Director or Manager
Directors Mr. K.M. Abraham2 05178826 Nil
Mr. Thomas Mathew 3
01277149 Nil
1
Resigned with effect from March 28, 2019
2
Appointed as Additional Independent Director with effect from January 18, 2019
3
Appointed as Additional Independent Director with effect from April 01, 2019

As detailed in the Board’s Report, Mr. R.K. Nair, Independent Director (DIN: 00631889), has resigned
from the Board with effect from March 28, 2019 due to compelling personal reasons and pre-occupation
with other professional commitments. The Board took on record the confirmation from Mr. R.K. Nair
that there are no material reasons for resignation other than those provided.

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ANNUAL REPORT 2018 - 19

b. Key Board Qualifications, Expertise and Attributes

The Board of the Company comprises qualified members who bring in the required skills, expertise
and competence that allows them to make effective contribution to the Board and its Committees. The
members of the Board are committed to ensure that the Board is in compliance with the highest standards
of corporate governance.

The below table summarizes the key qualifications, skills, expertise and attributes considered while
nominating a candidate to serve on the Board:

Board Qualification Indicators

Banking & Finance Being a Director in a finance company, proficiency in complex financial
management, capital allocation and financial reporting processes are
a must. The Director should have experience in actively supervising a
principal financial officer, principal accounting officer, controller, public
accountant, auditor or person performing similar functions.
Board Diversity Representation of gender, ethnic, geographic, cultural or other
perspectives that expand the Board’s understanding of the needs and
viewpoints of the Company’s customers, employees, governments,
regulators and other stakeholders.
Business Operations Vast experience in driving business success across the country with an
understanding of diverse business environments, economic conditions,
cultures and regulatory frameworks and have a broad perspective on
market opportunities.
Leadership Leadership experience in a significant enterprise with a practical
understanding of organizations, processes, strategic planning and risk
management. Demonstrated strengths in developing talent, succession
planning and driving change and long-term growth.
Technology A significant background in technology resulting in knowledge of how
to anticipate technological trends, generate disruptive innovation and
extend or create new business models.
Board Governance Service on the Board of the public company to develop insights
about maintaining board and management accountability, protecting
shareholder interests and observing appropriate governance practices.
Sales and Marketing Experience in developing strategies to grow sales and market share, build
brand awareness and equity and enhance company reputation.

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 ANNUAL REPORT 2018 - 19

The specific areas of focus or expertise of individual Board members are given below:

Key Board Qualifications

Area of expertise, skills and attributes

Name of Director Banking & Board Business Board Sales and
Leadership Technology
Finance Diversity Operations Governance Marketing
Thomas John Muthoot
     
Chairman
Thomas George Muthoot
     
Managing Director
Thomas Muthoot
     
Non-Executive Director
A.P. Kurian
     
Independent Director
Radha Unni
      
Independent Director
K.M. Abraham
    
Independent Director
Thomas Mathew
     
Independent Director

c. Appointment, criteria and tenure of Independent Directors

Pursuant to Sections 149, 150 and 152 of the Companies Act, 2013 and Regulation 17 (1) (a) of the
SEBI (LODR) Regulations, 2015, the Company has four Independent Directors on the Board. Mr. A.P
Kurian and Mrs. Radha Unni were appointed at the 20th Annual General Meeting held on September
03, 2014 for a fixed tenure of five years from their date of appointment and Mr. K.M. Abraham and Mr.
Thomas Mathew were appointed as the Additional Independent Directors by the Board and subject to the
approval of the shareholders in the ensuing Annual General Meeting, for appointment as Independent
Directors to hold office for a term upto five consecutive years each from the date of ensuing Annual
General Meeting.

All the Independent Directors of the Company satisfy the criteria of independence as contained
in Companies Act, 2013 and SEBI (LODR) Regulations, 2015 and they are independent from the
management.

The terms and conditions of appointment of Independent Directors are available on the website of
the Company at: [Link] It sets out the criteria of
appointment, independence, committee memberships, tenure of appointment, roles and duties, sitting
fees and other related terms of appointment.

d. Meeting of Independent Directors and Familiarisation Programme

In compliance with the Code for Independent Directors as stipulated under Schedule IV of the Companies
Act, 2013 and Regulation 25 (3) of the SEBI (LODR) Regulations, 2015, the Independent Directors
of the Company met without the presence of the Non - Independent Directors and members of the
management, on March 28, 2019.

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ANNUAL REPORT 2018 - 19

Attendance details of the independent directors meeting held during the FY 2018 - 2019 is given below:

No. of
No. of
meetings
Name of Director Designation meetings
held during
attended
the tenure
Mr. A.P Kurian Independent Director 1 1
Mr. R.K. Nair Independent Director 1 1
Mrs. Radha Unni Independent Director 1 0
Mr. K.M. Abraham Additional Independent Director 1 0
Mr. Thomas Mathew 1
Additional Independent Director 0 0
1
Appointed as Additional Independent Director with effect from April 01, 2019 and Independent Director’s meeting
was held on March 28, 2019.

The meeting has inter-alia, reviewed and assessed:

a) the performance of Non-Independent Directors and the Board as a whole;
b) performance of the Chairman and Managing Director; and
c) the quality, quantity, timelines of flow of information from the management to the Board of
Directors and its Committees which is necessary for the Board to effectively and reasonably
perform their duties.

Pursuant to the Regulation 25 (7) of the SEBI (LODR) Regulations, 2015, the Company familiarises
its Independent Directors with their roles, rights, responsibilities, nature of the industry in which the
company operates, business models of the Company and other important matters relating to the business
of the Company at the time of appointment and on a continuous basis.

The details of such familiarisation programmes is available on the website of the Company at: https://
[Link]/admin/uploads/[Link].

e. Performance Evaluation of Board, its Committees and individual Directors

In compliance with the provisions of Section 178 (3) of the Companies Act, 2013, the Company has put
in place a Policy on Nomination and Remuneration which sets out inter-alia, the attributes and criteria
for the annual performance evaluation of the Board, its Committees and individual Directors including
the Chairman and Managing Director. The Board of Directors have carried out the annual evaluation
based on criteria and framework adopted by the Board and in accordance with existing regulations. The
Board, as a whole, carries out an assessment of its own performance, its Committees and Independent
Directors, excluding the Director being evaluated. All the Directors are subject to peer-evaluation.

Performance of the Board and its Committees was evaluated on various parameters such as structure and
composition, meetings and procedures, diversity, corporate governance competencies, performance of
specific duties and obligations, quality of decision-making and overall Board effectiveness.

Performance of individual Directors was evaluated on parameters such as meeting attendance,

participation and contribution, engagement and relationship with other members on the Board,

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 ANNUAL REPORT 2018 - 19

knowledge and experience, responsibility towards stakeholders, leadership and management qualities and
independent judgement.

The major performance indicators of the Non-Executive Directors and Independent Directors are as follows:
(i) Understanding and knowledge of the market in which the Company is operating.
(ii) Ability to appreciate the working of the Company and the challenges it faces.
(iii) Attendance of meeting.
(iv) Extend of participation and involvement in the meetings.
(v) Ability to convey his views and flexibility to work with others.

The evaluation process was initiated by putting in place, a set of structured questionnaires (evaluation
sheets) after taking into consideration the inputs received from the Directors, covering the abovementioned
parameters and indicators based on the criteria laid down by the Policy on Nomination and Remuneration.
The Nomination & Remuneration Committee reviewed the performance of the individual Directors based
on the duly filled evaluation forms submitted by the Directors.

All Directors participated in the evaluation survey and reviews were carried out. The outcomes of each
evaluation forms were collated by the Nomination & Remuneration Committee at the meeting held on
March 28, 2019 and placed before the Board at its meeting held on April 24, 2019. The results of evaluation
were also discussed in the Independent Director’s meeting held during the year.

The Board discussed the performance evaluation reports of the Board, its Committees, individual Directors,
Chairman and Managing Director and also noted the suggestions or inputs of Independent Directors and
Nomination & Remuneration Committee and the Chairman of the respective Committees.

The Board arrived at a conclusion that the performance of the Board, its Committees and individual
Directors were satisfactory. The Board also deliberated upon the various suggestions or inputs to augment
its effectiveness and optimize individual strengths of the Directors.

f. Information provided to the Board of Directors

The Company provides complete access to the Board to all the relevant information within the Company.
The adequate information is provided to the Board by circulating the detailed Board agenda with proper
explanatory notes at least seven days before the date of the Board and Committee Meetings, except for the
meetings called at a shorter notice, if any, in accordance with the provisions of the Companies Act, 2013
and the Secretarial Standard on Meetings of Board of Directors (SS-1) issued by the Institute of Company
Secretaries of India and approved by the Central Government. In special and exceptional circumstances,
additional or supplementary item(s) are presented to the Board or Committee as ‘any other item’. All the
agenda items are backed by necessary supporting information and documents to enable the Board to take
informed decisions.

All statutory and other matters of significant importance including information as mentioned in Section
179 of the Companies Act, 2013 and Regulation 17 read with Part A of Schedule II of the SEBI (LODR)
Regulations, 2015 are tabled before the Board to enable it to discharge its responsibility of strategic
supervision of the Company. The information shared with the Board specifically includes the following:

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ANNUAL REPORT 2018 - 19

n Annual operating plans, budgets and updates therein;

n Quarterly and annual financial results of the Company;
n Minutes of the meetings of the Board and its Committees and resolutions passed by circulation;
n Information on recruitment / remuneration of senior officers just below Board level;
n Materially important show cause, demand, prosecution notices and penalty notices, if any;
n Fatal or serious accidents, dangerous occurrences, material effluent or pollution problems, if any;
n Any material default in financial obligations to and by the Company or substantial non-payment for
services provided by the Company;
n Any issue which involves possible public or product liability claims of substantial nature, if any;
n Details of any acquisition, joint venture or collaboration agreement;
n Transactions involving substantial payment towards goodwill, brand equity or intellectual property;
n Significant labour problems and their solutions, if any;
n Sale of material nature, of investments, subsidiaries, assets, which is not in the normal course of
business;
n Quarterly details of foreign exchange exposures, if any;
n Non-compliance of any regulatory, statutory nature or listing requirements and shareholders service,
if any;
n Disclosures received from Directors;
n Status of Related party transactions;
n Update on Corporate Social Responsibility activities;
n Report on action taken on last Board meeting decisions;
n Regular business updates and other proposals requiring guidance and approval of the Board.

Apart from the above, the Management team apprises the Board at every Meeting on the overall performance
of the Company, as well as the current market conditions including the Company’s business and the
regulatory scenario.

The Board reviews periodical compliances of all applicable laws, rules and regulations and the statements
submitted by the Management. The members of the Board have full freedom to express their opinion in the
Board and decisions are taken after detailed deliberations.

g. Board Meetings

During the FY 2018 - 2019, the Board of Directors of the Company met seven times on April 17, 2018, May
18, 2018, June 14, 2018, July 17, 2018, October 18, 2018, January 18, 2019 and March 28, 2019. The time
gap between any two meetings was well within the maximum gap of 120 days.

Requisite information, according to the requirements of Regulation 34 read with Schedule V of the SEBI
(LODR) Regulations, 2015 is provided below:

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 ANNUAL REPORT 2018 - 19

No. of No. of other directorships and committee

Whether
Board memberships and chairmanships1
attended last
Meetings
Name of Director AGM held Committees
attended/
on June 14, Directorships
held during Chairman Member
2018
the tenure
Mr. Thomas John Muthoot 7/7 Yes 5 1 1
Mr. Thomas George Muthoot 7/7 Yes 6 1 1
Mr. Thomas Muthoot 7/7 Yes 5 0 2
Mr. A. P. Kurian 7/7 Yes 1 0 1
Mr. R. K Nair 2
6/7 No 2 2 0
Mrs. Radha Unni 5/7 Yes 5 1 2
Mr. K.M. Abraham3 0/1 NA 0 0 0
Mr. Thomas Mathew 4
0/0 NA 1 1 0
1
Directorship and Committee membership considered for the purpose are those prescribed under Regulation 26 of the SEBI
(LODR) Regulations, 2015 i.e., Audit Committee and Stakeholders Relationship Committee in other Public Limited
Companies. Committee chairmanship and memberships are given separately.
2
Resigned with effect from March 28, 2019
3
Appointed as Additional Independent Director with effect from January 18, 2019
4
Appointed as Additional Independent Director with effect from April 01, 2019

The names of the other listed entities in which the member of the Board of the Company is a director as on
March 31, 2019 and their category of directorship are given below:

Name of other listed Category of

Name of Director
entities Directorship
Mr. Thomas John Muthoot Nil NA
Mr. Thomas George Muthoot Nil NA
Mr. Thomas Muthoot Nil NA
Mr. A. P. Kurian Nil NA
Mr. R. K Nair 1
Nil NA
Nitta Gelatin Limited
Mrs. Radha Unni Independent Director
V-Guard Industries Limited
Mr. K.M. Abraham2 Nil NA
Mr. Thomas Mathew 3
Nil NA
1
Resigned with effect from March 28, 2019
2
Appointed as Additional Independent Director with effect from January 18, 2019
3
Appointed as Additional Independent Director with effect from April 01, 2019

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ANNUAL REPORT 2018 - 19

h. Remuneration of Directors

The Company confirms that the remuneration paid to the Directors is as per terms laid out in the Policy on
Nomination & Remuneration of the Company. The Independent Directors of the Company has no pecuniary
relationship with the Company, its promoters or Directors during the two immediately preceding financial
years. Further, the Company has not paid any remuneration to the Non - Executive, Non - Independent
Directors during the FY 2018 - 2019. The Independent Directors were paid sitting fee of ₹ 15 000/- per
Board Meeting till June 14, 2018 and has increased to ₹ 25 000/- at the Board meeting held on June 14,
2018.

The details of the remuneration paid to the Directors during FY 2018 - 2019 are given below:
(₹ in Lakhs)
Gross PF Sitting
Name of Director Perquisites Total
Salary Contribution Fees
Executive Directors
Mr. Thomas George Muthoot 174.00 6.00 10.44 -- 190.44
Non-Executive Directors
Mr. Thomas John Muthoot -- -- -- -- --
Mr. Thomas Muthoot -- -- -- -- --
Mr. A. P. Kurian -- -- -- 1.20 1.20
Mr. R. K Nair1 -- -- -- 1.05 1.05
Mrs. Radha Unni -- -- -- 1.05 1.05
Mr. K.M. Abraham 2
-- -- -- -- --
Mr. Thomas Mathew3 -- -- -- -- --
Total 174.00 6.00 10.44 3.30 193.74

1
Resigned with effect from March 28, 2019
2
Appointed as Additional Independent Director with effect from January 18, 2019
3
Appointed as Additional Independent Director with effect from April 01, 2019

i. Code of Conduct for Directors and Senior Management Personnel

In compliance with the Regulation 17 (5) of SEBI (LODR) Regulations, 2015, the Company has put in
place a Code of Conduct for Directors and Senior Management. This Code is intended to focus the Board
and Senior Management on areas of ethical risk, provide guidance to Directors and Senior Management to
help them recognize and deal with ethical issues, provide mechanisms to report unethical conduct and to
help foster a culture of honesty and accountability. Each Director and Senior Management Personnel must
comply with the letter and spirit of this Code. The Code provides that the Independent Directors of the
Company shall also adhere to the Code stipulated in Schedule IV of the Companies Act 2013.

Pursuant to the Regulation 26 (3) of SEBI (LODR) Regulations, 2015, all the members of the Board and
Senior Management Personnel shall affirm the compliance of this Code on an annual basis and a declaration
by the Managing Director confirming the adherence to this Code is enclosed herewith as Annexure 2.

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 ANNUAL REPORT 2018 - 19

The code of conduct for Directors and Senior Management Personnel is available on the website of the
Company at: [Link]

j. Code of Conduct to Regulate, Monitor and Report Trading by Designated Persons

The Company has put in place a Code of Conduct to Regulate, Monitor and Report Trading by Designated
Persons in compliance with the SEBI (Prohibition of Insider Trading) Regulations, 2015 as amended upto
date. This Code is formulated to regulate, monitor and report the trading in the Company’s shares by the
Designated Persons of the Company.

The above mentioned Code of Conduct is available on the website of the Company at: [Link]
com/admin/uploads/Code_of_Conduct_to_Regulate,Monitor_and_Report_Trading_by_Designated_Persons.pdf

3. COMMITTEES AND ITS TERMS OF REFERENCE

The Board has constituted various sub-committees with specific terms of reference and scope in compliance
with the provisions of the Companies Act, 2013, SEBI (LODR) Regulations, 2015 and RBI Directions. The
composition of the Board Committees are available on the Company’s website [Link]
admin/uploads/4.-[Link] and are also stated herein.

A. Audit Committee

The Audit Committee of the Board is constituted under Section 177 of the Companies Act, 2013 read with
Rule 6 & 7 of Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 18 of the SEBI
(LODR) Regulations, 2015.

(i) Composition and Attendance

As on March 31, 2019, the Audit Committee of the Board consisted of four Non - Executive Directors
out of which three are Non - Executive Independent Directors. All the Members of the Committee have
accounting and financial management expertise. The Company Secretary of the Company acts as the
Secretary to the Committee.

The Audit Committee has met five times during the FY 2018 - 2019 on April 17, 2018, May 18, 2018, July
17, 2018, October 18, 2018 and January 18, 2019. All the recommendations made by the Audit Committee
were accepted by the Board unanimously.

The composition and attendance of the Members at the Audit Committee meetings held during the FY 2018
- 2019 are as follows:

Number of Meetings attended/

Name of the Member Position
held during the tenure
Mr. A.P Kurian Chairman 5/5
Mr. Thomas Muthoot Member 5/5
Mr. R.K. Nair1 Member 5/5
Mrs. Radha Unni Member 4/5
Mr. Thomas Mathew2 Member 0/0
1
Resigned with effect from March 28, 2019
2
Appointed as Additional Independent Director with effect from April 01, 2019

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ANNUAL REPORT 2018 - 19

Due to the resignation of Mr. R.K. Nair, member of the Audit Committee, the Board reconstituted the Audit
Committee at the meeting held on March 28, 2019 and inducted Mr. Thomas Mathew as the member of the
Committee.

(ii) Terms of reference

The terms of reference of Audit Committee of the Board in compliance with Section 177 (4) of the Companies
Act, 2013 and Regulation 18 (3) read with Part C of Schedule II of the SEBI (LODR) Regulations, 2015,
are given below:
a) Oversight of the Company’s financial reporting process and the disclosure of its financial information
to ensure that the financial statement is correct, sufficient and credible;
b) Recommendation for appointment, remuneration and terms of appointment of auditors of the
Company;
c) Approval of payment to statutory auditors for any other services rendered by the statutory auditors;
d) Reviewing, with the management, the annual financial statements and auditor’s report thereon before
submission to the Board for approval with particular reference to:
(i) Matters required to be included in Directors Responsibility Statement to be included in Board’s
Report in terms of Section 134 (3) (c) of the Companies Act, 2013;
(ii) Changes, if any, in accounting policies and practices and reasons for the same;
(iii) Major accounting entries involving estimates based on the exercise of judgement by the
management;
(iv) Significant adjustments made in the financial statements arising out of audit findings;
(v) Compliance with listing and other legal requirements relating to financial statements;
(vi) Disclosure of any related party transactions; and
(vii) Modified opinion(s) in the draft audit report.
e) Reviewing, with the management, the quarterly financial statements before submission to the Board
for approval;
f) Reviewing, with the management, the statement of uses/application of funds raised through an issue
(public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other
than those stated in the offer document/prospectus/ notice and the report submitted by the monitoring
agency monitoring the utilization of proceeds of a public or rights issue, and making appropriate
recommendations to the Board to take up steps in this matter;
g) Reviewing and monitoring the auditor’s independence and performance, and effectiveness of audit
process;
h) Approval or any subsequent modification of transactions of the Company with related parties;
i) Scrutiny of inter corporate loans and investments;
j) Valuation of undertakings or assets of the Company, wherever it is necessary;
k) Evaluation of internal financial controls and risk management systems;
l) Reviewing, with the management, performance of statutory and internal auditors, and adequacy of the
internal control systems;

68
 ANNUAL REPORT 2018 - 19

m) Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit
department, staffing and seniority of the official heading the department, reporting structure coverage
and frequency of internal audit;
n) Discussion with internal auditors of any significant findings and follow up there on;
o) Reviewing the findings of any internal investigations by the internal auditors into matters where
there is suspected fraud or irregularity or a failure of internal control systems of a material nature and
reporting the matter to the Board;
p) Discussion with statutory auditors before the audit commences, about the nature and scope of audit as
well as post audit discussion to ascertain any area of concern;
q) To look into the reasons for substantial defaults in the payment to the depositors, debenture holders,
shareholders (in case of non - payment of declared dividends) and creditors;
r) To review the functioning of the Whistle Blower mechanism;
s) Approval of appointment of Chief Finance Officer after assessing the qualifications, experience and
background, etc. of the candidate;
t) Carrying out any other function as is mentioned in the terms of reference of the Audit Committee; and
u) reviewing the utilization of loans and/ or advances from/investment by the holding company in the
subsidiary exceeding rupees 100 crore or 10% of the asset size of the subsidiary, whichever is lower
including existing loans / advances / investments.

