Description
The report for the financial year 2011 - 2012 of manappuram finance limited.
20th Annual Report 2011-12
Reliability
for all seasons
Forward-looking statements
In this Annual Report, we have disclosed forward-looking information to enable investors to comprehend our prospects and take
investment decisions. This report and other statements - written and oral – that we periodically make contain forward-looking
statements that set out anticipated results based on the management’s plans and assumptions. We have tried wherever possible
to identify such statements by using words such as ‘anticipate’, ‘estimate’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’, and words of
similar substance in connection with any discussion of future performance. We cannot guarantee that these forward-looking state-
ments will be realised, although we believe we have been prudent in assumptions. The achievements of results are subject to risks,
uncertainties, and even inaccurate assumptions. Should known or unknown risks or uncertainties materialise, or should underlying
assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated, or projected. Readers should
keep this in mind. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new infor-
mation, future events or otherwise.
ABOUT MANAPPURAM
04 Business Highlights
07 Corporate Identity
10 Chairman’s Communiqué
1
2
BUSINESS REVIEW
14 Reliability for all Seasons
19 Core Strengths
20 Brand Ambassadors
22 Human Capital
23 Social Commitments
3
BOARD AND MANAGEMENT REPORTS
24 Board of Directors
26 Directors’ Report
32 Management Discussion and Analysis
36 Report on Corporate Governance
4
FINANCIAL SECTION
46 Auditors’ Report
50 Balance Sheet
51 Profit & Loss Account
52 Notes
86 Cash Flow Statement
91 Corporate Information
Read about us
Focus and
foresight
The initiative of one visionary helped
improve many lives in more ways than one.
When Mr. V. C. Padmanabhan founded Manappuram in 1949 in the coastal Kerala village of
Valapad, his efforts helped fulfil the financial priorities of the local people — mostly farmers
and fisher folk — by providing access to quick loans in times of distress.
In those days, India was a fledgling republic and its banking services were underdeveloped.
Since then, the Company has grown rapidly to emerge as one of the most popular options
for fast and secure gold loan borrowings. In the year 1992, Manappuram General Finance
and Leasing Ltd. was incorporated.
Today, as Manappuram Finance Ltd., we have become one of the largest asset-based
NBFCs in India, thanks to our pioneering spirit, our culture of innovation, and our
sophisticated technology platform which assures safe and secure transactions.
Gold enjoys close
associations with almost all
aspects of civilised life. In
India, it is largely looked upon
as a cherished possession for
ornamentation or as a matter
of pride and social prestige.
Annual Report 2011-12
2
3
The outcome: India is home to 18,000
tonnes of privately-held gold assets,
of which hardly 10% is monetised.
At Manappuram, our vision is to
help unlock the value of this national
asset, and enable people from a
wide spectrum of society to achieve
ÒcVcX^VahZXjg^inVcYZXdcdb^X
empowerment through gold loans.
DjgZ[[dgihYg^kZÒcVcX^Va^cXajh^dc
for the disadvantaged sections of
the population, who have no access
idbV^chigZVbÒcVcXZ!VcYVgZ
often exploited by unscrupulous
moneylenders.
:kZc^ci]ZkdaVi^aZldgaYd[ÒcVcXZ
and markets, with upswings and
downturns, gold continues to enjoy
enduring value, protecting hard-earned
hVk^c\h[gdb^cÓVi^dcVgnYZkVajVi^dc!
and has emerged as a reliable source
of asset-based borrowing.
At Manappuram, we honour gold as a
timeless wealth creator and an enabler
of social security for all seasons,
keeping alive a faith, nourished by
ancient traditions.
99.1%
of assets under management
(AUMs) represent gold loans
as on March 31, 2012
98%
contribution of gold loans to
total interest income in 2011-12
76%
growth in gold loan
disbursement in 2011-12
4
5
Annual Report 2011-12
Total income
4-year CAGR 140.29%
0
7
-
0
8
7
9
6
.
5
9
1
,
6
6
1
.
0
9
4
,
7
8
2
.
0
1
1
1
,
8
1
5
.
2
6
2
6
,
5
5
8
.
4
5
0
8
-
0
9
1
0
-
1
1
0
9
-
1
0
1
1
-
1
2
1
2
4
.
7
8
%
(` in millions)
Profit after tax
4-year CAGR 130.40%
0
7
-
0
8
2
0
9
.
8
9
3
0
2
.
9
5
1
,
1
9
7
.
2
1
2
,
8
2
6
.
6
4
5
,
9
1
4
.
6
1
0
8
-
0
9
1
0
-
1
1
0
9
-
1
0
1
1
-
1
2
1
0
9
.
2
5
%
(` in millions)
0.32%
net NPA of gold loans as on
31st March, 2012
0.46
million new customers added
during 2011-12
24%
increase in gold holdings as on
31st March, 2012
AUM
4-year CAGR 112.18%
0
7
-
0
8
5
,
7
8
3
9
,
8
6
7
2
6
,
1
7
6
7
5
,
4
9
1
1
1
6
,
3
0
8
0
8
-
0
9
1
0
-
1
1
0
9
-
1
0
1
1
-
1
2
(` in millions)
5
4
.
0
7
%
Net interest income
4-year CAGR 121.32%
0
7
-
0
8
6
5
3
1
,
2
7
5
3
,
4
1
3
8
,
4
9
6
1
5
,
6
6
7
0
8
-
0
9
1
0
-
1
1
0
9
-
1
0
1
1
-
1
2
(` in millions)
8
4
.
4
0
%
Cost of borrowing
0
7
-
0
8
1
0
.
7
2
1
2
.
0
2
9
.
8
4
9
.
1
6
1
2
.
6
0
8
-
0
9
1
0
-
1
1
0
9
-
1
0
1
1
-
1
2
(%)
Earnings per share (basic)
4-year CAGR 39%
0
7
-
0
8
1
.
8
8
2
.
1
9
4
.
0
9
7
.
6
1
7
.
0
6
0
8
-
0
9
1
0
-
1
1
0
9
-
1
0
1
1
-
1
2
(`)
-
7
.
2
2
%
AUM per branch
0
7
-
0
8
1
8
.
2
1
9
.
5
2
5
.
9
3
6
.
4
3
9
.
7
0
8
-
0
9
1
0
-
1
1
0
9
-
1
0
1
1
-
1
2
(` in millions)
9
.
0
7
%
Net worth
4-year CAGR 124.95%
0
7
-
0
8
9
2
9
.
8
2
1
,
6
7
8
.
7
2
6
,
1
0
5
.
6
0
1
9
,
2
3
9
.
5
7
2
3
,
8
1
0
.
4
4
0
8
-
0
9
1
0
-
1
1
0
9
-
1
0
1
1
-
1
2
(` in millions)
2
3
.
7
6
%
3
4
4
b
p
s
Graphs not to scale
Business Review Board and Management Reports Financial Section About Manappuram
844
new branches opened
during 2011-12
5,000+
new employees added to the
Manappuram family during 2011-12
6
7
Annual Report 2011-12
2010-11 2011-12
Return on average assets 5.04% 4.89%
Return on equity 26.24% 26.57
Leverage 3.47 4.49
Capital adequacy ratio 29.13% 23.39%
Income pie in 2011-12
(` in millions)
Sources of fund in 2011-12
(` in millions)
Overdraft, Working Capital Demand Loan
(WCDL) and Short Term Loan (STL)
71,605
Securitisation and assignment 19,164
Debentures 14,740
Commercial papers 2,320
Subordinate debt 4,267
Others 12
71,605
19,164
14,740
2,320
4,267
12
Interest income 26,120
Fee-based income 35
Other income 403
26,120
403
35
Pie charts not to scale
Headquartered in Kerala,
Manappuram Finance Limited
is India’s first listed and highest
credit-rated gold loan company.
Incorporated in 1992, we have since
emerged as one the of the fastest
growing gold loan companies in India.
We provide our customers with
‘instant’ credit at reasonable rates of
interest, primarily against their used
gold jewellery, to help them fulfil
short-term financial priorities.
Manappuram Finance helps a
vast cross-section of customers to
translate their aspirations into reality
and lead a life of dignity.
Business Review Board and Management Reports Financial Section About Manappuram
8
9
Annual Report 2011-12
Gold loan
Customers can pledge gold ornaments
or jewellery and draw cash against it.
Depending on the net weight and purity
of the gold, cash is disbursed. They can
choose from various schemes according
to their requirements.
Money transfer
Customers can avail fast, easy and safe
money transfer worldwide instantly.
The money transfer service is available
across our pan-India branch network;
moreover no bank account is needed for
amounts up to ` 50,000.
Foreign exchange
Manappuram was one of the first NBFCs
from Kerala to have been awarded the AD
(Authorised Dealer II) license by the Reserve
Bank of India (RBI). We have been authorised
by the RBI to act as a full-fledged money
changer, undertaking currency exchanges
and sale of travellers’ cheques for a variety
of purposes, permitted under the Foreign
Exchange Management Act (FEMA).
Customer-first strategy
Our products aim at delivering maximum
value to our customer, irrespective of their
economic status. We believe that everyone
values time, and therefore everyone is
entitled to courtesy and prompt service,
with high levels of transparency.
Uncompromising integrity
We follow ethical values and practices in all
our dealings. We believe in transparency
and in following the laws of the land without
ambiguity. We value the contributions of all
our stakeholders and we take special pride
in recognising those contributions.
Cutting-edge technology
As a pioneer in the introduction of
technology into the gold loan sector,
we believe in constantly updating our
technology to keep costs low and deliver
accelerated customer service. We have
standardised our processes to enable
better and more cost-effective access to
our customers. And we believe in fostering
innovation to elevate our organisation to
the next level.
Business areas
Pillars of our
philosophy
Presence across states/
Union Territories
20
in 2010-11
26
in 2011-12
>
Branches
2,064
in 2010-11
2,908
in 2011-12
>
Expanding far and wide
Customers
1.19 mn
in 2010-11
1.64 mn
in 2011-12
>
Talent pool
16,751
in 2010-11
21,924
in 2011-12
>
Total gold loan disbursals
180,569 mn
in 2010-11
316,982 mn
in 2011-12
>
Gold holdings
52.97 tonnes
in 2010-11
65.57 tonnes
in 2011-12
>
Jammu &
Kashmir
Himachal
Pradesh
Uttarakhand
Andaman
7
1
3
2
Punjab
Chandigarh
Haryana
Rajasthan
Delhi
Uttar Pradesh
Bihar
Jharkhand
Assam
49
4
43
59
62
52
9
1
4
West Bengal
75
Orissa
Chhattisgarh
Madhya Pradesh
Gujarat
Daman and Diu
Maharashtra
Andhra Pradesh
Karnataka
Kerala
Tamil Nadu
Pondicherry
Goa
57
34
77
83
1
144
533
532
500
557
11
8
Pan-India coverage
Map not to scale
STRONG PRESENCE IN
SOUTH INDIA (73% OF
BRANCHES)
Business Review Board and Management Reports Financial Section About Manappuram
10
11
Annual Report 2011-12
Chairman’s
communiqué
V.P. Nandakumar
Executive Chairman
ECONOMIC OUTLOOK
The year 2011-12 saw the global economy lose traction once again,
in the wake of a deepening Eurozone crisis. Barring Germany, most
EU countries are faced with slow growth, even recession, along with
unsustainably high levels of debt. The crisis has impacted India too,
with the overall risk-averse sentiment crippling the flow of foreign
investment. Besides, our exports to Europe have fallen, aggravating
our trade deficit.
Undoubtedly, India’s macro-economic landscape also took a turn for
the worse. Contrary to the optimism that reigned at the beginning
of the year, GDP growth was restricted to a mere 6.5%, belying
expectations of much higher growth. The slowdown had an adverse
impact on the government’s finances, with revenues falling short
while the expenditure side overshot the estimates on account of
higher fuel and food subsidies. The country’s fiscal deficit moved into
the danger zone at 5.8% of the GDP.
Inflationary pressures remained high for much of the year,
occasionally flirting with the double digit mark. India’s current
account deficit stood at 3.9% of the GDP largely due to a record
trade deficit of US$ 185 billion with imports of oil and gold leading
the way. With the economy slowing down and corporate profitability
under strain, stock markets were down and inflows of foreign
investments were muted. This has put the Indian rupee under
severe pressure, which fell from levels of ` 45 per US$ in July, 2011
to a low of about ` 54 per US$ in December 2011. Some amount
of moderation in inflation was seen in the final quarter, which
encouraged the RBI to go ahead with a 50-basis point cut in interest
rates in April 2012, after 13 successive rounds of hikes in interest
rates.
The outlook for the coming fiscal (2012-13) is mixed, at best. While
government sources would have us believe that a recovery in
growth is on the cards, the market expectations are generally not
positive.
GOLD LOANS SECTOR
For the gold loans sector, 2011-12 began well with the leading
gold loan NBFCs reporting continuing gains in volumes and market
shares. However, in the final quarter of the year, the sector ran into
headwinds, with the Reserve Bank of India (RBI) intervening strongly
to address perceived risks building up in the financial system on
account of increasing exposure to gold loan companies. It may be
recalled that RBI’s tightening had actually begun in, February 2011,
with a notification that denied priority sector status to any finance
extended by the banking sector to the gold loan NBFCs. It had
the impact of raising the borrowing costs of the gold loan NBFCs
by about two percentage points. This year, on March 21, the RBI
imposed a cap on the loan to value (LTV) ratio for NBFCs at 60% of
the value of collateral. RBI’s concern is that the rapid growth of gold
loan companies, along with a dependence on public funds, poses a
systemic risk. Further, there was concern about concentration risks
in the gold loan NBFCs, arising from their single-product focus.
While the market has interpreted RBIs stance as being negative to
the gold loans sector, as insiders in the industry, we hold a different
view. Indeed, we are convinced that the RBI has acted out of its
I HAVE GREAT PLEASURE IN PRESENTING
TO YOU OUR 20TH ANNUAL REPORT
FOR THE YEAR ENDED MARCH 31, 2012.
OUR PERFORMANCE DURING THE YEAR,
SEEN IN THE CONTEXT OF AN ECONOMIC
SLOWDOWN, WAS QUITE SATISFACTORY. AT
THE SAME TIME, AFTER THE RECENT YEARS
OF RAPID GROWTH, WE ARE NOW MOVING
INTO A PHASE OF CONSOLIDATION. WITH
INDIA’S MACRO-ECONOMIC FUNDAMENTALS
LOSING SHINE, AND UNCERTAINTIES
EMERGING IN THE REGULATORY
ENVIRONMENT, THIS IS A GOOD TIME TO
RECHARGE AND RE-FOCUS.
For the gold loans sector,
2011-12 began well with the
leading gold loan NBFCs
reporting continuing gains in
volumes and market shares.
Business Review Board and Management Reports Financial Section About Manappuram
12
13
Annual Report 2011-12
key responsibility to prevent critical risks from materialising. At the
same time, we also believe that gold loans can be a transformative
force in India’s financial sector, particularly in promoting financial
inclusion and in monetising India’s vast stock of private gold.
Therefore, it’s imperative that we do not lose sight of the significant
upside potential that gold loans hold. By restricting the LTV to 60%
and making it applicable only to the NBFCs, there is a real risk of
breathing new life into the unorganised sector (local pawnbrokers
and moneylenders), and of stifling the original innovators in the
business. However, we expect the RBI to continue to keep a close
watch on the evolving situation and recalibrate its policy responses
as required. The fact that they have now constituted a working
group, led by Shri K.U.B. Rao, to study the business of gold loans is
a positive step in this direction, and we are hopeful of a favourable
outcome.
WIDER RELEVANCE OF GOLD LOANS
Ultimately, the true test of sustainability of a business is not the
returns to promoters and shareholders, but how much of value flows
back into the society. On this count, India owes a debt to its gold
loan NBFCs. Gold kept idle in our lockers and vaults is a drag on the
economy because it keeps billions of dollars in savings out of the
financial system. Gold loans generate economic activity out of an
unproductive asset. Thanks to the momentum given by the gold loan
NBFCs, a host of new players have entered the business and we can
expect more of our idle gold put to productive use. Incidentally, the
Indian government’s own efforts to monetise private gold, notably
through the Gold Bond and the Gold Deposit schemes, were failures.
Financial inclusion is a national priority, and gold loans can be a
useful tool in achieving this objective. Unlike other indicators of
wealth, the larger part of India’s private gold (about 65%) is held by
rural India. The poorer households own gold in significant measure,
as part of their savings. In a context, where the economically
challenged and the financially excluded Indian households are known
to possess gold in some measure, gold loans represent the prudent
way forward. What’s more, these gains are delivered even as
disadvantaged borrowers pay less interest on their borrowings than
before. An unintended consequence of the expansion of the gold
loans NBFCs has been that unregulated local financiers are forced
to drop their interest rates in response to the increased competition.
Not surprisingly, we believe there’s every reason to be optimistic
about the long-term future of India’s gold loan sector.
COMPANY’S PERFORMANCE
In keeping with the trend of recent years, your Company’s
performance in the year under review was, by all measures,
remarkable. Net profit for the financial year ended March 31, 2012
increased by 109% to ` 5,914.6 million, compared to ` 2,826.6
million for 2010-11. There was substantial growth in Assets under
Management (AUM) which stood at ` 116,308 million, a 54%
increase over the previous year’s level of ` 75,491 million. Total
gold loan disbursements during the year amounted to a staggering
Net profit for the financial year ended March 31, 2012 increased by
109% to ` 5,914.6 million, compared to ` 2,826.6 million for 2010-11.
There was substantial growth in Assets under Management (AUM)
which stood at ` 116,308 million, a 54% increase over the previous
year’s level of ` 75,491 million.
` 316,982 million, against ` 180,569 million in the previous year.
Operating income for the year grew 124.43% and stood at
` 26,155.5 million. Importantly, you can be proud that your Company
is a leading tax payer of Kerala, with provision towards income
tax amounting to ` 2,857.5 million, compared to ` 1,412.3 million
the year before. You will also be pleased to know that the Board
of Directors has proposed a final dividend of ` 1 per share of face
value of ` 2, over and above the interim dividend of ` 0.50 per share
declared earlier this year.
OTHER ISSUES
In February, 2012, the RBI had issued a public notice that censured
the Company for continuing to accept deposits from the public after
becoming a non-deposit taking NBFC in March, 2011. While we
have clarified that the Company was accepting retail subscriptions to
its secured NCDs (which is permitted), a related issue had also come
up regarding deposits accepted by a proprietary concern owned by
me in my personal capacity. In the light of the concerns expressed
by RBI, I have since transferred the entire amount of these deposits
into an escrow account with a local nationalised bank, and the bulk
of the deposits have now been repaid.
Arising from these developments, the top management of the
Company initiated a series of measures to review and improve
governance standards, and benchmark it to best practices. The
leading law firm of Amarchand Mangaldas was taken on board to
assist with the review exercise, and we are now in the process of
implementing their recommendations.
Lastly, I am indebted to all our stakeholders—the distinguished
shareholders, employees, our lending banks and financial
institutions, our foreign and domestic investors, the regulatory
bodies and the government—for their valuable contributions in
our success. I must make a special mention of the Reserve Bank
of India, which has devoted considerable time and resources to
ensure the security of the financial services sector and the long-term
survival of the gold loan sector. I mentioned at the beginning that we
are now in a phase of consolidation. By definition, consolidation is
not half as exciting as rapid growth; nevertheless, over the long haul,
it is vital for the health of the organisation. I seek your whole-hearted
support, so that the Company is able to achieve its true potential in
the years to come.
With best wishes,
V.P. Nandakumar
I must make a special mention of the Reserve
Bank of India, which has devoted considerable
time and resources to ensure the security of
the financial services sector and the long-term
survival of the gold loan sector.
Business Review Board and Management Reports Financial Section About Manappuram
14
15
Annual Report 2011-12
“For more than two thousand years, gold’s natural
qualities made it man’s universal medium of
exchange. In contrast to political money, gold is
honest money that survived the ages and will live
on long after the political fiats of today have gone
the way of all paper.”
Hans F. Sennholz
At Manappuram, we believe gold
has an enormous potential to help
strengthen developing economies
like India.
ENCOURAGING MONETISATION
Only a small proportion of the privately-held gold assets of Indian
households (mostly in the form of jewellery) is monetised, depriving
the economy of much-needed liquidity. Borrowing against gold
(monetisation) facilitates economic activity. At Manappuram, we
bring the power of gold to help accelerate economic growth.
DRIVING FINANCIAL INCLUSION
Around 65% of India’s private gold is held in rural areas. Due to the
lack of access to banks, poor people continue to invest their savings,
primarily in gold. Besides, there are strong cultural factors, which
make gold not only a desirable, but also a necessary asset to hold.
At Manappuram, we are driving rural financial inclusion through our
extensive reach, low operating costs (minimal compared to banks)
and the focus on a single product.
TAPPING THE MULTIPLIER EFFECT
Gold loans are typically small-ticket loans, falling within the definition
of micro-credit. In gold loans, delinquency rates are well below 1%
and any productive activity can be financed year after year, with
only an initial capital outlay, without need for periodic replenishment.
It sets into motion a multiplier momentum of sustainable economic
empowerment. In contrast, in a micro-credit model where recovery
rates are low (as with most government sponsored lending
programmes), a significant portion of the funds is lost in each
disbursement cycle. In the long-term, the cumulative compounded
cost to the economy is heavy, manifest in the form of depressed
GDP growth and lower living standards.
EXTENDING EFFICIENCY GAINS
Gold loans are typically short-term borrowings and, thanks to
technology and modern management techniques, they have
become a source of instant credit to the common man — in the way
a credit card has become for the well-off. For poor people surviving
on daily wages, this amounts to a critical advantage, as they cannot
afford to forego their daily earnings, or incur all manner of incidental
costs, in trying to get hold of a small loan. Besides, over the years,
we have seen that small loans disbursed promptly help kick-start,
and help keep alive, micro-entrepreneurship.
DISCOURAGING USURY
As the organised NBFC gold-loan companies expand their
reach, they displace the vice-like grip of the pawnbrokers and
moneylenders on poor people. It is a process with enormous
social relevance in a developing nation like India. Moreover, gold-
loan companies contribute to the national exchequer by paying
substantial amounts of corporate income tax.
Business Review Board and Management Reports Financial Section About Manappuram
“Gold bears the confidence of the world’s
millions.... It has been that way through all
recorded history. There is no reason to believe it
will lose the confidence of people in the future.”
Oakley R. Bramble
16
17
Annual Report 2011-12
At Manappuram, we help
strengthen this con?dence through
our easy-access gold loans and
risk-focused business model.
ROBUST IT INFRASTRUCTURE
Possesses IBM powered IT framework, ensuring accurate and
real-time information access for faster disbursal
Significant front-end automation, reducing human intervention
Centralised technology for offsite surveillance (for all
branches), enabling efficient monitoring and controlling
Proactive IT helpdesk troubleshooting IT issues across all
branches
State-of-the-art on-site and offsite (Chennai) disaster recovery
centre
Modern IT tools detect the need for preventive maintenance of
all IT devices
Developed a release management system, enabling in-house
testing of applications before pan-organisational rollout
STRONG INTERNAL AUDIT AND FRAUD
CONTROLS
Stringent collateral approval process
Routine inspections, backed by a proactive vigilance
Pledges are periodically checked by the internal audit team
Strict Know Your Customer (KYC) compliance
Employee profiling, tracking, and regular staff rotation across
departments and branches
FAST ASSET VALUATION AND RISK APPRAISAL
Decades of experience in gold evaluation
Employees are regularly trained in gold-appraisal methods
Evaluating purity of gold through touchstone test, nitric acid
test, sound test and hallmark check; ensures accuracy and
reliability
Follows a three-level gold appraisal process to ensure purity
GOLD SECURITY AND DE-RISKED CUSTODIAL
Post verification, assets are transferred to highly
secured vaults
Gold stored under joint custody
Cash balance in branches regulated, monitored and
periodically verified
Premises usually located above ground floor, with 24x7 CCTV
camera and burglar alarm system
Insurance coverage for pledged gold
ORGANISED GOLD LOANS IN
INDIA HAVE GROWN AT 40%
CAGR FROM 2002-12
CONSISTENT GROWTH
Business Review Board and Management Reports Financial Section About Manappuram
“Truth, like gold, is to be obtained not by
its growth, but by washing away from it all
that is not gold.”
Leo Tolstoy
We are elevating our governance
standards to enhance transparency
and stakeholder trust.
18
19
Annual Report 2011-12
At Manappuram, we decided to constitute an independent
committee of members, under the Chairmanship of Mr. Jagdish
Capoor (former Deputy Governor of RBI and former Chairman of
HDFC Bank) to enhance corporate governance standards.
The committee will review all relevant aspects of operations,
systems, controls and organisational structure, including the Board
composition and effectiveness. A leading law firm, Amarchand
Mangaldas, will assist the committee in this independent review
exercise.
We launched an ethics helpline service in collaboration with KPMG
for improving corporate governance. In addition, we also entered
into a contract with IBM to improve the IT support infrastructure
to an international standard. These two initiatives will improve the
quality of services extended to customers. This is perhaps the first
time in India an NBFC has sought partnership with KPMG and IBM
to improve the quality of its services.
Gold-driven
excellence
Front-runner in
the high-growth
driven gold loan
industry
Strong pan-India
distribution
network
Flexible gold loan
schemes, high
quality customer
service and short
response time
Consistent growth
trajectory and
impressive balance
sheet, enable strong
capital raising ability
Experienced
and professional
management,
supported by a
motivated team, is
taking Manappuram
to greater heights of
achievement
Robust support system,
IT infrastructure,
appraisal process,
internal audit,
inventory control and
safety systems
Enjoys highest CRISIL
rating (A1+) for short-term
debt instruments, including
commercial paper. For non-
convertible debentures (NCD)
issues, possess CRISIL (A+),
ICRA (LA+), Brickwork (AA-)
and CARE (A+)
Multiple sources of low-
cost funds by way of
credit lines from 34 banks,
unutilised limits with banks
VcYÒcVcX^Va^chi^iji^dch!
commercial papers (short-
term money markets), retail
NCDs and bonds
SOUTHERN INDIA
REPRESENTS THE LARGEST
MARKET FOR GOLD LOANS,
ACCOUNTING FOR 40% OF
INDIA’S GOLD DEMAND,
FOLLOWED BY THE WEST
(~25%), NORTH (20-25%) AND
EAST (10-15%). MOREOVER,
SOUTH ACCOUNTS FOR
85-90% OF GOLD LOANS
MARKET IN INDIA.
SOUTH, THE GOLD HUB
Business Review Board and Management Reports Financial Section About Manappuram
Puneeth Rajkumar
20
21
Annual Report 2011-12
Endorsed by the
silver screen
Brand Manappuram
is endorsed by top
stars from Bollywood
VcYi]ZÒab^cYjhig^Zh
of Andhra Pradesh,
Kerala, Karnataka,
Tamil Nadu,
Maharashtra, Odisha
and West Bengal.
These campaigns have
enhanced our brand
visibility, and earned a
h^\c^ÒXVcib^cYh]VgZ
among the rural and
urban populace.
Venkatesh
Mohan Lal
Vikram
Akshay Kumar
Mithun Chakrabarty
Sachin Khedekar
Uttam Mohanty
Business Review Board and Management Reports Financial Section About Manappuram
22
23
Annual Report 2011-12
Our Team represents
our brand mettle
At Manappuram, we are enhancing our people competencies
through prudent recruitment, continuous training and attractive
reward mechanism to improve retention.
PEOPLE INITIATIVES
Recruited 1,500+ branch managers and several regional
managers (especially for audit and operations), strengthening
operational parameters across branches
Maintained a monthly training calendar for all business
functions; to upgrade people knowledge in a constantly
evolving industry scenario
Enhanced focus on online training through weekly circulation
of training modules across all branches
Encouraged an online feedback mechanism for transparency
Implemented a suggestion scheme for innovative thinking
Offered Employee Stock Ownership Plan (ESOP) to senior
and line managers to enhance their sense of ownership and
belonging
Sponsored 110 employees for MBA degree from Sikkim
Manipal University
Commenced an employee welfare cell to enhance employee
engagement activities
Possesses a dedicated team to redress employee grievances
through online platform
Plan to incorporate Total Quality Management (TQM) in
collaboration with an external consultant to optimise resource
productivity
A social
commitment
Our social endeavours are conducted through the intervention of
Manappuram Foundation at Valapad, Kerala. The Foundation has
introduced free health insurance for people living below the poverty
line at Thrissur district in Kerala.
JANARAKSHA MANAPPURAM HEALTH
INSURANCE FOR BPL FAMILIES
The Janaraksha – Manappuram Free Health Insurance Scheme
provides free health insurance to 20,000 BPL families across seven
identified Panchayats around Valapad. In the two years since the
scheme began, nearly 5,000 families have benefited, having been
reimbursed a total amount of ` 32.5 million.
SAROJINI PADMANABHAN WOMEN
EMPOWERMENT PROGRAMME
This initiative seeks to provide a sustainable source of income to
rural women through the creation of Self-Help Group SHGs.
These SHGs involve ownership and management of farming and
farm-related activities in to generate sustainable income.
OTHER INITIATIVE
The Manappuram Foundation also provides financial assistance
to needy individuals, charitable institutions, and other worthy
causes. Over the last two years, the Foundation has disbursed a
total amount exceeding ` 5 million on this account. Some of the
major beneficiaries include the Alpha Pain and Palliative Care
Clinic, Edamuttom, an independent institution that has specialised
in palliative care and Santhi Medical Info Centre that provides free
dialysis to the needy.
Business Review Board and Management Reports Financial Section About Manappuram
24
25
Annual Report 2011-12
The Board
1 V. P. Nandakumar
57, Executive Chairman
He holds a masters degree in Science from Calicut University
and is also a Certified Associate of Indian Institute of Bankers.
He is the chief Promoter of the Manappuram Group of
Companies and has in the past been associated with the
banking industry in various capacities. He is the Chairman of
the Equipment Leasing Association (India) and the Kerala Non-
Banking Finance Companies Welfare Association. He has been
the Director of our Company since
July 15, 1992.
2 I. Unnikrishnan
47, Managing Director
He holds a bachelors degree in Commerce from Calicut
University and is also a fellow member of the Institute of
Chartered Accountants of India. He has, experience in
rendering advisory services relating to NBFCs. He has in the
past, worked with HAWA-MK Electrical Limited. He has been
a Director of the Company since October 11, 2001. He was
appointed as the Managing Director on October 1, 2006.
3 B. N. Raveendra Babu
59, Joint Managing Director
He holds a masters degree in Commerce from the Calicut
University and completed his inter from the Institute of
Certified Management Accountants. He has worked in a senior
position in the Finance and Accounts Department of Blue
Marine International in the U.A.E. He has been the Director
of our Company since July 15, 1992. He was appointed as the
Joint Managing Director on January 11, 2010.
4 V. R. Ramachandran
59, Independent and Non Executive Director
He holds a bachelors degree in Science from the Calicut
University and a bachelor’s degree in law from the Kerala
University. He has over 32 years of work experience and is a
civil lawyer enrolled with the Thrissur Bar Association. He has
been a Director of the Company since April 19, 2002.
5 A. R. Sankaranarayanan
85, Independent and Non Executive Director
He holds a masters degree in Science from Annamalai
University and is a retired officer from the Indian Revenue
Service. He has over 50 years of work experience and
has in the past worked as Director of the Prime Minister’s
Secretariat, Managing Director of SAIL International Limited
and Director of the Federal Bank Limited. He has been a
Director of the Company since August 18, 2003.
6 P. Manomohanan
70, Independent and Non Executive Director
He holds a bachelor’s degree in Commerce from Kerala
University and also a diploma in Industrial finance from Indian
Institute of Bankers. He is also a Certified Associate of the
Indian Institute of Bankers. He has over 38 years of work
experience in the RBI and in the regulatory aspects of NBFCs.
He has in the past held the post of General Manager
of Reserve Bank of India. He has been a Director of the
Company since August 18, 2003.
7 V. M. Manoharan
65, Independent and Non Executive Director
He holds a masters degree in Commerce from University
of Kerala and holds a Doctor of Philosophy in International
Business (Commerce) from Cochin University of Science
and Technology. He has over 40 years of work experience
and has, in the past, held the positions of Deputy Director,
Collegiate Education, Thrissur Zone and Dean, KMCT school
of Business, Kozhikode. He also held the position of Principal
1
7
2
8
3
9
4
10
5
11
6
12
in various Government Colleges in Kerala and was a Syndicate
Member of University of Calicut. Presently, he is a member of
the steering committee of Vidya International Charitable Trust,
Thalakkottukara, Thrissur, and of the All India Management
Association and the Association of Indian College Principals.
He has been a Director of the Company since August 18, 2003.
8 M. Anandan
61, Independent and Non Executive Director
He holds a bachelors degree in Commerce from the
Madras University and is a qualified Fellow Chartered
Accountant. He has more than 30 years of work experience
in the field of financial services. He has, in the past,
worked with Cholamandalam DBS Finance Limited and
with Cholamandalam MS General Insurance Limited as its
Managing Director. He was also the Director in Charge of
DBS Cholamandalam AMC Limited and DBS Cholamandalam
Securities Limited. Currently, he is the Chairman of Aptus
Value Housing Finance Limited and is on the Board of Equitas
Micro Finance India Private Limited as a non executive
director. He has been a Director of the Company since
August 17, 2009.
9 Shailesh J. Mehta
62, Independent and Non Executive Director
He has completed his Bachelor of Technology in Mechanical
Engineering from Indian Institute of Technology, Mumbai, and
holds a masters degree in science in Operations Research
from Case Western Reserve University. He holds a Doctor of
Philosophy degree in Operation Research and Human Letters
from the California State University and in Operation Research
and Computer Science from Case Western Reserve University.
He has over 38 years of work experience and has held the
positions of President, Granite Hill Capital Ventures, Chairman
and Chief Executive Officer, Providian Financial Corporation,
operating general partner, West Bridge Capital, President
and Chief Operating Officer, Capital Holding and Executive
Vice President, Key Corp (formerly Ameritrust). He has also
held the positions of Chairman and Chief Executive Officer,
Providian Financial Corporation and President and Chief
Operating Officer, Capital Holding. He has been a Director of
the Company since August 17, 2009.
10 Jagdish Capoor
72, Independent and Non Executive Director
He holds a masters degree in Commerce from Agra University
and a fellowship from the Indian Institute of Banking and
Finance. He has more than 39 years of work experience
in banking and finance. He has, in the past, worked as the
Deputy Governor of the Reserve Bank of India, Chairman of
HDFC Bank, BSE, Deposit Insurance and Credit Guarantee
Corporation of India, Unit Trust of India and also as a Director
on the Boards of several commercial banks. Currently, he
is on the Board of Indian Hotels Company Limited, Assets
Care Enterprise Limited, Indian Institute of Management, LIC
Pension Fund Limited and is the Chairman of Quantum Trustee
Company Private Limited. He has been a Director of our
Company since July 20, 2010.
11 Gautam Saigal
46, Nominee and Non Executive Director
He holds a masters degree in commerce from the Calcutta
University and is a qualified Chartered Accountant. He has
over 19 years of work experience, of which over 13 years
has been on the buy side private equity advisory services.
He is the Managing Director of AA Indian Development
Capital Advisory Services. Prior to this he co-led AIG Global
Investment Group’s private equity India advisory team,
advising on private equity investments by various AIG Group
sponsored funds in India. Earlier he was Vice President at SSKI
Corporate Finance, Mumbai. He has served on the Board of
several companies. Presently he is on the Board of Numero
Uno Clothing, Siesta Logistics and Barflex Polyfilms Ltd. He
has been a Director of the Company since August 17, 2009.
12 Sudhindar Krishan Khanna
59, Nominee and Non Executive Director
He has been Chairman of IEP Fund Advisors since 2008.
Previously, he built Accenture’s consulting and outsourcing
businesses in India. He was also the country managing partner
for the Middle East. During his 30-year tenure with Accenture,
he consulted with the Chairmen/CEOs and Boards of Directors
of most leading Indian corporate groups. He serves on the
boards of directors of Innovative Foods, RG Stone, United
Spirits, Peninsula Holdings and Canara HSBC Insurance. He
is also the India President of WPO, a global organisation of
more than 4,600 business leaders. He received his Bachelor of
Arts (Honours) in Economics from St. Stephen’s College (New
Delhi) and is a Chartered Accountant (Valedictorian, from the
Institute of Chartered Accountants of England & Wales).
Business Review Board and Management Reports Financial Section About Manappuram
Directors’ Report
In the recent past, NBFCs engaged in the gold
loan business have been registering fastest
growth. Your Company is also witnessing
substantial growth in terms of business
volumes and human capital, and has acquired
a pan India presence.
Annual Report 2011-12
26
27
To,
The Members
Manappuram Finance Limited
Your Directors are pleased to present the 20
th
Annual Report on the
working of the Company with the Audited Accounts and the Report
of the Auditors for the financial year ended March 31, 2012.
1. FINANCIAL RESULTS
(In ` million)
Description
2011-12 2010-11
Gross Income
26,558.45 11,815.26
Total Expenditure
17,786.39 7,576.30
Profit Before Tax
8,772.06 4,238.96
Provision for Taxes/Deferred tax
2,857.45 1,412.32
Net Profit
5,914.61 2,826.64
Profit b/f from previous year
2,319.84 917.13
Amount available for appropriations
8,228.97 3,743.75
Appropriations:
Transfer to Statutory Reserve
1,182.92 565.33
Transfer to General Reserve
591.48 282.67
Transfer to Debenture Redemption
Reserve
2,208.10 -
Transfer to Capital Redemption
Reserve
- --
Dividend on Preference shares
- --
Interim Dividend on Equity Shares
420.55 --
Tax on Interim Dividend
68.21 -
Proposed Equity Dividend
841.15 500.25
Tax on dividend
136.45 81.14
Balance carried forward to next
year
2,780.11 2,314.36
The comparative operational results shown above reveals the
performance of the Company for the year under report and of
the previous year. It is evident that the Company has achieved
enviable results during the fiscal 2011-12 compared to that
of the previous year. During the year under review gross
total income of the Company rose to ` 26,558.45 million as
against ` 11,815.26 million of the corresponding previous year
marking an increase of 124.78%. Total expenditure for the year
ended March 31, 2012 is ` 17,786.39 million as against
` 7,576.30 million of the previous year.
The Company has posted a record profit after tax of ` 5,915
million for the period under consideration as against ` 2,827
million of the previous year, signifying an increase of 109.23%
over the net profit for the corresponding previous year.
2. DIVIDEND
Your Board is pleased to recommend a final dividend of
` 1 per equity shares (50%- per equity share of ` 2 each) on
the paid up equity capital of the Company. On approval by
the Members at the ensuing Annual General Meeting, the
said dividend would be paid to those Members whose name
appears on the Register of Members as on the date of Book
Closure. The above final dividend includes a special dividend
of 50paise per equity share as commemorative of 20
th
Anniversary of the Company. Members may kindly recall that
the Board has already declared an interim dividend of 50 paise
per equity share during February 2012. Thus the total dividend
for the year is ` 1.50 per equity share of ` 2 per share.
The total cash outflow exclusive of tax on account of equity
dividend for the year 2011-12 would be ` 1,261.70 million
(inclusive of interim dividend) as compared to ` 500.25 million
during the previous year.
3. RAISING OF ADDITIONAL CAPITAL
During the year, Company has issued 1:1 bonus shares which
resulted in the increase of shares by 416,874,188 nos. Further
the Company has issued 7,404,760 shares to its employees
under the ESOP 2009 scheme of the Company resulting in
the paid up share capital increasing to ` 1,682,306,272 as on
March 31, 2012.
4. CAPITAL AND RESERVES
Capital and Reserves of the Company as on March 31, 2012
stood at ` 23,810.08 million. During the year under review the
Company transferred ` 1,182.85 million to Statutory Reserve
5. DEBENTURE REDEMPTION RESERVE
Members may recall that the Company had made a public
issue of Redeemable Non Convertible Debentures during
the year under review. The issue opened on August 18, 2011
and closed on August 26, 2011. The Company has issued
debentures equivalent to ` 4,416 million to the successful
applicants under the issue. The issue proceeds net of
issue expenses have been utilised for the stated purpose
being working capital for lending against the security of
gold jewellery. Under section 117C read with the circulars
issued thereunder the Company should create Debenture
Redemption Reserve (DRR) out of its profits for the purpose of
providing resources for redemption of debentures. During the
year, your Company has transferred ` 2,208.10 million to DRR
in compliance with the above provision out of the profits of the
Company.
6. BUSINESS OUTLOOK
In the recent past, NBFCs engaged in the gold loan business
have been registering rapid growth. Your Company is also
witnessing substantial growth in terms of business volumes
and human capital, and has acquired a pan India presence.
The future for the Company remains robust. Recently, Reserve
Bank of India (RBI) has issued a circular on March 21, 2012
amending the Non-Banking Financial (Non-Deposit Accepting
or Holding) companies Prudential Norms (Reserve Bank)
Directions, 2007 to the effect that all NBFCs shall maintain a
Loan- to Value (LTV) ratio of 60 % for loans granted against
the collateral of gold jewellery. In line with the latest regulatory
measures and encouraged by the Company’s success so
far, we have shaped our business plan for the financial year
2012-13 which will help to realise our long term strategy to
‘energise’ at least 10% of the vast privately held gold reserves
in the country. For this, it is necessary to develop a country-
wide presence to be close to the customers.
About Manappuram
Business Review Board and Management Reports Financial Section
Your Company provides credit, the average size of which is
` 38,582. Your Company has decided to make a way in to
innovative products, improved relationship management,
brand building, efficient customer service, better use of
technology and reduced operational costs which will become
the hallmark of successful NBFCs in future.
7. RESOURCES
Your Directors could successfully mobilise ` 4,416 million from
whole sale debt market by issue of listed Non convertible
Secured Debenture. The Company was also successful in
mobilising funds from the issue of debentures to both retail and
institutional investors and from instruments like Commercial
Paper.
Details of resources raised during the year under review are
given below:
a) Secured Redeemable Non-Convertible Debentures
Your Company continues to issue fully secured
redeemable convertible debentures of ` 1000/- each
on private placement basis, both retail and institutional.
During the year, your Company has raised ` 4416 million
from the public issue of NCDs. The outstanding balance
of Debentures including interest accrued and due as on
March 31, 2012 amounts to ` 14,739.56 million. The
debentures issued on private placement basis are
secured by a floating charge created on the receivables
and other current assets of the Company. The Company
has appointed Trustees to see that the interests of
debenture holders are well protected.
b) Unsecured Bonds.
The Company has issued unsecured Subordinated Bonds
in the nature of Promissory Notes on private placement
basis. These Bonds will be treated as Tier II Capital as
per RBI norms. The outstanding figure of these bonds as
on March 31, 2012 amounted to ` 4,266.84 million.
c) Assignment of Receivables
The Company has procured funds through assignment of
receivables to Banks and Financial Institutions during the
year. The aggregate amount assigned as at March 31,
2012 is ` 1916.36 million.
d) Commercial Paper (CP)
During the year, the Company made several issues of
the CPs and the outstanding figure of these CPs as on
March 31, 2012 amounted to ` 232 million.
8. COMPLIANCE WITH NBFC REGULATIONS
Your Company has complied with all the regulatory provisions
framed by Reserve Bank of India for Non-Banking Financial
Companies. The Capital Adequacy Ratio of the Company
as on March 31, 2012 is 23.38 % as against the statutory
requirement of 15%.
However, on 1st February, 2012, the Company received a
letter from Reserve Bank of India (RBI) directing the Company
to disassociate, its name, officials, and infrastructure from that
of any other group concerns carrying on financial activities.
The Company has complied with all the directions issued by
RBI with the professional assistance of reputed corporate legal
firm and management consultants and updated the progress
regularly to RBI.
9. IMPORTANT REGULATORY DEVELOPMENTS
In order to further strengthen the existing regulatory
framework, Reserve Bank of India (RBI) has issued revised
guidelines amending the existing the Fair Practices Code
(FPC). Accordingly, as required under the guidelines, the
Board of Directors of the Company at its meeting held on
24th April, 2012, has approved a new Fair Practices Code.
The Company has posted the new Fair Practices Code at its
website at www.manappuram.com. Further, as required under
the said guidelines, the Company has put in place an elaborate
Customer Grievance Mechanism, a revised Loan Policy and a
revised Auction Policy.
10. DIRECTORS
Retirement of Directors by Rotation
1) Mr. A.R Sankaranarayanan, Director, retires by rotation
and he is eligible for re-appointment.
2) Adv.V.R.Ramachandran, Director, retires by rotation and
he is eligible for re-appointment.
11. CONSERVATION OF ENERGY, TECHNOLOGY
ABSORPTION AND FOREIGN EXCHANGE
EARNINGS & OUTGO - INFORMATION AS
PER SECTION 217 (1) (e) OF THE COMPANIES
ACT, 1956
The Company does not have any activity relating to
conservation of energy or technology absorption.
The Company holds AD Category II licence from the Reserve
Bank of India for its foreign exchange operations. Following
are the details of foreign exchange earnings and outgo during
the period covered by this report:
Foreign Exchange Earnings : Nil
Foreign Exchange Outgo : Nil
12. PARTICULARS OF EMPLOYEES
Particulars of the employees covered by the provisions
of section 217 (2A) of the Companies Act, 1956 read with
Company’s (Particulars of Employees) Rules, 1975 is as under:
Annual Report 2011-12
28
29
STATEMENT PURSUANT TO SECTION 217 (2A) OF THE COMPANIES ACT, 1956 READ WITH COMPANY’S (PARTICULARS OF
EMPLOYEES) RULES, 1975
Name Designation Age Remuneration
Received
Date Of
Joining
Experience
In Years
Mr. V.P. Nandakumar Executive Chairman 58 2,52,00,000 15.07.1992 32
Mr. I. Unnikrishnan Managing Director 48 1,12,80,000 01.10.2006 22
Mr. B.N. Raveendra Babu Joint Managing Director 60 91,20,000 17.08.2009 34
13. DIRECTORS’ RESPONSIBILITY STATEMENT
As required under Section 217 (2AA) of the Companies Act,
1956, the Board of Directors hereby declares that:
a) In the preparation of Annual Accounts for the financial
year ended March 31, 2012, applicable Accounting
Standards have been followed along with proper
explanation relating to material departures.
b) The Directors have selected such accounting policies
and applied them consistently and made judgments and
estimates that are reasonable and prudent so as to give
a true and fair view of the state of affairs of the Company
at the end of the financial year 2011-12 and of the profit
of the Company for that period.
c) The Directors have taken proper and sufficient care
for the maintenance of adequate accounting records in
accordance with the provisions of Companies Act, 1956,
for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities.
d) The Directors have prepared the Annual Accounts for
the year 2011-12 on a going concern basis.
14. AUDITORS
The Statutory Auditors M/s S.R. Batliboi & Associates,
Chartered Accountants, (Firm Registration Number- 101049W,
(TIDEL Park, 6th and 7th Floor - A Block, Module 601,
701-702, No 4 Rajiv Gandhi Salai, Taramani, Chennai 600 113,
India, Office: + 91 44 6654 8100) retires at the ensuing Annual
General Meeting of the Company and are eligible for
re-appointment.
15. REPORT ON CORPORATE GOVERNANCE
Your Company has been practicing principle of good Corporate
Governance over the years. The endeavor of the Company
is not only to comply with the regulatory requirements but
also practice good Corporate Governance that lays strong
emphasis on integrity, transparency and overall accountability.
A separate section on Corporate Governance along with a
certificate from the Statutory Auditors confirming compliance
is annexed and forms part of this report.
16. MANAGEMENT DISCUSSION AND ANALYSIS
REPORT
Management Discussion and Analysis Report is attached and
forms an integral part of the Report of the Board of Directors.
17. ACKNOWLEDGEMENT
Your Directors acknowledge and place on record its sincere
appreciation and gratitude to the employees of the Company
at all levels for their dedicated service and commitments, to
the Reserve Bank of India, Rating Agencies, Stock exchanges,
Governments and its statutory agencies for the support,
guidance and co-operation, to the Investors, shareholders
Banks and other financial institutions and customers for
the whole hearted support and confidence reposed on the
Company and the management and to the general public at
large for their blessings and good wishes the Company have
been receiving in good measure over the years.
For and on behalf of the Board of Directors
Place: Valapad
Date: May 18, 2012
V.P.Nandakumar
Executive Chairman
About Manappuram
Business Review Board and Management Reports Financial Section
Annexure
to the Directors’ Report
SL
No.
Particulars Disclosures- ESOP 2009
a Options granted. 82,95,000
b Pricing Formula The exercise price may be decided by the Nomination, Compensation and
Corporate Governance Committee of the Board in accordance with the SEBI
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 and any amendments thereto.
c Options Vested 50% of the above Options has already vested on August 16, 2010 and the
balance on August 16, 2011.
d Options Exercised during the year. 74,04,760
e Total no. of shares arising as a result of exercise of
Options.
74,04,760
f Options lapsed 6,95,000
g Variation in terms of Options The criterion for expiry of Exercise Period has been amended as ‘Not later
than 4 years from the date of vesting of Options for continuing Employees’
at the Extra-Ordinary General Meeting held on 22.04.2010 and the number
of Options have been proportionately increased in view of the Subdivision
and Bonus issue.
h Money realised by exercise of Options ` 12,26,22,826
i Total number of Options in force 1,20,000
j Employee wise details of Options granted to:
(i) Senior Management Name No. of Options
Mr. I.Unnikrishnan 1200000
Mr. B.N.Raveendra Babu 1000000
Mr. P.Manomohanan 300000
Dr. V.M.Manoharan 300000
Mr. A.R.Sankaranarayanan 300000
Adv. V.R.Ramachandran 300000
Mr. M.Anandan 300000
Mr. Shailesh J Mehta 300000
(i) Any other employee who receives a grant in
any one year of Option amounting to 5 per cent
or more of Option granted during that year
Nil
(iii) Employees who were granted Option, during
any one year, equal to or exceeding 1 per cent
of the issued capital (excluding warrants and
conversions) of the Company at the time of
grant
Nil
Disclosures in terms of Clause 12 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999:
Annual Report 2011-12
30
31
SL
No.
Particulars Disclosures- ESOP 2009
k Diluted earnings per share pursuant to issue
of shares on exercise of Options calculated in
accordance with AS 20 ‘earnings per share’
` 7.03
l Where the Company has calculated the employee
compensation cost using the intrinsic value of the
Stock Options, the difference between the employee
compensation cost so computed and the employee
compensation cost that shall have been recognised
if it had used the fair value of the Options, shall be
disclosed. The impact of this difference on profits
and on EPS of the Company shall also be disclosed.
The difference between the employee compensation cost computed in
accordance with intrinsic value adopted by the Company and fair value is
` 11.72 million.
Had the Company adopted the fair value model, the net profit after tax
would have been ` 5902.89 million as against the reported amount of
` 5914.61
The Basic EPS would have been ` 7.05 as against the reported figures of
` 7.06 .
The Diluted EPS would have been ` 7.02 as against the reported figures of
` 7.03.
m Weighted-average exercise prices and weighted-
average fair values of Options shall be disclosed
separately for Options whose exercise price either
equals or exceeds or is less than the market price of
the stock on the grant date.
The exercise price is ` 33.12.
n Description of method and significant assumptions
used to estimate the fair value of Options
The fair value of options was estimated at the date of grant using the Black-
Scholes method with the following assumptions:
Particulars Vesting I
August 16, 2010
50%
Vesting II
August 16, 2011
50%
Risk-free interest rate 6.15% 6.53%
Expected life 3 years 4 years
Expected volatility 67.11% 66.62%
Expected dividend yield 2.76% 2.76%
Share price on the date of grant ` 331.15 /- ` 331.15 /-
About Manappuram
Business Review Board and Management Reports Financial Section
Management
Discussion and
Analysis Report
Consumption of gold remains strong in rural
India, and it is the preferred asset class
for those in the lower levels of the socio-
economic pyramid as well.
Annual Report 2011-12
32
33
1. ECONOMIC OUTLOOK
The year 2011-12 was marked by an economic slowdown
much against the optimism that reigned at the beginning of
the fiscal year. The Union Budget 2011-12 was premised
on a growth of 9% in our Gross Domestic Product (GDP).
However, the actual achievement fell short substantially with
recently published data pointing to a growth of only 6.5%
for the entire year. Even more worrying is the trend, with
the growth rate falling to 5.3% during the fourth quarter, and
hitting a nine-year low. The slowdown had an adverse impact
on the government’s finances as revenues fell way below the
budget estimates, while expenditure overshot the estimates on
account of food and fuel subsidies. India’s fiscal deficit has now
moved into a danger zone at 5.8% of GDP.
Moreover, inflationary pressures remained high for most of
the year and often breached the double-digit mark. Some
amount of moderation in inflation was witnessed in the final
quarter, which enabled the Reserve Bank of India (RBI) to
announce a 50 basis points cut in policy rates in April 2012,
after earlier having pushed through 13 consecutive rounds of
hikes in policy rates.
Notwithstanding the limited success achieved in reining
in inflation, the fact remains that 2011-12 saw the macro-
economic fundamentals of the Indian economy come under
severe strain. India’s current account deficit ballooned to an
estimated 4% of the GDP largely due to a record trade deficit
of US$ 185 billion, with imports of oil and gold leading the
way. Moreover, with corporate profitability under strain and a
lacklustre stock market, foreign portfolio inflows were muted.
This has put the Indian rupee further under pressure, falling
from levels of ` 45 per US$ in July 2011 to a low of about
` 54 per US$ by December.
Outlook for Fiscal Year 2012-13 is mixed, with a downward
bias. After the dismal fourth quarter performance, private
sector economists are busy downgrading their GDP growth
estimates for 2012-13 to a level of about 6.5%.
Key economic concerns during FY 2011-12:
Increase in international petroleum prices led to a
widening of the trade gap. Moreover, the general
inability of the government to pass on increased costs
to the domestic consumer bloated its subsidy bill and
contributed to the widening fiscal deficit. Some relief
is seen in the current year as crude prices have been
declining as the Eurozone economies lapsed into lower
growth and recession.
Current account deficit at 3.9% is well above the danger
level of 3%. Prospects appear brighter in the current
fiscal year with falling crude prices and reduction in gold
imports (following increased customs duty).
The Eurozone debt crisis has severely dented export
prospects and contributed to the rising trade deficit. In
fact, after being buoyant during the first half of 2011-12,
exports tapered off in the second half as the European
economies lost steam. And with Europe unlikely to stage
a full recovery soon, exports are likely to be weak in the
current year as well.
There’s been a continuous slowdown in the Indian
economy with GDP growth decelerating in each of the
four quarters in FY 2011-12. Growth in Oct-Dec quarter
was recorded at only 6.1%, followed by a dismal 5.3%
during Jan-Mar quarter.
Successive hikes in policy rates by RBI significantly
increased borrowing costs and suppressed demand, thus
negatively impacting corporate profitability.
Foreign portfolio investments remained relatively muted
on account of slowing growth and an uncertain policy
environment. The serious depreciation of the Indian
rupee vis-a-vis the US dollar, beginning in August 2012,
has muddied the waters even more.
While some success was achieved in moderating
inflationary pressures towards the year end, it is believed
the economy is yet to grapple with suppressed inflation
from the failure to pass on increased prices of petroleum
products to the domestic consumer.
At the same time, it is important to note that many analysts
retain a sense of optimism about the current year 2012-13.
This can be attributed to an expectation of sizable cuts in
interest rates by RBI to come, over signs that inflationary
pressures in the economy have peaked, and on concerns
over growth slowdown. However, while there’s no doubt
that a reversal in the cycle of rate hikes will be extremely
important for higher economic activity, possibilities remain that
inflationary pressures may re-emerge and play a spoil sport.
The depreciation in the Indian rupee, which has pushed up the
prices of essential imports such as crude oil, can also stoke
inflationary fires.
2. THE GOLD LOANS SECTOR
Scenario for Gold and Gold Loans: The US dollar is
regarded as a safe-haven currency across the world.
However, post-global financial crisis of 2008, Gold has
emerged as the new safe-haven asset, which safeguards
investors from deeply depreciation currencies the world
over. Gold is considered as a “must own” in all portfolios and
globally the demand for gold has increased considerably post
2008. As gold has been continually outperforming all other
asset classes in last five years, it is now widely regarded as
among the best investment asset in an uncertain environment.
And with the global economic environment deteriorating, gold
is likely to hold its importance and may even rise further in
value. Not surprisingly then, analysts indicate a further rise
in gold prices. Moving forward, this is a positive for gold loan
companies across India.
The slow pace of economic reforms in India and lack of FII
and FDI inflows exerted pressure on the Indian Rupee which
has depreciated over 20% since August 2011. Gold prices are
determined in the international market and the depreciation of
the rupee further increases gold prices in rupee terms.
Consumption of gold remains strong in rural India, and it is the
preferred asset class for those in the lower levels of the socio-
economic pyramid as well. Investing in gold is like a tradition.
Gold continues to be an important financing asset for those
with no access to the banking system or financial markets.
Gold loan companies cater to the credit demand of this section
of society and prevents them from falling prey to loan sharks
charging exorbitant interest rates. Though our Company has
a pan-India presence, it caters largely to the lower socio-
economic classes, as indicated by the average ticket size of
gold loans. Majority of the disbursements happen in semi-
urban and rural India. Owing to favourable monsoons and the
rural thrust in government spending, higher growth rate can
be expected in rural India, which augurs well for companies
such as Manappuram Finance Ltd. catering to this segment of
the market.
About Manappuram
Business Review Board and Management Reports Financial Section
The organised gold loans sector: India’s organised gold
loan industry has grown rapidly in the last two decades. Fiscal
year 2011-12 commenced on a good note with gold loan
NBFCs reporting gains in volumes as well as market shares.
However, the fourth quarter saw the sector facing strong
headwinds, with the RBI ushering in new regulations that
altered the rules of the game. The banking regulator imposed
a 60% cap on LTV for gold loans given by NBFCs, besides
tightening bank lending norms with a cap of 7.5% of a bank’s
net worth towards loans to any one gold loan NBFC. KYC
norms were also made stricter.
These sweeping changes in the regulatory landscape not only
led to greater accountability for existing players, but also make
things difficult for new entrants. The Company has complied
with the new guidelines, though there’s no denying these
changes have impacted short-term growth prospects for gold
loan NBFCs.
A working group committee has been formed by RBI under
the leadership of Mr. K.U.B. Rao to examine current practices
of gold loan NBFCs, assess influence of gold loans on gold
imports, study trends in gold prices and also examine whether
gold loan NBFCs have any role to play in influencing gold
prices. The committee is expected to release its report by July.
Even as the gold loan sector witnessed extreme turbulence,
Manappuram Finance Ltd. emerged stronger from the diverse
and unique challenges it faced, pointing to the fact that it has
a sound business model. Gold Loan financing is a window
that provides finance to those at the lower end of the socio-
economic pyramid for their immediate personal and business
needs. The company’s business model is geared up to satisfy
their business needs, as indicated by our average ticket size
of ` 38,582. The Company takes pride in the significant role it
plays in bridging the gap between urban and rural India.
3. COMPANY OVERVIEW
Established in 1992, Manappuram Finance Ltd is one of India’s
leading NBFCs providing financial services, including gold
loans, foreign exchange services and remittances. Through
its 20 years of operations, the Company has maintained a
consistently rapid pace of growth, demonstrating its ability to
scale up and to leverage its well-established brand name, built
up over the last two decades.
The Company has 2,908 branches across 22 states and 4
Union Territories and manages assets worth ` 116,308 million
with a live customer base of 1.64 million. The Company has
spent over ` 1,800 million on advertising and brand building
campaign in the last two years and has taken on board some
of the most well known celebrities as its brand ambassadors,
making it a nationally recognised brand. Today, the
Manappuram brand stands for trust, reliability and excellent
service, and repeat customers account for up to 80% of total
business, which bears testimony to the strength of the brand
and the loyalty it commands.
4. OPPORTUNITIES
The core business of the Company, of providing gold loans,
offers immense growth potential. The World Gold Council
(WGC) estimates privately held gold stock exceeding 18,000
tonnes in India. The Company aims to impart liquidity to at
least 10% of this stock. To stay on course with this vision,
the Company has expanded its branch network from 2,064
branches (March 31, 2011) to 2,908 branches as on March 31,
2012.
Efforts have also been taken to improve its quality of
operations, such as a tie-up with IBM with July 2011 to
strengthen its IT infrastructure. The Company is largely
immune to problems of recovery and of non-performing
assets (NPAs) as most of the lending is done in the gold loan
segment. Though successive rate hikes by RBI increased
borrowing costs, commercial banks have been more than
forthcoming in extending financial assistance.
The continuing firmness in gold prices offers good support to
the Company’s gold loan business. Moreover, indications for
the current year are that gold prices in India will hold its level
even if international prices decline, given the possibility of
further depreciation in the Indian rupee.
5. THREATS
Recent regulatory interventions, particularly with regard to the
cap on LTV for gold loans and tightening of capital adequacy
norms, have altered the rules of the game, somewhat to the
disadvantage of gold loan NBFCs. Rating agency Crisil expects
the new regulations to reduce industry growth rate to 20-25%
a year. The unorganised sector also poses a challenge to the
Company. The Crisil report noted that some unregistered firms
offered as high as 90% of the total value of pawned gold as
loan, as against an industry average of 75%, and expected
a share of business to shift to the unorganised sector. The
note also suggests that gold loan NBFC may reduce pricing
to protect market shares to prevent a shift to the unorganised
segment, which can moderate their profitability. However,
the new regulations will prove positive for the industry and
lower LTV ratios may strengthen their asset quality, owing to
increased ability to absorb volatility in gold prices.
Impact on the Company: Following the RBI directive, the
Company carried out an internal stock taking exercise that
compared its current gold loan AUM with the total weight of
gold held as security. The overall LTV stood at about 67%. The
new regulations are expected to bring down LTV by 6-7%. This
may translate into lower credit growth and also lead to a fall in
yield by 2-3% as loans at lower LTVs command lower pricing.
Some other important issues arising from RBI’s directive are
as below:
Threat of loss of business to banks and unorganised
sector: The general impression is that lower LTVs may
put gold loan NBFCs at a significant disadvantage vis-a-vis
commercial banks and money lenders. However, we do not
share this view. As a product class, gold loans have gained
wide acceptance in recent years mainly due to the multiple
conveniences offered by this product class. As gold loans
are usually small ticket loans availed for short periods, gold
loan customers have prioritised factors such as hassle-free
experience with minimum formalities, quick turn-around time
and easy access to branch network. In general, commercial
banks have been unable to match NBFCs on these counts.
This is particularly true in the case of public sector banks
which otherwise have the advantage of a wider reach. Private
banks are handicapped due to the lack of an extensive branch
network.
Annual Report 2011-12
34
35
As far as a likely shift to the unorganised sector is concerned,
we do expect a certain amount of churn. However, we also
strongly believe that our customers, who are accustomed to
our service, credibility and higher standards of transparency,
may find it difficult to reconcile to the practices of the
unorganised sector.
Impact on growth: The recent growth achieved by gold loan
NBFCs has emanated from two major sources:
a) New customers attracted from a class of relatively
better off gold owners, who earlier despised the idea of
pawning gold. This is a relatively more demanding class
which puts a premium on time and convenience and is,
therefore, likely to be put off by cumbersome procedural
formalities at commercial banks. Moreover, they are
highly unlikely to move to the unorganised sector fearing
lack of credibility and transparency.
b) Customers won over from the unorganised sector, who
were originally drawn to the gold loan NBFCs by the
lower prices along with good service and high levels of
transparency and credibility. A part of the attraction, no
doubt, was that they did not lose out on the LTV of their
limited gold. Consequently, this class presents a greater
challenge. While the decrease in interest rates (due to
lower LTV) would be a bonus, some “LTV sensitive”
customers may choose to go back to the unorganised
sector, adversely impacting growth.
6. RISKS AND CONCERNS
The Company has put in place a mechanism to minimise
operational risks through effective control systems which
call for constant review and an ongoing internal audit. Our
risk management framework aims to identify the diverse
risks faced by the Company and come up appropriate
mitigation strategies. Our Internal Audit Team, which reports
directly to the Audit Committee of the Board, undertakes a
comprehensive audit of functional areas and operations at
all the branches. Having successfully completed migration of
its technological base to the Dotnet platform, the Company
has also set up an off-site surveillance system to make its
internal control systems more risk-proof. Managing risks in
credit, interest rates, and liquidity, form critical components
of our risk management system. The Company has in place
rigorous norms for credit disbursal through the Lending Policy
Framework. An asset-liability management model has been
developed to measure and manage interest rate and liquidity
risks and these are discussed and reviewed periodically at Risk
Management Committee meetings.
Other concerns: The RBI issued a notice in February 2012 that
faulted the Company for accepting deposits from the public
after becoming a non-deposit taking NBFC in March 2011.
The management clarified that the Company had stopped
accepting public deposits since March 2011, but it continued
to accept subscriptions to its secured Non-Convertible
Debentures (NCD), which is permissible. There was another
issue regarding the permissibility of acceptance of deposits
by a proprietary concern owned by Mr. V.P. Nandakumar,
Executive Chairman, in his personal capacity. The Company
has since been informed by Mr. Nandakumar that these
deposits were placed in an escrow account with a nationalised
bank, a bulk of which has since been repaid. This development
has also been advised to the RBI.
In the light of these developments, a Board Meeting was
called for on February 10, 2012, which discussed the
corporate governance issues. The Board directed the
Company to take all the necessary measures in order to fully
address the concerns raised by the RBI. In particular, the
Company plans to take steps to ring fence its own operations
from that of other promoter owned or controlled entities to
avoid overlapping of assets, branches or personnel between
these entities.
Also, in order to enhance corporate governance, the Board
constituted an independent committee of its members
under the chairmanship of Mr. Jagdish Capoor (former
Deputy Governor, RBI; Former Chairman, HDFC Bank). The
committee was given the mandate to review the operations,
systems, controls and organisation structure, including Board
composition and effectiveness. Amarchand Mangaldas, a
leading law firm, has been roped in to assist the committee
with the independent review exercise.
7. DISCUSSION ON FINANCIAL
PERFORMANCE
Considering profit growth and overall performance, the
Board of Directors have recommended a dividend of 50%
(i.e. `1/-per equity share of ` 2/- each) on the paid-up capital
of the Company. It may be noted that in February 2011, the
Company paid an interim dividend of 25% (i.e. ` 0.50 per
equity share).
During the year under review, income from operations more
than doubled from ` 11,654 million in 2010-11 to ` 26,155
million in 2011-12. Profit after tax registered a smart increase
of 109%, moving up to ` 5,915 million, as against ` 2,827
million recorded in the previous fiscal year. The company
ended the year with an AUM of ` 116,308 million, which
registered a healthy growth of 54% over last fiscal.
8. CAUTIONARY STATEMENT
Statements in this report pertaining to the Company’s
objectives, projections, estimates, exceptions and predictions
are forward-looking statements subject to the applicable
laws and regulations. These statements may be subject to
certain risks and uncertainties. The Company’s operations
are affected by many external and internal factors which are
beyond the control of the management. Therefore, the actual
position may differ from those expressed or implied. The
Company assumes no obligation to amend or update forward
looking statements in future on the basis of new information,
subsequent developments or otherwise.
For and on behalf of the Board of Directors
Place: Valapad
Date: May 18, 2012
V.P.Nandakumar
Executive Chairman
About Manappuram
Business Review Board and Management Reports Financial Section
Report on Corporate
Governance
The objective is not merely compliance, but
also to uphold transparency and integrity in all
its operations, thereby optimising shareholder
value.
Annual Report 2011-12
36
37
COMPANY’S PHILOSOPHY ON CODE OF GOVERNANCE
The Corporate Governance standards of the Company place strong emphasis on transparency, accountability and integrity in all the business
activities of the Company. The objective is not merely compliance, but also to uphold transparency and integrity in all its operations, thereby
optimising shareholder value. The Company believes that its business plans and strategies 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.
The Company has complied with all mandatory requirements of corporate governance as detailed in the Clause 49 of the listing agreement.
The Company has also complied with some of the non-mandatory requirements, details whereof are given in the following paragraphs.
BOARD OF DIRECTORS
There are twelve directors in the Board of the Company having varied nature of experience and expertise in their respective areas. The
composition of the Board meets the criteria as prescribed in Clause 49 of the Listing Agreement. This composition also fulfills the norms issued
by Reserve Bank of India in this regard. Out of the twelve directors, three are executive directors, two are nominee directors and seven are
independent directors.
During the financial year 2011-12, the Board met on nine occasions viz. 28-04-2011, 31-05-2011, 06-07-2011, 27-07-2011, 03-11-2011,
29-12-2011, 02-02-2012, 10-02-2012, and 21-03-2012. The details of participation in the meetings and other relevant information are given in
the below statement.
Name & Category of Director No: of
Board
Meetings
attended
Whether
attended
the last
AGM
Details of membership in
Committees of the Board*
Share
Holding
of Non-
Executive
Directors
Director
ships in
other Public
Limited
Companies
1 Mr. V.P Nandakumar
Chief Promoter & Executive Chairman
8 Yes Nomination, Compensation &
Corporate Governance Committee
- 5
2 Mr. I Unnikrishnan
Managing Director
8 Yes NIL - 1
3 Mr. B.N.Raveendra Babu
Joint Managing Director
9 Yes Nil - 2
4 Adv.V.R.Ramachandran
Independent & Non Executive Director
8 Yes Share Holder’s Grievance
Committee
1526000 Nil
5 Mr. A.R.Sankaranarayanan
Independent & Non Executive Director
9 Yes Audit Committee & Nomination,
Compensation & Corporate
Governance Committee
900000 Nil
6 Mr. P. Manomohanan
Independent & Non Executive Director
9 Yes Audit Committee & Share Holder’s
Grievance Committee
1635582 Nil
7 Dr. V.M.Manoharan
Independent & Non Executive Director
9 Yes Share Holder’s Grievance
Committee
965000 1
8 Mr. M.Anandan
Independent & Non Executive Director
8 No Audit Committee & Nomination,
Compensation & Corporate
Governance Committee
755000 2
9 Mr. Shailesh. J. Mehta Independent &
Non Executive Director
4 No Audit Committee & Nomination,
Compensation & Corporate
Governance Committee
657000 6
10 Mr. Jagdish Capoor
Independent & Non Executive Director
7 No Nomination, Compensation &
Corporate Governance Committee
2000 6
11 Mr. Gautam Saigal
Nominee & Non Executive Director
5 No Audit Committee & Nomination,
Compensation & Corporate
Governance Committee
- 3
12 Mr. Gaurav Mathur # Nominee & Non
Executive Director
4 No NIL - 3
* Membership of Audit Committee, Nomination Compensation and Corporate Governance Committee and Share Holders Grievance
Committee only are shown.
# Mr. Gaurav Mathur, the nominee director of Hudson Equity Holdings Limited, has resigned from the Board w.e.f May 17, 2012 and
Mr. Sudhindar Krishan Khanna was appointed in place of him as the new nominee director of Hudson Equity Holdings Limited.
About Manappuram
Business Review Board and Management Reports Financial Section
Change in the Board of Directors during the year 2011-12
There was no change in the composition of the Board of Directors
during the financial year 2011-12.
COMMITTES OF THE BOARD
a. Audit Committee
The Company has constituted a qualified and independent
Audit Committee as required under Section 292A of the
Companies Act, 1956, and in fulfilment of the requirements
of clause 49 of the Listing Agreement. The Committee also
fulfils the guidelines issued by the Reserve Bank of India in this
regard.
The Committee has five members eminently qualified to
handle accounts, finance, audit and legal matters. The
Company Secretary acts as the Secretary of the Audit
Committee. The terms of reference of the Committee shall
be the same as those mentioned in the Listing Agreement, as
given below:
Terms of Reference:
1) Oversee the Company’s financial reporting process and
the disclosure of its financial information to ensure that
the financial statement is correct, sufficient and credible.
2) Recommending to the Board the appointment,
reappointment, and if required, the replacement or
removal of the statutory auditor and the fixation of audit
fee.
3) Approval of payment to statutory auditors for any other
services rendered by the statutory auditors.
4) Reviewing with management the annual financial
statements before submission to the Board for approval
with particular reference to:
a. Matters required to be included in the Directors
Responsibility Statement to be included in the
boards report in terms of clause 2AA of section
217 of the Companies Act 1956.
b. Changes if any in accounting policies and practices
and reasons for the same.
c. Major accounting entries involving estimates
based on the exercise of judgment by
management.
d. Significant adjustment made in the financial
statement arising out of audit findings.
e. Compliance with listing and other legal
requirements relating to the financial statements.
f. Disclosure of any related party transactions.
g. Qualifications in the draft audit report.
5) Reviewing with the management the quarterly financial
statements before submission to the board for approval.
6) Reviewing with the management performance of the
statutory and internal auditors and adequacy of the
internal control system.
7) Reviewing the adequacy of internal audit function if any
including the structure of internal audit department,
staffing and seniority of the official heading the
department, reporting structure coverage and frequency
of internal audit.
8) Discussion with internal auditors regarding any
significant findings and follow-up thereon.
9) 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.
10) Discussion with statutory auditors before audit
commences about the nature and scope of audit as
well as post-audit discussions to ascertain any area of
concern.
11) To look into the reasons for substantial defaults in
the payments to the depositors, debenture-holders,
shareholders (in case of non-payment of declared
dividends) and creditors.
12) To review the function of whistle blower mechanism in
case the same exists.
13) Carrying out any other function as mentioned in the
terms of reference of audit committee.
The Audit Committee met four times during the financial
year 2011-12 viz. 28-04-2011, 26-07-2011, 02-11-2011
and 01-02-2012. The constitution, record of attendance
of meetings and other details of the Audit Committee of
the Company are below:
Name of the Member Position Status No. of meetings attended
1. Mr. M . Anandan Chairman Independent and Nonexecutive 4
2. Mr.P.Manomohanan Member Independent and Nonexecutive 4
3. Mr.A.R.Sankaranarayanan Member Independent and Nonexecutive 4
4. Dr.Shailesh J Mehta Member Independent and Nonexecutive 3
5. Mr.Gautam Saigal Member Nominee and Nonexecutive 4
Annual Report 2011-12
38
39
b. Nomination, Compensation & Corporate Governance Committee
The Nomination, Compensation and Corporate Governance Committee of the Company was constituted to oversee the Compliance
with the Reserve Bank of India’s Circular No. DNBS/PD/CC/94/03.10.042/2006-07 dated May 08, 2007 to ensure that only capable
professionals are appointed as directors. The Committee also meets the requirements of the Clause 49 of the Listing Agreement.
The main role of the Committee to determine on behalf of the Board and on behalf of the Shareholders, the Company’s policies on
specific remuneration packages for Executive Directors, including pension rights and any compensation payments.
The Committee is chaired by a Non-Executive Director with other members as mentioned below:
1. Mr. A.R.Sanakaranarayanan Chairman
[Non-Executive]
2. Mr. V.P.Nandakumar Member [Executive]
3. Mr. Shailesh J Mehta Member [Non Executive]
4. Mr. M.Anandan Member [Non Executive]
5. Mr. Jagdish Capoor Member [Non Executive]
6. Mr. Gautham Saigal Member [Nominee]
Details of meetings held and resolution passed by circulation by the Committee during the financial year 2011-12 are given
in the following table
Date of
Meeting
Members Attended Item
Discussed
Remarks
28-04-2011 1. Mr. A.R.Sankaranarayanan
2. Mr. V.P.Nandakumar
3. Mr. P. Manomohanan
4. Mr. M.Anandan
5. Mr. Gautham Saigal
Managerial
Remuneration
1. Payment of Commission to Non-Executive
Directors for the Financial year 2010-11.
2. Payment of Commission to Executive Directors for
the Financial year 2010-11.
3. Commission to Non-Executive Directors for the
Financial Year 2011-12.
4. Commission to Executive Directors for the
Financial Year 2011-12.
5. Remuneration to Executive Directors for the
financial year 2011-12.
6. ESOP 2009 – Streamlining the Allotment.
Details of Remuneration paid to Directors during the financial year 2011-12
Sl
No
Name of Director Sitting Fees Salaries
and other
allowances
Commission Total
Board
Meeting
Committee
Meetings
1 Mr V.P.Nandakumar - - 2,52,00,000 - 2,52,00,000
2 Mr I. Unnikrishnan - - 84,00,000 28,80,000 1,12,80,000
3 Mr B.N.Raveendra Babu - - 67,20,000 24,00,000 91,20,000
4 Adv.V.R.Ramachandran 1,60,000 - - 4,00,000 5,60,000
5 Mr.A.R.Sankaranarayanan 1,80,000 82,500 - 4,00,000 6,62,500
6 Mr P.Manomohanan 1,80,000 75,000 - 4,00,000 6,55,000
7 Dr.V.M.Manoharan 1,80,000 - - 4,00,000 5,80,000
8 Mr M.Anandan 1,60,000 82,500 - 4,00,000 6,62,500
9 Mr Shailesh J Mehta 80,000 62,500 - 4,00,000 5,42,500
10 Mr.Jagdish Capoor 1,40,000 - - 4,00,000 5,40,000
About Manappuram
Business Review Board and Management Reports Financial Section
Criteria for remunerating Non-Executive Directors:
Decisions relating to the remuneration of Non Executive
Directors are taken by the Board of Directors of the Company.
Independent/Non-Executive directors were paid sitting fees
of ` 20,000/- per meeting. At the AGM held on August 18,
2011, the shareholders had approved payment of commission
at a rate not exceeding one percent of the net profits of the
Company to the Non-Executive Directors. Each year, the
Board determines the amount of commission to be paid to
directors based on the recommendation of the Nomination,
Compensation and Corporate Governance Committee of
the Company. The amount of commission payable is based
on their contribution to the growth and development of the
Company.
c. Shareholders’ Grievance Committee
The Company has constituted a Shareholders’ Grievance
Committee to monitor investor complaints/grievances
pertaining to non-receipt of share certificate, dividend, Annual
Report etc. The Committee shoulders the responsibility for
expeditious settlement on investor complaints and reporting
the same to the Board periodically.
During the period under review the Company had received 12
complaints from investors. All complaints received up to the
date of this report have been settled.
The Constitution of the Committee are given below:
1) Adv. V.R.Ramachandran - Chairman
2) Mr. P.Manomohanan - Member
3) Dr.V.M.Manoharan - Member
Other relevant details are given below:
Name and designation of Compliance Officer Mr. Rajesh
Kumar K, Company Secretary
All the 12 complaints of non receipt of dividend, share
certificate etc. received during the period was settled and
there is no outstanding complaints as on date.
OTHER COMMITTEES
i) Risk management Committee
The Company has constituted a Risk Management Committee
to review on an ongoing basis the measures adopted by the
Company for the identification, measurement, monitoring
and mitigation of the risks involved in various areas of the
Company’s functioning. The Committee is chaired by an
independent director with three other directors as members as
detailed below:-
1) Mr P. Manomohanan - Chairman
2) Mr.V.P. Nandakumar - Member
3) Mr I. Unnikrishnan - Member
4) Mr B.N. Raveendra Babu - Member
The Committee deliberates on the various aspects of risk
related to its business. In relation to its business of gold
loans, such risks may include appraisal risk, custodial risk,
competition risk, price fluctuation risk etc.
ii) Business Planning and Development Monitoring
Committee
The Committee was constituted to formulate and review
business plans and analyze the expenses incurred by the
Company as a measure to control cost. The Committee is
headed by the Chairman of the Company with participation of
there other members .It deliberates on matters like formulation
and review of business plans, budgeting review of capital and
revenue expenditure.
GENERAL BODY MEETINGS
Details of the last three Annual General Meetings of the Committee are given below
Year Date Time and
Place
Details of Special Business
2011 August 18 10.30.a.m
Anugraha Auditorium
Valapad, Thrissur
1. Appointment of Mr. Jagdish Capoor as director of the Company.
2. Appointment of Mr. Gaurav Mathur as director of the Company.
3. Variation of terms of appointment of Mr. V. P. Nandakumar,
Executive Chairman.
4. Reappointment and revision of Remuneration of
Mr. I Unnikrishnan, Managing Director.
5. Variation of terms of appointment of Mr.B.N.Raveendra Babu,
Joint Managing Director.
2010 July 20 10.30.a.m
Anugraha Auditorium
Valapad, Thrissur
1. Appointment of Mr.B.N.Raveendra Babu as a director and Joint
Managing Director of the Company.
2. Variation of terms of appointment of Executive Directors.
3. Appointment of Mr. K.P. Balraj and Mr. T. V. Antony as Directors
of the Company.
Annual Report 2011-12
40
41
Year Date Time and
Place
Details of Special Business
2009 August 17 10.30.a.m
Anugraha Auditorium
Valapad, Thrissur
1. Appointment of Mrs. Jyothy Prasannan to hold office or place of
profit.
2. Variation of terms of appointment of Mr. Sooraj Nandan.
3. Variation of terms of appointment and Remuneration of
Executive Chairman.
4. Revision of the remuneration of Managing Director.
5. Amending Articles of Association.
6. Approval of ESOP 2009
Details of Special Resolutions Passed in Previous 3 AGMS
Year 2009 2010 2011
Special
Resolutions
Passed during
AGMs.
1) Appointment of
Ms. Jyothy Prasannan to hold
office or place of profit.
2) Variation of terms Of appointment of
Mr. Sooraj Nandan.
3) Variation of terms of appointment of
Mr. V. P. Nandakumar, Executive
Chairman.
4) Reappointment and
revision of Remuneration of
Mr. I Unnikrishnan,
Managing Director.
5) Variation of terms of appointment of
Mr. B.N.Raveendra
Babu, Joint Managing Director
1) Variation of terms of
appointment of
Mr.V. P. Nandakumar,
Executive Chairman.
2) Reappointment and revision
of Remuneration of
Mr. I Unnikrishnan, Managing
Director.
3)Variation of terms of
appointment of
Mr.B.N.Raveendra
Babu, Joint Managing
Director.
1) Variation of terms of appointment of
Mr. V. P. Nandakumar, Executive Chairman.
2) Reappointment and revision of
Remuneration of Mr. I Unnikrishnan,
Managing Director.
3) Variation of terms of appointment of
Mr.B.N.Raveendra Babu, Joint Managing
Director.
Two Special Resolutions were passed by the Company, through postal ballot during the financial year 2010-11 for the following two purposes:
i. Amendment of the Object clause of the Memorandum of Association.
ii. Change of name.
Details of voting pattern for the Special Resolutions passed through Postal ballot
Total No of votes polled in favor of resolution of Resolution (i) above 20,81,42,952
Total No of votes polled in favor of resolution of Resolution (ii) above 20,81,43,481
Total No of votes polled against of resolution of Resolution (i) above 2,290
Total No of votes polled against of resolution of Resolution (ii) above 1,761
The Person who conducted Postl Ballot: Mr. Satheeh Kumar. N, Practicing Company Secretary.
Details of Extra Ordinary General Meetings held during the period are given below
Date of the Meeting Time and Place Details of Business Transacted
May 31, 2011 10.30.a.m
Anugraha Auditorium
Valapad, Thrissur
1. Enhancement of Authorsied Capital and alteration
or Memorandum and Articles of Association for
the same.
2. Issue of Bonus Shares.
3. Increasing the borrowing powers of the Company.
4. Starting new line of business viz; travel and
tourism related services.
About Manappuram
Business Review Board and Management Reports Financial Section
DISCLOSURES
i. There were no materially significant related party transactions
having potential conflict with the interests of the Company
at large. Transactions with related parties are disclosed in
Schedule 18 (notes forming part of accounts) in the Annual
Report.
ii. The Company has complied with all the directives issued by
stock exchanges and other statutory authorities. No penalties
and strictures were imposed on the Company by any of the
regulatory authorities, viz; the Stock Exchange, SEBI, Reserve
Bank of India, Registrar of Companies, for non-compliance
with any laws, guidelines and directives during the year.
However on 1st February 2012, the Company has received a
letter from Reserve Bank of India (RBI) directing the Company
to disassociate, its name, officials, and infrastructure from that
of any other group concerns carrying on financial activities.
The Company has complied with all the directions issued by
RBI with the professional assistance of reputed corporate legal
firm and management consultants and updated the progress
regularly to RBI.
iii. Whistle Blower Policy:
In terms of Clause 49 of the Listing Agreement, one of the
non-mandatory clauses provides that a listed company
may establish a mechanism for employees to report to the
management concerns about unethical behaviour, actual or
suspected fraud or violation of the Company’s code of conduct
or ethics policy. Though the Company has not formed a policy
on the same, the Company does have a helpline service
system, which aims at providing an independently monitored,
external, anonymous service for Manappuram employees, its
customers, vendors, contractors, counterparties etc. to voice
their concerns and report any unethical conduct within the
organisation.
It is hereby affirmed that no personnel has been denied access
to the Audit Committee.
MEANS OF COMMUNICATION
The Company publishes the un-audited / audited financial results on
quarterly basis as required under clause 41 of the listing agreement.
The financial results in the prescribed format are published in leading
newspapers including Economic Times, Business Line, Business
Standard, Malayala Manorama, Mathrubhumi etc. Other major
announcements pertaining to Book Closure, Board Meetings etc.
are also published as above. The Company has its web site at www.
manappuram.com wherein relevant information about the Company
and its performance are given. The financial results of the Company
are also posted on the web site.
CODE OF CONDUCT
As per the new clause 49 of the Listing Agreement the Company has
framed a Code of Conduct for the directors and senior management
personnel and the same was uploaded on to the website of the
Company and is accessible to the shareholders of the Company.
The requisite Certificate from CEO and the Chief Financial Officer
as per clause 49 of the Listing agreement was taken note of by the
Board of Directors at its meeting held on 18.05.2012 and is provided
in the annual report.
As required by clause 49 (1) (d) of Listing Agreement, it is hereby
affirmed that all the Board members and senior management
personnel have complied with Code of Conduct of the Company.
FAIR PRACTICES CODE
The Company has framed Fair Practices Code as per the latest
guidelines issued by Reserve Bank of India in this regard. The code
is posted on the website of the Company.
CEO/CFO CERTIFICATION
The requisite certification made by CEO/CFO as per the format given
in the clause 49 was placed before the Board a its meeting held on
May 18, 2012.
GENERAL SHAREHOLDER INFORMATION
20th Annual General Meeting Date August 2, 2012
Time 10.30 am
Place Anugraha Auditorium,Valapad PO-680 567 Thrissur District
Financial Year 2011-12
Date of Book closure 27.07.2012 to 02.08.2012 (both days inclusive)
Dividend Payment Date 17.08.2012
Listing on Stock Exchanges Mumbai, Chennai and Cochin (Permitted security in National Stock Exchange)
Stock Code 531213 – ISIN INE522D01027
Registrar and Share Transfer Agents M/s SKDC Consultants Limited
Kanapathy Towers
3rd Floor, 1391/A-1, Sathy Road Ganapathy PO, Coimbatore- 641 006
Ph: 0422-6549995, 0422-2539835
Email: [email protected]
Compliance Officer Mr. Rajesh Kumar K, Company Secretary
Ph: 0487-2399303
[email protected]
Company Address Manappuram Finance Limited, V/104 Manappuram House Valapad PO , Thrissur-680 567 Kerala
Phone: 0487- 2391306, 2391892. Fax 0487- 2399298
Email: [email protected]
Website: www.manappuram.com
Annual Report 2011-12
42
43
SHARE PRICE MOVEMENTS OF THE COMPANY [BSE] DURING EACH MONTH OF THE FINANCIAL
YEAR 2011-12.
Month Open Price High Price Low Price Close Price No. of
Shares
No. of
Trades
Total Turnover (`)
11-Apr 133.40 142.00 124.75 132.95 45,33,310 38,477 598,186,089
11-May 134.50 137.00 108.70 112.10 49,38,755 36,727 609,756,433
11-Jun 113.10 126.85 55.00 56.15 66,87,489 30,236 479,215,847
11-Jul 56.60 62.00 54.60 55.05 50,69,713 23,690 294,044,687
11-Aug 56.00 59.4 41.85 50.40 1,24,64,220 25,721 614,743,620
11-Sep 51.00 60.25 50.50 52.40 81,00,595 31,248 461,103,931
11-Oct 52.60 60.25 50.00 59.75 27,09,500 19,451 152,874,676
11-Nov 59.40 67.10 50.00 57.45 94,92,142 34,000 561,930,232
11-Dec 59.40 63.00 42.00 46.25 25,71,822 23,337 128,087,397
12-Jan 46.75 60.00 45.00 56.95 21,78,397 16,068 115,272,641
12-Feb 57.10 60.90 41.30 41.65 2,51,88,549 1,18,969 1,208,269,750
12-Mar 41.00 48.25 28.10 30.40 5,15,15,770 1,71,185 1,912,354,072
12-Apr 30.50 36.70 29.20 30.00 1,65,12,421 61,684 548,273,706
COMMON AGENCY FOR PHYSICAL AND ELECTRONIC TRANSFER
Share transfers, dividend payments and all other investor related activities are attended to and processed at the office of the Registrar and
Transfer Agents of the Company M/s. S.K.D.C Consultants Limited.
Distribution of Share Holding as on March 31, 2012
Share or Debenture holding of Nominal
value of
Share Holders Share Amount
Number % to Total % to Total % to Total
Upto - 5,000 59273 91.73 44138538 2.62
5,001 - 10,000 2238 3.46 16638918 0.99
10001 - 20,000 1117 1.73 17049746 1.01
20001 - 30,000 397 0.61 9824634 0.58
30,001 - 40,000 556 0.86 21116516 1.26
40,001 - 50,000 144 0.22 6582328 0.39
50,001 - 1,00,000 449 0.69 33078376 1.97
1,00,001 and above. 445 0.69 1533877216 91.18
TOTAL 64619 100.00 1682306272 100.00
DEMATERIALISATION
The Company is a member of the depository services of the National Securities Depository Limited (NSDL) and Central Depository Services
(India) Limited (CDSL) for dematerialisation of its shares. Share holders can get their share dematerialised with either NSDL or CDSL .
Through SKDC Consultants Limited, Registrars and Share Transfer Agents, we have established connectivity with both the depositories, that
is, National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL)
PAYMENT OF UNCLAIMED OR UNPAID DIVIDEND
The Company has remitted all unclaimed and unpaid dividend up to financial year 2003-04 to the Investor Education Protection Fund of Central
Government. Dividends relating to subsequent financial years would be transferred to said account on the expiry of seven years after transfer
of the same to unpaid dividend account.
GDRs/ADRs/Warrants or any other convertible instruments
The company does not have any GDRs/ADRs/Warrants or any other convertible instruments outstanding as on date.
On Behalf of the Board
Sd/-
V.P .Nandakumar
Executive Chairman
About Manappuram
Business Review Board and Management Reports Financial Section
Annual Report 2011-12
44
45
CEO & CFO Certification Under Clause
49(V) of The Listing Agreement
To
The Board of Directors
Manappuram Finance Limited
We, V.P.Nandakumar, Chairman , and Bindu A.L., Chief Financial Officer, of Manappuram Finance Limited, (“the Company”) hereby certify
that:-
(a) We have reviewed financial statements and the cash flow statement of the Company for the year ended March 31, 2012 and that to the
best of our knowledge and belief:
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.
(b) 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.
(c) 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 we have
taken or propose to take to rectify these deficiencies.
(d) We have indicated to the auditors and the audit committee
i) significant changes in internal control over financial reporting during the year;
i) significant changes in accounting policies during the year and that the same
have been disclosed in the notes to the financial statements; and
(iii) instances of significant fraud of which we 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.
V. P. Nandakumar Bindu A. L.
Executive Chairman Chief Financial Officer
Place: Kochi
Date: May 18, 2012
Auditors’ Certificate
To
The Board of Directors of
Manappuram Finance Limited
(formerly Manappuram General Finance and Leasing Limited)
We have examined the compliance of conditions of corporate governance by Manappuram Finance Limited (formerly Manappuram General
Finance and Leasing Limited) (‘the Company’), for the year ended on March 31, 2012, as stipulated in clause 49 of the Listing Agreement of
the said Company with stock exchanges.
The compliance of conditions of corporate governance is the responsibility of the management. Our examination was limited to procedures
and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither
an audit nor an expression of opinion on the financial statements of the Company.
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.
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.
Chartered Accountants
Firm Registration Number: 101049W
per S. Balasubrahmanyam
Partner
Membership No.: 053315
Place: Kochi
Date: May 18, 2012
About Manappuram
Business Review Board and Management Reports Financial Section
(All amounts are in million of Indian rupees unless otherwise stated)
To
The Members of
Manappuram Finance Limited
1. We have audited the attached Balance Sheet of Manappuram
Finance Limited (‘the Company’) as at March 31, 2012 and
also the Statement of profit and loss and the cash flow
statement for the year ended on that date annexed thereto.
These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an
opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003
(as amended) issued by the Central Government of India in
terms of sub-section (4A) of Section 227 of the Companies Act,
1956, we enclose in the Annexure a statement on the matters
specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to above,
we report that:
i. We have obtained all the information and explanations,
which to the best of our knowledge and belief were
necessary for the purposes of our audit;
ii. In our opinion, proper books of account as required by
law have been kept by the Company so far as appears
from our examination of those books;
iii. The balance sheet, statement of profit and loss and cash
flow statement dealt with by this report are in agreement
with the books of account;
Auditors’ Report
iv. In our opinion, the balance sheet, statement of profit and
loss and cash flow statement dealt with by this report
comply with the accounting standards referred to in sub-
section (3C) of section 211 of the Companies Act, 1956;
v. On the basis of the written representations received
from the directors, as on March 31, 2012, and taken on
record by the Board of Directors, we report that none of
the directors is disqualified as on March 31, 2012 from
being appointed as a director in terms of clause (g) of
sub-section (1) of section 274 of the Companies Act,
1956;
vi. In our opinion and to the best of our information
and according to the explanations given to us, the
said accounts give the information required by the
Companies Act, 1956, in the manner so required
and give a true and fair view in conformity with the
accounting principles generally accepted in India;
a) in the case of the balance sheet, of the state of
affairs of the Company as at March 31, 2012;
b) in the case of the statement of profit and loss, of
the profit for the year ended on that date; and
c) in the case of cash flow statement, of the cash
flows for the year ended on that date.
For S.R. BATLIBOI & ASSOCIATES
Chartered Accountants
Firm registration number: 101049W
per S. Balasubrahmanyam
Place: Kochi Partner
Date: May 18, 2012 Membership No.: 053315
Annual Report 2011-12
46
47
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
Annexure referred to in paragraph 3 of our report of even date
Re: Manappuram Finance Limited (‘the Company’)
(i) (a) The Company has maintained proper records showing
full particulars, including quantitative details and situation
of fixed assets.
(b) All fixed assets have not been physically verified by
the management during the year but there is a regular
programme of verification which, in our opinion, is
reasonable having regard to the size of the Company
and the nature of its assets. No material discrepancies
were noticed on such verification.
(c) There was no disposal of a substantial part of fixed
assets during the year.
(ii) The Company is a non banking finance company
engaged in the business of providing loans and
does not maintain any inventory. Therefore,
the provisions of clause 4(ii) of the Companies
(Auditor’s Report) Order, 2003 (as amended) are
not applicable to the Company.
(iii) (a) As informed, the Company has not granted any loans,
secured or unsecured to companies, firms or other
parties covered in the register maintained under section
301 of the Companies Act, 1956 (‘the Act’). Therefore,
the provisions of clause 4(iii) (a) of the Companies
(Auditor’s Report) Order, 2003 (as amended) is not
applicable to the Company.
(b) The provisions of clause 4(iii) (b) of the Companies
(Auditor’s Report) Order, 2003 (as amended) is not
applicable to the Company.
(c) The provisions of clause 4(iii) (c) of the Companies
(Auditor’s Report) Order, 2003 (as amended) is not
applicable to the Company.
(d) The provisions of clause 4(iii) (d) of the Companies
(Auditor’s Report) Order, 2003 (as amended) is not
applicable to the Company.
(e) The Company had taken loan from a Company covered
in the register maintained under section 301 of the
Companies Act, 1956. The maximum amount involved
during the year was ` 1.64 million and the year-end
balance of loan taken from such party was ` Nil.
(f) In our opinion and according to the information and
explanations given to us, the rate of interest and other
terms and conditions for such loans are not prima facie
prejudicial to the interest of the Company.
(g) In respect of loans taken, repayment of the principal
amount was as stipulated and payment of interest was
regular.
(iv) In our opinion and according to the information and
explanations given to us, there is an adequate internal control
system commensurate with the size of the Company and the
nature of its business, for the purchase of fixed assets and sale
of services. The activities of the Company during the year did
not involve any purchase and sale of goods. During the course
of our audit, we have not observed any major weakness or
continuing failure to correct any major weakness in the internal
control system of the Company in respect of these areas.
(v) (a) According to the information and explanations provided
by the management, we are of the opinion that the
particulars of contracts or arrangements referred to in
section 301 of the Act that need to be entered into the
register maintained under section 301 have been so
entered.
(b) In respect of transactions made in pursuance of such
contracts or arrangements exceeding value of Rupees
five lakhs entered into during the financial year, because
of the unique and specialized nature of the items
involved and absence of any comparable prices, we are
unable to comment whether the transactions were made
at prevailing market prices at the relevant time.
(vi) Based on information and explanations provided to
us, we report that the Company has not accepted any
deposits from the public.
(vii) The Company has an internal audit system
commensurate with the size and nature of its business.
(viii) To the best of our knowledge and as explained, the
Central Government has not prescribed maintenance of
cost records under clause (d) of sub-section (1) of section
209 of the Companies Act, 1956 for the products of the
Company.
(ix) (a) The Company is regular in depositing with appropriate
authorities undisputed statutory dues including provident
fund, employees’ state insurance, customs duty, investor
education and protection fund, income-tax, sales-tax,
service tax, cess and other material statutory dues
applicable to it. Dues in respect of wealth-tax and excise
duty are not applicable to the Company.
(b) According to the information and explanations given
to us, no undisputed amounts payable in respect of
provident fund, employees’ state insurance, customs
duty, investor education and protection fund, income-
tax, service tax, sales-tax and other material undisputed
statutory dues were outstanding, at the year end, for
a period of more than six months from the date they
became payable.
Auditors’ Report (Contd.)
(All amounts are in million of Indian rupees unless otherwise stated)
(c) According to the records of the Company, there are no dues outstanding of income tax and sales-tax on account of any dispute.
The dues outstanding of service tax on account of a dispute are as follows:
(Amount is millions)
Name of the Statute Nature of dues Period of dispute Amount Forum where it is pending
Finance Act, 1944 Service tax 2001-2008 5.00 (including penalty
of 2.5)
Commissioner of Service tax
(Appeals)
(x) The Company has no accumulated losses at the end of
the financial year and it has not incurred cash losses in
the current and immediately preceding financial year.
(xi) Based on our audit procedures and as per the
information and explanations given by the management,
we are of the opinion that the Company has not
defaulted in repayment of dues to banks, financial
institutions or debenture holders.
(xii) Based on our examination of documents and records,
we are of the opinion that the Company has maintained
adequate records where the Company has granted loans
and advances on the basis of security by way of pledge
of shares, debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund or a nidhi /
mutual benefit fund / society. Therefore, the provisions of
clause 4(xiii) of the Companies (Auditor’s Report) Order,
2003 (as amended) are not applicable to the Company.
(xiv) In our opinion, the Company is not dealing in or trading
in shares, securities, debentures and other investments.
Accordingly, the provisions of clause 4(xiv) of the
Companies (Auditor’s Report) Order, 2003 (as amended)
are not applicable to the Company.
(xv) According to the information and explanations given to
us, the Company has not given any guarantee for loans
taken by others from bank or financial institutions.
(xvi) Based on the information and explanations given to us
by the management, term loans were applied for the
purpose for which the loans were obtained.
(xvii) According to the information and explanations given to
us and on an overall examination of the balance sheet of
the Company, we report that no funds raised on short-
term basis have been used for long-term investment.
(xviii) The Company has not made any preferential allotment
of shares to parties or companies covered in the register
maintained under section 301 of the Companies Act,
1956.
(xix) According to the information and explanations given to
us, during the period covered by our audit report, the
Company has created security or charge in respect of
debentures issued other than on debentures aggregating
Rs 870 million which had been issued recently.
Subsequent to year end, the Company has created
security or charge in respect of these debentures.
(xx) We have verified that the end use of money raised by
public issue of non-convertible redeemable debentures is
as disclosed in the notes to the financial statements.
(xxi) As more fully discussed in Note 38 to the financial
statements and as informed by the management, we
report that, during the year there have been certain
instances of fraud on the Company by employees
where gold loan related misappropriations / cash
embezzlements have occurred for amounts aggregating
` 38.32 million. The Company has fully provided for
these amounts in the financial statements and is in
the process of recovering these amounts from the
employees and taking legal actions.
For S.R. BATLIBOI & ASSOCIATES
Chartered Accountants
Firm registration number: 101049W
per S. Balasubrahmanyam
Place: Kochi Partner
Date: May 18, 2012 Membership No.: 053315
Annual Report 2011-12
48
49
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
To the Board of Directors of
Manappuram Finance Limited (formerly Manappuram General
Finance and Leasing Limited)
1. We audited the attached Balance Sheet of Manappuram
Finance Limited (‘the Company’) as at March 31, 2012 and
also the Statement of Profit and Loss Account and the Cash
Flow Statement for the year ended on that date annexed
thereto and issued our audit opinion dated May 18, 2012
thereon. These financial statements are the responsibility
of the Company’s management. Our responsibility was to
express an opinion on these financial statements based on
our audit. Our audit was conducted in the manner specified in
paragraph 2 of the audit report.
2. As required by the Non-Banking Financial Companies
Auditor’s Report (Reserve Bank) Directions, 2008, issued by
the Reserve Bank of India (‘the Bank’) and amended from
time to time (‘the Directions’), based on our audit referred
to in paragraph 1 above and based on the information and
explanations given to us which to the best of our knowledge
and belief were necessary for this purpose, we report
hereunder on the matters specified in paragraphs 3 and 4 of
the Directions:
a. The Company is engaged in the business of a Non-
Banking Financial Institution (‘NBFI’) as defined in
section 45-I(a) of the Reserve Bank of India Act, 1934
(‘the Act’) during the year ended March 31, 2012. With
effect from March 22, 2011, the Company is registered
with the Bank as an NBFI without accepting public
deposits vide Certificate of Registration (‘CoR’) number
B-16.00029 dated March 22, 2011 with the Bank.
b. Based on the asset/income pattern as on March 31,
2012 determined by the Management in accordance
with the audited financial statements for the year ended
as on that date, and with reference to paragraph 15 of
the Non-Banking Financial (Non-Deposit Accepting or
Holding) Companies Prudential Norms (Reserve Bank)
Directions, 2007, the Company is entitled to continue to
hold such CoR;
c. Based on the criteria set forth by the Bank in Company
Circular No. DNBS.PD. CC No. 85 / 03.02.089 /2006-
07 dated December 6, 2006 for classification of
NBFCs, the Company has been correctly classified as
Loan Company as defined in Non-Banking Financial
Companies Acceptance of Public Deposits (Reserve
Bank) Directions, 1998 with reference to the business
carried on by it during the financial year ended March
31, 2012;
d. The Board of Directors has passed a resolution on
February 25, 2011 for non-acceptance of any public
deposits;
e. The Company has not accepted any public deposits
during the year ended March 31, 2012. The board of
directors have also passed a resolution to this effect on
May 10, 2012;
f. The Company has complied with the prudential norms
relating to income recognition, accounting standards,
asset classification and provisioning for bad and doubtful
debts as applicable to it in terms of Non-Banking
Financial (Non-Deposit Accepting or Holding) Companies
Prudential Norms (Reserve Bank) Directions, 2007
during the year ended March 31, 2012;
g. The capital adequacy ratio as disclosed in the return
submitted to the Bank in the Form NBS-7 for the year
ended March 31, 2012, has been correctly arrived at and
such ratio is in compliance with the minimum Capital to
Risk Assets Ratio prescribed by the Bank;
h. The Company has furnished to the Bank the annual
statement of capital funds, risk assets/exposures and risk
asset ratio (Form NBS-7) within the stipulated period.
The Company furnished Form NBS-7 for the year ended
March 31, 2012 to the Bank on June 29, 2012
3. We have no responsibility to update this report for events and
circumstances occurring after the date of our audit opinion
mentioned in paragraph 1, except for the comments on
paragraph 2(h) above regarding date of furnishing Form NBS-
7 to the Bank.
4. This report is issued solely for reporting on the matters
specified in paragraphs 3 and 4 of the Directions, to the Board
of Directors and is not to be used or distributed for any other
purpose.
For S.R. BATLIBOI & ASSOCIATES
Chartered Accountants
Firm registration number: 101049W
per S. Balasubrahmanyam
Place: Chennai Partner
Date: June 29, 2012 Membership No.: 053315
(All amounts are in million of Indian rupees unless otherwise stated)
Balance Sheet as at March 31, 2012
Note No.
As at
March 31, 2012
As at
March 31, 2011
EQUITY AND LIABILITIES
Shareholders’ funds
Share capital 3 1,682.31 833.75
Reserves and surplus 4 22,128.13 18,405.82
23,810.44 19,239.57
Non-current liabilities
Long-term borrowings 5 10,717.42 4,892.29
Other long term liabilities 6 106.57 47.17
10,823.99 4,939.46
Current liabilities
Short-term borrowings 7 72,313.61 48,708.21
Other current liabilities 8 12,226.50 3,991.90
Short-term provisions 9 1,593.88 947.47
86,133.99 53,647.58
TOTAL 120,768.42 77,826.61
ASSETS
Non-current assets
Fixed assets
Tangible assets 10A 2,163.72 1,319.02
Intangible assets 10B 76.53 59.84
Capital work-in-progress 144.04 67.72
Non-current investments 11A 100.03 3.20
Deferred tax assets (net) 12 188.98 87.07
Long-term loans and advances 13 523.02 299.45
Other Non current assets 14 334.60 259.25
3,530.92 2,095.55
Current assets
Current investments 11B 2,082.39 400.00
Cash and bank balances 15 8,177.08 6,430.85
Short-term loans and advances 13 96,621.46 63,940.42
Other current assets 14 10,356.57 4,959.79
117,237.50 75,731.06
Total 120,768.42 77,826.61
Summary of significant accounting policies 2.1
The accompanying notes are an integral part of the financial statements.
As per our report of even date
For S. R. BATLIBOI & ASSOCIATES For and on behalf of the Board of Directors
Chartered Accountants
Firm Registration Number: 101049W
per S. Balasubrahmanyam V. P. Nandakumar I. Unnikrishnan B. N. Raveendra Babu
Partner Executive Chairman Managing Director Joint Managing Director
Membership No.: 053315
Place: Kochi M. Anandan A. L.. Bindu K. Rajesh Kumar
Date: May 18, 2012 Director Chief Financial Officer Company Secretary
Annual Report 2011-12
50
51
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
Statement of Profit and Loss for the year ended March 31, 2012
Notes
Year ended
March 31, 2012
Year ended
March 31, 2011
INCOME
Revenue from operations 16 26,155.48 11,654.20
Other income 17 402.97 161.06
Total revenue 26,558.45 11,815.26
EXPENSES
Finance costs 18 10,891.00 3,391.55
Employee benefits expense 19 3,090.11 1,605.00
Other expenses 20 3,322.42 2,366.79
Depreciation and amortisation expense 21 482.86 212.96
Total Expenses 17,786.39 7,576.30
Profit before tax 8,772.06 4,238.96
Tax expenses
Current tax 2,959.36 1,466.04
Deferred tax (101.91) (53.72)
Total tax expense 2,857.45 1,412.32
Profit for the year 5,914.61 2,826.64
Earnings per equity share [nominal value of share ` 2/-] 22
Basic earnings per share (`/-) 7.06 3.81
Diluted earnings per share (`/-) 7.03 3.75
Summary of significant accounting policies 2.1
The accompanying notes are an integral part of the financial statements.
As per our report of even date
For S. R. BATLIBOI & ASSOCIATES For and on behalf of the Board of Directors
Chartered Accountants
Firm Registration Number: 101049W
per S. Balasubrahmanyam V. P. Nandakumar I. Unnikrishnan B. N. Raveendra Babu
Partner Executive Chairman Managing Director Joint Managing Director
Membership No.: 053315
Place: Kochi M. Anandan A. L.. Bindu K. Rajesh Kumar
Date: May 18, 2012 Director Chief Financial Officer Company Secretary
(All amounts are in million of Indian rupees unless otherwise stated)
NOTE :1
Nature of operations
Manappuram Finance Limited (formerly Manappuram General
Finance & Leasing Limited) (‘MAFIL’ or ‘the Company’) was
incorporated on July 15, 1992 in Thrissur, Kerala. The Company is
a non banking financial Company (‘NBFC’), which provides a wide
range of fund based and fee based services including gold loans,
money exchange facilities, etc. The Company currently operates
through 2,907 branches spread across the country. The Company is
a Systemically Important Non-Deposit Taking NBFC.
NOTE :2
Basis of preparation
The financial statements of the Company have been prepared
in accordance with generally accepted accounting principles in
India (Indian GAAP). The Company has prepared these financial
statements to comply in all material respects with the accounting
standards notified under the Companies (Accounting Standards)
Rules, 2006, (as amended) and the relevant provisions of the
Companies Act, 1956 and the guidelines issued by the Reserve Bank
of India as applicable to a non deposit accepting NBFC. The financial
statements have been prepared under the historical cost convention
and on an accrual basis except for interest and discounts on non
performing assets which are recognised on realisation basis. The
accounting policies have been consistently applied by the Company
and are consistent with those used in the previous year, except for
certain change in estimates discussed in note 2(d).
2.1) Statement of significant accounting policies
a) Presentation and disclosure of financial statements
During the year ended 31 March 2012, the revised
Schedule VI notified under the Companies Act 1956, has
become applicable to the Company, for preparation and
presentation of its financial statements. The adoption
of revised Schedule VI does not impact recognition
and measurement principles followed for preparation
of financial statements. However, it has significant
impact on presentation and disclosures made in the
financial statements. The Company has also reclassified
the previous year figures in accordance with the
requirements applicable in the current year.
b) Use of estimates
The preparation of financial statements in conformity
with Indian GAAP requires the management to make
judgments, estimates and assumptions that affect the
reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the
end of the reporting period. Although these estimates
are based on the management’s best knowledge of
current events and actions, uncertainty about these
assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts
of assets or liabilities in future periods.
c) Fixed assets
Fixed assets are stated at cost, less accumulated
depreciation and impairment losses if any. The
cost comprises purchase price, borrowing costs if
capitalisation criteria are met and directly attributable
cost of bringing the asset to its working condition for the
intended use.
d) Depreciation
Depreciation is provided using straight line method at the
following rates, which is management’s estimate of the
useful lives of the assets:
Nature of asset Rate of depreciation
followed
Computer equipment 33.33%
Furniture and fixtures
excluding [safes and strong
rooms]
20%
Buildings, office equipments,
vehicles, plant & machinery
and furniture and fixtures
(safes and strong rooms)
Rates prescribed
under Schedule XIV
of the Companies Act,
1956
During the current year, the Company has changed its
estimated useful life of furnitures and fixtures (except
safes and strong rooms) from 15 years to 5 years. This
change in estimated useful life has resulted in provision
of additional depreciation by ` 111.79 million and
the profit before tax of the Company is lower by the
corresponding number.
e) Intangible assets
Intangible assets acquired separately are measured on
initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less accumulated
amortisation and accumulated impairment losses, if any.
Intangible assets are amortised on a straight line basis
over the estimated useful economic life of 6 years.
The amortisation period and the amortisation method
are reviewed at least at each financial year end.
f) Impairment of tangible and intangible assets
The Company assesses at each reporting date whether
there is an indication that an asset may be impaired. If
any indication exists, or when annual impairment testing
for an asset is required, the Company estimates the
asset’s recoverable amount. An asset’s recoverable
amount is the higher of an asset’s or cash-generating
unit’s (CGU) net selling price and its value in use. The
recoverable amount is determined for an individual
asset, unless the asset does not generate cash inflows
that are largely independent of those from other assets
or groups of assets. Where the carrying amount of
an asset or CGU exceeds its recoverable amount, the
Notes to the Financial statements for the year ended March 31, 2012
Annual Report 2011-12
52
53
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
asset is considered impaired and is written down to
its recoverable amount. In assessing value in use, the
estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects
current market assessments of the time value of money
and the risks specific to the asset. In determining net
selling price, recent market transactions are taken into
account, if available. If no such transactions can be
identified, an appropriate valuation model is used.
After impairment, depreciation is provided on the
revised carrying amount of the asset over its remaining
useful life.
g) Leases
Leases where the lessor effectively retains substantially
all the risks and benefits of ownership of the leased
term, are classified as operating leases. Operating
lease payments in respect of non-cancellable leases are
recognised as an expense in the Profit and Loss account
on a straight-line basis over the lease term.
h) Investments
The Board of Directors have spelt out the criteria
to classify investments into current and long term
investments in the investment policy. Investments that
are readily realisable and intended to be held for not
more than a year are classified as current investments.
All other investments are classified as long-term
investments. Any inter class transfer should be with the
approval of the board and as per RBI regulation.
Current investments are carried at lower of cost and
fair value determined on an individual investment basis.
Quoted current investments for each category is valued
at cost or market value whichever is lower. Unquoted
equity shares in the nature of current investments is
valued at cost or break-up value, whichever is lower.
Long-term investments are carried at cost. However,
provision for diminution in value is made to recognise
a decline other than temporary in the value of the
investments.
i) Revenues
Revenue is recognised to the extent that it is probable
that the economic benefits will flow to the Company and
the revenue can be reliably measured.
Interest income on loans given is recognised under the
internal rate of return method. Such interests, where
instalments are overdue in respect of non performing
assets are recognised on realisation basis. Any such
income recognised and remaining unrealised after
the instalments become overdue with respect to non
performing assets is reversed.
Revenues from fee-based activities are recognised as
and when services are rendered.
Interest on deposits is recognised on a time proportion
basis taking into account the amount outstanding and the
rate applicable.
Gains arising on direct assignment of assets is
recognised over the tenure of agreements as per
guideline on securitisation of standard assets issued by
the Reserve Bank of India, losses, if any are recognised
upfront.
j) Employee benefits
i. Retirement benefit in the form of Provident Fund
is a defined contribution scheme and the contribu-
tions are charged to the statement of Profit and
Loss of the year when the contributions to the
fund maintained by the Central Government is
due. There is no other obligation other than the
contribution payable to the trust.
ii. Gratuity liability under the Payment of Gratuity Act
which is a defined benefit scheme is accrued and
provided for on the basis of an actuarial valuation
on projected unit credit method made at the end of
each financial year.
iii. Short term compensated absences are provided
for based on estimates.
iv. Actuarial gains / losses are immediately taken to
statement of profit and loss and are not deferred.
v. Employee stock compensation cost -
Measurement and disclosure of the employee
share-based payment plans is done in accordance
with SEBI (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines,
1999 and the Guidance Note on Accounting for
Employee Share-based Payments, issued by the
Institute of Chartered Accountants of India. The
Company measures compensation cost relating
to employee stock options using the intrinsic
value method. Compensation expense, if any, is
amortised over the vesting period of the option on
a straight line basis.
k) Foreign currency transactions
(i) Initial Recognition
Foreign currency transactions are recorded in
the reporting currency, by applying to the foreign
currency amount the exchange rate between the
reporting currency and the foreign currency at the
date of the transaction.
(ii) Conversion
Foreign currency monetary items are reported
using the closing rate. Non-monetary items which
are carried in terms of historical cost denominated
in a foreign currency are reported using the
exchange rate at the date of the transaction and
non-monetary items which are carried at fair value
or other similar valuation denominated in a foreign
currency are reported using the exchange rates
that existed when the values were determined.
Notes to the Financial statements for the year ended March 31, 2012
(All amounts are in million of Indian rupees unless otherwise stated)
(iii) Exchange Differences
Exchange differences arising on the settlement
of monetary items or on reporting Company’s
monetary items at rates different from those at
which they were initially recorded during the year,
or reported in previous financial statements, are
recognised as income or as expenses in the year
in which they arise.
l) Borrowing costs
Borrowing cost includes interest, amortisation
of ancillary costs incurred in connection with the
arrangement of borrowings and exchange differences
arising from foreign currency borrowings to the extent
they are regarded as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily
takes a substantial period of time to get ready for its
intended use are capitalised as part of the cost of the
respective asset. All other borrowing costs are expensed
in the period they occur.
m) Income Tax
Tax expense comprises 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. Deferred
income taxes reflect the impact of timing differences
between taxable income and accounting income
originating during the current year and reversal of timing
differences for the earlier years.
Deferred tax is measured based on the tax rates and
the tax laws enacted or substantively enacted at the
balance sheet date. Deferred tax assets are recognised
only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against
which such deferred tax assets can be realised.
At each balance sheet date the Company re-assesses
unrecognised deferred tax assets. It recognises
unrecognised deferred tax assets to the extent that it has
become reasonably certain or virtually certain, as the
case may be that sufficient future taxable income will be
available against which such deferred tax assets can be
realised.
The carrying amount of deferred tax assets are reviewed
at each balance sheet date. The Company writes-down
the carrying amount of a 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
realised. 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.
n) 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 period. The weighted
average numbers of equity shares outstanding during
the period are adjusted for events of bonus issue; bonus
element in a rights issue to existing shareholders; share
split; and reverse share split, if any.
For the purpose of calculating diluted earnings per share,
the net profit or loss for the period attributable to equity
shareholders and the weighted average number of
shares outstanding during the period are adjusted for the
effects of all dilutive potential equity shares.
o) Provisions
(i) A provision is recognised when an enterprise has
a present obligation as a result of past event and
it is probable that an outflow of resources will
be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions
are not discounted to its present value and are
determined based on management estimate
required to settle the obligation at the balance
sheet date. These are reviewed at each balance
sheet date and adjusted to reflect the current
management estimates.
(ii) Provision policy for gold loans and other loan
portfolios
Secured loans are classified / provided for, as
per management’s best estimates, subject to
the minimum provision required as per Non-
Banking Financial (Deposit Accepting or Holding)
Companies Prudential Norms (Reserve Bank)
Directions, 2007 as follows:
Notes to the Financial statements for the year ended March 31, 2012
Annual Report 2011-12
54
55
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
Classification of loans (Gold and other loans)
Asset Classification Provisioning policy
Standard Assets # 0.25%
Sub-standard assets 10%
Doubtful assets 100% of unsecured portion + 20 to 50% of secured portion.
Loss assets 100% provided / written off in books.
Classification of loans (Hypothecation and Stock on Hire)
Asset Classification Provisioning policy
Standard Assets # 0.25%
Sub-standard assets 100%
Doubtful assets* 100% written off in books.
Loss assets 100% provided / written off in books.
* Company considers all loans overdue for more than 18 months as doubtful of recovery.
# As per notification DNBB.222 / CGM(US)-2011 issued by Reserve Bank of India (RBI) on January 17, 2011.
p) Segment reporting
The Company primarily operates in the business of “Gold
loan” and its operations are in India. Accordingly, no
segment reporting is applicable.
q) Cash and Cash Equivalents
Cash and cash equivalents in the balance sheet comprise
cash at bank and in hand and short-term investments
with an original maturity of three months or less.
r) Ancillary borrowing costs
Ancillary borrowings costs incurred issue of debentures
and other long term borrowings are expensed over the
tenure of the loan.
s) Securities issue expenses
Expenses incurred in connection with issue of shares are
adjusted (net of tax effects, if any) against the securities
premium account in accordance with Section 78 of the
Companies Act, 1956.
Public issue expenses incurred in connection with
issue of debentures are amortised over the term of the
debenture.
t) Insurance claims
Insurance claims are accrued for on the basis of claims
admitted and/or to the extent there is no uncertainty
in receiving the claims. The Company re-assesses the
claims made at each reporting period for recoverability.
u) Auctioned gold and Surplus on auction of pledged gold
Auctioned gold is valued at lower of cost or realisable
value as at balance sheet date.
The Company has a policy of refund of any surplus
that arises on auction of pledged gold which has been
re-possessed by the Company in accordance with the
terms of the agreement with the customers.
v) 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 recognised
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 recognised because it cannot
be measured reliably. The Company does not recognise
a contingent liability but discloses its existence in the
financial statements as there is no indication of the
uncertainties relating to any outflow.
Notes to the Financial statements for the year ended March 31, 2012
(All amounts are in million of Indian rupees unless otherwise stated)
As at
March 31, 2012
As at
March 31, 2011
NOTE: 3
Share Capital
Authorised shares
980,000,000 (March 31, 2011: 53,00,00,000) equity shares of ` 2/- each 1,960.00 1,060.00
4,00,00,000 (March 31, 2011: 4,00,00,000) redeemable preference shares (CCPS) of
`100/- each
40.00 40.00
Issued, subscribed and fully paid-up shares
841,153,136 (31 March 2011: 416,874,188 ) equity shares of ` 2/- each 1,682.31 833.75
Total issued, subscribed and fully paid-up share capital 1,682.31 833.75
a. Reconciliation of the shares outstanding at the beginning and at the end of the reporting period
31 March 2012 31 March 2011
No.
millions
Amount
(in millions)
No.
millions
Amount
(in millions)
At the beginning of the year 416.87 833.74 170.19 340.38
Issued during the period - Bonus issue 416.87 833.74 170.19 340.38
Preferential allotment - - 13.21 26.42
Issued during the period - ESOP 7.41 14.82 3.76 7.52
Qualified Institutional Placement - - 59.52 119.04
Outstanding at the end of the period 841.15 1,682.30 416.87 833.74
b. Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of ` 2/- per share. Each holder of equity shares is entitled to one vote
per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting.
During the year ended 31 March 2012, the amount of per share dividend recognised as distributions to equity shareholders was ` 1.50/-
(31 March 2011: ` 0.60/- per share, after considering bonus issue).
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after
distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
c. Aggregate number of bonus shares issued, and shares issued for consideration other than cash during the period of five years
immediately preceding the reporting date:
March 31, 2012
No. millions
March 31, 2011
No. millions
Equity shares allotted as fully paid bonus shares by capitalisation of securities
premium, general reserve and capital redemption reserve.
614.56 197.69
In addition, the Company has issued total 11,159,880 shares (March 31, 2011: 3,755,120) during the period of five years immediately
preceding the reporting date on exercise of options granted under the employee stock option plan (ESOP) wherein part consideration
was received in form of employee services.
Notes to the Financial statements for the year ended March 31, 2012
Annual Report 2011-12
56
57
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
d. Details of shareholders holding more than 5% shares in the Company (Equity shares of ` 2/- each fully paid)
March 31, 2012 March 31, 2011
No. millions % holding in the
class
No. millions % holding in the
class
Nandakumar V P 217.41 25.85 128.00 30.70
Sushama Nandakumar 48.00 5.70 24.00 5.76
Smallcap World Fund Inc 57.99 6.89 27.21 6.53
Hudson Equity Holdings Ltd 71.81 8.54 37.75 9.06
AA Development Capital India Fund 1, LLC 30.22 3.59 21.78 5.23
As per 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.
As at
March 31, 2012
As at
March 31, 2011
NOTE: 4
Resreves and Surplus
Securities premium account
Balance as per the last financial statements 14,424.32 3,988.96
Add: premium on issue of shares - 10,916.72
Add: additions on ESOPs exercised 107.81 54.67
Less: amounts utilised toward issue of fully paid bonus shares (833.75) (300.39)
Less: Share issues expenses adjusted against securities premium - (235.64)
Closing Balance 13,698.38 14,424.32
Statutory reserve
Balance as per the last financial statements 1,016.08 450.75
Add: amount transferred from surplus balance in the statement of profit and loss 1,182.92 565.33
Closing Balance 2,199.00 1,016.08
Debenture Redemption reserve
Balance as per the last financial statements - -
Add: amount transferred from surplus balance in the statement of profit and loss (refer
note below)
2,208.10 -
Closing Balance 2,208.10 -
General reserve
Balance as per the last financial statements 651.06 368.39
Add: amount transferred from surplus balance in the statement of profit and loss 591.48 282.67
Closing Balance 1,242.54 651.06
Surplus/(deficit) in the statement of profit and loss
Balance as per last financial statements 2,314.36 917.11
Profit for the year 5,914.61 2,826.64
Less: Appropriations
Transfer to debenture redemption reserve 2,208.10 -
Proposed final equity dividend (amount per share Re. 1/-(31 March 2011: Re 0.60/- per
share, after considering bonus issue))
841.15 500.25
Interim dividend on equity shares 420.55 -
Tax on proposed equity dividend 136.45 81.14
Tax on interim dividend on equity shares 68.21 -
Transfer to Statutory reserve 1,182.92 565.33
Transfer to general reserve 591.48 282.67
Total appropriations 5,448.86 1,429.39
Net surplus in the statement of profit and loss 2,780.11 2,314.36
Total reserves and surplus 22,128.13 18,405.82
Note:
Pursuant to Section 117C of the Companies Act, 1956 and circular 9/2002, issued by Ministry of Corporate Affairs, the Company is required
to transfer adequate amounts to Debenture redemption reserve. Further, as per the said circular 50% of the value of the debentures issued
is considered adequate. The Company has apportioned ` 2,208.10 to debenture redemption reserve representing 50% of the total value of
debentures issued through a public issue.
Notes to the Financial statements for the year ended March 31, 2012
(All amounts are in million of Indian rupees unless otherwise stated)
Non-current portion Current maturities
31 March 2012 31 March 2011 31 March 2012 31 March 2011
NOTE: 5
Long-term borrowings
Term loans
Indian rupee loan from banks (secured) 1,112.00 - 1,000.00 -
Vehicle loans (Secured loans) 6.85 7.44 5.11 3.50
Sub-ordinated debt (Unsecured)
Subordinate debt from banks 1,500.00 1,000.00 - -
Subordinate bonds from others 2,613.14 1,670.07 153.70 61.52
Debentures (Secured)
Non-convertible Debentures - Private placement 2,498.11 2,214.78 7,325.26 2,795.97
Non-convertible Debentures - Public issue 2,987.32 - 1,428.87 -
10,717.42 4,892.29 9,912.94 2,860.99
The above amount includes
Secured borrowings 6,604.28 2,222.22 9,759.24 2,799.47
Unsecured borrowings 4,113.14 2,670.07 153.70 61.52
Amount disclosed under the head “other current
liabilities” (note 8)
(9,912.94) (2,860.99)
Net amount 10,717.42 4,892.29 - -
“Indian Rupee loans from banks includes:
i) ` 2,000 taken for onward lending against gold jewellery. These loans carry an interest rate of 14% (floating - BR + 4.5%) and are repayable
at the end of 18 months from the date of the loan. These are secured by an exclusive charge by way of hypothecation of book debts pertaining
to loans granted against gold with a margin of 15%. Also, they are secured by a cash collateral deposit of 5% of the loan amount, lien marked
in favour of the bank during the tenor of the loan. Further, the loan has been guaranteed by the personal guarantee of Mr. V.P Nandakumar.
Executive Chairman.
ii) ` 112 availed for the purpose of construction of the corporate office. These loans carry an interest rate of 13.5% (floating - BR + 3%) and are
repayable at the end of 77 months from the date of the loan. These loans are secured by an exclusive mortgage of 53.07 cents of property
of the Company situated at Trikkur Village, Mukundapuram taluk. Also, they are secured by a cash collateral deposit of 10% of the sanction
amount, lien marked in favour of the bank during the tenor of the loan. Further, the loan has been guaranteed by the personal guarantee of
Mr. V.P Nandakumar. Executive Chairman.”
Vehicle loans carry an interest of 10 to 12 % and are payable in 30 to 60 installments from the date of the loan. The loans are secured by
hypothecation of the respective vehicles against which the loan has been availed.
Subordinate debt from banks includes ` 1,000 (previous year : ` 1,000) which carries an interest rate of 14.5% (floating - BR + 4.5%) and is
repayable at the end of five years and three months from the date of the loan viz. December 13, 2010, and ` 500 (previous year : ` Nil) which
carries an interest rate of 14% (floating - BR + 3.3%) and is repayable at the end of five years and three months from the date of the loan viz.
January 28, 2012.
Annual Report 2011-12
58
59
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
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Notes to the Financial statements for the year ended March 31, 2012
Annual Report 2011-12
60
61
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
NOTE : 5 (CONTD.)
ii) Private Placement Institutional- Issue of Redeemable Non-convertible Debentures of ` 1,00,000/- each - Terms of repayment
As at March 31, 2012
Date of allotment Number
Amount
outstanding
Interest Rate
Redeemable
at par on
Security
17-Jun-11 400 40.00 12.50% 17-Jun-16
Secured by first pari passu
charge on the receivable of the
Company with minimum asset
cover ratio of 1.10 times and
immovable property*
27-May-11 84 8.40 12.25% 27-May-16
27-May-11 3,880 388.00 12.50% 27-May-16
31-Mar-11 1,312 131.20 12.25% 31-Mar-16
28-Mar-11 2,640 264.00 12.25% 28-Mar-16
17-Jun-11 300 30.00 12.50% 17-Jun-15
27-May-11 63 6.30 12.25% 27-May-15
27-May-11 2,910 291.00 12.50% 27-May-15
31-Mar-11 984 98.40 12.25% 31-Mar-15
28-Mar-11 1,980 198.00 12.25% 28-Mar-15
17-Jun-11 500 50.00 12.25% 17-Jun-14
17-Jun-11 300 30.00 12.50% 17-Jun-14
27-May-11 10 1.00 12.00% 27-May-14
27-May-11 63 6.30 12.25% 27-May-14
27-May-11 2,910 291.00 12.50% 27-May-14
31-Mar-11 984 98.40 12.25% 31-Mar-14
28-Mar-11 1,000 100.00 12.00% 28-Mar-14
28-Mar-11 1,980 198.00 12.25% 28-Mar-14
17-Jun-11 500 50.00 12.25% 17-Jun-13
27-May-11 10 1.00 12.00% 27-May-13
28-Mar-11 1,000 100.00 12.00% 28-Mar-13
Total 23,810 2,381.00
As at March 31, 2011
Date of allotment Number
Amount
outstanding
Interest Rate
Redeemable
at par on
Security
31-Mar-11 1,312 131.20 12.25% 31-Mar-16
Secured by first pari passu
charge on the receivable of the
Company with minimum asset
cover ratio of 1.10 times and
immovable property*
28-Mar-11 2,640 264.00 12.25% 28-Mar-16
31-Mar-11 984 98.40 12.25% 31-Mar-15
28-Mar-11 1,980 198.00 12.25% 28-Mar-15
31-Mar-11 984 98.40 12.25% 31-Mar-14
28-Mar-11 1,000 100.00 12.00% 28-Mar-14
28-Mar-11 1,980 198.00 12.25% 28-Mar-14
28-Mar-11 1,000 100.00 12.00% 28-Mar-13
Total 11,880 1,188.00
*Immovable property shall mean the commercial premises of the Company admeasuring 2250.64 Sq ft area on the fifth floor along with 2 car
parking space in the building known as Aishwarya Business Plaza situated at Kole Kalyan, Santacruz (East) Mumbai.