B. Nomination & Remuneration Committee

The Nomination & Remuneration Committee (NRC) is set up by the Board in compliance with the Section
178 (1) of the Companies Act, 2013 and Regulation 19 of the SEBI (LODR) Regulations, 2015. The
Committee is entrusted with combined advisory responsibilities concerning the nomination for appointment
or removal of Directors and Senior Management including Key Managerial Personal and recommendation
of remuneration policy. The Company Secretary of the Company acts as the Secretary to the Committee.

(i) Composition and attendance

As on March 31, 2019, the NRC of the Company comprise of three Non - Executive Independent Directors.
The Committee met four times during the FY 2018 - 2019 on April 17, 2018, May 18, 2018, January 18,
2019 and March 28, 2019.
The composition and attendance of the Members at the NRC meetings held during the FY 2018 - 2019 are
as follows:

Number of Meetings attended/

Name of the Member Position
held during the tenure
Mr. A.P Kurian Chairman 4/4
Mr. R.K. Nair 1
Member 4/4
Mrs. Radha Unni Member 2/4
Mr. Thomas Mathew2 Member 0/0

1
Resigned with effect from March 28, 2019
2
Appointed as Additional Independent Director with effect from April 01, 2019

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ANNUAL REPORT 2018 - 19

Due to the resignation of Mr. R.K. Nair, member of NRC, the Board reconstituted the NRC at the meeting
held on March 28, 2019 and inducted Mr. Thomas Mathew as the member of the Committee.

(ii) Terms of reference

The terms of reference of the Nomination & Remuneration Committee in line with Section 178 of the
Companies Act, 2013 and Regulation 19 read with Para A of Part D of Schedule II of the SEBI (LODR)
Regulations, 2015, are as under:
a) Formulation of the criteria for determining qualifications, positive attributes and independence of
a director and recommend to the Board of Directors a policy, relating to the remuneration of the
Directors, Key Managerial Personnel and other employees;
b) Formulation of criteria for evaluation of performance of Independent Directors and the Board of
Directors;
c) Devising a policy on diversity of Board of Directors;
d) Identifying persons who are qualified to become Directors and who may be appointed in Senior
Management in accordance with the criteria laid down, and recommend to the Board of Directors for
their appointment and removal;
e) Whether to extend or continue the term of appointment of the Independent Director, on the basis of
the report of performance evaluation of Independent Directors; and
f) recommend to the board, all remuneration, in whatever form, payable to senior management.

C. Stakeholders Relationship Committee

In compliance with the provisions of Section 178 (5) of the Companies Act, 2013 and Regulation 20 of
the SEBI (LODR) Regulations, 2015, the Board has constituted a Stakeholders Relationship Committee to
redress the grievances of shareholders, debenture holders and other stakeholders. The Company Secretary
of the Company acts as the Secretary to the Committee.

(i) Composition and attendance

As on March 31, 2019, the Stakeholders Relationship Committee of the Company consists of three Directors.
The Committee has met four times during the FY 2018 - 2019 on April 17, 2018, July 17, 2018, October
18, 2018 and January 18, 2019.

The composition and attendance of the Members at the SRC meetings held during the FY 2018 - 2019 are
as follows:

Number of Meetings attended/

Name of the Member Position
held during the tenure
Mr. Thomas Muthoot Chairman 4/4
Mr. Thomas John Muthoot Member 4/4
Mr. Thomas George Muthoot Member 4/4
Mr. K.M. Abraham1 Member 0/0
1
Appointed as Additional Independent Director with effect from January 18, 2019

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 ANNUAL REPORT 2018 - 19

Based on the provisions of SEBI (LODR) (Amendment) Regulations, 2018, the Board reconstituted the
SRC and inducted Mr. K.M. Abraham as the member of the Committee.

(ii) Terms of reference

The terms of reference of Stakeholders Relationship Committee in accordance with Section 178 (6) of the
Companies Act, 2013, and Regulation 20 read with Para B of Part D of Schedule II of the SEBI (LODR)
Regulations, 2015 include the following:
a) Resolving the grievances of the security holders of the listed entity including complaints related to
transfer/transmission of shares, non-receipt of annual report, non-receipt of declared dividends, issue
of new/duplicate certificates, general meetings etc.;
b) Review of measures taken for effective exercise of voting rights by shareholders;
c) Review of adherence to the service standards adopted by the listed entity in respect of various services
being rendered by the Registrar & Share Transfer Agent; and
d) Review of the various measures and initiatives taken by the listed entity for reducing the quantum
of unclaimed dividends and ensuring timely receipt of dividend warrants/annual reports/statutory
notices by the shareholders of the Company.

The Company has in place an Investor Grievance Redressal Policy for the redressal of investor grievances/
complaints on a timely manner. The Company maintains a designated email id investorgrievance@
[Link] and its corporate email id mail@[Link] for handling investor grievances on
which investors can lodge their complaints.

The Compliance Officer of the Company reviews the investor complaints on regularly basis to find out
whether complaint has been resolved within the time specified in the Investor Grievance Redressal Policy
of the Company.

Pursuant to Regulation 13 (3) of SEBI (LODR) Regulations, 2015, the status of investor complaints received
and redressed during FY 2018 - 2019 are as follows:

Sl. No. of
Particulars
No. Complaints
Number of Investor complaints pending at the beginning of the year
1. Nil
(i.e. 01.04.2018)
Number of Investor complaints received during the year
2. Nil
(i.e. 01.04.2018 - 31.03.2019)
Number of Investor complaints redressed during year
3. Nil
(i.e. 01.04.2018 - 31.03.2019)
Number of Investor complaints remaining unresolved at the end of the year
4. Nil
(i.e. 31.03.2019)

D. Corporate Social Responsibility Committee

In compliance with the requirements of Section 135 of the Companies Act, 2013, the Board of Directors
of the Company had constituted a Corporate Social Responsibility (CSR) Committee to promote a culture
that emphasizes and sets high standards for social responsibility of the Company and reviews corporate
performance against those standards.

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ANNUAL REPORT 2018 - 19

(i) Composition and attendance

As on March 31, 2019, the CSR Committee of the Company, consists of four Non - Executive Directors,
out of which three are Independent Directors. The Company Secretary of the Company acts as the Secretary
to the Committee.

The CSR Committee of the Company has formulated and recommended to the Board, a Corporate Social
Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company in accordance
with Schedule VII to the Companies Act, 2013, which has been approved by the Board.

The CSR Policy of the Company, as approved and adopted by the Board, is available on the website of the
Company at [Link]

The CSR Committee met five times during the FY 2018 - 2019 on April 17, 2018, June 14, 2018, July 17,
2018, October 18, 2018 and January 18, 2019.

The composition and attendance of the Members at the CSR Committee meetings held during the FY 2018
- 2019 are as follows:

Number of Meetings attended/

Name of the Member Position
held during the tenure
Mr. Thomas Muthoot Chairman 5/5
Mr. R.K Nair 1
Member 4/5
Mrs. Radha Unni Member 5/5
Mr. K.M. Abraham 2
Member 0/0
Mr. Thomas Mathew 3
Member 0/0

1
Resigned with effect from March 28, 2019
2
Appointed as Additional Independent Director with effect from January 18, 2019
3
Appointed as Additional Independent Director with effect from April 01, 2019

Due to the resignation of Mr. R.K. Nair, member of the CSR Committee, the Board reconstituted the CSR
Committee at the meeting held on March 28, 2019 and inducted Mr. K.M. Abraham and Mr. Thomas
Mathew as the members of the Committee.

(ii) Terms of reference

The terms of reference of the CSR Committee is in accordance with Section 135 (3) of the Companies Act,
2013 and are given below:
a) Formulate and recommend to the Board, a CSR Policy which shall indicate the activities to be
undertaken by the Company as specified in Schedule VII of the Companies Act, 2013;
b) Recommend to the Board the amount of expenditure to be incurred on the CSR activities referred to
in (a) above; and
c) Monitor the CSR policy of the Company from time to time.

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 ANNUAL REPORT 2018 - 19

E. Risk Management Committee

Pursuant to Regulation 21 of SEBI (LODR) Regulations, 2015, the top 500 listed companies on the basis
of market capitalisation shall constitute a Risk Management Committee. Even though the Company is not
covered under the list of top 500 listed companies based on the market capitalisation, the Board of Directors
of the Company has constituted a Risk Management Committee in compliance with the provisions of
NBFCs - Corporate Governance (Reserve Bank) Directions. The Committee is mandated to manage the
integrated risk. The Company Secretary of the Company acts as the Secretary to the Committee.

(i) Composition and attendance

As on March 31, 2019, the Risk Management Committee of the Company comprise of three Directors of
which two are Independent Director. The Board also designated Mr. Madhu Alexiouse, Chief Operating
Officer, Mr. Vinodkumar M. Panicker, Chief Finance Officer and Mr. Sandeep Vellarikkat, Head - Credit &
Risk, Product as the permanent invitees to the Committee.

The Committee met twice during the FY 2018 - 2019 on October 18, 2018 and January 18, 2019.

The composition of the Committee and attendance of the Members at the Risk Management Committee
meetings held during the FY 2018 - 2019 are as follows:

Number of Meetings attended/

Name of the Member Position
held during the tenure
Mr. Thomas George Muthoot Chairman 2/2
Mr. Thomas Muthoot Member 2/2
Mr. R.K. Nair1 Member 2/2
Mr. K.M. Abraham 2
Member 0/0
Mr. Thomas Mathew 3
Member 0/0
1
Resigned with effect from March 28, 2019
2
Appointed as Additional Independent Director with effect from January 18, 2019
3
Appointed as Additional Independent Director with effect from April 01, 2019

Due to the resignation of Mr. R.K. Nair, member of the Risk Management Committee, the Board reconstituted
the Risk Management Committee at the meeting held on March 28, 2019 and inducted Mr. K.M. Abraham
and Mr. Thomas Mathew as the members of the Committee.

(ii) Terms of reference

The terms of reference of the Committee shall be as follows:

a) Oversee the development, implementation and maintenance of the Company’s overall risk management
framework and its appetite, strategy, principles and policies, to ensure they are in line with emerging
regulatory, corporate governance and industry best practice;
b) Oversee the Company’s risk exposures, risk/return and proposed improvements to the Group`s risk
management framework and its risk appetite, strategy, principles, policies and standards;

73
ANNUAL REPORT 2018 - 19

c) Provide formal sign - off for the board risk report and other risk related sections within the annual
reports & accounts;
d) Facilitate effective contribution and involvement of non - executives and aid their understanding of
risk issues and the Company’s risk management framework;
e) Provide input to the Remuneration Committee on the alignment of remuneration to risk performance;
f) Monitoring the cyber security of the Company and take appropriate actions/approach to combat cyber
threats given the level of complexity of business and acceptable levels of risk;
g) Review new risk principles and policy and material amendments to risk principles and policy
recommended by the Chief Executive and Chief Risk Officer (‘CRO’), for approval by the Board;
h) Oversee adherence to Company’s risk principles, policies and standards and any action taken resulting
from material policy breaches, based upon reports from the Chief Executive and the CRO;
i) i) Review the appointment, resignation or dismissal of the CRO and make appropriate recommendation
to the Board;
ii) Review and discuss with the CRO the scope of work of the Company’s Risk Division, its plans,
the issues identified as a result of its work, how management is addressing these issues and the
effectiveness of systems of risk management;
iii) Review the adequacy of the Company’s Risk Division’s resources, and its authority and standing
within the Company;
iv) Review co-ordination between the Company’s Risk Division and the external auditors;
v) Periodically review and update its own terms of reference to reflect best practice, requesting Board
approval for all proposed changes and, at appropriate intervals, evaluate its own performance
against the terms of reference;
j) Review periodically the report of Asset Liability Management Committee (ALCO) and to suggest on
improvements, actions to be taken.

F. Asset Liability Management Committee

The Asset Liability Management Committee (ALCO) of the Company is constituted to monitor the asset
liability gap and strategize action to mitigate the risk associated. The Committee is entrusted with the task
of reviewing the asset liability mismatches and to report to the Board with respect thereto.

(i) Composition and Attendance

As on March 31, 2019, the Asset Liability Management Committee (ALCO) consists of five members from
the management team.

The Committee met twice during the FY 2018 - 2019 on December 10, 2018 and January 17, 2019.

The composition and attendance of the Members at the ALCO meetings held during the FY 2018 - 2019
are as follows:

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 ANNUAL REPORT 2018 - 19

Number of Meetings attended/

Name of the Member Position
held during the tenure
Mr. Madhu Alexiouse Chairman 2/2
Mr. Balakrishnan R. Member 2/2
Mr. Vinodkumar M. Panicker Member 2/2
Mr. Vijayan T. Member 2/2
Ms. Priya A Menon Member 2/2

(ii) Terms of reference

The terms of reference of the Committee shall be as follows:

a) Monitor and review the asset liability matches and mismatches (budgeted vs. actual) and make such
reports and recommendations to the Board with respect thereto as the Committee may deem advisable;
b) Review the periodical returns submitted to RBI every year;
c) Review the credit facilities sanctioned considering the overall risks faced by the Company, and to
suggest the actions to be taken;
d) Monitor and review the cost of funds and the net interest margin;
e) Carry out any other functions as is mandated by the Board from time to time and/or enforced by any
statutory notification, amendment or modification as may be applicable;
f) Other transactions or issues that the Board may desire to have them reviewed by the ALCO; and
g) Regularly review and make recommendations about changes to the Charter of the Committee.

The Company Secretary of the Company acts as the Secretary to the Committee.

4. WHISTLE BLOWER POLICY / VIGIL MECHANISM FOR DIRECTORS AND

EMPLOYEES

The Company has formulated a comprehensive Whistle Blower Policy in line with the provisions of Section
177 (9) & 177 (10) of the Companies Act, 2013 and Regulation 4 (2) (d) (iv) & 34 (3) read with Para 10
of Part C of Schedule V of the SEBI (LODR) Regulations, 2015 with a view to enabling stakeholders,
including directors, individual employees and their representative bodies to freely communicate their
concerns about illegal or unethical practices and to report genuine concerns to the Audit Committee of
the Company. It outlines the method and process for various stakeholders to voice genuine concerns about
unethical conduct that may be in breach with the employees’ Code of Conduct.

The mechanism provides for adequate safeguards against victimization of Director(s) or employee(s) who
avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in
exceptional cases.

The said Policy is available on the website of the Company at [Link]

[Link].

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ANNUAL REPORT 2018 - 19

5. GENERAL MEETINGS
a) Details of General Meetings

The details of General Meetings held during the last three years are as follows:

FY ended Date Time Venue

March 31, 2018 June 14, 2018 10.30 a.m. The International Hotel, Kochi
March 31, 2017 June 06, 2017 10.30 a.m. The International Hotel, Kochi
March 31, 2016 June 06, 2016 10.00 a.m. The International Hotel, Kochi

b) Special Resolutions passed at the last three AGMs

Sl.
Date of AGM Special Resolution
No.
(i) Enhancement of borrowing powers of the Company from ₹ 2000
crores to ₹ 5000 crores.
(ii) Issue of Non - Convertible Debentures (NCDs) on Private
1 June 14, 2018 Placement basis upto an amount of ₹ 200.00 crores.
(iii) Approval of MCSL Employee Stock Option Scheme 2018 under
various schemes such as Scheme - I, Scheme - II, Scheme - III
and Scheme - IV.
(i) Alteration of Articles of Association of the Company for increase
in Authorised Share Capital.
2 June 06, 2017
(ii) Issue of Non-Convertible Debentures on Private Placement basis
upto an amount of ₹ 200.00 crores.
(i) Approval of re-appointment of Mr. Thomas George Muthoot (DIN:
3 June 06, 2016
00011552) as Managing Director and fixation of remuneration.

c) Postal Ballot

The Company passed the following Special Resolutions through Postal Ballot/E-Voting on December
02, 2018:
a) Related party transactions with Muthoot Fincorp Limited;
b) Continuation of directorship of Mr. A.P. Kurian, Non-Executive Independent Director who has
attained the age above 75 years; and
c) Continuation of directorship of Mr. R.K. Nair, Non-Executive Independent Director who has
attained the age above 75 years.

Person who conducted the Postal Ballot Exercise: Mr. Thomas John Muthoot, Chairman, Mr. Thomas
George Muthoot, Managing Director and Mr. Ravi Oruganti, Company Secretary & Compliance Officer
were authorised by the Board as persons responsible for the entire Postal Ballot/E-Voting process. CS
Nikhil George Pinto (C.P No. 16059), Partner, M/s. CaesarPintoJohn & Associates LLP, Company
Secretaries, Kochi was appointed as the Scrutinizer for conducting the Postal Ballot / E-Voting process
in a fair and transparent manner. He conducted the process and submitted the report to the Company.

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 ANNUAL REPORT 2018 - 19

Procedure Followed for Postal Ballot:

a) The Company, on Friday, November 02, 2018, dispatched the Postal Ballot Notice dated Thursday,
October 18, 2018 containing draft resolutions together with the explanatory statements, the postal
ballot forms and self-addressed envelopes to the members whose names appeared in the Register of
Members / List of Beneficiary Owners as on cut-off date i.e. Friday, October 26, 2018. The Company
also published a notice in the newspaper informing the details of completion of dispatch on Saturday,
November 03, 2018 and other requirements as mandated under the Act and applicable rules.
b) In compliance with the Regulation 44 of the SEBI (LODR) Regulations, 2015 and Section 108, 110
and other applicable provisions of the Companies Act, 2013, read with the Rules 20 and 22 of the
Companies (Management and Administration) Rules, 2014, the Company provided electronic voting
facility to all its members as an alternate mode to enable them to cast their votes electronically. The
Company engaged the services of Central Depository Services (India) Limited (CDSL) for facilitating
remote e-voting facility. The members had the option to vote either by Physical Ballot or E-Voting.
c) Members desiring to exercise their votes by physical postal ballot forms were requested to return the
forms duly completed and signed, to the Scrutinizer on or before 05:00 p.m. on Sunday, December 02,
2018. The members who opted for the e-voting could vote from 09:00 a.m. on Saturday, November
03, 2018 to 05:00 p.m. on Sunday, December 02, 2018.
d) The Scrutinizer submitted his report on Thursday, December 06, 2018, after the completion of
scrutiny.
e) The results of the postal ballot were announced on Friday, December 07, 2018. The last date specified
for receipt of duly completed Postal Ballot Forms and closure of e-voting i.e. December 02, 2018, was
taken as the date of passing of the resolution.
f) The results of the Postal Ballot along with the Scrutinizer’s Report were displayed at the Registered
Office of the Company and hosted at the Company’s website at [Link] and on the
website of CDSL E-Voting i.e. [Link] and were communicated to the Stock Exchanges
where the Company’s shares are listed.

Details of the voting pattern:

Votes cast in Votes cast

No. of
Details of Agenda favor of the against the
valid votes
resolution resolution
Related party transactions with Muthoot Fincorp 23 40 038 0
23 40 038
Limited (100%) (0%)
Continuation of directorship of Mr. A.P. Kurian,
1 20 86 172 5 32 177
Non-Executive Independent Director who has 1 26 18 349
(95.783%) (4.217%)
attained the age above 75 years
Continuation of directorship of Mr. R.K. Nair,
1 20 85 952 5 32 177
Non-Executive Independent Director who has 1 26 18 129
(95.782%) (4.218%)
attained the age above 75 years

There is no immediate proposal for passing any special resolution through Postal Ballot on or before ensuing
Annual General Meeting.

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ANNUAL REPORT 2018 - 19

6. MEANS OF COMMUNICATION
a) Quarterly unaudited and annual audited financial results of the Company were published in “Business
Standard” (English Language National Daily) and “Mangalam” (Vernacular Language).
b) The results were made available on the website of BSE Limited and National Stock Exchange of India
Limited and also on the Company’s website at [Link]
c) The Company issues press releases after quarterly and annual financial results were announced.

7. CEO/CFO CERTIFICATION

The certificate required under Regulation 17 (8) of the SEBI (LODR) Regulations, 2015, duly signed by Mr.
Thomas George Muthoot, Managing Director and Mr. Vinodkumar M. Panicker, Chief Finance Officer was
reviewed by the Board. The said certificate is enclosed herewith as Annexure 3.

8. COMPLIANCE WITH THE MANDATORY REQUIREMENTS OF THE LISTING

REGULATIONS

A comprehensive report on the status of compliance with all the applicable corporate laws, rules and
regulations by the Company is placed before the Board on a quarterly basis for their information and review.
The Company has complied with all the mandatory requirements of the Code of Corporate Governance as
specified in Regulations 17 to 27 and clauses (b) to (i) of sub regulation (2) of Regulation 46 of the SEBI
(LODR) Regulations, 2015.