Notes to the Financial statements for the year ended March 31, 2012
(All amounts are in million of Indian rupees unless otherwise stated)
NOTE : 5 (CONTD.)
iii) Institutional issue of Redeemable Non-convertible Debentures of ` 1,000,000/- each - Terms
of repayment
As at March 31, 2012
Date of allotment Number
Amount
outstanding
Interest
Rate
Redeemable
at par on
Put and Call option
19-Jan-12 80.00 80.00 13.00% 16-Apr-13 None **
17-Jan-12 500.00 500.00 12.90% 16-Jan-13 17th April 2012 and every
three months thereafter
**
20-Dec-11 271.00 238.62 Zero Coupon
IRR 12.67%
13-Jan-13 None
24-Nov-11 1,000.00 1,000.00 12.50% 23-Dec-12 None
29-Jul-11 566.00 499.04 Zero Coupon
IRR 12.53%
22-Aug-12 None
31-Mar-11 1,000.00 1,000.00 12.60% 29-Jun-12 28th June 2011 and every
three months thereafter
Total 3,417.00 3,317.66
**The Company has subsequent to year end created the charge deed and filed the necessary forms with the regulatory authorities.
As at March 31, 2011
Date of allotment Number
Amount
outstanding
Interest
Rate
Redeemable
at par on
Put and Call option
31-Mar-11 1,000 1,000.00 12.60% 20-Jul-12 28th June 2011 and every three months
3-Sep-10 250 250.00 10.65% 5-Mar-12 3rd February 2011 and every three
months
3-Sep-10 750 750.00 10.65% 3-Mar-12 3rd February 2011 and every three
months
18-Aug-10 250 250.00 9.25% 18-Feb-12 None
15-Feb-10 250 250.00 9.00% 16-Aug-11 None
Total 2,500.00 2,500.00
Nature of Security
Secured by present and future gold loan receivable of the Company with minimum asset cover ratio of 1.10 times.
iv) Public issue of Redeemable Non-convertible Debentures of ` 1,000/- each - Terms of repayment
As at March 31, 2012
Date of allotment Number Amount Interest
Rate
Redeemable
at par on
8-Sep-11 2,201,384 2,201.38 12.20% 8-Sep-13
8-Sep-11 785,940 785.94 12.00% 8-Sep-13
8-Sep-11 1,428,866 1,428.87 12.00% 12-Oct-12
Total 4,416,190 4,416.19
Nature of Security
Secured by mortgage of the immovable property of the Company and a charge on all current asset, book debts, receivables as fully described
in the debenture trust deed except those receivables specifically exclusively charged, on a first ranking pari passu basis with all other lenders
to the Company holding pari passu charge over security.
The Company shall maintain an asset cover of at least 1.10 times of the outstanding amount of debenture, at all times, till the debentures are
completely redeemed.
Notes to the Financial statements for the year ended March 31, 2012
Annual Report 2011-12
62
63
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
As at
March 31, 2012
As at
March 31, 2011
NOTE : 6
Other long term liabilities
Interest accrued but not due on long term borrowings 106.57 47.17
106.57 47.17
As at
March 31, 2012
As at
March 31, 2011
NOTE : 7
Short-term borrowings
Non convertible Debentures - Private placement (Secured) (refer note 5) 500.00 2.10
Cash credit / Overdraft facilities from banks (secured) 26,711.58 7,488.19
Working Capital demand loan from banks (secured) 38,960.25 30,558.41
Working Capital demand loan from others (secured) 3,820.83 650.00
Commercial Papers (unsecured) 2,320.95 10,007.87
10% - 11% Inter-corporate deposit repayable within one year - 1.64
72,313.61 48,708.21
The above amount includes
Secured borrowings 69,992.66 38,698.70
Unsecured borrowings 2,320.95 10,009.51
Non convertible Debentures - Private placement (Secured)- refer Note 5 for details.
Commercial papers carry interest rates of 10.5% to 13.3% and their tenor ranges from 90 days to 365 days.
Notes to the Financial statements for the year ended March 31, 2012
(All amounts are in million of Indian rupees unless otherwise stated)
Details of Security * Rate of
interest
March 31,
2012
Book debts-25% - -
Book debts-25% - -
Book debts +25% margin and 5% of cash collateral BR+1.5% 2,031.36
Book debts + 10% margin BR+1.9% 3,000.00
Book debts +10% margin and 5% of cash collateral BR+1.8% 1,000.00
Book debts + 15% margin 12.50% 741.01
Book debts + 25% margin and Cash Collateral ` 80
Crs (Paripassu)
BR+2.5% 7,990.00
Specified book debts + 25% margin BR+2.75% 3,011.29
Book debts + 15% margin BR+3.25% 2,500.00
Book debts + 10% margin BR+2.1% 2,500.00
Book debts + 10% margin BR+1.75% 3,999.00
Specified Book debts + 10% margin BR+2.25% 2,000.94
Book debts + 15% margin BR+2% 500.00
Book debts + 25% margin (paripassu) BR+2.5% 3,462.00
Book debts +25% margin and 10% of cash collateral BR+2.5% 987.66
Book debts + 5% margin and 5% of cash collateral 13.20% 750.00
Book debts and cash collateral at 10% 13.25% 1,000.00
Book debts + 25% margin BR+2.25% 904.05
Book debts + 25% margin (paripassu) BR+2.5% 4,708.69
Specified book debts + 25% margin & cash collateral
at 5%
BR+3.25% 250.06
Specified book debts + 20% margin BR+2.5% 1,999.56
Specified book debts + 25% margin BR+3.25% 3,500.00
Book debts + 15% margin BR+2.5% 692.97
Specified book debts + 15% margin BR+3% 1,249.97
book debts-10% BR+3.5% 19.50
Specified Book debts + 25% margin BR+2.75% 2,000.68
Specified book debts BR+3.5% 232.70
Book debts + 15% margin BR+3% 1,498.95
Specified book debts + 15% margin BR+3% 1,248.38
Specified book debts + 10% margin BBR+2.5% 2,005.90
Book debts + 15% margin BR+3.5% 1,783.31
Specified book debts + 25% margin BR+3.25% 466.59
Book debts +10% margin and 5% of cash collateral BR+2.75% 250.00
Book debts + 25% margin BR+3.5% 357.88
Book debts +20% margin and 3.5% of cash collateral BR+3% 499.99
Book debts + 5% margin and cash collateral at 5% BR+ 3.75% 1,088.62
Book debts + 35% margin (paripassu) BR+3% 3,451.89
Book debts-25% & 7.5% of cash collateral BR+1.5% 1,500.00
Specified Book debts + 15% margin BR+2.25% 488.88
Specified book debt margin+ cash collateral-10% 9.00% -
Specified book debts & cash collateral-2.5% 8.25% -
65,671.83
Details of Security * Rate of
interest
March 31,
2011
Specified book debts + 10% 12.75% 500.00
Specified book debts + 10% 12.60% 500.00
Book debts + 15% BR+.50% 1,000.00
Specified book debts + 25% BR+1.5% 1,000.00
Book debts + 10% and 5% of cash collateral BR +
1.25%
750.00
Specified book debts + 15% 12.00% 544.00
Specified book debts + 25% and Cash collateral of
` 40 cr
10.50% 4,000.00
BR + 2.25% BR +
2.25%
1,900.00
Specified book debts + 10% BR+2.1% 2,000.00
book debts + 10% BR +
1.75%
2,000.00
Specified book debts + 5% 11.00% 500.00
Book debts + 25% BR+2.5% 1,762.00
Specified book debts + 10% and 5% of Cash
collateral
10.75% 750.00
Specified book debts + 25% BR +
2.25%
510.00
Book debts + 25% 9.00% 2,936.70
Specified book debts + 15% BR+2.5% 499.90
Specified book debts + 10% BR+3.5% 18.00
Specified book debt BR +
3.00%
267.00
Specified book debts + 15% BR +
2.00%
1,500.00
Specified book debts + 15% BR +
2.00%
1,250.00
Specified book debts + 10% BR +
2.00%
4,773.00
Specified book debts + 15% BR +
3.20%
1,209.00
Specified book debts + 10% and 5% of Cash
collateral
BR +
2.50%
500.00
Specified book debts + 25% BR+3.5% 37.00
Specified book debts + 10% and 5% of Cash collateral BR +
2.00%
417.00
Specified book debts + 5% and 5% of Cash collateral BR +
4.50%
2,500.00
Specified book debts + 25% BR+3% 1,849.00
Specified book debts + 10% &7.5% Cash collateral BR+1.5% 2,000.00
Specified book debts + 15% BR+2.25% 500.00
Specified book debts+ cash collateral-10% BPLR-6% 24.00
Specified book debts + cash collateral-2.5% IVBR+0.5% 50.00
38,046.60
NOTE : 7 (CONTD.)
Cash credit, overdraft and working capital loans are repayable on demand or within a maximum period of one year. Details of security and rate of interest is as under:
Loans from banks:
Loan from Others
Details of Security * Rate of interest March 31, 2012
Book debts + 5% margin and 2.5% of
cash collateral
13% + Base rate
Increase
83.33
Specified Book debts + 25% margin SICOM Medium
Term Reference
Rate - 1%
750.00
Specified Book debts + 25% margin PLR + 0.75% 2,000.00
Specified book debts + 20% margin 14.00% 487.50
Book debts-20% 11.55% 500.00
3,820.83
Details of Security * Rate of interest March 31, 2012
Book debts + 5% and 2.5% of Cash
collateral
13% 150.00
Specified book debts + 10% 12% 500.00
650.00
* The loans have been guaranteed by the personal guarantee of Mr. V.P
Nandakumar. Executive Chairman.
Notes to the Financial statements for the year ended March 31, 2012
Annual Report 2011-12
64
65
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
Notes to the Financial statements for the year ended March 31, 2012
As at
March 31, 2012
As at
March 31, 2011
NOTE : 8
Other current liabilities
Current maturities of long-term borrowings (note 5) 9,912.94 2,860.99
Interest accrued but not due on borrowings 803.71 107.72
Interest accrued and due on borrowings 19.02 11.44
Statutory dues payable 80.58 52.80
Employee related payables 252.19 180.91
Payable for expenses 370.56 400.07
Debenture application money 149.20 20.00
Book overdraft 9.43 5.09
Interest free security deposits from employees 22.31 10.92
Auction surplus 488.10 100.58
Unmatured finance charge 19.01 197.90
Retention deposit 28.74 15.31
Others 61.60 14.60
Investor education and protection funds shall be credited by following amounts as and
when due:
Unclaimed dividend 4.43 2.13
Unclaimed matured deposits 0.62 11.44
Unclaimed matured subordinate bonds 4.06 -
12,226.50 3,991.90
There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at March 31,
2012 and March 31, 2011. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act,
2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.
As at
March 31, 2012
As at
March 31, 2011
NOTE : 9
Short term provisions
Provision for employee benefits - 14.82
Provision for gratuity 24.26 7.20
Provision for leave encashment 24.26 22.02
Other provisions
Provision for non performing loan portfolio 296.17 155.63
Provisions for taxation (net of advance tax and tax deducted at source) 55.63 29.96
Proposed equity dividend 841.15 500.25
Provision for tax on proposed equity dividend 136.44 81.14
Provision for standard assets 240.23 158.47
1,569.62 925.45
1,593.88 947.47
(All amounts are in million of Indian rupees unless otherwise stated)
Notes to the Financial statements for the year ended March 31, 2012
NOTE : 10A
Tangible assets
Freehold
Land*
Building Office
equipment
Computer
equipment
Furniture
and
Fittings**
Vehicle*** Plant &
Machinery
Total
Cost
At April 1, 2010 31.32 15.12 60.20 168.82 383.89 9.55 0.90 669.80
Additions - 66.02 113.02 203.33 595.34 14.34 2.16 994.21
Deletions - - 0.26 9.50 0.29 1.46 0.68 12.19
At March 31, 2011 31.32 81.14 172.96 362.65 978.94 22.43 2.38 1,651.82
Cost
At April 1, 2011 31.32 81.14 172.96 362.65 978.94 22.43 2.38 1,651.82
Additions 41.21 18.86 160.06 292.10 751.69 9.18 38.70 1,311.80
Deletions - - - 11.62 0.18 1.26 - 13.06
At March 31, 2012 72.53 100.00 333.02 643.13 1,730.45 30.35 41.08 2,950.56
Accumulated Depreciation
At April 1, 2010 - 0.42 13.61 62.68 56.38 2.52 0.02 135.63
Charge for the year - 0.51 26.75 106.05 69.51 1.60 0.03 204.45
Deletions - - 0.19 6.10 0.28 0.70 0.01 7.28
At March 31, 2011 - 0.93 40.17 162.63 125.61 3.42 0.04 332.80
Accumulated Depreciation
At April 1, 2011 - 0.93 40.17 162.63 125.61 3.42 0.04 332.80
Charge for the year 1.54 40.57 162.37 258.07 2.46 0.97 465.98
Disposals - - 11.49 0.06 0.39 - 11.94
At March 31, 2012 - 2.47 80.74 313.51 383.62 5.49 1.01 786.84
Net Block at March 31,
2011
31.32 80.21 132.79 200.02 853.33 19.01 2.34 1,319.02
Net Block at March 31,
2012
72.53 97.53 252.28 329.62 1,346.83 24.86 40.07 2,163.72
* The Company is in the process of registering the title of the land acquired in an earlier year for ` 0.7 in its name. Borrowing costs of ` 3 has
been capitalised under capital work in progress for eligible assets
** Also, refer note 2(d) for change in estimate in useful lives of furniture and fittings other than safes and strong rooms
*** Includes vehicles taken on finance lease/hire purchase- Gross block ` 22.47 (Previous year ` 18.39): Depreciation for the year ` 1.82
(Previous year ` 1.18) and Net block ` 19.73 (Previous Year ` 16.81)
Annual Report 2011-12
66
67
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
Notes to the Financial statements for the year ended March 31, 2012
NOTE : 10B
Intangible assets
Computer Software
Cost
At April 1, 2010 46.03
Purchase 34.80
Deletions -
At March 31, 2011 80.83
Cost
At April 1, 2011 80.83
Purchase 33.57
Deletions -
At March 31, 2012 114.40
Amortisation
At April 1, 2010 12.48
Charge for the year 8.51
Deletions -
At March 31, 2011 20.99
Amortisation
At April 1, 2011 20.99
Charge for the year 16.88
Deletions -
At 31 March 2012 37.87
Net block
At March 31, 2011 59.84
At March 31, 2012 76.53
As at
March 31, 2012
As at
March 31, 2011
NOTE : 11A
Non-current investments
Trade investments (Quoted, at cost)
Nil (Previous year - 32,000) units of ` 100/- each in 7.38% Govt. of India Bond - 3.15
Nil (Previous year - 100) equity share of ` 10/- each fully paid in The Dhanalaxmi Bank
Limited.
- 0.01
Nil (Previous year - 100) equity share of ` 10/- each fully paid in Vijaya Bank Limited - 0.01
Trade investments (Unquoted, at cost)
100 (previous year: Nil) Non Convertible Subordinated bonds of ` 1,000,000/- each fully
paid in Yes Bank Limited
100.00 -
Other than trade (Unquoted, at cost)
1,000 (Previous year - 1,000) equity share of ` 10/- each fully paid in The Catholic Syrian
Bank Limited.
0.03 0.03
100.03 3.20
Note :
1. Aggregate amount of unquoted investments 100.03 0.03
2. Aggregate amount of quoted investments (Market Value ` Nil; previous year ` 3.37) - 3.17
(All amounts are in million of Indian rupees unless otherwise stated)
Notes to the Financial statements for the year ended March 31, 2012
As at
March 31, 2012
As at
March 31, 2011
NOTE : 11B
Current Investments (Unquoted, At Net Asset Value)
Trade investments (Quoted, at cost)
40,000,000 (previous year - 40,000,000) of ` 10/- each in SBI Mutual Fund - Debt Fund
Series - 367 Days - 9- Growth
413.06 400.00
541,448.1297 (previous year - Nil) of ` 1,662.2089/- each in SBI Mutual Fund - Premier
Liquid Fund -Super Institutional Growth Plan
912.91 -
220,366.909 (previous year - Nil) of ` 1,134.4716/- each in IDBI Liquid Fund Growth 253.61 -
11,494,992.7811 (previous year - Nil) of ` 21.7486/- each in Kotak Liquid (Institututional
Premium) Growth
250.09 -
249,870.142 (previous year - Nil) of ` 1,000.5197/- each in Daiwa Liquid Fund
Institututional Plan Daily Dividend Option Growth
252.72 -
2,082.39 400.00
Note :
1. Aggregate amount of unquoted investments (book value) 2,050.00 400.00
1. Aggregate amount of unquoted investments (NAV) 2,082.39 400.00
As at
March 31, 2012
As at
March 31, 2011
NOTE : 12
Deferred tax assets (net)
Deferred tax liability
Fixed assets: Impact of difference between tax depreciation and depreciation/
amortisation charged for the financial reporting.
(20.56) (34.39)
Gross deferred tax liability (20.56) (34.39)
Deferred tax asset
Impact of expenditure charged to the statement of profit and loss in the current year but
allowed for tax purposes on payment basis
7.87 15.71
Provision for advances 201.67 105.75
Gross deferred tax asset 209.54 121.46
Net deferred tax asset 188.98 87.07
Annual Report 2011-12
68
69
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
Notes to the Financial statements for the year ended March 31, 2012
Non-current Current
March 31, 2012 March 31, 2011 March 31, 2012 March 31, 2011
NOTE : 13
Loans and advances
Portfolio Loan
Secured, considered good
- Gold - - 95,882.49 63,556.57
- Hypothecation - - - 18.79
- Stock on Hire - - - 0.30
- Other loans 45.71 9.27 153.50 45.13
45.71 9.27 96,035.99 63,620.79
Secured, considered doubtful#
- Gold - - 280.66 119.17
- Hypothecation - - - 26.69
- Stock on Hire - - - 1.30
Portfolio Loan
Unsecured, considered good
- Other loans 7.23 2.69 3.15 17.53
Unsecured, considered doubtful# - - 15.51 8.47
Advances recoverable in cash or kind *
Advances receivable from related parties - - 12.37 -
Unsecured, considered good - - 76.30 56.17
Unsecured, considered doubtful - - 85.19 11.82
- - 173.86 67.99
Less: Provision for doubtful advances - - (85.19) (11.82)
- - 88.67 56.17
Deposits (Unsecured, considered good)
Rental deposits 451.54 286.57 105.12 54.17
Other security deposits - - 47.51 6.46
451.54 286.57 152.63 60.63
Service tax and other taxes recoverable, from
Government
- - 44.85 29.67
Capital advances (Unsecured, considered good) 18.54 0.92 - -
Total 523.02 299.45 96,621.46 63,940.42
* Advances recoverable in cash or kind includes dues
from relative of Directors and related parties
- - 4.87 3.11
# Provision for the same has been disclosed separately under note 9. Also refer note 32(a)
(All amounts are in million of Indian rupees unless otherwise stated)
Notes to the Financial statements for the year ended March 31, 2012
Non-current Current
March 31, 2012 March 31, 2011 March 31, 2012 March 31, 2011
NOTE: 14
Other assets
Non-current bank deposits (note 15) 281.13 232.51 - -
(A) 281.13 232.51 - -
Interest accrued:
Loan Portfolio - - 8,913.91 4,569.98
Fixed deposits and investment 1.56 3.25 119.22 85.20
Auctioned gold - - 1,225.41 287.17
Ancillary cost of arranging the borrowings 51.91 23.49 95.15 15.53
Others - 2.88 1.91
(B) 53.47 26.74 10,356.57 4,959.79
Total (A + B ) 334.60 259.25 10,356.57 4,959.79
Non-current Current
March 31, 2012 March 31, 2011 March 31, 2012 March 31, 2011
NOTE: 15
Cash and bank balances
Cash and cash equivalents
Balances with banks:
On current accounts # - - 3,414.45 2,480.92
Deposits with original maturity of less than three
months
- - 30.00 750.00
On unpaid dividend account - - 4.44 2.13
Cash on hand - - 1,055.23 1,188.01
- - 4,504.12 4,421.06
Other bank balances
Deposits with original maturity of less than 3 months* - - 25.00 225.29
Deposits with original maturity for more than 3 months
but less than 12 months*
- - 3,039.93 1,608.45
Deposits with original maturity for more than 12
months*
281.13 232.51 608.03 176.05
281.13 232.51 3,672.96 2,009.79
Amount disclosed under
non-current assets (note 14) 281.13 232.51 - -
- - 8,177.08 6,430.85
“* Includes:
a) cash collateral deposits aggregating ` 3,421.49 (Previous year: ` 2,119.41) towards assignments and other approved facilities; and
b) Employee security deposits aggregating ` 23.27 (previous year : ` 10.95) placed as fixed deposits with banks .
These are not freely available to the Company and accordingly, have not been considered as cash and cash equivalents.”
# includes amounts in Escrow account towards closed public deposits ` 0.62 (previous year: ` 11.44).
Annual Report 2011-12
70
71
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
Notes to the Financial statements for the year ended March 31, 2012
Year ended
March 31, 2012
Year ended
March 31, 2011
NOTE: 16
Revenue from operations
Interest Income
- Gold loans 26,093.01 11,584.17
- Hypothecation and hire purchase loans 2.28 43.01
- Other loans 24.68 6.94
Revenue from other services
- Money transfer 34.58 19.21
- Others 0.93 0.87
Revenue from operations 26,155.48 11,654.20
Year ended
March 31, 2012
Year ended
March 31, 2011
NOTE: 17
Other Income
Interest income on
Bank and other deposits 221.20 124.67
Net gain on sale of current investments 45.56 3.62
Gain on unquoted mutual funds 32.39 -
Profit on sale of fixed assets (net) 1.93 -
Bad debts recovered 3.97 8.64
Foreign exchange gain (net) 0.02 0.02
Other non-operating income 97.90 24.11
402.97 161.06
Year ended
March 31, 2012
Year ended
March 31, 2011
NOTE: 18
Finance Cost
Interest
- on Debentures 1,387.55 299.67
- on Deposits 1.58 1.37
- on Bank and other borrowings 6,830.75 2,244.60
- on Subordinate bonds 440.60 233.15
- on Commercial papers 1,719.42 369.88
- Others 16.86 7.92
Other borrowing cost 494.24 234.96
10,891.00 3,391.55
Year ended
March 31, 2012
Year ended
March 31, 2011
NOTE: 19
Employee benefit expense
Salaries, wages and bonus 2,797.95 1,419.26
Contribution to provident and other funds 271.95 180.71
Staff welfare expenses 20.21 5.03
3,090.11 1,605.00
(All amounts are in million of Indian rupees unless otherwise stated)
Notes to the Financial statements for the year ended March 31, 2012
Year ended
March 31, 2012
Year ended
March 31, 2011
NOTE: 20
Other expenses
Electricity 73.92 38.16
Rent 602.39 328.40
Rates and taxes 61.03 40.47
Insurance 40.22 23.75
Repairs and maintenance
-Vehicles 4.04 1.78
-Others 68.40 62.79
Advertising and sales promotion 798.72 1,038.51
Travelling and conveyance 184.94 83.90
Communication costs 103.08 44.23
Printing and stationery 69.67 41.51
IT Support costs 195.46 -
Legal and professional fees 105.81 23.27
Security charges 549.54 204.16
Bad debts/advances written off 87.31 - 237.12
Provision for non performing assets, net of bad debts written off 140.54 - (24.66)
Provision for doubtful advances 73.36 301.21 11.82 224.28
Provision for standard assets 81.76 158.47
Miscellaneous expenses 82.23 53.11
3,322.42 2,366.79
Legal and professional charges include Payment to auditors:
As auditor:
Audit fee 2.75 2.50
Limited review 1.80 1.50
Certification fees 0.65 0.50
Reimbursement of expenses 0.25 0.20
5.45 4.70
The fees dislcosed above excldues ` 2 paid for services in connection with public issue of secured non-convertible debentures by the
Company.
Year ended
March 31, 2012
Year ended
March 31, 2011
NOTE: 21
Depreciation and amortisation expense
Depreciation of tangible assets 465.98 204.45
Amortisation of intangible assets 16.88 8.51
482.86 212.96
Annual Report 2011-12
72
73
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
Notes to the Financial statements for the year ended March 31, 2012
Year ended
March 31, 2012
Year ended
March 31, 2011
NOTE: 22
Earnings per share (EPS)
The following reflects the profit and share data used in the basic and diluted EPS
computations:
Net profit for calculation of basic EPS 5,914.61 2,826.64
Weighted average number of equity shares in calculating basic EPS (Nos.) 837,277,508 742,761,651
Effect of dilution:
Stock options granted under ESOP (Nos.) 3,956,645 10,222,897
Weighted average number of equity shares in calculating diluted EPS (Nos.) 841,234,153 752,984,548
NOTE: 23
Employee Stock Option Scheme (ESOS), 2009
The details of the Employee Stock Option Scheme 2009 are as under:
Date of share holders’ approval August 17, 2009
Number of options approved 1,000,000
Date of grant August 17, 2009
Number of options granted 829,500
Method of settlement Equity
Graded Vesting 50% after one year from the date of grant i.e. August 16, 2010 and
balance 50% after two years from the date of grant i.e August 16,
2011
Exercisable period 4 years from vesting date
Vesting conditions On achievement of pre-determined performance parameters.
Subsequent to the share split and bonus issue in an earlier year, the number of options has been adjusted to 8,295,000 options and the
exercise price has been adjusted to ` 33.12/- per share in accordance with the terms of the scheme. Further, subsequent to bonus issue in the
current year, the exercise price has been adjusted to ` 16.56/-
The Company has adopted the (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 issued by Securities
and Exchange Board of India, and has recorded a compensation expense using the intrinsic value method as set out in those guidelines. The
summary of the movements in options is given below:
Particulars As at
March 31, 2012
As at
March 31, 2011
Options outstanding, beginning of year 4,094,880 7,850,000
Increase on account of Bonus issue 4,094,880 -
Lapsed Options restored during the year 30,000 -
Options exercised during the year (7,404,760) (3,755,120)
Options lapsed during the year (695,000) -
Options outstanding, end of year 120,000 4,094,880
Options outstanding at the yearend comprise of :
- Options eligible for exercise at year end 120,000 169,880
- Options not eligible for exercise at year end - 3,925,000
(All amounts are in million of Indian rupees unless otherwise stated)
Notes to the Financial statements for the year ended March 31, 2012
Particulars As at
March 31, 2012
As at
March 31, 2011
Weighted average remaining contract life of options 1 years 5 month 2 years 5 month
Weighted average market price of share exercised ` 51.06/- `144.47/-
The options outstanding at March 31, 2012 had an exercise price of `16.56/-
The fair value of options estimated at the date of grant using the Black-Scholes method and the assumptions used are as under:
Particulars Vesting I Vesting II
August 16, 2010 August 16, 2011
50% 50%
Option fair value (pre-split and bonus at a face value of ` 10/- per share) ` 142.43 ` 157.92
Risk-free interest rate 6.15% 6.53%
Expected life 3 years 4 years
Expected volatility 67.11% 66.62%
Expected dividend yield 2.76% 2.76%
Share price on the date of grant (face value of ` 10/-) ` 331.15 /- ` 331.15 /-
The expected volatility of the stock has been determined based on historical volatility of the stock. The period over which volatility has been
considered is the expected life of the option.
Pro-forma Disclosures for ESOS 2009
In accordance with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, had the compensation
cost for ESOS 2009 been recognised based on the fair value at the date of grant in accordance with Black-Scholes method, the amounts of the
Company’s net profit and earnings per share would have been as follows:
Particulars Profit after tax Basic EPS (`) Diluted EPS (`)
Year ended March 31, 2012
- Amounts as reported 5,914.61 7.06 7.03
- Amounts as per pro-forma 5,902.89 7.05 7.02
Particulars Profit after tax Basic EPS (`) Diluted EPS (`)
Year ended March 31, 2011
- Amounts as reported 2,826.64 3.81 3.75
- Amounts as per pro-forma 2,774.52 3.74 3.69
Annual Report 2011-12
74
75
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
Notes to the Financial statements for the year ended March 31, 2012
Particulars Associates / Enterprises
owned or significantly
influenced by key
management personnel or
their relatives
Key Management
Personnel
Relatives of key
management personnel
Total
31-Mar-12 31-Mar-11 31-Mar-12 31-Mar-11 31-Mar-12 31-Mar-11 31-Mar-12 31-Mar-11
NOTE 24
Related party transactions
Debentures and Subordinate
Bond issued during the period
- - - 46.03 5.20 2.36 5.20 48.39
Mr. V.P.Nandakumar - - - 46.03 - - - 46.03
Mrs. Sathyalekshmi - - - - 0.64 0.97 0.64 0.97
Mrs. Rajalakshmi Raveendra Babu - - - - 2.20 0.68 2.20 0.68
Ms. Biju Babu - - - - 0.80 - 0.80 -
Meenakshy Amma - - - - 1.02 - 1.02 -
Others 0.54 0.71 0.54 0.71
Debentures and Subordinate
Bond redeemed during the
period
- 60.10 0.83 2.57 0.83 62.67
Mr. V.P.Nandakumar 60.10 - - - 60.10
Mrs. Sathyalekshmi - - - - 0.72 1.21 0.72 1.21
Others - - - - 0.11 1.36 0.11 1.36
Interest paid - - 3.06 0.08 0.34 0.08 3.40
Mr. V.P.Nandakumar - - 3.06 - - - 3.06
Mrs. Sathyalekshmi - 0.07 0.05 0.07 0.05
Others - - - - 0.01 0.29 0.01 0.29
Commission paid to Directors - - 5.28 18.60 - - 5.28 18.60
Mr. V.P.Nandakumar - - 12.00 - 12.00
Mr. I Unnikrishnan - 2.88 3.60 2.88 3.60
Mr. Raveendra Babu - 2.40 3.00 2.40 3.00
Remuneration Paid to Directors - - 40.32 32.26 - - 40.32 32.26
Mr. V.P.Nandakumar 25.20 20.16 25.20 20.16
Mr. I Unnikrishnan 8.40 6.72 8.40 6.72
Mr. Raveendra Babu 6.72 5.38 6.72 5.38
Advances made - - - 1.76 1.91 1.76 1.91
Mrs. Jyothi Prasannan - - - 1.34 1.31 1.34 1.31
Sooraj Nandan - - - 0.42 0.60 0.42 0.60
Subscription to Equity Shares - - - - - 1,000.00 - 1,000.00
Mrs. Sushama Nandakumar - - - - - 1,000.00 - 1,000.00
Donation made 8.17 6.20 - - 8.17 6.20
Manappuram Foundations 8.17 6.20 - - 8.17 6.20
Rent Paid 1.55 0.51 - 1.55 0.51
Mr. V.P.Nandakumar - 1.55 0.51 - 1.55 0.51
Rent Received 0.26 0.24 - - 0.26 0.24
Manappuram Jewellers Private Limited 0.06 0.04 - - 0.06 0.04
Manappuram Asset Finance Limited 0.02 0.02 - - 0.02 0.02
Manappuram Insurance Brokers Private
Limited
0.18 0.18 - - 0.18 0.18
Sale of gold 769.55 972.70 - - 769.55 972.70
Manappuram Jewellers Limited 769.55 972.70 - - 769.55 972.70
(All amounts are in million of Indian rupees unless otherwise stated)
Notes to the Financial statements for the year ended March 31, 2012
Particulars Associates / Enterprises
owned or significantly
influenced by key
management personnel or
their relatives
Key Management
Personnel
Relatives of key
management personnel
Total
31-Mar-12 31-Mar-11 31-Mar-12 31-Mar-11 31-Mar-12 31-Mar-11 31-Mar-12 31-Mar-11
Other Income 1.91 0.56 - - 1.91 0.56
Manappuram Jewellers Limited 1.89 0.20 - - 1.89 0.20
Others 0.02 0.36 - - 0.02 0.36
Service charges from related party 12.37 - - - - - 12.37 -
Manappuram Agro farms 10.22 - - - - - 10.22 -
Manappuram Jewellers Limited 0.82 0.82 -
Manappuram Chits (India) Limited 0.07 0.07 -
Manappuram Chits India 1.23 1.23 -
Manappuram Chit Funds Company
Private Limited
0.03 0.03 -
Manappuram Chits Company (Karnataka)
Private Limited
0.00 0.00 -
Manappuram Benefit Fund Limited (Refer
Note 36(b))
- -
Manappuram Asset Finance Limited
(Refer Note 36(b))
- -
Manappuram Finance (Refer Note 36(b)) - -
Purchase of assets - - 35.58 - - - 35.58 -
Mr. V.P.Nandakumar - - 35.58 - - - 35.58 -
Balance outstanding as at the period
end:
Amounts payable (net) to related
parties
- - 5.14 18.86 6.62 2.82 11.76 21.68
Mr. V.P.Nandakumar - - - 12.26 - - - 12.26
Mr. I Unnikrishnan 2.88 3.60 - - 2.88 3.60
Mr. Raveendra Babu 2.26 3.00 - - 2.26 3.00
Mrs. Rajalakshmi Raveendra Babu - - - - 3.08 0.57 3.08 0.57
Ms. Biji Babu 0.81 - 0.81 -
Mrs. Sathyalekshmy - - - - 1.15 0.36 1.15 0.36
Meenakshy Amma - - - - 1.04 - 1.04 -
Others - - - - 0.54 1.89 0.54 1.89
Amounts receivables (net) from
related parties
12.45 0.04 - - 4.88 3.11 17.33 3.15
Manappuram Agro firms 10.22 - - - - - 10.22 -
Manappuram Chits India 1.23 - - - - - 1.23 -
Mrs. Jyothi Prasannan - - 3.86 2.51 3.86 2.51
Others 1.00 0.04 - - 1.02 0.60 2.02 0.64
Annual Report 2011-12
76
77
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
Notes to the Financial statements for the year ended March 31, 2012
Names of related parties
Associates / Enterprises owned Manappuram Benefit Fund Limited
or significantly influenced by key management Manappuram Chits (India) Limited
personnel or their relatives Manappuram Asset Finance Limited
Manappuram Finance (sole proprietorship)
Manappuram Insurance Brokers Private Limited
Manappuram Jewellers Private Limited
Manappuram Healthcare
Manappuram Foundations (charitable trust)
Manappuram Chits India
Manappuram Agro farms
Manappuram Chit Funds Company Private Limited
Manappuram Chits Company (Karnataka) Private
Limited
Key Management Personnel Mr. V P Nandakumar
Mr. I Unnikrishnan
Mr. B.N Raveendra Babu
Relatives of key management personnel Mrs. Sushama Nandakumar
Mr. Sooraj Nandan
Mrs Sumitha Nandakumar
Mrs. Jyothi Prasannan
Mrs. Shelly Ekalavyan
Mrs. Geetha Ravi
Mrs. Rajalakshmi Raveendra Babu
Mrs. Sathyalekshmy
Meenakshy Amma
Ms. Biji Babu
* Transactions with relatives of key management personnel are based on delcarations
by the KMPs and relied upon by the auditors.
NOTE : 25
Employment benefits disclosures:
The amounts of Provident fund contribution charged to the Profit and loss account during the year aggregates to ` 173.97 (Previous year -
` 96.51 ).
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on
departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation of
India.
The following tables summaries the components of net benefit expense recognised in the profit and loss account and the funded status and
amounts recognised in the balance sheet for the gratuity plan.
(All amounts are in million of Indian rupees unless otherwise stated)
Profit and Loss account
Net employee benefit expense
2012 2011
Current service cost 41.33 32.48
Interest cost on benefit obligation 4.31 0.31
Expected return on plan assets (4.86) (1.86)
Net actuarial loss recognised in the year (21.69) 15.16
Net (benefit) / expense 19.09 46.09
Actual return on plan assets 5.26 2.01
Balance sheet
Reconciliation of present value of the obligation and the fair value of plan assets:
2012 2011
Defined benefit obligation (75.65) (51.91)
Fair value of plan assets 81.72 37.09
Asset/(liability) recognised in the balance sheet 6.07 (14.82)
Experience adjustments on plan liabilities (Gain) / Loss (26.07) 14.90
Experience adjustments on plan assets Gain / (Loss) 0.42 0.15
There are no experience adjustments for the years ended March 31, 2010, March 31,
2009 and March 31, 2008.
Changes in the present value of the defined benefit obligation are as follows:
2012 2011
Opening defined benefit obligation 51.91 3.88
Interest cost 4.31 0.31
Current service cost 41.33 32.48
Benefits paid (0.63) (0.07)
Actuarial loss / (gain) on obligation (21.27) 15.31
Closing defined benefit obligation 75.65 51.91
Changes in the fair value of plan assets are as follows:
2012 2011
Opening fair value of plan assets 37.09 4.06
Expected return 4.86 1.86
Contributions by employer 39.98 31.09
Benefits paid (0.63) (0.07)
Actuarial gains / (losses) 0.42 0.15
Closing fair value of plan assets 81.72 37.09
The Company expects to contribute ` 30 to gratuity in 2012-13.
The principal assumptions used in determining gratuity obligations for the Company’s
plans are shown below:
2012 2011
% %
Discount rate 8.6% 8.3%
Expected rate of return on assets 8.5% 8.5%
The fund is administered by Life Insurance Corporation of India (“LIC”). The overall expected rate of return on assets is determined based
on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant
factors, such as supply and demand in the employment market.
Notes to the Financial statements for the year ended March 31, 2012
Annual Report 2011-12
78
79
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
NOTE: 26
Commitments
(i) Estimated amount of contracts remaining to be executed on capital account, net of advances is ` 127.90 (Previous year - ` 89.54).
(ii) The Company has entered into an agreement for outsourcing of Information Technology support in April 2011 for a period of 5 years with
an annual expense of ` 200 .
NOTE : 27
Contingent liabilities
2012 2011
(a) The Company is contingently liable to banks and other financial institutions with
respect to assignment of gold loans to the extent of the collateral deposits / guarantees.
Management does not expect the contingency to dwell on the Company.
2,600.72 1,702.76
Total 2,600.72 1,702.76
(b) Applicability of Kerala Money Lenders’ Act
The Company has challenged in the Hon’ble Supreme Court the order of Hon’ble Kerala High Court upholding the applicability of Kerala
Money Lenders Act to NBFCs. The Hon’ble Supreme Court has directed that a status quo on the matter shall be maintained and the
matter is currently pending with the Hon’ble Supreme Court. The Company has taken legal opinion on the matter and based on such
opinion the management is confident of a favourable outcome. Pending the resolution of the same, no adjustments have been made in
the financial statements for the required license fee and Security deposits.
(c) Show cause notice from Reserve Bank of India
The Company has received a show cause notice from the Reserve bank of India on May 7, 2012 with certain observations made pursu-
ant to their inspection of books and records of the Company. The Company is in process of responding to the show cause notice. Based
on the internal and external legal opinion, the Company believes that it can address all observations to the satisfaction of the Reserve
Bank of India. Pending resolution of the matter by the Reserve Bank of India, no adjustments, if any that may be required, have been
made in these financial statements.
NOTE : 28
Additional disclosures as required by circular no DNBS(PD).CC.No.125/03.05.002/2008-2009 dated August 1, 2008 issued by the
Reserve Bank of India:
a) Capital to Risk Assets Ratio
Particulars March 31, 2012 March 31, 2011
CRAR (%) 23.38 29.13
CRAR - Tier I Capital (%) 20.64 26.36
CRAR - Tier II Capital (%) 2.74 2.77
b) Exposure to real estate sector
The Company does not have any direct or indirect exposure towards real estate sector.
Notes to the Financial statements for the year ended March 31, 2012
(All amounts are in million of Indian rupees unless otherwise stated)
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Notes to the Financial statements for the year ended March 31, 2012
Annual Report 2011-12
80
81
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
NOTE : 29
Lease Disclosures
Operating Lease :
Office premises are obtained on operating lease which are cancellable in nature.
Finance Leases:
2012 2011
Total minimum lease payments at the year end 13.40 12.57
Less: amount representing finance charges 1.44 1.63
Present value of minimum lease payments 11.96 10.94
Lease payments for the year 6.49 2.01
Minimum lease Payments:
Not less than one year [Present value ` 4.84 as on March 31, 2012 (` 3.78 as on March
31 ,2011)
5.96 4.55
Later than one year but not later than five years [Present value ` 7.12 as on March
31,2012 (` 7.16 as on March 31, 2011]
7.44 8.02
Later than five years [Present value Nil as on March 31, 2012 (Nil as on 31 March, 2011)] - -
NOTE : 30
Assignment Of Receivables
The Company has assigned a portion of its gold loans to banks and financial institution during the year. The aggregate amount of assigned
as at March 31, 2012 is ` 19,163.62 (Previous year 11,182.83). These amounts have been reduced from the gross loan and hypothecation
loan balances. Bank /Institution wise breakup of the same is as under.
Bank/Financial institution 2012 2011
Kotak Mahindra Bank Ltd 2,728.71 1,971.79
ICICI Bank Ltd 2,990.62 1,564.86
Federal Bank Ltd 750.00 166.55
Punjab National Bank 199.77 -
IDBI Bank Ltd 6,844.35 548.36
Dhanlaxmi Bank Ltd 2,208.02 1,849.41
Yes Bank Ltd 3,442.15 1,684.88
ING Vysya Bank Ltd - 1,628.67
Axis Bank Ltd (UTI Bank) - 1,118.19
Development Credit Bank Ltd - 199.72
IndusInd Bank Ltd - 450.40
19,163.62 11,182.83
Notes to the Financial statements for the year ended March 31, 2012
(All amounts are in million of Indian rupees unless otherwise stated)
NOTE : 31
Cash collateral deposits
Deposit with Banks includes Cash collaterals deposits aggregating ` 3,421.49 (Previous year ` 2,119.41) towards assignments and other
approved facilities. Bank /institution wise breakup of the same is as under :
Bank/Financial institution 2012 2011
Andhra Bank 206.93 125.00
Aditya Birla Finance Ltd (with CSB) 6.25 -
DBS Bank Ltd 37.50 37.50
Development Credit Bank Ltd 25.00 25.00
Dena Bank 50.00 37.50
Dhanlaxmi Bank Ltd 425.82 365.33
The Federal Bank Ltd 200.00 50.00
HDFC Bank Ltd 110.35 153.57
ICICI Bank Ltd 243.44 192.73
IDBI Bank Ltd 376.13 155.00
Indian Overseas Bank 292.54 275.32
The Jammu and Kashmir Bank Ltd 125.00 50.00
The Karnataka Bank Ltd 25.00 -
The Karur Vysya Bank Ltd 12.50 25.00
Kotak Mahindra Bank Ltd 38.37 35.54
Punjab National Bank 25.00 -
The South Indian Bank Ltd 186.99 127.89
State Bank of India 400.00 -
State Bank of Mauritius Ltd 25.00 -
United Bank of India 150.00 100.00
Vijaya Bank 100.00 -
Yes Bank Ltd 359.67 209.24
ING Vysya Bank Ltd - 54.79
Uco Bank - 100.00
3,421.49 2,119.41
Notes to the Financial statements for the year ended March 31, 2012
Annual Report 2011-12
82
83
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
NOTE : 32 (A)
Gold and other loan portfolio classification and and provision for non performing assets (As per RBI Prudential Norms)
Particulars Gross Loan Outstanding Provision For Assets Net Loan Outstanding
2012 2011 2012 2011 2012 2011
Secured Loans
A) Gold Loan
Standard Asset 95,532.17 63,477.61 239.70 158.23 95,292.47 63,319.38
Sub Standard Asset 376.42 76.27 37.64 7.63 338.78 68.64
Doubtful Asset 15.08 12.26 3.54 1.94 11.54 10.32
Loss Asset 239.48 109.60 239.48 109.60 - -
Total - A 96,163.15 63,675.74 520.36 277.40 95,642.79 63,398.34
B) Hypothecation Loan
Standard Asset - 18.79 - 0.05 - 18.74
Sub Standard Asset - 26.69 - 26.69 - -
Doubtful Asset - - - - - -
Loss Asset - - - - - -
Total - B - 45.48 - 26.74 - 18.74
C) Stock on Hire
Standard Asset - 0.30 - 0.00 - 0.30
Sub Standard Asset - 1.30 - 1.30 - -
Doubtful Asset - - - - - -
Loss Asset - - - - - -
Total - C - 1.60 - 1.30 - 0.30
D) Other Loans
Standard Asset 199.21 54.40 0.50 0.14 198.71
Sub Standard Asset - - - - -
Doubtful Asset - - - - -
Loss Asset - - - - -
Total - D 199.21 54.40 0.50 0.14 198.71 -
Total (A+B+C+D) 96,362.36 63,777.22 520.86 305.58 95,841.50 63,417.38
Unsecured Loans
A) Other Loans
Standard Asset 10.38 20.22 0.03 0.05 10.35 20.17
Sub Standard Asset - - - - - -
Doubtful Asset 15.51 8.47 15.51 8.47 - -
Loss Asset - - - - - -
Total 25.89 28.69 15.54 8.52 10.35 20.17
Notes to the Financial statements for the year ended March 31, 2012
(All amounts are in million of Indian rupees unless otherwise stated)
NOTE : 32 (A)
Gold and other loan portfolio classification and and provision for non performing assets (As per RBI Prudential Norms)
Particulars Gross Loan Outstanding Provision For Assets Net Loan Outstanding
2012 2011 2012 2011 2012 2011
NOTE : 32 (B)
Provision for diminution in value of investments
Particulars 2012 2011
Provision for diminution in
value of investments
- -
NOTE : 33
Additional disclosures as required by circular no DNBS.CC.PD.No.265/03.10.01/2011-2012 dated March 21, 2012 issued by the
Reserve Bank of India:
Particulars 2012 2011
Total Gold loan portfolio 96,163.15 63,675.74
Total Assets 120,768.42 77,826.61
Gold loan portfolio as a %age of total assets 79.63% 81.82%
NOTE : 34
Expenditure in foreign currency
Particulars 2012 2011
Travel 0.14 2.52
Consultancy charges - 7.96
0.14 10.48
NOTE : 35
Value of imports on C.I.F basis
Particulars 2012 2011
Capital goods 30.97 2.52
30.97 2.52
NOTE: 36
Transactions with related parties
a) Remuneration to relatives of director
The Company had in an earlier year made an application to Central Government for approval of remuneration paid to relatives of director
holding office or place of profit in the Company. During the current year, the application has been rejected by the Central Government.
Subsequently, the Company has made an application to the Central Government to waive the amounts paid to the relatives in the earlier
years. Pending the receipt of the approval the entire amount paid of ` 4.87 is shown as receivable from them.
b) Transactions under Section 297 of the Companies Act, 1956
The Company had shared common infrastructure facilities and performed / received collection services from other companies covered
under Section 301 of the Companies Act, 1956. The Company is in the process of obtaining necessary approvals / condonations from
the Central Government, if any that may be required in respect of the various classes of transactions entered into with parties covered
under Section 297 of the Companies Act, 1956, including certain free of cost transactions. The Company has also made provision for the
probable compounding fees payable.
Notes to the Financial statements for the year ended March 31, 2012
Annual Report 2011-12
84
85
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
As per our report of even date
For S. R. BATLIBOI & ASSOCIATES For and on behalf of the Board of Directors
Chartered Accountants
Firm Registration Number: 101049W
per S. Balasubrahmanyam V. P. Nandakumar I. Unnikrishnan B. N. Raveendra Babu
Partner Executive Chairman Managing Director Joint Managing Director
Membership No.: 053315
Place: Kochi M. Anandan A. L.. Bindu K. Rajesh Kumar
Date: May 18, 2012 Director Chief Financial Officer Company Secretary
Notes to the Financial statements for the year ended March 31, 2012
NOTE : 37
Utilisation of proceeds of public issue
During the current year, the Company has raised ` 4,416.19 by way of public issue of Secured Non Convertible debentures (public issue)
to be utilised to meet its various financing activities including lending and investments and towards business operations including for capital
expenditure and working capital requirements. As at March 31, 2012, the Company has utilised the entire proceeds of the public issue, net of
issue expenses in accordance with the objects stated in the offer document.
NOTE : 38
During the year there have been certain instances of fraud on the Company by employees where gold loan related misappropriations / cash
embezzlements have occurred for amounts aggregating ` 38.32 million. The Company has fully provided for these amounts in the financial
statements and is in the process of recovering these amounts from the employees and taking appropriate legal actions.
NOTE : 39
Comparatives
Till the year ended 31 March 2011, the Company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and
presentation of its financial statements. During the year ended 31 March 2012, the revised Schedule VI notified under the Companies Act
1956, has become applicable to the Company. The Company has reclassified previous year figures to conform to this year’s classification.
(All amounts are in million of Indian rupees unless otherwise stated)
March 31, 2012 March 31, 2012
A. CASH FLOW FROM OPERATING ACTIVITIES
Net profit before taxation 8,772.06 4,238.96
Depreciation and amortisation 482.86 212.96
Loss/ (profit) on sale of fixed assets (1.93) 2.28
Net gain on sale of current investments (45.56) (3.96)
Gain on unquoted mutual funds (32.39) -
Interest income (221.20) (124.67)
Dividend Income - (3.62)
Provision for standard assets 81.76 158.47
Bad debts/advances written off and provision for non performing assets 227.85 212.46
Provision for doubtful advances 73.36 11.82
Operating profit before working capital changes 9,336.81 4,704.70
Movements in working capital :
Increase/ (decrease) in other current liabilities 1,060.15 315.67
Decrease / (increase) in long-term loans and advances (223.57) (185.81)
Decrease / (increase) in short-term loans and advances (32,841.72) (45,215.57)
Decrease / (increase) in other current assets (5,439.80) (3,183.44)
Decrease / (increase) in other bank balances (net) (1,663.17) (930.34)
Cash generated from /(used in) operations (29,771.30) (44,494.79)
Direct taxes paid (net of refunds) (2,933.68) (1,441.62)
Net cash flow from/ (used in) operating activities (A) (32,704.98) (45,936.41)
B. CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets, including CWIP (1,421.69) (1,096.42)
Proceeds from sale of fixed assets 3.05 2.63
Purchase of Investment (2,850.00) (5,770.00)
Sale/ maturity of Investment 1,148.73 6,777.45
Interest received 188.87 82.35
Dividend received - 3.62
Net cash flow from/ (used in) investing activities (B) (2,931.04) (0.37)
C. CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of equity share capital 122.62 11,124.38
Share issue expenses - (235.64)
Proceeds from Institutional debentures 4,510.66 3,438.00
Repayment of Institutional debentures (3,000.00) -
Proceeds from Public issue of debentures 4,416.19 -
Proceeds from Institutional debentures (short term) 500.00 -
Increase / (decrease) in secured debentures including application money (net) 3,429.06 (1,027.47)
Proceeds from commercial paper 58,205.77 21,810.03
Repayment of commercial paper (65,892.70) (12,452.89)
Proceeds from subordinated debt 500.00 1,000.00
Increase / (decrease) in subordinate bond (net) 1,039.31 566.47
Increase / (decrease) in vehicle loans (net) 1.02 8.39
Increase / (decrease) in deposits including inter-corporate deposits (net) (12.46) (12.92)
Proceed from Term loan from Bank 2,112.00 -
Increase / (decrease) in bank borrowings (net) 27,625.23 24,388.01
Cash Flow Statement for the year ended March 31, 2012
Annual Report 2011-12
86
87
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
March 31, 2012 March 31, 2012
Increase / (decrease) in borrowings from others (net) 3,170.83 450.00
Increase / (decrease) in Other long term liabilities (net) 59.40 11.38
Dividends paid (918.50) (169.86)
Tax on dividend paid (149.35) (28.27)
Net cash flow from/ (used in) in financing activities (C) 35,719.08 48,869.61
Net increase/(decrease) in cash and cash equivalents (A + B + C) 83.06 2,932.83
Cash and cash equivalents at the beginning of the year 4,421.06 1,488.23
Cash and cash equivalents at the end of the year 4,504.12 4,421.06
Components of cash and cash equivalents
Cash on hand 1,055.23 1,188.01
With banks
- on current account# 3,414.45 2,480.92
- on deposit account 30.00 750.00
- on unpaid dividend account * 4.44 2.13
Total cash and cash equivalents (note 15) 4,504.12 4,421.06
# includes amounts in Escrow account towards closed public deposits ` 0.62 (previous year: Rs 11.44), which can be utilized towards
settlement of deposits.
* The Company can utilize the balance only towards the settlement of unpaid dividend liability.
For S. R. BATLIBOI & ASSOCIATES For and on behalf of the Board of Directors
Chartered Accountants
Firm Registration Number: 101049W
per S. Balasubrahmanyam V. P. Nandakumar I. Unnikrishnan B. N. Raveendra Babu
Partner Executive Chairman Managing Director Joint Managing Director
Membership No.: 053315
Place: Kochi M. Anandan A. L. Bindu K. Rajesh Kumar
Date: May 18, 2012 Director Chief Financial Officer Company Secretary
(All amounts are in million of Indian rupees unless otherwise stated)
Schedule to the Balance Sheet of a deposit taking non-banking financial company
(as required in terms of paragraph 13 of Non-Banking Financial (Non- Deposit Accepting or Holding) Companies Prudential Norms (Reserve
Bank) Directions, 2007)
(` in lakhs)
Sl
No
Particulars Amount
Outstanding
Amount
Overdue
Liabilities side :
(1) Loans and advances availed by the non-banking financial
company inclusive of interest accrued thereon but not paid:
(a) Debentures : Secured 152,981.72
: Unsecured 1,492.00
(other than falling within the meaning of public deposits*)
(b) Deferred Credits -
(c) Term Loans 21,239.60
(d) Inter-corporate loans and borrowing -
(e) Commercial Paper 24,677.28
(f) Public Deposits* -
(g) Other Loans:
Subordinate bond 43,596.08 40.60
Bank 657,004.62
Others 38,208.30
* Please see Note 1 below
Assets side :
Amount outstanding
(2) Break-up of Loans and Advances including bills
receivables [other than those included in (4) below] :
(a) Secured 1,052,762.70
(b) Unsecured 7,821.20
(3) Break up of Leased Assets and stock on hire and other
assets counting towards AFC activities
(i) Lease assets including lease rentals under sundry debtors :
(a) (a) Financial lease -
(b) (b) Operating lease -
(ii) Stock on hire including hire charges under sundry debtors: -
(a) Assets on hire -
(b) Repossessed Assets -
(iii) Other loans counting towards AFC activities -
(a) Loans where assets have been repossessed -
(b) Loans other than (a) above -
Annual Report 2011-12
88
89
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
(4) Break-up of Investments :
Current Investments:
1 Quoted :
(i) Shares : (a) Equity -
(b) Preference -
(ii) Debentures and Bonds -
(iii) Units of mutual funds -
(iv) Government Securities -
(v) Others -
2 Unquoted :
(i) Shares : (a) Equity -
(b) Preference -
(ii) Debentures and Bonds
(iii) Units of mutual funds 20,823.90
(iv) Government Securities -
(v) Others -
Long Term investments:
1 Quoted :
(i) Shares : (a) Equity -
(b) Preference -
(ii) Debentures and Bonds -
(iii) Units of mutual funds -
(iv) Government Securities -
(v) Others -
2 Unquoted :
(i) Shares : (a) Equity 0.30
(b) Preference -
(ii) Debentures and Bonds 1,000.00
(iii) Units of mutual funds -
(iv) Government Securities -
(v) Others -
(5) Borrower group-wise classification of assets financed as in (2) and (3) above :
Please see Note 2 below
Category Amount net of provisions
Secured Unsecured Total
1. Related Parties **
(a) Subsidiaries - - -
(b) Companies in the same group - - -
(c) Other related parties - 123.70 123.70
2. Other than related parties 1,052,762.70 7,697.50 1,060,460.20
Total 1,052,762.70 7,821.20 1,060,583.90
** As per Accounting Standard of ICAI (please see Note 3)
(All amounts are in million of Indian rupees unless otherwise stated)
For S. R. BATLIBOI & ASSOCIATES For and on behalf of the Board of Directors
Chartered Accountants
Firm Registration Number: 101049W
per S. Balasubrahmanyam V. P. Nandakumar I. Unnikrishnan B. N. Raveendra Babu
Partner Executive Chairman Managing Director Joint Managing Director
Membership No.: 053315
Place: Kochi M. Anandan A. L. Bindu K. Rajesh Kumar
Date: May 18, 2012 Director Chief Financial Officer Company Secretary
Schedule to the Balance Sheet of a deposit taking non-banking financial company
(as required in terms of paragraph 13 of Non-Banking Financial (Non- Deposit Accepting or Holding) Companies Prudential Norms (Reserve
Bank) Directions, 2007)
Annual Report 2011-12
90
91
(6) Investor group-wise classification of all investments (current and long term) in shares and securities (both quoted and
unquoted):
Please see note 3 below
Category Market Value / Break
up or fair value or
NAV
Book Value
(Net of
Provisions)
1. Related Parties **
(a) Subsidiaries - -
(b) Companies in the same group - -
(c) Other related parties - -
2. Other than related parties 1,000.30 1,000.30
Total 1,000.30 1,000.30
(7) Other Information :
Amount outstanding
(i) Gross Non-Performing Assets
(a) Related parties -
(b) Other than related parties 6,464.90
(ii) Net Non-Performing Assets
(a) Related parties -
(b) Other than related parties 3,503.20
Assets acquired in satisfaction of debt -
Notes:
1. As defined in paragraph 2(1)(xii) of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998.
2. Provisioning norms shall be applicable as prescribed in the Non-Banking Financial (Non Deposit Accepting or Holding) Companies
Prudential Norms (Reserve Bank) Directions, 2007.
3. All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of investments and other assets as
also assets acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/fair value/NAV in
respect of unquoted investments should be disclosed irrespective of whether they are classified as long term or current in (4) above.
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
Corporate Information
GZ\^hiZgZYd[ÒXZ
V/104 Manappuram House
Valapad PO, Thrissur 680567
Kerala
Phone No(s): 0487-3050100, 108
Fax No.: 0487- 2399298
Email: [email protected]
Website: www.manappuram.com
Company Registration No: 09-06623
CIN NO: L65910KL1992PLC006623
RBI Registration No: B.16.00029
Executive Chairman
Mr. V. P. Nandakumar
Managing Director
Mr. I. Unnikrishnan
Joint Managing Director
Mr B. N. Raveendra Babu
Board Members
Adv. V. R. Ramachandran
Mr. A. R. Sankaranarayanan
Mr. P. Manomohanan
Dr. V. M. Manoharan
Mr. M. Anandan
Mr. Shailesh J Mehta
Mr. Jagdish Capoor
Mr. Gautam Saigal
Mr. Sudhindar Krishan Khanna
Company Secretary
Mr. Rajesh Kumar.K
8]^Z[;^cVcX^VaD[ÒXZg
Ms. Bindhu A. L.
Chief General Manager
Mr. N. R. Bahuleyan
Chief Technical Advisor
Mr. K. B. Brahmadathan
(Retd. Chief General Manager BSNL)
Registrar and Share Transfer Agents
M/s SKDC Consultants Limited
Kanapathy Towers
3rd Floor, 1391/A-1, Sathy Road
Ganapathy PO, Coimbator-641 006
Ph 0422 6549995, 0422 2539835
[email protected]
Statutory Auditors
M/s S.R. Batliboi & Associates
Chartered Accountants (Firm Registration Number: 101049W)
TIDEL Park, 6th and 7th Floor - A Block, Module 601, 701-702,
No 4 Rajiv Gandhi Salai, Taramani,
Chennai-600 113, Ph: + 91 44 6654 8100
Share Listed at
Bombay Stock Exchange
Cochin Stock Exchange
Madras Stock Exchange
BSE Scrip Code 531213
ISIN – INE 522 D 01027
Bankers
Andhra bank
United Bank of India
Dena Bank
Indusind Bank
State Bank of India
Axis Bank
State Bank of Travancore
Corporation Bank
UCO Bank
Punjab & Sind Bank
Ratnakar Bank
Union Bank
Vijaya Bank
DBS
HDFC Bank
Dhanlaxmi Bank
Punjab National Bank
State Bank of Mauritius
Oriental Bank of Commerce
ICICI Bank
Lakshmi Vilas Bank
State Bank of Patiala
Kotak Mahindra Bank
Syndicate Bank
Development Credit Bank
Indian Overseas Bank
IDBI Bank
South Indian Bank
Federal bank
Karur Vysya Bank
Catholic Syrian Bank
Karnataka Bank
Yes Bank
Central bank
1
MANAPPURAM FINANCE LIMITED
Regd. Office: V/104, Manappuram House, Valapad P.O, Thrissur – 680 567
Ph: (0487) 2391306, 2391892, Fax No. (0487) 2399298
Email: [email protected], Website – www.manappuram.com
NOTICE
Notice is heieby given that the TWENTIETH Annual ueneial Neeting of the Shaieholueis of
Nanappuiam Finance Limiteu will be helu on Thuisuay ?
nu
August ???? at ????? AN at Anugiaha
Auuitoiium? valapau? Thiissui? ??? ??? to tiansact the following business?
OrdinaryBusiness:
?? To ieceive? consiuei anu auopt the auuiteu Piofit anu Loss account foi the financial yeai enueu
??
st
Naich ???? anu the Balance Sheet as at that uate? the iepoit of the Biiectois anu the
Auuitois theieon?
?? To ueclaie final uiviuenu foi the financial yeai enueu ??st Naich? ?????
?? To appoint a uiiectoi in place of Auv? v?R? Ramachanuian? who ietiies by iotation? anu being
eligible? offeis himself foi ie?appointment?
?? To appoint a uiiectoi in place of Ni? A?R? Sankaianaiayanan? who ietiies by iotation? anu being
eligible? offeis himself foi ie?appointment?
?? To appoint Auuitois anu to fix theii iemuneiation?
To appoint Auuitois to holu office fiom the conclusion of the Annual ueneial Neeting until the
conclusion of the next Annual ueneial Neeting anu to fix theii iemuneiation anu to pass the
following iesolution theieof?
?RES0LvEB TBAT N?s S?R? Batliboi ? Associates? Chaiteieu Accountants? ?Fiim Registiation
Numbei? ??????W? TIBEL Paik? ?th anu ?th Flooi ? A Block ? Nouule ???? ???????? No ? Rajiv
uanuhi salai? Taiamani ? Chennai ??? ???? Inuia 0ffice? ? ?? ?? ???? ????? ietiiing auuitois
be anu aie heieby ieappointeu as the auuitois of the company to holu office fiom the
conclusion of this Annual ueneial Neeting to the conclusion of the next Annual ueneial
Neeting on such iemuneiation as may be ueteimineu by the Boaiu of Biiectois plus
ieimbuisement of out of pocket expenses anu levies such as seivice tax etc?
SpecialBusiness
?? Appointment of Ni? Suuhinuai Kiishan Khanna as a Biiectoi of the Company
To consiuei anu if thought fit to pass with oi without mouification? the following iesolution as an
0iuinaiy Resolution?
?RES0LvEB TBAT Ni? Suuhinuai Kiishan Khanna be anu is heieby appointeu as Biiectoi of the
company whose teim of office shall be liable to teimination by ietiiement of Biiectois by iotation??
2
?? Appointment of Ni? E?A? Kshiisagai as a Biiectoi of the Company
To consiuei anu if thought fit to pass with oi without mouification? the following iesolution as an
0iuinaiy Resolution?
?RES0LvEB TBAT Ni? E?A? Kshiisagai be anu is heieby appointeu as Biiectoi of the company
whose teim of office shall be liable to teimination by ietiiement of Biiectois by iotation??
?? Amenument of Aiticles of Association
?To ieplace the existing Pait II of the Aiticles of Association of the company with the following Pait
II compiising Aiticles fiom ??? to ????
To consiuei anu if thought fit to pass with oi without mouification? the following iesolution as a
SpecialResolution:
“RESOLVED THAT existing Pait II of the Aiticles of Association of the company be ieplaceu with
the following Pait II compiising aiticles fiom ??? to ????
PART II
DEFINITIONS
129. In the event of any conflict between the provisions of Part I and Part II of the Articles, the
provisions of Part II shall apply. Unless the context otherwise requires, or unless otherwise defined or
provided for herein, words or expressions contained in Part II shall have the meanings as provided
below. Other terms may be defined elsewhere in the text of Part II of these Articles and, unless
otherwise indicated, shall have such meaning throughout Part II of these Articles.
“AAIA” shall mean AA Development Capital India Fund I LLC, a company established in the Republic
of Mauritius as a public limited company under the Mauritius Companies Act, 2001 and having its
registered office at 10, Frere Felix De Valois Street, Port Louis, Mauritius, and shall include its
successors and permitted assigns;
“AAIA Additional Shares Offer Terms” shall have the meaning as set out in Article 164;
“AAIA Director” shall have the meaning as set out in Article 139(iv);
“AAIA Offer Shares” shall have the meaning as set out in Article 164;
“AAIA Subscription Shares” shall mean an aggregate of 2,240,000 (Two Million Two Hundred Forty
Thousand only) CCPS issued by way of preferential allotment to AAIA;
“Acceptance Notice” shall have the meaning as set out in Article 161(i);
“Act” shall mean the Companies Act, 1956;
“Additional Shares” shall have the meaning as set out in Article 164;
3
“Additional Shares Offer Period” shall have the meaning as set out in Article 165;
“Affiliate” shall mean with respect to any Person, (i) any Person, which, directly or indirectly, Controls,
is Controlled by or is under common Control with, such Person, and (ii) where such Person is an
individual, shall include Relatives of such Person;
“Alternate Director” shall have the meaning as set out in Article 147;
“Annual General Meeting” or “AGM” shall mean the annual general meeting of the Company
convened and held in accordance with the Act;
“Articles of Association” or “Articles” shall mean the Articles of Association of the Company as
amended from time to time;
“BRIC II Mauritius Trading” shall mean BRIC II Mauritius Trading, a company incorporated and
validly existing under the laws of Mauritius with its principal place of business at c/o Citco (Mauritius)
Limited, 4
th
Floor, Tower A, 1 Cybercity, Ebene, Mauritius, and registered as sub-account with the
Securities and Exchange Board of India bearing registration number 20110205 (and unless repugnant to
the context or meaning thereof, shall be deemed to mean and include its successors, legal representatives
and permitted assigns);
“Baring India Private Equity Fund II Limited” shall mean Baring India Private Equity Fund II
Limited, a company incorporated and validly existing under the laws of Mauritius with its principal
place of business at C/o Multiconsult Limited, Rogers House, 5, President John Kennedy Street, Port
Louis, Mauritius, and registered as a sub-account with the Securities and Exchange Board of India
bearing registration number 20110969 (and unless repugnant to the context or meaning thereof, shall be
deemed to mean and include its successors, legal representatives and permitted assigns);
“Baring India Private Equity Fund III Listed Investments Limited” shall mean Baring India Private
Equity Fund III Listed Investments Limited, a company incorporated and validly existing under the laws
of Mauritius with its principal place of business at C/o Multiconsult Limited, Rogers House, 5, President
John Kennedy Street, Port Louis, Mauritius, and registered as an FII with the Securities and Exchange
Board of India bearing registration number IN-MU-FD-2055-08 (and unless repugnant to the context or
meaning thereof, shall be deemed to mean and include its successors, legal representatives and permitted
assigns);
“Baring Investors” shall mean Baring India Private Equity Fund II Limited, Baring India Private
Equity Fund III Listed Investments Limited and BRIC II Mauritius Trading, collectively.