9. DISCLOSURES
a) There were no materially significant Related Party Transactions having potential conflict with the
interests of the Company at large. The policy on dealing with the related party transactions are
available on the website of the Company at [Link]
pdf.
b) There have been no instances of non-compliances by the Company and no penalties and / or strictures
have been imposed by Stock Exchanges or SEBI or any statutory authority on any matter related to
capital markets during the last three years.
c) Disclosure under Regulation 32 (7A): The Company has utilized the entire funds raised through
Qualified Institutions Placement for on-lending for the various schemes provided by the Company.
d) The certificate from a Company Secretary in Practice that none of the Directors on the Board of
the Company have been debarred or disqualified from being appointed or continuing as Directors
of Companies by SEBI/Ministry of Corporate Affairs or any such statutory authority is enclosed
herewith as Annexure 4.
e) The Board had accepted all the recommendations made by all its Committees, which are mandatorily
required to be constituted, during the FY 2018 - 2019.
f) Disclosure under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013:
The Company has been employing 462 women employees in various cadres as on March 31, 2019.
The Company has in place a Policy on Prevention, Prohibition and Redressal of Sexual Harassment
of Women at Workplace and an Internal Complaint Committee in line with the requirements of the
Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and

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Rules made thereunder for reporting and conducting inquiry into the complaints made by the
victim on the harassments at the work place. The functioning of the Committees were carried out
as per letter and spirit contained in the provisions of the Act.
During the FY 2018 - 2019, the Company has not received any complaint of sexual harassment and
hence, there were no complaints pending for redressal as on March 31, 2019. The Company had
conducted 5 workshops/awareness programs regarding women empowerment during the period
under review.
g) The details of total fees paid to M/s. Varma & Varma, Chartered Accountants, Statutory Auditors
during the FY 2018 - 2019 for all services rendered by them is given below:

Particulars Amount (₹ in lakhs)

Audit fees (including for Limited Review) 13.63
Taxation matters 2.18
Other services 0.40
Reimbursement of expenses 1.74
Total 17.95

h) The Company has followed the Accounting Standards laid down by the Companies (Accounting
Standards) Rules, 2006 (as amended) in preparation of the financial statements.

10. REDRESSAL OF INVESTOR GRIEVANCES THROUGH SEBI COMPLAINTS

REDRESSAL SYSTEM (SCORES)

SCORES (SEBI Complaints and Redress System) is a centralized web-based grievance redressal system
launched by SEBI ([Link] SCORES provide a platform for aggrieved investors, whose
grievances, pertaining to securities market, remain unresolved by the concerned listed company or registered
intermediary after a direct approach. All the activities starting from lodging of a complaint till its closure
by SEBI would be handled in an automated environment and the complainant can view the status of his
complaint online.

An investor, who is not familiar with SCORES or does not have access to SCORES, can lodge complaints
in physical form at any of the offices of SEBI. Such complaints would be scanned and also uploaded in
SCORES for processing.

11. UNCLAIMED DIVIDENDS

During the FY 2018 - 2019, the Company had transferred an amount of ₹ 3 92 625/- to Investor Education
and Protection Fund (IEPF) Authority, being unclaimed and unpaid dividend for the financial year 2010 -
2011. Since the amount has been transferred to IEPF Authority, no claim for unclaimed and unpaid dividends
for the FY 2010 - 2011 shall lie against the Company.

Further, in compliance with the provisions of Companies Act, 2013 and Rules made thereunder, the Company
had transferred the shares pertaining to the shareholders whose dividends were remained unclaimed and
unpaid for a period of seven consecutive years to the IEPF Authority. As per the provisions of IEPF Authority
(Accounting, Audit, Transfer and Refund) Rules, 2016 (as amended), the shareholder may lodge the claim

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to the IEPF Authority for such dividends and shares by submitting an online application in Form IEPF-5
available on the website [Link].

The shareholders who have not yet encashed their dividend warrants relating to the FY 2011 - 2012
and subsequent years are requested to contact the Company/Registrar and Share Transfer Agents to
revalidate the same.

12. CREDIT RATING

The Credit Rating enjoyed by the Company as on March 31, 2019, is as given below:

Credit Rating Rating as on March Migration during the

Instrument
Agency 31, 2019 FY 2018 - 2019
Upgraded from
CRISIL Bank Facilities CRISIL A/ Stable
CRISIL A-/Stable
Upgraded from FA-/
CRISIL Public Deposits FA+/Stable
Stable
CRISIL Commercial Paper CRISIL A1 No change
Non-Convertible Upgraded from
CRISIL CRISIL A/ Stable
Debentures CRISIL A-/Stable

13. COMPLIANCE CERTIFICATE ON CORPORATE GOVERNANCE

Compliance certificate on Corporate Governance provided by the Independent Auditors of the Company
confirming the compliance with the conditions of Corporate Governance as stipulated in SEBI (LODR)
Regulations, 2015, is enclosed herewith as Annexure 5.

14. GENERAL SHAREHOLDER INFORMATION

a) 25th Annual General Meeting:

Date Time Venue

June 17, 2019 10.30 a.m. The International Hotel, Kochi

b) Financial Year: April 01, 2018 to March 31, 2019

c) Dividend Details: Nil
d) Listing Details:

Status of Listing Fee

Name and address of the Stock Exchange Scrip Code
for the FY 2019 - 2020
BSE Limited
Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai 511766 Paid
- 400 001
National Stock Exchange of India Limited
Exchange Plaza, C-1, Block G, Bandra Kurla MUTHOOTCAP Paid
Complex, Bandra (E), Mumbai - 400 051

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e) Stock Market Data from April 01, 2018 to March 31, 2019:

BSE NSE
Month Volume Volume
High Low High Low
(Nos.) (Nos.)
April 2018 1012.00 751.10 1 70 912 1008.00 746.00 8 54 165
May 2018 990.00 880.30 21 506 990.00 880.00 2 09 664
June 2018 1124.00 845.00 1 19 457 1129.00 843.60 7 56 312
July 2018 1300.00 934.00 1 21 780 1300.00 941.25 7 60 450
August 2018 1294.00 880.00 1 01 687 1278.00 876.20 9 49 083
September 2018 1045.00 788.85 59 226 1045.00 789.85 4 84 487
October 2018 908.00 700.10 50 900 884.95 719.20 6 33 551
November 2018 870.00 786.15 13 141 860.00 789.40 1 63 716
December 2018 1014.55 780.40 1 05 448 1011.95 783.50 5 31 080
January 2019 1049.40 850.05 12 762 1048.10 850.00 3 52 450
February 2019 930.25 748.65 28 654 954.00 745.10 3 60 942
March 2019 945.00 794.00 13 789 940.00 796.10 2 85 536

MCSL Share Prices vs. BSE Sensex

BSE Sensex High MCSL High

40000 1500

35000 1200

30000 900

25000 600

20000 300
May ’18

Aug ’18

Nov ’18

Mar ’19
Dec ’18
Apr ’18

Sep ’18

Feb ’19
Oct ’18
Jun ’18

Jan ’19
Jul ’18

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ANNUAL REPORT 2018 - 19

MCSL Share Prices vs. NSE Nifty

NSE Nifty High MCSL High

12000 1500

10000 1200

8000 900

6000 600

4000 300
May ’18

Aug ’18

Nov ’18

Mar ’19
Dec ’18
Apr ’18

Sep ’18

Feb ’19
Oct ’18
Jun ’18

Jan ’19
Jul ’18

f) Registration Details:

The Company is registered within the state of Kerala. The Company being a Non-Banking Financial
Company, is also registered with Reserve Bank of India (Certificate of Registration Number: 16.0024). In
1998, the Company obtained Deposit Taking NBFC license from RBI. Corporate Identity Number (CIN) of
the Company is L67120KL1994PLC007726.

g) Share Transfer System:

The shareholders are free to hold the Company’s shares either in physical form or in dematerialized form.
However, with effect from April 01, 2019, the shareholders are not allowed to transfer any shares in the
physical form and hence, the dematerialisation of the shares is mandatory for transfer of shares. Thus, the
Company encourages the holding of shares in dematerialized form. The shares held in dematerialized form
can be transferred through the depositories without the Company’s involvement.

Transfer of shares in physical form is processed within 15 days from the date of receipt, provided the
documents are complete in all respects. All such transfers are processed by the Registrar and Share Transfer
Agents of the Company and thereafter submitted to the Company.

Pursuant to Regulation 40 (9) of the SEBI (LODR) Regulations, 2015, the Company obtain certificates
from a Company Secretary in Practice on a half-yearly basis to the effect that all the transfers are completed
within the statutory stipulated period. A copy of the said certificate is submitted to both the Stock Exchanges,
where the shares of the Company are listed.

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 ANNUAL REPORT 2018 - 19

h) Distribution of Shareholding as on March 31, 2019

Sl. No. of
Category % Holders No. of Shares % Shares
No. Holders
1 Upto 500 13579 94.67 12 57 505 7.65
2 501 - 1000 396 2.76 2 78 413 1.69
3 1001 - 2000 179 1.25 2 44 150 1.48
4 2001 - 3000 47 0.33 1 12 646 0.68
5 3001 - 4000 33 0.23 1 13 735 0.69
6 4001 - 5000 16 0.11 72 519 0.44
7 5001 - 10000 36 0.25 2 48 125 1.51
8 10001 and above 58 0.40 1 41 20 440 85.85
Total 14344 100.00 1 64 47 533 100.00

i) Dematerialisation of Shares and Liquidity:

The Company has arrangements with both National Securities Depositories Limited (NSDL) and Central
Depository Services (India) Limited (CDSL) to establish electronic connectivity of our shares for scrip-
less trading. The shareholders can hold the Company’s shares with any of the depository participants,
registered with these depositories. The ISIN for the shares of the Company is INE296G01013.

As on March 31, 2019, 97.87% of shares of the Company were held in dematerialized form. The
Company’s equity shares are frequently traded at the BSE Limited and the National Stock Exchange of
India Limited.

SHAREHOLDING STATUS

2.13%

NSDL
38.24% CDSL
Physical

59.63%

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ANNUAL REPORT 2018 - 19

PERCENTAGE OF SHAREHOLDING

5.98%
11.46%

Promoters
1.11% Bodies Coporate/LLP
Public
Banks/FI
17.63% Mutual Funds
Others
62.49%

1.33%

MARKET CAPITALIZATION

2019

2018

2017

2016

2015

0 50000 100000 150000

₹ in Lakhs

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 ANNUAL REPORT 2018 - 19

j) Outstanding GDRs / ADRs / Warrants or any Convertible instruments, conversion date and
likely impact on equity:

The Company does not have any outstanding GDRs / ADRs / Warrants or any convertible instruments as
on date.

k) Disclosure of commodity price risks and commodity hedging activities:

The Company follows prudent Board approved Risk Management Policy for minimizing threats or losses
and identifying and maximizing opportunities and thereby to ensure sustainable business growth with
stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with
the business. A detailed note on the risks and concerns is given the Management Discussion and Analysis
forming part of this Annual Report.

l) Plant Locations:

Being a financial service company, Muthoot Capital Services Limited has no plant locations.

m) Address for correspondence:

For any assistance regarding transfer and transmission of shares, change of registered address, non - receipt
of any declared dividend or balance sheet, issue of duplicate share certificate or any other query relating to
shares, the investors shall contact:

a) Integrated Registry Management Services Private Ltd.,

Registrar and Share Transfer Agents
2nd Floor, “Kences Towers”, No.1, Ramakrishna Street,
North Usman Road, T. Nagar, Chennai - 600 017
Ph: 044 - 28140801 - 803
Fax: 044 - 28142479
Email: corpserv@[Link]

b) Compliance Officer
Muthoot Capital Services Limited
3rd Floor, Muthoot Towers, M.G. Road, Kochi - 682 035,
Ph: 0484 - 6619689
Fax: 0484 - 2381261
Email: investorgrievance@[Link] / mail@[Link]

For queries on financial statements, contact:

c) Chief Finance Officer

Muthoot Capital Services Limited
3rd Floor, Muthoot Towers, M.G. Road, Kochi - 682 035
Ph: 0484 - 6619603
Fax: 0484 - 2381261
Email: [Link]@[Link]

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ANNEXURE 1

CONFIRMATION CERTIFICATE FROM MANAGING DIRECTOR

To,

The members of Muthoot Capital Services Limited

I confirm that the Company has received from all the Directors, a declaration of compliance in accordance
with the provisions of Section 165 of the Companies Act, 2013, and Regulation 17A & 26 (1) SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015, for the financial year ended March 31, 2019.

Sd/-
THOMAS GEORGE MUTHOOT
Kochi Managing Director
April 24, 2019 DIN: 00011552

ANNEXURE 2

CONFIRMATION CERTIFICATE REGARDING COMPLIANCE BY

BOARD MEMBERS AND SENIOR MANAGEMENT PERSONNEL WITH THE
COMPANY’S CODE OF CONDUCT

To,

The members of Muthoot Capital Services Limited

I confirm that the Company has received from the members of the Board and Senior Management team
of the Company, declarations of compliance with the Code of Conduct as applicable to them during the
financial year ended March 31, 2019.

Sd/-
THOMAS GEORGE MUTHOOT
Kochi Managing Director
April 24, 2019 DIN: 00011552

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ANNEXURE 3

CERTIFICATION BY CHIEF EXECUTIVE OFFICER (MD)/

CHIEF FINANCE OFFICER

We hereby certify that for the quarter and financial year ending March 31, 2019, on the basis of the review
of the financial statements and the cash flow statement and to the best of our knowledge and belief that:
(i) These statements do not contain any materially untrue statement or omit any material fact or contain
statements that might be misleading.
(ii) These statements together present a true and fair view of the Company’s affairs and are in compliance
with existing accounting standards, applicable laws and regulations.
(iii) There are, to the best of our knowledge and belief, no transactions entered into by the Company
during the year which are fraudulent, illegal or violative of the Company’s code of conduct.
(iv) We accept responsibility for establishing and maintaining internal controls for financial reporting
and that we have evaluated the effectiveness of internal control systems of the company pertaining to
financial reporting and we have disclosed to the auditors and the Audit Committee, deficiencies in the
design or operation of such internal controls, if any, of which we are aware and the steps they have
taken or propose to take to rectify these deficiencies.
(v) We further certify that:
(i) There have been no significant changes in internal control over financial reporting during the
year;
(ii) There have been no significant changes in accounting policies during the year and that the same
have been disclosed in the notes to the financial statements; and
(iii) There have been no instances of significant fraud of which they have become aware and the
involvement therein, if any, of the management or an employee having a significant role in the
company’s internal control system over financial reporting.

Sd/- Sd/-
Kochi THOMAS GEORGE MUTHOOT VINODKUMAR M. PANICKER
April 24, 2019 Managing Director (CEO) Chief Finance Officer
DIN: 00011552

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ANNEXURE 4

CERTIFICATE

[As per Regulation 34 (3) of the Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015 read with Schedule V (C) 10 (i) thereto]

We, CaesarPintoJohn & Associates LLP, Company Secretaries, Kochi, have examined the documents
and records made available to us and explanation provided by Muthoot Capital Services Limited
[CIN:L67120KL1994PLC007726], having its registered office at 3rd Floor, Muthoot Towers, [Link],
Kochi-682035 and the directors of the said Company.

We have followed the practices and processes as is appropriate to obtain reasonable assurance about the
correctness of the information provided to us. We believe that the processes and practices we followed
provide a reasonable basis for this certificate. We have sought and obtained information and explanations
which to the best of our knowledge and belief were necessary for the purpose of this certificate.

In our opinion and to the best of our information and according to the explanations given to us, and based
on the representations and declarations made by the Directors and the management, we hereby certify that
none of the directors on the Board of Muthoot Capital Services Limited as on 31st March, 2019 have
been debarred or disqualified from being appointed or continuing as directors of the Company by
the Securities and Exchange Board of India/ Ministry of Corporate Affairs or any such statutory authority.

For CaesarPintoJohn
& Associates LLP
Company Secretaries

Sd/-
Kochi NIKHIL GEORGE PINTO
24.04.2019 Partner
M. No. 39471
CP. No. 16059

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 ANNUAL REPORT 2018 - 19

ANNEXURE 5

INDEPENDENT AUDITOR’S CERTIFICATE ON CORPORATE GOVERNANCE

To
The Members
Muthoot Capital Services Ltd

1. We have examined the compliance of conditions of Corporate Governance by Muthoot Capital

Services Ltd (“the company”) for the year ended on March 31, 2019, as stipulated in the relevant
provisions of Chapter IV of Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015 (“Listing Regulations”).

2. The compliance of conditions of Corporate Governance is the responsibility of the Management. Our
examination was limited to the procedures and implementation thereof, adopted by the Company for
ensuring compliance with the conditions of the Corporate Governance. It is neither an audit nor an
expression of opinion on the financial statements of the Company.

3. In our opinion and to the best of our information and according to the explanations given to us, we
certify that the Company has complied with the conditions of Corporate Governance as stipulated in
the above mentioned Listing Agreement/ Listing Regulations, as applicable.

4. We further state that such compliance is neither an assurance as to the future viability of the Company
nor the efficiency or effectiveness with which the Management has conducted the affairs of the
Company.

For Varma & Varma

Chartered Accountants
FRN No: 004532S

Sd/-
Place : Kochi - 19 VIJAY NARAYAN GOVIND
Date : 24th April, 2019 Partner
[Link]. 203094

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ANNUAL REPORT 2018 - 19

INDEPENDENT
AUDITOR’S REPORT

To
The Members of Muthoot Capital Services Limited
Report on the Audit of the Standalone Financial Statements

Opinion
We have audited the standalone financial statements of Muthoot Capital Services Limited (“the Company”),
which comprise the Balance Sheet as at 31st March 2019, the Statement of Profit and Loss and Statement of
Cash Flows for the year ended on that date, and the notes to the financial statements, including a summary
of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid
standalone financial statements give the information required by the Companies Act, 2013 (“the Act”) in
the manner so required and give a true and fair view in conformity with the accounting principles generally
accepted in India, of the state of affairs of the Company as at March 31, 2019, its Profit and Cash Flows for
the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10)
of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditor’s
Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the
Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India
together with the ethical requirements that are relevant to our audit of the financial statements under the
provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in
accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment were of most significance in our audit
of the financial statements of the current period. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.

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Key Audit Matters How addressed in Audit

Accuracy in identification and categorisation We have assessed the systems and processes laid down
of receivables from financing activities by the company to appropriately identify and classify
as performing and non-performing assets the receivables from financing activities including
including those under securitisation those in place to ensure correct classification, income
arrangements and in ensuring appropriate recognition and provisioning/write off including of
asset classification, existence of security, Non-performing assets as per applicable RBI guidelines.
income recognition, provisioning/ write The audit approach included testing the existence and
off thereof and completeness of disclosure effectiveness of the control environment laid down by
including compliance in accordance with the management and conducting of detailed substantive
the applicable extant guidelines issued by verification on selected samples of continuing and
Reserve Bank of India (RBI). new transactions in accordance with the principles
laid down in the Standards on Auditing and other
guidance issued by Institute of Chartered Accountants
of India. Agreements entered into regarding significant
transactions including related to corporate loans
and securitization/assignment arrangements have
been examined to ensure compliance. We have also
reviewed the reports generated from management
information systems, audit/inspection reports issued
by the concurrent / internal/secretarial auditors and
Reserve Bank of India. The impact of all significant
external and internal events including those if any,
subsequent to balance sheet date have been taken into
consideration for the above purposes. Compliance
with material disclosure requirements prescribed by
RBI guidelines and other statutory requirements have
been verified.

Completeness in identification, accounting We have assessed the systems and processes laid down
and disclosure of related party transactions by the company to appropriately identify, account
in accordance with the applicable laws and and disclose all material related party transactions
financial reporting framework. in accordance with applicable laws and financial
reporting framework. We have designed and performed
audit procedures in accordance with the guidelines laid
down by ICAI in the Standard on Auditing (SA 550)
to identify, assess and respond to the risks of material
misstatement arising from the entity’s failure to
appropriately account for or disclose material related
party transactions which includes obtaining necessary
approvals at appropriate stages of such transactions
as mandated by applicable laws and regulations. We
have also reviewed the Secretarial Audit report during
the course of evaluating the internal control systems
in ensuring compliance with applicable laws, rules,
regulations and guidelines.

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Information Other than the Standalone Financial Statements and Auditor’s Report thereon (Other
Information)
The Company’s Board of Directors is responsible for the other information. The other information comprises
the information included in the Corporate Overview, Board’s Report, Management Discussion and Analysis
Report and Report on Corporate Governance in the Annual Report of the Company for the financial year
2018-19, but does not include the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other Information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information; we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Standalone Financial
Statements.
The Company’s Board of Directors is responsible for the matters stated in section 134(5) of the Act with
respect to the preparation of these standalone financial statements that give a true and fair view of the
financial position, financial performance, and cash flows of the Company in accordance with the accounting
principles generally accepted in India, including the accounting Standards specified under section 133 of the
Act. This responsibility also includes maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds
and other irregularities; selection and application of appropriate accounting policies; making judgments
and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate
internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the
accounting records, relevant to the preparation and presentation of the financial statement that give a true
and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to liquidate the Company or to cease
operations, or has no realistic alternative but to do so.
The Board of Directors are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:

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●● Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting
a material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
●● Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible
for expressing our opinion on whether the company has adequate internal financial controls system
in place and the operating effectiveness of such controls.
●● Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
●● Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Company to cease to continue
as a going concern.
●● Evaluate the overall presentation, structure and content of the financial statements including the
disclosures, and whether the financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the standalone financial statements that, individually or
in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the
financial statements may be influenced. We consider quantitative materiality and qualitative factors in
(i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the
effect of any identified misstatements in the financial statements.

We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.

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From the matters communicated with those charged with governance, we determine those matters
that were of most significance in the audit of the financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”), issued by the Central
Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we
give in “Annexure A”, a statement on the matters specified in paragraphs 3 and 4 of the Order, to
the extent applicable.

2. As required by Section 143(3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our
knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so
far as it appears from our examination of those books

(c) The Balance Sheet, the Statement of Profit and Loss, and the Statement of Cash Flows dealt
with by this Report are in agreement with the books of account.

(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting
Standards specified under Section 133 of the Act, read with Rule 7 of the Companies
(Accounts) Rules,2014.

(e) On the basis of the written representations received from the directors as on 31st March, 2019
taken on record by the Board of Directors, none of the directors is disqualified as on 31st
March, 2019 from being appointed as a director in terms of Section 164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controls over financial statement reporting
of the Company and the operating effectiveness of such controls, refer to our separate Report
in “Annexure B”.

(g) With respect to the other matters to be included in the Auditor’s Report in accordance with
Section 197(16) of the Act, in our opinion and to the best of our information and according to
the explanations given to us: the remuneration paid by the Company to its directors during the
year is in accordance with the provisions of section 197 of the Act.

(h) With respect to the other matters to be included in the Auditor’s Report in accordance with
Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of
our information and according to the explanations given to us:

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i. The Company has disclosed the impact of pending litigations on its financial position in
its financial statements – Refer Note 7 to the financial statements

ii. The Company did not have any long-term contracts including derivative contracts for
which there were any material foreseeable losses.

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor
Education and Protection Fund by the Company.

For Varma & Varma

Chartered Accountants
FRN No: 004532S

Sd/-
Place : Kochi -19 VIJAY NARAYAN GOVIND
Date : 24th April, 2019 Partner
[Link]. 203094

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ANNUAL REPORT 2018 - 19

ANNEXURE A REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING “REPORT ON

OTHER LEGAL AND REGULATORY REQUIREMENTS” OF OUR INDEPENDENT AUDITOR’S
REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTS OF MUTHOOT CAPITAL
SERVICES LIMITED FOR THE YEAR ENDED MARCH 31, 2019:

1. (a) The Company is maintaining proper records showing full particulars including quantitative
details and situation of fixed assets.

(b) We are informed that the company has a programme for physical verification of fixed assets
at reasonable intervals and that no material discrepancies were noticed on such verification.

(c) The Company does not have any immovable property and hence the reporting requirements
as per clause 3 (1) (c) of the Order are not applicable.

2. Except for the repossessed assets from borrowers, stock of stationery and sales promotion items,
the Company does not have any other stock of inventory. These Inventories have been physically
verified during the year by the management. In our opinion, the frequency of verification is
reasonable. In our opinion and according to the information and explanations given to us, material
discrepancies were not noticed on such physical verification.

3. According to the information and explanation given to us, the Company has granted secured loan
to one company, unsecured intercorporate deposit to one company and unsecured loan to one
partnership firm covered in the Register maintained under section 189 of the Act in respect of
which;
(a) The terms and conditions of the grant of such loans are, in our opinion, prima facie, not
prejudicial to the Company’s interest.
(b) The schedule of repayment of principal and payment of interest has been stipulated and
repayments or receipts of principal amounts and interest have been regular as per stipulations.
(c) There is no overdue amount remaining outstanding as at the balance sheet date.

4. According to the information and explanations given to us and the records of the company
examined by us, the Company has complied with the provisions of Sections 185 and 186 of the
Act in respect of grant of loans, making investments and providing guarantees and securities, as
applicable.

5. In respect of deposits accepted, in our opinion and according to the information and explanations
given to us, directives issued by the Reserve Bank of India and the provisions of sections 73 to
76 or any other relevant provisions of the Act and the rules framed there under, to the extent
applicable, have been complied with. According to the information and explanations given to us
by the management no order has been passed by Company Law Board or National Company Law
Tribunal or Reserve Bank of India or any court or any other Tribunal in respect of the aforesaid
deposits.

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As stated in Note 11.2 of the financial statements, there are unpaid amounts against matured
public deposits amounting to Rs. 28,916 thousand (including interest) outstanding as on 31st
March, 2019, and the management has confirmed that they could not pay the same since claims
were not received from public deposit holders.

6. The maintenance of cost audit records has not been specified by the Central Government under
section 148(1) of the Companies Act, 2013 for the business activities carried out by the company.
Thus reporting under clause 3(vi) of the order is not applicable to the company.

7. (a) As per the information and explanations furnished to us and according to our examination
of the records of the Company, except for three instances of delay in deduction and
remittance of Tax deducted at source, the Company has been generally regular in depositing
undisputed statutory dues including Provident Fund, Employee’s State Insurance, Income
Tax, Goods and Service Tax, Cess and any other statutory dues, as applicable to the Company.
According to the information and explanation given to us by the management, there are no
arrears of undisputed statutory dues outstanding as at the last date of the financial year for
a period of more than six months from the date on which they became payable.

(b) According to the information and explanations given to us, there were no outstanding dues
of sales tax, income tax, wealth tax, customs duty, excise duty, service tax, Goods and
Service Tax, and cess that have not been deposited on account of any dispute.

8. In our opinion and according to the information and explanations given to us and the records of the
Company examined by us, the Company has not defaulted in repayment of loans or borrowings to
financial institutions, banks, Governments or dues to debenture holders.

As stated in Note No.11.1 of the financial statements, there are unpaid amounts against matured
debentures amounting to Rs. 621 thousand (including interest) outstanding as on March 31,
2019 and the management has confirmed that they could not pay the same since claims were not
received from the debenture holders.

9. According to the information and explanations given to us and the records of the Company
examined by us, no moneys were raised by way of initial public offer or further public offer
(including debt instruments) and the term loans availed by the company have been applied for the
purpose for which the loans were obtained.

10. According to the information and explanations given to us, no material fraud by the company or
on the company by its officers or employees has been noticed or reported during the year.

11. According to the information and explanations given to us and the records of the Company
examined by us, managerial remuneration has been paid or provided in accordance with the
requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

12. The Company is not a Nidhi Company. Accordingly, the reporting requirement under clause (xii)
of paragraph 3 of the Order is not applicable to the Company.

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13. The Company has complied with the provisions of Section 177 and 188 of the Act, where
applicable, for all transactions with the related parties. The details of related party transactions
have been disclosed in Note No 4 of the financial statements, as required by the applicable
accounting standards.

14. The company has not made any preferential allotment of shares or fully or partly convertible
debentures during the year under review and thus the requirement under section 42 of the Act is
not applicable.

15. According to the information and explanations given to us and based on our examination of
the records of the company, the company has not entered into any non-cash transactions with
Directors or persons connected with the Directors and hence the reporting requirement under
clause (xv) of paragraph 3 of the Order is not applicable.

16. The Company is engaged in the business of Non-Banking Financial Institution and it has obtained
the certificate of registration as provided in section 45-IA of the Reserve Bank of India Act, 1934.

For Varma & Varma

Chartered Accountants
FRN No: 004532S

Sd/-
Place : Kochi -19 VIJAY NARAYAN GOVIND
Date : 24th April, 2019 Partner
[Link]. 203094

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ANNEXURE B REFERRED TO IN PARAGRAPH 2(f) UNDER THE HEADING “REPORT

ON OTHER LEGAL AND REGULATORY REQUIREMENTS” OF OUR INDEPENDENT
AUDITOR’S REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTS OF
MUTHOOT CAPITAL SERVICES LIMITED FOR THE YEAR ENDED 31ST MARCH 2019.

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section
3 of Section 143 of the Companies Act, 2013 (“the Act”)
We have audited the internal financial control systems with reference to financial statements reporting of
Muthoot Capital Services Limited (“the Company”) as of March 31, 2019 in conjunction with our audit
of the financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internal financial controls
based on the internal controls with reference to financial statements reporting criteria established by the
Company considering the essential components of internal control stated in the Guidance Note on Audit
of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants
of India. These responsibilities include the design, implementation and maintenance of adequate internal
financial controls that were operating effectively for ensuring the orderly and efficient conduct of its
business, including adherence to company’s policies, the safeguarding of its assets, the prevention and
detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely
preparation of reliable financial information, as required under the Companies Act, 2013.

Auditor’s Responsibility
Our responsibility is to express an opinion on the Company’s internal financial controls systems with
reference to financial statements reporting based on our audit. We conducted our audit in accordance with
the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”)
and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the
Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable
to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of
India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan
and perform the audit to obtain reasonable assurance about whether adequate internal financial controls
system with reference to financial statements reporting was established and maintained and if such controls
operated effectively in all material respects.

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Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal
financial controls system with reference to financial statements reporting and their operating effectiveness.
Our audit of internal financial controls system with reference to financial statements reporting included
obtaining an understanding of internal financial controls system with reference to financial statements
reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. The procedures selected depend on
the auditor’s judgement, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion on the Company’s internal financial controls system with reference to financial statements
reporting.

Meaning of Internal Financial Controls with reference to Financial Statements reporting

A company’s internal financial controls system with reference to financial statements reporting is a process
designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally accepted accounting principles.
A company’s internal financial controls system with reference to financial statements reporting includes
those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures
of the company are being made only in accordance with authorisations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.

Inherent Limitations of Internal Financial Controls with reference to Financial Statements

reporting
Because of the inherent limitations of internal financial controls system with reference to financial statements
reporting, including the possibility of collusion or improper management override of controls, material
misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation
of the internal financial controls system with reference to financial statements reporting to future periods
are subject to the risk that the internal financial controls system with reference to financial statements
reporting may become inadequate because of changes in conditions, or that the degree of compliance with
the policies or procedures may deteriorate.

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Opinion
In our opinion, to the best of our information and according to the explanations given to us, the Company
has, in all material respects, an adequate internal financial controls system with reference to financial
statements reporting and such internal financial controls system with reference to financial statements
reporting were operating effectively as at March 31, 2019, based on the internal control with reference to
financial statements reporting criteria established by the Company considering the essential components
of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial
Reporting issued by the Institute of Chartered Accountants of India.

For Varma & Varma

Chartered Accountants
FRN No: 004532S

Sd/-
Place : Kochi - 19 VIJAY NARAYAN GOVIND
Date : 24th April, 2019 Partner
[Link]. 203094

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BALANCE SHEET
as at 31st March, 2019
(₹ in ‘000)
As At
Particulars Note
31-Mar-19 31-Mar-18
[Link] AND LIABILITIES
(1) Shareholders’ Funds
(a) Share Capital 2.1 16 44 75 16 44 75
(b) Reserves and Surplus 2.2 459 90 70 3 77 48 23
476 35 45 393 92 98
(2) Non-Current Liabilities
(a) Long-Term Borrowings 2.3 202 56 00 96 26 74
(b) Other Long-Term Liabilities 2.4 11 66 71 6 32 88
(c) Long-Term Provision 2.5 7 168 -
214 94 39 102 59 62
(3) Current Liabilities
(a) Short-Term Borrowings 2.6 1158 47 50 1253 25 08
(b) Trade Payables 2.7 - -
(i) Total Outstanding Dues of Micro Enterprises and Small Enterprises
(ii) Total Outstanding Dues of Creditors Other than Micro Enterprises
and Small Enterprises 21 83 46 15 58 44
(c) Other Current Liabilities 2.8 327 88 10 168 58 01
(d) Short-Term Provisions 2.9 61 46 64 43 84 42
1569 65 70 1481 25 95
TOTAL 2260 95 54 1977 78 55
II. ASSETS
(1) Non-Current Assets
(a) Fixed Assets 2.10
(i) Tangible Assets-Property, Plant and Equipment 1 49 20 2 24 57
(ii) Intangible Assets 23 05 23 45
(iii) Intangible Assets Under Development 22 49 -
(b) Non-Current Investments 2.11 10 28 65 17 86 19
(c) Deferred Tax Assets (Net) 2.12 16 78 34 11 32 21
(d) Long-Term Receivables from Financing Activities 2.13 1008 72 00 827 72 22
(e) Long-Term Loans and Advances 2.14 1 11 78 1 09 23
(f) Other Non- Current Assets 2.15 3 51 21 80
1042 36 72 860 48 67
(2) Current Assets
(a) Current Investments 2.16 8 35 63 19
(b) Cash and Cash Equivalents 2.17 84 27 99 16 84 29
(c) Receivables from Financing Activities 2.18 1075 47 80 1088 28 05
(d) Short-Term Loans and Advances 2.19 7 62 83 2 88 81
(e) Other Current Assets 2.20 42 84 57 9 28 54
1218 58 82 1117 29 88
TOTAL 2260 95 54 1977 78 55
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS 1 to 12
Note:The accompanying notes form an integral part of the financial statements.
As per our separate report of even date attached
For VARMA AND VARMA For and on behalf of the Board of Directors of
FRN: 004532S MUTHOOT CAPITAL SERVICES LIMITED

Sd/- Sd/- Sd/- Sd/-

VIJAY NARAYAN GOVIND THOMAS JOHN MUTHOOT THOMAS GEORGE MUTHOOT THOMAS MUTHOOT
Partner Chairman Managing Director Director
Chartered Accountants Din :00011618 Din:00011552 Din: 00082099
Membership Number: 203094
Sd/-
Place : Kochi - 19 VINODKUMAR M. PANICKER
Date : 24th April, 2019 Chief Finance Officer

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STATEMENT OF PROFIT AND LOSS

for the year ended 31st March, 2019
(₹ in ‘000)
For the Year Ended
Particulars Note
31-Mar-19 31-Mar-18
Income
I. Revenue from Operations 2.21 534 62 94 397 72 60
II. Other Income 2.22 64 48 35 96
III. Total Revenue (I+II) 535 27 42 398 08 56

IV. Expenses
a. Employee Benefits Expenses 2.23 77 81 93 64 17 62
b. Finance Costs 2.24 161 50 72 122 82 79
c. Depreciation and Amortization 2.10 1 03 51 97 17
d. Other Expenses 2.25 118 84 69 94 05 58
e. Provisions and Write Off 2.26 48 82 03 33 59 38
Total Expenses 408 02 88 315 62 54

V. Profit Before Tax (III - IV) 127 24 54 82 46 02

VI. Tax Expenses

a. Current Tax 50 28 00 33 54 00
b. Deferred Tax (5 46 13) (4 75 70)
c. Income Tax Adjustment for Earlier Years 20 -
Total Tax Expenses 44 82 07 28 78 30

VII. Profit for the Year (V-VI) 82 42 47 53 67 72

VIII. Earnings per equity share of ₹ 10 each:
Basic and Diluted (in ₹) 6 50.11 36.39
SIGNIFICANT ACCOUNTING POLICIES AND NOTES
ON ACCOUNTS 1 to 12

Note:The accompanying notes form an integral part of the financial statements.

As per our separate report of even date attached

For VARMA AND VARMA For and on behalf of the Board of Directors of
FRN: 004532S MUTHOOT CAPITAL SERVICES LIMITED

Sd/- Sd/- Sd/- Sd/-

VIJAY NARAYAN GOVIND THOMAS JOHN MUTHOOT THOMAS GEORGE MUTHOOT THOMAS MUTHOOT
Partner Chairman Managing Director Director
Chartered Accountants Din :00011618 Din:00011552 Din: 00082099
Membership Number: 203094

Sd/-
Place : Kochi - 19 VINODKUMAR M. PANICKER
Date : 24th April, 2019 Chief Finance Officer

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CASH FLOW STATEMENT

for the year ended 31st March, 2019
(₹ in ‘000)
For the Year Ended
Particulars
31-Mar-19 31-Mar-18
A. CASH FLOW FROM OPERATING ACTIVITIES
Net Profit before tax 127 24 54 82 46 02
Adjustments for:-
Depreciation/Amortisation 1 03 51 97 17
Provision against Non - Performing Assets 20 25 09 14 36 95
Provisions against Standard Assets 57 00 3 36 00
Loss / (Profit) from Capital Market Operations (12 99) ( 6 68)
Loss / (Profit) on Sale of Assets ( 51) ( 1 21)
Interest on Investments (1 13 36) (1 13 36)
Income from Investments in Alternate Investment fund ( 37 66) ( 13 88)
Dividend Income ( 1 50)
Discount on Issue of Commercial Paper 1 25 73
20 21 08 18 59 22

Operating Profit before Working Capital Changes 147 45 62 101 05 24

Net (Increase) / Decrease in Operating Assets:-
Short-Term Loans and Advances 54 83 ( 77 37)
Long-Term Loans and Advances ( 2 55) ( 63)
Receivables from Financing Activities (168 19 53) (712 33 11)
Other Current Assets 1 79 02 17 81 45
Other Non - Current Assets 79 5 81 66
(165 87 44) (689 48 00)
Net Increase/ (Decrease) in Operating Liabilities-
Long-Term Liabilities 91 52 (4 84 74)
Other Current Liabilities 29 18 20 9 51 08
Short-Term Provisions (16 44) 1 90 71
Long-Term Provision 71 68 -
30 64 96 6 57 05
Net Changes in Working Capital (135 22 48) (682 90 95)
Cash Generated from Operations 12 23 14 (581 85 71)
Direct Taxes Paid (58 60 49) (32 13 01)
Net Cash from/(used in) Operating Activities (46 37 35) (613 98 72)

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets Including Intangible Assets Under Development (51 41) (91 03)
Sale of Fixed Assets 1 70 6 20
Increase / (Decrease) in Investments (77 91) (3 11 30)

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(₹ in ‘000)
For the Year Ended
Particulars
31-Mar-19 31-Mar-18
Interest on Investments 1 13 36 1 13 36
(Loss) / Profit from Capital Market Operations 12 99 6 68
Dividend Income - 1 50
Income from Investments in Alternate Investment fund 37 66 13 88
Net Cash from/(used in) Investing Activities 36 39 (2 60 71)
C. CASH FLOW FROM FINANCING ACTIVITIES
Net Increase / (Decrease) in Issued & Paid up Capital - 2 72 76
Net Increase/ (Decrease) in Securities Premium - 159 54 00
Net Increase / (Decrease) in Secured Debentures(Including Interest Accrued) (11 92) (2 14 66)
Net Increase / (Decrease) in Subordinated debts (Including Interest Accrued) (1 33 61) 12 68 28
Net Increase / (Decrease) in Public Deposits (Including Interest Accrued) (21 93 03) (27 17 78)
Increase / (Decrease) in Secured and Unsecured Borrowings
(Including Interest Accrued) 136 71 64 473 41 17
Increase / (Decrease) in Inter Corporate Deposits (Including Interest Accrued) 12 53 (2 66)
Dividend Paid (Including Corporate Dividend Tax) (95) (5 90)
Net Cash Generated from Financing Activities 113 44 66 618 95 21
Net Increase/(Decrease) in Cash and Cash Equivalents (A+B+C) 67 43 70 2 35 78
Opening Balance of Cash and Cash Equivalents 16 84 29 14 48 51
Closing Balance of Cash and Cash Equivalents 84 27 99 16 84 29
COMPONENTS OF CASH AND CASH EQUIVALENTS
Cash on Hand 3 16
- Balances with Banks 31 47 10 2 81 67
- SLR Deposits 2 00 00 4 81 25
- Deposits offered as Collateral security against securitisation transaction 50 44 80 8 84 20
- Balances with Unclaimed Dividend Accounts 36 06 37 01
Total Cash and Cash Equivalents 8 42 799 16 84 29

Note:The accompanying notes form an integral part of the financial statements.

As per our separate report of even date attached

For VARMA AND VARMA For and on behalf of the Board of Directors of
FRN: 004532S MUTHOOT CAPITAL SERVICES LIMITED

Sd/- Sd/- Sd/- Sd/-

VIJAY NARAYAN GOVIND THOMAS JOHN MUTHOOT THOMAS GEORGE MUTHOOT THOMAS MUTHOOT
Partner Chairman Managing Director Director
Chartered Accountants Din :00011618 Din:00011552 Din: 00082099
Membership Number: 203094

Sd/-
Place : Kochi - 19 VINODKUMAR M. PANICKER
Date : 24th April, 2019 Chief Finance Officer

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ANNUAL REPORT 2018 - 19

NOTES TO FINANCIAL
STATEMENTS
for the year ended 31st March, 2019

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

1. SIGNIFICANT ACCOUNTING POLICIES

1.1 Basis for preparation of financial statements
i. The financial statements have been prepared and presented under historical cost convention on
accrual basis of accounting in accordance with the Generally Accepted Accounting Principles in
India (“Indian GAAP”) in compliance with the provisions of the Companies Act, 2013, Accounting
Standards specified under section 133 of the Companies Act, 2013, read together with paragraph 7
of the Companies (Accounts) Rules, 2014 and the applicable directions issued by Reserve Bank of
India for Non-Banking Financial Companies. The accounting policies have been consistently applied
by the Company and are consistent with those used in the previous year, except wherever stated.
ii. All assets and liabilities have been classified as current and non-current as per the Company’s normal
operating cycle and other criteria set out in the Schedule III of the Companies Act, 2013. Based
on the nature of financial services provided and their realization in cash and cash equivalents, the
Company has assessed its operating cycle as 12 months for the purpose of classification of its assets
and liabilities into current and non-current as per the requirements of Schedule III of the Companies
Act, 2013.

1.2 Use of Estimates

The preparation of the financial statements requires the use of estimates and assumptions that affect
the reported amount of assets and liabilities as at the Balance Sheet date, reported amounts of revenues
and expenses during the period and disclosure of contingent liabilities as at that date. The estimates
and assumptions used in these financial statements are based upon the management’s evaluation of
the relevant facts and circumstances as on the date of financial statements. Although these estimates
are based upon management’s best knowledge of current events and actions, actual results could
differ from these estimates. Any revisions to the accounting estimates are recognized prospectively
in the current and future years.