“Beaver Investment Holdings” shall mean Beaver Holdings Limited, a company incorporated and
validly existing under the laws of Mauritius with its principal place of business at IFS Court,
TwentyEight, Cybercity, Ebene, Mauritius, and registered as a sub-account with the Securities and
Exchange Board of India bearing registration number 20090030 (and unless repugnant to the context or
meaning thereof, shall be deemed to mean and include its successors, legal representatives and permitted
assigns);
“Board of Directors” or “Board” shall mean the board of directors of the Company in office at
applicable times and as nominated and appointed in accordance with the terms of these Articles;
“Business Day” shall mean a day on which the scheduled commercial banks are open for business in
4
Mumbai and Kochi, India;
“CCPS” shall mean the 0.05% compulsorily convertible preference shares of Rs.100 (Rupees One
Hundred only) each in the Share Capital issued to the Investors issued to the Investors as fully paid up
preference shares, and having the rights and privileges attached to them as agreed in writing between the
Company, the promoters and each Investor and these Articles of Association;
“Closing Date” shall November 5, 2008;
“Contract” shall mean, with respect to a Person, any agreement, contract, subcontract, lease,
understanding, instrument, note, warranty, insurance policy, benefit plan or legally binding commitment
or undertaking of any nature, whether written or oral, entered into by such Person;
“Control” (including with correlative meaning, the terms “Controlled by” and “under common
Control with”) shall mean the power and ability to direct the management and policies of the controlled
enterprise through ownership of voting shares of the controlled enterprise or the power to appoint a
majority of the members on the board of directors of such controlled enterprise or by Contract or
otherwise. Without prejudice to the generality of the above, in the context of the Subsequent Investors,
the direct or indirect ownership of or the power to direct the vote of 50% or more of the voting share
capital of a Person shall also be deemed to constitute Control of that Person;
“Deed of Adherence” shall mean the deed of adherence in the form agreed to between the Company,
the Promoters and each of AAIA, Hudson and GHIOF separately;
“Defaulting Party” shall mean a person who commits an Event of Default;
“Direct Competitor” shall mean any Person who is directly engaged as its principal activity in the
business of providing gold loans (such that these gold loans and income arising therefrom is not less
than 50% of its total assets and total income respectively) and has a minimum asset size of INR
2,500,00,00,000 (Indian Rupees Two Thousand Five Hundred Crores only);
“Director” shall mean a director of the Company;
“ESOP(s)” shall mean any employee stock option plans or employee stock purchase plans existing or
which may be approved or adopted in future by the Company;
“Employee(s)” shall mean Persons in the employment of the Company and/or its Affiliates, as the case
may be;
“Encumbrance” shall mean any mortgage, pledge, equitable interest, assignment by way of security,
conditional sales contract, hypothecation, claim, encumbrance, title defect, title retention agreement,
voting trust agreement, interest, option, lien, charge, commitment, restriction or limitation of any nature
whatsoever, including restriction on use, voting rights, transfer, receipt of income or exercise of any
other attribute of ownership, right of set-off, any arrangement (for the purpose of, or which has the effect
of, granting security), or any agreement, whether conditional or otherwise, to create any of the same;
“Equity Shares” shall mean the equity shares of the Company;
“Event of Default” shall mean an event of default as agreed between the Company, the Promoter Group
and each of AAIA, Hudson and GHIOF;
5
“Execution Date” shall mean 14
th
March, 2012.
“Extra Ordinary General Meeting” or “EGM” shall mean the extra ordinary meeting of the Company
convened and held in accordance with the Act;
“Financial Year” shall mean the period commencing from April 1 each year and ending on March 31
the next year, or such other period as may be determined by the Board of Directors of the Company to
be the financial year for the Company;
“Fully Diluted Basis” shall mean on the basis of the deemed conversion of all outstanding convertible
Preference Shares of the Company including the CCPS in accordance with these Articles of Association,
the exercise of all convertible notes, options, warrants, and any other convertible instruments;
“Further Securities” shall have the meaning as set out in Article 172(iv);
“General Meetings” shall mean either an EGM or an AGM of the Shareholders of the Company;
“GHIOF” shall mean GHIOF Mauritius, a company established in the Republic of Mauritius as a
private limited company under the Mauritius Companies Act, 2001 and having its registered office at
C/o DTOS Limited, 4th Floor, IBL House, Caudan, Port Louis, Mauritius, and shall include its
successors and permitted assigns;
“GHIOF Director” shall have the meaning set out in Article 139(iv);
“GHIOF Subscription Shares” shall mean an aggregate of 420,000 (Four Hundred Twenty Thousand
only) CCPS issued by way of preferential allotment to GHIOF;
“Governmental Authority” shall mean the Government of India or of any state or Union Territory in
India, or any central, state or local governmental, semi-governmental, judicial, quasi-judicial, regulatory
or administrative authority, branch, agency, any statutory body or commission or any court, tribunal,
arbitral or judicial body, or any department thereof, or any Person (whether autonomous or not) who is
charged with the administration of Law;
“Hudson” shall mean Hudson Equity Holdings Limited, a private limited company established in the
Republic of Mauritius, registered under the Mauritius Companies Act, 2001, and having its registered
office at 7
th
Floor, Happy World House, Sir William Newton St, Port Louis, Mauritius, and shall include
its successors and permitted assigns;
“Hudson Additional Shares Offer Terms” shall have the meaning as set out in Article 164;
“Hudson Director” shall have the meaning set out in Article 139(iv);
“Hudson Offer Shares” shall have the meaning as set out in Article 164;
“Hudson Subscription Shares” shall mean an aggregate of 1,146,250 (One Million One Hundred Forty
Six Thousand Two Hundred Fifty only) CCPS issued by way of preferential allotment to Hudson;
“INR” or “Rupees” or “Rs.” shall mean Indian rupees, being the lawful currency of India;
6
“Investors” shall mean collectively AAIA, Hudson and GHIOF and the respective Investor Affiliates
that may acquire Shares from time to time and who may execute a Deed of Adherence, and “Investor”
shall mean any of them individually;
“Investor Acceptance Notice” shall have the meaning as set out in Article Error! Reference source
not found.;
“Investor Affiliate(s)” in relation to AAIA shall include, (a) any Affiliates of AAIA; (b) funds and/or
foreign institutional investor entities advised by AAIA or its Affiliates; (c) entities which are wholly
owned, controlled or managed, either directly or indirectly, by the funds advised by AAIA, or any of its
Affiliates, excluding companies that are in direct competition with the Company in India; and (d) any
fund or entity in which AAIA is a general or limited partner or any Affiliate or associate of such fund or
other entity;
“Investor Affiliate(s)” in relation to Hudson shall include, (a) any Affiliates of Hudson; (b) funds
and/or foreign institutional investor entities advised by Hudson or its Affiliates; (c) entities which are
wholly owned, controlled or managed, either directly or indirectly, by the funds advised by Hudson, or
any of its Affiliates, excluding companies that are in direct competition with the Company in India; and
(d) any fund or entity in which Hudson is a general or limited partner or any Affiliate or associate of
such fund or other entity;
“Investor Affiliate(s)” in relation to GHIOF shall include, (a) any Affiliates of GHIOF; (b) funds and/or
foreign institutional investor entities advised by GHIOF or its Affiliates; (c) entities which are wholly
owned, controlled or managed, either directly or indirectly, by the funds advised by GHIOF, or any of
its Affiliates, excluding companies that are in direct competition with the Company in India; and (d) any
fund or entity in which GHIOF is a general or limited partner or any Affiliate or associate of such fund
or other entity;
“Investor Director” shall mean collectively the AAIA Director, the Hudson Director and the GHIOF
Director;
“Investor Observer” shall mean collectively the observer appointed by each of Hudson on the Board of
Directors of the Company
“Investor Offered Shares” shall have the meaning as set out in Article 164(i)
“Investor Rejection Notice” shall have the meaning as set out in Article 164 (v);
“Investor Trigger Notice” shall have the meaning as set out in Article 164 (v)
“Key Management Personnel” shall mean and include persons that head the finance, compliance, risk
and human resources departments of the Company at the relevant time (by whatever name called) or
above, the heads of department of any new line of business that the Company may commence and the
managing director of the Company;
“Law” shall mean any statute, law, regulation, ordinance, rule, judgment, notification, rule of common
law, order, decree, bye-law, government approval, directive, guideline, requirement or other
governmental restriction, or any similar form of decision of, or determination by, or any interpretation,
policy or administration, having the force of law of any of the foregoing, by any Governmental
Authority or Stock Exchange having jurisdiction over the matter in question;
7
“Lien” shall mean any mortgage, pledge, security interest, charge, lien, option, pre-emptive right,
adverse claim, title retention agreement or other encumbrance of any kind, or a Contract to give or
refrain from giving any of the foregoing, including any restriction imposed under applicable Law or
Contract on the Transferability of the Shares;
“MAFIT” shall mean Manappuram Finance (Tamil Nadu) Limited, a Manappuram Group Company
having its registered office at 1st Floor, Vijay Centre, 65 Oppanakkara Street, Coimbatore 641 012,
Tamil Nadu, India;
“MIBPL” shall mean Manappuram Insurance Brokers Private Limited, a Manappuram Group company,
having its registered office at “Manappuram House”, Valapad P.O., Thrissur 680 567, Kerala, India;
“Manappuram Group” shall mean and include the Company and its Affiliates, including the entities
listed below and any other entity as may become a Subsidiary or Affiliate of the Company after
November
1. Manappuram General Finance and Leasing Limited
2. Manappuram Insurance Brokers Private Limited
3. Manappurm Benefit Fund Limited
4. Manappuram Finance (Tamil Nadu) Limited
5. Manappuram Chits (India) Limited
6. Manappuram Comptech and Consultants Private Limited
7. Manappuram Health Care Limited
8. Manappuram Asset Finance Limited
“Memorandum of Association” or “Memorandum” shall mean the Memorandum of Association of
the Company as amended from time to time;
“Nambe Investment Holdings” shall mean Nambe Investment Holdings, a company incorporated and
validly existing under the laws of Mauritius with its principal place of business at is 608, St.James
Court, St.Denis Street, Port Louis, Mauritius, and registered as a sub-account with the Securities and
Exchange Board of India bearing registration number 20081302 (and unless repugnant to the context or
meaning thereof, shall be deemed to mean and include its successors, legal representatives and permitted
assigns);
“Offered Shares” shall have the meaning as set out in Article 161(i);
“Original Director” shall have the meaning as set out in Article 147;
“Person” shall mean any natural person, limited or unlimited liability company, corporation, partnership
(whether limited or unlimited), proprietorship, Hindu undivided family, trust, union, association,
government or any agency or political subdivision thereof or any other entity that may be treated as a
person under applicable Law;
“Persons Acting in Concert” or “PACs” shall mean Vazhappully Padmanabhan Nandakumar,
Sushama Nandakumar, Shelly Ekalavian, Geetha Ravy, Jyothy Prasannan, Geetha Vazhappully
Padmanabhan, Dr. Prasannan P.D, Nandakumar V.P., Jyothi, Jyothi Prasannan, Blangat Narayanan
Raveendra Babu acting in concert with the Promoters and also includes Persons who may commence
acting in concert with the Promoters after November 5, 2008 within the meaning of “persons acting in
concert” as defined in the Takeover Code, provided that any such Person who ceases to be acting in
8
concert with the Promoters at any date subsequent to November 5, 2008 shall not cease to be a PAC and
shall continue to be so until such PAC ceases to be a shareholder in the Company in accordance with
these Articles;
“Preference Shares” shall mean the preference shares in the Company, and shall include the CCPS;
“Prohibited Promoter Transfer” shall have the meaning as set out in Article 162(vii);
“Promoters” shall mean Vazhappully Padmanabhan Nandakumar, Sushama Nandakumar, Shelly
Ekalavian, Geetha Ravy, Jyothy Prasannan, Geetha Vazhappully Padmanabhan, Dr. Prasannan P.D,
Nandakumar V.P., Nandakumar V.P., Jyothi, Jyothi Prasannan, Blanghat Narayanan Raveendra Babu,
Ekalavyan P.K., Rajalakshmi, Ravi K.G., Sugathan P.K. and Prasanna B.N., the Persons Acting in
Concert, the Relatives and Affiliates of each such Person and also includes such other Persons Acting in
Concert who may execute a Deed of Adherence. Notwithstanding the preceding sentence, in the context
of Subsequent Investors under these Articles, the term “Promoters” shall mean Mr. V.P. Nandakumar
and Ms. Sushama Nandakumar collectively, and the term “Promoter” shall mean either one of them.
“Promoters’ Affiliate” shall mean any Affiliate of any of the Promoters, or any Person in which at least
10% (ten percent) of the shareholding, voting rights, economic interest or the Control, in each case
directly or indirectly, is held by any of the Promoters individually or collectively, and shall include the
Promoters Group Companies;
“Promoters Group Companies” shall mean MIBPL, Manappuram Benefit Fund Limited, Manappuram
Finance (Tamil Nadu) Limited, Manappuram Comptech and Consultants Private Limited, Manappuram
Chits India Limited, Manappuram Health Care Limited and Manappuram Asset Finance Limited;
“Promoters Offer Notice” shall have the meaning as set out in Article162 (i);
“Promoters Offer Price” shall have the meaning as set out in Article Article162 (i);
“Promoters Right of First Offer” shall have the meaning as set out in Article 164(i);
“Promoter Sale Shares” shall have the meaning as set out in Article 160(ii);
“Promoter Transfer Notice” shall have the meaning as set out in Article 162(i);
“Promoter Transfer Shares” shall have the meaning as set out in Article 162(i);
“Promoter Transferor” shall have the meaning as set out in Article 160(ii);
“Rejection Notice” shall have the meaning as set out in Article 161(iv);
“Related Party Transactions” shall mean any Contract, arrangement or transaction between or
amongst the Company and any of the following: (i) its Subsidiaries and/or its Affiliates, (ii) any other
entity forming part of Manappuram Group or any of the respective Affiliates of such entities, (iii) any
Promoters’ Affiliates, (iv) any of the Promoters, (v) any Director, (vi) any Employee (other than in
respect of employment contracts with the employees and arrangements and transactions contemplated
thereby), (vii) any other shareholder of the Company or its Subsidiaries or Affiliates who is an Affiliate
of the Promoters, or where (a) such shares are held as nominees of any of the Promoters, or the
beneficial ownership of such Shares is a Promoter, or (b) a Promoter can direct the voting or exercise of
9
other rights in respect of such Shares;
“Related Party” shall have the meaning ascribed to such term in Accounting Standard -18 issued by the
Institute of Chartered Accountants of India;
“Relatives” shall have the meaning as set out in the Act, and shall also include (i) any sibling of such
Relative and such sibling’s children; and (ii) such Persons as included under Accounting Standard 18
issued by the Institute of Chartered Accountants of India;
“Right of First Sale” shall have the meaning as set out in Article 160(iii);
“Sale Shares Notice” shall have the meaning as set out in Article 160(ii);
“Secondary Offering” shall have the meaning as set out in Article 170;
“Sequoia Investors” shall mean Nambe Investment Holdings and Beaver Investment Holdings.
“Shares” shall mean Equity Shares and Preference Shares;
“Share Capital” shall mean the total issued and paid up share capital of the Company on a Fully
Diluted Basis;
“Share Sale Notice” shall have the meaning as set out in Article 170;
“Shareholders” shall mean and refer collectively to the Promoters and the Investor and “Shareholder”
shall refer to any one of them, as the context may require;
“Stock Exchange(s)” shall mean any recognized stock exchange in India or overseas;
“Subsequent Investors” shall mean the Baring Investors and the Sequoia Investors along with their
respective Subsequent Investors Affiliates.
“Subsequent Investors Affilate(s)” in relation to Baring Investors shall include, (a) any Affiliates of
any of the Baring Investors; (b) funds and/or foreign institutional investor entities advised by any of the
Baring Investors or their Affiliates; (c) entities which are advisors of any of the Baring Investors,
excluding companies that are Direct Competitors of the Company in India; and (d) any fund or entity in
which any of the Baring Investors is a general or limited partner or any Affiliate or associate of such
fund or other entity. Without prejudice to the generality of the foregoing, it is clarified that Baring India
Private Equity Fund II Limited, Baring India Private Equity Fund III Listed Investments Limited and
BRIC II Mauritius Trading shall be considered as Subsequent Investor Affiliates in relation to Baring
Investors.
“Subsequent Investors Affilate(s)” in relation to Sequoia Investors shall include, (a) any Affiliates of
any of the Sequoia Investors; (b) funds and/or foreign institutional investor entities advised by any of the
Sequoia Investors or their Affiliates; (c) entities which are advisors of any of the Sequoia Investors,
excluding companies that are Direct Competitors of the Company in India; and (d) any fund or entity in
which any of the Sequoia Investors is a general or limited partner or any Affiliate or associate of such
fund or other entity. Without prejudice to the generality of the foregoing, it is clarified that Nambe
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Investment Holdings and Beaver Investment Holdings shall be considered as Subsequent Investors
Affiliates in relation to Sequoia Investors.
“Subsidiaries” shall mean the direct and indirect subsidiaries of the Company, and shall include
companies that may become direct or indirect subsidiaries of the Company after November 5, 2008;
“Tag Along Notice” shall have the meaning as set out in Article 162(ii);
“Tag Along Period” shall have the meaning as set out in Article 162(ii);
“Tag Along Rights” shall have the meaning as set out in Article 162(ii);
“Tag Along Shares” shall have the meaning as set out in Article 162(ii);
“Takeover Code” shall mean the Securities and Exchange Board of India (Substantial Acquisition of
Shares and Takeovers) Regulations, 1997;
“Third Party Transferee” shall have the meaning as set out in Article 160(ii);
“Transfer” (including with correlative meaning, the terms “Transferred By” and “Transferability”)
shall mean to transfer, sell, assign, mortgage, pledge, charge, hypothecate, create a security interest in or
Lien on, place in trust (voting or otherwise), exchange, gift or transfer by operation of Law or in any
other way subject to any encumbrance or dispose of, whether or not voluntarily, whether directly or
indirectly (pursuant to the transfer of an economic or other interest, the creation of a derivative security
or otherwise); and
“Trigger Notice” shall have the meaning as set out in Article 161(i).
TERMS OF THE CCPS
130. Articles 130 to Article 174 shall be subject at all times to the relevant provisions of the Indian
Companies Act, 1956 and rules there under, the Securities and Exchange Board of India (Disclosure
And Investor Protection) Guidelines, 2000 and other applicable Laws and regulations.
131. Nature of Instrument
The CCPS shall be compulsorily convertible preference shares in the Share Capital of the Company.
132. Face Value
The CCPS shall have a face value of Rs. 100 (Rupees One Hundred only) each.
133. Dividend
(i) The CCPS shall be entitled to receive a dividend per CCPS in preference to any dividend on the
Equity Shares or any other class of Shares of the Company, present or future;
(ii) The rate of dividend payable on each CCPS shall be 0.05% on the face value of the CCPS;
(iii) The dividend payable on the CCPS shall be cumulative and any dividend which has accumulated
but not paid shall be paid on or before conversion of the CCPS into equity shares.
134. Conversion for AAIA
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(i) The AAIA Subscription Shares will convert into 1,344,337 (One Million Three Hundred Forty
Four Thousand Three Hundred Thirty Seven) Equity Shares on September 30, 2009 or at the option of
AAIA, at any time before September 30, 2009, without any further payment being required to be made
by AAIA for such conversion.
(ii) The Hudson Subscription Shares will convert into 687,923 (Six Hundred and Eighty Seven
Thousand Nine Hundred Twenty Three only) Equity Shares on September 30, 2009 or at the option of
Hudson, at any time before September 30, 2009, without any further payment being required to be made
by Hudson for such conversion.
(iii) The GHIOF Subscription Shares will convert into 252,063 (Two Hundred Fifty Two Thousand
Sixty Three only) Equity Shares on September 30, 2009 or at the option of GHIOF, at any time before
September 30, 2009, without any further payment being required to be made by GHIOF for such
conversion.
(iv) Subject to Article 135, the issue price per Equity Share shall be Rs. 166.62 (Rupees One
Hundred Sixty Six and Paise Sixty Two only).
Provided that the issue price per share shall be subject to applicable Law, including the pricing
requirements under the Securities and Exchange Board of India (Disclosure and Investor Protection)
Guidelines, 2000.
135. Antidilution Rights
135.1 Adjustments for Diluting Issues: Subject to applicable Law, till the CCPS held by the Investors
are converted into equity shares in full, the Investors shall be entitled to antidilution rights as set forth
below:
(i) For the purposes of this Article 135, “Additional Equity Shares” means all Equity Shares
issued (or, pursuant to Article 135.2, deemed to be issued) by the Company, other than issuances or
deemed issuances of:
(a) Equity Shares and convertible securities issued pursuant to the ESOP of the Company; and
(b) Equity Shares issued or issuable upon conversion of the CCPS;
135.2 Deemed Issue of Additional Equity Shares
In the event the Company at any time shall issue any convertible securities or shall fix a record date for
the determination of holders of any class of securities entitled to receive any convertible securities, then
the maximum number of equity shares (as set forth in the instrument relating thereto without regard to
any provisions contained therein for a subsequent adjustment of such number) issuable upon the
conversion or exchange of such convertible securities or, in the case of options for convertible securities,
the exercise of such options and the conversion or exchange of the underlying securities, shall be
deemed to have been issued as of the time of such issue or, in case such a record date shall have been
fixed, as of the close of business on such record date, provided that in any such case in which shares are
deemed to be issued:
(i) no further adjustment shall be made upon the subsequent issue of convertible securities or equity
12
shares in connection with the exercise of such options or conversion or exchange of such convertible
securities;
(ii) if the terms of such options or convertible securities provide, with the passage of time or
otherwise, for any change in the consideration payable to the Company or in the number of equity shares
issuable upon the exercise, conversion or exchange thereof (other than a change pursuant to the anti-
dilution provisions of such options or convertible securities such as this Article 135 or pursuant to
recapitalization provisions of such options or Convertible Securities), the adjustment and any subsequent
adjustments based thereon shall be recomputed to reflect such change as if such change had been in
effect as of the original issue thereof (or upon the occurrence of the record date with respect thereto);
(iii) upon the expiration of any such options or any rights of conversion or exchange under such
convertible securities which shall not have been exercised, the adjustment computed upon the original
issue thereof (or upon the occurrence of a record date with respect thereto) and any subsequent
adjustments based thereon shall, upon such expiration, be recomputed as if:
(a) in the case of convertible securities or options for equity shares, the only Additional Equity
Shares issued were the equity shares, if any, actually issued upon the exercise of such options or the
conversion or exchange of such Convertible Securities and the consideration received therefor was the
consideration actually received by the Company for the issue of such exercised options plus the
consideration actually received by the Company upon such exercise or for the issue of all such
convertible securities which were actually converted or exchanged, plus the additional consideration, if
any, actually received by the Company upon such conversion or exchange, and
(b) in the case of options for convertible securities, only the convertible securities, if any, actually
issued upon the exercise thereof were issued at the time of issue of such options, and the consideration
received by the Company for the Additional Equity Shares deemed to have been then issued was the
consideration actually received by the Company for the issue of such exercised options, plus the
consideration deemed to have been received by the Company (determined pursuant to this Clause 4
upon the issue of the convertible securities with respect to which such options were actually exercised);
and
(c) if such record date shall have been fixed and such options or convertible securities are not issued
on the date fixed therefor, the adjustment previously made which became effective on such record date
shall be cancelled as of the close of business on such record date, and thereafter shall be adjusted
pursuant to this Article 135 as of the actual date of their issuance.
135.3 Adjustment Upon Issuance of Additional Equity Shares
If the Company shall issue, on and after the date hereof, any Additional Equity Shares without
consideration or for a consideration per share less than the issue price per share in Article 134(iv), shall
forthwith (except as otherwise provided in this sub Article 135.3 be adjusted to a price which shall be
the lowest price per share for any of the Additional Equity Shares, subject to applicable Law.
(i) Determination of Consideration. For purposes of this Article 135.4, the consideration received
by the Company for the issue (or deemed issue) of any Additional Equity Shares shall be computed as
follows:
(ii) Cash and Property. Such consideration shall:
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(a) insofar as it consists of cash, be computed at the aggregate amount of cash received by the
Company before deducting any reasonable discounts, commissions or other expenses allowed, paid or
incurred by the Company for any underwriting or otherwise in connection with such issuance;
(b) insofar as it consists of property other than cash, be computed at the fair market value thereof at
the time of such issue, as determined in good faith by the Board; and
(c) in the event Additional Equity Shares are issued together with other shares or securities or other
Assets of the Company for consideration which covers both, be the proportion of such consideration so
received, computed as provided in Article 135, as reasonably determined in good faith by the Board.
(d) Convertible Securities. The consideration per share received by the Company for Additional
Equity Shares deemed to have been issued shall be determined by dividing
(A)A the total amount, if any, received or receivable by the Company as consideration for the issue of
such options or Convertible Securities, plus the minimum aggregate amount of additional consideration
(as set forth in the instruments relating thereto, without regard to any provision contained therein for a
subsequent adjustment of such consideration) payable to the Company upon the exercise of such options
or the conversion or exchange of such convertible securities, or in the case of options for convertible
securities, the exercise of such options for convertible securities and the conversion or exchange of such
convertible securities by
(A)B the maximum number of equity shares (as set forth in the instruments relating thereto, without
regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such options or the conversion or exchange of such convertible securities.
135.4 Adjustments for Reclassification, Exchange and Substitution
(i) If the equity shares shall be changed into the same or a different number of shares of any other
class or classes of shares, whether by capital reorganization, reclassification or otherwise, or if there is a
bonus issue, split, or consolidation of shares, then, in any such event, the Investors shall be entitled to
such number and class of shares that would place the Investor in the same position relative to all other
shareholders as the Investors were immediately before such reorganization or reclassification.
(ii) The Company shall not, through any amendment of its Articles or Memorandum or any
reorganization, transfer of Assets, merger, dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company but will at all times in good faith assist in the carrying out of all
the provisions of this Article 135, and in the taking of all such action as may be necessary or appropriate
in order to protect the rights of the Investors against impairment.
(iii) Upon the occurrence of each adjustment or readjustment pursuant to this Article 135.4, the
Company at its expense shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and furnish to the Investors a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based along with stock
certificates evidencing such adjustment. The Company shall, upon the written request at any time of the
Investors, furnish or cause to be furnished to such Investors a like certificate setting forth such
adjustments and readjustments and the number of equity shares and the amount, if any, of other property
which at the time would be received upon the adjustment.
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(iv) The Company and all shareholders shall take all reasonable actions to at all times reserve and
keep available out of its authorized but unissued equity shares solely for the purpose of effecting an
adjustment pursuant to this Article 135.4, such number of its equity shares as shall from time to time be
sufficient to effect an adjustment; and if at any time the number of authorized but unissued Equity
Shares shall not be sufficient to effect an adjustment, the Company and all shareholders shall take such
corporate action as may be necessary to increase its authorized but unissued equity shares to such
number of equity shares as shall be sufficient for such purpose.
136. Preference on the occurrence of a Liquidation Event prior to conversion of CCPS
(i) Subject to applicable Law, upon the occurrence of a Liquidation Event, the Company shall
distribute the proceeds of such Liquidation Event to its Shareholders, provided that the Investors shall be
entitled to receive, together with and at the same time as the other holders of the CCPS, a preferential
payment in accordance with this Article 136 from the Assets of the Company or cash or other property,
for the CCPS held by it.
(ii) In the event of a Liquidation Event occurring at any time after the Closing Date, to the extent of
funds legally available therefore and subject to applicable Law, the Investors shall receive an amount in
accordance with this Section, which is the higher of:
(a) The amount which would be distributed to the Investors, as if the CCPS held by the Investors
have been converted into Equity Shares in accordance with these Articles, if all amounts available to the
Company were distributed among all the Shareholders of the Company (including, the Investor) in
proportion to their shareholding in the Company on a fully diluted basis.
Or
(b) The Investor Subscription Consideration paid by each of the Investors, together with any accrued
but unpaid dividend.
(iii) The Promoter Group hereby covenants that each of them shall hold all amounts received by them
(pursuant to a Liquidation Event) in their capacity as Shareholders, in trust for and on behalf of each of
the Investors and shall immediately, but in any case not later than 15 (fifteen) days from the receipt of
such amount, transfer all proceeds received by them (such that each of the Investors receives the amount
equivalent to the amount provided in Article 136(ii) from the Company in the event of a Liquidation
Event to each of the Investors so as to give effect to the provisions of this Clause.
137. Voting Rights
Subject to provisions of these Articles, the holders of the CCPS shall be entitled to such voting rights as
holders of preference shares under the Companies Act.
138. Other Rights
THE HOLDERS OF THE CCPS AND THE SUBSEQUENT INVESTORS SHALL HAVE OTHER RIGHTS THAT ARE
SET OUT IN THESE ARTICLES AND UNDER LAW.
MANAGEMENT
139. Board Composition of the Company
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(i) The property, business and affairs of the Company shall be managed under the direction of the Board.
The Board may exercise all such powers of the Company and do all such lawful acts and things as are permitted
under applicable Law and the Memorandum of Association and Articles of Association.
(ii) Till such time that either of the Subsequent Investors, collectively with their respective Subsequent
Investors Affiliates, hold atleast 1% (One percent) Shares, the following matters shall specifically require the
prior approval of the Board:
a. transactions, agreements or arrangements between the Company and any of its Related
Parties (which for the sake of clarity shall include the Promoters and their respective
Affiliates and directors), singly or cumulatively in a financial year exceeding a value of
Rs. 1,00,00,000/- (Rupees One Crore only);
b. change in statutory auditor or internal auditors of the Company;
c. change in compliance officer or a designated officer of the Company, designated as the
“officer who is in default” for the purpose of the applicable Laws;
d. termination, or modification of the terms, of existing employment / services of the key
personnel of the Company, including Mr. I Unnikrishnan and Mr. B. N. Raveendra Babu;
(iii) With effect from the Closing Date, the Board of Directors of the Company will consist of not
more than 12 (twelve) Directors or such other number as may be mutually agreed to in writing between
the Parties, including the Investor Director.
(iv) From and with effect from the Closing Date, as long as each of AAIA and Hudson hold at least
1% (one per cent) (six percent) of the Share Capital, each of AAIA and Hudson shall have the right to
appoint 1 (one) non executive Director (the “AAIA Director” and “Hudson Director” respectively) on
the Board of the Company.
(v) From and with effect from the Closing Date, as long as GHIOF holds any Shares, GHIOF shall
have the right to appoint 1 (one) non executive Director (“GHIOF Director”) on the Board of the
Company.
(vi) Each of the Subsequent Investors shall, till such time as they collectively with their respective
Subsequent Investors Affiliates, hold at least 1 % (One percent) of the Share Capital, have the right to
nominate their one representative on the Board (“Subsequent Investors Nominee Director”). Upon
exercise of their respective right to nominate the Subsequent Investors Nominee Director on the Board,
the Company shall cause the appointment of the respective Subsequent Investors Nominee Director on
the Board. The Subsequent Investors Nominee Director shall not be a person who is also a director or
observer on the board of directors of Muthoot Finance Limited or any other Direct Competitor.
(vii) The Investor Director, Subsequent Investors Nominee Directors shall be non-executive
Directors, and shall not be responsible for the day to day affairs of the Company, or in control of the
management. In the event of the resignation, retirement or vacation of office of any of the Investor
Director or the Subsequent Investors Nominee Directors, each of the Investors and the Subsequent
Investors Nominee Directors (as the case may be) shall be entitled to appoint another Director in such
place.
(viii) The Investor Director shall in no event be categorized as an ‘officer in default’ under any Law,
and subject to applicable Law, shall not be liable for acts of the Company committed without his
knowledge, or in respect of which he exercised due diligenceThe Subsequent Investors Nominee
16
Directors shall not be liable for any failure by the Company to comply with applicable Laws, and shall
not be named as an “officer in default” (under any Law), or an “occupier” (of the Company’s premises)
or “a person in charge of and responsible to the Company for the conduct of business of the Company”
under applicable Law.
(ix) The Company shall, at all times (a) nominate a director(s) or any Person (other than the
Subsequent Investors Nominee Directors) as a person in charge who shall be responsible for ensuring
compliance with Law; and (b) appoint a compliance officer(s) or a designated officer(s) of the Company
who shall be the “officer in default” or “occupier” or “person in charge” for the purposes of applicable
Laws.
(x) In the event that any notice or proceedings have been filed against the Subsequent Investors
Nominee Directors in their capacity as a director or officer of the Company, the Company shall, and the
Promoters shall procure that the Company shall, take all necessary steps to, (a) ensure that the name of
the Subsequent Investors Nominee Directors, are excluded; and the charges / proceedings against such
Subsequent Investors Nominee Directors are withdrawn; (b) defend the Subsequent Investors Nominee
Directors, against such proceedings; and (c) pay all reasonable costs, damages, fines that may be
incurred/levied against the Subsequent Investors Nominee Directors.
(xi) The Chairman of the Board shall not have a casting vote.
(xii) The Company shall indemnify its Directors to the maximum extent permitted by applicable Law
and shall obtain Directors and Officers liability insurance to the satisfaction of each of the Investors and
the Subsequent Investors.
(xiii) In the event the Company incorporates any Subsidiary in the future, each of the Investors would
have the right to appoint a Director on each such subsidiary and the provisions of Part II of the Articles
in relation to management of the Company, would apply to the board of directors of each such
Subsidiary.
140. Committees
(i) Subject to applicable Law and as long as each of AAIA and Hudson holds at least 1% (one
percent) of the Share Capital, each of AAIA and Hudson has the right to appoint a member on all
the committees established by the Board of Directors of the Company.
(ii) As long as each of the Subsequent Investors along with their respective Subsequent Investors
Affiliates hold at least 1% (One percent) Shares, each of the Subsequent Investors Nominee
Directors shall be appointed as a member of the audit committee, the corporate governance
committee, the Interim Management Supervisory and Review Committee, and the remuneration
committee of the Board (collectively referred to as the “Committees”).
(iii) Each of the Committees shall act under the supervision of, and in accordance with the powers
and authority delegated to it by the Board, and in accordance with applicable Law.
(iv) As long as each of the Subsequent Investors along with their respective Subsequent Investors
Affiliate hold at least 1% (One percent) Shares, the Company shall, constitute and maintain such
committees at all times, by whatever name called.
141. All provisions of Part II of the Articles in relation to Board of Directors shall apply mutatis
mutandis to committees of the Board of Directors.
17
142. ESOP
(i) The Promoters and the Company hereby undertake that the ESOP shall be amended
appropriately, so as to enlarge its size and enhance its scope in order to use the same as an incentive to
reward and retain key personnel within the Company subject however to compliance with applicable
Law.
(ii) The details of the proposed changes to the ESOP shall be determined by the Board of Directors
after Closing.
143. Exercise of Rights
The Promoters and the Investors undertake to take such actions as may be necessary (including
exercising their votes at General Meetings, meeting of the Board of Directors or any committees
thereof), to give effect to the provisions of, and to comply with their obligations under these Articles.
144. Removal/Resignation of Directors
The Promoters, the Investors and the Subsequent Investors may require the removal of any Director
nominated by them to the Company and nominate another individual as a Director in his/her place, and
the other Shareholders shall exercise their rights to ensure the appointment of the individual nominated
as aforesaid, provided, that the Investors, the Subsequent Investors and the Promoters have each
nominated Directors qualified under the requirements of applicable Law, and each such Director has
submitted to the Board any certificate or consent required under the Act to be submitted by him/her in
connection with his/her appointment as a member of the relevant Board of Directors. In the event of the
resignation, retirement or vacation of office of any Director, the Shareholder who has appointed such
Director shall be entitled to appoint another Director in such place and the other Shareholders shall
exercise their rights to ensure the appointment of the individual nominated as aforesaid.
145. Meetings of the Board
(i) The Board of Directors of the Company shall meet at least once every 3 (three) months, with
each such meeting to be held in Valapad, Kerala (unless otherwise agreed to by the Company, Promoters
and each Investor).
(ii) Any meeting of the Board of Directors shall be called, held and convened only upon giving a
prior written notice of not less than 14 (fourteen) Business Days to all the Directors. Each notice of a
meeting of the Board of Directors shall contain, inter alia, an agenda specifying, in reasonable detail, the
matters to be discussed at the relevant meeting and shall be accompanied by all necessary written
information.
GHIOF or the GHIOF Director shall intimate the Company at least 2 (two) days prior to the scheduled
date of the Board meeting whether or not the GHIOF Director shall be attending the meeting of the
Board.
(iii) Subject to the provisions of these Article including Article 149, a decision shall be said to have
been made and/or a resolution shall be said to have been passed at a meeting of the Board of Directors
only if at a validly constituted meeting, such decisions are approved by and/or the resolution is approved
by a majority of the Directors, which unless otherwise mandated by Law in India, shall mean approval
18
by a majority of the Directors present and voting at such Board meeting.
(iv) Subject to applicable Law, the Directors or members of any committee of the Board of Directors
may participate in meetings of the Board of Directors or committee of the Board of Directors through
video-conference or telephonic conference.
146. Quorum of the Board
(i) The quorum for a meeting of the Board of Directors of the Company shall be as required under
the Act, subject to the presence of each of the AAIA Director and the Hudson Director being required to
constitute such quorum at a meeting where any business relating to the matters referred to in Article 149
is proposed to be transacted, it being agreed and understood that AAIA and Hudson do not acquire
Control of the Company and there is no change in Control of the Company.
Provided that if such a quorum is not present within 1 (one) hour from the time appointed for the meeting, the meeting shall
adjourn to the same place and time 10 (ten) days later, at which meeting the Directors present shall, subject to their
constituting a valid quorum under the Act, constitute a valid quorum even though the Investor Director is not present,
provided that notice of such adjourned meeting shall have been delivered to all Directors at least 5 (five) days prior to the
date of such adjourned meeting.
(ii) If either of the AAIA Director or Hudson Director notifies the Company that he/she shall be
unable to attend such adjourned meeting, then any matter referred to in Article 149 shall not be taken up
at such adjourned meeting, without obtaining the prior written consent of each of the AAIA Director or
the Hudson Director but shall instead be passed as a resolution by circulation in accordance with Article
148. Provided that if any matter referred to in Article 149 cannot be passed as a resolution by
circulation, and either of AAIA or Hudson has not consented to such resolution, then such matter shall
not be taken up at the adjourned meeting.
Provided further that AAIA or Hudson may, in writing, waive the requirements of quorum specified in
this Article for any meeting.
147. Alternate Director
Each of the Investors shall be entitled to nominate an alternate Director (an “Alternate Director”) in
place of their respective Investor Director originally nominated by it (an “Original Director”) from
time to time and the Board shall appoint such Alternate Director. Upon the appointment of the Alternate
Director, the Company shall ensure compliance with the provisions of the Act, including by filing
necessary forms with the jurisdictional Registrar of Companies. The Alternate Director shall be entitled
to receive notice of all meetings and to attend and vote at such meetings in place of the Original Director
and generally to perform all functions of the Original Director in his or her absence.
148. Resolution by Circulation
A written resolution circulated to all the Directors or members of committees of the Board of Directors,
whether in India or overseas and signed by a majority of them as approved, shall (subject to compliance
with the relevant requirements of the Act) be as valid and effective as a resolution duly passed at a
meeting of the Board of Directors or committee of the Board of Directors, called and held in accordance
with these Articles (provided that it has been circulated in draft form, together with the relevant papers,
if any, to all the Directors); provided however that if the resolution proposed to be passed by circulation
pertains to a matter referred to in Article 149, such circular resolution shall be valid and effective only if
it has received the written consent of each of the AAIA Director and Hudson Director .
19
149. Affirmative Rights in the Company
(i) Notwithstanding anything to the contrary contained in these Articles, so long as each of AAIA
and Hudson holds at least 1% (one percent) of the total Share Capital, decisions on the following matters
shall not be taken and/or implemented, and no action in connection with those matters shall be taken by
the Company, whether at meetings of its shareholders and/or its Board of Directors and/or committees of
its Boards of Directors or otherwise, in each case without the affirmative votes or prior written consent
of, each of AAIA and Hudson or each of the AAIA Director and the Hudson Director nominated by
AAIA and Hudson respectively, as the case may be:
(a) Acquisition of shares, assets, business, business organization or division of any other Person,
creation of legal entities, joint ventures or partnerships, mergers, de-mergers, spin-offs and
consolidations, creation of any new Subsidiaries (other than acquisition of shares in the normal course of
business and acquisition of assets in the normal course of business up to an amount of Rs. 30,000,000
(Rupees Thirty Million only), except the proposed merger of MAFIT with and into the Company.
(b) Any changes in class rights for Shares (directly or indirectly).
(c) Entry into or amendments to any exclusive marketing agreements or arrangements (other than
short marketing agreements or arrangements having a validity period not exceeding 1 year).
(d) Commencement of any new line of business, which is unrelated to the business carried on by the
Company as an NBFC including the business of lending against gold pledged, hire purchase, personal
loans, and money transfer services to consumers,.
(e) Any change in the capital structure of the Company including issued, subscribed or paid up
equity or preference share capital of the Company, or re-organization of the Share Capital, including
new issuance of shares or other securities or any other convertible instrument of the Company or
redemption, retirement or repurchase of any shares or other securities, issuance of convertible
debentures or warrants, or grant of any options over its shares by the Company, and the granting of any
rights to the holder of such shares or other securities, convertible debentures or warrants, or options, at
terms more favourable than those given to AAIA or Hudson, or which in any way affect the rights and
remedies of AAIA or Hudson. Provided that an Investor will not be entitled to exercise this veto right in
the event (a) the Company proposes to issue any equity, preference, equity-related or convertible
securities to any Person(s) other than AAIA or Hudson at a pre-money valuation of the Company which
is higher than the post money valuation on the basis of which AAIA or Hudson had subscribed for the
AAIA Subscription Shares and Hudson Subscription Shares respectively, at no better terms than the
terms on which AAIA or Hudson were issued the AAIA Subscription Shares and Hudson Subscription
Shares respectively, and which do not affect the rights of AAIA or Hudson (b) the Company issues non
convertible debentures up to the limits set out in the annual budget/business plan.
(f) Creation of Subsidiaries.
(g) Sale, transfer or other disposition of the Company, any of its Subsidiaries, its joint ventures and
its subsidiaries.
(h) De-listing of Shares of the Company or any of its Subsidiaries on any stock-exchanges.
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(i) Taking of steps towards or appointment of any advisers, including but not limited to, investment
bankers, merchant bankers, underwriters to the issue, in connection with a potential sale or floatation of
Shares of the Company or any of its Subsidiaries including through a Public Offering.
(j) Declaration or payment of dividends or other distributions on any class of Shares of the
Company.
(k) Approval and adoption of the annual budget/ business plan of the Company or any of its
Subsidiaries.
(l) Any amendment or modification or the taking of any action that would be inconsistent with the
budget/ business plan as approved by the Board and then in effect by more than 5% (five percent).
Provided that such permissible limit of 5% (five percent) would however not apply if, in the opinion of
any of AAIA or Hudson, the proposed action is not likely to have an adverse impact on the profitability
and need to raise additional debt or equity capital.
(m) The appointment or removal and determination of the terms of employment including
compensation of Key Management Personnel and any significant changes in the terms of their
employment agreements.
Creation or adoption of any new or additional ESOP, or any change or modification or
amendment to any ESOPs of the Company or its Subsidiaries.
(o) The prosecution or settlement of legal actions or claims by or against the Company and/or its
Subsidiaries where the aggregate amount of all claims so prosecuted or settled would exceed Rs.
10,000,000 (Rupees Ten Million only) within any Financial Year.
(p) Dissolution, winding-up or liquidation of the Company or any of its Subsidiaries, whether or not
voluntary, or any restructuring or reorganization that has a similar effect;
(q) Entering into or any amendments to the terms of any Related Party Transactions other than as
disclosed to AAIA and Hudson.
(r) Any amendment, supplement, modification or restatement of the Memorandum or Articles of
Association of the Company or any of its Subsidiaries.
(s) Any changes to accounting or tax policies, procedures or practices or reappointment or change of
internal or statutory auditors of the Company or any of its Subsidiaries.
(t) Change of registered office of the Company or any of its Subsidiaries;
(u) Taking any decision or action, entering into or amending any Contract with any Person in
relation to MIBPL;
(v) Delegation of authority or any of the powers relating to any matter contained in this Article 149
by the Board of the Company and/or its Subsidiaries to any individual or committee and any
commitment or agreement to do any of the foregoing.
(w) Any proposal by the Company to take any decisions or action on matters listed in this Article
149 with respect to its Subsidiaries.
21
(x) Any decision to convene a General Meeting to consider any of the foregoing matters.
It is clarified that all financial limits in this Article 149 are indicated on an aggregate basis.
(ii) In the event that the Company proposes to convene a General Meeting to consider any of the
matters listed in Article 149, and if the AAIA Director or the Hudson Director vote against the inclusion
of such resolution in the General Meting, then such matter or resolution shall not be considered in the
General Meeting, and if considered or put to vote, such matter forming part of the resolution shall be
null and void, and deemed to have not been passed and shall not be given effect to. The Company and
the Promoters shall do all acts necessary or required under Law to give effect to this Article 149.
150. Statutory Auditor
Any change in the auditor appointed by the Company shall be made only with the prior written consent
of each of AAIA and Hudson.
INFORMATION AND ACCESS RIGHTS
151. The Company shall furnish to the Investors, all such information as is provided to all other
Directors and to any other shareholders of the Company.
152. Subject to applicable Law, including but not limited to the Securities and Exchange Board of
India (Prohibition of Insider Trading) Regulations, 1992, the Company shall, upon reasonable notice,
provide full access to each of the Investors and their authorized representatives (including lawyers,
accountants, auditors and other professional advisors) to visit and inspect all properties, assets,
corporate, financial and other records, reports, books, Contracts and commitments of the Company, its
Affiliates and joint ventures, and to discuss and consult its business, actions plans, budgets and finances
with the Directors and executive officers of the Company, its Affiliates and joint ventures.
GENERAL MEETINGS
153. An AGM shall be held each calendar year within 6 (six) months following the end of the
previous Financial Year.
154. Prior written notice of a minimum of 21 (twenty one) Business Days for a General Meeting
shall be given to all shareholders of the Company; provided however that any General Meeting may be
held upon shorter notice in accordance with the provisions of the Act. All notices shall be accompanied
by an agenda setting out the particular business proposed to be transacted at such meeting.
155. The Board of Directors shall provide the Company’s previous Financial Year’s audited
financial statements to all Shareholders at least 1 (one) month before the AGM is held to approve and
adopt the audited financial statements. All other General Meetings, other than the AGM, shall be EGMs.
156. The quorum for General Meetings shall be a minimum of 5 (five) members being present,
subject to at least 1 (one) authorized representative representing the Promoters and each of AAIA and
Hudson being present at such meeting; provided, however, that no decision or determination will be
made and no action will be taken by or with respect to the Company in respect of any of the reserved
matters referred to in Article 149 unless approved in accordance with Article 149.
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157. Related Party Transactions
All related party transactions of the company or its affiliates or subsidiaries shall be duly approved by the board
and shareholders of the company or the subsidiaries, as the case may be and shall be made on an arm’s length,
market terms basis.
158. Right to Invest
(i) The Investors and/or any of its Affiliates shall be entitled to invest in any entity engaged in the
same or allied field as that of the Company, its Subsidiaries/ Affiliates, and the Promoters confirm that
that they will have no objection to any of the Investors and/or any of the Investor Affiliate making such
investments. The Company shall provide each of the Investors with a No Objection Certificate to this
effect at or before the Closing Date in the form as required by the Investors.
(ii) If any of the Investors invest in Muthoot Finance Private Limited, Muthoot Fincorp Limited and
Muthoot Capital Services Limited, such Investors shall not nominate a common director on the board of
directors of such investee company and any such company of the Muthoot group.
159. Transfer of Shares by the Promoters
(i) Subject to Article (ii), none of the Promoters shall Transfer any or all of its Shares in the
Company and/ or its Subsidiaries/ Affiliates, and the Company shall not Transfer any of its Shares in
any of its Subsidiaries/ Affiliates, except with the prior written consent of each of AAIA and Hudson.
(ii) Notwithstanding anything contained in Article (i), but subject to this Article, the Promoters shall,
upon expiry of 12 (twelve) months from March 14, 2012, have the right to sell up to 3% (three percent)
(collectively) of the total shareholding of the Promoters in the Company in a Financial Year, without the
prior written consent of each of AAIA and Hudson, provided that the shareholding of the Promoters post
such Transfer shall not be less than 26% (twenty six percent) of the total Share Capital, provided
however that subject to Article 161(iii), a Transfer of Shares by the Promoters under this Article (ii)
shall be subject to the Right of First Offer of AAIA and Hudson under Article 0. It is hereby clarified
that the Tag Along Rights of each of AAIA and Hudson shall not apply to a Transfer of up to 3% (three
percent) (collectively) of the shareholding of the Promoters in the Company in a Financial Year by the
Promoters in compliance with this Article (ii).
(iii) Transfer of Shares by the Promoters within 12 months of the Execution Date
(a) Save and except as provided in this Article 159(iii), the Promoters shall not Transfer any or all of
their Shares in the Company within the first 12 months from the Execution Date, except with the
prior written consent of the Subsequent Investors.
(b) The aggregate Shares transferred or proposed to be transferred by the Promoters during the financial
year ending March 31, 2012, after reckoning the sale of Shares on the Execution Date or within 15 days
of the Execution Date, shall not exceed 4.75% of the Share Capital. Any such transfer of Shares held by
the Promoters in the Company in excess of 4.75% of the Share Capital shall be subject to prior approval
of the Subsequent Investors.
(iv) Transfer of Shares by the Promoters after 12 months of the Execution Date
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(a) After 12 months from the Execution Date, the Promoters can Transfer any or all of their Shares
in the Company, without the prior written consent of the Subsequent Investors, subject to the
restrictions as set out in Articles 159(iii), 159(iv) and 159(v) and provided that the collective
shareholding of the Promoters after such Transfer shall not be less than 26% of the total Share
Capital.
(b) After 12 months from the Execution Date, the Promoters shall have the right to sell up to 3%
(collectively) of the total shareholding of the Promoters on an aggregate basis in a Financial Year
(“Yearly Divestment Limit”), without the prior written consent of the Subsequent Investors,
provided that the shareholding of the Promoters post such Transfer shall not be less than 26% of
the Share Capital, provided however that a Transfer of Shares by the Promoters under this
Article 159(iv)(b) shall be subject to the Right of First Offer of the Subsequent Investors under
Article 161A.
(v) The restrictions set out in Article 159(iii) and Article 159(iv) shall not apply in respect of any
Transfer of Shares by the Promoters to its Affiliates. Any Affiliate of the Promoters to which Shares
have been Transferred, shall execute a deed of adherence in an agreed form; provided that if the Affiliate
of any of the Promoters ceases to be an Affiliate of such Promoter, the Promoters shall ensure that the
Shares held by such Person are transferred to the Promoters, who shall be bound by the terms of these
Articles.
160. Right of First Sale of AAIA and Hudson
(i) After 3 (three) years from the Closing Date, the Promoters shall have the right to sell more than
3% (three percent) of the shareholding of the Promoters in the Company in a Financial Year, subject to
the Right of First Sale as described in Article 196(ii).
(ii) In the event any Promoter (the “Promoter Transferor”) proposes to Transfer any of its Shares
in the Company in excess of the limit of 3% (three percent) of the Shares held by the Promoters
(“Promoter Sale Shares”) to any Person (the “Third Party Transferee”) on terms that satisfy the
conditions set out in Article (i), the Promoter Transferor shall, within 3 (three) Business Days of receipt
of such offer, provide each of AAIA and Hudson a written notice (“Sale Shares Notice”) of its intention
to sell the Promoter Sale Shares, setting out the identity of the Third Party Transferee, the price and
payment terms of such offer received from the Third Party Transferee.
(iii) Upon receipt of the Sale Shares Notice, each of AAIA and Hudson shall have the right to sell to
the Third Party Transferee up to such number of Shares held by each of them which equals the number
of Promoter Sale Shares (the “Sale Shares”) at the price and payment terms offered by the Third Party
Transferee to the Promoter Transferor (the “Right of First Sale”), by providing, within 15 (fifteen)
Business Days of the receipt of the Sale Shares Notice by each of AAIA and Hudson, a written notice to
the Promoter Transferor of its intention to sell the First Sale Shares to the Third Party Transferee (the
“Sale Shares Notice”).
(iv) Upon receipt of the Sale Shares Notice, the Promoter Transferor shall ensure that within 7
(seven) Business Days of receipt of the Sale Shares Notice, the Third Party Transferee informs each of
AAIA and Hudson and the Promoter Transfer in writing (“Sale Shares Acceptance Notice”) of its
intention to purchase all the Sale Shares at the price and payment terms stated in the Sale Shares Notice.
In such an event, the Third Party Transferee shall purchase the Sale Shares within 30 (thirty) Business
Days from the issue of the Sale Shares Acceptance Notice, after obtaining any consents/ approvals or
making any regulatory filings as may be required under applicable Laws, which shall be the
24
responsibility of the Promoters. The Promoter Transferor shall be entitled to sell any of the Promoter
Sale Shares to the Third Party only after the Third Party Transferee has purchased all the Sale Shares in
accordance with these Articles.
(v) In the event that the Third Party Transferee does not agree to purchase the Sale Shares at the
price and payment terms stated in the Sale Shares Notice, the Promoter Transferor shall not be entitled
to sell the Promoter Sale Shares to the Third Party Transferee, unless otherwise agreed to in writing by
each of AAIA and Hudson.
(vi) In the event either of AAIA or Hudson does not exercise the Right of First Sale under this Article
160 or having received the Sale Shares Acceptance Notice, fails to consummate the Transfer of the Sale
Shares within the period of 30 (thirty) Business Days as stated in Article (iv) other than for reasons not
attributable to each of AAIA and Hudson, the Promoter Transferor shall be entitled to Transfer the
Promoter Sale Shares to the Third Party Transferee at the price and on the payment terms mentioned in
the Sale Shares Notice.
(vii) The exercise of the Right of First Sale under Article 160 shall be without prejudice to the Right
of First Offer of AAIA and Hudson under Article 0. Any failure to exercise the Right of First Sale under
this Article 160 with respect to the Transfer of Shares by the Promoters in one instance shall be without
prejudice to the right of each of AAIA and Hudson to exercise the Right of First Sale with respect to any
subsequent offers for purchase of Shares of the Promoters as contained in Article (i).
(viii) In case any of the other shareholders of the Company having a similar right of first sale under the
Articles, decide to exercise such right of first sale, then the Promoter shall forthwith inform AAIA and
Hudson of such decision taken by the relevant shareholder, along with the details thereof.
(ix) Any transferee of the Shares of the Promoters under this Article 159 (other than AAIA and
Hudson and subject to compliance with Article 159(ii), Persons to whom the Promoters sell up to 3%
(three percent) of the total shareholding of the Promoters in the Company in a Financial Year) shall
execute a Deed of Adherence agreeing to be subject to all the obligations of the Promoters, provided that
each of AAIA and Hudson may, on a request made in this regard by the Promoters, waive the
requirement of the transferee of the Shares of the Promoters under this Article 159 executing a Deed of
Adherence.
160A. Right of First Sale of the Subsequent Investors
160A.1 Save and except as provided in Articles 159(iii) and 159(iv), in the event any of the Promoters
(the “Transferring Promoter”) propose to Transfer any of its Shares in the Company in excess
of 3% (collectively) of the total shareholding of the Promoters on an aggregate basis in a
Financial Year (“Yearly Divestment Limit”) (“Promoter Transfer Shares”) to any Person (the
“Third Person Transferee”) on terms that satisfy the conditions set out in Articles 159(iii) and
Article 159(iv), the Transferring Promoter shall, within 3 Business Days of receipt of such offer,
provide each of the Subsequent Investors a written notice (“Transfer Shares Notice”) of its
intention to sell the Promoter Transfer Shares, setting out the identity of the Third Person
Transferee, the price and the payment terms of such offer received from the Third Person
Transferee.
160A.2 Upon receipt of the Transfer Shares Notice, each of the Subsequent Investors shall have the right
(along with the other exiting Investors in accordance with their respective shareholding in the
Company at the relevant time) to sell to the Third Person Transferee up to such number of Shares
25
held by them which equals the number of Promoter Transfer Shares (the “Subsequent Investor
Sale Shares”) at the price and payment terms offered by the Third Person Transferee to the
Transferring Promoter (the “Subsequent Investors’ Right of First Sale”), by providing, within
15 Business Days of the receipt of the Transfer Shares Notice by the respective Subsequent
Investors, a written notice to the Transferring Promoter of its intention to sell the Subsequent
Investor Sale Shares to the Third Person Transferee (the “Subsequent Investor Sale Shares
Notice”).
160A.3 Upon receipt of the Subsequent Investor Sale Shares Notice, the Transferring Promoter shall
ensure that within 7 Business Days of receipt of the Subsequent Investor Sale Shares Notice, the
Third Person Transferee informs each of the Subsequent Investors and the Transferring Promoter
in writing (“Transfer Shares Acceptance Notice”) of its intention to purchase all the
Subsequent Investor Sale Shares at the price and payment terms stated in the Transfer Shares
Notice. In such an event, the Third Person Transferee shall purchase the Subsequent Investor
Sale Shares within 30 Business Days from the issue of the Transfer Shares Acceptance Notice,
after obtaining any consents/ approvals or making any regulatory filings as may be required
under applicable Laws, which shall be the responsibility of the Promoters. The Transferring
Promoter shall be entitled to sell any of the Promoter Transfer Shares to the Third Person
Transferee only after the Third Person Transferee has purchased all the Subsequent Investor Sale
Shares in accordance with these Articles.
160A.4 In the event that the Third Party Transferee does not agree to purchase the Subsequent Investor
Sale Shares at the price and payment terms stated in the Transfer Shares Notice, the Transferring
Promoter shall not be entitled to sell the Promoter Transfer Shares to the Third Person
Transferee, unless otherwise agreed to in writing by the relevant Subsequent Investors.
160A.5 In the event the Subsequent Investors do not exercise their Subsequent Investors Right of First
Sale under this Article 160A or having received the Transfer Shares Acceptance Notice, fails to
consummate the Transfer of the Subsequent Investor Sale Shares within the period of 30
Business Days as stated in Article 160A.3 above, for reasons attributable to such Subsequent
Investors, as the case may be, the Transferring Promoter shall be entitled to Transfer the
Promoter Transfer Shares to the Third Person Transferee at the price and on the payment terms
mentioned in the Transfer Shares Notice.
160A.6 The exercise of the Subsequent Investors’ Right of First Sale under Article 160A.3 shall be
without prejudice to the Subsequent Investors’ Right of First Offer of the Subsequent Investors
under Article 161A. Any failure to exercise the Subsequent Investors’ Right of First Sale under
this Article 160A with respect to the Transfer of Shares by the Promoters in one instance shall be
without prejudice to the right of such Subsequent Investors, to exercise their Subsequent
Investors’ Right of First Sale with respect to any subsequent offers for purchase of Shares of the
Promoters as contained in Article 160A.1.
160A.7 Notwithstanding anything contained in these Articles, the Subsequent Investors’ Right of First
Sale of the Subsequent Investors shall at all times be pari pasu inter se each other as well with
the Investors and not in any manner secondary to the right of first sale of the Investors, as
provided under Article 160. In case any of the Investors or the Subsequent Investors decides to
exercise their right of first sale under Articles 160 or 160A (as the case may be), then the
Promoters shall forthwith inform the other Subsequent Investors of such decision taken by the
relevant Investor or the Subsequent Investor, along with the details thereof.
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160A.8 Each Subsequent Investor shall cease to have its respective Subsequent Investors’ Right of First
Sale under this Article 160A as soon as such Subsequent Investor collectively with its
Subsequent Investor Affiliates ceases to hold at least 1.5% of the Share Capital.
161. Right of First Offer of AAIA and Hudson
(i) If any Promoter Transferor proposes to Transfer any or all of its Shares (the “Offered Shares”)
to any Person, each of AAIA and Hudson shall have the right of first offer to purchase such proportion
of the Offered Shares (the “Right of First Offer”) as its shareholding in the Company bears to the
shareholding of other Persons who have a similar right to purchase the Offered Shares. The Promoter
Transferor shall provide each of AAIA and Hudson, a written notice of its intention to sell the Offered
Shares (the “Trigger Notice”). The Trigger Notice shall set out the number of the Offered Shares,
identity of the transferee, the price at which the Promoter Transferor is willing to Transfer such Offered
Shares (“ROFO Price”) on a cash, non contingent basis. Each of AAIA and Hudson shall have the
option to, within 15 (fifteen) Business Days of receipt of the respective Trigger Notice from the
Promoter Transferor, inform the Promoter Transferor in writing (the “Offer Notice”) of its intention to
purchase the Offered Shares and state the price for such purchase (the “Offer Price”) along with the
payment terms. Upon receipt of the respective Offer Notice by the Promoter Transferor, if the Offer
Price by each of AAIA and Hudson is equal to or greater than their respective ROFO Price and payment
terms stated in the respective Offer Notice are acceptable to the Promoter Transferor, it shall, by written
notice (the “Acceptance Notice”), intimate its acceptance of the Offer Price and payment terms to each
of AAIA and Hudson within a period of 5 (five) Business Days from the date of receipt of each of the
Offer Notice.
(ii) Upon the Promoter Transferor sending an Acceptance Notice, the Promoter Transferor and each
of AAIA and Hudson shall consummate the Transfer of the Offered Shares within a period of 30 (thirty)
Business Days from the date of receipt of the Acceptance Notice. Each of AAIA and Hudson shall also
pay a deposit of 5% (five percent) of the respective Offer Price to the Promoter Transferor upon receipt
of the respective Acceptance Notice after obtaining any consents/ approvals or making any regulatory
filings as may be required under applicable Laws which shall be the responsibility of the Promoters.
(iii) In the event that the Promoter Transferor does not receive the Acceptance Notice within 15
(fifteen) Business Days from receipt of the Trigger Notice or after having exercised the Right of First
Offer within 15 (fifteen) Business Days from receipt of the Trigger Notice, each of AAIA and Hudson
fails to purchase the Offered Shares offered by the Promoter Transferor within a period of 30 (thirty)
Business Days from the date of their respective Acceptance Notice other than for reasons not
attributable to it, the Right of First Offer of each of AAIA and Hudson shall be deemed to have lapsed
and the Promoter Transferor shall be entitled to sell the Offered Shares offered to each of AAIA and
Hudson to any Third Party Transferee at a price higher than the respective ROFO Price, within 90
(ninety) days from the expiry of the 15 (fifteen) day or 30 (thirty) day period referred to in this Article
(iii), as the case may be.
(iv) In the event that the Right of First Offer under this Article is exercised and each of AAIA and
Hudson under Article 0issues their respective Offer Notice in accordance with Article (i) to the
Promoter Transferor, the Promoter Transferor shall have the right to reject the offer made by each of
AAIA and Hudson in their respective Offer Notice only in the event that their respective Offer Price is
less than their respective ROFO Price, and the Promoter Transferor shall intimate each of AAIA and
Hudson , within 7 (seven) Business Days from receipt of the respective Offer Notice, by written notice
(the “Rejection Notice”), that the terms of each of the Offer Notice are not acceptable to it. The
Promoter Transferor shall be entitled to sell the Offered Shares in respect of which the Right of First
27
Offer has not been exercised to any Third Party Transferee at any price higher than the ROFO Price and
on payment terms which are no more favourable to the Third Party Transferee than the payment terms
specified in the Offer Notice, and the Promoter Transferor and the Third Party Transferee shall
consummate the Transfer of the Offered Shares within a period of 90 (ninety) days from the date of the
Rejection Notice.
(v) In the event that the Transfer of Offered Shares by the Promoter Transferor to a Third Party
Transferee is not consummated within a period of 90 (ninety) days from the date of the Rejection Notice
as provided in Article (iv), any subsequent proposal to Transfer any Shares including the Offered Shares
shall again be subject to the Right of First Offer under this Article 0.
(vi) Each of AAIA and Hudson shall cease to have the Right of First Offer under this Article 0 as
soon as it ceases to hold 1.5 (one point five per cent) of the Share Capital.
(vii) The Right of First Offer under this Article 0 shall not apply in respect of any Transfer of Shares
by the Promoter Transferor to its Affiliate. Any Affiliate of the Promoters to which Shares have been
Transferred in accordance with these Articles shall execute a Deed of Adherence, provided that if the
Affiliate of any of the Promoters ceases to be an Affiliate of such Promoter, the Promoters shall ensure
that the Shares held by such Person are transferred to the Promoters, who shall be bound by the terms of
these Articles.
(viii) The Right of First Offer under this Article 0 shall apply to all such Shares (such shares the
“Additional Offered Shares”) in respect of which other Persons who have a right of first offer have not
exercised such right. Each of AAIA and Hudson shall have the right of first offer to purchase such
proportion of the Additional Offered Shares as its shareholding in the Company bears to the
shareholding of other Persons who have a similar right to purchase the Additional Offered Shares, and
the provisions of this Article 0 shall apply mutatis mutandis to the Additional Offered Shares.
(ix) In case any of the other shareholders of the Company having a similar right of first offer under
this Article, decide to exercise such right of first offer, then the Promoter shall forthwith inform the
AAIA and Hudson of such decision taken by the relevant shareholder, along with the details thereof.
161A. Right of First Offer of the Subsequent Investors
161A.1 Save and except as provided in Articles 159(iii) and 159(iv) , if any Transferring Promoter
proposes to Transfer any or all of its Shares (the “Promoter Offered Shares”) to any Person, the
Subsequent Investors shall have the right of first offer to purchase by itself or through its
Subsequent Investor Affiliates or through a person designated by the Subsequent Investors,
provided that such transferee Subsequent Investors Affiliate or the person designated by the
Subsequent Investors shall be subject to all the terms and conditions of these Articles by
executing a deed of adherence in the agreed format, such proportion of the Promoter Offered
Shares (the “Subsequent Investors’ Right of First Offer”) as its shareholding in the Company
bears to the shareholding of the Investors, who have a similar right under these Articles to
purchase the Promoter Offered Shares. The Transferring Promoter shall provide the Subsequent
Investors, a written notice of its intention to sell the Offered Shares (the “Subsequent Investor
Trigger Notice”). The Subsequent Investor Trigger Notice shall set out the number of the
Promoter Offered Shares, identity of the transferee, the price at which the Transferring Promoter
is willing to Transfer such Promoter Offered Shares (“Subsequent Investor ROFO Price”) on a
cash, non contingent basis. Each of the Subsequent Investors shall have the option to, within 15
Business Days of receipt of the Subsequent Investor Trigger Notice from the Transferring
28
Promoter, inform the Transferring Promoter in writing (the “Subsequent Investor Offer
Notice”) of its intention to purchase the Promoter Offered Shares and state the price for such
purchase (the “Subsequent Investor Offer Price”) along with the payment terms. Upon receipt
of the Subsequent Investor Offer Notice by the Transferring Promoter, if the Subsequent Investor
Offer Price by such Subsequent Investors, is equal to or greater than the Subsequent Investor
ROFO Price, and payment terms stated in the Subsequent Investor Offer Notice are acceptable to
the Transferring Promoter, it shall, by written notice (the “Promoter Acceptance Notice”),
intimate its acceptance of the Subsequent Investor Offer Price and payment terms to such
Subsequent Investor within a period of 5 Business Days from the date of receipt of each of the
Subsequent Investor Offer Notice.
161A.2 Upon the Transferring Promoter sending a Promoter Acceptance Notice, the Transferring
Promoter and the Subsequent Investors or the respective Subsequent Investor Affiliates or their
designees, as the case may be, shall consummate the Transfer of the Promoter Offered Shares
within a period of 30 Business Days from the date of receipt of the Promoter Acceptance Notice.
In such a case, the Subsequent Investors shall also pay a deposit of 5% (five percent) of the
Subsequent Investor Offer Price to the Transferring Promoter upon receipt of the Promoter
Acceptance Notice after obtaining any consents/ approvals or making any regulatory filings as
may be required under applicable Law, which shall be the responsibility of Promoters.
161A.3 In the event that the Transferring Promoter does not receive the Subsequent Investor Offer
Notice within 15 Business Days from receipt of the Subsequent Investor Trigger Notice or after
having exercised the Subsequent Investor Right of First Offer within 15 Business Days from
receipt of the Subsequent Investor Trigger Notice, the Subsequent Investors fail to purchase the
Promoter Offered Shares offered by the Transferring Promoter within a period of 30 Business
Days from the date of the Acceptance Notice for reasons attributable to such Subsequent
Investor, the Right of First Offer of such Subsequent Investor shall be deemed to have lapsed and
the Transferring Promoter shall be entitled to sell the Offered Shares offered to the such
Subsequent Investor to any Third Party Transferee at a price higher than the ROFO Price, within
90 days from the expiry of the 15 day or 30 day period referred to in this Article 161A.3.
161A.4 In the event that the Right of First Offer under this Article 161A is exercised and the Subsequent
Investors issue the Offer Notice in accordance with Article 161A.1 to the Transferring Promoter,
the Transferring Promoter shall have the right to reject the offer made by the Subsequent
Investors in the Subsequent Investor Offer Notice only in the event that the Subsequent Investor
Offer Price is less than the Subsequent Investor ROFO Price, and the Transferring Promoter shall
intimate such Subsequent Investor, within 7 Business Days from receipt of the Subsequent
Investor Offer Notice, by written notice (the “Promoter Rejection Notice”), that the terms of the
Subsequent Investor Offer Notice are not acceptable to it. The Transferring Promoter shall be
entitled to sell the Promoter Offered Shares in respect of which the Subsequent Investors’ Right
of First Offer has not been exercised, to any Third Person Transferee at any price higher than the
Subsequent Investor ROFO Price and on payment terms which are no more favourable to the
Third Person Transferee than the payment terms specified in the Subsequent Investor Offer
Notice, and the Transferring Promoter and the Third Person Transferee shall consummate the
Transfer of the Promoter Offered Shares within a period of 90 days from the date of the
Promoter Rejection Notice.
161A.5 In the event that the Transfer of Promoter Offered Shares by the Transferring Promoter to a
Third Person Transferee is not consummated within a period of 90 days from the date of the
Promoter Rejection Notice as provided in Article 161A.4, any subsequent proposal to Transfer
29
any Shares including the Promoter Offered Shares shall again be subject to the Subsequent
Investors’ Right of First Offer under this Article 161A.
161A.6 Each Subsequent Investor shall cease to have its respective Subsequent Investors’ Right of First
Offer under this Article 161A as soon as such Subsequent Investor collectively with its
Subsequent Investor Affiliates ceases to hold at least 1.5% of the Share Capital.
161A.7 The Subsequent Investors’ Right of First Offer under this Article 161A shall apply to all such
Shares (such shares the “Further Offered Shares”) in respect of which other Persons who have
a right of first offer have not exercised such right. The Subsequent Investors shall have the
Subsequent Investors’ Right of First Offer to purchase such proportion of the Further Offered
Shares as its shareholding in the Company bears to the shareholding of other Persons who have a
similar right to purchase the Further Offered Shares under these Articles, and the provisions of
this Article 161A shall apply mutatis mutandis to the Further Offered Shares.
161A.8 Notwithstanding anything contained in these Articles, the Parties agree that the Subsequent
Investors’ Right of First Offer of the Subsequent Investors shall at all times be pari pasu inter se
each other as well with the Investors and not in any manner secondary to the right of first offer of
the other existing Investors in the Company, as provided under Article 161 of these Articles. In
case any of the Investors or the Subsequent Investor decides to exercise their right of first offer
under Articles 161 or 161A (as the case may be), then the Promoters shall forthwith inform the
other Subsequent Investors of such decision taken by the relevant Investor or the Subsequent
Investor, along with the details thereof.
162. Tag Along Rights of AAIA and Hudson
(i) In the event that a Promoter Transferor proposes to Transfer any of its Shares in excess of the
limit of 3% (three percent) of the Shares held by the Promoters to any Third Party Transferee (which
transfer shall be subject to Article 159(ii)) in respect of which the Right of First Sale or the Right of First
Offer has not been exercised, then the Promoter Transferor shall give a notice in writing (the “Promoter
Transfer Notice”) to each of AAIA and Hudson specifying the number of Shares proposed to be
Transferred (the “Promoter Transfer Shares”), the price at which the Promoter Transferor intends to
Transfer such Promoter Transfer Shares, the identity of the Third Party Transferee and any other
material or relevant terms and conditions of the proposed Transfer.
(ii) Upon each of AAIA and Hudson , receiving the Promoter Transfer Notice, each of AAIA and
Hudson may, within 15 (fifteen) Business Days of receipt of the Promoter Transfer Notice (the “Tag
Along Period”), send a written notice to the Promoter Transferor (the “Tag Along Notice”) requiring
the Promoter Transferor to ensure that the Third Party Transferee also purchases such number of Shares
then held by each of AAIA and Hudson in the Company which shall not exceed the pro rata number of
Shares of each of AAIA and Hudson in the issued Share Capital at the relevant time (the “Tag Along
Shares”) at the same price and on the same terms as mentioned in the Promoter Transfer Notice (the
“Tag Along Right”). The Tag Along Right under this Article 0 shall be available in respect of the
proportionate shareholding of each of AAIA and Hudson at the relevant time.
(iii) In the event that each of AAIA and Hudson delivers a Tag Along Notice to the Promoter
Transferor, the Promoter Transferor shall ensure that along with the Promoter Transfer Shares
mentioned in the Promoter Transfer Notice, the Third Party Transferee also acquires the respective Tag
Along Shares of each of AAIA. Hudson as specified in the respective Tag Along Notice for the same
consideration and upon the same terms and conditions as mentioned in the respective Promoter Transfer
30
Notice, provided that each of AAIA and Hudson shall, at its option, be entitled to, and the Promoter
Transferor shall procure that each of AAIA and Hudson will, receive the cash equivalent of any non-
cash component of the consideration to be paid by the Third Party Transferee. The value of such non
cash component of the consideration shall be determined by an independent valuation to be caused by
each of AAIA and Hudson by an internationally renowned accounting firm if each of AAIA and Hudson
and Promoter Transferor fail to mutually agree on such value.
(iv) In the event that the Third Party Transferee is unwilling or unable to acquire all of the Promoter
Transfer Shares mentioned in the Promoter Transferor Notice and all the Tag Along Shares upon such
terms, then the Promoter Transferor may elect either to cancel the proposed Transfer to the Third Party
Transferee or, to allocate the maximum number of Shares of the Company which the Third Party
Transferee is willing to purchase among the Promoter Transfer Shares and the Tag Along Shares pro-
rata as calculated above and to complete such Transfer in accordance with the revised terms. In the event
the Promoter Transferor elects to cancel the proposed Transfer to the Third Party Transferee, each of
AAIA and Hudson may, at its option, also cancel the proposed Transfer of its respective Tag Along
Shares.
(v) Notwithstanding anything to the contrary in this Article 0, the Promoter Transferor shall not be
entitled to Transfer any Shares to any Third Party Transferee unless the Third Party Transferee
simultaneously purchases and pays for all the Tag Along Shares or a proportionate number of the Tag
Along Shares determined in accordance with Article (iv) .
(vi) If either of AAIA or Hudson do not deliver their respective Tag Along Notice to the Promoter
Transferor prior to the expiry of their respective Tag Along Period, the Promoter Transferor shall be
entitled to Transfer the respective Promoter Transfer Shares to the Third Party Transferee.
(vii) In the event of the Promoter Transferor Transferring any Shares held by it in violation of the
provisions of this Article 0 (the “Prohibited Promoter Transfer”), then each of AAIA and Hudson
upon exercise of its respective Tag Along Right, shall have the right to sell to the Promoter Transferor
and the Promoter Transferor shall purchase from each of AAIA and Hudson , their respective Tag Along
Shares at a price higher by at least 33% (thirty three percent) to the price at which the Promoter
Transferor Transferred the Promoter Transfer Shares to the Third Party Transferee, without prejudice to
any other rights and remedies that the Promoter Transferor may have in order to restrict the Prohibited
Promoter Transfer or take any other action or exercise any other rights that it may be entitled to under
Law. The Promoter Transferor shall also reimburse each of AAIA and Hudson for any and all fees and
expenses, including legal fees and expenses, incurred pursuant to the exercise of each of AAIA and
Hudson ’s rights under this Article 0. The Promoter Transferor shall purchase the Tag Along Shares
within 90 (ninety) days from the date of notice provided by each of AAIA and Hudson , exercising its
right under this Article (vii).
(viii) In case any of the other shareholders of the Company having a similar tag along right under the
Articles, decide to exercise such tag along right, then the Promoter shall forthwith inform AAIA and
Hudson of such decision taken by the relevant shareholder, along with the details thereof.
162A. Tag Along Rights of the Subsequent Investors
162A.1 Save and except as provided in Articles 159(iii) and 159(iv), in the event that a Transferring
Promoter proposes to Transfer any of its Shares in excess of the Yearly Divestment Limit to any
Third Person Transferee in respect of which the Subsequent Investors’ Right of First Sale or the
Subsequent Investors’ Right of First Offer has not been exercised, then the Transferring
31
Promoter shall give a notice in writing (the “Selling Promoter Transfer Notice”) to the
Subsequent Investors, specifying the number of Shares proposed to be Transferred (the “Selling
Promoter Transfer Shares”), the price at which the Transferring Promoter intends to Transfer
such Selling Promoter Transfer Shares, the identity of the Third Person Transferee and any other
material or relevant terms and conditions of the proposed Transfer.
162A.2 Upon the Subsequent Investors receiving the Selling Promoter Transfer Notice, the Subsequent
Investors, within 15 Business Days of receipt of the Selling Promoter Transfer Notice (the
“Subsequent Investor Tag Along Period”), send a written notice to the Transferring Promoter
(the “Subsequent Investor Tag Along Notice”) requiring the Transferring Promoter to ensure
that the Third Person Transferee also purchases such number of Shares then held by the
Subsequent Investors in the Share Capital at the relevant time, which shall not exceed the pro
rata number of Shares of each of the Investors and the Subsequent Investors in the Share Capital
at that time (the “Subsequent Investor Tag Along Shares”) at the same price and on the same
terms as mentioned in the Selling Promoter Transfer Notice (the “Subsequent Investors’ Tag
Along Right”). The Subsequent Investors’ Tag Along Right under this Article 162A shall be
available in respect of the proportionate shareholding of the Subsequent Investors at the relevant
time.
162A.3 In the event that the Subsequent Investors deliver their respective Subsequent Investor Tag
Along Notice to the Transferring Promoter, the Transferring Promoter shall ensure that along
with the Selling Promoter Transfer Shares mentioned in the Selling Promoter Transfer Notice,
the Third Person Transferee also acquires the Subsequent Investor Tag Along Shares of the
Subsequent Investors, as specified in the Subsequent Investor Tag Along Notice for the same
consideration and upon the same terms and conditions as mentioned in the Selling Promoter
Transfer Notice, provided that the Subsequent Investors shall, at their option, be entitled to, and
the Transferring Promoter shall procure that the Subsequent Investors shall, receive the cash
equivalent of any non-cash component of the consideration to be paid by the Third Person
Transferee. The value of such non cash component of the consideration shall be determined by
an independent valuation to be caused by the Subsequent Investors by an internationally
renowned accounting firm if the Subsequent Investors and the Transferring Promoter fail to
mutually agree on such value.
162A.4 In the event that the Third Person Transferee is unwilling or unable to acquire all of the Selling
Promoter Transfer Shares mentioned in the Promoter Transfer Notice and all the Subsequent
Investor Tag Along Shares upon such terms, then the Transferring Promoter may elect either to
cancel the proposed Transfer to the Third Person Transferee or, to allocate the maximum number
of Shares of the Company which the Third Person Transferee is willing to purchase among the
Selling Promoter Transfer Shares and the Subsequent Investor Tag Along Shares pro-rata as
calculated above and to complete such Transfer in accordance with the revised terms. In the
event the Transferring Promoter elects to cancel the proposed Transfer to the Third Person
Transferee, each of the Subsequent Investors may, at their respective option, also cancel the
proposed Transfer of its respective Subsequent Investor Tag Along Shares.
162A.5 Notwithstanding anything to the contrary in this Article 162A, the Transferring Promoter shall
not be entitled to Transfer any Shares to any Third Person Transferee unless the Third Person
Transferee simultaneously purchases and pays for all the Subsequent Investor Tag Along Shares
or a proportionate number of the Subsequent Investor Tag Along Shares determined in
accordance with Article 162A.4.
32
162A.6 If the Subsequent Investors do not deliver the Subsequent Investor Tag Along Notice to the
Transferring Promoter prior to the expiry of the Subsequent Investor Tag Along Period, the
Transferring Promoter shall be entitled to Transfer the respective Selling Promoter Transfer
Shares to the Third Person Transferee.
162A.7 In the event of the Transferring Promoter Transferring any Shares in violation of the provisions
of this Article 162A (the “Prohibited Selling Promoter Transfer”), then the Subsequent
Investors, upon exercise of their Subsequent Investors’ Tag Along Right, shall have the right to
sell to the Transferring Promoter and the Transferring Promoter shall purchase from the
Subsequent Investors , subject to Law, the Subsequent Investor Tag Along Shares at a price
higher by at least 33% to the price at which the Transferring Promoter Transferred the Selling
Promoter Transfer Shares to the Third Person Transferee, without prejudice to any other rights
and remedies that the Transferring Promoter may have in order to restrict the Prohibited Selling
Promoter Transfer or take any other action or exercise any other rights that it may be entitled to
under Law. The Transferring Promoter shall also reimburse the Subsequent Investors for any and
all fees and expenses, including legal fees and expenses, incurred pursuant to the exercise of the
Subsequent Investors’ rights under this Article 162A. The Transferring Promoter shall purchase
the Subsequent Investor Tag Along Shares within 90 days from the date of notice provided by
the Subsequent Investors exercising its right under this Article 162A.7.
162A.8 Notwithstanding anything contained in these Articles, the Subsequent Investors’ Tag Along
Right of the Subsequent Investors shall at all times be pari pasu inter se each other and also with
the Investors and not in any manner secondary to the tag along right of the other Investors, as
provided under Article 162, as amended from time to time. In case any of the Investors or the
Subsequent Investor decides to exercise their tag along right under Articles 162 or 162A (as the
case may be), then the Promoters shall forthwith inform the other Subsequent Investors of such
decision taken by the relevant Investor or the Subsequent Investor, along with the details thereof.
162A.9 Each Subsequent Investor shall cease to have its respective Tag Along Right under this Article
162A as soon as such Subsequent Investor collectively with its Subsequent Investor Affiliates
ceases to hold at least 1.5% of the Share Capital.
163. Transfer of Shares by the Investors
(i) The Investors shall be entitled to Transfer all or part of its Shares, along with the right attached
to such Shares, at any time to a Third Party Transferee, without the prior consent of the Promoters or
any other shareholder of the Company.
(ii) Notwithstanding the provisions of Article Error! Reference source not found., the Investors
shall be entitled to Transfer all or any part of its Shares in the Company, along with the right attached to
such Shares, at any time to their respective Investor Affiliate without the prior consent of the Promoters
or any other shareholder of the Company.
163A. Collective Action
(i) Collective Action by Baring Investors
Notwithstanding anything in these Articles, each of the Baring Investors hereby irrevocably authorize
Baring India Private Equity Fund III Listed Investments Limited to take any and all decisions on their
behalf with regard to any matter relating to or contemplated by these Articles, including the exercise of
33
any right or remedy or performance of any obligations or grant of any waiver or consent hereunder.
Exercise of any right or performance of any obligations or grant of any waiver or consent by Baring
India Private Equity Fund III Listed Investments Limited as aforesaid shall be construed to be a joint
exercise, performance or grant by all the Baring Investors, and any such consent, waiver or exercise of
rights or obligations by Baring India Private Equity Fund III Listed Investments Limited can be relied
upon by the Company and the Promoters. The Baring Investors shall collectively exercise all rights and
perform all obligations under these Articles. It is clarified that any limits applicable to the Baring
Investors under these Articles shall apply to them as if Baring Investors were one single entity, and not
separately.
(ii) Collective Action by Sequoia Investors
Notwithstanding anything in these Articles, each of the Sequoia Investors hereby irrevocably authorize
Beaver Holdings Limited to take any and all decisions on their behalf with regard to any matter relating
to or contemplated by these Articles, including the exercise of any right or remedy or performance of
any obligations or grant of any waiver or consent hereunder. Exercise of any right or performance of any
obligations or grant of any waiver or consent by Beaver Holdings Limited as aforesaid shall be
construed to be a joint exercise, performance or grant by all the Sequoia Investors, and any such consent,
waiver or exercise of rights or obligations by Beaver Holdings Limited can be relied upon by the
Company and the Promoters. The Sequoia Investors shall collectively exercise all rights and perform all
obligations under these Articles. It is clarified that any limits applicable to the Sequoia Investors under
these Articles shall apply to them as if Sequoia Investors were one single entity, and not separately.
(iii) It is clarified that wherever any limits are made applicable on Subsequent Investors under these
Articles, such limits shall apply separately to the Sequoia Investors and the Baring Investors, and not
collectively.
ADDITIONAL CAPITAL
164. In the event the Company decides to issue any additional Shares (in excess of the Share Capital
as on the Effective Date) or other securities (the “Additional Shares”), to any Third Party, then within 2
(two) Business Days of such matter being approved by the Board, the Company shall first offer to issue
such number of the Additional Shares to AAIA such that the shareholding of AAIA after issue of the
Additional Shares does not fall below 6% (six percent) of the Share Capital (the “AAIA Offer Shares”)
upon the terms and conditions set out in the offer notice with respect to such further issue (the terms of
such offer to AAIA shall be referred to as the “AAIA Additional Shares Offer Terms”).
In the event the Company decides to issue any additional Shares (in excess of the Share Capital as on the
Effective Date) or other securities (the “Additional Shares”), to any Third Party, then within 2 (two)
Business Days of such matter being approved by the Board, the Company shall first offer to issue such
proportion of the Additional Shares equivalent to Hudson’s then shareholding in the Share Capital to
Hudson (the “Hudson Offer Shares”) upon the terms and conditions set out in the offer notice with
respect to such further issue (the terms of such offer to Hudson shall be referred to as the “Hudson
Additional Shares Offer Terms”).
In the event the Company decides to issue any additional Shares (in excess of the Share Capital as on the
Effective Date) or other securities (the “Additional Shares”), to any Third Party, then within 2 (two)
Business Days of such matter being approved by the Board, the Company shall first offer to issue such
proportion of the Additional Shares equivalent to Sequoia’s then shareholding in the Share Capital to
Sequoia (the “Sequoia Offer Shares”) upon the terms and conditions set out in the offer notice with
34
respect to such further issue (the terms of such offer to Sequoia shall be referred to as the (“Sequoia
Additional Shares Offer Terms”).
165. Upon such offer being made, each of AAIA and Hudson shall have the first right to agree to
subscribe for all or part of the AAIA Offer Shares, Hudson Offer Shares respectively, in accordance
with the AAIA Additional Shares Offer Terms, Hudson Additional Shares Offer Terms Additional
Shares Offer Terms respectively, within a period of 21 (twenty one) Business Days (the “Additional
Shares Offer Period”). If each of AAIA and Hudson agrees to subscribe for the AAIA Offer Shares,
Hudson Offer Shares Offer Shares respectively, in whole or in part within the Additional Shares Offer
Period the Company shall, after receipt of such intimation to subscribe for the AAIA Offer Shares,
Hudson Offer Shares Offer Shares, in whole or in part, by each of AAIA and Hudson respectively,
convene a General Meeting to approve the preferential allotment of the AAIA Offer Shares, Hudson
Offer Shares Offer Shares and thereafter complete the issue and allotment of the AAIA Offer Shares,
Hudson Offer Shares, within the time period prescribed under Law. In the event that either of AAIA or
Hudson does not respond to the notice from the Company within the prescribed time period or declines
to subscribe for the AAIA Offer Shares, Hudson Offer Shares respectively, then the Company shall be
entitled to issue the remainder of the Additional Shares to any Person and the shareholding of each of
AAIA and Hudson , shall be treated as diluted to such extent from the date of issuance of the Additional
Shares.
166. In the event that any future round of financing of the Company involves a secondary purchase
of Shares from the Promoters, each of AAIA and Hudson shall have their respective Right of First Offer
and respective Tag Along Rights set out in Article 0 and Article 0 respectively in respect of the shares of
the Promoters that are proposed to be Transferred in such round of financing. To enable each of AAIA
and Hudson to effectively exercise its right under this Article, the Company and/or the Promoters shall
notify each of AAIA and Hudson in writing of such an opportunity. Such written notice shall be
provided to each of AAIA and Hudson within 2 (two) Business Days of the Company, or any of the
Promoters executing a term sheet, letter of intent, memorandum of understanding, or entering into any
arrangement, whether written or otherwise, and whether binding or non-binding. The written notice shall
set out in reasonable detail all facts necessary for each of AAIA and Hudson to effectively exercise their
right under Article 164 to Article 169.
167. If any future or present investor (other than Hudson under paragraphs 2 and 3 of Article 164
respectively) is granted more favourable rights than the rights granted to each of AAIA and Hudson
under any agreement, each of AAIA and Hudson shall be entitled to be issued a single share in such
round of additional funding upon which each of AAIA and Hudson shall be entitled to all such
additional favourable rights granted in such placement and shall also be entitled to such additional
favourable rights in respect of its then existing Shares in the Company. Each of AAIA and Hudson shall
cease to have the right to be issued a single share in future rounds of funding as set out in this Article as
soon as it ceases to hold 1% (one per cent) of the Share Capital.
168. In addition, each of AAIA and Hudson shall have the rights agreed to in writing under Article
135, relating to the further issue of Shares.
169. Nothing in Article 164 to Article 169 shall apply to any Shares that may be issued pursuant to
any ESOP or a rights issue by the Company or bonus issue of Shares to all the shareholders of the
Company on a pro-rata basis.
EXIT BY AAIA AND HUDSON
35
170. At any time after March 31, 2010, each of AAIA and Hudson shall have the right, subject to
providing a notice of 30 (thirty) days (the “Share Sale Notice”), to cause the Company and the
Promoters to procure the sale of part or all of the Shares held by each of AAIA and Hudson in one or
more private placements of Shares, or by way of a secondary offering of Shares held by each of AAIA
and Hudson to the public (subject to applicable Law) (the “Secondary Offering”), or a combination
thereof and may require the Company and the Promoters to, within a period of 30 (thirty) days from the
date of such request, initiate the process to facilitate such sale of part or all of each of AAIA, Hudson’s
Shares, with the primary purpose of enabling each of AAIA and Hudson to sell its Shares through such
private placement or Secondary Offering on any Stock Exchange, subject to compliance with applicable
Law.
171. In the event that each of AAIA and Hudson serves the Share Sale Notice, the Promoters shall
exercise their voting rights (at the Board and shareholder levels), and cause the Board of Directors of the
Company to take all steps necessary for the Company to undertake such private placement or Secondary
Offering, to enable each of AAIA and Hudson to Transfer its Shares (or any part thereof) through such
offering or sale, including but not limited to, preparing and signing the relevant offer documents,
conducting road shows, entering into such documents, providing all necessary information and
documents necessary for preparing the offer document, obtaining such regulatory or other approvals and
doing such further reasonable acts or deeds as may be necessary to effect such a sale by each of AAIA
and Hudson . The Company shall comply with all the procedures and execute documents in each case as
are customary in transactions of such nature, or do all acts necessary to facilitate the private placement
or Secondary Offering as aforesaid. The Promoters and the Company shall assist each of AAIA and
Hudson to the fullest extent possible to enable the sale of the Shares (or any part thereof) held by each of
AAIA and Hudson through the private placement or Secondary Offering as aforesaid.
172. Rights of AAIA and Hudson in relation to Secondary Sales/Private Placement of Shares of the
Company
(i) Each of AAIA and Hudson shall be entitled to make one or more requests for sale of its Shares
as detailed in Article 170, either in whole or in part, and the Company and the Promoters shall comply
with the requirements of this Article 172 in respect of each such request. Each of AAIA and Hudson
shall be entitled to determine the price and number of Shares held by it to be offered in the Secondary
Offering and each of AAIA and Hudson will have the right to sell up to 100% (one hundred percent) of
its Shares as a part of the Secondary Offering. Each of AAIA and Hudson will consider the
recommendations, if any, of the appointed investment banking firm in this regard in accordance with
Article (ii) and Article (iii).
(ii) The Stock Exchange(s) on which the Shares offered by each of AAIA and Hudson shall be listed
and the appointment of an investment bank as book runner for the offering shall be mutually agreed to
between each of AAIA and Hudson , the Promoters and the Company. Such offering shall be managed
and underwritten by a reputable investment banking firm of recognized high standing in the market in
which the Shares of each of AAIA and Hudson are to be offered, who is acceptable to each of AAIA and
Hudson .
(iii) In the event that the Company, the Promoters and each of AAIA and Hudson do not reach an
agreement with regard to the choice of Stock Exchange(s) on which the Shares are to be listed and/or the
choice of investment banker to be appointed as book runner for the offering, each of AAIA and Hudson
shall have the option, at its sole discretion, to (A) require the listing of the Shares on any Stock
Exchanges as it determines fit, and (B) appoint any one or more investment banks as book runner(s) for
the offering.
36
(iv) In the event that the Company issues American Depository Receipts, Global Depository Receipts
or such other similar instruments (the “Further Securities”) that are listed or are to be listed on any Stock
Exchange, then subject to applicable Law, upon written request by each of AAIA and Hudson the
Company shall re-classify, as may be required, and list the Shares (or other securities arising from such
reclassification) held by each of AAIA and Hudson on the same date (or at a future date, if requested in
writing by each of AAIA and Hudson ) and on the same Stock Exchange(s) on which listing of the
Further Securities occurs. The Company’s obligations to list the Shares held by each of AAIA and
Hudson shall exist irrespective of whether each of AAIA and Hudson sell their Shares pursuant to such
listing or not.
173. The right of each of AAIA and Hudson under this Article 170 to Article 174 cause the
Company and the Promoters to procure the sale of part or all of the Shares held by each of AAIA and
Hudson in one or more Secondary Offering of the Shares, and any Transfer of Shares held by each of
AAIA and Hudson in any Secondary Offering of the Shares shall not be subject to the Promoters Right
of First Offer set out in Article Error! Reference source not found..
174. Upon the occurrence of an Event of Default, each Investor, the Company and the Promoters,
except the Defaulting Party, shall have the option to continue to exercise its rights under Part II of the
Articles, but without being liable to comply with any of its obligations hereunder.
By order of the Board of Directors
Sd/-
Rajesh Kumar. K
Valappad Company Secretary
02-07-2012
37
NOTES:
AMemberentitledtoattendandvoteisentitledtoappointaproxytoattendandvote
insteadofhimself/herselfandtheproxyneednotbeamemberofthecompany.ProxyForm
duly completed must be sent so as to reach the Registered Office of the company not later
than48hoursbeforethecommencementofthemeeting.Ablankproxyformisenclosed?
?? Explanatoiy statement puisuant to Section ?????? of the Companies Act? ???? in iespect of
item Nos? ? to ? aie annexeu heieto anu foims pait of this notice?
?? The Registei of Nembeis anu the Shaie Tiansfei Books of the company will iemain closeu fiom
?????????? to ?????????? ?both uays inclusive?? foi the puipose of annual uiviuenu?
?? Nembeis aie iequesteu to? ?a? intimate changes? if any? in the iegisteieu auuiesses on oi befoie
?????????? ?b? quote leugei folio numbei in all theii coiiesponuence ?c? biing theii copies of
the AnnualRepoit anu the Attenuance Slips with them at the Annual ueneial Neeting.
?? Nembeis holuing shaies in uemateiializeu foim aie iequesteu to wiite theii client IB anu BP IB
numbeis in attenuance slip anu all theii coiiesponuences with the company? Those who holu
shaies in physical foim aie iequesteu to wiite theii folio numbei in the attenuance slip?
?? The uiviuenu on the equity shaies as appioveu by the ueneial Bouy foi the financial yeai enueu
??
st
Naich? ???? will be payable within ?? uays fiom the uate of ueclaiation of uiviuenu to
those shaieholueis whose names will featuie on the Registei of Nembeis of the company on
??????????? Nembeis may please note that the Biviuenu Waiiants aie payable at pai at the
uesignateu Bianches of the Bank piinteu on the ieveise of the waiiant foi an initial peiiou of ?
months only? In oiuei to avoiu unnecessaiy inconvenience? the membeis aie auviseu to encash
Biviuenu Waiiants within the initial valiuity peiiou?
?? The membeis holuing shaies in electionic foim aie heieby infoimeu that? the Bank paiticulais
iegisteieu against theii iespective uepositoiy accounts will be useu by the Company foi the
payment of uiviuenu?
?? Nembeis aie fuithei auviseu to upuate youi bank account anu IFS numbeis in youi uemat
account so that the uiviuenu ueclaieu on the shaies will be electionically cieuiteu insteau of
physical waiiants?
?? Puisuant to the piovisions of Section ???C of the Companies Act? ????? as amenueu? uiviuenu
foi the financial yeai enueu ??
st
Naich? ???? which iemains unpaiu oi unclaimeu foi a peiiou
of seven yeais will be tiansfeiieu to the Investoi Euucation anu Piotection Funu of the Cential
uoveinment? Shaieholueis who have not encasheu the uiviuenu waiiants so fai foi the
financial yeai ????????? aie iequesteu to make theii claim to the company?
?? Nembeis who woulu like to ask questions on Accounts aie iequesteu to senu theii questions to
the Registeieu 0ffice of the company at least ?? uays befoie the Annual ueneial Neeting to
enable the company to piepaie suitable ieplies to such questions?
38
ANNEXURETOTHENOTICE
ExplanatoryStatementPursuanttoSection173(2)oftheCompaniesAct,1956
ItemNo.6.
Ni? Suuhinuai Kiishan Khanna ageu ?? yeais was inuucteu to the Boaiu of the company as an
auuitional uiiectoi unuei Section ??? of the Companies Act? ???? at the meeting helu on
??????????? Be ieceiveu his Bachelois Begiee ?Bonois? in Economics fiom St? Stephen?s college anu
is a Chaiteieu Accountant fiom the Institute of Chaiteieu Accountants of Englanu ? Wales anu is
the Chaiiman of IEP Funu since ?????Be is also the Inuia Piesiuent of WP0? a global oiganization of
???? business leaueis?
The Company has ieceiveu a notice unuei Section ??? of the Companies Act? ???? fiom a membei
togethei with necessaiy fee infoiming his intention to piopose the appointment of Ni?Suuhinuai
Kiishnan Khanna as a uiiectoi of the company? Youi Boaiu iecommenus the iesolution set out in
item no? ? of the Notice foi the Appioval of the membeis? None of the uiiectois except Ni?Suuhinuai
Kiishan Khanna is inteiesteu oi conceineu in the iesolution?
ItemNo7
Ni? E?A?Kshiisagai ageu ?? yeais was inuucteu to the Boaiu of the company as an auuitional
uiiectoi unuei Section ??? of the Companies Act? ???? at the meeting helu on ??????????? Be is a
Fellow of Chaiteieu Accountants of Englanu ? Wales? Ni? E?A?Kshiisagai has a wiue expeiience in
coipoiate stiategy ? stiuctuie? valuation? feasibility stuuies? Bisinvestment? Neigei ? Acquisitions?
Ni? E?A?Kshiisagai Seives on the Boaiu of leauing Inuian Public Companies?
The Company has ieceiveu a notice unuei Section ??? of the Companies Act? ???? fiom a membei
togethei with necessaiy fee infoiming his intention to piopose the appointment of Ni?
E?A?Kshiisagai as a uiiectoi of the company? Youi Boaiu iecommenus the iesolution set out in item
no? ? of the Notice foi the Appioval of the membeis? None of the uiiectois except Ni? E?A?Kshiisagai
is inteiesteu oi conceineu in the iesolution?
ItemNo.8
Company is iequiieu to amenu its Aiticles of Association subject to the applicable laws to ieflect
the teims anu conuitions of the uefinitive agieements enteieu into with the investois? The pioposal
is foi incoipoiating the impoitant iights of the investois in the Aiticles of Association as a sepaiate
PartII?The pioposal is foi the acceptance of the membeis? Youi Boaiu iecommenus the iesolution
set out in item no? ? of the Notice foi the Appioval of the membeis?
By oiuei of the Boaiu
Su??
RajeshKumar.K
CompanySecretary
Place? valapau
Date: 02.07.2012
39
MANAPPURAM FINANCE LIMITED
Regd. Office: V/104, Manappuram House,Valapad P.O., Thrissur - 680 567
ATTENDANCE SLIP
Members Folio No ………………………………..
Client ID No ………………………………..
DP ID No ……………………………….
Name of the Member ……………………………….
Name of Proxy Holder ……………………………….
No.of shares held ……………………………….
I hereby record my presence at the Annual General Meeting of the company held on Thursday the 2
nd
August 2012 at 10.30 AM at
Anugraha Auditorium, Valapad, Thrissur - 680 567.
Signature of Member/Proxy
Notes:
1. Members/proxy holders are requested to produce the attendance slip duly signed for admission to the meeting hall.
2. Members are requested to bring the copy of the notice of Annual General Meeting.
………………………………………………………………………………………………………………………………………………….
MANAPPURAM FINANCE LIMITED
Regd. Office: V/104, Manappuram House, Valapad P.O., Thrissur - 680 567
PROXY FORM
Members Folio No/ Client ID ………………………
I/We……………………………………………………..……..……of…………………………………………………………………in the district
of ……………………………………………being a member/members of Manappuram Finance Limited hereby appoint
…………………………...of ………………………………………..in the district of………………..or failing him/her
…………………………………of ………………of ……………………………………………… in the district of
……………………………………. as my/ our proxy to vote for me/us on my/our behalf at the Annual General Meeting of the
company to be held on Thursday, the 2
nd
day of August 2012 at 10.30 AM and any adjournment thereof.
Signed this ……………………………….day of …………………………2012.
Note:
If it is intended to appoint a proxy the form of proxy should be completed and deposited at the Registered office of the company at
least 48 hours before the commencement of meeting.
MANAPPURAM FINANCE LIMITED
Regd. Office: V/104, Manappuram House, Valapad P.O, Thrissur - 680 567
Ph: (0487) 2391306, 2391892, 2399303. Fax No. (0487) 2399298
E-mail: [email protected], Website: www.manappuram.com
8
th
June, 2012
Dear Shareholder,
I am very happy to inform you that Manappuram Finance Ltd. will annually award five awards
given as below for the children of its shareholders, based on the marks obtained in the
S.S.L.C/equivalent examination.
First Prize : 5000/-
Second prize : 3000/-
Third Prize : 2000/- (3 Nos.)
He/She should pursue higher education. The child also should have a consistently high academic
record. For a child to be eligible for this award; his/her parent should have been a shareholder of
the company as on March 31, 2012.
The prize for the Academic year 2011-12 will be awarded at our Annual General Meeting which
will be held at Anugraha Auditorium, Valapad P.O, Thrissur 680 567 on Thursday, August 2,
2012 at 10.30 A.M.
Interested Shareholders are requested to forward a written application along with copy of the
supporting mark list duly attested by a Gazetted officer to Shri. Rajesh Kumar K, Company
Secretary at the above address. The completed application should reach the registered Office of
the Company Latest by July 25, 2012.
The decision of the Board will be final in this regard.
Yours sincerely
Jagadish Capoor
Sd/-
Chairman
Note
Events at
Manappuram
GZ\^hiZgZYd[ÒXZ
V/104 Manappuram House
Valapad PO, Thrissur 680567, Kerala
www.manappuram.com
doc_835059861.pdf
The report for the financial year 2011 - 2012 of manappuram finance limited.
20th Annual Report 2011-12
Reliability
for all seasons
Forward-looking statements
In this Annual Report, we have disclosed forward-looking information to enable investors to comprehend our prospects and take
investment decisions. This report and other statements - written and oral – that we periodically make contain forward-looking
statements that set out anticipated results based on the management’s plans and assumptions. We have tried wherever possible
to identify such statements by using words such as ‘anticipate’, ‘estimate’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’, and words of
similar substance in connection with any discussion of future performance. We cannot guarantee that these forward-looking state-
ments will be realised, although we believe we have been prudent in assumptions. The achievements of results are subject to risks,
uncertainties, and even inaccurate assumptions. Should known or unknown risks or uncertainties materialise, or should underlying
assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated, or projected. Readers should
keep this in mind. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new infor-
mation, future events or otherwise.
ABOUT MANAPPURAM
04 Business Highlights
07 Corporate Identity
10 Chairman’s Communiqué
1
2
BUSINESS REVIEW
14 Reliability for all Seasons
19 Core Strengths
20 Brand Ambassadors
22 Human Capital
23 Social Commitments
3
BOARD AND MANAGEMENT REPORTS
24 Board of Directors
26 Directors’ Report
32 Management Discussion and Analysis
36 Report on Corporate Governance
4
FINANCIAL SECTION
46 Auditors’ Report
50 Balance Sheet
51 Profit & Loss Account
52 Notes
86 Cash Flow Statement
91 Corporate Information
Read about us
Focus and
foresight
The initiative of one visionary helped
improve many lives in more ways than one.
When Mr. V. C. Padmanabhan founded Manappuram in 1949 in the coastal Kerala village of
Valapad, his efforts helped fulfil the financial priorities of the local people — mostly farmers
and fisher folk — by providing access to quick loans in times of distress.
In those days, India was a fledgling republic and its banking services were underdeveloped.
Since then, the Company has grown rapidly to emerge as one of the most popular options
for fast and secure gold loan borrowings. In the year 1992, Manappuram General Finance
and Leasing Ltd. was incorporated.
Today, as Manappuram Finance Ltd., we have become one of the largest asset-based
NBFCs in India, thanks to our pioneering spirit, our culture of innovation, and our
sophisticated technology platform which assures safe and secure transactions.
Gold enjoys close
associations with almost all
aspects of civilised life. In
India, it is largely looked upon
as a cherished possession for
ornamentation or as a matter
of pride and social prestige.
Annual Report 2011-12
2
3
The outcome: India is home to 18,000
tonnes of privately-held gold assets,
of which hardly 10% is monetised.
At Manappuram, our vision is to
help unlock the value of this national
asset, and enable people from a
wide spectrum of society to achieve
ÒcVcX^VahZXjg^inVcYZXdcdb^X
empowerment through gold loans.
DjgZ[[dgihYg^kZÒcVcX^Va^cXajh^dc
for the disadvantaged sections of
the population, who have no access
idbV^chigZVbÒcVcXZ!VcYVgZ
often exploited by unscrupulous
moneylenders.
:kZc^ci]ZkdaVi^aZldgaYd[ÒcVcXZ
and markets, with upswings and
downturns, gold continues to enjoy
enduring value, protecting hard-earned
hVk^c\h[gdb^cÓVi^dcVgnYZkVajVi^dc!
and has emerged as a reliable source
of asset-based borrowing.
At Manappuram, we honour gold as a
timeless wealth creator and an enabler
of social security for all seasons,
keeping alive a faith, nourished by
ancient traditions.
99.1%
of assets under management
(AUMs) represent gold loans
as on March 31, 2012
98%
contribution of gold loans to
total interest income in 2011-12
76%
growth in gold loan
disbursement in 2011-12
4
5
Annual Report 2011-12
Total income
4-year CAGR 140.29%
0
7
-
0
8
7
9
6
.
5
9
1
,
6
6
1
.
0
9
4
,
7
8
2
.
0
1
1
1
,
8
1
5
.
2
6
2
6
,
5
5
8
.
4
5
0
8
-
0
9
1
0
-
1
1
0
9
-
1
0
1
1
-
1
2
1
2
4
.
7
8
%
(` in millions)
Profit after tax
4-year CAGR 130.40%
0
7
-
0
8
2
0
9
.
8
9
3
0
2
.
9
5
1
,
1
9
7
.
2
1
2
,
8
2
6
.
6
4
5
,
9
1
4
.
6
1
0
8
-
0
9
1
0
-
1
1
0
9
-
1
0
1
1
-
1
2
1
0
9
.
2
5
%
(` in millions)
0.32%
net NPA of gold loans as on
31st March, 2012
0.46
million new customers added
during 2011-12
24%
increase in gold holdings as on
31st March, 2012
AUM
4-year CAGR 112.18%
0
7
-
0
8
5
,
7
8
3
9
,
8
6
7
2
6
,
1
7
6
7
5
,
4
9
1
1
1
6
,
3
0
8
0
8
-
0
9
1
0
-
1
1
0
9
-
1
0
1
1
-
1
2
(` in millions)
5
4
.
0
7
%
Net interest income
4-year CAGR 121.32%
0
7
-
0
8
6
5
3
1
,
2
7
5
3
,
4
1
3
8
,
4
9
6
1
5
,
6
6
7
0
8
-
0
9
1
0
-
1
1
0
9
-
1
0
1
1
-
1
2
(` in millions)
8
4
.
4
0
%
Cost of borrowing
0
7
-
0
8
1
0
.
7
2
1
2
.
0
2
9
.
8
4
9
.
1
6
1
2
.
6
0
8
-
0
9
1
0
-
1
1
0
9
-
1
0
1
1
-
1
2
(%)
Earnings per share (basic)
4-year CAGR 39%
0
7
-
0
8
1
.
8
8
2
.
1
9
4
.
0
9
7
.
6
1
7
.
0
6
0
8
-
0
9
1
0
-
1
1
0
9
-
1
0
1
1
-
1
2
(`)
-
7
.
2
2
%
AUM per branch
0
7
-
0
8
1
8
.
2
1
9
.
5
2
5
.
9
3
6
.
4
3
9
.
7
0
8
-
0
9
1
0
-
1
1
0
9
-
1
0
1
1
-
1
2
(` in millions)
9
.
0
7
%
Net worth
4-year CAGR 124.95%
0
7
-
0
8
9
2
9
.
8
2
1
,
6
7
8
.
7
2
6
,
1
0
5
.
6
0
1
9
,
2
3
9
.
5
7
2
3
,
8
1
0
.
4
4
0
8
-
0
9
1
0
-
1
1
0
9
-
1
0
1
1
-
1
2
(` in millions)
2
3
.
7
6
%
3
4
4
b
p
s
Graphs not to scale
Business Review Board and Management Reports Financial Section About Manappuram
844
new branches opened
during 2011-12
5,000+
new employees added to the
Manappuram family during 2011-12
6
7
Annual Report 2011-12
2010-11 2011-12
Return on average assets 5.04% 4.89%
Return on equity 26.24% 26.57
Leverage 3.47 4.49
Capital adequacy ratio 29.13% 23.39%
Income pie in 2011-12
(` in millions)
Sources of fund in 2011-12
(` in millions)
Overdraft, Working Capital Demand Loan
(WCDL) and Short Term Loan (STL)
71,605
Securitisation and assignment 19,164
Debentures 14,740
Commercial papers 2,320
Subordinate debt 4,267
Others 12
71,605
19,164
14,740
2,320
4,267
12
Interest income 26,120
Fee-based income 35
Other income 403
26,120
403
35
Pie charts not to scale
Headquartered in Kerala,
Manappuram Finance Limited
is India’s first listed and highest
credit-rated gold loan company.
Incorporated in 1992, we have since
emerged as one the of the fastest
growing gold loan companies in India.
We provide our customers with
‘instant’ credit at reasonable rates of
interest, primarily against their used
gold jewellery, to help them fulfil
short-term financial priorities.
Manappuram Finance helps a
vast cross-section of customers to
translate their aspirations into reality
and lead a life of dignity.
Business Review Board and Management Reports Financial Section About Manappuram
8
9
Annual Report 2011-12
Gold loan
Customers can pledge gold ornaments
or jewellery and draw cash against it.
Depending on the net weight and purity
of the gold, cash is disbursed. They can
choose from various schemes according
to their requirements.
Money transfer
Customers can avail fast, easy and safe
money transfer worldwide instantly.
The money transfer service is available
across our pan-India branch network;
moreover no bank account is needed for
amounts up to ` 50,000.
Foreign exchange
Manappuram was one of the first NBFCs
from Kerala to have been awarded the AD
(Authorised Dealer II) license by the Reserve
Bank of India (RBI). We have been authorised
by the RBI to act as a full-fledged money
changer, undertaking currency exchanges
and sale of travellers’ cheques for a variety
of purposes, permitted under the Foreign
Exchange Management Act (FEMA).
Customer-first strategy
Our products aim at delivering maximum
value to our customer, irrespective of their
economic status. We believe that everyone
values time, and therefore everyone is
entitled to courtesy and prompt service,
with high levels of transparency.
Uncompromising integrity
We follow ethical values and practices in all
our dealings. We believe in transparency
and in following the laws of the land without
ambiguity. We value the contributions of all
our stakeholders and we take special pride
in recognising those contributions.
Cutting-edge technology
As a pioneer in the introduction of
technology into the gold loan sector,
we believe in constantly updating our
technology to keep costs low and deliver
accelerated customer service. We have
standardised our processes to enable
better and more cost-effective access to
our customers. And we believe in fostering
innovation to elevate our organisation to
the next level.
Business areas
Pillars of our
philosophy
Presence across states/
Union Territories
20
in 2010-11
26
in 2011-12
>
Branches
2,064
in 2010-11
2,908
in 2011-12
>
Expanding far and wide
Customers
1.19 mn
in 2010-11
1.64 mn
in 2011-12
>
Talent pool
16,751
in 2010-11
21,924
in 2011-12
>
Total gold loan disbursals
180,569 mn
in 2010-11
316,982 mn
in 2011-12
>
Gold holdings
52.97 tonnes
in 2010-11
65.57 tonnes
in 2011-12
>
Jammu &
Kashmir
Himachal
Pradesh
Uttarakhand
Andaman
7
1
3
2
Punjab
Chandigarh
Haryana
Rajasthan
Delhi
Uttar Pradesh
Bihar
Jharkhand
Assam
49
4
43
59
62
52
9
1
4
West Bengal
75
Orissa
Chhattisgarh
Madhya Pradesh
Gujarat
Daman and Diu
Maharashtra
Andhra Pradesh
Karnataka
Kerala
Tamil Nadu
Pondicherry
Goa
57
34
77
83
1
144
533
532
500
557
11
8
Pan-India coverage
Map not to scale
STRONG PRESENCE IN
SOUTH INDIA (73% OF
BRANCHES)
Business Review Board and Management Reports Financial Section About Manappuram
10
11
Annual Report 2011-12
Chairman’s
communiqué
V.P. Nandakumar
Executive Chairman
ECONOMIC OUTLOOK
The year 2011-12 saw the global economy lose traction once again,
in the wake of a deepening Eurozone crisis. Barring Germany, most
EU countries are faced with slow growth, even recession, along with
unsustainably high levels of debt. The crisis has impacted India too,
with the overall risk-averse sentiment crippling the flow of foreign
investment. Besides, our exports to Europe have fallen, aggravating
our trade deficit.
Undoubtedly, India’s macro-economic landscape also took a turn for
the worse. Contrary to the optimism that reigned at the beginning
of the year, GDP growth was restricted to a mere 6.5%, belying
expectations of much higher growth. The slowdown had an adverse
impact on the government’s finances, with revenues falling short
while the expenditure side overshot the estimates on account of
higher fuel and food subsidies. The country’s fiscal deficit moved into
the danger zone at 5.8% of the GDP.
Inflationary pressures remained high for much of the year,
occasionally flirting with the double digit mark. India’s current
account deficit stood at 3.9% of the GDP largely due to a record
trade deficit of US$ 185 billion with imports of oil and gold leading
the way. With the economy slowing down and corporate profitability
under strain, stock markets were down and inflows of foreign
investments were muted. This has put the Indian rupee under
severe pressure, which fell from levels of ` 45 per US$ in July, 2011
to a low of about ` 54 per US$ in December 2011. Some amount
of moderation in inflation was seen in the final quarter, which
encouraged the RBI to go ahead with a 50-basis point cut in interest
rates in April 2012, after 13 successive rounds of hikes in interest
rates.
The outlook for the coming fiscal (2012-13) is mixed, at best. While
government sources would have us believe that a recovery in
growth is on the cards, the market expectations are generally not
positive.
GOLD LOANS SECTOR
For the gold loans sector, 2011-12 began well with the leading
gold loan NBFCs reporting continuing gains in volumes and market
shares. However, in the final quarter of the year, the sector ran into
headwinds, with the Reserve Bank of India (RBI) intervening strongly
to address perceived risks building up in the financial system on
account of increasing exposure to gold loan companies. It may be
recalled that RBI’s tightening had actually begun in, February 2011,
with a notification that denied priority sector status to any finance
extended by the banking sector to the gold loan NBFCs. It had
the impact of raising the borrowing costs of the gold loan NBFCs
by about two percentage points. This year, on March 21, the RBI
imposed a cap on the loan to value (LTV) ratio for NBFCs at 60% of
the value of collateral. RBI’s concern is that the rapid growth of gold
loan companies, along with a dependence on public funds, poses a
systemic risk. Further, there was concern about concentration risks
in the gold loan NBFCs, arising from their single-product focus.
While the market has interpreted RBIs stance as being negative to
the gold loans sector, as insiders in the industry, we hold a different
view. Indeed, we are convinced that the RBI has acted out of its
I HAVE GREAT PLEASURE IN PRESENTING
TO YOU OUR 20TH ANNUAL REPORT
FOR THE YEAR ENDED MARCH 31, 2012.
OUR PERFORMANCE DURING THE YEAR,
SEEN IN THE CONTEXT OF AN ECONOMIC
SLOWDOWN, WAS QUITE SATISFACTORY. AT
THE SAME TIME, AFTER THE RECENT YEARS
OF RAPID GROWTH, WE ARE NOW MOVING
INTO A PHASE OF CONSOLIDATION. WITH
INDIA’S MACRO-ECONOMIC FUNDAMENTALS
LOSING SHINE, AND UNCERTAINTIES
EMERGING IN THE REGULATORY
ENVIRONMENT, THIS IS A GOOD TIME TO
RECHARGE AND RE-FOCUS.
For the gold loans sector,
2011-12 began well with the
leading gold loan NBFCs
reporting continuing gains in
volumes and market shares.
Business Review Board and Management Reports Financial Section About Manappuram
12
13
Annual Report 2011-12
key responsibility to prevent critical risks from materialising. At the
same time, we also believe that gold loans can be a transformative
force in India’s financial sector, particularly in promoting financial
inclusion and in monetising India’s vast stock of private gold.
Therefore, it’s imperative that we do not lose sight of the significant
upside potential that gold loans hold. By restricting the LTV to 60%
and making it applicable only to the NBFCs, there is a real risk of
breathing new life into the unorganised sector (local pawnbrokers
and moneylenders), and of stifling the original innovators in the
business. However, we expect the RBI to continue to keep a close
watch on the evolving situation and recalibrate its policy responses
as required. The fact that they have now constituted a working
group, led by Shri K.U.B. Rao, to study the business of gold loans is
a positive step in this direction, and we are hopeful of a favourable
outcome.
WIDER RELEVANCE OF GOLD LOANS
Ultimately, the true test of sustainability of a business is not the
returns to promoters and shareholders, but how much of value flows
back into the society. On this count, India owes a debt to its gold
loan NBFCs. Gold kept idle in our lockers and vaults is a drag on the
economy because it keeps billions of dollars in savings out of the
financial system. Gold loans generate economic activity out of an
unproductive asset. Thanks to the momentum given by the gold loan
NBFCs, a host of new players have entered the business and we can
expect more of our idle gold put to productive use. Incidentally, the
Indian government’s own efforts to monetise private gold, notably
through the Gold Bond and the Gold Deposit schemes, were failures.
Financial inclusion is a national priority, and gold loans can be a
useful tool in achieving this objective. Unlike other indicators of
wealth, the larger part of India’s private gold (about 65%) is held by
rural India. The poorer households own gold in significant measure,
as part of their savings. In a context, where the economically
challenged and the financially excluded Indian households are known
to possess gold in some measure, gold loans represent the prudent
way forward. What’s more, these gains are delivered even as
disadvantaged borrowers pay less interest on their borrowings than
before. An unintended consequence of the expansion of the gold
loans NBFCs has been that unregulated local financiers are forced
to drop their interest rates in response to the increased competition.
Not surprisingly, we believe there’s every reason to be optimistic
about the long-term future of India’s gold loan sector.
COMPANY’S PERFORMANCE
In keeping with the trend of recent years, your Company’s
performance in the year under review was, by all measures,
remarkable. Net profit for the financial year ended March 31, 2012
increased by 109% to ` 5,914.6 million, compared to ` 2,826.6
million for 2010-11. There was substantial growth in Assets under
Management (AUM) which stood at ` 116,308 million, a 54%
increase over the previous year’s level of ` 75,491 million. Total
gold loan disbursements during the year amounted to a staggering
Net profit for the financial year ended March 31, 2012 increased by
109% to ` 5,914.6 million, compared to ` 2,826.6 million for 2010-11.
There was substantial growth in Assets under Management (AUM)
which stood at ` 116,308 million, a 54% increase over the previous
year’s level of ` 75,491 million.
` 316,982 million, against ` 180,569 million in the previous year.
Operating income for the year grew 124.43% and stood at
` 26,155.5 million. Importantly, you can be proud that your Company
is a leading tax payer of Kerala, with provision towards income
tax amounting to ` 2,857.5 million, compared to ` 1,412.3 million
the year before. You will also be pleased to know that the Board
of Directors has proposed a final dividend of ` 1 per share of face
value of ` 2, over and above the interim dividend of ` 0.50 per share
declared earlier this year.
OTHER ISSUES
In February, 2012, the RBI had issued a public notice that censured
the Company for continuing to accept deposits from the public after
becoming a non-deposit taking NBFC in March, 2011. While we
have clarified that the Company was accepting retail subscriptions to
its secured NCDs (which is permitted), a related issue had also come
up regarding deposits accepted by a proprietary concern owned by
me in my personal capacity. In the light of the concerns expressed
by RBI, I have since transferred the entire amount of these deposits
into an escrow account with a local nationalised bank, and the bulk
of the deposits have now been repaid.
Arising from these developments, the top management of the
Company initiated a series of measures to review and improve
governance standards, and benchmark it to best practices. The
leading law firm of Amarchand Mangaldas was taken on board to
assist with the review exercise, and we are now in the process of
implementing their recommendations.
Lastly, I am indebted to all our stakeholders—the distinguished
shareholders, employees, our lending banks and financial
institutions, our foreign and domestic investors, the regulatory
bodies and the government—for their valuable contributions in
our success. I must make a special mention of the Reserve Bank
of India, which has devoted considerable time and resources to
ensure the security of the financial services sector and the long-term
survival of the gold loan sector. I mentioned at the beginning that we
are now in a phase of consolidation. By definition, consolidation is
not half as exciting as rapid growth; nevertheless, over the long haul,
it is vital for the health of the organisation. I seek your whole-hearted
support, so that the Company is able to achieve its true potential in
the years to come.
With best wishes,
V.P. Nandakumar
I must make a special mention of the Reserve
Bank of India, which has devoted considerable
time and resources to ensure the security of
the financial services sector and the long-term
survival of the gold loan sector.
Business Review Board and Management Reports Financial Section About Manappuram
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Annual Report 2011-12
“For more than two thousand years, gold’s natural
qualities made it man’s universal medium of
exchange. In contrast to political money, gold is
honest money that survived the ages and will live
on long after the political fiats of today have gone
the way of all paper.”
Hans F. Sennholz
At Manappuram, we believe gold
has an enormous potential to help
strengthen developing economies
like India.
ENCOURAGING MONETISATION
Only a small proportion of the privately-held gold assets of Indian
households (mostly in the form of jewellery) is monetised, depriving
the economy of much-needed liquidity. Borrowing against gold
(monetisation) facilitates economic activity. At Manappuram, we
bring the power of gold to help accelerate economic growth.
DRIVING FINANCIAL INCLUSION
Around 65% of India’s private gold is held in rural areas. Due to the
lack of access to banks, poor people continue to invest their savings,
primarily in gold. Besides, there are strong cultural factors, which
make gold not only a desirable, but also a necessary asset to hold.
At Manappuram, we are driving rural financial inclusion through our
extensive reach, low operating costs (minimal compared to banks)
and the focus on a single product.
TAPPING THE MULTIPLIER EFFECT
Gold loans are typically small-ticket loans, falling within the definition
of micro-credit. In gold loans, delinquency rates are well below 1%
and any productive activity can be financed year after year, with
only an initial capital outlay, without need for periodic replenishment.
It sets into motion a multiplier momentum of sustainable economic
empowerment. In contrast, in a micro-credit model where recovery
rates are low (as with most government sponsored lending
programmes), a significant portion of the funds is lost in each
disbursement cycle. In the long-term, the cumulative compounded
cost to the economy is heavy, manifest in the form of depressed
GDP growth and lower living standards.
EXTENDING EFFICIENCY GAINS
Gold loans are typically short-term borrowings and, thanks to
technology and modern management techniques, they have
become a source of instant credit to the common man — in the way
a credit card has become for the well-off. For poor people surviving
on daily wages, this amounts to a critical advantage, as they cannot
afford to forego their daily earnings, or incur all manner of incidental
costs, in trying to get hold of a small loan. Besides, over the years,
we have seen that small loans disbursed promptly help kick-start,
and help keep alive, micro-entrepreneurship.
DISCOURAGING USURY
As the organised NBFC gold-loan companies expand their
reach, they displace the vice-like grip of the pawnbrokers and
moneylenders on poor people. It is a process with enormous
social relevance in a developing nation like India. Moreover, gold-
loan companies contribute to the national exchequer by paying
substantial amounts of corporate income tax.
Business Review Board and Management Reports Financial Section About Manappuram
“Gold bears the confidence of the world’s
millions.... It has been that way through all
recorded history. There is no reason to believe it
will lose the confidence of people in the future.”
Oakley R. Bramble
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17
Annual Report 2011-12
At Manappuram, we help
strengthen this con?dence through
our easy-access gold loans and
risk-focused business model.
ROBUST IT INFRASTRUCTURE
Possesses IBM powered IT framework, ensuring accurate and
real-time information access for faster disbursal
Significant front-end automation, reducing human intervention
Centralised technology for offsite surveillance (for all
branches), enabling efficient monitoring and controlling
Proactive IT helpdesk troubleshooting IT issues across all
branches
State-of-the-art on-site and offsite (Chennai) disaster recovery
centre
Modern IT tools detect the need for preventive maintenance of
all IT devices
Developed a release management system, enabling in-house
testing of applications before pan-organisational rollout
STRONG INTERNAL AUDIT AND FRAUD
CONTROLS
Stringent collateral approval process
Routine inspections, backed by a proactive vigilance
Pledges are periodically checked by the internal audit team
Strict Know Your Customer (KYC) compliance
Employee profiling, tracking, and regular staff rotation across
departments and branches
FAST ASSET VALUATION AND RISK APPRAISAL
Decades of experience in gold evaluation
Employees are regularly trained in gold-appraisal methods
Evaluating purity of gold through touchstone test, nitric acid
test, sound test and hallmark check; ensures accuracy and
reliability
Follows a three-level gold appraisal process to ensure purity
GOLD SECURITY AND DE-RISKED CUSTODIAL
Post verification, assets are transferred to highly
secured vaults
Gold stored under joint custody
Cash balance in branches regulated, monitored and
periodically verified
Premises usually located above ground floor, with 24x7 CCTV
camera and burglar alarm system
Insurance coverage for pledged gold
ORGANISED GOLD LOANS IN
INDIA HAVE GROWN AT 40%
CAGR FROM 2002-12
CONSISTENT GROWTH
Business Review Board and Management Reports Financial Section About Manappuram
“Truth, like gold, is to be obtained not by
its growth, but by washing away from it all
that is not gold.”
Leo Tolstoy
We are elevating our governance
standards to enhance transparency
and stakeholder trust.
18
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Annual Report 2011-12
At Manappuram, we decided to constitute an independent
committee of members, under the Chairmanship of Mr. Jagdish
Capoor (former Deputy Governor of RBI and former Chairman of
HDFC Bank) to enhance corporate governance standards.
The committee will review all relevant aspects of operations,
systems, controls and organisational structure, including the Board
composition and effectiveness. A leading law firm, Amarchand
Mangaldas, will assist the committee in this independent review
exercise.
We launched an ethics helpline service in collaboration with KPMG
for improving corporate governance. In addition, we also entered
into a contract with IBM to improve the IT support infrastructure
to an international standard. These two initiatives will improve the
quality of services extended to customers. This is perhaps the first
time in India an NBFC has sought partnership with KPMG and IBM
to improve the quality of its services.
Gold-driven
excellence
Front-runner in
the high-growth
driven gold loan
industry
Strong pan-India
distribution
network
Flexible gold loan
schemes, high
quality customer
service and short
response time
Consistent growth
trajectory and
impressive balance
sheet, enable strong
capital raising ability
Experienced
and professional
management,
supported by a
motivated team, is
taking Manappuram
to greater heights of
achievement
Robust support system,
IT infrastructure,
appraisal process,
internal audit,
inventory control and
safety systems
Enjoys highest CRISIL
rating (A1+) for short-term
debt instruments, including
commercial paper. For non-
convertible debentures (NCD)
issues, possess CRISIL (A+),
ICRA (LA+), Brickwork (AA-)
and CARE (A+)
Multiple sources of low-
cost funds by way of
credit lines from 34 banks,
unutilised limits with banks
VcYÒcVcX^Va^chi^iji^dch!
commercial papers (short-
term money markets), retail
NCDs and bonds
SOUTHERN INDIA
REPRESENTS THE LARGEST
MARKET FOR GOLD LOANS,
ACCOUNTING FOR 40% OF
INDIA’S GOLD DEMAND,
FOLLOWED BY THE WEST
(~25%), NORTH (20-25%) AND
EAST (10-15%). MOREOVER,
SOUTH ACCOUNTS FOR
85-90% OF GOLD LOANS
MARKET IN INDIA.