1.3 Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
Company and the revenue can be reliably measured:

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 Income from Financial Services

i. Interest Income in respect of hypothecation loans are recognised on accrual basis with reference
to contractual terms, applying the Internal Rate of Return method. Overdue charges on belated
hypothecation loan installments are accounted as and when received by the company.
ii. Interest on loans and advances, including Loan Buyout and Other business loans, is recognized
on accrual basis at the contract rate wherever feasible. Overdue charges for belated payments are
accounted as and when received.
iii. Income in respect of Non-performing assets is recognized as and when received as per The Master
Direction - Non-Banking Financial Company - Systemically Important Non-Deposit taking
Company and Deposit taking Company (Reserve Bank) Directions, 2016.
iv. Interest Income on SLR Investments / Bank Deposits including collateral deposits is recognized
on accrual basis.
v. Income from securitisation transactions, being interest spread under par structure of securitisation
loan receivables, is recognized as income on realisation of dues in cash from Special purpose
vehicle.
vi. Income on retained interest in the assigned asset , if any, is accounted on accrual basis.
vii. Income from financing activities and services is recognized on accrual basis.

 Income from Investments

Dividend on investments is recognized as income, when right to receive payment is established by
the date of Balance Sheet. The profit/loss on Capital Market Operations is recognized at the time
of actual sale/redemption of investments.

1.4 Receivables from Financing Activities

The Company has followed the Master Directions issued by the Reserve Bank of India for Non-
Banking Financial Companies in respect of Prudential Norms for Income Recognition, Asset
Classification, Accounting Standards, Provisioning / writing off for bad and doubtful debts,
Capital Adequacy and Concentration of credit / investments.

 Hypothecation Loans
i. Hypothecation loans are stated at the amounts advanced including Interest and other finance
charges accrued and due, as reduced by amounts received and loans securitised.
ii. Advance instalments received against Hypothecation loans are shown as Current Liabilities.
iii. Repossessed assets are valued at lower of book value and estimated realisable value.

 Securitisation transactions: -
i. Securitised receivables are de-recognized in the Balance Sheet when they are sold i.e. if they fully
meet the true sale criteria as per the Master Direction issued by the Reserve Bank of India.
ii. Company’s contractual rights to receive the share of the future interest (i.e. interest spread) in
respect of the transferred asset from the SPV is capitalized at the present value as Interest Only
(I/O) Strip(Interest Strip Retained on Securitisation of Receivables) with the corresponding
liability created for Unrealized Gains on Loan Transfer Transactions.

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1.5 Tangible Assets (Property, Plant and Equipment)

Property, Plant and Equipment are stated at historical cost, net of accumulated depreciation and
accumulated impairment losses, if any. The cost comprises of purchase price, borrowing costs,
if capitalization criteria are met, and directly attributable cost of bringing the asset to its working
condition for the intended use. Any trade discount and rebate are deducted in arriving at the
purchase price.
Subsequent expenditure related to an item of property,plant & equipment is added to its book
value, only if it increases the future benefit of the existing asset beyond its previously assessed
standard of performance. All other expenses on existing Property, Plant and Equipment, including
day-to-day repairs and maintenance expenditure and cost of replacing parts, are charged to the
Statement of Profit and Loss for the period during which such expenses are incurred.
Gains or losses arising from de-recognition of Property, Plant and Equipment are measured as
the difference between the net disposal proceeds and the carrying amount of the asset and are
recognized in the Statement of Profit and Loss when the asset is de-recognized.

1.6 Intangible Assets

Intangible assets are recorded at the cost incurred for developing such assets and are carried at
cost less accumulated amortization and impairment, if any.
Intangible assets under development not put for use as at the date of balance sheet,are classified
as asset under development.

1.7 Depreciation / Amortization of Tangible and Intangible assets.

i. Depreciation on assets held for own use of the Company is provided on written down value
method as per the useful years of life of the assets and in the manner prescribed under Schedule
II of the Companies Act, 2013 and in accordance with revised Accounting Standard-10 “Property,
Plant and Equipment”.
ii. Intangible assets are amortized over a period of three years.

1.8 Impairment of Tangible and Intangible Assets

i. The carrying amounts of assets are reviewed at each Balance Sheet date to ascertain impairment
based on internal / external factors. An impairment loss is recognized wherever the carrying
amount of an asset exceeds its recoverable amount. An asset’s recoverable amount is the higher of
an asset’s net selling price and its value in use.
ii. An assessment is made at each reporting date as to whether there is any indication that previously
recognized impairment losses may no longer exist or may have decreased. If such indication exists,
the Company estimates the asset’s recoverable amount. A previously recognized impairment loss
is increased or reversed depending on changes in circumstances. However, the carrying value,
after reversal is not increased beyond the carrying value that would have prevailed by charging
usual depreciation, if there was no impairment.

1.9 Leases
Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of
the leased item, are classified as operating leases. Operating lease payments are recognized as an
expense in the Statement of Profit and Loss on straight line basis over the lease term.

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1.10 Investments
i. Investment in Government Securities
a. Non - Current Investments are stated at cost and provision for diminution in value, other than
temporary, is considered wherever necessary.
b. Current Investments are valued at lower of cost and market value / net asset value.
ii. Investments - Others
a. Investments, which are readily realizable and intended to be held for not more than one year
from the date on which such investments are made, are classified as Current Investments. All
other investments are classified as Non-Current Investments.
On initial recognition, all investments are measured at cost. The cost comprises of purchase
price and directly attributable acquisition charges such as brokerage, fees and duties. Current
investments are carried in the financial statements at lower of cost and fair value determined on
an individual investment basis. Non-Current Investments are carried at cost. However, provision
for diminution in value is made to recognize a decline other than temporary in the value of the
investments.
On disposal of investments, the difference between its carrying amount and net disposal proceeds
is charged or credited to the Statement of Profit and Loss.

1.11 Income Tax

Tax expense comprises of Current and Deferred Tax. Current Income Tax is measured at the
amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961
enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted
or substantially enacted, at the reporting date.
Deferred income taxes reflect the impact of timing differences between taxable income and
accounting income originating during the current year and the reversal of timing differences of
the earlier years.
Deferred Tax Liabilities are recognized for all taxable timing differences. Deferred Tax Assets are
recognized for deductible timing differences only to the extent that there is a reasonable certainty
that sufficient future taxable income will be available against which such Deferred Tax Assets can
be realized.
The carrying amount of Deferred Tax Assets are reviewed at each reporting date. The company
writes down the carrying amount of deferred tax asset to the extent that it is no longer reasonably
certain or virtually certain, as the case may be, that sufficient future taxable income will be
available against which Deferred Tax Asset can be realized. Any such write down is reversed to
the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient
future taxable income will be available.
Deferred Tax Assets and Deferred Tax Liabilities are offset, if a legally enforceable right exists to
set off current tax asset against current tax liabilities and the deferred tax assets and deferred tax
liabilities relate to the same taxation authority.

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1.12 Retirement and Other Employee Benefits

i. Defined Contribution Plan
(i) Provident Fund
The contributions to the provident fund are charged to the Statement of Profit and Loss for the
year when the contributions are due in accordance with the fund rules. The Company has no
obligation, other than the contribution payable to the provident fund.

(ii) Employees State Insurance

The Company also contributes to Employees State Insurance Corporation on behalf of its
employees.

ii. Defined Benefit Plan

a. Gratuity (Funded)
Payment of gratuity to employees is covered by the Gratuity Trust Scheme based on the Group
Gratuity Cum Assurance Scheme of the LIC of India which is a defined benefit scheme. The yearly
contribution/premium paid/ payable is determined on actuarial valuation done by an independent
valuer. Actuarial gain and loss for defined benefit plan is recognized in full in the period in which
they occur in the Statement of Profit and Loss.
b. Accumulated Compensated Absences
The company provides for liability of accumulated compensated absences for eligible employees
on the basis of an independent actuarial valuation carried out at the end of the year, using the
projected unit credit method. Actuarial gains and losses are recognised in the Statement of Profit
and Loss for the period in which they occur.

1.13 Segment Reporting

The Company’s business activity primarily falls within a single reportable business segment which
constitutes Financing Activities (Advancing of hypothecation loans, term loans, buying loan
portfolio of other NBFCs/ Micro Finance Companies and loan against demand promissory notes
etc.). Hence additional disclosures are not required under Accounting Standard -17 “Segment
Reporting”.
The Company operates only in India; hence there is no other significant geographical segment that
requires the disclosure.

1.14 Related Party Disclosures

Disclosures are made as per the requirements of the Accounting Standard- 18 “Related Party
Disclosures”.

1.15 Earnings per Share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable
to equity shareholders by the weighted average number of equity shares outstanding during the
[Link] the purpose of calculating the diluted earnings per share, the net profit or loss for

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the period attributable to the equity shareholders and the weighted average number of shares
outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

1.16 Material Events

Material Events occurring after the Balance Sheet date are taken into cognizance.

1.17 Provisions other than that for Non-Performing Assets

A provision is recognized when the Company has a present legal or constructive obligation as a
result of past event, for which it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and reliable estimate can be made for the amount
of the obligation. Provisions are not discounted to their present value and are determined based
on the best estimate required to settle the obligation at the reporting date. These estimates are
reviewed at each reporting date and adjusted to reflect the current best estimates.

1.18 Contingent Liabilities

A Contingent Liability is a possible obligation that arises from past events whose existence
will be confirmed by the occurrence or non-occurrence of one or more uncertain future events
beyond the control of the Company or a present obligation that is not recognized because it is
not probable that an outflow of resources will be required to settle the obligation. A Contingent
Liability also arises, in extremely rare cases, where there is a liability that cannot be recognized
because it cannot be measured reliably. The company does not recognize a Contingent Liability,
but discloses its existence, if it exists, in the financial statements.

1.19 Classification and Provisioning of receivables from Financing Activity

i. As per the guidelines given in the Master Directions issued by the Reserve Bank of India for
Non-Banking Financial Companies in respect of Prudential Norms for Income Recognition,
Asset Classification, Accounting Standards, Provisioning / Writing off for bad and doubtful
debts, Capital Adequacy and Concentration of credit / investments, the company makes adequate
provisions against Receivables from financing activities in the following manner;
a. Standard Assets:
Provision against Standard Assets is made at the rate prescribed by The Master Direction -
Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and
Deposit taking Company (Reserve Bank) Directions, 2016.

b. Non-Performing assets : Sub-standard, Doubtful and loss assets:

Provision as required under The Master Direction - Non-Banking Financial Company -
Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve
Bank) Directions, 2016 is made. Further additional provision over and above the minimum
levels specified is made as considered appropriate by the management.
ii. Loss on Sale of Repossessed Assets represents shortfall in realization of outstanding loan
receivable balances on disposal of the underlying hypothecated assets and includes provisions
created in the earlier years in respect of such loan balances.

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

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

BALANCE SHEET
2.1 SHARE CAPITAL (₹ in ‘000)
As at
Particulars
31-Mar-19 31-Mar-18
Authorized
2,50,00,000 equity shares of ₹10 par value 25 00 00 25 00 00
(2,50,00,000 equity shares of ₹10 par value)
Issued, Subscribed and fully Paid up
1,64,47,533 equity shares of ₹10 par value 16 44 75 16 44 75
(1,64,47,533 equity shares of ₹10 par value)
Total 16 44 75 16 44 75

The reconciliation of the number of equity shares outstanding and the amount of share capital as
at 31st March, 2019 and 31st March 2018, is set out below:
(₹ in ‘000)
As at 31-Mar-19 As at 31-Mar-18
Particulars No of Shares Amount No of Shares Amount
in ‘000 ₹ in ‘000 in ‘000 ₹ in ‘000
No of shares outstanding at the beginning of the year 1 64 48 16 44 75 1 24 73 12 47 26
Add: Bonus shares issued by capitalization of general
reserve account - - 12 47 1 24 73
1 64 48 16 44 75 1 37 20 13 71 99
Add: Shares issued to Qualified Institutional Buyers - - 27 28 2 72 76
No of shares outstanding at the end of the year 1 64 48 16 44 75 1 64 48 16 44 75

The Company has only one class of shares referred to as equity shares having a par value of ₹ 10. Each holder
of equity share is entitled to one vote per share.
In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive any of the
remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential
amounts exist currently. The distribution will be in proportion to the number of equity shares held by the
shareholders.

Shareholders holding more than 5% shares in the Company:

(₹ in ‘000)

As at 31-Mar-19 As at 31-Mar-18
Particulars No. of shares No. of shares
in ‘000 % in ‘000 %
Equity Shares
Thomas John Muthoot 31 34 19.06 31 36 19.07
Thomas George Muthoot 31 31 19.04 31 31 19.04
Thomas Muthoot 30 77 18.71 30 77 18.71

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

2.2 RESERVES AND SURPLUS

(₹ in ‘000)
As at
Particulars
31-Mar-19 31-Mar-18
Securities Premium:
At the beginning of the year 201 34 80 41 80 80
Add: Issue of shares at a premium of ₹595/- per share - 162 29 82
Less: Expenditure on Qualified Institutional Placement - (2 75 82)
At the end of the year 201 34 80 201 34 80
Statutory Reserve:
(As per Section 45-IC of the Reserve Bank of India Act, 1934)
At the beginning of the year 45 15 79 34 35 79
Add: Transfer from Surplus in Statement of Profit and Loss 16 50 00 10 80 00
At the end of the year 61 65 79 45 15 79
General Reserve:
At the beginning of the year 11 85 27 13 10 00
Less: Amounts utilised towards issue of fully paid bonus shares (1 24 73)
At the end of the year 11 85 27 11 85 27
Surplus in the Statement of Profit and Loss
At the beginning of the year 119 12 37 76 24 65
Add: Profit for the year 82 42 47 53 67 72
Less: Appropriations
Transfer to Statutory Reserves (16 50 00) (10 80 00)
At the end of the year 185 04 84 119 12 37
Total 459 90 70 377 48 23

2.3 LONG - TERM BORROWINGS

(₹ in ‘000)
As at
Particulars
31-Mar-19 31-Mar-18
Secured:
Loan from Banks - Term Loans (Refer Note No. 2.3.1) 99 58 41 7 85 00
Loan from Others - Financial Institution (Refer Note No. 2.3.2) 26 90 40 -
Unsecured:
Subordinated Term Loan (Refer Note No. 2.3.3A) 30 00 00 30 00 00
Subordinated Debts-Retail(Includes subordinated debt from related party
₹ 3 00 00 thousand (₹3 00 00 thousand) (Refer Note No. 2.3.3B) 28 66 90 27 95 81
Public Deposits (Includes deposit from related party₹ 1 00 00 thousand
(Nil) (Refer Note No. 2.3.4) 17 40 29 30 45 93
Total 202 56 00 96 26 74

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2.3.1 Loans from Banks - Term Loans

This liability towards term loan from banks appears in the financial statements in the manner given below:

(₹ in ‘000)

Name of the element in Refer As at

Particulars
Financial Statements Note 31-Mar-19 31-Mar-18
Long- Term Borrowings 2.3 Loans from banks 99 58 41 7 85 00
Other Current Liabilities 2.8 Current Maturities of Long
term debts- Term Loans from bank 102 85 08 40 51 28

Total 202 43 49 48 36 28

Terms of Repayment of Bank Loans:

Security and Rate of Interest of Term Loans from Banks
The term loans from banks are secured by charge on the entire current assets including loans receivable of the
company. The rate of interest varies from 9.30% to 11.00% as on the Balance Sheet date.
These loans are repayable in equal monthly/ quarterly instalments which are spread over period up to 36
months.

2.3.2 Term Loan From Other Financial Institutions:

Maturity pattern of Term Loan From Financial Institutions
This liability towards term loan appears in the financial statements in the manner given below:
(₹ in ‘000)
Name of the element in Refer As at
Particulars
Financial Statements Note 31-Mar-19 31-Mar-18
Long- Term Borrowings 2.3 Loans from Others - Financial Institutions 26 90 40 -
Current Maturities of Long term debts-Term
Other Current Liabilities 2.8 Loans from Others 49 93 74 -
Total 76 84 14 -

Security and Rate of Interest of Term Loans from Financial Institution

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

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

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2.3.3 Subordinated Term Loans/Debts (Sub Debts):

A. Northern Arc Capital Limited (Formerly known as IFMR Capital Finance Private
Limited) -
The Company has taken two Subordinated Unsecured Term Loans from Northern Arc Capital
Ltd. of ₹ 15 00 00 thousand each on 29th June, 2016 and 30th March, 2017 respectively, with
interest rates being 12.5% and 11.95%. The loans will be repaid only on maturity i.e. after 66
months from the date of availing the loan.
B. The Company has also accepted subordinated debts from public under three schemes, namely
Monthly, Annual and Maturity interest payment with interest rates ranging from 9% to 13.4%.
The maturity period of the loan ranges from 60 months to 96 months. The subordinated debts
issued under each scheme will be repaid only on maturity.

Maturity pattern of Subordinated Debts from public:

(₹ in ‘000)

Interest For the Financial Year 2018-19 For the Financial Year 2017-18
Rate % per Matured Current Non- Total Matured Current Non- Total
Annum
Unclaimed Current Unclaimed Current
<=9 - - 36 50 36 50 - - - -
>9 – 12 - - 27 09 31 27 09 31 - - 26 74 72 26 74 72
>12 – 15 25 - 1 21 09 1 21 34 - 2 58 32 1 21 09 3 79 41
Total 25 - 28 66 90 28 67 15 - 2 58 32 27 95 81 30 54 13

This liability towards subordinated debts from public appears in the financial statements in the manner
given below:

Name of the element in Refer As at

Particulars
Financial Statements Note 31-Mar-19 31-Mar-18
Long - Term Borrowings 2.3 Subordinated Debts – Retail 28 66 90 27 95 81
Other Current Liabilities 2.8 Current Maturities of Long term - 2 58 32
Debts:
Subordinated Debts 25 -
Unclaimed Subordinated Debts
Total 28 67 15 30 54 13

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

2.3.4 Public Deposits:

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

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Maturity pattern of Public Deposits:

(₹ in ‘000)
Interest For the Financial Year 2018-19 For the Financial Year 2017-18
Rate %
per Matured Current Non- Total Matured Current Non- Total
Annum Unclaimed Current Unclaimed Current
<=9 2 19 24 36 13 11 10 81 12 49 13 47 2 52 07 34 15 86 18 26 69 54 94 62
>9 to 12.5 52 36 5 30 42 6 59 17 12 41 95 74 15 14 39 97 12 19 24 27 33 36
Total 2 71 60 41 43 53 17 40 29 61 55 42 3 26 22 48 55 83 30 45 93 82 27 98

The Matured Unclaimed Public Deposits include the Public Deposits - pending Renewal amounting to
₹ 94 26 thousand (₹ 1 26 40 thousand) as shown in Note No. 2.8 Other Current Liabilities.

This liability towards Public Deposits appears in the financial statements in the manner given below:
(₹ in ‘000)
Name of the As at
Refer
element in Financial Particulars
Note 31-Mar-19 31-Mar-18
Statements
Long- Term
2.3 Public Deposits 17 40 29 30 45 93
Borrowings
Other Current Current Maturities of Long Term
2.8 41 43 53 48 55 83
Liabilities Debt: Public Deposits
Other Current
2.8 Public Deposits Pending Renewal 94 26 1 26 40
Liabilities
Other Current
2.8 Unclaimed Matured Public Deposits 1 77 34 1 99 82
Liabilities
Total 61 55 42 82 27 98

2.4 OTHER LONG TERM LIABILITIES

(₹ in ‘000)
As at
Particulars
31-Mar-19 31-Mar-18
Non-current portion of interest accrued, but not due on:
Subordinated Debts (Refer Note No. 2.4.1) 4 88 99 2 95 54
Public Deposits (Refer Note No. 2.4.1) 98 72 2 01 07
Others
Security Deposits (Unsecured) 2 27 79 1 35 47
Non - Current portion of Unrealized Gain (Refer Note No. 2.4.2) 3 51 21 80
Total 11 66 71 6 32 88

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

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

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(₹ in ‘000)
Name of the element in Refer As at
Particulars
Financial Statements Note 31-Mar-19 31-Mar-18
Other Long- Term 2.4 Non-Current portion of Unrealized 3 51 21 80
Liabilities Gain
Other Current Liabilities 2.8 Unrealized Gain on Loan Transfer
35 35 04 6 45 69
Transactions
Total 38 86 25 6 46 49

2.5 LONG TERM PROVISIONS

(₹ in ‘000)
As at
Particulars
31-Mar-19 31-Mar-18
Provision for Accumulated Compensated Absences 71 68 -
(Refer Note No.2.5.1and 3.2)
Total 71 68 -

2.5.1The liability towards Accumulated Compensated Absences appears in the financial statements in
the manner given below:
(₹ in ‘000)
Name of the element in Refer As at
Particulars
Financial Statements Note 31-Mar-19 31-Mar-18
Long Term Provisions 2.5 Provision for Accumulated 71 68 -
Compensated Absences
Short Term Provisions 2.9 Provision for Accumulated
5 06 -
Compensated Absences
Total 76 74 -

2.6 SHORT - TERM BORROWINGS

(₹ in ‘000)
As at
Particulars
31-Mar-19 31-Mar-18
Secured
Loans from Banks
Working Capital Demand Loans and Cash Credits
(Refer Note No. 2.6.1) 1146 60 69 1100 73 98
Unsecured
Loans and Advances from Related Parties (Refer Note No. 2.6.2) 10 24 34 5 78 06
Inter Corporate Deposits (Refer Note No. 2.6.3) 1 62 47 1 49 95
Commercial Paper - 145 23 09
Total 1158 47 50 1253 25 08

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

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Security and Rate of Interest of Working Capital Demand Loans and Cash Credits from
Banks
The Cash Credits and Working Capital Demand Loan facilities have been obtained from the banks by
creating First Charge by way of hypothecation of the entire current assets, including business loans,
hypothecation loans and all other loan receivables, ranking pari-passu with other banks and Debenture
Holders.
Interest on these loans varies between 8.4% to 11.2% per annum as on the Balance Sheet date.
These loans are repayable within a period upto 12 months from the date of sanction.