SOUTH, THE GOLD HUB
Business Review Board and Management Reports Financial Section About Manappuram
Puneeth Rajkumar
20
21
Annual Report 2011-12
Endorsed by the
silver screen
Brand Manappuram
is endorsed by top
stars from Bollywood
VcYi]ZÒab^cYjhig^Zh
of Andhra Pradesh,
Kerala, Karnataka,
Tamil Nadu,
Maharashtra, Odisha
and West Bengal.
These campaigns have
enhanced our brand
visibility, and earned a
h^\c^ÒXVcib^cYh]VgZ
among the rural and
urban populace.
Venkatesh
Mohan Lal
Vikram
Akshay Kumar
Mithun Chakrabarty
Sachin Khedekar
Uttam Mohanty
Business Review Board and Management Reports Financial Section About Manappuram
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Annual Report 2011-12
Our Team represents
our brand mettle
At Manappuram, we are enhancing our people competencies
through prudent recruitment, continuous training and attractive
reward mechanism to improve retention.
PEOPLE INITIATIVES
Recruited 1,500+ branch managers and several regional
managers (especially for audit and operations), strengthening
operational parameters across branches
Maintained a monthly training calendar for all business
functions; to upgrade people knowledge in a constantly
evolving industry scenario
Enhanced focus on online training through weekly circulation
of training modules across all branches
Encouraged an online feedback mechanism for transparency
Implemented a suggestion scheme for innovative thinking
Offered Employee Stock Ownership Plan (ESOP) to senior
and line managers to enhance their sense of ownership and
belonging
Sponsored 110 employees for MBA degree from Sikkim
Manipal University
Commenced an employee welfare cell to enhance employee
engagement activities
Possesses a dedicated team to redress employee grievances
through online platform
Plan to incorporate Total Quality Management (TQM) in
collaboration with an external consultant to optimise resource
productivity
A social
commitment
Our social endeavours are conducted through the intervention of
Manappuram Foundation at Valapad, Kerala. The Foundation has
introduced free health insurance for people living below the poverty
line at Thrissur district in Kerala.
JANARAKSHA MANAPPURAM HEALTH
INSURANCE FOR BPL FAMILIES
The Janaraksha – Manappuram Free Health Insurance Scheme
provides free health insurance to 20,000 BPL families across seven
identified Panchayats around Valapad. In the two years since the
scheme began, nearly 5,000 families have benefited, having been
reimbursed a total amount of ` 32.5 million.
SAROJINI PADMANABHAN WOMEN
EMPOWERMENT PROGRAMME
This initiative seeks to provide a sustainable source of income to
rural women through the creation of Self-Help Group SHGs.
These SHGs involve ownership and management of farming and
farm-related activities in to generate sustainable income.
OTHER INITIATIVE
The Manappuram Foundation also provides financial assistance
to needy individuals, charitable institutions, and other worthy
causes. Over the last two years, the Foundation has disbursed a
total amount exceeding ` 5 million on this account. Some of the
major beneficiaries include the Alpha Pain and Palliative Care
Clinic, Edamuttom, an independent institution that has specialised
in palliative care and Santhi Medical Info Centre that provides free
dialysis to the needy.
Business Review Board and Management Reports Financial Section About Manappuram
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Annual Report 2011-12
The Board
1 V. P. Nandakumar
57, Executive Chairman
He holds a masters degree in Science from Calicut University
and is also a Certified Associate of Indian Institute of Bankers.
He is the chief Promoter of the Manappuram Group of
Companies and has in the past been associated with the
banking industry in various capacities. He is the Chairman of
the Equipment Leasing Association (India) and the Kerala Non-
Banking Finance Companies Welfare Association. He has been
the Director of our Company since
July 15, 1992.
2 I. Unnikrishnan
47, Managing Director
He holds a bachelors degree in Commerce from Calicut
University and is also a fellow member of the Institute of
Chartered Accountants of India. He has, experience in
rendering advisory services relating to NBFCs. He has in the
past, worked with HAWA-MK Electrical Limited. He has been
a Director of the Company since October 11, 2001. He was
appointed as the Managing Director on October 1, 2006.
3 B. N. Raveendra Babu
59, Joint Managing Director
He holds a masters degree in Commerce from the Calicut
University and completed his inter from the Institute of
Certified Management Accountants. He has worked in a senior
position in the Finance and Accounts Department of Blue
Marine International in the U.A.E. He has been the Director
of our Company since July 15, 1992. He was appointed as the
Joint Managing Director on January 11, 2010.
4 V. R. Ramachandran
59, Independent and Non Executive Director
He holds a bachelors degree in Science from the Calicut
University and a bachelor’s degree in law from the Kerala
University. He has over 32 years of work experience and is a
civil lawyer enrolled with the Thrissur Bar Association. He has
been a Director of the Company since April 19, 2002.
5 A. R. Sankaranarayanan
85, Independent and Non Executive Director
He holds a masters degree in Science from Annamalai
University and is a retired officer from the Indian Revenue
Service. He has over 50 years of work experience and
has in the past worked as Director of the Prime Minister’s
Secretariat, Managing Director of SAIL International Limited
and Director of the Federal Bank Limited. He has been a
Director of the Company since August 18, 2003.
6 P. Manomohanan
70, Independent and Non Executive Director
He holds a bachelor’s degree in Commerce from Kerala
University and also a diploma in Industrial finance from Indian
Institute of Bankers. He is also a Certified Associate of the
Indian Institute of Bankers. He has over 38 years of work
experience in the RBI and in the regulatory aspects of NBFCs.
He has in the past held the post of General Manager
of Reserve Bank of India. He has been a Director of the
Company since August 18, 2003.
7 V. M. Manoharan
65, Independent and Non Executive Director
He holds a masters degree in Commerce from University
of Kerala and holds a Doctor of Philosophy in International
Business (Commerce) from Cochin University of Science
and Technology. He has over 40 years of work experience
and has, in the past, held the positions of Deputy Director,
Collegiate Education, Thrissur Zone and Dean, KMCT school
of Business, Kozhikode. He also held the position of Principal
1
7
2
8
3
9
4
10
5
11
6
12
in various Government Colleges in Kerala and was a Syndicate
Member of University of Calicut. Presently, he is a member of
the steering committee of Vidya International Charitable Trust,
Thalakkottukara, Thrissur, and of the All India Management
Association and the Association of Indian College Principals.
He has been a Director of the Company since August 18, 2003.
8 M. Anandan
61, Independent and Non Executive Director
He holds a bachelors degree in Commerce from the
Madras University and is a qualified Fellow Chartered
Accountant. He has more than 30 years of work experience
in the field of financial services. He has, in the past,
worked with Cholamandalam DBS Finance Limited and
with Cholamandalam MS General Insurance Limited as its
Managing Director. He was also the Director in Charge of
DBS Cholamandalam AMC Limited and DBS Cholamandalam
Securities Limited. Currently, he is the Chairman of Aptus
Value Housing Finance Limited and is on the Board of Equitas
Micro Finance India Private Limited as a non executive
director. He has been a Director of the Company since
August 17, 2009.
9 Shailesh J. Mehta
62, Independent and Non Executive Director
He has completed his Bachelor of Technology in Mechanical
Engineering from Indian Institute of Technology, Mumbai, and
holds a masters degree in science in Operations Research
from Case Western Reserve University. He holds a Doctor of
Philosophy degree in Operation Research and Human Letters
from the California State University and in Operation Research
and Computer Science from Case Western Reserve University.
He has over 38 years of work experience and has held the
positions of President, Granite Hill Capital Ventures, Chairman
and Chief Executive Officer, Providian Financial Corporation,
operating general partner, West Bridge Capital, President
and Chief Operating Officer, Capital Holding and Executive
Vice President, Key Corp (formerly Ameritrust). He has also
held the positions of Chairman and Chief Executive Officer,
Providian Financial Corporation and President and Chief
Operating Officer, Capital Holding. He has been a Director of
the Company since August 17, 2009.
10 Jagdish Capoor
72, Independent and Non Executive Director
He holds a masters degree in Commerce from Agra University
and a fellowship from the Indian Institute of Banking and
Finance. He has more than 39 years of work experience
in banking and finance. He has, in the past, worked as the
Deputy Governor of the Reserve Bank of India, Chairman of
HDFC Bank, BSE, Deposit Insurance and Credit Guarantee
Corporation of India, Unit Trust of India and also as a Director
on the Boards of several commercial banks. Currently, he
is on the Board of Indian Hotels Company Limited, Assets
Care Enterprise Limited, Indian Institute of Management, LIC
Pension Fund Limited and is the Chairman of Quantum Trustee
Company Private Limited. He has been a Director of our
Company since July 20, 2010.
11 Gautam Saigal
46, Nominee and Non Executive Director
He holds a masters degree in commerce from the Calcutta
University and is a qualified Chartered Accountant. He has
over 19 years of work experience, of which over 13 years
has been on the buy side private equity advisory services.
He is the Managing Director of AA Indian Development
Capital Advisory Services. Prior to this he co-led AIG Global
Investment Group’s private equity India advisory team,
advising on private equity investments by various AIG Group
sponsored funds in India. Earlier he was Vice President at SSKI
Corporate Finance, Mumbai. He has served on the Board of
several companies. Presently he is on the Board of Numero
Uno Clothing, Siesta Logistics and Barflex Polyfilms Ltd. He
has been a Director of the Company since August 17, 2009.
12 Sudhindar Krishan Khanna
59, Nominee and Non Executive Director
He has been Chairman of IEP Fund Advisors since 2008.
Previously, he built Accenture’s consulting and outsourcing
businesses in India. He was also the country managing partner
for the Middle East. During his 30-year tenure with Accenture,
he consulted with the Chairmen/CEOs and Boards of Directors
of most leading Indian corporate groups. He serves on the
boards of directors of Innovative Foods, RG Stone, United
Spirits, Peninsula Holdings and Canara HSBC Insurance. He
is also the India President of WPO, a global organisation of
more than 4,600 business leaders. He received his Bachelor of
Arts (Honours) in Economics from St. Stephen’s College (New
Delhi) and is a Chartered Accountant (Valedictorian, from the
Institute of Chartered Accountants of England & Wales).
Business Review Board and Management Reports Financial Section About Manappuram
Directors’ Report
In the recent past, NBFCs engaged in the gold
loan business have been registering fastest
growth. Your Company is also witnessing
substantial growth in terms of business
volumes and human capital, and has acquired
a pan India presence.
Annual Report 2011-12
26
27
To,
The Members
Manappuram Finance Limited
Your Directors are pleased to present the 20
th
Annual Report on the
working of the Company with the Audited Accounts and the Report
of the Auditors for the financial year ended March 31, 2012.
1. FINANCIAL RESULTS
(In ` million)
Description
2011-12 2010-11
Gross Income
26,558.45 11,815.26
Total Expenditure
17,786.39 7,576.30
Profit Before Tax
8,772.06 4,238.96
Provision for Taxes/Deferred tax
2,857.45 1,412.32
Net Profit
5,914.61 2,826.64
Profit b/f from previous year
2,319.84 917.13
Amount available for appropriations
8,228.97 3,743.75
Appropriations:
Transfer to Statutory Reserve
1,182.92 565.33
Transfer to General Reserve
591.48 282.67
Transfer to Debenture Redemption
Reserve
2,208.10 -
Transfer to Capital Redemption
Reserve
- --
Dividend on Preference shares
- --
Interim Dividend on Equity Shares
420.55 --
Tax on Interim Dividend
68.21 -
Proposed Equity Dividend
841.15 500.25
Tax on dividend
136.45 81.14
Balance carried forward to next
year
2,780.11 2,314.36
The comparative operational results shown above reveals the
performance of the Company for the year under report and of
the previous year. It is evident that the Company has achieved
enviable results during the fiscal 2011-12 compared to that
of the previous year. During the year under review gross
total income of the Company rose to ` 26,558.45 million as
against ` 11,815.26 million of the corresponding previous year
marking an increase of 124.78%. Total expenditure for the year
ended March 31, 2012 is ` 17,786.39 million as against
` 7,576.30 million of the previous year.
The Company has posted a record profit after tax of ` 5,915
million for the period under consideration as against ` 2,827
million of the previous year, signifying an increase of 109.23%
over the net profit for the corresponding previous year.
2. DIVIDEND
Your Board is pleased to recommend a final dividend of
` 1 per equity shares (50%- per equity share of ` 2 each) on
the paid up equity capital of the Company. On approval by
the Members at the ensuing Annual General Meeting, the
said dividend would be paid to those Members whose name
appears on the Register of Members as on the date of Book
Closure. The above final dividend includes a special dividend
of 50paise per equity share as commemorative of 20
th
Anniversary of the Company. Members may kindly recall that
the Board has already declared an interim dividend of 50 paise
per equity share during February 2012. Thus the total dividend
for the year is ` 1.50 per equity share of ` 2 per share.
The total cash outflow exclusive of tax on account of equity
dividend for the year 2011-12 would be ` 1,261.70 million
(inclusive of interim dividend) as compared to ` 500.25 million
during the previous year.
3. RAISING OF ADDITIONAL CAPITAL
During the year, Company has issued 1:1 bonus shares which
resulted in the increase of shares by 416,874,188 nos. Further
the Company has issued 7,404,760 shares to its employees
under the ESOP 2009 scheme of the Company resulting in
the paid up share capital increasing to ` 1,682,306,272 as on
March 31, 2012.
4. CAPITAL AND RESERVES
Capital and Reserves of the Company as on March 31, 2012
stood at ` 23,810.08 million. During the year under review the
Company transferred ` 1,182.85 million to Statutory Reserve
5. DEBENTURE REDEMPTION RESERVE
Members may recall that the Company had made a public
issue of Redeemable Non Convertible Debentures during
the year under review. The issue opened on August 18, 2011
and closed on August 26, 2011. The Company has issued
debentures equivalent to ` 4,416 million to the successful
applicants under the issue. The issue proceeds net of
issue expenses have been utilised for the stated purpose
being working capital for lending against the security of
gold jewellery. Under section 117C read with the circulars
issued thereunder the Company should create Debenture
Redemption Reserve (DRR) out of its profits for the purpose of
providing resources for redemption of debentures. During the
year, your Company has transferred ` 2,208.10 million to DRR
in compliance with the above provision out of the profits of the
Company.
6. BUSINESS OUTLOOK
In the recent past, NBFCs engaged in the gold loan business
have been registering rapid growth. Your Company is also
witnessing substantial growth in terms of business volumes
and human capital, and has acquired a pan India presence.
The future for the Company remains robust. Recently, Reserve
Bank of India (RBI) has issued a circular on March 21, 2012
amending the Non-Banking Financial (Non-Deposit Accepting
or Holding) companies Prudential Norms (Reserve Bank)
Directions, 2007 to the effect that all NBFCs shall maintain a
Loan- to Value (LTV) ratio of 60 % for loans granted against
the collateral of gold jewellery. In line with the latest regulatory
measures and encouraged by the Company’s success so
far, we have shaped our business plan for the financial year
2012-13 which will help to realise our long term strategy to
‘energise’ at least 10% of the vast privately held gold reserves
in the country. For this, it is necessary to develop a country-
wide presence to be close to the customers.
About Manappuram
Business Review Board and Management Reports Financial Section
Your Company provides credit, the average size of which is
` 38,582. Your Company has decided to make a way in to
innovative products, improved relationship management,
brand building, efficient customer service, better use of
technology and reduced operational costs which will become
the hallmark of successful NBFCs in future.
7. RESOURCES
Your Directors could successfully mobilise ` 4,416 million from
whole sale debt market by issue of listed Non convertible
Secured Debenture. The Company was also successful in
mobilising funds from the issue of debentures to both retail and
institutional investors and from instruments like Commercial
Paper.
Details of resources raised during the year under review are
given below:
a) Secured Redeemable Non-Convertible Debentures
Your Company continues to issue fully secured
redeemable convertible debentures of ` 1000/- each
on private placement basis, both retail and institutional.
During the year, your Company has raised ` 4416 million
from the public issue of NCDs. The outstanding balance
of Debentures including interest accrued and due as on
March 31, 2012 amounts to ` 14,739.56 million. The
debentures issued on private placement basis are
secured by a floating charge created on the receivables
and other current assets of the Company. The Company
has appointed Trustees to see that the interests of
debenture holders are well protected.
b) Unsecured Bonds.
The Company has issued unsecured Subordinated Bonds
in the nature of Promissory Notes on private placement
basis. These Bonds will be treated as Tier II Capital as
per RBI norms. The outstanding figure of these bonds as
on March 31, 2012 amounted to ` 4,266.84 million.
c) Assignment of Receivables
The Company has procured funds through assignment of
receivables to Banks and Financial Institutions during the
year. The aggregate amount assigned as at March 31,
2012 is ` 1916.36 million.
d) Commercial Paper (CP)
During the year, the Company made several issues of
the CPs and the outstanding figure of these CPs as on
March 31, 2012 amounted to ` 232 million.
8. COMPLIANCE WITH NBFC REGULATIONS
Your Company has complied with all the regulatory provisions
framed by Reserve Bank of India for Non-Banking Financial
Companies. The Capital Adequacy Ratio of the Company
as on March 31, 2012 is 23.38 % as against the statutory
requirement of 15%.
However, on 1st February, 2012, the Company received a
letter from Reserve Bank of India (RBI) directing the Company
to disassociate, its name, officials, and infrastructure from that
of any other group concerns carrying on financial activities.
The Company has complied with all the directions issued by
RBI with the professional assistance of reputed corporate legal
firm and management consultants and updated the progress
regularly to RBI.
9. IMPORTANT REGULATORY DEVELOPMENTS
In order to further strengthen the existing regulatory
framework, Reserve Bank of India (RBI) has issued revised
guidelines amending the existing the Fair Practices Code
(FPC). Accordingly, as required under the guidelines, the
Board of Directors of the Company at its meeting held on
24th April, 2012, has approved a new Fair Practices Code.
The Company has posted the new Fair Practices Code at its
website at www.manappuram.com. Further, as required under
the said guidelines, the Company has put in place an elaborate
Customer Grievance Mechanism, a revised Loan Policy and a
revised Auction Policy.
10. DIRECTORS
Retirement of Directors by Rotation
1) Mr. A.R Sankaranarayanan, Director, retires by rotation
and he is eligible for re-appointment.
2) Adv.V.R.Ramachandran, Director, retires by rotation and
he is eligible for re-appointment.
11. CONSERVATION OF ENERGY, TECHNOLOGY
ABSORPTION AND FOREIGN EXCHANGE
EARNINGS & OUTGO - INFORMATION AS
PER SECTION 217 (1) (e) OF THE COMPANIES
ACT, 1956
The Company does not have any activity relating to
conservation of energy or technology absorption.
The Company holds AD Category II licence from the Reserve
Bank of India for its foreign exchange operations. Following
are the details of foreign exchange earnings and outgo during
the period covered by this report:
Foreign Exchange Earnings : Nil
Foreign Exchange Outgo : Nil
12. PARTICULARS OF EMPLOYEES
Particulars of the employees covered by the provisions
of section 217 (2A) of the Companies Act, 1956 read with
Company’s (Particulars of Employees) Rules, 1975 is as under:
Annual Report 2011-12
28
29
STATEMENT PURSUANT TO SECTION 217 (2A) OF THE COMPANIES ACT, 1956 READ WITH COMPANY’S (PARTICULARS OF
EMPLOYEES) RULES, 1975
Name Designation Age Remuneration
Received
Date Of
Joining
Experience
In Years
Mr. V.P. Nandakumar Executive Chairman 58 2,52,00,000 15.07.1992 32
Mr. I. Unnikrishnan Managing Director 48 1,12,80,000 01.10.2006 22
Mr. B.N. Raveendra Babu Joint Managing Director 60 91,20,000 17.08.2009 34
13. DIRECTORS’ RESPONSIBILITY STATEMENT
As required under Section 217 (2AA) of the Companies Act,
1956, the Board of Directors hereby declares that:
a) In the preparation of Annual Accounts for the financial
year ended March 31, 2012, applicable Accounting
Standards have been followed along with proper
explanation relating to material departures.
b) The Directors have selected such accounting policies
and applied them consistently and made judgments and
estimates that are reasonable and prudent so as to give
a true and fair view of the state of affairs of the Company
at the end of the financial year 2011-12 and of the profit
of the Company for that period.
c) The Directors have taken proper and sufficient care
for the maintenance of adequate accounting records in
accordance with the provisions of Companies Act, 1956,
for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities.
d) The Directors have prepared the Annual Accounts for
the year 2011-12 on a going concern basis.
14. AUDITORS
The Statutory Auditors M/s S.R. Batliboi & Associates,
Chartered Accountants, (Firm Registration Number- 101049W,
(TIDEL Park, 6th and 7th Floor - A Block, Module 601,
701-702, No 4 Rajiv Gandhi Salai, Taramani, Chennai 600 113,
India, Office: + 91 44 6654 8100) retires at the ensuing Annual
General Meeting of the Company and are eligible for
re-appointment.
15. REPORT ON CORPORATE GOVERNANCE
Your Company has been practicing principle of good Corporate
Governance over the years. The endeavor of the Company
is not only to comply with the regulatory requirements but
also practice good Corporate Governance that lays strong
emphasis on integrity, transparency and overall accountability.
A separate section on Corporate Governance along with a
certificate from the Statutory Auditors confirming compliance
is annexed and forms part of this report.
16. MANAGEMENT DISCUSSION AND ANALYSIS
REPORT
Management Discussion and Analysis Report is attached and
forms an integral part of the Report of the Board of Directors.
17. ACKNOWLEDGEMENT
Your Directors acknowledge and place on record its sincere
appreciation and gratitude to the employees of the Company
at all levels for their dedicated service and commitments, to
the Reserve Bank of India, Rating Agencies, Stock exchanges,
Governments and its statutory agencies for the support,
guidance and co-operation, to the Investors, shareholders
Banks and other financial institutions and customers for
the whole hearted support and confidence reposed on the
Company and the management and to the general public at
large for their blessings and good wishes the Company have
been receiving in good measure over the years.
For and on behalf of the Board of Directors
Place: Valapad
Date: May 18, 2012
V.P.Nandakumar
Executive Chairman
About Manappuram
Business Review Board and Management Reports Financial Section
Annexure
to the Directors’ Report
SL
No.
Particulars Disclosures- ESOP 2009
a Options granted. 82,95,000
b Pricing Formula The exercise price may be decided by the Nomination, Compensation and
Corporate Governance Committee of the Board in accordance with the SEBI
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 and any amendments thereto.
c Options Vested 50% of the above Options has already vested on August 16, 2010 and the
balance on August 16, 2011.
d Options Exercised during the year. 74,04,760
e Total no. of shares arising as a result of exercise of
Options.
74,04,760
f Options lapsed 6,95,000
g Variation in terms of Options The criterion for expiry of Exercise Period has been amended as ‘Not later
than 4 years from the date of vesting of Options for continuing Employees’
at the Extra-Ordinary General Meeting held on 22.04.2010 and the number
of Options have been proportionately increased in view of the Subdivision
and Bonus issue.
h Money realised by exercise of Options ` 12,26,22,826
i Total number of Options in force 1,20,000
j Employee wise details of Options granted to:
(i) Senior Management Name No. of Options
Mr. I.Unnikrishnan 1200000
Mr. B.N.Raveendra Babu 1000000
Mr. P.Manomohanan 300000
Dr. V.M.Manoharan 300000
Mr. A.R.Sankaranarayanan 300000
Adv. V.R.Ramachandran 300000
Mr. M.Anandan 300000
Mr. Shailesh J Mehta 300000
(i) Any other employee who receives a grant in
any one year of Option amounting to 5 per cent
or more of Option granted during that year
Nil
(iii) Employees who were granted Option, during
any one year, equal to or exceeding 1 per cent
of the issued capital (excluding warrants and
conversions) of the Company at the time of
grant
Nil
Disclosures in terms of Clause 12 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999:
Annual Report 2011-12
30
31
SL
No.
Particulars Disclosures- ESOP 2009
k Diluted earnings per share pursuant to issue
of shares on exercise of Options calculated in
accordance with AS 20 ‘earnings per share’
` 7.03
l Where the Company has calculated the employee
compensation cost using the intrinsic value of the
Stock Options, the difference between the employee
compensation cost so computed and the employee
compensation cost that shall have been recognised
if it had used the fair value of the Options, shall be
disclosed. The impact of this difference on profits
and on EPS of the Company shall also be disclosed.
The difference between the employee compensation cost computed in
accordance with intrinsic value adopted by the Company and fair value is
` 11.72 million.
Had the Company adopted the fair value model, the net profit after tax
would have been ` 5902.89 million as against the reported amount of
` 5914.61
The Basic EPS would have been ` 7.05 as against the reported figures of
` 7.06 .
The Diluted EPS would have been ` 7.02 as against the reported figures of
` 7.03.
m Weighted-average exercise prices and weighted-
average fair values of Options shall be disclosed
separately for Options whose exercise price either
equals or exceeds or is less than the market price of
the stock on the grant date.
The exercise price is ` 33.12.
n Description of method and significant assumptions
used to estimate the fair value of Options
The fair value of options was estimated at the date of grant using the Black-
Scholes method with the following assumptions:
Particulars Vesting I
August 16, 2010
50%
Vesting II
August 16, 2011
50%
Risk-free interest rate 6.15% 6.53%
Expected life 3 years 4 years
Expected volatility 67.11% 66.62%
Expected dividend yield 2.76% 2.76%
Share price on the date of grant ` 331.15 /- ` 331.15 /-
About Manappuram
Business Review Board and Management Reports Financial Section
Management
Discussion and
Analysis Report
Consumption of gold remains strong in rural
India, and it is the preferred asset class
for those in the lower levels of the socio-
economic pyramid as well.
Annual Report 2011-12
32
33
1. ECONOMIC OUTLOOK
The year 2011-12 was marked by an economic slowdown
much against the optimism that reigned at the beginning of
the fiscal year. The Union Budget 2011-12 was premised
on a growth of 9% in our Gross Domestic Product (GDP).
However, the actual achievement fell short substantially with
recently published data pointing to a growth of only 6.5%
for the entire year. Even more worrying is the trend, with
the growth rate falling to 5.3% during the fourth quarter, and
hitting a nine-year low. The slowdown had an adverse impact
on the government’s finances as revenues fell way below the
budget estimates, while expenditure overshot the estimates on
account of food and fuel subsidies. India’s fiscal deficit has now
moved into a danger zone at 5.8% of GDP.
Moreover, inflationary pressures remained high for most of
the year and often breached the double-digit mark. Some
amount of moderation in inflation was witnessed in the final
quarter, which enabled the Reserve Bank of India (RBI) to
announce a 50 basis points cut in policy rates in April 2012,
after earlier having pushed through 13 consecutive rounds of
hikes in policy rates.
Notwithstanding the limited success achieved in reining
in inflation, the fact remains that 2011-12 saw the macro-
economic fundamentals of the Indian economy come under
severe strain. India’s current account deficit ballooned to an
estimated 4% of the GDP largely due to a record trade deficit
of US$ 185 billion, with imports of oil and gold leading the
way. Moreover, with corporate profitability under strain and a
lacklustre stock market, foreign portfolio inflows were muted.
This has put the Indian rupee further under pressure, falling
from levels of ` 45 per US$ in July 2011 to a low of about
` 54 per US$ by December.
Outlook for Fiscal Year 2012-13 is mixed, with a downward
bias. After the dismal fourth quarter performance, private
sector economists are busy downgrading their GDP growth
estimates for 2012-13 to a level of about 6.5%.
Key economic concerns during FY 2011-12:
Increase in international petroleum prices led to a
widening of the trade gap. Moreover, the general
inability of the government to pass on increased costs
to the domestic consumer bloated its subsidy bill and
contributed to the widening fiscal deficit. Some relief
is seen in the current year as crude prices have been
declining as the Eurozone economies lapsed into lower
growth and recession.
Current account deficit at 3.9% is well above the danger
level of 3%. Prospects appear brighter in the current
fiscal year with falling crude prices and reduction in gold
imports (following increased customs duty).
The Eurozone debt crisis has severely dented export
prospects and contributed to the rising trade deficit. In
fact, after being buoyant during the first half of 2011-12,
exports tapered off in the second half as the European
economies lost steam. And with Europe unlikely to stage
a full recovery soon, exports are likely to be weak in the
current year as well.
There’s been a continuous slowdown in the Indian
economy with GDP growth decelerating in each of the
four quarters in FY 2011-12. Growth in Oct-Dec quarter
was recorded at only 6.1%, followed by a dismal 5.3%
during Jan-Mar quarter.
Successive hikes in policy rates by RBI significantly
increased borrowing costs and suppressed demand, thus
negatively impacting corporate profitability.
Foreign portfolio investments remained relatively muted
on account of slowing growth and an uncertain policy
environment. The serious depreciation of the Indian
rupee vis-a-vis the US dollar, beginning in August 2012,
has muddied the waters even more.
While some success was achieved in moderating
inflationary pressures towards the year end, it is believed
the economy is yet to grapple with suppressed inflation
from the failure to pass on increased prices of petroleum
products to the domestic consumer.
At the same time, it is important to note that many analysts
retain a sense of optimism about the current year 2012-13.
This can be attributed to an expectation of sizable cuts in
interest rates by RBI to come, over signs that inflationary
pressures in the economy have peaked, and on concerns
over growth slowdown. However, while there’s no doubt
that a reversal in the cycle of rate hikes will be extremely
important for higher economic activity, possibilities remain that
inflationary pressures may re-emerge and play a spoil sport.
The depreciation in the Indian rupee, which has pushed up the
prices of essential imports such as crude oil, can also stoke
inflationary fires.
2. THE GOLD LOANS SECTOR
Scenario for Gold and Gold Loans: The US dollar is
regarded as a safe-haven currency across the world.
However, post-global financial crisis of 2008, Gold has
emerged as the new safe-haven asset, which safeguards
investors from deeply depreciation currencies the world
over. Gold is considered as a “must own” in all portfolios and
globally the demand for gold has increased considerably post
2008. As gold has been continually outperforming all other
asset classes in last five years, it is now widely regarded as
among the best investment asset in an uncertain environment.
And with the global economic environment deteriorating, gold
is likely to hold its importance and may even rise further in
value. Not surprisingly then, analysts indicate a further rise
in gold prices. Moving forward, this is a positive for gold loan
companies across India.
The slow pace of economic reforms in India and lack of FII
and FDI inflows exerted pressure on the Indian Rupee which
has depreciated over 20% since August 2011. Gold prices are
determined in the international market and the depreciation of
the rupee further increases gold prices in rupee terms.
Consumption of gold remains strong in rural India, and it is the
preferred asset class for those in the lower levels of the socio-
economic pyramid as well. Investing in gold is like a tradition.
Gold continues to be an important financing asset for those
with no access to the banking system or financial markets.
Gold loan companies cater to the credit demand of this section
of society and prevents them from falling prey to loan sharks
charging exorbitant interest rates. Though our Company has
a pan-India presence, it caters largely to the lower socio-
economic classes, as indicated by the average ticket size of
gold loans. Majority of the disbursements happen in semi-
urban and rural India. Owing to favourable monsoons and the
rural thrust in government spending, higher growth rate can
be expected in rural India, which augurs well for companies
such as Manappuram Finance Ltd. catering to this segment of
the market.
About Manappuram
Business Review Board and Management Reports Financial Section
The organised gold loans sector: India’s organised gold
loan industry has grown rapidly in the last two decades. Fiscal
year 2011-12 commenced on a good note with gold loan
NBFCs reporting gains in volumes as well as market shares.
However, the fourth quarter saw the sector facing strong
headwinds, with the RBI ushering in new regulations that
altered the rules of the game. The banking regulator imposed
a 60% cap on LTV for gold loans given by NBFCs, besides
tightening bank lending norms with a cap of 7.5% of a bank’s
net worth towards loans to any one gold loan NBFC. KYC
norms were also made stricter.
These sweeping changes in the regulatory landscape not only
led to greater accountability for existing players, but also make
things difficult for new entrants. The Company has complied
with the new guidelines, though there’s no denying these
changes have impacted short-term growth prospects for gold
loan NBFCs.
A working group committee has been formed by RBI under
the leadership of Mr. K.U.B. Rao to examine current practices
of gold loan NBFCs, assess influence of gold loans on gold
imports, study trends in gold prices and also examine whether
gold loan NBFCs have any role to play in influencing gold
prices. The committee is expected to release its report by July.
Even as the gold loan sector witnessed extreme turbulence,
Manappuram Finance Ltd. emerged stronger from the diverse
and unique challenges it faced, pointing to the fact that it has
a sound business model. Gold Loan financing is a window
that provides finance to those at the lower end of the socio-
economic pyramid for their immediate personal and business
needs. The company’s business model is geared up to satisfy
their business needs, as indicated by our average ticket size
of ` 38,582. The Company takes pride in the significant role it
plays in bridging the gap between urban and rural India.
3. COMPANY OVERVIEW
Established in 1992, Manappuram Finance Ltd is one of India’s
leading NBFCs providing financial services, including gold
loans, foreign exchange services and remittances. Through
its 20 years of operations, the Company has maintained a
consistently rapid pace of growth, demonstrating its ability to
scale up and to leverage its well-established brand name, built
up over the last two decades.
The Company has 2,908 branches across 22 states and 4
Union Territories and manages assets worth ` 116,308 million
with a live customer base of 1.64 million. The Company has
spent over ` 1,800 million on advertising and brand building
campaign in the last two years and has taken on board some
of the most well known celebrities as its brand ambassadors,
making it a nationally recognised brand. Today, the
Manappuram brand stands for trust, reliability and excellent
service, and repeat customers account for up to 80% of total
business, which bears testimony to the strength of the brand
and the loyalty it commands.
4. OPPORTUNITIES
The core business of the Company, of providing gold loans,
offers immense growth potential. The World Gold Council
(WGC) estimates privately held gold stock exceeding 18,000
tonnes in India. The Company aims to impart liquidity to at
least 10% of this stock. To stay on course with this vision,
the Company has expanded its branch network from 2,064
branches (March 31, 2011) to 2,908 branches as on March 31,
2012.
Efforts have also been taken to improve its quality of
operations, such as a tie-up with IBM with July 2011 to
strengthen its IT infrastructure. The Company is largely
immune to problems of recovery and of non-performing
assets (NPAs) as most of the lending is done in the gold loan
segment. Though successive rate hikes by RBI increased
borrowing costs, commercial banks have been more than
forthcoming in extending financial assistance.
The continuing firmness in gold prices offers good support to
the Company’s gold loan business. Moreover, indications for
the current year are that gold prices in India will hold its level
even if international prices decline, given the possibility of
further depreciation in the Indian rupee.
5. THREATS
Recent regulatory interventions, particularly with regard to the
cap on LTV for gold loans and tightening of capital adequacy
norms, have altered the rules of the game, somewhat to the
disadvantage of gold loan NBFCs. Rating agency Crisil expects
the new regulations to reduce industry growth rate to 20-25%
a year. The unorganised sector also poses a challenge to the
Company. The Crisil report noted that some unregistered firms
offered as high as 90% of the total value of pawned gold as
loan, as against an industry average of 75%, and expected
a share of business to shift to the unorganised sector. The
note also suggests that gold loan NBFC may reduce pricing
to protect market shares to prevent a shift to the unorganised
segment, which can moderate their profitability. However,
the new regulations will prove positive for the industry and
lower LTV ratios may strengthen their asset quality, owing to
increased ability to absorb volatility in gold prices.
Impact on the Company: Following the RBI directive, the
Company carried out an internal stock taking exercise that
compared its current gold loan AUM with the total weight of
gold held as security. The overall LTV stood at about 67%. The
new regulations are expected to bring down LTV by 6-7%. This
may translate into lower credit growth and also lead to a fall in
yield by 2-3% as loans at lower LTVs command lower pricing.
Some other important issues arising from RBI’s directive are
as below:
Threat of loss of business to banks and unorganised
sector: The general impression is that lower LTVs may
put gold loan NBFCs at a significant disadvantage vis-a-vis
commercial banks and money lenders. However, we do not
share this view. As a product class, gold loans have gained
wide acceptance in recent years mainly due to the multiple
conveniences offered by this product class. As gold loans
are usually small ticket loans availed for short periods, gold
loan customers have prioritised factors such as hassle-free
experience with minimum formalities, quick turn-around time
and easy access to branch network. In general, commercial
banks have been unable to match NBFCs on these counts.
This is particularly true in the case of public sector banks
which otherwise have the advantage of a wider reach. Private
banks are handicapped due to the lack of an extensive branch
network.
Annual Report 2011-12
34
35
As far as a likely shift to the unorganised sector is concerned,
we do expect a certain amount of churn. However, we also
strongly believe that our customers, who are accustomed to
our service, credibility and higher standards of transparency,
may find it difficult to reconcile to the practices of the
unorganised sector.
Impact on growth: The recent growth achieved by gold loan
NBFCs has emanated from two major sources:
a) New customers attracted from a class of relatively
better off gold owners, who earlier despised the idea of
pawning gold. This is a relatively more demanding class
which puts a premium on time and convenience and is,
therefore, likely to be put off by cumbersome procedural
formalities at commercial banks. Moreover, they are
highly unlikely to move to the unorganised sector fearing
lack of credibility and transparency.
b) Customers won over from the unorganised sector, who
were originally drawn to the gold loan NBFCs by the
lower prices along with good service and high levels of
transparency and credibility. A part of the attraction, no
doubt, was that they did not lose out on the LTV of their
limited gold. Consequently, this class presents a greater
challenge. While the decrease in interest rates (due to
lower LTV) would be a bonus, some “LTV sensitive”
customers may choose to go back to the unorganised
sector, adversely impacting growth.
6. RISKS AND CONCERNS
The Company has put in place a mechanism to minimise
operational risks through effective control systems which
call for constant review and an ongoing internal audit. Our
risk management framework aims to identify the diverse
risks faced by the Company and come up appropriate
mitigation strategies. Our Internal Audit Team, which reports
directly to the Audit Committee of the Board, undertakes a
comprehensive audit of functional areas and operations at
all the branches. Having successfully completed migration of
its technological base to the Dotnet platform, the Company
has also set up an off-site surveillance system to make its
internal control systems more risk-proof. Managing risks in
credit, interest rates, and liquidity, form critical components
of our risk management system. The Company has in place
rigorous norms for credit disbursal through the Lending Policy
Framework. An asset-liability management model has been
developed to measure and manage interest rate and liquidity
risks and these are discussed and reviewed periodically at Risk
Management Committee meetings.
Other concerns: The RBI issued a notice in February 2012 that
faulted the Company for accepting deposits from the public
after becoming a non-deposit taking NBFC in March 2011.
The management clarified that the Company had stopped
accepting public deposits since March 2011, but it continued
to accept subscriptions to its secured Non-Convertible
Debentures (NCD), which is permissible. There was another
issue regarding the permissibility of acceptance of deposits
by a proprietary concern owned by Mr. V.P. Nandakumar,
Executive Chairman, in his personal capacity. The Company
has since been informed by Mr. Nandakumar that these
deposits were placed in an escrow account with a nationalised
bank, a bulk of which has since been repaid. This development
has also been advised to the RBI.
In the light of these developments, a Board Meeting was
called for on February 10, 2012, which discussed the
corporate governance issues. The Board directed the
Company to take all the necessary measures in order to fully
address the concerns raised by the RBI. In particular, the
Company plans to take steps to ring fence its own operations
from that of other promoter owned or controlled entities to
avoid overlapping of assets, branches or personnel between
these entities.
Also, in order to enhance corporate governance, the Board
constituted an independent committee of its members
under the chairmanship of Mr. Jagdish Capoor (former
Deputy Governor, RBI; Former Chairman, HDFC Bank). The
committee was given the mandate to review the operations,
systems, controls and organisation structure, including Board
composition and effectiveness. Amarchand Mangaldas, a
leading law firm, has been roped in to assist the committee
with the independent review exercise.
7. DISCUSSION ON FINANCIAL
PERFORMANCE
Considering profit growth and overall performance, the
Board of Directors have recommended a dividend of 50%
(i.e. `1/-per equity share of ` 2/- each) on the paid-up capital
of the Company. It may be noted that in February 2011, the
Company paid an interim dividend of 25% (i.e. ` 0.50 per
equity share).
During the year under review, income from operations more
than doubled from ` 11,654 million in 2010-11 to ` 26,155
million in 2011-12. Profit after tax registered a smart increase
of 109%, moving up to ` 5,915 million, as against ` 2,827
million recorded in the previous fiscal year. The company
ended the year with an AUM of ` 116,308 million, which
registered a healthy growth of 54% over last fiscal.
8. CAUTIONARY STATEMENT
Statements in this report pertaining to the Company’s
objectives, projections, estimates, exceptions and predictions
are forward-looking statements subject to the applicable
laws and regulations. These statements may be subject to
certain risks and uncertainties. The Company’s operations
are affected by many external and internal factors which are
beyond the control of the management. Therefore, the actual
position may differ from those expressed or implied. The
Company assumes no obligation to amend or update forward
looking statements in future on the basis of new information,
subsequent developments or otherwise.
For and on behalf of the Board of Directors
Place: Valapad
Date: May 18, 2012
V.P.Nandakumar
Executive Chairman
About Manappuram
Business Review Board and Management Reports Financial Section
Report on Corporate
Governance
The objective is not merely compliance, but
also to uphold transparency and integrity in all
its operations, thereby optimising shareholder
value.
Annual Report 2011-12
36
37
COMPANY’S PHILOSOPHY ON CODE OF GOVERNANCE
The Corporate Governance standards of the Company place strong emphasis on transparency, accountability and integrity in all the business
activities of the Company. The objective is not merely compliance, but also to uphold transparency and integrity in all its operations, thereby
optimising shareholder value. The Company believes that its business plans and strategies 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.
The Company has complied with all mandatory requirements of corporate governance as detailed in the Clause 49 of the listing agreement.
The Company has also complied with some of the non-mandatory requirements, details whereof are given in the following paragraphs.
BOARD OF DIRECTORS
There are twelve directors in the Board of the Company having varied nature of experience and expertise in their respective areas. The
composition of the Board meets the criteria as prescribed in Clause 49 of the Listing Agreement. This composition also fulfills the norms issued
by Reserve Bank of India in this regard. Out of the twelve directors, three are executive directors, two are nominee directors and seven are
independent directors.
During the financial year 2011-12, the Board met on nine occasions viz. 28-04-2011, 31-05-2011, 06-07-2011, 27-07-2011, 03-11-2011,
29-12-2011, 02-02-2012, 10-02-2012, and 21-03-2012. The details of participation in the meetings and other relevant information are given in
the below statement.
Name & Category of Director No: of
Board
Meetings
attended
Whether
attended
the last
AGM
Details of membership in
Committees of the Board*
Share
Holding
of Non-
Executive
Directors
Director
ships in
other Public
Limited
Companies
1 Mr. V.P Nandakumar
Chief Promoter & Executive Chairman
8 Yes Nomination, Compensation &
Corporate Governance Committee
- 5
2 Mr. I Unnikrishnan
Managing Director
8 Yes NIL - 1
3 Mr. B.N.Raveendra Babu
Joint Managing Director
9 Yes Nil - 2
4 Adv.V.R.Ramachandran
Independent & Non Executive Director
8 Yes Share Holder’s Grievance
Committee
1526000 Nil
5 Mr. A.R.Sankaranarayanan
Independent & Non Executive Director
9 Yes Audit Committee & Nomination,
Compensation & Corporate
Governance Committee
900000 Nil
6 Mr. P. Manomohanan
Independent & Non Executive Director
9 Yes Audit Committee & Share Holder’s
Grievance Committee
1635582 Nil
7 Dr. V.M.Manoharan
Independent & Non Executive Director
9 Yes Share Holder’s Grievance
Committee
965000 1
8 Mr. M.Anandan
Independent & Non Executive Director
8 No Audit Committee & Nomination,
Compensation & Corporate
Governance Committee
755000 2
9 Mr. Shailesh. J. Mehta Independent &
Non Executive Director
4 No Audit Committee & Nomination,
Compensation & Corporate
Governance Committee
657000 6
10 Mr. Jagdish Capoor
Independent & Non Executive Director
7 No Nomination, Compensation &
Corporate Governance Committee
2000 6
11 Mr. Gautam Saigal
Nominee & Non Executive Director
5 No Audit Committee & Nomination,
Compensation & Corporate
Governance Committee
- 3
12 Mr. Gaurav Mathur # Nominee & Non
Executive Director
4 No NIL - 3
* Membership of Audit Committee, Nomination Compensation and Corporate Governance Committee and Share Holders Grievance
Committee only are shown.
# Mr. Gaurav Mathur, the nominee director of Hudson Equity Holdings Limited, has resigned from the Board w.e.f May 17, 2012 and
Mr. Sudhindar Krishan Khanna was appointed in place of him as the new nominee director of Hudson Equity Holdings Limited.
About Manappuram
Business Review Board and Management Reports Financial Section
Change in the Board of Directors during the year 2011-12
There was no change in the composition of the Board of Directors
during the financial year 2011-12.
COMMITTES OF THE BOARD
a. Audit Committee
The Company has constituted a qualified and independent
Audit Committee as required under Section 292A of the
Companies Act, 1956, and in fulfilment of the requirements
of clause 49 of the Listing Agreement. The Committee also
fulfils the guidelines issued by the Reserve Bank of India in this
regard.
The Committee has five members eminently qualified to
handle accounts, finance, audit and legal matters. The
Company Secretary acts as the Secretary of the Audit
Committee. The terms of reference of the Committee shall
be the same as those mentioned in the Listing Agreement, as
given below:
Terms of Reference:
1) Oversee the Company’s financial reporting process and
the disclosure of its financial information to ensure that
the financial statement is correct, sufficient and credible.
2) Recommending to the Board the appointment,
reappointment, and if required, the replacement or
removal of the statutory auditor and the fixation of audit
fee.
3) Approval of payment to statutory auditors for any other
services rendered by the statutory auditors.
4) Reviewing with management the annual financial
statements before submission to the Board for approval
with particular reference to:
a. Matters required to be included in the Directors
Responsibility Statement to be included in the
boards report in terms of clause 2AA of section
217 of the Companies Act 1956.
b. Changes if any in accounting policies and practices
and reasons for the same.
c. Major accounting entries involving estimates
based on the exercise of judgment by
management.
d. Significant adjustment made in the financial
statement arising out of audit findings.
e. Compliance with listing and other legal
requirements relating to the financial statements.
f. Disclosure of any related party transactions.
g. Qualifications in the draft audit report.
5) Reviewing with the management the quarterly financial
statements before submission to the board for approval.
6) Reviewing with the management performance of the
statutory and internal auditors and adequacy of the
internal control system.
7) Reviewing the adequacy of internal audit function if any
including the structure of internal audit department,
staffing and seniority of the official heading the
department, reporting structure coverage and frequency
of internal audit.
8) Discussion with internal auditors regarding any
significant findings and follow-up thereon.
9) 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.
10) Discussion with statutory auditors before audit
commences about the nature and scope of audit as
well as post-audit discussions to ascertain any area of
concern.
11) To look into the reasons for substantial defaults in
the payments to the depositors, debenture-holders,
shareholders (in case of non-payment of declared
dividends) and creditors.
12) To review the function of whistle blower mechanism in
case the same exists.
13) Carrying out any other function as mentioned in the
terms of reference of audit committee.
The Audit Committee met four times during the financial
year 2011-12 viz. 28-04-2011, 26-07-2011, 02-11-2011
and 01-02-2012. The constitution, record of attendance
of meetings and other details of the Audit Committee of
the Company are below:
Name of the Member Position Status No. of meetings attended
1. Mr. M . Anandan Chairman Independent and Nonexecutive 4
2. Mr.P.Manomohanan Member Independent and Nonexecutive 4
3. Mr.A.R.Sankaranarayanan Member Independent and Nonexecutive 4
4. Dr.Shailesh J Mehta Member Independent and Nonexecutive 3
5. Mr.Gautam Saigal Member Nominee and Nonexecutive 4
Annual Report 2011-12
38
39
b. Nomination, Compensation & Corporate Governance Committee
The Nomination, Compensation and Corporate Governance Committee of the Company was constituted to oversee the Compliance
with the Reserve Bank of India’s Circular No. DNBS/PD/CC/94/03.10.042/2006-07 dated May 08, 2007 to ensure that only capable
professionals are appointed as directors. The Committee also meets the requirements of the Clause 49 of the Listing Agreement.
The main role of the Committee to determine on behalf of the Board and on behalf of the Shareholders, the Company’s policies on
specific remuneration packages for Executive Directors, including pension rights and any compensation payments.
The Committee is chaired by a Non-Executive Director with other members as mentioned below:
1. Mr. A.R.Sanakaranarayanan Chairman
[Non-Executive]
2. Mr. V.P.Nandakumar Member [Executive]
3. Mr. Shailesh J Mehta Member [Non Executive]
4. Mr. M.Anandan Member [Non Executive]
5. Mr. Jagdish Capoor Member [Non Executive]
6. Mr. Gautham Saigal Member [Nominee]
Details of meetings held and resolution passed by circulation by the Committee during the financial year 2011-12 are given
in the following table
Date of
Meeting
Members Attended Item
Discussed
Remarks
28-04-2011 1. Mr. A.R.Sankaranarayanan
2. Mr. V.P.Nandakumar
3. Mr. P. Manomohanan
4. Mr. M.Anandan
5. Mr. Gautham Saigal
Managerial
Remuneration
1. Payment of Commission to Non-Executive
Directors for the Financial year 2010-11.
2. Payment of Commission to Executive Directors for
the Financial year 2010-11.
3. Commission to Non-Executive Directors for the
Financial Year 2011-12.
4. Commission to Executive Directors for the
Financial Year 2011-12.
5. Remuneration to Executive Directors for the
financial year 2011-12.
6. ESOP 2009 – Streamlining the Allotment.
Details of Remuneration paid to Directors during the financial year 2011-12
Sl
No
Name of Director Sitting Fees Salaries
and other
allowances
Commission Total
Board
Meeting
Committee
Meetings
1 Mr V.P.Nandakumar - - 2,52,00,000 - 2,52,00,000
2 Mr I. Unnikrishnan - - 84,00,000 28,80,000 1,12,80,000
3 Mr B.N.Raveendra Babu - - 67,20,000 24,00,000 91,20,000
4 Adv.V.R.Ramachandran 1,60,000 - - 4,00,000 5,60,000
5 Mr.A.R.Sankaranarayanan 1,80,000 82,500 - 4,00,000 6,62,500
6 Mr P.Manomohanan 1,80,000 75,000 - 4,00,000 6,55,000
7 Dr.V.M.Manoharan 1,80,000 - - 4,00,000 5,80,000
8 Mr M.Anandan 1,60,000 82,500 - 4,00,000 6,62,500
9 Mr Shailesh J Mehta 80,000 62,500 - 4,00,000 5,42,500
10 Mr.Jagdish Capoor 1,40,000 - - 4,00,000 5,40,000
About Manappuram
Business Review Board and Management Reports Financial Section
Criteria for remunerating Non-Executive Directors:
Decisions relating to the remuneration of Non Executive
Directors are taken by the Board of Directors of the Company.
Independent/Non-Executive directors were paid sitting fees
of ` 20,000/- per meeting. At the AGM held on August 18,
2011, the shareholders had approved payment of commission
at a rate not exceeding one percent of the net profits of the
Company to the Non-Executive Directors. Each year, the
Board determines the amount of commission to be paid to
directors based on the recommendation of the Nomination,
Compensation and Corporate Governance Committee of
the Company. The amount of commission payable is based
on their contribution to the growth and development of the
Company.
c. Shareholders’ Grievance Committee
The Company has constituted a Shareholders’ Grievance
Committee to monitor investor complaints/grievances
pertaining to non-receipt of share certificate, dividend, Annual
Report etc. The Committee shoulders the responsibility for
expeditious settlement on investor complaints and reporting
the same to the Board periodically.
During the period under review the Company had received 12
complaints from investors. All complaints received up to the
date of this report have been settled.
The Constitution of the Committee are given below:
1) Adv. V.R.Ramachandran - Chairman
2) Mr. P.Manomohanan - Member
3) Dr.V.M.Manoharan - Member
Other relevant details are given below:
Name and designation of Compliance Officer Mr. Rajesh
Kumar K, Company Secretary
All the 12 complaints of non receipt of dividend, share
certificate etc. received during the period was settled and
there is no outstanding complaints as on date.
OTHER COMMITTEES
i) Risk management Committee
The Company has constituted a Risk Management Committee
to review on an ongoing basis the measures adopted by the
Company for the identification, measurement, monitoring
and mitigation of the risks involved in various areas of the
Company’s functioning. The Committee is chaired by an
independent director with three other directors as members as
detailed below:-
1) Mr P. Manomohanan - Chairman
2) Mr.V.P. Nandakumar - Member
3) Mr I. Unnikrishnan - Member
4) Mr B.N. Raveendra Babu - Member
The Committee deliberates on the various aspects of risk
related to its business. In relation to its business of gold
loans, such risks may include appraisal risk, custodial risk,
competition risk, price fluctuation risk etc.
ii) Business Planning and Development Monitoring
Committee
The Committee was constituted to formulate and review
business plans and analyze the expenses incurred by the
Company as a measure to control cost. The Committee is
headed by the Chairman of the Company with participation of
there other members .It deliberates on matters like formulation
and review of business plans, budgeting review of capital and
revenue expenditure.
GENERAL BODY MEETINGS
Details of the last three Annual General Meetings of the Committee are given below
Year Date Time and
Place
Details of Special Business
2011 August 18 10.30.a.m
Anugraha Auditorium
Valapad, Thrissur
1. Appointment of Mr. Jagdish Capoor as director of the Company.
2. Appointment of Mr. Gaurav Mathur as director of the Company.
3. Variation of terms of appointment of Mr. V. P. Nandakumar,
Executive Chairman.
4. Reappointment and revision of Remuneration of
Mr. I Unnikrishnan, Managing Director.
5. Variation of terms of appointment of Mr.B.N.Raveendra Babu,
Joint Managing Director.
2010 July 20 10.30.a.m
Anugraha Auditorium
Valapad, Thrissur
1. Appointment of Mr.B.N.Raveendra Babu as a director and Joint
Managing Director of the Company.
2. Variation of terms of appointment of Executive Directors.
3. Appointment of Mr. K.P. Balraj and Mr. T. V. Antony as Directors
of the Company.
Annual Report 2011-12
40
41
Year Date Time and
Place
Details of Special Business
2009 August 17 10.30.a.m
Anugraha Auditorium
Valapad, Thrissur
1. Appointment of Mrs. Jyothy Prasannan to hold office or place of
profit.
2. Variation of terms of appointment of Mr. Sooraj Nandan.
3. Variation of terms of appointment and Remuneration of
Executive Chairman.
4. Revision of the remuneration of Managing Director.
5. Amending Articles of Association.
6. Approval of ESOP 2009
Details of Special Resolutions Passed in Previous 3 AGMS
Year 2009 2010 2011
Special
Resolutions
Passed during
AGMs.
1) Appointment of
Ms. Jyothy Prasannan to hold
office or place of profit.
2) Variation of terms Of appointment of
Mr. Sooraj Nandan.
3) Variation of terms of appointment of
Mr. V. P. Nandakumar, Executive
Chairman.
4) Reappointment and
revision of Remuneration of
Mr. I Unnikrishnan,
Managing Director.
5) Variation of terms of appointment of
Mr. B.N.Raveendra
Babu, Joint Managing Director
1) Variation of terms of
appointment of
Mr.V. P. Nandakumar,
Executive Chairman.
2) Reappointment and revision
of Remuneration of
Mr. I Unnikrishnan, Managing
Director.
3)Variation of terms of
appointment of
Mr.B.N.Raveendra
Babu, Joint Managing
Director.
1) Variation of terms of appointment of
Mr. V. P. Nandakumar, Executive Chairman.
2) Reappointment and revision of
Remuneration of Mr. I Unnikrishnan,
Managing Director.
3) Variation of terms of appointment of
Mr.B.N.Raveendra Babu, Joint Managing
Director.
Two Special Resolutions were passed by the Company, through postal ballot during the financial year 2010-11 for the following two purposes:
i. Amendment of the Object clause of the Memorandum of Association.
ii. Change of name.
Details of voting pattern for the Special Resolutions passed through Postal ballot
Total No of votes polled in favor of resolution of Resolution (i) above 20,81,42,952
Total No of votes polled in favor of resolution of Resolution (ii) above 20,81,43,481
Total No of votes polled against of resolution of Resolution (i) above 2,290
Total No of votes polled against of resolution of Resolution (ii) above 1,761
The Person who conducted Postl Ballot: Mr. Satheeh Kumar. N, Practicing Company Secretary.
Details of Extra Ordinary General Meetings held during the period are given below
Date of the Meeting Time and Place Details of Business Transacted
May 31, 2011 10.30.a.m
Anugraha Auditorium
Valapad, Thrissur
1. Enhancement of Authorsied Capital and alteration
or Memorandum and Articles of Association for
the same.
2. Issue of Bonus Shares.
3. Increasing the borrowing powers of the Company.
4. Starting new line of business viz; travel and
tourism related services.
About Manappuram
Business Review Board and Management Reports Financial Section
DISCLOSURES
i. There were no materially significant related party transactions
having potential conflict with the interests of the Company
at large. Transactions with related parties are disclosed in
Schedule 18 (notes forming part of accounts) in the Annual
Report.
ii. The Company has complied with all the directives issued by
stock exchanges and other statutory authorities. No penalties
and strictures were imposed on the Company by any of the
regulatory authorities, viz; the Stock Exchange, SEBI, Reserve
Bank of India, Registrar of Companies, for non-compliance
with any laws, guidelines and directives during the year.
However on 1st February 2012, the Company has received a
letter from Reserve Bank of India (RBI) directing the Company
to disassociate, its name, officials, and infrastructure from that
of any other group concerns carrying on financial activities.
The Company has complied with all the directions issued by
RBI with the professional assistance of reputed corporate legal
firm and management consultants and updated the progress
regularly to RBI.
iii. Whistle Blower Policy:
In terms of Clause 49 of the Listing Agreement, one of the
non-mandatory clauses provides that a listed company
may establish a mechanism for employees to report to the
management concerns about unethical behaviour, actual or
suspected fraud or violation of the Company’s code of conduct
or ethics policy. Though the Company has not formed a policy
on the same, the Company does have a helpline service
system, which aims at providing an independently monitored,
external, anonymous service for Manappuram employees, its
customers, vendors, contractors, counterparties etc. to voice
their concerns and report any unethical conduct within the
organisation.
It is hereby affirmed that no personnel has been denied access
to the Audit Committee.
MEANS OF COMMUNICATION
The Company publishes the un-audited / audited financial results on
quarterly basis as required under clause 41 of the listing agreement.
The financial results in the prescribed format are published in leading
newspapers including Economic Times, Business Line, Business
Standard, Malayala Manorama, Mathrubhumi etc. Other major
announcements pertaining to Book Closure, Board Meetings etc.
are also published as above. The Company has its web site at www.
manappuram.com wherein relevant information about the Company
and its performance are given. The financial results of the Company
are also posted on the web site.
CODE OF CONDUCT
As per the new clause 49 of the Listing Agreement the Company has
framed a Code of Conduct for the directors and senior management
personnel and the same was uploaded on to the website of the
Company and is accessible to the shareholders of the Company.
The requisite Certificate from CEO and the Chief Financial Officer
as per clause 49 of the Listing agreement was taken note of by the
Board of Directors at its meeting held on 18.05.2012 and is provided
in the annual report.
As required by clause 49 (1) (d) of Listing Agreement, it is hereby
affirmed that all the Board members and senior management
personnel have complied with Code of Conduct of the Company.
FAIR PRACTICES CODE
The Company has framed Fair Practices Code as per the latest
guidelines issued by Reserve Bank of India in this regard. The code
is posted on the website of the Company.
CEO/CFO CERTIFICATION
The requisite certification made by CEO/CFO as per the format given
in the clause 49 was placed before the Board a its meeting held on
May 18, 2012.
GENERAL SHAREHOLDER INFORMATION
20th Annual General Meeting Date August 2, 2012
Time 10.30 am
Place Anugraha Auditorium,Valapad PO-680 567 Thrissur District
Financial Year 2011-12
Date of Book closure 27.07.2012 to 02.08.2012 (both days inclusive)
Dividend Payment Date 17.08.2012
Listing on Stock Exchanges Mumbai, Chennai and Cochin (Permitted security in National Stock Exchange)
Stock Code 531213 – ISIN INE522D01027
Registrar and Share Transfer Agents M/s SKDC Consultants Limited
Kanapathy Towers
3rd Floor, 1391/A-1, Sathy Road Ganapathy PO, Coimbatore- 641 006
Ph: 0422-6549995, 0422-2539835
Email: [email protected]
Compliance Officer Mr. Rajesh Kumar K, Company Secretary
Ph: 0487-2399303
[email protected]
Company Address Manappuram Finance Limited, V/104 Manappuram House Valapad PO , Thrissur-680 567 Kerala
Phone: 0487- 2391306, 2391892. Fax 0487- 2399298
Email: [email protected]
Website: www.manappuram.com
Annual Report 2011-12
42
43
SHARE PRICE MOVEMENTS OF THE COMPANY [BSE] DURING EACH MONTH OF THE FINANCIAL
YEAR 2011-12.
Month Open Price High Price Low Price Close Price No. of
Shares
No. of
Trades
Total Turnover (`)
11-Apr 133.40 142.00 124.75 132.95 45,33,310 38,477 598,186,089
11-May 134.50 137.00 108.70 112.10 49,38,755 36,727 609,756,433
11-Jun 113.10 126.85 55.00 56.15 66,87,489 30,236 479,215,847
11-Jul 56.60 62.00 54.60 55.05 50,69,713 23,690 294,044,687
11-Aug 56.00 59.4 41.85 50.40 1,24,64,220 25,721 614,743,620
11-Sep 51.00 60.25 50.50 52.40 81,00,595 31,248 461,103,931
11-Oct 52.60 60.25 50.00 59.75 27,09,500 19,451 152,874,676
11-Nov 59.40 67.10 50.00 57.45 94,92,142 34,000 561,930,232
11-Dec 59.40 63.00 42.00 46.25 25,71,822 23,337 128,087,397
12-Jan 46.75 60.00 45.00 56.95 21,78,397 16,068 115,272,641
12-Feb 57.10 60.90 41.30 41.65 2,51,88,549 1,18,969 1,208,269,750
12-Mar 41.00 48.25 28.10 30.40 5,15,15,770 1,71,185 1,912,354,072
12-Apr 30.50 36.70 29.20 30.00 1,65,12,421 61,684 548,273,706
COMMON AGENCY FOR PHYSICAL AND ELECTRONIC TRANSFER
Share transfers, dividend payments and all other investor related activities are attended to and processed at the office of the Registrar and
Transfer Agents of the Company M/s. S.K.D.C Consultants Limited.
Distribution of Share Holding as on March 31, 2012
Share or Debenture holding of Nominal
value of
Share Holders Share Amount
Number % to Total % to Total % to Total
Upto - 5,000 59273 91.73 44138538 2.62
5,001 - 10,000 2238 3.46 16638918 0.99
10001 - 20,000 1117 1.73 17049746 1.01
20001 - 30,000 397 0.61 9824634 0.58
30,001 - 40,000 556 0.86 21116516 1.26
40,001 - 50,000 144 0.22 6582328 0.39
50,001 - 1,00,000 449 0.69 33078376 1.97
1,00,001 and above. 445 0.69 1533877216 91.18
TOTAL 64619 100.00 1682306272 100.00
DEMATERIALISATION
The Company is a member of the depository services of the National Securities Depository Limited (NSDL) and Central Depository Services
(India) Limited (CDSL) for dematerialisation of its shares. Share holders can get their share dematerialised with either NSDL or CDSL .
Through SKDC Consultants Limited, Registrars and Share Transfer Agents, we have established connectivity with both the depositories, that
is, National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL)
PAYMENT OF UNCLAIMED OR UNPAID DIVIDEND
The Company has remitted all unclaimed and unpaid dividend up to financial year 2003-04 to the Investor Education Protection Fund of Central
Government. Dividends relating to subsequent financial years would be transferred to said account on the expiry of seven years after transfer
of the same to unpaid dividend account.
GDRs/ADRs/Warrants or any other convertible instruments
The company does not have any GDRs/ADRs/Warrants or any other convertible instruments outstanding as on date.
On Behalf of the Board
Sd/-
V.P .Nandakumar
Executive Chairman
About Manappuram
Business Review Board and Management Reports Financial Section
Annual Report 2011-12
44
45
CEO & CFO Certification Under Clause
49(V) of The Listing Agreement
To
The Board of Directors
Manappuram Finance Limited
We, V.P.Nandakumar, Chairman , and Bindu A.L., Chief Financial Officer, of Manappuram Finance Limited, (“the Company”) hereby certify
that:-
(a) We have reviewed financial statements and the cash flow statement of the Company for the year ended March 31, 2012 and that to the
best of our knowledge and belief:
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.
(b) 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.
(c) 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 we have
taken or propose to take to rectify these deficiencies.
(d) We have indicated to the auditors and the audit committee
i) significant changes in internal control over financial reporting during the year;
i) significant changes in accounting policies during the year and that the same
have been disclosed in the notes to the financial statements; and
(iii) instances of significant fraud of which we 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.
V. P. Nandakumar Bindu A. L.
Executive Chairman Chief Financial Officer
Place: Kochi
Date: May 18, 2012
Auditors’ Certificate
To
The Board of Directors of
Manappuram Finance Limited
(formerly Manappuram General Finance and Leasing Limited)
We have examined the compliance of conditions of corporate governance by Manappuram Finance Limited (formerly Manappuram General
Finance and Leasing Limited) (‘the Company’), for the year ended on March 31, 2012, as stipulated in clause 49 of the Listing Agreement of
the said Company with stock exchanges.