2.6.2. Loans and Advances from Related Parties

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

2.6.3. Inter Corporate Deposits

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

2.7 TRADE PAYABLES

(₹ in ‘000)
As at
Particulars
31-Mar-19 31-Mar-18
Total outstanding dues of micro enterprises and small enterprises
(Refer Note 2.7.1) - -
Total outstanding dues of creditors other than micro enterprises and 21 83 46 15 58 44
small enterprises
Total 21 83 46 15 58 44

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

thousand)

2.7.1 Amount Payable to Micro, Small and Medium Enterprises

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

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

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2.8 OTHER CURRENT LIABILITIES

(₹ in ‘000)
As at
Particulars
31-Mar-19 31-Mar-18

Current Maturities of Long Term Debts:

Debentures (Secured) - 8
Public Deposits 41 43 53 48 55 83
Subordinated Debts - 2 58 32
Term Loans:
From Banks 102 85 08 40 51 28
From Others - Financial Institution 49 93 74 -
Unclaimed Matured
Debentures (Refer Note No. 2.8.1) 3 76 9 56
Public Deposits 1 77 34 1 99 82
Subordinated Debts 25 -
Interest accrued and due on borrowings
Unclaimed Matured Debentures 2 45 8 44
Unclaimed Matured Public Deposits 17 56 13 40
Subordinated Debts 24 -
Interest accrued, but not due on
Bank Borrowings 4 09 93 3 96 01
Borrowings from Other Financial Institutions 56 46
Debentures - 5
Subordinated Debts (Includes interest accrued on subordinated debt
from related party ₹1 15 thousand (₹1 28 thousand) 16 00 1 56 32
Public Deposits (Includes interest on public deposit from related party
₹10 thousand (Nil) 3 35 47 3 57 75
Inter Corporate Deposits 8 7
Instalment received in advance from Hypothecation Customers/Term loans 10 99 83 9 93 20
Unclaimed dividends 36 06 37 01
Public Deposits Pending Renewal 94 26 1 26 40
Unrealized Gain on Loan Transfer Transactions 35 35 04 6 45 69
Initial Payment 3 83 11 89
Foreclosure 23 58 1 24
Payables towards securitisation transactions 71 72 65 44 24 66
Other Payables:
Statutory Dues Payable 3 80 96 3 10 99
Total 327 88 10 168 58 01

2.8.1 Debentures:

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

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Maturity Pattern of Debentures:

(₹ in ‘000)
Interest For the Financial Year 2018-19 For the Financial Year 2017-18
Rate %
per Matured Current Non- Total Matured Current Non- Total
Annum Unclaimed Current Unclaimed Current
>9 – 12 97 - - 97 1 04 8 - 1 12
>12 – 15 279 - - 2 79 8 52 - - 8 52

Total 3 76 - - 3 76 9 56 8 - 9 64

This liability towards Debentures appears in the financial statements in the manner given below:
(₹ in ‘000)
Name of the element in Refer As at
Particulars
Financial Statements Note 31-Mar-19 31-Mar-18
Other Current Liabilities 2.8 Current Maturities of Long Term - 8
Debt: Debentures (Secured)
Other Current Liabilities 2.8 Unclaimed matured Debentures 3 76 9 56
Total 3 76 9 64

2.9 SHORT - TERM PROVISIONS

(₹ in ‘000)
As at
Particulars
31-Mar-19 31-Mar-18
Provision for Employee Benefits
Provision for Bonus 1 40 00 1 25 00
Provision for Gratuity (Refer Note No. 3.1) 34 35 39 36
Provision for Accumulated Compensated Absences
(Refer Note No. 3.2) 5 06
Provision for Taxation (Net) - 3 03 43
Contingency provisions against standard assets 7 89 00 7 32 00
Provision for Non-Performing Assets 51 23 37 30 98 28
Provision for others 54 86 86 35
Total 61 46 64 43 84 42

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 2.10 FIXED ASSETS (₹ in ‘000)
GROSS BLOCK (AT COST) DEPRECIATION/AMORTISATION NET BLOCK
Particulars As at 01 Additions Deductions/ As at 31 As at 01 Disposal/ As at 31 As at 31 As at 31
For the Year
April, 2018 Transfer Transfer March, 2019 April, 2018 Adjustment March, 2019 March, 2019 March, 2018
(i) Tangible
Assets-
(Property,
Plant &
Equipment)
Vehicles 55 88 - - 55 88 38 32 5 36 - 43 68 12 20 17 56
(63 92) - (8 04) (55 88) (38 05) (7 91) (7 64) (38 32) (17 56) (25 87)
Furniture and 2 94 53 3 18 7 92 2 89 79 1 84 65 29 18 7 18 2 06 65 83 14 1 09 88
Fittings (2 74 03) (31 11) (10 61) (2 94 53) (1 58 03) (34 21) (7 59) (1 84 65) (1 09 88) (1 16 00)
Office 1 34 60 9 75 2 54 1 41 81 1 16 80 7 52 2 33 1 21 99 19 82 17 80
Equipments (1 33 64) (7 57) (6 61) (1 34 60) (1 10 97) (11 85) (6 02) (1 16 80) (17 80) (22 67)
Computers and 3 79 82 15 99 44 87 3 50 94 3 04 98 17 50 1 09 3 21 39 29 55 74 84
Accessories (3 29 95) (52 12) (2 25) (3 79 82) (2 75 97) (30 27) (1 26) (3 04 98) (74 84) (53 98)
Windmill 89 78 - - 89 78 85 29 - - 85 29 4 49 4 49
Generator (89 78) - - (89 78) (85 29) - - (85 29) (4 49) (4 49)
Total Tangible 9 54 61 28 92 55 33 9 28 20 7 30 04 59 56 10 60 7 79 00 1 49 20 2 24 57
Assets (8 91 32) (90 80) (27 51) (9 54 61) (6 68 31) (84 24) (22 51) (7 30 04) (2 24 57) (2 23 01)
(ii)Intangible
Assets
Computer 36 38 43 55 - 79 93 12 93 43 95 - 56 88 23 05 23 45
Software (-) (36 38) (-) (36 38) (-) (12 93) (-) (12 93) (23 45) (-)
Total Intangible 36 38 43 55 - 79 93 12 93 43 95 - 56 88 23 05 23 45
Assets (-) (36 38) (-) (36 38) (-) (12 93) (-) (12 93) (23 45) (-)
Grand Total 9 90 99 72 47 55 33 10 08 13 7 42 97 1 03 51 10 60 8 35 88 1 72 25 2 48 02
(8 91 32) (1 27 18) (27 51) (9 90 99) (6 68 31) (97 17) (22 51) (7 42 97) (2 48 02) (2 23 01)
(iii) Intangible - 22 49 - 22 49 - - - - 22 49 -
Assets under
Development -
Software (36 15) (23) (36 38) - - - - - - (36 15)
Total Intangible - 22 49 - 22 49 - - - - 22 49 -
Assets under
development (36 15) (23) (36 38) - (-) (-) (-) (-) (-) (36 15)

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ANNUAL REPORT 2018 - 19

2.11 NON - CURRENT INVESTMENTS

(₹ in ‘000)
As at
Particulars
31-Mar-19 31-Mar-18
Investments in Government Securities (Refer Note 2.11.2 ,2.11.3 and 2.11.4)
Nil (8,88,000) units of ₹100/-each in 7.28% GOI 2019 - 8 35 44
5,00,000 (5,00,000) units of ₹100/-each in 8.12% GOI 2020 4 89 50 4 89 50
50,000 (50,000) units of ₹100/-each in 8.24% Kerala SDL 2025 50 00 50 00
50,000 (50,000) units of ₹100/-each in 7.98% Tamilnadu SDL 2026 50 00 50 00
Investments in Portfolio Management Service (PMS): Hedge Equities 94 15 56 25
(Refer note No. 2.11.1 and 2.11.2)
Investment in Alternate Investment Funds Investments 40 (Nil)
units of ₹100 000/- each in JM Financials (Refer Note No. 2.11.2) 40 00 -
Investment in Alternate Investment Funds 3 05 000 (3 05 000)
units of ₹100/- each in BPEA (Refer Note No. 2.11.2) 3 05 00 3 05 00
Total 10 28 65 17 86 19

2.11.1 Investment in PMS is represented by the following-

(a) Nil (7 750) shares of ₹2/- each in Manappuram Finance Ltd –₹Nil (₹7 64 thousand)
(b) 9 260 (10 526) shares of ₹10/- each in Muthoot Finance Ltd-₹41 94 thousand (₹48 57thousand)
(c) 5 02 006 (Nil) units in HDFC Ultra Short-term Fund ₹52 21 thousand (₹Nil)
(d) Balance with PMS ₹Nil (₹4 thousand)

2.11.2 Aggregate amount of quoted investment is ₹6 83 65 thousand (₹14 81 15 thousand) and market
value is ₹7 25 07 thousand (₹15 60 91 thousand), aggregate amount of unquoted investment
is ₹3 45 00 thousand (₹3 05 04 thousand). Aggregate provision for diminution in value of
investment is Nil.

2.11.3 The summary of the investments in Government Securities appears in the financial statements
in the manner shown below.
(₹ in ‘000)
Name of the element in Refer As at
Particulars
Financial Statements Note 31-Mar-19 31-Mar-18
Non-Current Investments 2.11 Investments in Government 5 89 50 14 24 94
Securities
Current Investments 2.16 Investments in Government
8 35 44 -
Securities
Total 14 24 94 14 24 94

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

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2.12 DEFERRED TAX ASSETS (NET)

(₹ in ‘000)
As at
Particulars
31-Mar-19 31-Mar-18
Deferred Tax Assets
Provision for NPA and Others 16 23 87 10 87 10
Impact of Difference between Tax depreciation and depreciation
charged for Financial Reporting 54 47 45 11

Net Deferred Tax Asset 16 78 34 11 32 21

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

2.13 LONG TERM RECEIVABLES FROM FINANCING ACTIVITIES

(₹ in ‘000)
As at
Particulars
31-Mar-19 31-Mar-18

Secured,considered good, unless otherwise stated:

Hypothecation Loans (includes loan to related parties ₹ Nil 775 17 55 672 99 66
(₹2 16 thousand) (Refer Note 2.13.1)
Retained interest under Securitization and Assignment transaction
(Refer Note 2.13.2) 77 44 16 23 81 90
Term Loans (Refer Note 2.13.3) 134 09 37 129 22 15
Loan Buyout 16 84 33 20 70
Demand Promissory Note (Refer Note 2.13.4) 5 00 00 1 00 00
Other Loans (Loan against Public Deposits) 10 82 18 87
Unsecured,considered good, unless otherwise stated:
Demand Promissory Notes (Refer Note 2.13.4) 5 77 28 94
Total 1008 72 00 827 72 22

2.13.1 The summary of the receivables against Hypothecation Loans appears in the financial
statements in the manner shown below.
(₹ in ‘000)
Name of the element in Refer As at
Particulars
Financial Statements Note 31-Mar-19 31-Mar-18
Long -Term Receivables 2.13 Hypothecation Loans 775 17 55 672 99 66
from Financing Activities
Receivables from Financing 2.18 Balance outstanding in current
814 32 19 890 35 76
Activities maturity of Hypothecation Loans
Total 1589 49 74 1563 35 42

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2.13.2 The summary of the Retained Interest under Securitisation and Assignment Transaction
appears in the financial statements in the manner shown below.
(₹ in ‘000)
Name of the element in Refer As at
Particulars
Financial Statements Note 31-Mar-19 31-Mar-18
Long -Term Receivables 2.13 Retained Interest under Securitization 77 44 16 23 81 90
from Financing Activities and Assignment Transactions
Receivables from Financing 2.18 Retained Interest under Securitisation 19 06 51 30 56 95
Activities and Assignment Transactions
Total 96 50 67 54 38 85

2.13.3 The summary of Term Loans appears in the financial statements in the manner shown below:
(₹ in ‘000)
Name of the element in Refer As at
Particulars
Financial Statements Note 31-Mar-19 31-Mar-18
Long -Term Receivables 2.13 Term Loans 134 09 37 129 22 15
from Financing Activities
Receivables from Financing 2.18 Balance outstanding in current
Activities 152 13 06 123 39 60
maturity of Term Loans
Total 286 22 43 252 61 75

2.13.4 The summary of the Demand Promissory Notes appears in the financial statements in the
manner shown below:
(₹ in ‘000)
Name of the element in Refer As at
Particulars
Financial Statements Note 31-Mar-19 31-Mar-18
Secured - Demand Promissory Notes 5 00 00 1 00 00
Long -Term Receivables 2.13
from Financing Activities Unsecured - Demand Promissory 5 77 28 94
Notes
Secured - Demand Promissory Notes 10 16 26 4 63 24
Receivables from Financing 2.18
Activities Unsecured - Demand Promissory 14 44 36 7 82 49
Notes
Total 29 66 39 13 74 67

2.14 LONG -TERM LOANS AND ADVANCES

(₹ in ‘000)
As at
Particulars
31-Mar-19 31-Mar-18
Unsecured, considered good, unless otherwise stated
Security deposits (Including security deposit to related party
₹68 65 thousand (₹68 65 thousand) ) 1 11 78 1 09 23
Total 1 11 78 1 09 23

2.15 OTHER NON - CURRENT ASSETS

(₹ in ‘000)
As at
Particulars
31-Mar-19 31-Mar-18
Interest only strip (i/o strip) under securitization transactions
(Refer Note no.2.15.1) 3 51 21 80
Total 3 51 21 80

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2.15.1 The summary of Interest only strip (i/o strip) under securitization transactions appears in the
financial statements in the manner shown below.
(₹ in ‘000)
Name of the element in Refer As at
Particulars
Financial Statements Note 31-Mar-19 31-Mar-18
Other Non-Current Assets 2.15 Interest only strip (i/o strip) under 3 51 21 80
securitisation transactions
Other Current Assets 2.20 Interest only strip (i/o strip) under 35 35 04 6 45 69
securitisation transactions
Total 38 86 25 6 46 49

2.16 CURRENT INVESTMENTS

(₹ in ‘000)
As at
Particulars
31-Mar-19 31-Mar-18
Quoted
Investments - Mutual Fund 19 19
(10 (10) units of UTI Mutual Fund Gold Exchange Traded Fund-Market
value of ₹ 28 thousand) (₹ 27 thousand)
Investment in Government Securities (8,88,000 (Nil) units of 7.28%
GOI 2019 (Refer note no.2.16.1 and 2.11.4) 8 35 44 -
Total 8 35 63 19

2.16.1 Aggregate amount of quoted investment is ₹8 35 63 thousand (₹19 thousand) and market value
is ₹8 8961 thousand (₹27 thousand).

2.17 CASH AND CASH EQUIVALENTS

(₹ in ‘000)
As at
Particulars
31-Mar-19 31-Mar-18
Balances with Banks 31 47 10 2 81 67
Cash on Hand 3 16
Other balances with banks
in Deposit accounts – SLR Deposits 2 00 00 4 81 25
in Unclaimed Dividend Accounts 36 06 37 01
Deposits offered as Collateral security against securitisation transaction
(Refer Note 2.17.1) 50 44 80 8 84 20
Total 84 27 99 16 84 29

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

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2.18 RECEIVABLES FROM FINANCING ACTIVITIES

(₹ in ‘000)
As at
Particulars
31-Mar-19 31-Mar-18
Secured, considered good unless otherwise stated
Balance outstanding in current maturity of:
Hypothecation Loans (includes loan to related parties ₹ 2 15 thousand
(₹ 1 80 thousand) (Refer note 2.18.1 and 2.18.4) 814 32 19 890 35 76
Loans Buyout (Refer note 2.18.2) 35 22 13 36 88
Term Loans(Refer note 2.18.3 and 2.18.5) 152 13 06 123 39 60
Demand Promissory Notes (Refer note 2.18.6) 10 16 26 4 63 24
Retained interest under Securitisation and Assignment transaction 19 06 51 30 56 95
Other Loans 12 19 41 16
Interest Accrued, but not due on:
Hypothecation Loans (includes interest accrued on related
parties ₹ 3 thousand (₹ 5 thousand) 22 12 31 21 81 98
Loans Buyout 12 36 31
Term Loans 1 22 98 87 31
Retained Interest under Securitisation and Assignment Transaction 6 50 91 7 93 91
Other Loans 2 54 8 46
(Unsecured, considered good unless otherwise stated)
Balance outstanding in current maturity of:
Demand Promissory Notes (DPN)
(includes DPN to related party ₹ 2 50 39 thousand (₹ 5 00 80 thousand) 14 44 36 7 82 49
(Refer Note 2.18.6)
Total 1075 47 80 1088 28 05

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

2.18.2 Loans Buyout

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

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(₹ in ‘000)
Sl As at
Type of Portfolio
No. 31-Mar-19 31-Mar-18
1 Two - Wheeler Portfolio 28 71 46 23 05
2 Four - Wheeler Portfolio 5 92 90 34 53
3 Micro Finance Portfolio 17 42 10 -
Total 52 06 46 57 58

2.18.3 Term Loans

The company has advanced Term Loans to other Companies / NBFCs secured by way of first
charge/pari-passu charge on the loan portfolio created out of the lending by the Company. The
rate of interest receivable on the term loans ranges between 12.4% to 16% per annum on the
diminishing balance. The tenure of the loans ranges between 15 and 48 months.
(₹ in ‘000)

Sl As at
Segment dealt by the borrowers
No. 31-Mar-19 31-Mar-18
1 Agriculture Loan 4 02 78 7 36 11
2 Vehicle Loans 67 83 68 63 01 66
3 Education Loan 1 93 75 2 68 75
4 Housing Loan 7 29 24 10 90 94
5 Microfinance 1 03 24 09 85 54 95
6 SME / MSME 62 97 22 43 88 89
7 Small Business 31 00 00 39 20 45
8 Gold Loans 7 91 67
Total 286 22 43 252 61 75

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

2.18.4 Maturity Pattern of Hypothecation Loans:

(₹ in ‘000)
For the Financial Year 2018- 2019 For the Financial Year 2017-2018
Particulars Current Non- Total Current Non- Total
Current Current
Hypothecation Loan 814 32 19 775 17 55 1589 49 74 890 35 76 672 99 66 1563 35 42
Total 814 32 19 775 17 55 1589 49 74 890 35 76 672 99 66 1563 35 42

2.18.5 Maturity Pattern of Term Loans:

(₹ in ‘000)
For the Financial Year 2018- 2019 For the Financial Year 2017-2018
Particulars Current Non- Total Current Non- Total
Current Current
Term Loan 152 13 06 134 09 37 286 22 43 123 39 60 129 22 15 252 61 75
Total 152 13 06 134 09 37 286 22 43 123 39 60 129 22 15 252 61 75

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2.18.6 Maturity Pattern of Demand Promissory Notes:

(₹ in ‘000)
For the Financial Year 2018- 2019 For the Financial Year 2017-2018
Particulars Current Non- Total Current Non- Total
Current Current
Demand Promissory
Note 24 60 62 5 05 77 29 66 39 12 45 73 1 28 94 13 74 67
Total 24 60 62 5 05 77 29 66 39 12 45 73 1 28 94 13 74 67

2.19 SHORT TERM LOANS AND ADVANCES

(₹ in ‘000)
As at
Particulars
31-Mar-19 31-Mar-18
Unsecured, considered good unless otherwise stated
Advances to Dealers 29 63 70 79
Other Advances 26 20 53 45
Balances with Statutory Authorities
Income Tax 6 91 02 1 59 06
Indirect Tax (Includes tax paid under protest ₹15 98 thousand) 15 98 5 51
Total 7 62 83 2 88 81

2.20 OTHER CURRENT ASSETS

(₹ in ‘000)
As at
Particulars
31-Mar-19 31-Mar-18
Unsecured, considered good unless otherwise stated
Interest Accrued on SLR Deposits / Investments 50 83 57 10
Interest accrued on Collateral / Bank deposits 39 06 21 86
Stock of stationery 26 30 20 27
Stock of Promotional Items 25 48 -
Debts Due from Related Parties 1 65 5 87
Other Receivables (Refer Note No. 2.20.1) 5 53 05 1 46 09
Interest only strip (i/o strip) under securitisation transactions
(Refer Note No. 2.20.2) 35 35 04 6 45 69
Prepaid Expense (Refer Note No. 2.20.3) 53 16 31 66
Total 42 84 57 9 28 54

2.20.1 Other receivables include amounts receivable from related parties amounting to ₹7 48 thousand
(₹3 87 thousand).

2.20.2 It comprises of Company’s share of future interest strip receivables in case of par structure of
securitisation.

2.20.3 Prepaid expense includes expense paid to related parties amounting to ₹ 14 08 thousand (Nil).

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STATEMENT OF PROFIT AND LOSS