The compliance of conditions of corporate governance is the responsibility of the management. Our examination was limited to procedures
and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither
an audit nor an expression of opinion on the financial statements of the Company.
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.
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.
Chartered Accountants
Firm Registration Number: 101049W
per S. Balasubrahmanyam
Partner
Membership No.: 053315
Place: Kochi
Date: May 18, 2012
About Manappuram
Business Review Board and Management Reports Financial Section
(All amounts are in million of Indian rupees unless otherwise stated)
To
The Members of
Manappuram Finance Limited
1. We have audited the attached Balance Sheet of Manappuram
Finance Limited (‘the Company’) as at March 31, 2012 and
also the Statement of profit and loss and the cash flow
statement for the year ended on that date annexed thereto.
These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an
opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003
(as amended) issued by the Central Government of India in
terms of sub-section (4A) of Section 227 of the Companies Act,
1956, we enclose in the Annexure a statement on the matters
specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to above,
we report that:
i. We have obtained all the information and explanations,
which to the best of our knowledge and belief were
necessary for the purposes of our audit;
ii. In our opinion, proper books of account as required by
law have been kept by the Company so far as appears
from our examination of those books;
iii. The balance sheet, statement of profit and loss and cash
flow statement dealt with by this report are in agreement
with the books of account;
Auditors’ Report
iv. In our opinion, the balance sheet, statement of profit and
loss and cash flow statement dealt with by this report
comply with the accounting standards referred to in sub-
section (3C) of section 211 of the Companies Act, 1956;
v. On the basis of the written representations received
from the directors, as on March 31, 2012, and taken on
record by the Board of Directors, we report that none of
the directors is disqualified as on March 31, 2012 from
being appointed as a director in terms of clause (g) of
sub-section (1) of section 274 of the Companies Act,
1956;
vi. In our opinion and to the best of our information
and according to the explanations given to us, the
said accounts give the information required by the
Companies Act, 1956, in the manner so required
and give a true and fair view in conformity with the
accounting principles generally accepted in India;
a) in the case of the balance sheet, of the state of
affairs of the Company as at March 31, 2012;
b) in the case of the statement of profit and loss, of
the profit for the year ended on that date; and
c) in the case of cash flow statement, of the cash
flows for the year ended on that date.
For S.R. BATLIBOI & ASSOCIATES
Chartered Accountants
Firm registration number: 101049W
per S. Balasubrahmanyam
Place: Kochi Partner
Date: May 18, 2012 Membership No.: 053315
Annual Report 2011-12
46
47
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
Annexure referred to in paragraph 3 of our report of even date
Re: Manappuram Finance Limited (‘the Company’)
(i) (a) The Company has maintained proper records showing
full particulars, including quantitative details and situation
of fixed assets.
(b) All fixed assets have not been physically verified by
the management during the year but there is a regular
programme of verification which, in our opinion, is
reasonable having regard to the size of the Company
and the nature of its assets. No material discrepancies
were noticed on such verification.
(c) There was no disposal of a substantial part of fixed
assets during the year.
(ii) The Company is a non banking finance company
engaged in the business of providing loans and
does not maintain any inventory. Therefore,
the provisions of clause 4(ii) of the Companies
(Auditor’s Report) Order, 2003 (as amended) are
not applicable to the Company.
(iii) (a) As informed, the Company has not granted any loans,
secured or unsecured to companies, firms or other
parties covered in the register maintained under section
301 of the Companies Act, 1956 (‘the Act’). Therefore,
the provisions of clause 4(iii) (a) of the Companies
(Auditor’s Report) Order, 2003 (as amended) is not
applicable to the Company.
(b) The provisions of clause 4(iii) (b) of the Companies
(Auditor’s Report) Order, 2003 (as amended) is not
applicable to the Company.
(c) The provisions of clause 4(iii) (c) of the Companies
(Auditor’s Report) Order, 2003 (as amended) is not
applicable to the Company.
(d) The provisions of clause 4(iii) (d) of the Companies
(Auditor’s Report) Order, 2003 (as amended) is not
applicable to the Company.
(e) The Company had taken loan from a Company covered
in the register maintained under section 301 of the
Companies Act, 1956. The maximum amount involved
during the year was ` 1.64 million and the year-end
balance of loan taken from such party was ` Nil.
(f) In our opinion and according to the information and
explanations given to us, the rate of interest and other
terms and conditions for such loans are not prima facie
prejudicial to the interest of the Company.
(g) In respect of loans taken, repayment of the principal
amount was as stipulated and payment of interest was
regular.
(iv) In our opinion and according to the information and
explanations given to us, there is an adequate internal control
system commensurate with the size of the Company and the
nature of its business, for the purchase of fixed assets and sale
of services. The activities of the Company during the year did
not involve any purchase and sale of goods. During the course
of our audit, we have not observed any major weakness or
continuing failure to correct any major weakness in the internal
control system of the Company in respect of these areas.
(v) (a) According to the information and explanations provided
by the management, we are of the opinion that the
particulars of contracts or arrangements referred to in
section 301 of the Act that need to be entered into the
register maintained under section 301 have been so
entered.
(b) In respect of transactions made in pursuance of such
contracts or arrangements exceeding value of Rupees
five lakhs entered into during the financial year, because
of the unique and specialized nature of the items
involved and absence of any comparable prices, we are
unable to comment whether the transactions were made
at prevailing market prices at the relevant time.
(vi) Based on information and explanations provided to
us, we report that the Company has not accepted any
deposits from the public.
(vii) The Company has an internal audit system
commensurate with the size and nature of its business.
(viii) To the best of our knowledge and as explained, the
Central Government has not prescribed maintenance of
cost records under clause (d) of sub-section (1) of section
209 of the Companies Act, 1956 for the products of the
Company.
(ix) (a) The Company is regular in depositing with appropriate
authorities undisputed statutory dues including provident
fund, employees’ state insurance, customs duty, investor
education and protection fund, income-tax, sales-tax,
service tax, cess and other material statutory dues
applicable to it. Dues in respect of wealth-tax and excise
duty are not applicable to the Company.
(b) According to the information and explanations given
to us, no undisputed amounts payable in respect of
provident fund, employees’ state insurance, customs
duty, investor education and protection fund, income-
tax, service tax, sales-tax and other material undisputed
statutory dues were outstanding, at the year end, for
a period of more than six months from the date they
became payable.
Auditors’ Report (Contd.)
(All amounts are in million of Indian rupees unless otherwise stated)
(c) According to the records of the Company, there are no dues outstanding of income tax and sales-tax on account of any dispute.
The dues outstanding of service tax on account of a dispute are as follows:
(Amount is millions)
Name of the Statute Nature of dues Period of dispute Amount Forum where it is pending
Finance Act, 1944 Service tax 2001-2008 5.00 (including penalty
of 2.5)
Commissioner of Service tax
(Appeals)
(x) The Company has no accumulated losses at the end of
the financial year and it has not incurred cash losses in
the current and immediately preceding financial year.
(xi) Based on our audit procedures and as per the
information and explanations given by the management,
we are of the opinion that the Company has not
defaulted in repayment of dues to banks, financial
institutions or debenture holders.
(xii) Based on our examination of documents and records,
we are of the opinion that the Company has maintained
adequate records where the Company has granted loans
and advances on the basis of security by way of pledge
of shares, debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund or a nidhi /
mutual benefit fund / society. Therefore, the provisions of
clause 4(xiii) of the Companies (Auditor’s Report) Order,
2003 (as amended) are not applicable to the Company.
(xiv) In our opinion, the Company is not dealing in or trading
in shares, securities, debentures and other investments.
Accordingly, the provisions of clause 4(xiv) of the
Companies (Auditor’s Report) Order, 2003 (as amended)
are not applicable to the Company.
(xv) According to the information and explanations given to
us, the Company has not given any guarantee for loans
taken by others from bank or financial institutions.
(xvi) Based on the information and explanations given to us
by the management, term loans were applied for the
purpose for which the loans were obtained.
(xvii) According to the information and explanations given to
us and on an overall examination of the balance sheet of
the Company, we report that no funds raised on short-
term basis have been used for long-term investment.
(xviii) The Company has not made any preferential allotment
of shares to parties or companies covered in the register
maintained under section 301 of the Companies Act,
1956.
(xix) According to the information and explanations given to
us, during the period covered by our audit report, the
Company has created security or charge in respect of
debentures issued other than on debentures aggregating
Rs 870 million which had been issued recently.
Subsequent to year end, the Company has created
security or charge in respect of these debentures.
(xx) We have verified that the end use of money raised by
public issue of non-convertible redeemable debentures is
as disclosed in the notes to the financial statements.
(xxi) As more fully discussed in Note 38 to the financial
statements and as informed by the management, we
report that, during the year there have been certain
instances of fraud on the Company by employees
where gold loan related misappropriations / cash
embezzlements have occurred for amounts aggregating
` 38.32 million. The Company has fully provided for
these amounts in the financial statements and is in
the process of recovering these amounts from the
employees and taking legal actions.
For S.R. BATLIBOI & ASSOCIATES
Chartered Accountants
Firm registration number: 101049W
per S. Balasubrahmanyam
Place: Kochi Partner
Date: May 18, 2012 Membership No.: 053315
Annual Report 2011-12
48
49
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
To the Board of Directors of
Manappuram Finance Limited (formerly Manappuram General
Finance and Leasing Limited)
1. We audited the attached Balance Sheet of Manappuram
Finance Limited (‘the Company’) as at March 31, 2012 and
also the Statement of Profit and Loss Account and the Cash
Flow Statement for the year ended on that date annexed
thereto and issued our audit opinion dated May 18, 2012
thereon. These financial statements are the responsibility
of the Company’s management. Our responsibility was to
express an opinion on these financial statements based on
our audit. Our audit was conducted in the manner specified in
paragraph 2 of the audit report.
2. As required by the Non-Banking Financial Companies
Auditor’s Report (Reserve Bank) Directions, 2008, issued by
the Reserve Bank of India (‘the Bank’) and amended from
time to time (‘the Directions’), based on our audit referred
to in paragraph 1 above and based on the information and
explanations given to us which to the best of our knowledge
and belief were necessary for this purpose, we report
hereunder on the matters specified in paragraphs 3 and 4 of
the Directions:
a. The Company is engaged in the business of a Non-
Banking Financial Institution (‘NBFI’) as defined in
section 45-I(a) of the Reserve Bank of India Act, 1934
(‘the Act’) during the year ended March 31, 2012. With
effect from March 22, 2011, the Company is registered
with the Bank as an NBFI without accepting public
deposits vide Certificate of Registration (‘CoR’) number
B-16.00029 dated March 22, 2011 with the Bank.
b. Based on the asset/income pattern as on March 31,
2012 determined by the Management in accordance
with the audited financial statements for the year ended
as on that date, and with reference to paragraph 15 of
the Non-Banking Financial (Non-Deposit Accepting or
Holding) Companies Prudential Norms (Reserve Bank)
Directions, 2007, the Company is entitled to continue to
hold such CoR;
c. Based on the criteria set forth by the Bank in Company
Circular No. DNBS.PD. CC No. 85 / 03.02.089 /2006-
07 dated December 6, 2006 for classification of
NBFCs, the Company has been correctly classified as
Loan Company as defined in Non-Banking Financial
Companies Acceptance of Public Deposits (Reserve
Bank) Directions, 1998 with reference to the business
carried on by it during the financial year ended March
31, 2012;
d. The Board of Directors has passed a resolution on
February 25, 2011 for non-acceptance of any public
deposits;
e. The Company has not accepted any public deposits
during the year ended March 31, 2012. The board of
directors have also passed a resolution to this effect on
May 10, 2012;
f. The Company has complied with the prudential norms
relating to income recognition, accounting standards,
asset classification and provisioning for bad and doubtful
debts as applicable to it in terms of Non-Banking
Financial (Non-Deposit Accepting or Holding) Companies
Prudential Norms (Reserve Bank) Directions, 2007
during the year ended March 31, 2012;
g. The capital adequacy ratio as disclosed in the return
submitted to the Bank in the Form NBS-7 for the year
ended March 31, 2012, has been correctly arrived at and
such ratio is in compliance with the minimum Capital to
Risk Assets Ratio prescribed by the Bank;
h. The Company has furnished to the Bank the annual
statement of capital funds, risk assets/exposures and risk
asset ratio (Form NBS-7) within the stipulated period.
The Company furnished Form NBS-7 for the year ended
March 31, 2012 to the Bank on June 29, 2012
3. We have no responsibility to update this report for events and
circumstances occurring after the date of our audit opinion
mentioned in paragraph 1, except for the comments on
paragraph 2(h) above regarding date of furnishing Form NBS-
7 to the Bank.
4. This report is issued solely for reporting on the matters
specified in paragraphs 3 and 4 of the Directions, to the Board
of Directors and is not to be used or distributed for any other
purpose.
For S.R. BATLIBOI & ASSOCIATES
Chartered Accountants
Firm registration number: 101049W
per S. Balasubrahmanyam
Place: Chennai Partner
Date: June 29, 2012 Membership No.: 053315
(All amounts are in million of Indian rupees unless otherwise stated)
Balance Sheet as at March 31, 2012
Note No.
As at
March 31, 2012
As at
March 31, 2011
EQUITY AND LIABILITIES
Shareholders’ funds
Share capital 3 1,682.31 833.75
Reserves and surplus 4 22,128.13 18,405.82
23,810.44 19,239.57
Non-current liabilities
Long-term borrowings 5 10,717.42 4,892.29
Other long term liabilities 6 106.57 47.17
10,823.99 4,939.46
Current liabilities
Short-term borrowings 7 72,313.61 48,708.21
Other current liabilities 8 12,226.50 3,991.90
Short-term provisions 9 1,593.88 947.47
86,133.99 53,647.58
TOTAL 120,768.42 77,826.61
ASSETS
Non-current assets
Fixed assets
Tangible assets 10A 2,163.72 1,319.02
Intangible assets 10B 76.53 59.84
Capital work-in-progress 144.04 67.72
Non-current investments 11A 100.03 3.20
Deferred tax assets (net) 12 188.98 87.07
Long-term loans and advances 13 523.02 299.45
Other Non current assets 14 334.60 259.25
3,530.92 2,095.55
Current assets
Current investments 11B 2,082.39 400.00
Cash and bank balances 15 8,177.08 6,430.85
Short-term loans and advances 13 96,621.46 63,940.42
Other current assets 14 10,356.57 4,959.79
117,237.50 75,731.06
Total 120,768.42 77,826.61
Summary of significant accounting policies 2.1
The accompanying notes are an integral part of the financial statements.
As per our report of even date
For S. R. BATLIBOI & ASSOCIATES For and on behalf of the Board of Directors
Chartered Accountants
Firm Registration Number: 101049W
per S. Balasubrahmanyam V. P. Nandakumar I. Unnikrishnan B. N. Raveendra Babu
Partner Executive Chairman Managing Director Joint Managing Director
Membership No.: 053315
Place: Kochi M. Anandan A. L.. Bindu K. Rajesh Kumar
Date: May 18, 2012 Director Chief Financial Officer Company Secretary
Annual Report 2011-12
50
51
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
Statement of Profit and Loss for the year ended March 31, 2012
Notes
Year ended
March 31, 2012
Year ended
March 31, 2011
INCOME
Revenue from operations 16 26,155.48 11,654.20
Other income 17 402.97 161.06
Total revenue 26,558.45 11,815.26
EXPENSES
Finance costs 18 10,891.00 3,391.55
Employee benefits expense 19 3,090.11 1,605.00
Other expenses 20 3,322.42 2,366.79
Depreciation and amortisation expense 21 482.86 212.96
Total Expenses 17,786.39 7,576.30
Profit before tax 8,772.06 4,238.96
Tax expenses
Current tax 2,959.36 1,466.04
Deferred tax (101.91) (53.72)
Total tax expense 2,857.45 1,412.32
Profit for the year 5,914.61 2,826.64
Earnings per equity share [nominal value of share ` 2/-] 22
Basic earnings per share (`/-) 7.06 3.81
Diluted earnings per share (`/-) 7.03 3.75
Summary of significant accounting policies 2.1
The accompanying notes are an integral part of the financial statements.
As per our report of even date
For S. R. BATLIBOI & ASSOCIATES For and on behalf of the Board of Directors
Chartered Accountants
Firm Registration Number: 101049W
per S. Balasubrahmanyam V. P. Nandakumar I. Unnikrishnan B. N. Raveendra Babu
Partner Executive Chairman Managing Director Joint Managing Director
Membership No.: 053315
Place: Kochi M. Anandan A. L.. Bindu K. Rajesh Kumar
Date: May 18, 2012 Director Chief Financial Officer Company Secretary
(All amounts are in million of Indian rupees unless otherwise stated)
NOTE :1
Nature of operations
Manappuram Finance Limited (formerly Manappuram General
Finance & Leasing Limited) (‘MAFIL’ or ‘the Company’) was
incorporated on July 15, 1992 in Thrissur, Kerala. The Company is
a non banking financial Company (‘NBFC’), which provides a wide
range of fund based and fee based services including gold loans,
money exchange facilities, etc. The Company currently operates
through 2,907 branches spread across the country. The Company is
a Systemically Important Non-Deposit Taking NBFC.
NOTE :2
Basis of preparation
The financial statements of the Company have been prepared
in accordance with generally accepted accounting principles in
India (Indian GAAP). The Company has prepared these financial
statements to comply in all material respects with the accounting
standards notified under the Companies (Accounting Standards)
Rules, 2006, (as amended) and the relevant provisions of the
Companies Act, 1956 and the guidelines issued by the Reserve Bank
of India as applicable to a non deposit accepting NBFC. The financial
statements have been prepared under the historical cost convention
and on an accrual basis except for interest and discounts on non
performing assets which are recognised on realisation basis. The
accounting policies have been consistently applied by the Company
and are consistent with those used in the previous year, except for
certain change in estimates discussed in note 2(d).
2.1) Statement of significant accounting policies
a) Presentation and disclosure of financial statements
During the year ended 31 March 2012, the revised
Schedule VI notified under the Companies Act 1956, has
become applicable to the Company, for preparation and
presentation of its financial statements. The adoption
of revised Schedule VI does not impact recognition
and measurement principles followed for preparation
of financial statements. However, it has significant
impact on presentation and disclosures made in the
financial statements. The Company has also reclassified
the previous year figures in accordance with the
requirements applicable in the current year.
b) Use of estimates
The preparation of financial statements in conformity
with Indian GAAP requires the management to make
judgments, estimates and assumptions that affect the
reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the
end of the reporting period. Although these estimates
are based on the management’s best knowledge of
current events and actions, uncertainty about these
assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts
of assets or liabilities in future periods.
c) Fixed assets
Fixed assets are stated at cost, less accumulated
depreciation and impairment losses if any. The
cost comprises purchase price, borrowing costs if
capitalisation criteria are met and directly attributable
cost of bringing the asset to its working condition for the
intended use.
d) Depreciation
Depreciation is provided using straight line method at the
following rates, which is management’s estimate of the
useful lives of the assets:
Nature of asset Rate of depreciation
followed
Computer equipment 33.33%
Furniture and fixtures
excluding [safes and strong
rooms]
20%
Buildings, office equipments,
vehicles, plant & machinery
and furniture and fixtures
(safes and strong rooms)
Rates prescribed
under Schedule XIV
of the Companies Act,
1956
During the current year, the Company has changed its
estimated useful life of furnitures and fixtures (except
safes and strong rooms) from 15 years to 5 years. This
change in estimated useful life has resulted in provision
of additional depreciation by ` 111.79 million and
the profit before tax of the Company is lower by the
corresponding number.
e) Intangible assets
Intangible assets acquired separately are measured on
initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less accumulated
amortisation and accumulated impairment losses, if any.
Intangible assets are amortised on a straight line basis
over the estimated useful economic life of 6 years.
The amortisation period and the amortisation method
are reviewed at least at each financial year end.
f) Impairment of tangible and intangible assets
The Company assesses at each reporting date whether
there is an indication that an asset may be impaired. If
any indication exists, or when annual impairment testing
for an asset is required, the Company estimates the
asset’s recoverable amount. An asset’s recoverable
amount is the higher of an asset’s or cash-generating
unit’s (CGU) net selling price and its value in use. The
recoverable amount is determined for an individual
asset, unless the asset does not generate cash inflows
that are largely independent of those from other assets
or groups of assets. Where the carrying amount of
an asset or CGU exceeds its recoverable amount, the
Notes to the Financial statements for the year ended March 31, 2012
Annual Report 2011-12
52
53
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
asset is considered impaired and is written down to
its recoverable amount. In assessing value in use, the
estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects
current market assessments of the time value of money
and the risks specific to the asset. In determining net
selling price, recent market transactions are taken into
account, if available. If no such transactions can be
identified, an appropriate valuation model is used.
After impairment, depreciation is provided on the
revised carrying amount of the asset over its remaining
useful life.
g) Leases
Leases where the lessor effectively retains substantially
all the risks and benefits of ownership of the leased
term, are classified as operating leases. Operating
lease payments in respect of non-cancellable leases are
recognised as an expense in the Profit and Loss account
on a straight-line basis over the lease term.
h) Investments
The Board of Directors have spelt out the criteria
to classify investments into current and long term
investments in the investment policy. Investments that
are readily realisable and intended to be held for not
more than a year are classified as current investments.
All other investments are classified as long-term
investments. Any inter class transfer should be with the
approval of the board and as per RBI regulation.
Current investments are carried at lower of cost and
fair value determined on an individual investment basis.
Quoted current investments for each category is valued
at cost or market value whichever is lower. Unquoted
equity shares in the nature of current investments is
valued at cost or break-up value, whichever is lower.
Long-term investments are carried at cost. However,
provision for diminution in value is made to recognise
a decline other than temporary in the value of the
investments.
i) Revenues
Revenue is recognised to the extent that it is probable
that the economic benefits will flow to the Company and
the revenue can be reliably measured.
Interest income on loans given is recognised under the
internal rate of return method. Such interests, where
instalments are overdue in respect of non performing
assets are recognised on realisation basis. Any such
income recognised and remaining unrealised after
the instalments become overdue with respect to non
performing assets is reversed.
Revenues from fee-based activities are recognised as
and when services are rendered.
Interest on deposits is recognised on a time proportion
basis taking into account the amount outstanding and the
rate applicable.
Gains arising on direct assignment of assets is
recognised over the tenure of agreements as per
guideline on securitisation of standard assets issued by
the Reserve Bank of India, losses, if any are recognised
upfront.
j) Employee benefits
i. Retirement benefit in the form of Provident Fund
is a defined contribution scheme and the contribu-
tions are charged to the statement of Profit and
Loss of the year when the contributions to the
fund maintained by the Central Government is
due. There is no other obligation other than the
contribution payable to the trust.
ii. Gratuity liability under the Payment of Gratuity Act
which is a defined benefit scheme is accrued and
provided for on the basis of an actuarial valuation
on projected unit credit method made at the end of
each financial year.
iii. Short term compensated absences are provided
for based on estimates.
iv. Actuarial gains / losses are immediately taken to
statement of profit and loss and are not deferred.
v. Employee stock compensation cost -
Measurement and disclosure of the employee
share-based payment plans is done in accordance
with SEBI (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines,
1999 and the Guidance Note on Accounting for
Employee Share-based Payments, issued by the
Institute of Chartered Accountants of India. The
Company measures compensation cost relating
to employee stock options using the intrinsic
value method. Compensation expense, if any, is
amortised over the vesting period of the option on
a straight line basis.
k) Foreign currency transactions
(i) Initial Recognition
Foreign currency transactions are recorded in
the reporting currency, by applying to the foreign
currency amount the exchange rate between the
reporting currency and the foreign currency at the
date of the transaction.
(ii) Conversion
Foreign currency monetary items are reported
using the closing rate. Non-monetary items which
are carried in terms of historical cost denominated
in a foreign currency are reported using the
exchange rate at the date of the transaction and
non-monetary items which are carried at fair value
or other similar valuation denominated in a foreign
currency are reported using the exchange rates
that existed when the values were determined.
Notes to the Financial statements for the year ended March 31, 2012
(All amounts are in million of Indian rupees unless otherwise stated)
(iii) Exchange Differences
Exchange differences arising on the settlement
of monetary items or on reporting Company’s
monetary items at rates different from those at
which they were initially recorded during the year,
or reported in previous financial statements, are
recognised as income or as expenses in the year
in which they arise.
l) Borrowing costs
Borrowing cost includes interest, amortisation
of ancillary costs incurred in connection with the
arrangement of borrowings and exchange differences
arising from foreign currency borrowings to the extent
they are regarded as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily
takes a substantial period of time to get ready for its
intended use are capitalised as part of the cost of the
respective asset. All other borrowing costs are expensed
in the period they occur.
m) Income Tax
Tax expense comprises 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. Deferred
income taxes reflect the impact of timing differences
between taxable income and accounting income
originating during the current year and reversal of timing
differences for the earlier years.
Deferred tax is measured based on the tax rates and
the tax laws enacted or substantively enacted at the
balance sheet date. Deferred tax assets are recognised
only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against
which such deferred tax assets can be realised.
At each balance sheet date the Company re-assesses
unrecognised deferred tax assets. It recognises
unrecognised deferred tax assets to the extent that it has
become reasonably certain or virtually certain, as the
case may be that sufficient future taxable income will be
available against which such deferred tax assets can be
realised.
The carrying amount of deferred tax assets are reviewed
at each balance sheet date. The Company writes-down
the carrying amount of a 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
realised. 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.
n) 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 period. The weighted
average numbers of equity shares outstanding during
the period are adjusted for events of bonus issue; bonus
element in a rights issue to existing shareholders; share
split; and reverse share split, if any.
For the purpose of calculating diluted earnings per share,
the net profit or loss for the period attributable to equity
shareholders and the weighted average number of
shares outstanding during the period are adjusted for the
effects of all dilutive potential equity shares.
o) Provisions
(i) A provision is recognised when an enterprise has
a present obligation as a result of past event and
it is probable that an outflow of resources will
be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions
are not discounted to its present value and are
determined based on management estimate
required to settle the obligation at the balance
sheet date. These are reviewed at each balance
sheet date and adjusted to reflect the current
management estimates.
(ii) Provision policy for gold loans and other loan
portfolios
Secured loans are classified / provided for, as
per management’s best estimates, subject to
the minimum provision required as per Non-
Banking Financial (Deposit Accepting or Holding)
Companies Prudential Norms (Reserve Bank)
Directions, 2007 as follows:
Notes to the Financial statements for the year ended March 31, 2012
Annual Report 2011-12
54
55
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
Classification of loans (Gold and other loans)
Asset Classification Provisioning policy
Standard Assets # 0.25%
Sub-standard assets 10%
Doubtful assets 100% of unsecured portion + 20 to 50% of secured portion.
Loss assets 100% provided / written off in books.
Classification of loans (Hypothecation and Stock on Hire)
Asset Classification Provisioning policy
Standard Assets # 0.25%
Sub-standard assets 100%
Doubtful assets* 100% written off in books.
Loss assets 100% provided / written off in books.
* Company considers all loans overdue for more than 18 months as doubtful of recovery.
# As per notification DNBB.222 / CGM(US)-2011 issued by Reserve Bank of India (RBI) on January 17, 2011.
p) Segment reporting
The Company primarily operates in the business of “Gold
loan” and its operations are in India. Accordingly, no
segment reporting is applicable.
q) Cash and Cash Equivalents
Cash and cash equivalents in the balance sheet comprise
cash at bank and in hand and short-term investments
with an original maturity of three months or less.
r) Ancillary borrowing costs
Ancillary borrowings costs incurred issue of debentures
and other long term borrowings are expensed over the
tenure of the loan.
s) Securities issue expenses
Expenses incurred in connection with issue of shares are
adjusted (net of tax effects, if any) against the securities
premium account in accordance with Section 78 of the
Companies Act, 1956.
Public issue expenses incurred in connection with
issue of debentures are amortised over the term of the
debenture.
t) Insurance claims
Insurance claims are accrued for on the basis of claims
admitted and/or to the extent there is no uncertainty
in receiving the claims. The Company re-assesses the
claims made at each reporting period for recoverability.
u) Auctioned gold and Surplus on auction of pledged gold
Auctioned gold is valued at lower of cost or realisable
value as at balance sheet date.
The Company has a policy of refund of any surplus
that arises on auction of pledged gold which has been
re-possessed by the Company in accordance with the
terms of the agreement with the customers.
v) 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 recognised
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 recognised because it cannot
be measured reliably. The Company does not recognise
a contingent liability but discloses its existence in the
financial statements as there is no indication of the
uncertainties relating to any outflow.
Notes to the Financial statements for the year ended March 31, 2012
(All amounts are in million of Indian rupees unless otherwise stated)
As at
March 31, 2012
As at
March 31, 2011
NOTE: 3
Share Capital
Authorised shares
980,000,000 (March 31, 2011: 53,00,00,000) equity shares of ` 2/- each 1,960.00 1,060.00
4,00,00,000 (March 31, 2011: 4,00,00,000) redeemable preference shares (CCPS) of
`100/- each
40.00 40.00
Issued, subscribed and fully paid-up shares
841,153,136 (31 March 2011: 416,874,188 ) equity shares of ` 2/- each 1,682.31 833.75
Total issued, subscribed and fully paid-up share capital 1,682.31 833.75
a. Reconciliation of the shares outstanding at the beginning and at the end of the reporting period
31 March 2012 31 March 2011
No.
millions
Amount
(in millions)
No.
millions
Amount
(in millions)
At the beginning of the year 416.87 833.74 170.19 340.38
Issued during the period - Bonus issue 416.87 833.74 170.19 340.38
Preferential allotment - - 13.21 26.42
Issued during the period - ESOP 7.41 14.82 3.76 7.52
Qualified Institutional Placement - - 59.52 119.04
Outstanding at the end of the period 841.15 1,682.30 416.87 833.74
b. Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of ` 2/- per share. Each holder of equity shares is entitled to one vote
per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting.
During the year ended 31 March 2012, the amount of per share dividend recognised as distributions to equity shareholders was ` 1.50/-
(31 March 2011: ` 0.60/- per share, after considering bonus issue).
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after
distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
c. Aggregate number of bonus shares issued, and shares issued for consideration other than cash during the period of five years
immediately preceding the reporting date:
March 31, 2012
No. millions
March 31, 2011
No. millions
Equity shares allotted as fully paid bonus shares by capitalisation of securities
premium, general reserve and capital redemption reserve.
614.56 197.69
In addition, the Company has issued total 11,159,880 shares (March 31, 2011: 3,755,120) during the period of five years immediately
preceding the reporting date on exercise of options granted under the employee stock option plan (ESOP) wherein part consideration
was received in form of employee services.
Notes to the Financial statements for the year ended March 31, 2012
Annual Report 2011-12
56
57
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
d. Details of shareholders holding more than 5% shares in the Company (Equity shares of ` 2/- each fully paid)
March 31, 2012 March 31, 2011
No. millions % holding in the
class
No. millions % holding in the
class
Nandakumar V P 217.41 25.85 128.00 30.70
Sushama Nandakumar 48.00 5.70 24.00 5.76
Smallcap World Fund Inc 57.99 6.89 27.21 6.53
Hudson Equity Holdings Ltd 71.81 8.54 37.75 9.06
AA Development Capital India Fund 1, LLC 30.22 3.59 21.78 5.23
As per 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.
As at
March 31, 2012
As at
March 31, 2011
NOTE: 4
Resreves and Surplus
Securities premium account
Balance as per the last financial statements 14,424.32 3,988.96
Add: premium on issue of shares - 10,916.72
Add: additions on ESOPs exercised 107.81 54.67
Less: amounts utilised toward issue of fully paid bonus shares (833.75) (300.39)
Less: Share issues expenses adjusted against securities premium - (235.64)
Closing Balance 13,698.38 14,424.32
Statutory reserve
Balance as per the last financial statements 1,016.08 450.75
Add: amount transferred from surplus balance in the statement of profit and loss 1,182.92 565.33
Closing Balance 2,199.00 1,016.08
Debenture Redemption reserve
Balance as per the last financial statements - -
Add: amount transferred from surplus balance in the statement of profit and loss (refer
note below)
2,208.10 -
Closing Balance 2,208.10 -
General reserve
Balance as per the last financial statements 651.06 368.39
Add: amount transferred from surplus balance in the statement of profit and loss 591.48 282.67
Closing Balance 1,242.54 651.06
Surplus/(deficit) in the statement of profit and loss
Balance as per last financial statements 2,314.36 917.11
Profit for the year 5,914.61 2,826.64
Less: Appropriations
Transfer to debenture redemption reserve 2,208.10 -
Proposed final equity dividend (amount per share Re. 1/-(31 March 2011: Re 0.60/- per
share, after considering bonus issue))
841.15 500.25
Interim dividend on equity shares 420.55 -
Tax on proposed equity dividend 136.45 81.14
Tax on interim dividend on equity shares 68.21 -
Transfer to Statutory reserve 1,182.92 565.33
Transfer to general reserve 591.48 282.67
Total appropriations 5,448.86 1,429.39
Net surplus in the statement of profit and loss 2,780.11 2,314.36
Total reserves and surplus 22,128.13 18,405.82
Note:
Pursuant to Section 117C of the Companies Act, 1956 and circular 9/2002, issued by Ministry of Corporate Affairs, the Company is required
to transfer adequate amounts to Debenture redemption reserve. Further, as per the said circular 50% of the value of the debentures issued
is considered adequate. The Company has apportioned ` 2,208.10 to debenture redemption reserve representing 50% of the total value of
debentures issued through a public issue.
Notes to the Financial statements for the year ended March 31, 2012
(All amounts are in million of Indian rupees unless otherwise stated)
Non-current portion Current maturities
31 March 2012 31 March 2011 31 March 2012 31 March 2011
NOTE: 5
Long-term borrowings
Term loans
Indian rupee loan from banks (secured) 1,112.00 - 1,000.00 -
Vehicle loans (Secured loans) 6.85 7.44 5.11 3.50
Sub-ordinated debt (Unsecured)
Subordinate debt from banks 1,500.00 1,000.00 - -
Subordinate bonds from others 2,613.14 1,670.07 153.70 61.52
Debentures (Secured)
Non-convertible Debentures - Private placement 2,498.11 2,214.78 7,325.26 2,795.97
Non-convertible Debentures - Public issue 2,987.32 - 1,428.87 -
10,717.42 4,892.29 9,912.94 2,860.99
The above amount includes
Secured borrowings 6,604.28 2,222.22 9,759.24 2,799.47
Unsecured borrowings 4,113.14 2,670.07 153.70 61.52
Amount disclosed under the head “other current
liabilities” (note 8)
(9,912.94) (2,860.99)
Net amount 10,717.42 4,892.29 - -
“Indian Rupee loans from banks includes:
i) ` 2,000 taken for onward lending against gold jewellery. These loans carry an interest rate of 14% (floating - BR + 4.5%) and are repayable
at the end of 18 months from the date of the loan. These are secured by an exclusive charge by way of hypothecation of book debts pertaining
to loans granted against gold with a margin of 15%. Also, they are secured by a cash collateral deposit of 5% of the loan amount, lien marked
in favour of the bank during the tenor of the loan. Further, the loan has been guaranteed by the personal guarantee of Mr. V.P Nandakumar.
Executive Chairman.
ii) ` 112 availed for the purpose of construction of the corporate office. These loans carry an interest rate of 13.5% (floating - BR + 3%) and are
repayable at the end of 77 months from the date of the loan. These loans are secured by an exclusive mortgage of 53.07 cents of property
of the Company situated at Trikkur Village, Mukundapuram taluk. Also, they are secured by a cash collateral deposit of 10% of the sanction
amount, lien marked in favour of the bank during the tenor of the loan. Further, the loan has been guaranteed by the personal guarantee of
Mr. V.P Nandakumar. Executive Chairman.”
Vehicle loans carry an interest of 10 to 12 % and are payable in 30 to 60 installments from the date of the loan. The loans are secured by
hypothecation of the respective vehicles against which the loan has been availed.
Subordinate debt from banks includes ` 1,000 (previous year : ` 1,000) which carries an interest rate of 14.5% (floating - BR + 4.5%) and is
repayable at the end of five years and three months from the date of the loan viz. December 13, 2010, and ` 500 (previous year : ` Nil) which
carries an interest rate of 14% (floating - BR + 3.3%) and is repayable at the end of five years and three months from the date of the loan viz.
January 28, 2012.
Annual Report 2011-12
58
59
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
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Notes to the Financial statements for the year ended March 31, 2012
Annual Report 2011-12
60
61
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
NOTE : 5 (CONTD.)
ii) Private Placement Institutional- Issue of Redeemable Non-convertible Debentures of ` 1,00,000/- each - Terms of repayment
As at March 31, 2012
Date of allotment Number
Amount
outstanding
Interest Rate
Redeemable
at par on
Security
17-Jun-11 400 40.00 12.50% 17-Jun-16
Secured by first pari passu
charge on the receivable of the
Company with minimum asset
cover ratio of 1.10 times and
immovable property*
27-May-11 84 8.40 12.25% 27-May-16
27-May-11 3,880 388.00 12.50% 27-May-16
31-Mar-11 1,312 131.20 12.25% 31-Mar-16
28-Mar-11 2,640 264.00 12.25% 28-Mar-16
17-Jun-11 300 30.00 12.50% 17-Jun-15
27-May-11 63 6.30 12.25% 27-May-15
27-May-11 2,910 291.00 12.50% 27-May-15
31-Mar-11 984 98.40 12.25% 31-Mar-15
28-Mar-11 1,980 198.00 12.25% 28-Mar-15
17-Jun-11 500 50.00 12.25% 17-Jun-14
17-Jun-11 300 30.00 12.50% 17-Jun-14
27-May-11 10 1.00 12.00% 27-May-14
27-May-11 63 6.30 12.25% 27-May-14
27-May-11 2,910 291.00 12.50% 27-May-14
31-Mar-11 984 98.40 12.25% 31-Mar-14
28-Mar-11 1,000 100.00 12.00% 28-Mar-14
28-Mar-11 1,980 198.00 12.25% 28-Mar-14
17-Jun-11 500 50.00 12.25% 17-Jun-13
27-May-11 10 1.00 12.00% 27-May-13
28-Mar-11 1,000 100.00 12.00% 28-Mar-13
Total 23,810 2,381.00
As at March 31, 2011
Date of allotment Number
Amount
outstanding
Interest Rate
Redeemable
at par on
Security
31-Mar-11 1,312 131.20 12.25% 31-Mar-16
Secured by first pari passu
charge on the receivable of the
Company with minimum asset
cover ratio of 1.10 times and
immovable property*
28-Mar-11 2,640 264.00 12.25% 28-Mar-16
31-Mar-11 984 98.40 12.25% 31-Mar-15
28-Mar-11 1,980 198.00 12.25% 28-Mar-15
31-Mar-11 984 98.40 12.25% 31-Mar-14
28-Mar-11 1,000 100.00 12.00% 28-Mar-14
28-Mar-11 1,980 198.00 12.25% 28-Mar-14
28-Mar-11 1,000 100.00 12.00% 28-Mar-13
Total 11,880 1,188.00
*Immovable property shall mean the commercial premises of the Company admeasuring 2250.64 Sq ft area on the fifth floor along with 2 car
parking space in the building known as Aishwarya Business Plaza situated at Kole Kalyan, Santacruz (East) Mumbai.
Notes to the Financial statements for the year ended March 31, 2012
(All amounts are in million of Indian rupees unless otherwise stated)
NOTE : 5 (CONTD.)
iii) Institutional issue of Redeemable Non-convertible Debentures of ` 1,000,000/- each - Terms
of repayment
As at March 31, 2012
Date of allotment Number
Amount
outstanding
Interest
Rate
Redeemable
at par on
Put and Call option
19-Jan-12 80.00 80.00 13.00% 16-Apr-13 None **
17-Jan-12 500.00 500.00 12.90% 16-Jan-13 17th April 2012 and every
three months thereafter
**
20-Dec-11 271.00 238.62 Zero Coupon
IRR 12.67%
13-Jan-13 None
24-Nov-11 1,000.00 1,000.00 12.50% 23-Dec-12 None
29-Jul-11 566.00 499.04 Zero Coupon
IRR 12.53%
22-Aug-12 None
31-Mar-11 1,000.00 1,000.00 12.60% 29-Jun-12 28th June 2011 and every
three months thereafter
Total 3,417.00 3,317.66
**The Company has subsequent to year end created the charge deed and filed the necessary forms with the regulatory authorities.
As at March 31, 2011
Date of allotment Number
Amount
outstanding
Interest
Rate
Redeemable
at par on
Put and Call option
31-Mar-11 1,000 1,000.00 12.60% 20-Jul-12 28th June 2011 and every three months
3-Sep-10 250 250.00 10.65% 5-Mar-12 3rd February 2011 and every three
months
3-Sep-10 750 750.00 10.65% 3-Mar-12 3rd February 2011 and every three
months
18-Aug-10 250 250.00 9.25% 18-Feb-12 None
15-Feb-10 250 250.00 9.00% 16-Aug-11 None
Total 2,500.00 2,500.00
Nature of Security
Secured by present and future gold loan receivable of the Company with minimum asset cover ratio of 1.10 times.
iv) Public issue of Redeemable Non-convertible Debentures of ` 1,000/- each - Terms of repayment
As at March 31, 2012
Date of allotment Number Amount Interest
Rate
Redeemable
at par on
8-Sep-11 2,201,384 2,201.38 12.20% 8-Sep-13
8-Sep-11 785,940 785.94 12.00% 8-Sep-13
8-Sep-11 1,428,866 1,428.87 12.00% 12-Oct-12
Total 4,416,190 4,416.19
Nature of Security
Secured by mortgage of the immovable property of the Company and a charge on all current asset, book debts, receivables as fully described
in the debenture trust deed except those receivables specifically exclusively charged, on a first ranking pari passu basis with all other lenders
to the Company holding pari passu charge over security.
The Company shall maintain an asset cover of at least 1.10 times of the outstanding amount of debenture, at all times, till the debentures are
completely redeemed.
Notes to the Financial statements for the year ended March 31, 2012
Annual Report 2011-12
62
63
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
As at
March 31, 2012
As at
March 31, 2011
NOTE : 6
Other long term liabilities
Interest accrued but not due on long term borrowings 106.57 47.17
106.57 47.17
As at
March 31, 2012
As at
March 31, 2011
NOTE : 7
Short-term borrowings
Non convertible Debentures - Private placement (Secured) (refer note 5) 500.00 2.10
Cash credit / Overdraft facilities from banks (secured) 26,711.58 7,488.19
Working Capital demand loan from banks (secured) 38,960.25 30,558.41
Working Capital demand loan from others (secured) 3,820.83 650.00
Commercial Papers (unsecured) 2,320.95 10,007.87
10% - 11% Inter-corporate deposit repayable within one year - 1.64
72,313.61 48,708.21
The above amount includes
Secured borrowings 69,992.66 38,698.70
Unsecured borrowings 2,320.95 10,009.51
Non convertible Debentures - Private placement (Secured)- refer Note 5 for details.
Commercial papers carry interest rates of 10.5% to 13.3% and their tenor ranges from 90 days to 365 days.
Notes to the Financial statements for the year ended March 31, 2012
(All amounts are in million of Indian rupees unless otherwise stated)
Details of Security * Rate of
interest
March 31,
2012
Book debts-25% - -
Book debts-25% - -
Book debts +25% margin and 5% of cash collateral BR+1.5% 2,031.36
Book debts + 10% margin BR+1.9% 3,000.00
Book debts +10% margin and 5% of cash collateral BR+1.8% 1,000.00
Book debts + 15% margin 12.50% 741.01
Book debts + 25% margin and Cash Collateral ` 80
Crs (Paripassu)
BR+2.5% 7,990.00
Specified book debts + 25% margin BR+2.75% 3,011.29
Book debts + 15% margin BR+3.25% 2,500.00
Book debts + 10% margin BR+2.1% 2,500.00
Book debts + 10% margin BR+1.75% 3,999.00
Specified Book debts + 10% margin BR+2.25% 2,000.94
Book debts + 15% margin BR+2% 500.00
Book debts + 25% margin (paripassu) BR+2.5% 3,462.00
Book debts +25% margin and 10% of cash collateral BR+2.5% 987.66
Book debts + 5% margin and 5% of cash collateral 13.20% 750.00
Book debts and cash collateral at 10% 13.25% 1,000.00
Book debts + 25% margin BR+2.25% 904.05
Book debts + 25% margin (paripassu) BR+2.5% 4,708.69
Specified book debts + 25% margin & cash collateral
at 5%
BR+3.25% 250.06
Specified book debts + 20% margin BR+2.5% 1,999.56
Specified book debts + 25% margin BR+3.25% 3,500.00
Book debts + 15% margin BR+2.5% 692.97
Specified book debts + 15% margin BR+3% 1,249.97
book debts-10% BR+3.5% 19.50
Specified Book debts + 25% margin BR+2.75% 2,000.68
Specified book debts BR+3.5% 232.70
Book debts + 15% margin BR+3% 1,498.95
Specified book debts + 15% margin BR+3% 1,248.38
Specified book debts + 10% margin BBR+2.5% 2,005.90
Book debts + 15% margin BR+3.5% 1,783.31
Specified book debts + 25% margin BR+3.25% 466.59
Book debts +10% margin and 5% of cash collateral BR+2.75% 250.00
Book debts + 25% margin BR+3.5% 357.88
Book debts +20% margin and 3.5% of cash collateral BR+3% 499.99
Book debts + 5% margin and cash collateral at 5% BR+ 3.75% 1,088.62
Book debts + 35% margin (paripassu) BR+3% 3,451.89
Book debts-25% & 7.5% of cash collateral BR+1.5% 1,500.00
Specified Book debts + 15% margin BR+2.25% 488.88
Specified book debt margin+ cash collateral-10% 9.00% -
Specified book debts & cash collateral-2.5% 8.25% -
65,671.83
Details of Security * Rate of
interest
March 31,
2011
Specified book debts + 10% 12.75% 500.00
Specified book debts + 10% 12.60% 500.00
Book debts + 15% BR+.50% 1,000.00
Specified book debts + 25% BR+1.5% 1,000.00
Book debts + 10% and 5% of cash collateral BR +
1.25%
750.00
Specified book debts + 15% 12.00% 544.00
Specified book debts + 25% and Cash collateral of
` 40 cr
10.50% 4,000.00
BR + 2.25% BR +
2.25%
1,900.00
Specified book debts + 10% BR+2.1% 2,000.00
book debts + 10% BR +
1.75%
2,000.00
Specified book debts + 5% 11.00% 500.00
Book debts + 25% BR+2.5% 1,762.00
Specified book debts + 10% and 5% of Cash
collateral
10.75% 750.00
Specified book debts + 25% BR +
2.25%
510.00
Book debts + 25% 9.00% 2,936.70
Specified book debts + 15% BR+2.5% 499.90
Specified book debts + 10% BR+3.5% 18.00
Specified book debt BR +
3.00%
267.00
Specified book debts + 15% BR +
2.00%
1,500.00
Specified book debts + 15% BR +
2.00%
1,250.00
Specified book debts + 10% BR +
2.00%
4,773.00
Specified book debts + 15% BR +
3.20%
1,209.00
Specified book debts + 10% and 5% of Cash
collateral
BR +
2.50%
500.00
Specified book debts + 25% BR+3.5% 37.00
Specified book debts + 10% and 5% of Cash collateral BR +
2.00%
417.00
Specified book debts + 5% and 5% of Cash collateral BR +
4.50%
2,500.00
Specified book debts + 25% BR+3% 1,849.00
Specified book debts + 10% &7.5% Cash collateral BR+1.5% 2,000.00
Specified book debts + 15% BR+2.25% 500.00
Specified book debts+ cash collateral-10% BPLR-6% 24.00
Specified book debts + cash collateral-2.5% IVBR+0.5% 50.00
38,046.60
NOTE : 7 (CONTD.)
Cash credit, overdraft and working capital loans are repayable on demand or within a maximum period of one year. Details of security and rate of interest is as under:
Loans from banks:
Loan from Others
Details of Security * Rate of interest March 31, 2012
Book debts + 5% margin and 2.5% of
cash collateral
13% + Base rate
Increase
83.33
Specified Book debts + 25% margin SICOM Medium
Term Reference
Rate - 1%
750.00
Specified Book debts + 25% margin PLR + 0.75% 2,000.00
Specified book debts + 20% margin 14.00% 487.50
Book debts-20% 11.55% 500.00
3,820.83
Details of Security * Rate of interest March 31, 2012
Book debts + 5% and 2.5% of Cash
collateral
13% 150.00
Specified book debts + 10% 12% 500.00
650.00
* The loans have been guaranteed by the personal guarantee of Mr. V.P
Nandakumar. Executive Chairman.
Notes to the Financial statements for the year ended March 31, 2012
Annual Report 2011-12
64
65
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
Notes to the Financial statements for the year ended March 31, 2012
As at
March 31, 2012
As at
March 31, 2011
NOTE : 8
Other current liabilities
Current maturities of long-term borrowings (note 5) 9,912.94 2,860.99
Interest accrued but not due on borrowings 803.71 107.72
Interest accrued and due on borrowings 19.02 11.44
Statutory dues payable 80.58 52.80
Employee related payables 252.19 180.91
Payable for expenses 370.56 400.07
Debenture application money 149.20 20.00
Book overdraft 9.43 5.09
Interest free security deposits from employees 22.31 10.92
Auction surplus 488.10 100.58
Unmatured finance charge 19.01 197.90
Retention deposit 28.74 15.31
Others 61.60 14.60
Investor education and protection funds shall be credited by following amounts as and
when due:
Unclaimed dividend 4.43 2.13
Unclaimed matured deposits 0.62 11.44
Unclaimed matured subordinate bonds 4.06 -
12,226.50 3,991.90
There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at March 31,
2012 and March 31, 2011. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act,
2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.
As at
March 31, 2012
As at
March 31, 2011
NOTE : 9
Short term provisions
Provision for employee benefits - 14.82
Provision for gratuity 24.26 7.20
Provision for leave encashment 24.26 22.02
Other provisions
Provision for non performing loan portfolio 296.17 155.63
Provisions for taxation (net of advance tax and tax deducted at source) 55.63 29.96
Proposed equity dividend 841.15 500.25
Provision for tax on proposed equity dividend 136.44 81.14
Provision for standard assets 240.23 158.47
1,569.62 925.45
1,593.88 947.47
(All amounts are in million of Indian rupees unless otherwise stated)
Notes to the Financial statements for the year ended March 31, 2012
NOTE : 10A
Tangible assets
Freehold
Land*
Building Office
equipment
Computer
equipment
Furniture
and
Fittings**
Vehicle*** Plant &
Machinery
Total
Cost
At April 1, 2010 31.32 15.12 60.20 168.82 383.89 9.55 0.90 669.80
Additions - 66.02 113.02 203.33 595.34 14.34 2.16 994.21
Deletions - - 0.26 9.50 0.29 1.46 0.68 12.19
At March 31, 2011 31.32 81.14 172.96 362.65 978.94 22.43 2.38 1,651.82
Cost
At April 1, 2011 31.32 81.14 172.96 362.65 978.94 22.43 2.38 1,651.82
Additions 41.21 18.86 160.06 292.10 751.69 9.18 38.70 1,311.80
Deletions - - - 11.62 0.18 1.26 - 13.06
At March 31, 2012 72.53 100.00 333.02 643.13 1,730.45 30.35 41.08 2,950.56
Accumulated Depreciation
At April 1, 2010 - 0.42 13.61 62.68 56.38 2.52 0.02 135.63
Charge for the year - 0.51 26.75 106.05 69.51 1.60 0.03 204.45
Deletions - - 0.19 6.10 0.28 0.70 0.01 7.28
At March 31, 2011 - 0.93 40.17 162.63 125.61 3.42 0.04 332.80
Accumulated Depreciation
At April 1, 2011 - 0.93 40.17 162.63 125.61 3.42 0.04 332.80
Charge for the year 1.54 40.57 162.37 258.07 2.46 0.97 465.98
Disposals - - 11.49 0.06 0.39 - 11.94
At March 31, 2012 - 2.47 80.74 313.51 383.62 5.49 1.01 786.84
Net Block at March 31,
2011
31.32 80.21 132.79 200.02 853.33 19.01 2.34 1,319.02
Net Block at March 31,
2012
72.53 97.53 252.28 329.62 1,346.83 24.86 40.07 2,163.72
* The Company is in the process of registering the title of the land acquired in an earlier year for ` 0.7 in its name. Borrowing costs of ` 3 has
been capitalised under capital work in progress for eligible assets
** Also, refer note 2(d) for change in estimate in useful lives of furniture and fittings other than safes and strong rooms
*** Includes vehicles taken on finance lease/hire purchase- Gross block ` 22.47 (Previous year ` 18.39): Depreciation for the year ` 1.82
(Previous year ` 1.18) and Net block ` 19.73 (Previous Year ` 16.81)
Annual Report 2011-12
66
67
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
Notes to the Financial statements for the year ended March 31, 2012
NOTE : 10B
Intangible assets
Computer Software
Cost
At April 1, 2010 46.03
Purchase 34.80
Deletions -
At March 31, 2011 80.83
Cost
At April 1, 2011 80.83
Purchase 33.57
Deletions -
At March 31, 2012 114.40
Amortisation
At April 1, 2010 12.48
Charge for the year 8.51
Deletions -
At March 31, 2011 20.99
Amortisation
At April 1, 2011 20.99
Charge for the year 16.88
Deletions -
At 31 March 2012 37.87
Net block
At March 31, 2011 59.84
At March 31, 2012 76.53
As at
March 31, 2012
As at
March 31, 2011
NOTE : 11A
Non-current investments
Trade investments (Quoted, at cost)
Nil (Previous year - 32,000) units of ` 100/- each in 7.38% Govt. of India Bond - 3.15
Nil (Previous year - 100) equity share of ` 10/- each fully paid in The Dhanalaxmi Bank
Limited.
- 0.01
Nil (Previous year - 100) equity share of ` 10/- each fully paid in Vijaya Bank Limited - 0.01
Trade investments (Unquoted, at cost)
100 (previous year: Nil) Non Convertible Subordinated bonds of ` 1,000,000/- each fully
paid in Yes Bank Limited
100.00 -
Other than trade (Unquoted, at cost)
1,000 (Previous year - 1,000) equity share of ` 10/- each fully paid in The Catholic Syrian
Bank Limited.
0.03 0.03
100.03 3.20
Note :
1. Aggregate amount of unquoted investments 100.03 0.03
2. Aggregate amount of quoted investments (Market Value ` Nil; previous year ` 3.37) - 3.17
(All amounts are in million of Indian rupees unless otherwise stated)
Notes to the Financial statements for the year ended March 31, 2012
As at
March 31, 2012
As at
March 31, 2011
NOTE : 11B
Current Investments (Unquoted, At Net Asset Value)
Trade investments (Quoted, at cost)
40,000,000 (previous year - 40,000,000) of ` 10/- each in SBI Mutual Fund - Debt Fund
Series - 367 Days - 9- Growth
413.06 400.00
541,448.1297 (previous year - Nil) of ` 1,662.2089/- each in SBI Mutual Fund - Premier
Liquid Fund -Super Institutional Growth Plan
912.91 -
220,366.909 (previous year - Nil) of ` 1,134.4716/- each in IDBI Liquid Fund Growth 253.61 -
11,494,992.7811 (previous year - Nil) of ` 21.7486/- each in Kotak Liquid (Institututional
Premium) Growth
250.09 -
249,870.142 (previous year - Nil) of ` 1,000.5197/- each in Daiwa Liquid Fund
Institututional Plan Daily Dividend Option Growth
252.72 -
2,082.39 400.00
Note :
1. Aggregate amount of unquoted investments (book value) 2,050.00 400.00
1. Aggregate amount of unquoted investments (NAV) 2,082.39 400.00
As at
March 31, 2012
As at
March 31, 2011
NOTE : 12
Deferred tax assets (net)
Deferred tax liability
Fixed assets: Impact of difference between tax depreciation and depreciation/
amortisation charged for the financial reporting.
(20.56) (34.39)
Gross deferred tax liability (20.56) (34.39)
Deferred tax asset
Impact of expenditure charged to the statement of profit and loss in the current year but
allowed for tax purposes on payment basis
7.87 15.71
Provision for advances 201.67 105.75
Gross deferred tax asset 209.54 121.46
Net deferred tax asset 188.98 87.07
Annual Report 2011-12
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69
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
Notes to the Financial statements for the year ended March 31, 2012
Non-current Current
March 31, 2012 March 31, 2011 March 31, 2012 March 31, 2011
NOTE : 13
Loans and advances
Portfolio Loan
Secured, considered good
- Gold - - 95,882.49 63,556.57
- Hypothecation - - - 18.79
- Stock on Hire - - - 0.30
- Other loans 45.71 9.27 153.50 45.13
45.71 9.27 96,035.99 63,620.79
Secured, considered doubtful#
- Gold - - 280.66 119.17
- Hypothecation - - - 26.69
- Stock on Hire - - - 1.30
Portfolio Loan
Unsecured, considered good
- Other loans 7.23 2.69 3.15 17.53
Unsecured, considered doubtful# - - 15.51 8.47
Advances recoverable in cash or kind *
Advances receivable from related parties - - 12.37 -
Unsecured, considered good - - 76.30 56.17
Unsecured, considered doubtful - - 85.19 11.82
- - 173.86 67.99
Less: Provision for doubtful advances - - (85.19) (11.82)
- - 88.67 56.17
Deposits (Unsecured, considered good)
Rental deposits 451.54 286.57 105.12 54.17
Other security deposits - - 47.51 6.46
451.54 286.57 152.63 60.63
Service tax and other taxes recoverable, from
Government
- - 44.85 29.67
Capital advances (Unsecured, considered good) 18.54 0.92 - -
Total 523.02 299.45 96,621.46 63,940.42
* Advances recoverable in cash or kind includes dues
from relative of Directors and related parties
- - 4.87 3.11
# Provision for the same has been disclosed separately under note 9. Also refer note 32(a)
(All amounts are in million of Indian rupees unless otherwise stated)
Notes to the Financial statements for the year ended March 31, 2012
Non-current Current
March 31, 2012 March 31, 2011 March 31, 2012 March 31, 2011
NOTE: 14
Other assets
Non-current bank deposits (note 15) 281.13 232.51 - -
(A) 281.13 232.51 - -
Interest accrued:
Loan Portfolio - - 8,913.91 4,569.98
Fixed deposits and investment 1.56 3.25 119.22 85.20
Auctioned gold - - 1,225.41 287.17
Ancillary cost of arranging the borrowings 51.91 23.49 95.15 15.53
Others - 2.88 1.91
(B) 53.47 26.74 10,356.57 4,959.79
Total (A + B ) 334.60 259.25 10,356.57 4,959.79
Non-current Current
March 31, 2012 March 31, 2011 March 31, 2012 March 31, 2011
NOTE: 15
Cash and bank balances
Cash and cash equivalents
Balances with banks:
On current accounts # - - 3,414.45 2,480.92
Deposits with original maturity of less than three
months
- - 30.00 750.00
On unpaid dividend account - - 4.44 2.13
Cash on hand - - 1,055.23 1,188.01
- - 4,504.12 4,421.06
Other bank balances
Deposits with original maturity of less than 3 months* - - 25.00 225.29
Deposits with original maturity for more than 3 months
but less than 12 months*
- - 3,039.93 1,608.45
Deposits with original maturity for more than 12
months*
281.13 232.51 608.03 176.05
281.13 232.51 3,672.96 2,009.79
Amount disclosed under
non-current assets (note 14) 281.13 232.51 - -
- - 8,177.08 6,430.85
“* Includes:
a) cash collateral deposits aggregating ` 3,421.49 (Previous year: ` 2,119.41) towards assignments and other approved facilities; and
b) Employee security deposits aggregating ` 23.27 (previous year : ` 10.95) placed as fixed deposits with banks .
These are not freely available to the Company and accordingly, have not been considered as cash and cash equivalents.”
# includes amounts in Escrow account towards closed public deposits ` 0.62 (previous year: ` 11.44).
Annual Report 2011-12
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71
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
Notes to the Financial statements for the year ended March 31, 2012
Year ended
March 31, 2012
Year ended
March 31, 2011
NOTE: 16
Revenue from operations
Interest Income
- Gold loans 26,093.01 11,584.17
- Hypothecation and hire purchase loans 2.28 43.01
- Other loans 24.68 6.94
Revenue from other services
- Money transfer 34.58 19.21
- Others 0.93 0.87
Revenue from operations 26,155.48 11,654.20
Year ended
March 31, 2012
Year ended
March 31, 2011
NOTE: 17
Other Income
Interest income on
Bank and other deposits 221.20 124.67
Net gain on sale of current investments 45.56 3.62
Gain on unquoted mutual funds 32.39 -
Profit on sale of fixed assets (net) 1.93 -
Bad debts recovered 3.97 8.64
Foreign exchange gain (net) 0.02 0.02
Other non-operating income 97.90 24.11
402.97 161.06
Year ended
March 31, 2012
Year ended
March 31, 2011
NOTE: 18
Finance Cost
Interest
- on Debentures 1,387.55 299.67
- on Deposits 1.58 1.37
- on Bank and other borrowings 6,830.75 2,244.60
- on Subordinate bonds 440.60 233.15
- on Commercial papers 1,719.42 369.88
- Others 16.86 7.92
Other borrowing cost 494.24 234.96
10,891.00 3,391.55
Year ended
March 31, 2012
Year ended
March 31, 2011
NOTE: 19
Employee benefit expense
Salaries, wages and bonus 2,797.95 1,419.26
Contribution to provident and other funds 271.95 180.71
Staff welfare expenses 20.21 5.03
3,090.11 1,605.00
(All amounts are in million of Indian rupees unless otherwise stated)
Notes to the Financial statements for the year ended March 31, 2012
Year ended
March 31, 2012
Year ended
March 31, 2011
NOTE: 20
Other expenses
Electricity 73.92 38.16
Rent 602.39 328.40
Rates and taxes 61.03 40.47
Insurance 40.22 23.75
Repairs and maintenance
-Vehicles 4.04 1.78
-Others 68.40 62.79
Advertising and sales promotion 798.72 1,038.51
Travelling and conveyance 184.94 83.90
Communication costs 103.08 44.23
Printing and stationery 69.67 41.51
IT Support costs 195.46 -
Legal and professional fees 105.81 23.27
Security charges 549.54 204.16
Bad debts/advances written off 87.31 - 237.12
Provision for non performing assets, net of bad debts written off 140.54 - (24.66)
Provision for doubtful advances 73.36 301.21 11.82 224.28
Provision for standard assets 81.76 158.47
Miscellaneous expenses 82.23 53.11
3,322.42 2,366.79
Legal and professional charges include Payment to auditors:
As auditor:
Audit fee 2.75 2.50
Limited review 1.80 1.50
Certification fees 0.65 0.50
Reimbursement of expenses 0.25 0.20
5.45 4.70
The fees dislcosed above excldues ` 2 paid for services in connection with public issue of secured non-convertible debentures by the
Company.
Year ended
March 31, 2012
Year ended
March 31, 2011
NOTE: 21
Depreciation and amortisation expense
Depreciation of tangible assets 465.98 204.45
Amortisation of intangible assets 16.88 8.51
482.86 212.96
Annual Report 2011-12
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73
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
Notes to the Financial statements for the year ended March 31, 2012
Year ended
March 31, 2012
Year ended
March 31, 2011
NOTE: 22
Earnings per share (EPS)
The following reflects the profit and share data used in the basic and diluted EPS
computations:
Net profit for calculation of basic EPS 5,914.61 2,826.64
Weighted average number of equity shares in calculating basic EPS (Nos.) 837,277,508 742,761,651
Effect of dilution:
Stock options granted under ESOP (Nos.) 3,956,645 10,222,897
Weighted average number of equity shares in calculating diluted EPS (Nos.) 841,234,153 752,984,548
NOTE: 23
Employee Stock Option Scheme (ESOS), 2009
The details of the Employee Stock Option Scheme 2009 are as under:
Date of share holders’ approval August 17, 2009
Number of options approved 1,000,000
Date of grant August 17, 2009
Number of options granted 829,500
Method of settlement Equity
Graded Vesting 50% after one year from the date of grant i.e. August 16, 2010 and
balance 50% after two years from the date of grant i.e August 16,
2011
Exercisable period 4 years from vesting date
Vesting conditions On achievement of pre-determined performance parameters.
Subsequent to the share split and bonus issue in an earlier year, the number of options has been adjusted to 8,295,000 options and the
exercise price has been adjusted to ` 33.12/- per share in accordance with the terms of the scheme. Further, subsequent to bonus issue in the
current year, the exercise price has been adjusted to ` 16.56/-
The Company has adopted the (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 issued by Securities
and Exchange Board of India, and has recorded a compensation expense using the intrinsic value method as set out in those guidelines. The
summary of the movements in options is given below:
Particulars As at
March 31, 2012
As at
March 31, 2011
Options outstanding, beginning of year 4,094,880 7,850,000
Increase on account of Bonus issue 4,094,880 -
Lapsed Options restored during the year 30,000 -
Options exercised during the year (7,404,760) (3,755,120)
Options lapsed during the year (695,000) -
Options outstanding, end of year 120,000 4,094,880
Options outstanding at the yearend comprise of :
- Options eligible for exercise at year end 120,000 169,880
- Options not eligible for exercise at year end - 3,925,000
(All amounts are in million of Indian rupees unless otherwise stated)
Notes to the Financial statements for the year ended March 31, 2012
Particulars As at
March 31, 2012
As at
March 31, 2011
Weighted average remaining contract life of options 1 years 5 month 2 years 5 month
Weighted average market price of share exercised ` 51.06/- `144.47/-
The options outstanding at March 31, 2012 had an exercise price of `16.56/-
The fair value of options estimated at the date of grant using the Black-Scholes method and the assumptions used are as under:
Particulars Vesting I Vesting II
August 16, 2010 August 16, 2011
50% 50%
Option fair value (pre-split and bonus at a face value of ` 10/- per share) ` 142.43 ` 157.92
Risk-free interest rate 6.15% 6.53%
Expected life 3 years 4 years
Expected volatility 67.11% 66.62%
Expected dividend yield 2.76% 2.76%
Share price on the date of grant (face value of ` 10/-) ` 331.15 /- ` 331.15 /-
The expected volatility of the stock has been determined based on historical volatility of the stock. The period over which volatility has been
considered is the expected life of the option.