2.21 REVENUE FROM OPERATIONS

(₹ in ‘000)
For the Year Ended
Particulars
31-Mar-19 31-Mar-18
Income from Financial Operations
Interest Income
Hypothecation Loans 314 19 39 235 70 79
Term Loans 33 77 81 26 18 38
Loans Buyout 62 39 38 43
Demand Promissory Notes 3 00 14 99 10
SLR Investments 1 13 36 1 13 36
Collateral fixed deposits with bank 1 53 74 65 84
SLR deposits with bank 29 39 47 80
Inter Corporate Deposit-MFL 2 32 28 -
Others 40 70 12 14
Other Financial Services
Hypothecation Loans 108 80 81 94 48 55
Term Loans / DPN 1 68 85 1 28 67
Income from Securitisation and Assignment Transactions 66 67 77 36 20 47
Servicer Fee income 16 31 9 07
Total 534 62 94 397 72 60

2.22 OTHER INCOME

(₹ in ‘000)
For the Year Ended
Particulars
31-Mar-19 31-Mar-18
Dividend Income 1 50
Net gain on sale of investments 12 99 6 68
Other Non- operating Income
Miscellaneous Income 13 32 12 69
Profit on sale of Fixed Assets 51 1 21
Income from Alternate Investment Fund 37 66 13 88
Total 64 48 35 96

2.23 EMPLOYEE BENEFITS EXPENSE

(₹ in ‘000)
For the Year Ended
Particulars
31-Mar-19 31-Mar-18
Salaries and Wages 51 10 67 41 82 29
Incentive to Employees 8 39 90 8 15 26
Contribution to Provident and Other funds 4 64 68 4 22 08
Staff Welfare Expense 65 97 32 23
Outsourced Manpower 9 93 69 6 29 40
Other Expenses 3 07 02 3 36 36
Total 77 81 93 64 17 62

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2.24 FINANCE COSTS

(₹ in ‘000)
For the Year Ended
Particulars
31-Mar-19 31-Mar-18
Interest Expenses
Bank Loans 12 68 165 97 14 52
Other Financial Institution 5 33 56 -
Debentures 40 14 23
Subordinated Debts 7 52 18 6 95 92
Public Deposits 6 03 93 8 61 10
Loans from Directors 40 73 1 28 82
Inter Corporate Deposits 33 64 13 71
Securitisation Expense 2 81 03 1 47 81
Discount on Commercial Paper 5 35 39 2 69 46
Other Borrowing cost 6 88 21 4 37 22
Total 161 50 72 122 82 79

2.25 OTHER EXPENSES

(₹ in ‘000)
For the Year Ended
Particulars
31-Mar-19 31-Mar-18
Hypothecation Loan Collection Charges 61 36 80 43 77 86
Business sourcing Incentive 28 51 61 29 35 87
Investigation and Professional Charges 4 88 01 5 27 49
Rent 4 08 75 3 85 40
Advertisement Expenses 5 16 80 52 72
Communication Expenses 2 69 57 2 27 28
Printing & Stationery 1 58 29 1 36 48
Travelling Expenses 1 37 83 1 28 81
Back Office Processing 2 66 52 2 01 15
Business Promotion Expense 86 87 35 22
Power and Fuel 33 53 35 27
Expenditure against Corporate Social Responsibility Activities
(Refer Note 2.25.2) 1 31 21 54 33
Repairs and Maintenance 53 01 15 15
Insurance 5 07 5 18
Payment to Auditor (Refer note 2.25.1) 17 95 16 81
Internal Audit Fees 15 24 12 12
Rates and Taxes 17 99 167
Miscellaneous Expenses 2 89 64 2 56 77
Total 118 84 69 94 05 58

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2.25.1 Payment to Auditor

(₹ in ‘000)
For the Year Ended
Particulars
31-Mar-19 31-Mar-18
Audit fees (including for Limited Review) 13 63 13 08
Taxation matters 2 18 2 18
Reimbursement of expenses 40 46
Other Services (Includes Nil (₹779 thousand) under expenditure on
Qualified Institutional Placement) 1 74 8 88
Total 17 95 24 60

2.25.2 Expenditure against Corporate Social Responsibility Activities

(₹ in ‘000)
For the Year Ended
Particulars
31-Mar-19 31-Mar-18
a) Gross Amount required to be spent by the company during the year 1 69 00 1 13 19
b) Amount spent during the year on: - -
-On purposes, other than construction/ acquisition of any asset
Paid in Cash 1 31 21 54 33
Yet to be paid in Cash - -

2.26 PROVISIONS AND WRITE OFF

(₹ in ‘000)
For the Year Ended
Particulars
31-Mar-19 31-Mar-18
Loss on sale of repossessed assets 19 99 82 14 11 74
Loans Written off (Refer Note No. 2.26.1) 7 75 77 1 60 35
Provisions for:
Non-Performing Assets 20 25 09 14 36 95
Standard Assets 57 00 3 36 00
Others 24 35 14 34
Total 48 82 03 33 59 38

2.26.1 An amount of ₹ 7 75 77 thousand (₹ 1 60 35 thousand) has been written off against the non-
performing hypothecation assets. (Refer significant accounting policy No 1.19)

[Link] Benefit Plans

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

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ANNUAL REPORT 2018 - 19

A. Reconciliation of benefit obligation and plan asset for the year

(₹ in ‘000)
For the Year Ended
Particulars
31-Mar-19 31-Mar-18
(i) Change in Defined Benefit Obligation
Opening Defined Benefit Obligation 2 81 81 1 85 07
Current Service Cost 72 07 56 92
Past Service Cost - -
Interest Cost 22 54 17 08
Benefits paid from fund (30 45) (26 18)
Actuarial Losses/ (Gain) (4 67) 48 92
Closing Defined Benefit Obligation 3 41 30 2 81 81

(ii) Change in Fair Value of Plan Assets

Opening Fair Value of Plan Assets 2 42 45 2 19 21
Expected Return on Plan Assets 19 40 17 54
Contributions by employer 80 00 30 41
Interest - -
Benefits Paid (30 45) (26 18)
Actuarial Losses/ (Gain) (4 45) 1 47
Closing Fair Value of Plan Assets 3 06 95 2 42 45

B. Amount recognized in Balance Sheet

(₹ in ‘000)
For the Year Ended
Particulars
31-Mar-19 31-Mar-18
Present Value of Funded Obligations (3 41 30) (2 81 81)
Fair Value of Plan Assets 3 06 95 2 42 45
Net Asset/(Liability) (34 35) (39 36)

C. Expense recognized in the Statement of Profit & Loss.

(₹ in ‘000)
For the Year Ended
Particulars
31-Mar-19 31-Mar-18
Current Service Cost 72 07 56 92
Past Service Cost -
Interest on defined benefit obligation 22 54 17 08
Interest on plan asset - -
Expected return on plan asset (19 40) (17 54)
Net Actuarial losses/(gains) recognized in the year (22) 47 45
Total, included in “Employee Benefits Expense” as shown in Note 2.23 74 99 1 03 91

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D. The principal assumptions used in determining gratuity obligation for the Company’s plans
are shown below:
(₹ in ‘000)
For the Year Ended
Particulars
31-Mar-19 31-Mar-18
Discount Rate (p.a.) 7.7% 8.0%
Salary Escalation Rate (p.a.) 5.0% 5.0%

3.2 Defined Benefit Plan - Accumulated Compensated Absences

During the year,the company has recognized provision for accumulated compensated absence in the
statement of Profit and Loss in note no.2.23 “Employee Benefit Expenses”. Details on as follows:
(₹ in ‘000)
Particulars 2018-19 2017-18
Provision for Accumulated Compensated Absences 76 74 -
Total 76 74 -

Out of the above ₹ 71 68 thousand (Nil) is classified as long term provisions and ₹ 5 06 thousand (Nil)
classifies as short term provisions.

4. Related Party Disclosures

Related party disclosures as per AS - 18 ‘Related Party Disclosures’ for the year ended 31st
March 2019, are given below:
4.1 Particulars of companies/ Firms/Limited Liability Partnerships/ Trusts where control /
significant influence exists:-: (with whom the company had transactions)

Name of the Companies/Firms/LLP/Trusts

SI No.
COMPANIES
1 Muthoot Fincorp Limited
2 Muthoot Housing Finance Company Limited
3 Muthoot Pappachan Technologies Limited
4 MPG Hotels and Infrastructure Ventures Private Limited
5 Muthoot Automotive (India) Private Limited
6 Muthoot Pappachan Medicare Private Limited
7 Muthoot Motors Private Limited
8 Muthoot Exim Private Limited
9 MPG Security Group Private Limited
FIRMS/LLPS/TRUSTS
1 Muthoot Bankers
2 Muthoot Estate Investments
3 Muthoot Motors (Cochin)
4 Muthoot Pappachan Foundation

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4.2 Related Parties including Key Managerial Personnel :( with whom the company had
transactions)

Sl No. Name of the Related Parties Designation

1 Thomas John Muthoot Chairman
2 Thomas George Muthoot Managing Director
3 Thomas Muthoot Director
4 Madhu Alexiouse Chief Operating Officer (from 01.02.2017)
5 Vinodkumar M. Panicker Chief Finance Officer
6 Syam Kumar R. Company Secretary & Head- Governancen (till 15.01.2018)
7 Ravi Oruganti (Refer Note No.4.2.1) Company Secretary & Compliance Officer (from 18.04.2018
till 28.03.2019)

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

4.3 Relatives of Related Parties: (with whom the company had transactions)

Sl No. Related Parties Name of Relatives Nature of Relationship

1 Thomas George Muthoot Ms. Tina Suzanne George Daughter
2 Thomas Muthoot Mrs. Remmy Thomas Wife

4.4 Details relating to transactions with parties referred in Note No. 4.1):
(₹ in ‘000)
For the Year For the Year
Particulars Name of Related Party
2018 -19 2017-18
Income:
Income from Wind Mill Operations Muthoot Bankers 7 24 8 82
Interest Income Muthoot Fincorp Limited 36 92 4 79
Interest Income on Term Loan Muthoot Housing Finance Limited 32 60 5 70
Processing Fees Muthoot Housing Finance Limited 2 50 50
Income from Hypothecation Loa Muthoot Pappachan Medicare - 89
Private Limited
Income from Hypothecation Loan MPG Hotels and Infrastructure 54 80
Ventures Private Limited
Interest Income on DPN Loan Muthoot Automotive (India) Private - 1 33
Limited
Interest Income on DPN Loan Muthoot Motors (Cochin) 30 73 23 71
Processing Fees Muthoot Motors (Cochin) 4 45 -
Income from Intercorporate Deposit Muthoot Fincorp Limited 2 32 28 -
Expenses:
Interest on Intercorporate Deposit Muthoot Fincorp Limited 19 73 -
Remuneration for services of Muthoot Fincorp Limited 12 46 -
Company Secretary (Refer Note 4.2.1)

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 ANNUAL REPORT 2018 - 19

(₹ in ‘000)
For the Year For the Year
Particulars Name of Related Party
2018 -19 2017-18
Business Sourcing Incentive (i) Muthoot Motors (Cochin) 1 16 30 99 95
(ii) Muthoot Motors Private Limited 4 49 3 41
(iii) Muthoot Fincorp Limited 5 42 83 6 83 25
Collection Charges Muthoot Fincorp Limited 5 21 09 5 03 54
Brokerage for canvassing Public Muthoot Fincorp Limited 8 61 -
Deposits
Wind Mill Expense Muthoot Bankers 2 50 3 64
Cibil-Transunion Muthoot Fincorp Limited 9 22 35 61
CSR Expenses Muthoot Pappachan Foundation 40 19 6 63
Travelling Expenses Muthoot Fincorp Limited 91 1 05
Advertisement Expenses Muthoot Motors (Cochin) 1 71 1 59
Printing and Stationery Muthoot Motors (Cochin) 5 -
Business Promotion Muthoot Exim Pvt Ltd 4 70 -
Rent on Space Sharing Muthoot Fincorp Limited 39 58 32 23
Rent Muthoot Estate Investments 83 94 79 71
Reimbursement of Expenses- Repairs Muthoot Motors (Cochin) 1 15 35
and Maintenance
Software Usage Charges Muthoot Pappachan Technologies 1 64 20 93 65
Limited
Annual Maintenance Charge Muthoot Pappachan Technologies 33 24 -
Limited
Assets:-
Trade Receivables Muthoot Bankers 7 48 3 87
Intangible assets developed Muthoot Pappachan Technologies - 36 26
Limited
Debt Due from Related Party Muthoot Fincorp Limited 1 65 5 87
Rent Deposit (i) Muthoot Estate Investments 30 17 30 17
(ii) Muthoot Fincorp Limited 13 48 13 48
Hypothecation loan receivable MPG Hotels and Infrastructure 2 18 4 01
including interest accrued Ventures Private Limited
Unsecured Loan-DPN (Including Muthoot Motors (Cochin) 2 50 39 5 00 80
Interest Accrued)
Prepaid - Software Usage Muthoot Fincorp Limited 7 00 -
Prepaid - Annual Maintenance Muthoot Fincorp Limited 7 08 -
Charge
Liabilities:
Business Sourcing Incentive Payable (i) Muthoot Motors (Cochin) 1107 9 45
(ii) Muthoot Motors Private Limited 43 31
Trade Advance –Payable Muthoot Motors (Cochin) 10 90 26 57
Cibil-Transunion Payable Muthoot Fincorp Limited 8 54 8 17
Travelling Expense Payable Muthoot Fincorp Limited 13 47
Brokerage Payable on Public Deposit Muthoot Fincorp Limited 8 61 -

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ANNUAL REPORT 2018 - 19

(₹ in ‘000)
For the Year For the Year
Particulars Name of Related Party
2018 -19 2017-18
Collection Charges and Business Muthoot Fincorp Limited 2 36 56 1 50 78
Sourcing Incentive Payable
Software Usage Charges Muthoot Pappachan Technologies 8 63 8 42
Limited
Debt Due to Related Party Muthoot Fincorp Limited 3 15 35 73
Rent Payable (i) Muthoot Estate Investments 6 93 13 20
(ii) Muthoot Fincorp Limited 6 21 2 57

4.5 Details relating to transactions with parties referred in Note No. (4.2& 4.3):
(₹ in ‘000)
For the Year For the Year
Particulars Name of Related Party
2018 -19 2017-18
Expenses:
Salaries, Perquisites and Incentives (i) Thomas George Muthoot 1 74 00 1 74 00
(ii) Madhu Alexiouse 66 90 50 51
(iii) Vinod Kumar M Panicker 76 66 69 56
(iv) Syam Kumar - 19 27
(v) Tina Suzanne George 13 10 2 57
PF Contribution (i) Thomas George Muthoot 10 44 10 44
(ii) Madhu Alexiouse 1 75 1 48
(iii) VinodKumar M Panicker 5 90 5 38
(iv) Syam Kumar - 17
(v) Tina Suzanne George 19 10
Reimbursement of expenses (i) Thomas George Muthoot 6 00 64
(ii) Madhu Alexiouse 1 75 2 25
(iii) Vinod Kumar M Panicker 4 75 5 55
Interest on Loan From director (i) Thomas George Muthoot 40 73 1 02 44
(ii) Thomas John Muthoot - 13 23
(iii) Thomas Muthoot - 13 15
Interest on Subordinate Debt Thomas George Muthoot 33 39 33 32
Interest on Public Deposit Remmy Thomas 11 -
Rent Paid Thomas George Muthoot 2 17 39 2 00 69
Assets:
Rent Deposit Thomas George Muthoot 25 00 25 00
Liabilities:
Loan from Directors Thomas George Muthoot 10 24 34 5 78 06
Subdebt (including interest accrued) Thomas George Muthoot 3 01 15 3 01 28
Public Deposit (including interest Remmy Thomas
accrued) 1 00 10 -

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 ANNUAL REPORT 2018 - 19

4.6. Transaction with Related parties referred in Note No. 4.1 & 4.2
(₹ in ‘000)
For the Year For the Year
Particulars Name of Related Party
2018-19 2017-18
Unsecured Loan –DPN
Given during the year Muthoot Motors (Cochin) 13 80 00 13 00 00
Muthoot Automotive (India) Private
Limited - 1 50 00
Repaid during the year Muthoot Motors (Cochin) 16 30 00 10 00 00
Muthoot Automotive (India) Private - 1 50 00
Limited
Hypothecation Loans
Repaid during the year Muthoot Pappachan Medicare - 8 63
Private Limited
MPG Hotels and Infrastructure 1 80 1 51
Ventures Private Limited
Term Loan Given
Given during the year Muthoot Housing Finance Limited 10 00 00 5 00 00
Repaid during the year Muthoot Housing Finance Limited 10 00 00 5 00 00
Loan from Directors:
Accepted during the year Thomas George Muthoot 4 50 00 7 25 00
Repaid during the year Thomas George Muthoot 372 12 00 00
Thomas John Muthoot - 1 56 00
Thomas Muthoot - 1 55 00
Intercorporate Deposit:
Given during the period Muthoot Fincorp Ltd 230 00 00 -
Repaid during the period Muthoot Fincorp Ltd 230 00 00 -
Taken during the period Muthoot Fincorp Ltd 50 00 00 -
Repaid during the period Muthoot Fincorp Ltd 50 00 00 -

4.7 Provisions for doubtful debts due from related parties at the balance sheet date-Nil (Nil)
4.8 Amounts written off or written back of debts due from or to related parties-Nil (Nil)

5. LEASES
The Lease rentals charged during the period and the maximum obligation on operating leases payable as
per the rentals stated in the respective agreements are as follows:
(₹ in ‘000)
Sl For the Year For the Year
Particulars
No. 2018-19 2017-18
1 Lease rentals recognized during the period 4 08 75 3 85 40
2 Lease obligations payable
Not later than one year 3 95 44 3 92 36
Later than one year and less than five years 6 36 00 5 59 08
Later than five years 57 20 1 36 60
Total 14 97 39 14 73 44

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ANNUAL REPORT 2018 - 19

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

6. EARNINGS PER SHARE

For the Year Ended

Particulars
31-Mar-19 31-Mar-18
Net profit for the year attributable to equity 82 42 47 53 67 72
shareholders (in ₹ ‘000)
Weighted average number of equity shares (in ‘000) 1 64 48 1 47 51
Basic and Diluted Earnings per share (in ₹) (Face Value of ₹10 per Share) 50.11 36.39

7. CONTINGENT LIABILITIES NOT PROVIDED FOR

(₹ in ‘000)
As at
Particulars
31-Mar-19 31-Mar-18
Matters where the future cash outflows are determinable only on receipt of
pending judgements /conclusions
-Income Tax issues where the Company is in appeal - 1 87
-Service Tax issues where Company is in appeal (Amount fully paid) 15 98 --
Corporate Guarantee for Securitisation transactions (Refer Note No 10 D) - 22 12 27
Capital Commitment 2 55 00 2 95 00
Total 2 70 98 25 09 14

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 ANNUAL REPORT 2018 - 19

8. GENERAL
8.1 Particulars showing maturity pattern of secured privately placed Redeemable Non
Convertible Debentures
Secured by charge on all movable assets, book debts, receivables and advances in the books of the
company.
(₹ in ‘000)
Series Number of Debentures
Financial Year of Maturity Amount
No. (in No’s)
B 2014-15 10 10
Total 10 10
G 2015-16 50 50
Total 50 50
H 2015-16 18 18
2016-17 72 72
Total 90 90
K 2016-17 10 10
Total 10 10
M 2012-13 59 59
2017-18 30 30
Total 89 89
N 2012-13 38 38
2015-16 44 44
2017-18 20 20
Total 102 102
R 2014-15 25 25
Total 25 25
Grand Total 376 376

Summary of Year Wise Maturity Pattern of the Debentures

(₹ in ‘000)

Financial Year of Maturity Amount

2012-13 97
2014-15 35
2015-16 112
2016-17 82
2017-18 50
Grand Total 376

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ANNUAL REPORT 2018 - 19

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

8.3 Expenditure in foreign currency
(₹ in ‘000)
For the Year For the Year
Particulars
Ended 31.03.2019 Ended 31.03.2018
Software Usage Fee 79 61
Expenditure on Qualified Institutional Placement 4 94
Total 79 5 55

8.4 Earnings in Foreign Currency - NIL

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

10. Disclosures required in Master Directions - Non-Banking Financial Company - Systemically

Important Non-Deposit taking company and Deposit taking company (Reserve Bank)
Directions, 2016 issued by Reserve Bank of India.

A. Capital
(₹ in ‘000)
Particulars March 31, 2019 March 31, 2018
i) Capital to Risk Weighted Asset Ratio (%) 21.88% 22.04%
ii) Capital to Risk Weighted Asset Ratio - Tier I Capital (%) 21.17% 19.69%
iii) Capital to Risk Weighted Asset Ratio - Tier II Capital (%) 0.71% 2.35%
iv) Amount of subordinated debt raised as Tier- II Capital 31 40 55 41 38 28
(Discounted value)
v) Amount raised by issue of Perpetual Debt Instruments Nil Nil

Discounted value of Subordinated debts

(₹ in ‘000)
March 31, 2019 March 31, 2018
Remaining maturity Rate of
of Instruments Discounted Discounted Discounted
Amount Amount
Value Value
Upto 1 year 100% 25 Nil 2 58 32 Nil
More than 1 year but upto 2 years 80% 1 26 59 25 32 Nil Nil
More than 2 years but upto 3 years 60% 28 77 64 11 51 06 1 26 59 50 64
More than 3 years but upto 4 years 40% 21 52 60 12 91 56 28 77 64 17 26 58
More than 4 years but upto 5 years 20% 1 87 30 1 49 84 21 52 60 17 22 08
More than 5 years 0% 5 22 77 5 22 77 6 38 98 6 38 98
Total 58 67 15 31 40 55 60 54 13 41 38 28

Note: Excluding interest accrued.

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 ANNUAL REPORT 2018 - 19

B. Investments
(₹ in ‘000)
Sl
Particulars 2018-19 2017-18
No.
(1) Value of Investments
(i) Gross Value of Investments
(a) In India 18 64 28 17 86 38
(b) Outside India Nil Nil
(ii) Provisions for Depreciation
(a) In India Nil Nil
(b) Outside India Nil Nil
(iii) Net Value of Investments
(a) In India 18 64 28 17 86 38
(b) Outside India Nil Nil
(2) Movement of provisions held towards depreciation on
investments
(i) Opening balance Nil Nil
(ii) Add : Provisions made during the year Nil Nil
(iii) Less:Write-off /write-back of excess provisions during Nil Nil
the year
(iv) Closing balance Nil Nil

C. Derivatives
(i) Forward Rate Agreement or Interest Rate Swap
(₹ in ‘000)
Sl
Particulars 2018-19 2017-18
No.
(1) The notional principal of swap agreements Nil Nil
(2) Losses which would be incurred if counter parties failed to Nil Nil
fulfill their obligations under the agreements
(3) Collateral required by the NBFC upon entering into swaps Nil Nil
(4) Concentration of credit risk arising from the swaps Nil Nil
(5) The Fair value of the swap book Nil Nil

(ii) Exchange Traded Interest Rate (IR) Derivatives

(₹ in ‘000)
Sl No. Particulars Amount
Notional principal amount of exchange traded IR Derivatives undertaken during the
(i) Nil
year (Instrument-wise)
Notional principal amount of exchange traded IR Derivatives outstanding as on 31st
(ii) Nil
March, 2019 (Instrument-wise)
Notional principal amount of exchange traded IR Derivatives outstanding and not
(iii) Nil
“highly effective” (Instrument-wise)
Mark- to market value of exchange traded IR derivatives outstanding and not “highly
(iv) Nil
effective” (Instrument-wise)

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ANNUAL REPORT 2018 - 19

(iii) Disclosures on Risk Exposure in derivatives

(a) Qualitative Disclosures- Nil
(b) Quantitative Disclosures (₹ in ‘000)
Sl Currency Interest Rate
Particulars
No. Derivatives Derivatives
(i) Derivatives (Notional Principal Amount)
For Hedging Nil Nil
(ii) Marked to Market Positions [1]
(a) Asset (+) Nil Nil
(b) Liability (-) Nil Nil
(iii) Credit Exposure [2] Nil Nil
(iv) Unhedged Exposures Nil Nil

D. Disclosures relating to Securitisation

i. SPVs and Minimum Retention Requirements
(₹ in ‘000)
Sl
Particulars No./ Amount
No.
No of SPVs sponsored by the NBFC for securitization transactions
1 7
(Refer Note 1)
2 Total amount of securitized assets as per books of the SPVs sponsored 639 53 51
Total amount of exposures retained by the NBFC to comply with
3
Minimum Retention Requirement (MRR) as on the date of Balance Sheet
(a) Off-Balance Sheet exposures
First loss Nil
Others Nil
(b) On-Balance Sheet exposures
First loss 49 72 43
Others Nil
Amount of exposures to securitization transactions other than Minimum
4
Retention Requirement (MRR)
(a) Off-Balance Sheet exposures
(i) Exposure to own securitizations
First loss Nil
Other Nil
(ii) Exposure to third party securitizations
First loss Nil
Other Nil
(b) On-Balance Sheet exposures
(i) Exposure to own securitizations
First loss Nil
Other Nil
(ii) Exposure to third party securitizations
First loss Nil
Other Nil

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 ANNUAL REPORT 2018 - 19

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

ii. Details of Financial Assets sold to Securitisation or Reconstruction Company for Asset
Reconstruction
(₹ in ‘000)
Sl
Particulars 2018-19 2017-18
No.
(i) Number of Accounts Nil Nil
(ii) Aggregate Value(Net of Provisions) of accounts sold to SC/ RC Nil Nil
(iii) Aggregate Consideration Nil Nil
(iv) Additional Consideration Realized in respect of accounts Nil Nil
transferred in earlier years
(v) Aggregate gain/ loss over Net Book Value Nil Nil

iii. Details of Assignment Transactions undertaken by NBFCs

(₹ in ‘000)
Sl
Particulars 2018-19 2017-18
No.
(i) Number of Accounts (In Nos) 43 894 94 551
(ii) Aggregate Value (Net of Provisions) of accounts sold, gross 150 94 52 320 44 15
exposure
(iii) Amount of Exposures retained by the company towards MRR 15 09 45 27 97 22
(iv) Aggregate Consideration (ii-iii) 135 85 07 292 46 93
(v) Additional Consideration realized in respect of accounts Nil Nil
transferred in earlier years
(vi) Aggregate gain/ loss over Net Book Value Nil Nil

iv. Details of Non Performing Financial Assets purchased or sold

a. Details of Non Performing Financial Assets purchased
(₹ in ‘000)
Sl
Particulars 2018-19 2017-18
No.
1 (a) Number of accounts purchased during the year Nil Nil
(b) Aggregate outstanding Nil Nil
2 (a) Of these, number of accounts restructured during the year Nil Nil
(b) Aggregate outstanding Nil Nil

b. Details of Non Performing Financial Assets sold

(₹ in ‘000)
Sl
Particulars 2018-19 2017-18
No.
1 Number of accounts sold Nil Nil
2 Aggregate outstanding Nil Nil
3 Aggregate consideration received Nil Nil

143
144
E. Asset Liability Management Maturity Pattern of certain items of Assets and Liabilities

Over 1 Over 2 Over 3 Over 6 Over 1 Year Over 3 Over 5

Particulars 30/31 days month upto month upto month upto month upto upto 3 years years upto 5 years Total
2 months 3 months 6 months 1 year (Refer Note 3) years
Assets
Hyp Receivable 136 85 81 71 31 08 70 72 67 207 76 68 375 35 68 827 01 73 25 59 76 22 1714 63 63
ANNUAL REPORT 2018 - 19

Other Advances 34 24 63 14 95 24 19 05 44 56 41 86 88 78 71 126 07 17 28 78 12 1 25 00 369 56 17

Foreign Currency Assets - - - - - - - - -
Total 171 10 44 86 26 32 89 78 11 264 18 54 464 14 39 953 08 90 54 37 88 1 25 22 2084 19 80
Investments - 1 39 8 69 79 - 19 9 28 64 - 1 00 01 19 00 02
Total 171 10 44 86 27 71 98 47 90 264 18 54 464 14 58 962 37 54 54 37 88 2 25 23 2103 19 82
Borrowings
Public Deposits 6 06 64 4 41 30 4 36 23 10 07 68 22 76 31 18 25 39 13 62 - 66 07 17
Debentures 6 21 - - - - - - - 6 21
Subordinated Debts 6 76 - - 5 43 4 30 33 43 97 24 08 01 6 03 91 63 72 38
Loan From Directors - - - - 10 24 34 - - - 10 24 34
Inter Corporate Deposit - - 1 62 55 - - - - - 1 62 55
Bank Loan 188 04 71 22 46 45 26 01 25 1 99 61 12 8 17 42 17 99 58 41 - - 13 53 14 11
Other Financial Institutuion - 6 54 41 6 04 10 12 32 45 25 59 24 26 90 40 - - 77 40 60
Foreign Currency - - - - - - - - -
Total 194 24 32 33 42 16 38 04 13 222 06 68 876 06 36 178 18 17 24 21 63 6 03 91 1572 27 36

Note 1: The above maturity profile has been compiled from the internal records and system reports maintained by the management on which reliance is placed
by the auditors.
Note 2: Above includes Interest accrued.
Note 3: In accordance with the revised ALM policy of the management, Non-Performing Assets as at 31st March 2019 have been categorized under the
maturity pattern of “ Over 1 year upto 3 years” for the above disclosure.
 ANNUAL REPORT 2018 - 19

F. Exposures
(i) Exposure to Real Estate Sector
(₹ in ‘000)
Sl
Category 31.03.2019 31.03.2018
No.
Direct Exposure
(i) Residential Mortgages
Lending fully secured by mortgages on residential property 1 00 24 5 63 24
that is or will be occupied by the borrower or that is rented
(ii) Commercial Real Estate-
Lending secured by mortgages on commercial real estates Nil Nil
(office buildings, retail space, multi-purpose commercial
premises, multi-family residential buildings, multi tenanted
commercial premises, industrial or warehouse space, hotels,
land acquisition, development and construction, etc.).
Exposure would also include non-fund based limits.
(iii) Investments in Mortgage Backed Securities (MBS) and
other securitized exposures-
(a) Residential Nil Nil
(b) Commercial Real Estate Nil Nil
Total Exposure to Real Estate Sector 1 00 24 5 63 24

(ii) Exposure to Capital Market

(₹ in ‘000)
Sl
Particulars 31.03.2019 31.03.2018
No.
(i) Direct investment in equity shares, convertible bonds, convertible
debentures and units of equity- oriented mutual funds, the corpus of
which is not exclusively invested in corporate debt; 41 94 56 21
(ii) Advances against shares/bonds/debentures or other securities or on
clean basis to individuals for investment in shares (including IPOs/
ESOPs), convertible bonds, convertible debentures, and units of
equity oriented mutual funds; Nil Nil
(iii) Advances for any other purposes where shares or convertible bonds
or convertible debentures or units of equity oriented mutual funds are
taken as primary security; Nil Nil
(iv) Advances for any other purposes to the extent secured by the collateral
security of shares or convertible bonds or convertible debentures or
units of equity oriented mutual funds, i.e where the primary security
other than shares or convertible bonds or convertible debentures or
units of equity oriented mutual funds do not fully cover the advances; Nil Nil
(v) Secured and unsecured advances to stock brokers and guarantees
issued on behalf of stock brokers and market makers; Nil Nil
(vi) Loans sanctioned to corporates against the security of shares or bonds
or debentures or other securities or on clean bases for meeting
promoter’s contribution to the equity of new companies in
anticipation of raising resources; Nil Nil
(vii) Bridge Loans to companies against expected equity flows or issues; Nil Nil
(viii) All exposures to Venture Capital Funds (both registered and
unregistered) Nil Nil
Total Exposure to Capital Market 41 94 56 21

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ANNUAL REPORT 2018 - 19

iii. Details of financing of parent company products – NIL

iv. Details of Single Borrower Limit (SBL) / Group Borrower Limit (GBL) exceeded by the
company – NIL
v. Unsecured Advances

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

G. Registration obtained from other financial sector regulators – NIL

H. Disclosure of Penalties imposed by Reserve Bank of India and other regulators – NIL
I. Ratings Assigned by Credit Rating Agencies and migration of ratings during the year

Name of the Migration in Ratings

Sl No. Rated Instrument Rating
Rating Agency during the year
1 CRISIL Commercial Paper CRISIL A1 Nil
2 CRISIL Fixed Deposits FA +/ Stable From FA -/ Stable
3 CRISIL Bank Loan Facility Long-Term CRISIL A/ Stable From CRISIL A-/Stable
4 CRISIL Non- Convertible Debentures CRISIL A/ Stable From CRISIL A-/Stable

J. Provisions and Contingencies

Break up of ‘Provisions and Contingencies’ shown under the head Expenditure in the
Statement of Profit and Loss
(₹ in ‘000)
Provisions and Contingencies 2018-2019 2017-2018
Provision for:
Non-Performing Assets (Net) 20 25 09 14 36 95
Standard Assets 57 00 3 36 00
Others 24 35 14 34
Provision made towards Income tax 50 28 00 33 54 00
Total 71 34 44 51 41 29

K. Drawn Down from Reserves-Nil

L. Concentration of Deposits, Advances, Exposures and NPAs
i. Concentration of Deposits (for deposit taking NBFCs)
(₹ in ‘000)
Particulars 2018-19 2017-18
Total Deposits of twenty largest depositors 6 69 98 6 87 73
Percentage of Deposits of twenty largest depositors to Total Deposits of the
NBFC 10.14% 7.81%

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 ANNUAL REPORT 2018 - 19

ii. Concentration of Advances

(₹ in ‘000)
Particulars 2018-19 2017-18
Total Advances to twenty largest borrowers 249 53 22 213 77 05
Percentage of Advances to twenty largest borrowers to Total Advances of
the NBFC 11.97% 11.16%

iii. Concentration of Exposures

(₹ in ‘000)
Particulars 2018-19 2017-18
Total Exposure to twenty largest borrowers / customers 249 53 22 213 77 05
Percentage of Exposures to twenty largest borrowers / customers to Total
Exposure of the NBFC on borrowers / customers 11.97% 11.16%

iv. Concentration of NPAs

(₹ in ‘000)
Particulars 2018-19 2017-18
Total Exposure to top four NPA accounts 6 07 7 45

v. Sector-wise NPAs
(₹ in ‘000)
Percentage of NPAs to Total
Sl No Sector Advances in that sector
2018-19 2017-18
1 Agriculture & allied activities 0% 0%
2 MSME 0% 0%
3 Corporate borrowers 0% 0%
4 Services 0% 0%
5 Unsecured personal loans 0.21% 0.05%
6 Auto loans 6.57% 5.44%
7 Micro Finance - Buyout 0.07% 0%
8 Other loans 5.66% 3.69%

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ANNUAL REPORT 2018 - 19

vi . Movement of NPAs
(₹ in ‘000)

Sl No. Particulars 2018- 2019 2017- 2018

(i) Net NPAs to Net Advances (%) 3.05% 3.02%

(ii) Movement of NPAs (Gross)
(a) Opening balance 87 91 26 74 15 09
(b) Additions during the year 81 85 41 64 89 72
(c) Reductions during the year 56 62 87 51 13 55
(d) Closing balance 113 13 80 87 91 26
(iii) Movement of Net NPA’s
(a) Opening balance 56 92 98 57 53 76
(b) Additions during the year 61 60 32 50 52 77
(c) Reductions during the year (Refer Note no. vi.(i)) 56 62 87 51 13 55
(d) Closing balance 61 90 43 56 92 98
(iv) Movement of provisions for NPAs (excluding
provisionson standard assets)
(a) Opening balance 30 98 28 16 61 33
(b) Provisions made during the year (Refer Note vi.(ii)) 20 25 09 14 36 95
(c) Write-off / write- back of excess provisions Nil Nil
(d) Closing balance 51 23 37 30 98 28

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

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

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

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 ANNUAL REPORT 2018 - 19

O. Customer Complaints pertaining to the Financial Year

Sl No. Particulars Numbers

(a) No. of complaints pending at the beginning of the year 14
(b) No. of complaints received during the year 1139
(c) No. of complaints redressed during the year 1143
(d) No. of complaints pending at the end of the year 10

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

11 Additional disclosures as required in terms of Para 18 of Master Directions - Non-Banking

Financial Company - Systemically Important Non-Deposit taking company and Deposit
taking company (Reserve Bank) Directions, 2016 issued by Reserve Bank of India.

Liabilities side:
11.1 Loans and advances availed by the NBFC, inclusive of interest accrued thereon but not paid:
(₹ in ‘000)
Amount Amount
Sl No Particulars
Outstanding Overdue
(a) Debentures : Secured - 6 21
: Unsecured - -
(Other than falling within the meaning of Public Deposits)
(b) Deferred Credits - -
(c) Term Loans 280 47 38 -
(d) Inter- corporate loans and borrowings 1 62 55 -
(e) Commercial Paper - -
(f) Public Deposits 63 18 01 2 89 16
(g) Other loans
Subordinated Debt 33 70 97 49
Subordinated Term Loan 30 00 92 -
Working Capital Demand Loan 727 94 76 -
Cash Credit 422 12 57 -
Loans and Advances from Directors (Unsecured) 10 24 34 -
Total 1569 31 50 2 95 86

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

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

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ANNUAL REPORT 2018 - 19

Note 3- Overdue of ₹49 thousand in respect of Subordinated Debt represents debts for which payments
could not be made as claims were not received from Subordinated Debt holders.
Note 4 - Balance outstanding against amounts borrowed from banks is inclusive of interest accrued, but
not due.

11.2 Break-up of (11.1 .f) above (Outstanding public deposits inclusive of interest accrued thereon
but not paid):
(₹ in ‘000)
Amount Amount
Sl No Particulars
Outstanding Overdue
(a) In the form of Unsecured Debentures Nil Nil
(b) In the form of partly Secured Debentures i.e. debentures
where there is a shortfall in the value of security Nil Nil
(c) Other Public Deposits 63 18 01 2 89 16

Assets Side:
11.3 Break-up of Loans and Advances including bills receivables (other than those included in 11.4
below)
(₹ in ‘000)
Sl No Particulars Amount Outstanding
(a) Secured 355 06 04
(b) Unsecured (DPN) 14 50 13

11.4 Break up of Leased Assets and Stock on Hire and Hypothecation Loans counting towards EL/
HP activities:
(₹ in ‘000)
Sl No Particulars Amount Outstanding
(i) Lease assets including lease rentals under sundry debtors
(a) Financial lease Nil
(b) Operating lease Nil
(ii) Stock on hire including hire charges under sundry debtors:
(a) Assets on hire Nil
(b) Repossessed Assets Nil
(iii) Hypothecation loans counting towards EL/HP activities
(a) Loans where assets have been repossessed (Refer Nil
Note 11.4.1)
(b) Loans other than (a) above 1714 63 63

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

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 ANNUAL REPORT 2018 - 19

11.5 Break-up of Investments:

(₹ in ‘000)
Sl No Particulars Amount Outstanding
Current Investments: -
1 Quoted: -
(i) Shares:
(a) Equity Nil
(b) Preference Nil
(ii) Debentures and Bonds Nil
(iii) Units of mutual funds Nil
(iv) Government Securities 8 35 44
(v) Others
Gold Exchange traded fund of UTI 19
2 Unquoted: -
(i) Shares:
(a) Equity Nil
(b) Preference Nil
ii) Debentures and Bonds Nil
(iii) Units of mutual funds Nil
(iv) Government Securities Nil
(v) Others Nil
Long Term investments: -
3 Quoted: -
(i) Shares:
(a) Equity 41 94
(b) Preference Nil
(ii) Debentures and Bonds Nil
(iii) Units of mutual funds 52 2l
(iv) Government Securities 5 89 50
(v) Others Nil
4 Unquoted: -
(i) Shares:
(a) Equity Nil
(b) Preference Nil
(ii) Debentures and Bonds Nil
(iii) Units of mutual funds Nil
(iv) Government Securities Nil
(v) Others 3 45 00
Total 18 64 28

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ANNUAL REPORT 2018 - 19

11.6 Borrower group-wise classification of all Leased Assets, Stock – on – Hire and Loans and
Advances:
(₹ in ‘000)
Amount Net of Provisions
Sl No Category (Refer Note 11.6.1)
Secured Unsecured Total
1 Related Parties
(a) Subsidiaries Nil Nil Nil
(b) Companies in the same group 2 18 Nil 2 18
(c) Other related parties Nil 2 50 39 2 50 39
2 Other than related parties 2 018 44 46 11 99 40 2 030 43 86
Total 2 018 46 64 14 49 79 2 032 96 43

11.6.1: Excluding standard asset provision.

11.7 Group-wise classification of all investments (current and non current) in shares and securities
(both quoted and unquoted):
(₹ in ‘000)
Market Value/
Book Value Net of
Sl No Category Break-up or Fair
provisions)
Value or NAV
1 Related Parties
(a) Subsidiaries Nil Nil
(b) Companies in the same group Nil Nil
(c) Other related parties Nil Nil
2 Other than related parties 19 65 26 18 64 28
Total 19 65 26 18 64 28

11.8 Other Information:

(₹ in ‘000)
Sl No Particulars Amount
(i) Gross Non-Performing Assets
(a) Related Parties Nil
(b) Other than related parties 113 13 80
(ii) Net Non –Performing Assets
(a) Related Parties Nil
(b) Other than related parties 61 90 43
(iii) Assets acquired in satisfaction of debt Nil

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11.9 Asset Classification

(₹ in ‘000)
Sl No Category Amount
1 Standard 1971 06 00
2 Substandard 62 01 28
3 Doubtful 51 12 52
4 Loss Assets Nil
Total 2084 19 80

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

As per our separate report of even date attached

For VARMA AND VARMA For and on behalf of the Board of Directors of
FRN: 004532S MUTHOOT CAPITAL SERVICES LIMITED

Sd/- Sd/- Sd/- Sd/-

VIJAY NARAYAN GOVIND THOMAS JOHN MUTHOOT THOMAS GEORGE MUTHOOT THOMAS MUTHOOT
Partner Chairman Managing Director Director
Chartered Accountants Din :00011618 Din:00011552 Din: 00082099
Membership Number: 203094

Sd/-
Place : Kochi - 19 VINODKUMAR M. PANICKER
Date : 24th April, 2019 Chief Finance Officer

153