Pro-forma Disclosures for ESOS 2009
In accordance with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, had the compensation
cost for ESOS 2009 been recognised based on the fair value at the date of grant in accordance with Black-Scholes method, the amounts of the
Company’s net profit and earnings per share would have been as follows:
Particulars Profit after tax Basic EPS (`) Diluted EPS (`)
Year ended March 31, 2012
- Amounts as reported 5,914.61 7.06 7.03
- Amounts as per pro-forma 5,902.89 7.05 7.02
Particulars Profit after tax Basic EPS (`) Diluted EPS (`)
Year ended March 31, 2011
- Amounts as reported 2,826.64 3.81 3.75
- Amounts as per pro-forma 2,774.52 3.74 3.69
Annual Report 2011-12
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75
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
Notes to the Financial statements for the year ended March 31, 2012
Particulars Associates / Enterprises
owned or significantly
influenced by key
management personnel or
their relatives
Key Management
Personnel
Relatives of key
management personnel
Total
31-Mar-12 31-Mar-11 31-Mar-12 31-Mar-11 31-Mar-12 31-Mar-11 31-Mar-12 31-Mar-11
NOTE 24
Related party transactions
Debentures and Subordinate
Bond issued during the period
- - - 46.03 5.20 2.36 5.20 48.39
Mr. V.P.Nandakumar - - - 46.03 - - - 46.03
Mrs. Sathyalekshmi - - - - 0.64 0.97 0.64 0.97
Mrs. Rajalakshmi Raveendra Babu - - - - 2.20 0.68 2.20 0.68
Ms. Biju Babu - - - - 0.80 - 0.80 -
Meenakshy Amma - - - - 1.02 - 1.02 -
Others 0.54 0.71 0.54 0.71
Debentures and Subordinate
Bond redeemed during the
period
- 60.10 0.83 2.57 0.83 62.67
Mr. V.P.Nandakumar 60.10 - - - 60.10
Mrs. Sathyalekshmi - - - - 0.72 1.21 0.72 1.21
Others - - - - 0.11 1.36 0.11 1.36
Interest paid - - 3.06 0.08 0.34 0.08 3.40
Mr. V.P.Nandakumar - - 3.06 - - - 3.06
Mrs. Sathyalekshmi - 0.07 0.05 0.07 0.05
Others - - - - 0.01 0.29 0.01 0.29
Commission paid to Directors - - 5.28 18.60 - - 5.28 18.60
Mr. V.P.Nandakumar - - 12.00 - 12.00
Mr. I Unnikrishnan - 2.88 3.60 2.88 3.60
Mr. Raveendra Babu - 2.40 3.00 2.40 3.00
Remuneration Paid to Directors - - 40.32 32.26 - - 40.32 32.26
Mr. V.P.Nandakumar 25.20 20.16 25.20 20.16
Mr. I Unnikrishnan 8.40 6.72 8.40 6.72
Mr. Raveendra Babu 6.72 5.38 6.72 5.38
Advances made - - - 1.76 1.91 1.76 1.91
Mrs. Jyothi Prasannan - - - 1.34 1.31 1.34 1.31
Sooraj Nandan - - - 0.42 0.60 0.42 0.60
Subscription to Equity Shares - - - - - 1,000.00 - 1,000.00
Mrs. Sushama Nandakumar - - - - - 1,000.00 - 1,000.00
Donation made 8.17 6.20 - - 8.17 6.20
Manappuram Foundations 8.17 6.20 - - 8.17 6.20
Rent Paid 1.55 0.51 - 1.55 0.51
Mr. V.P.Nandakumar - 1.55 0.51 - 1.55 0.51
Rent Received 0.26 0.24 - - 0.26 0.24
Manappuram Jewellers Private Limited 0.06 0.04 - - 0.06 0.04
Manappuram Asset Finance Limited 0.02 0.02 - - 0.02 0.02
Manappuram Insurance Brokers Private
Limited
0.18 0.18 - - 0.18 0.18
Sale of gold 769.55 972.70 - - 769.55 972.70
Manappuram Jewellers Limited 769.55 972.70 - - 769.55 972.70
(All amounts are in million of Indian rupees unless otherwise stated)
Notes to the Financial statements for the year ended March 31, 2012
Particulars Associates / Enterprises
owned or significantly
influenced by key
management personnel or
their relatives
Key Management
Personnel
Relatives of key
management personnel
Total
31-Mar-12 31-Mar-11 31-Mar-12 31-Mar-11 31-Mar-12 31-Mar-11 31-Mar-12 31-Mar-11
Other Income 1.91 0.56 - - 1.91 0.56
Manappuram Jewellers Limited 1.89 0.20 - - 1.89 0.20
Others 0.02 0.36 - - 0.02 0.36
Service charges from related party 12.37 - - - - - 12.37 -
Manappuram Agro farms 10.22 - - - - - 10.22 -
Manappuram Jewellers Limited 0.82 0.82 -
Manappuram Chits (India) Limited 0.07 0.07 -
Manappuram Chits India 1.23 1.23 -
Manappuram Chit Funds Company
Private Limited
0.03 0.03 -
Manappuram Chits Company (Karnataka)
Private Limited
0.00 0.00 -
Manappuram Benefit Fund Limited (Refer
Note 36(b))
- -
Manappuram Asset Finance Limited
(Refer Note 36(b))
- -
Manappuram Finance (Refer Note 36(b)) - -
Purchase of assets - - 35.58 - - - 35.58 -
Mr. V.P.Nandakumar - - 35.58 - - - 35.58 -
Balance outstanding as at the period
end:
Amounts payable (net) to related
parties
- - 5.14 18.86 6.62 2.82 11.76 21.68
Mr. V.P.Nandakumar - - - 12.26 - - - 12.26
Mr. I Unnikrishnan 2.88 3.60 - - 2.88 3.60
Mr. Raveendra Babu 2.26 3.00 - - 2.26 3.00
Mrs. Rajalakshmi Raveendra Babu - - - - 3.08 0.57 3.08 0.57
Ms. Biji Babu 0.81 - 0.81 -
Mrs. Sathyalekshmy - - - - 1.15 0.36 1.15 0.36
Meenakshy Amma - - - - 1.04 - 1.04 -
Others - - - - 0.54 1.89 0.54 1.89
Amounts receivables (net) from
related parties
12.45 0.04 - - 4.88 3.11 17.33 3.15
Manappuram Agro firms 10.22 - - - - - 10.22 -
Manappuram Chits India 1.23 - - - - - 1.23 -
Mrs. Jyothi Prasannan - - 3.86 2.51 3.86 2.51
Others 1.00 0.04 - - 1.02 0.60 2.02 0.64
Annual Report 2011-12
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77
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
Notes to the Financial statements for the year ended March 31, 2012
Names of related parties
Associates / Enterprises owned Manappuram Benefit Fund Limited
or significantly influenced by key management Manappuram Chits (India) Limited
personnel or their relatives Manappuram Asset Finance Limited
Manappuram Finance (sole proprietorship)
Manappuram Insurance Brokers Private Limited
Manappuram Jewellers Private Limited
Manappuram Healthcare
Manappuram Foundations (charitable trust)
Manappuram Chits India
Manappuram Agro farms
Manappuram Chit Funds Company Private Limited
Manappuram Chits Company (Karnataka) Private
Limited
Key Management Personnel Mr. V P Nandakumar
Mr. I Unnikrishnan
Mr. B.N Raveendra Babu
Relatives of key management personnel Mrs. Sushama Nandakumar
Mr. Sooraj Nandan
Mrs Sumitha Nandakumar
Mrs. Jyothi Prasannan
Mrs. Shelly Ekalavyan
Mrs. Geetha Ravi
Mrs. Rajalakshmi Raveendra Babu
Mrs. Sathyalekshmy
Meenakshy Amma
Ms. Biji Babu
* Transactions with relatives of key management personnel are based on delcarations
by the KMPs and relied upon by the auditors.
NOTE : 25
Employment benefits disclosures:
The amounts of Provident fund contribution charged to the Profit and loss account during the year aggregates to ` 173.97 (Previous year -
` 96.51 ).
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on
departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation of
India.
The following tables summaries the components of net benefit expense recognised in the profit and loss account and the funded status and
amounts recognised in the balance sheet for the gratuity plan.
(All amounts are in million of Indian rupees unless otherwise stated)
Profit and Loss account
Net employee benefit expense
2012 2011
Current service cost 41.33 32.48
Interest cost on benefit obligation 4.31 0.31
Expected return on plan assets (4.86) (1.86)
Net actuarial loss recognised in the year (21.69) 15.16
Net (benefit) / expense 19.09 46.09
Actual return on plan assets 5.26 2.01
Balance sheet
Reconciliation of present value of the obligation and the fair value of plan assets:
2012 2011
Defined benefit obligation (75.65) (51.91)
Fair value of plan assets 81.72 37.09
Asset/(liability) recognised in the balance sheet 6.07 (14.82)
Experience adjustments on plan liabilities (Gain) / Loss (26.07) 14.90
Experience adjustments on plan assets Gain / (Loss) 0.42 0.15
There are no experience adjustments for the years ended March 31, 2010, March 31,
2009 and March 31, 2008.
Changes in the present value of the defined benefit obligation are as follows:
2012 2011
Opening defined benefit obligation 51.91 3.88
Interest cost 4.31 0.31
Current service cost 41.33 32.48
Benefits paid (0.63) (0.07)
Actuarial loss / (gain) on obligation (21.27) 15.31
Closing defined benefit obligation 75.65 51.91
Changes in the fair value of plan assets are as follows:
2012 2011
Opening fair value of plan assets 37.09 4.06
Expected return 4.86 1.86
Contributions by employer 39.98 31.09
Benefits paid (0.63) (0.07)
Actuarial gains / (losses) 0.42 0.15
Closing fair value of plan assets 81.72 37.09
The Company expects to contribute ` 30 to gratuity in 2012-13.
The principal assumptions used in determining gratuity obligations for the Company’s
plans are shown below:
2012 2011
% %
Discount rate 8.6% 8.3%
Expected rate of return on assets 8.5% 8.5%
The fund is administered by Life Insurance Corporation of India (“LIC”). The overall expected rate of return on assets is determined based
on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant
factors, such as supply and demand in the employment market.
Notes to the Financial statements for the year ended March 31, 2012
Annual Report 2011-12
78
79
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
NOTE: 26
Commitments
(i) Estimated amount of contracts remaining to be executed on capital account, net of advances is ` 127.90 (Previous year - ` 89.54).
(ii) The Company has entered into an agreement for outsourcing of Information Technology support in April 2011 for a period of 5 years with
an annual expense of ` 200 .
NOTE : 27
Contingent liabilities
2012 2011
(a) The Company is contingently liable to banks and other financial institutions with
respect to assignment of gold loans to the extent of the collateral deposits / guarantees.
Management does not expect the contingency to dwell on the Company.
2,600.72 1,702.76
Total 2,600.72 1,702.76
(b) Applicability of Kerala Money Lenders’ Act
The Company has challenged in the Hon’ble Supreme Court the order of Hon’ble Kerala High Court upholding the applicability of Kerala
Money Lenders Act to NBFCs. The Hon’ble Supreme Court has directed that a status quo on the matter shall be maintained and the
matter is currently pending with the Hon’ble Supreme Court. The Company has taken legal opinion on the matter and based on such
opinion the management is confident of a favourable outcome. Pending the resolution of the same, no adjustments have been made in
the financial statements for the required license fee and Security deposits.
(c) Show cause notice from Reserve Bank of India
The Company has received a show cause notice from the Reserve bank of India on May 7, 2012 with certain observations made pursu-
ant to their inspection of books and records of the Company. The Company is in process of responding to the show cause notice. Based
on the internal and external legal opinion, the Company believes that it can address all observations to the satisfaction of the Reserve
Bank of India. Pending resolution of the matter by the Reserve Bank of India, no adjustments, if any that may be required, have been
made in these financial statements.
NOTE : 28
Additional disclosures as required by circular no DNBS(PD).CC.No.125/03.05.002/2008-2009 dated August 1, 2008 issued by the
Reserve Bank of India:
a) Capital to Risk Assets Ratio
Particulars March 31, 2012 March 31, 2011
CRAR (%) 23.38 29.13
CRAR - Tier I Capital (%) 20.64 26.36
CRAR - Tier II Capital (%) 2.74 2.77
b) Exposure to real estate sector
The Company does not have any direct or indirect exposure towards real estate sector.
Notes to the Financial statements for the year ended March 31, 2012
(All amounts are in million of Indian rupees unless otherwise stated)
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Annual Report 2011-12
80
81
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
NOTE : 29
Lease Disclosures
Operating Lease :
Office premises are obtained on operating lease which are cancellable in nature.
Finance Leases:
2012 2011
Total minimum lease payments at the year end 13.40 12.57
Less: amount representing finance charges 1.44 1.63
Present value of minimum lease payments 11.96 10.94
Lease payments for the year 6.49 2.01
Minimum lease Payments:
Not less than one year [Present value ` 4.84 as on March 31, 2012 (` 3.78 as on March
31 ,2011)
5.96 4.55
Later than one year but not later than five years [Present value ` 7.12 as on March
31,2012 (` 7.16 as on March 31, 2011]
7.44 8.02
Later than five years [Present value Nil as on March 31, 2012 (Nil as on 31 March, 2011)] - -
NOTE : 30
Assignment Of Receivables
The Company has assigned a portion of its gold loans to banks and financial institution during the year. The aggregate amount of assigned
as at March 31, 2012 is ` 19,163.62 (Previous year 11,182.83). These amounts have been reduced from the gross loan and hypothecation
loan balances. Bank /Institution wise breakup of the same is as under.
Bank/Financial institution 2012 2011
Kotak Mahindra Bank Ltd 2,728.71 1,971.79
ICICI Bank Ltd 2,990.62 1,564.86
Federal Bank Ltd 750.00 166.55
Punjab National Bank 199.77 -
IDBI Bank Ltd 6,844.35 548.36
Dhanlaxmi Bank Ltd 2,208.02 1,849.41
Yes Bank Ltd 3,442.15 1,684.88
ING Vysya Bank Ltd - 1,628.67
Axis Bank Ltd (UTI Bank) - 1,118.19
Development Credit Bank Ltd - 199.72
IndusInd Bank Ltd - 450.40
19,163.62 11,182.83
Notes to the Financial statements for the year ended March 31, 2012
(All amounts are in million of Indian rupees unless otherwise stated)
NOTE : 31
Cash collateral deposits
Deposit with Banks includes Cash collaterals deposits aggregating ` 3,421.49 (Previous year ` 2,119.41) towards assignments and other
approved facilities. Bank /institution wise breakup of the same is as under :
Bank/Financial institution 2012 2011
Andhra Bank 206.93 125.00
Aditya Birla Finance Ltd (with CSB) 6.25 -
DBS Bank Ltd 37.50 37.50
Development Credit Bank Ltd 25.00 25.00
Dena Bank 50.00 37.50
Dhanlaxmi Bank Ltd 425.82 365.33
The Federal Bank Ltd 200.00 50.00
HDFC Bank Ltd 110.35 153.57
ICICI Bank Ltd 243.44 192.73
IDBI Bank Ltd 376.13 155.00
Indian Overseas Bank 292.54 275.32
The Jammu and Kashmir Bank Ltd 125.00 50.00
The Karnataka Bank Ltd 25.00 -
The Karur Vysya Bank Ltd 12.50 25.00
Kotak Mahindra Bank Ltd 38.37 35.54
Punjab National Bank 25.00 -
The South Indian Bank Ltd 186.99 127.89
State Bank of India 400.00 -
State Bank of Mauritius Ltd 25.00 -
United Bank of India 150.00 100.00
Vijaya Bank 100.00 -
Yes Bank Ltd 359.67 209.24
ING Vysya Bank Ltd - 54.79
Uco Bank - 100.00
3,421.49 2,119.41
Notes to the Financial statements for the year ended March 31, 2012
Annual Report 2011-12
82
83
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
NOTE : 32 (A)
Gold and other loan portfolio classification and and provision for non performing assets (As per RBI Prudential Norms)
Particulars Gross Loan Outstanding Provision For Assets Net Loan Outstanding
2012 2011 2012 2011 2012 2011
Secured Loans
A) Gold Loan
Standard Asset 95,532.17 63,477.61 239.70 158.23 95,292.47 63,319.38
Sub Standard Asset 376.42 76.27 37.64 7.63 338.78 68.64
Doubtful Asset 15.08 12.26 3.54 1.94 11.54 10.32
Loss Asset 239.48 109.60 239.48 109.60 - -
Total - A 96,163.15 63,675.74 520.36 277.40 95,642.79 63,398.34
B) Hypothecation Loan
Standard Asset - 18.79 - 0.05 - 18.74
Sub Standard Asset - 26.69 - 26.69 - -
Doubtful Asset - - - - - -
Loss Asset - - - - - -
Total - B - 45.48 - 26.74 - 18.74
C) Stock on Hire
Standard Asset - 0.30 - 0.00 - 0.30
Sub Standard Asset - 1.30 - 1.30 - -
Doubtful Asset - - - - - -
Loss Asset - - - - - -
Total - C - 1.60 - 1.30 - 0.30
D) Other Loans
Standard Asset 199.21 54.40 0.50 0.14 198.71
Sub Standard Asset - - - - -
Doubtful Asset - - - - -
Loss Asset - - - - -
Total - D 199.21 54.40 0.50 0.14 198.71 -
Total (A+B+C+D) 96,362.36 63,777.22 520.86 305.58 95,841.50 63,417.38
Unsecured Loans
A) Other Loans
Standard Asset 10.38 20.22 0.03 0.05 10.35 20.17
Sub Standard Asset - - - - - -
Doubtful Asset 15.51 8.47 15.51 8.47 - -
Loss Asset - - - - - -
Total 25.89 28.69 15.54 8.52 10.35 20.17
Notes to the Financial statements for the year ended March 31, 2012
(All amounts are in million of Indian rupees unless otherwise stated)
NOTE : 32 (A)
Gold and other loan portfolio classification and and provision for non performing assets (As per RBI Prudential Norms)
Particulars Gross Loan Outstanding Provision For Assets Net Loan Outstanding
2012 2011 2012 2011 2012 2011
NOTE : 32 (B)
Provision for diminution in value of investments
Particulars 2012 2011
Provision for diminution in
value of investments
- -
NOTE : 33
Additional disclosures as required by circular no DNBS.CC.PD.No.265/03.10.01/2011-2012 dated March 21, 2012 issued by the
Reserve Bank of India:
Particulars 2012 2011
Total Gold loan portfolio 96,163.15 63,675.74
Total Assets 120,768.42 77,826.61
Gold loan portfolio as a %age of total assets 79.63% 81.82%
NOTE : 34
Expenditure in foreign currency
Particulars 2012 2011
Travel 0.14 2.52
Consultancy charges - 7.96
0.14 10.48
NOTE : 35
Value of imports on C.I.F basis
Particulars 2012 2011
Capital goods 30.97 2.52
30.97 2.52
NOTE: 36
Transactions with related parties
a) Remuneration to relatives of director
The Company had in an earlier year made an application to Central Government for approval of remuneration paid to relatives of director
holding office or place of profit in the Company. During the current year, the application has been rejected by the Central Government.
Subsequently, the Company has made an application to the Central Government to waive the amounts paid to the relatives in the earlier
years. Pending the receipt of the approval the entire amount paid of ` 4.87 is shown as receivable from them.
b) Transactions under Section 297 of the Companies Act, 1956
The Company had shared common infrastructure facilities and performed / received collection services from other companies covered
under Section 301 of the Companies Act, 1956. The Company is in the process of obtaining necessary approvals / condonations from
the Central Government, if any that may be required in respect of the various classes of transactions entered into with parties covered
under Section 297 of the Companies Act, 1956, including certain free of cost transactions. The Company has also made provision for the
probable compounding fees payable.
Notes to the Financial statements for the year ended March 31, 2012
Annual Report 2011-12
84
85
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
As per our report of even date
For S. R. BATLIBOI & ASSOCIATES For and on behalf of the Board of Directors
Chartered Accountants
Firm Registration Number: 101049W
per S. Balasubrahmanyam V. P. Nandakumar I. Unnikrishnan B. N. Raveendra Babu
Partner Executive Chairman Managing Director Joint Managing Director
Membership No.: 053315
Place: Kochi M. Anandan A. L.. Bindu K. Rajesh Kumar
Date: May 18, 2012 Director Chief Financial Officer Company Secretary
Notes to the Financial statements for the year ended March 31, 2012
NOTE : 37
Utilisation of proceeds of public issue
During the current year, the Company has raised ` 4,416.19 by way of public issue of Secured Non Convertible debentures (public issue)
to be utilised to meet its various financing activities including lending and investments and towards business operations including for capital
expenditure and working capital requirements. As at March 31, 2012, the Company has utilised the entire proceeds of the public issue, net of
issue expenses in accordance with the objects stated in the offer document.
NOTE : 38
During the year there have been certain instances of fraud on the Company by employees where gold loan related misappropriations / cash
embezzlements have occurred for amounts aggregating ` 38.32 million. The Company has fully provided for these amounts in the financial
statements and is in the process of recovering these amounts from the employees and taking appropriate legal actions.
NOTE : 39
Comparatives
Till the year ended 31 March 2011, the Company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and
presentation of its financial statements. During the year ended 31 March 2012, the revised Schedule VI notified under the Companies Act
1956, has become applicable to the Company. The Company has reclassified previous year figures to conform to this year’s classification.
(All amounts are in million of Indian rupees unless otherwise stated)
March 31, 2012 March 31, 2012
A. CASH FLOW FROM OPERATING ACTIVITIES
Net profit before taxation 8,772.06 4,238.96
Depreciation and amortisation 482.86 212.96
Loss/ (profit) on sale of fixed assets (1.93) 2.28
Net gain on sale of current investments (45.56) (3.96)
Gain on unquoted mutual funds (32.39) -
Interest income (221.20) (124.67)
Dividend Income - (3.62)
Provision for standard assets 81.76 158.47
Bad debts/advances written off and provision for non performing assets 227.85 212.46
Provision for doubtful advances 73.36 11.82
Operating profit before working capital changes 9,336.81 4,704.70
Movements in working capital :
Increase/ (decrease) in other current liabilities 1,060.15 315.67
Decrease / (increase) in long-term loans and advances (223.57) (185.81)
Decrease / (increase) in short-term loans and advances (32,841.72) (45,215.57)
Decrease / (increase) in other current assets (5,439.80) (3,183.44)
Decrease / (increase) in other bank balances (net) (1,663.17) (930.34)
Cash generated from /(used in) operations (29,771.30) (44,494.79)
Direct taxes paid (net of refunds) (2,933.68) (1,441.62)
Net cash flow from/ (used in) operating activities (A) (32,704.98) (45,936.41)
B. CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets, including CWIP (1,421.69) (1,096.42)
Proceeds from sale of fixed assets 3.05 2.63
Purchase of Investment (2,850.00) (5,770.00)
Sale/ maturity of Investment 1,148.73 6,777.45
Interest received 188.87 82.35
Dividend received - 3.62
Net cash flow from/ (used in) investing activities (B) (2,931.04) (0.37)
C. CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of equity share capital 122.62 11,124.38
Share issue expenses - (235.64)
Proceeds from Institutional debentures 4,510.66 3,438.00
Repayment of Institutional debentures (3,000.00) -
Proceeds from Public issue of debentures 4,416.19 -
Proceeds from Institutional debentures (short term) 500.00 -
Increase / (decrease) in secured debentures including application money (net) 3,429.06 (1,027.47)
Proceeds from commercial paper 58,205.77 21,810.03
Repayment of commercial paper (65,892.70) (12,452.89)
Proceeds from subordinated debt 500.00 1,000.00
Increase / (decrease) in subordinate bond (net) 1,039.31 566.47
Increase / (decrease) in vehicle loans (net) 1.02 8.39
Increase / (decrease) in deposits including inter-corporate deposits (net) (12.46) (12.92)
Proceed from Term loan from Bank 2,112.00 -
Increase / (decrease) in bank borrowings (net) 27,625.23 24,388.01
Cash Flow Statement for the year ended March 31, 2012
Annual Report 2011-12
86
87
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
March 31, 2012 March 31, 2012
Increase / (decrease) in borrowings from others (net) 3,170.83 450.00
Increase / (decrease) in Other long term liabilities (net) 59.40 11.38
Dividends paid (918.50) (169.86)
Tax on dividend paid (149.35) (28.27)
Net cash flow from/ (used in) in financing activities (C) 35,719.08 48,869.61
Net increase/(decrease) in cash and cash equivalents (A + B + C) 83.06 2,932.83
Cash and cash equivalents at the beginning of the year 4,421.06 1,488.23
Cash and cash equivalents at the end of the year 4,504.12 4,421.06
Components of cash and cash equivalents
Cash on hand 1,055.23 1,188.01
With banks
- on current account# 3,414.45 2,480.92
- on deposit account 30.00 750.00
- on unpaid dividend account * 4.44 2.13
Total cash and cash equivalents (note 15) 4,504.12 4,421.06
# includes amounts in Escrow account towards closed public deposits ` 0.62 (previous year: Rs 11.44), which can be utilized towards
settlement of deposits.
* The Company can utilize the balance only towards the settlement of unpaid dividend liability.
For S. R. BATLIBOI & ASSOCIATES For and on behalf of the Board of Directors
Chartered Accountants
Firm Registration Number: 101049W
per S. Balasubrahmanyam V. P. Nandakumar I. Unnikrishnan B. N. Raveendra Babu
Partner Executive Chairman Managing Director Joint Managing Director
Membership No.: 053315
Place: Kochi M. Anandan A. L. Bindu K. Rajesh Kumar
Date: May 18, 2012 Director Chief Financial Officer Company Secretary
(All amounts are in million of Indian rupees unless otherwise stated)
Schedule to the Balance Sheet of a deposit taking non-banking financial company
(as required in terms of paragraph 13 of Non-Banking Financial (Non- Deposit Accepting or Holding) Companies Prudential Norms (Reserve
Bank) Directions, 2007)
(` in lakhs)
Sl
No
Particulars Amount
Outstanding
Amount
Overdue
Liabilities side :
(1) Loans and advances availed by the non-banking financial
company inclusive of interest accrued thereon but not paid:
(a) Debentures : Secured 152,981.72
: Unsecured 1,492.00
(other than falling within the meaning of public deposits*)
(b) Deferred Credits -
(c) Term Loans 21,239.60
(d) Inter-corporate loans and borrowing -
(e) Commercial Paper 24,677.28
(f) Public Deposits* -
(g) Other Loans:
Subordinate bond 43,596.08 40.60
Bank 657,004.62
Others 38,208.30
* Please see Note 1 below
Assets side :
Amount outstanding
(2) Break-up of Loans and Advances including bills
receivables [other than those included in (4) below] :
(a) Secured 1,052,762.70
(b) Unsecured 7,821.20
(3) Break up of Leased Assets and stock on hire and other
assets counting towards AFC activities
(i) Lease assets including lease rentals under sundry debtors :
(a) (a) Financial lease -
(b) (b) Operating lease -
(ii) Stock on hire including hire charges under sundry debtors: -
(a) Assets on hire -
(b) Repossessed Assets -
(iii) Other loans counting towards AFC activities -
(a) Loans where assets have been repossessed -
(b) Loans other than (a) above -
Annual Report 2011-12
88
89
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
(4) Break-up of Investments :
Current Investments:
1 Quoted :
(i) Shares : (a) Equity -
(b) Preference -
(ii) Debentures and Bonds -
(iii) Units of mutual funds -
(iv) Government Securities -
(v) Others -
2 Unquoted :
(i) Shares : (a) Equity -
(b) Preference -
(ii) Debentures and Bonds
(iii) Units of mutual funds 20,823.90
(iv) Government Securities -
(v) Others -
Long Term investments:
1 Quoted :
(i) Shares : (a) Equity -
(b) Preference -
(ii) Debentures and Bonds -
(iii) Units of mutual funds -
(iv) Government Securities -
(v) Others -
2 Unquoted :
(i) Shares : (a) Equity 0.30
(b) Preference -
(ii) Debentures and Bonds 1,000.00
(iii) Units of mutual funds -
(iv) Government Securities -
(v) Others -
(5) Borrower group-wise classification of assets financed as in (2) and (3) above :
Please see Note 2 below
Category Amount net of provisions
Secured Unsecured Total
1. Related Parties **
(a) Subsidiaries - - -
(b) Companies in the same group - - -
(c) Other related parties - 123.70 123.70
2. Other than related parties 1,052,762.70 7,697.50 1,060,460.20
Total 1,052,762.70 7,821.20 1,060,583.90
** As per Accounting Standard of ICAI (please see Note 3)
(All amounts are in million of Indian rupees unless otherwise stated)
For S. R. BATLIBOI & ASSOCIATES For and on behalf of the Board of Directors
Chartered Accountants
Firm Registration Number: 101049W
per S. Balasubrahmanyam V. P. Nandakumar I. Unnikrishnan B. N. Raveendra Babu
Partner Executive Chairman Managing Director Joint Managing Director
Membership No.: 053315
Place: Kochi M. Anandan A. L. Bindu K. Rajesh Kumar
Date: May 18, 2012 Director Chief Financial Officer Company Secretary
Schedule to the Balance Sheet of a deposit taking non-banking financial company
(as required in terms of paragraph 13 of Non-Banking Financial (Non- Deposit Accepting or Holding) Companies Prudential Norms (Reserve
Bank) Directions, 2007)
Annual Report 2011-12
90
91
(6) Investor group-wise classification of all investments (current and long term) in shares and securities (both quoted and
unquoted):
Please see note 3 below
Category Market Value / Break
up or fair value or
NAV
Book Value
(Net of
Provisions)
1. Related Parties **
(a) Subsidiaries - -
(b) Companies in the same group - -
(c) Other related parties - -
2. Other than related parties 1,000.30 1,000.30
Total 1,000.30 1,000.30
(7) Other Information :
Amount outstanding
(i) Gross Non-Performing Assets
(a) Related parties -
(b) Other than related parties 6,464.90
(ii) Net Non-Performing Assets
(a) Related parties -
(b) Other than related parties 3,503.20
Assets acquired in satisfaction of debt -
Notes:
1. As defined in paragraph 2(1)(xii) of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998.
2. Provisioning norms shall be applicable as prescribed in the Non-Banking Financial (Non Deposit Accepting or Holding) Companies
Prudential Norms (Reserve Bank) Directions, 2007.
3. All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of investments and other assets as
also assets acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/fair value/NAV in
respect of unquoted investments should be disclosed irrespective of whether they are classified as long term or current in (4) above.
(All amounts are in million of Indian rupees unless otherwise stated)
About Manappuram
Business Review Board and Management Reports Financial Section
Corporate Information
GZ\^hiZgZYd[ÒXZ
V/104 Manappuram House
Valapad PO, Thrissur 680567
Kerala
Phone No(s): 0487-3050100, 108
Fax No.: 0487- 2399298
Email: [email protected]
Website: www.manappuram.com
Company Registration No: 09-06623
CIN NO: L65910KL1992PLC006623
RBI Registration No: B.16.00029
Executive Chairman
Mr. V. P. Nandakumar
Managing Director
Mr. I. Unnikrishnan
Joint Managing Director
Mr B. N. Raveendra Babu
Board Members
Adv. V. R. Ramachandran
Mr. A. R. Sankaranarayanan
Mr. P. Manomohanan
Dr. V. M. Manoharan
Mr. M. Anandan
Mr. Shailesh J Mehta
Mr. Jagdish Capoor
Mr. Gautam Saigal
Mr. Sudhindar Krishan Khanna
Company Secretary
Mr. Rajesh Kumar.K
8]^Z[;^cVcX^VaD[ÒXZg
Ms. Bindhu A. L.
Chief General Manager
Mr. N. R. Bahuleyan
Chief Technical Advisor
Mr. K. B. Brahmadathan
(Retd. Chief General Manager BSNL)
Registrar and Share Transfer Agents
M/s SKDC Consultants Limited
Kanapathy Towers
3rd Floor, 1391/A-1, Sathy Road
Ganapathy PO, Coimbator-641 006
Ph 0422 6549995, 0422 2539835
[email protected]
Statutory Auditors
M/s S.R. Batliboi & Associates
Chartered Accountants (Firm Registration Number: 101049W)
TIDEL Park, 6th and 7th Floor - A Block, Module 601, 701-702,
No 4 Rajiv Gandhi Salai, Taramani,
Chennai-600 113, Ph: + 91 44 6654 8100
Share Listed at
Bombay Stock Exchange
Cochin Stock Exchange
Madras Stock Exchange
BSE Scrip Code 531213
ISIN – INE 522 D 01027
Bankers
Andhra bank
United Bank of India
Dena Bank
Indusind Bank
State Bank of India
Axis Bank
State Bank of Travancore
Corporation Bank
UCO Bank
Punjab & Sind Bank
Ratnakar Bank
Union Bank
Vijaya Bank
DBS
HDFC Bank
Dhanlaxmi Bank
Punjab National Bank
State Bank of Mauritius
Oriental Bank of Commerce
ICICI Bank
Lakshmi Vilas Bank
State Bank of Patiala
Kotak Mahindra Bank
Syndicate Bank
Development Credit Bank
Indian Overseas Bank
IDBI Bank
South Indian Bank
Federal bank
Karur Vysya Bank
Catholic Syrian Bank
Karnataka Bank
Yes Bank
Central bank
1
MANAPPURAM FINANCE LIMITED
Regd. Office: V/104, Manappuram House, Valapad P.O, Thrissur – 680 567
Ph: (0487) 2391306, 2391892, Fax No. (0487) 2399298
Email: [email protected], Website – www.manappuram.com
NOTICE
Notice is heieby given that the TWENTIETH Annual ueneial Neeting of the Shaieholueis of
Nanappuiam Finance Limiteu will be helu on Thuisuay ?
nu
August ???? at ????? AN at Anugiaha
Auuitoiium? valapau? Thiissui? ??? ??? to tiansact the following business?
OrdinaryBusiness:
?? To ieceive? consiuei anu auopt the auuiteu Piofit anu Loss account foi the financial yeai enueu
??
st
Naich ???? anu the Balance Sheet as at that uate? the iepoit of the Biiectois anu the
Auuitois theieon?
?? To ueclaie final uiviuenu foi the financial yeai enueu ??st Naich? ?????
?? To appoint a uiiectoi in place of Auv? v?R? Ramachanuian? who ietiies by iotation? anu being
eligible? offeis himself foi ie?appointment?
?? To appoint a uiiectoi in place of Ni? A?R? Sankaianaiayanan? who ietiies by iotation? anu being
eligible? offeis himself foi ie?appointment?
?? To appoint Auuitois anu to fix theii iemuneiation?
To appoint Auuitois to holu office fiom the conclusion of the Annual ueneial Neeting until the
conclusion of the next Annual ueneial Neeting anu to fix theii iemuneiation anu to pass the
following iesolution theieof?
?RES0LvEB TBAT N?s S?R? Batliboi ? Associates? Chaiteieu Accountants? ?Fiim Registiation
Numbei? ??????W? TIBEL Paik? ?th anu ?th Flooi ? A Block ? Nouule ???? ???????? No ? Rajiv
uanuhi salai? Taiamani ? Chennai ??? ???? Inuia 0ffice? ? ?? ?? ???? ????? ietiiing auuitois
be anu aie heieby ieappointeu as the auuitois of the company to holu office fiom the
conclusion of this Annual ueneial Neeting to the conclusion of the next Annual ueneial
Neeting on such iemuneiation as may be ueteimineu by the Boaiu of Biiectois plus
ieimbuisement of out of pocket expenses anu levies such as seivice tax etc?
SpecialBusiness
?? Appointment of Ni? Suuhinuai Kiishan Khanna as a Biiectoi of the Company
To consiuei anu if thought fit to pass with oi without mouification? the following iesolution as an
0iuinaiy Resolution?
?RES0LvEB TBAT Ni? Suuhinuai Kiishan Khanna be anu is heieby appointeu as Biiectoi of the
company whose teim of office shall be liable to teimination by ietiiement of Biiectois by iotation??
2
?? Appointment of Ni? E?A? Kshiisagai as a Biiectoi of the Company
To consiuei anu if thought fit to pass with oi without mouification? the following iesolution as an
0iuinaiy Resolution?
?RES0LvEB TBAT Ni? E?A? Kshiisagai be anu is heieby appointeu as Biiectoi of the company
whose teim of office shall be liable to teimination by ietiiement of Biiectois by iotation??
?? Amenument of Aiticles of Association
?To ieplace the existing Pait II of the Aiticles of Association of the company with the following Pait
II compiising Aiticles fiom ??? to ????
To consiuei anu if thought fit to pass with oi without mouification? the following iesolution as a
SpecialResolution:
“RESOLVED THAT existing Pait II of the Aiticles of Association of the company be ieplaceu with
the following Pait II compiising aiticles fiom ??? to ????
PART II
DEFINITIONS
129. In the event of any conflict between the provisions of Part I and Part II of the Articles, the
provisions of Part II shall apply. Unless the context otherwise requires, or unless otherwise defined or
provided for herein, words or expressions contained in Part II shall have the meanings as provided
below. Other terms may be defined elsewhere in the text of Part II of these Articles and, unless
otherwise indicated, shall have such meaning throughout Part II of these Articles.
“AAIA” shall mean AA Development Capital India Fund I LLC, a company established in the Republic
of Mauritius as a public limited company under the Mauritius Companies Act, 2001 and having its
registered office at 10, Frere Felix De Valois Street, Port Louis, Mauritius, and shall include its
successors and permitted assigns;
“AAIA Additional Shares Offer Terms” shall have the meaning as set out in Article 164;
“AAIA Director” shall have the meaning as set out in Article 139(iv);
“AAIA Offer Shares” shall have the meaning as set out in Article 164;
“AAIA Subscription Shares” shall mean an aggregate of 2,240,000 (Two Million Two Hundred Forty
Thousand only) CCPS issued by way of preferential allotment to AAIA;
“Acceptance Notice” shall have the meaning as set out in Article 161(i);
“Act” shall mean the Companies Act, 1956;
“Additional Shares” shall have the meaning as set out in Article 164;
3
“Additional Shares Offer Period” shall have the meaning as set out in Article 165;
“Affiliate” shall mean with respect to any Person, (i) any Person, which, directly or indirectly, Controls,
is Controlled by or is under common Control with, such Person, and (ii) where such Person is an
individual, shall include Relatives of such Person;
“Alternate Director” shall have the meaning as set out in Article 147;
“Annual General Meeting” or “AGM” shall mean the annual general meeting of the Company
convened and held in accordance with the Act;
“Articles of Association” or “Articles” shall mean the Articles of Association of the Company as
amended from time to time;
“BRIC II Mauritius Trading” shall mean BRIC II Mauritius Trading, a company incorporated and
validly existing under the laws of Mauritius with its principal place of business at c/o Citco (Mauritius)
Limited, 4
th
Floor, Tower A, 1 Cybercity, Ebene, Mauritius, and registered as sub-account with the
Securities and Exchange Board of India bearing registration number 20110205 (and unless repugnant to
the context or meaning thereof, shall be deemed to mean and include its successors, legal representatives
and permitted assigns);
“Baring India Private Equity Fund II Limited” shall mean Baring India Private Equity Fund II
Limited, a company incorporated and validly existing under the laws of Mauritius with its principal
place of business at C/o Multiconsult Limited, Rogers House, 5, President John Kennedy Street, Port
Louis, Mauritius, and registered as a sub-account with the Securities and Exchange Board of India
bearing registration number 20110969 (and unless repugnant to the context or meaning thereof, shall be
deemed to mean and include its successors, legal representatives and permitted assigns);
“Baring India Private Equity Fund III Listed Investments Limited” shall mean Baring India Private
Equity Fund III Listed Investments Limited, a company incorporated and validly existing under the laws
of Mauritius with its principal place of business at C/o Multiconsult Limited, Rogers House, 5, President
John Kennedy Street, Port Louis, Mauritius, and registered as an FII with the Securities and Exchange
Board of India bearing registration number IN-MU-FD-2055-08 (and unless repugnant to the context or
meaning thereof, shall be deemed to mean and include its successors, legal representatives and permitted
assigns);
“Baring Investors” shall mean Baring India Private Equity Fund II Limited, Baring India Private
Equity Fund III Listed Investments Limited and BRIC II Mauritius Trading, collectively.
“Beaver Investment Holdings” shall mean Beaver Holdings Limited, a company incorporated and
validly existing under the laws of Mauritius with its principal place of business at IFS Court,
TwentyEight, Cybercity, Ebene, Mauritius, and registered as a sub-account with the Securities and
Exchange Board of India bearing registration number 20090030 (and unless repugnant to the context or
meaning thereof, shall be deemed to mean and include its successors, legal representatives and permitted
assigns);
“Board of Directors” or “Board” shall mean the board of directors of the Company in office at
applicable times and as nominated and appointed in accordance with the terms of these Articles;
“Business Day” shall mean a day on which the scheduled commercial banks are open for business in
4
Mumbai and Kochi, India;
“CCPS” shall mean the 0.05% compulsorily convertible preference shares of Rs.100 (Rupees One
Hundred only) each in the Share Capital issued to the Investors issued to the Investors as fully paid up
preference shares, and having the rights and privileges attached to them as agreed in writing between the
Company, the promoters and each Investor and these Articles of Association;
“Closing Date” shall November 5, 2008;
“Contract” shall mean, with respect to a Person, any agreement, contract, subcontract, lease,
understanding, instrument, note, warranty, insurance policy, benefit plan or legally binding commitment
or undertaking of any nature, whether written or oral, entered into by such Person;
“Control” (including with correlative meaning, the terms “Controlled by” and “under common
Control with”) shall mean the power and ability to direct the management and policies of the controlled
enterprise through ownership of voting shares of the controlled enterprise or the power to appoint a
majority of the members on the board of directors of such controlled enterprise or by Contract or
otherwise. Without prejudice to the generality of the above, in the context of the Subsequent Investors,
the direct or indirect ownership of or the power to direct the vote of 50% or more of the voting share
capital of a Person shall also be deemed to constitute Control of that Person;
“Deed of Adherence” shall mean the deed of adherence in the form agreed to between the Company,
the Promoters and each of AAIA, Hudson and GHIOF separately;
“Defaulting Party” shall mean a person who commits an Event of Default;
“Direct Competitor” shall mean any Person who is directly engaged as its principal activity in the
business of providing gold loans (such that these gold loans and income arising therefrom is not less
than 50% of its total assets and total income respectively) and has a minimum asset size of INR
2,500,00,00,000 (Indian Rupees Two Thousand Five Hundred Crores only);
“Director” shall mean a director of the Company;
“ESOP(s)” shall mean any employee stock option plans or employee stock purchase plans existing or
which may be approved or adopted in future by the Company;
“Employee(s)” shall mean Persons in the employment of the Company and/or its Affiliates, as the case
may be;
“Encumbrance” shall mean any mortgage, pledge, equitable interest, assignment by way of security,
conditional sales contract, hypothecation, claim, encumbrance, title defect, title retention agreement,
voting trust agreement, interest, option, lien, charge, commitment, restriction or limitation of any nature
whatsoever, including restriction on use, voting rights, transfer, receipt of income or exercise of any
other attribute of ownership, right of set-off, any arrangement (for the purpose of, or which has the effect
of, granting security), or any agreement, whether conditional or otherwise, to create any of the same;
“Equity Shares” shall mean the equity shares of the Company;
“Event of Default” shall mean an event of default as agreed between the Company, the Promoter Group
and each of AAIA, Hudson and GHIOF;
5
“Execution Date” shall mean 14
th
March, 2012.
“Extra Ordinary General Meeting” or “EGM” shall mean the extra ordinary meeting of the Company
convened and held in accordance with the Act;
“Financial Year” shall mean the period commencing from April 1 each year and ending on March 31
the next year, or such other period as may be determined by the Board of Directors of the Company to
be the financial year for the Company;
“Fully Diluted Basis” shall mean on the basis of the deemed conversion of all outstanding convertible
Preference Shares of the Company including the CCPS in accordance with these Articles of Association,
the exercise of all convertible notes, options, warrants, and any other convertible instruments;
“Further Securities” shall have the meaning as set out in Article 172(iv);
“General Meetings” shall mean either an EGM or an AGM of the Shareholders of the Company;
“GHIOF” shall mean GHIOF Mauritius, a company established in the Republic of Mauritius as a
private limited company under the Mauritius Companies Act, 2001 and having its registered office at
C/o DTOS Limited, 4th Floor, IBL House, Caudan, Port Louis, Mauritius, and shall include its
successors and permitted assigns;
“GHIOF Director” shall have the meaning set out in Article 139(iv);
“GHIOF Subscription Shares” shall mean an aggregate of 420,000 (Four Hundred Twenty Thousand
only) CCPS issued by way of preferential allotment to GHIOF;
“Governmental Authority” shall mean the Government of India or of any state or Union Territory in
India, or any central, state or local governmental, semi-governmental, judicial, quasi-judicial, regulatory
or administrative authority, branch, agency, any statutory body or commission or any court, tribunal,
arbitral or judicial body, or any department thereof, or any Person (whether autonomous or not) who is
charged with the administration of Law;
“Hudson” shall mean Hudson Equity Holdings Limited, a private limited company established in the
Republic of Mauritius, registered under the Mauritius Companies Act, 2001, and having its registered
office at 7
th
Floor, Happy World House, Sir William Newton St, Port Louis, Mauritius, and shall include
its successors and permitted assigns;
“Hudson Additional Shares Offer Terms” shall have the meaning as set out in Article 164;
“Hudson Director” shall have the meaning set out in Article 139(iv);
“Hudson Offer Shares” shall have the meaning as set out in Article 164;
“Hudson Subscription Shares” shall mean an aggregate of 1,146,250 (One Million One Hundred Forty
Six Thousand Two Hundred Fifty only) CCPS issued by way of preferential allotment to Hudson;
“INR” or “Rupees” or “Rs.” shall mean Indian rupees, being the lawful currency of India;
6
“Investors” shall mean collectively AAIA, Hudson and GHIOF and the respective Investor Affiliates
that may acquire Shares from time to time and who may execute a Deed of Adherence, and “Investor”
shall mean any of them individually;
“Investor Acceptance Notice” shall have the meaning as set out in Article Error! Reference source
not found.;
“Investor Affiliate(s)” in relation to AAIA shall include, (a) any Affiliates of AAIA; (b) funds and/or
foreign institutional investor entities advised by AAIA or its Affiliates; (c) entities which are wholly
owned, controlled or managed, either directly or indirectly, by the funds advised by AAIA, or any of its
Affiliates, excluding companies that are in direct competition with the Company in India; and (d) any
fund or entity in which AAIA is a general or limited partner or any Affiliate or associate of such fund or
other entity;
“Investor Affiliate(s)” in relation to Hudson shall include, (a) any Affiliates of Hudson; (b) funds
and/or foreign institutional investor entities advised by Hudson or its Affiliates; (c) entities which are
wholly owned, controlled or managed, either directly or indirectly, by the funds advised by Hudson, or
any of its Affiliates, excluding companies that are in direct competition with the Company in India; and
(d) any fund or entity in which Hudson is a general or limited partner or any Affiliate or associate of
such fund or other entity;
“Investor Affiliate(s)” in relation to GHIOF shall include, (a) any Affiliates of GHIOF; (b) funds and/or
foreign institutional investor entities advised by GHIOF or its Affiliates; (c) entities which are wholly
owned, controlled or managed, either directly or indirectly, by the funds advised by GHIOF, or any of
its Affiliates, excluding companies that are in direct competition with the Company in India; and (d) any
fund or entity in which GHIOF is a general or limited partner or any Affiliate or associate of such fund
or other entity;
“Investor Director” shall mean collectively the AAIA Director, the Hudson Director and the GHIOF
Director;
“Investor Observer” shall mean collectively the observer appointed by each of Hudson on the Board of
Directors of the Company
“Investor Offered Shares” shall have the meaning as set out in Article 164(i)
“Investor Rejection Notice” shall have the meaning as set out in Article 164 (v);
“Investor Trigger Notice” shall have the meaning as set out in Article 164 (v)
“Key Management Personnel” shall mean and include persons that head the finance, compliance, risk
and human resources departments of the Company at the relevant time (by whatever name called) or
above, the heads of department of any new line of business that the Company may commence and the
managing director of the Company;
“Law” shall mean any statute, law, regulation, ordinance, rule, judgment, notification, rule of common
law, order, decree, bye-law, government approval, directive, guideline, requirement or other
governmental restriction, or any similar form of decision of, or determination by, or any interpretation,
policy or administration, having the force of law of any of the foregoing, by any Governmental
Authority or Stock Exchange having jurisdiction over the matter in question;
7
“Lien” shall mean any mortgage, pledge, security interest, charge, lien, option, pre-emptive right,
adverse claim, title retention agreement or other encumbrance of any kind, or a Contract to give or
refrain from giving any of the foregoing, including any restriction imposed under applicable Law or
Contract on the Transferability of the Shares;
“MAFIT” shall mean Manappuram Finance (Tamil Nadu) Limited, a Manappuram Group Company
having its registered office at 1st Floor, Vijay Centre, 65 Oppanakkara Street, Coimbatore 641 012,
Tamil Nadu, India;
“MIBPL” shall mean Manappuram Insurance Brokers Private Limited, a Manappuram Group company,
having its registered office at “Manappuram House”, Valapad P.O., Thrissur 680 567, Kerala, India;
“Manappuram Group” shall mean and include the Company and its Affiliates, including the entities
listed below and any other entity as may become a Subsidiary or Affiliate of the Company after
November
1. Manappuram General Finance and Leasing Limited
2. Manappuram Insurance Brokers Private Limited
3. Manappurm Benefit Fund Limited
4. Manappuram Finance (Tamil Nadu) Limited
5. Manappuram Chits (India) Limited
6. Manappuram Comptech and Consultants Private Limited
7. Manappuram Health Care Limited
8. Manappuram Asset Finance Limited
“Memorandum of Association” or “Memorandum” shall mean the Memorandum of Association of
the Company as amended from time to time;
“Nambe Investment Holdings” shall mean Nambe Investment Holdings, a company incorporated and
validly existing under the laws of Mauritius with its principal place of business at is 608, St.James
Court, St.Denis Street, Port Louis, Mauritius, and registered as a sub-account with the Securities and
Exchange Board of India bearing registration number 20081302 (and unless repugnant to the context or
meaning thereof, shall be deemed to mean and include its successors, legal representatives and permitted
assigns);
“Offered Shares” shall have the meaning as set out in Article 161(i);
“Original Director” shall have the meaning as set out in Article 147;
“Person” shall mean any natural person, limited or unlimited liability company, corporation, partnership
(whether limited or unlimited), proprietorship, Hindu undivided family, trust, union, association,
government or any agency or political subdivision thereof or any other entity that may be treated as a
person under applicable Law;
“Persons Acting in Concert” or “PACs” shall mean Vazhappully Padmanabhan Nandakumar,
Sushama Nandakumar, Shelly Ekalavian, Geetha Ravy, Jyothy Prasannan, Geetha Vazhappully
Padmanabhan, Dr. Prasannan P.D, Nandakumar V.P., Jyothi, Jyothi Prasannan, Blangat Narayanan
Raveendra Babu acting in concert with the Promoters and also includes Persons who may commence
acting in concert with the Promoters after November 5, 2008 within the meaning of “persons acting in
concert” as defined in the Takeover Code, provided that any such Person who ceases to be acting in
8
concert with the Promoters at any date subsequent to November 5, 2008 shall not cease to be a PAC and
shall continue to be so until such PAC ceases to be a shareholder in the Company in accordance with
these Articles;
“Preference Shares” shall mean the preference shares in the Company, and shall include the CCPS;
“Prohibited Promoter Transfer” shall have the meaning as set out in Article 162(vii);
“Promoters” shall mean Vazhappully Padmanabhan Nandakumar, Sushama Nandakumar, Shelly
Ekalavian, Geetha Ravy, Jyothy Prasannan, Geetha Vazhappully Padmanabhan, Dr. Prasannan P.D,
Nandakumar V.P., Nandakumar V.P., Jyothi, Jyothi Prasannan, Blanghat Narayanan Raveendra Babu,
Ekalavyan P.K., Rajalakshmi, Ravi K.G., Sugathan P.K. and Prasanna B.N., the Persons Acting in
Concert, the Relatives and Affiliates of each such Person and also includes such other Persons Acting in
Concert who may execute a Deed of Adherence. Notwithstanding the preceding sentence, in the context
of Subsequent Investors under these Articles, the term “Promoters” shall mean Mr. V.P. Nandakumar
and Ms. Sushama Nandakumar collectively, and the term “Promoter” shall mean either one of them.
“Promoters’ Affiliate” shall mean any Affiliate of any of the Promoters, or any Person in which at least
10% (ten percent) of the shareholding, voting rights, economic interest or the Control, in each case
directly or indirectly, is held by any of the Promoters individually or collectively, and shall include the
Promoters Group Companies;
“Promoters Group Companies” shall mean MIBPL, Manappuram Benefit Fund Limited, Manappuram
Finance (Tamil Nadu) Limited, Manappuram Comptech and Consultants Private Limited, Manappuram
Chits India Limited, Manappuram Health Care Limited and Manappuram Asset Finance Limited;
“Promoters Offer Notice” shall have the meaning as set out in Article162 (i);
“Promoters Offer Price” shall have the meaning as set out in Article Article162 (i);
“Promoters Right of First Offer” shall have the meaning as set out in Article 164(i);
“Promoter Sale Shares” shall have the meaning as set out in Article 160(ii);
“Promoter Transfer Notice” shall have the meaning as set out in Article 162(i);
“Promoter Transfer Shares” shall have the meaning as set out in Article 162(i);
“Promoter Transferor” shall have the meaning as set out in Article 160(ii);
“Rejection Notice” shall have the meaning as set out in Article 161(iv);
“Related Party Transactions” shall mean any Contract, arrangement or transaction between or
amongst the Company and any of the following: (i) its Subsidiaries and/or its Affiliates, (ii) any other
entity forming part of Manappuram Group or any of the respective Affiliates of such entities, (iii) any
Promoters’ Affiliates, (iv) any of the Promoters, (v) any Director, (vi) any Employee (other than in
respect of employment contracts with the employees and arrangements and transactions contemplated
thereby), (vii) any other shareholder of the Company or its Subsidiaries or Affiliates who is an Affiliate
of the Promoters, or where (a) such shares are held as nominees of any of the Promoters, or the
beneficial ownership of such Shares is a Promoter, or (b) a Promoter can direct the voting or exercise of
9
other rights in respect of such Shares;
“Related Party” shall have the meaning ascribed to such term in Accounting Standard -18 issued by the
Institute of Chartered Accountants of India;
“Relatives” shall have the meaning as set out in the Act, and shall also include (i) any sibling of such
Relative and such sibling’s children; and (ii) such Persons as included under Accounting Standard 18
issued by the Institute of Chartered Accountants of India;
“Right of First Sale” shall have the meaning as set out in Article 160(iii);
“Sale Shares Notice” shall have the meaning as set out in Article 160(ii);
“Secondary Offering” shall have the meaning as set out in Article 170;
“Sequoia Investors” shall mean Nambe Investment Holdings and Beaver Investment Holdings.
“Shares” shall mean Equity Shares and Preference Shares;
“Share Capital” shall mean the total issued and paid up share capital of the Company on a Fully
Diluted Basis;
“Share Sale Notice” shall have the meaning as set out in Article 170;
“Shareholders” shall mean and refer collectively to the Promoters and the Investor and “Shareholder”
shall refer to any one of them, as the context may require;
“Stock Exchange(s)” shall mean any recognized stock exchange in India or overseas;
“Subsequent Investors” shall mean the Baring Investors and the Sequoia Investors along with their
respective Subsequent Investors Affiliates.
“Subsequent Investors Affilate(s)” in relation to Baring Investors shall include, (a) any Affiliates of
any of the Baring Investors; (b) funds and/or foreign institutional investor entities advised by any of the
Baring Investors or their Affiliates; (c) entities which are advisors of any of the Baring Investors,
excluding companies that are Direct Competitors of the Company in India; and (d) any fund or entity in
which any of the Baring Investors is a general or limited partner or any Affiliate or associate of such
fund or other entity. Without prejudice to the generality of the foregoing, it is clarified that Baring India
Private Equity Fund II Limited, Baring India Private Equity Fund III Listed Investments Limited and
BRIC II Mauritius Trading shall be considered as Subsequent Investor Affiliates in relation to Baring
Investors.
“Subsequent Investors Affilate(s)” in relation to Sequoia Investors shall include, (a) any Affiliates of
any of the Sequoia Investors; (b) funds and/or foreign institutional investor entities advised by any of the
Sequoia Investors or their Affiliates; (c) entities which are advisors of any of the Sequoia Investors,
excluding companies that are Direct Competitors of the Company in India; and (d) any fund or entity in
which any of the Sequoia Investors is a general or limited partner or any Affiliate or associate of such
fund or other entity. Without prejudice to the generality of the foregoing, it is clarified that Nambe
10
Investment Holdings and Beaver Investment Holdings shall be considered as Subsequent Investors
Affiliates in relation to Sequoia Investors.
“Subsidiaries” shall mean the direct and indirect subsidiaries of the Company, and shall include
companies that may become direct or indirect subsidiaries of the Company after November 5, 2008;
“Tag Along Notice” shall have the meaning as set out in Article 162(ii);
“Tag Along Period” shall have the meaning as set out in Article 162(ii);
“Tag Along Rights” shall have the meaning as set out in Article 162(ii);
“Tag Along Shares” shall have the meaning as set out in Article 162(ii);
“Takeover Code” shall mean the Securities and Exchange Board of India (Substantial Acquisition of
Shares and Takeovers) Regulations, 1997;
“Third Party Transferee” shall have the meaning as set out in Article 160(ii);
“Transfer” (including with correlative meaning, the terms “Transferred By” and “Transferability”)
shall mean to transfer, sell, assign, mortgage, pledge, charge, hypothecate, create a security interest in or
Lien on, place in trust (voting or otherwise), exchange, gift or transfer by operation of Law or in any
other way subject to any encumbrance or dispose of, whether or not voluntarily, whether directly or
indirectly (pursuant to the transfer of an economic or other interest, the creation of a derivative security
or otherwise); and
“Trigger Notice” shall have the meaning as set out in Article 161(i).
TERMS OF THE CCPS
130. Articles 130 to Article 174 shall be subject at all times to the relevant provisions of the Indian
Companies Act, 1956 and rules there under, the Securities and Exchange Board of India (Disclosure
And Investor Protection) Guidelines, 2000 and other applicable Laws and regulations.
131. Nature of Instrument
The CCPS shall be compulsorily convertible preference shares in the Share Capital of the Company.
132. Face Value
The CCPS shall have a face value of Rs. 100 (Rupees One Hundred only) each.
133. Dividend
(i) The CCPS shall be entitled to receive a dividend per CCPS in preference to any dividend on the
Equity Shares or any other class of Shares of the Company, present or future;
(ii) The rate of dividend payable on each CCPS shall be 0.05% on the face value of the CCPS;
(iii) The dividend payable on the CCPS shall be cumulative and any dividend which has accumulated
but not paid shall be paid on or before conversion of the CCPS into equity shares.
134. Conversion for AAIA
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(i) The AAIA Subscription Shares will convert into 1,344,337 (One Million Three Hundred Forty
Four Thousand Three Hundred Thirty Seven) Equity Shares on September 30, 2009 or at the option of
AAIA, at any time before September 30, 2009, without any further payment being required to be made
by AAIA for such conversion.
(ii) The Hudson Subscription Shares will convert into 687,923 (Six Hundred and Eighty Seven
Thousand Nine Hundred Twenty Three only) Equity Shares on September 30, 2009 or at the option of
Hudson, at any time before September 30, 2009, without any further payment being required to be made
by Hudson for such conversion.
(iii) The GHIOF Subscription Shares will convert into 252,063 (Two Hundred Fifty Two Thousand
Sixty Three only) Equity Shares on September 30, 2009 or at the option of GHIOF, at any time before
September 30, 2009, without any further payment being required to be made by GHIOF for such
conversion.
(iv) Subject to Article 135, the issue price per Equity Share shall be Rs. 166.62 (Rupees One
Hundred Sixty Six and Paise Sixty Two only).
Provided that the issue price per share shall be subject to applicable Law, including the pricing
requirements under the Securities and Exchange Board of India (Disclosure and Investor Protection)
Guidelines, 2000.
135. Antidilution Rights
135.1 Adjustments for Diluting Issues: Subject to applicable Law, till the CCPS held by the Investors
are converted into equity shares in full, the Investors shall be entitled to antidilution rights as set forth
below:
(i) For the purposes of this Article 135, “Additional Equity Shares” means all Equity Shares
issued (or, pursuant to Article 135.2, deemed to be issued) by the Company, other than issuances or
deemed issuances of:
(a) Equity Shares and convertible securities issued pursuant to the ESOP of the Company; and
(b) Equity Shares issued or issuable upon conversion of the CCPS;
135.2 Deemed Issue of Additional Equity Shares
In the event the Company at any time shall issue any convertible securities or shall fix a record date for
the determination of holders of any class of securities entitled to receive any convertible securities, then
the maximum number of equity shares (as set forth in the instrument relating thereto without regard to
any provisions contained therein for a subsequent adjustment of such number) issuable upon the
conversion or exchange of such convertible securities or, in the case of options for convertible securities,
the exercise of such options and the conversion or exchange of the underlying securities, shall be
deemed to have been issued as of the time of such issue or, in case such a record date shall have been
fixed, as of the close of business on such record date, provided that in any such case in which shares are
deemed to be issued:
(i) no further adjustment shall be made upon the subsequent issue of convertible securities or equity
12
shares in connection with the exercise of such options or conversion or exchange of such convertible
securities;
(ii) if the terms of such options or convertible securities provide, with the passage of time or
otherwise, for any change in the consideration payable to the Company or in the number of equity shares
issuable upon the exercise, conversion or exchange thereof (other than a change pursuant to the anti-
dilution provisions of such options or convertible securities such as this Article 135 or pursuant to
recapitalization provisions of such options or Convertible Securities), the adjustment and any subsequent
adjustments based thereon shall be recomputed to reflect such change as if such change had been in
effect as of the original issue thereof (or upon the occurrence of the record date with respect thereto);
(iii) upon the expiration of any such options or any rights of conversion or exchange under such
convertible securities which shall not have been exercised, the adjustment computed upon the original
issue thereof (or upon the occurrence of a record date with respect thereto) and any subsequent
adjustments based thereon shall, upon such expiration, be recomputed as if:
(a) in the case of convertible securities or options for equity shares, the only Additional Equity
Shares issued were the equity shares, if any, actually issued upon the exercise of such options or the
conversion or exchange of such Convertible Securities and the consideration received therefor was the
consideration actually received by the Company for the issue of such exercised options plus the
consideration actually received by the Company upon such exercise or for the issue of all such
convertible securities which were actually converted or exchanged, plus the additional consideration, if
any, actually received by the Company upon such conversion or exchange, and
(b) in the case of options for convertible securities, only the convertible securities, if any, actually
issued upon the exercise thereof were issued at the time of issue of such options, and the consideration
received by the Company for the Additional Equity Shares deemed to have been then issued was the
consideration actually received by the Company for the issue of such exercised options, plus the
consideration deemed to have been received by the Company (determined pursuant to this Clause 4
upon the issue of the convertible securities with respect to which such options were actually exercised);
and
(c) if such record date shall have been fixed and such options or convertible securities are not issued
on the date fixed therefor, the adjustment previously made which became effective on such record date
shall be cancelled as of the close of business on such record date, and thereafter shall be adjusted
pursuant to this Article 135 as of the actual date of their issuance.
135.3 Adjustment Upon Issuance of Additional Equity Shares
If the Company shall issue, on and after the date hereof, any Additional Equity Shares without
consideration or for a consideration per share less than the issue price per share in Article 134(iv), shall
forthwith (except as otherwise provided in this sub Article 135.3 be adjusted to a price which shall be
the lowest price per share for any of the Additional Equity Shares, subject to applicable Law.
(i) Determination of Consideration. For purposes of this Article 135.4, the consideration received
by the Company for the issue (or deemed issue) of any Additional Equity Shares shall be computed as
follows:
(ii) Cash and Property. Such consideration shall:
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(a) insofar as it consists of cash, be computed at the aggregate amount of cash received by the
Company before deducting any reasonable discounts, commissions or other expenses allowed, paid or
incurred by the Company for any underwriting or otherwise in connection with such issuance;
(b) insofar as it consists of property other than cash, be computed at the fair market value thereof at
the time of such issue, as determined in good faith by the Board; and
(c) in the event Additional Equity Shares are issued together with other shares or securities or other
Assets of the Company for consideration which covers both, be the proportion of such consideration so
received, computed as provided in Article 135, as reasonably determined in good faith by the Board.
(d) Convertible Securities. The consideration per share received by the Company for Additional
Equity Shares deemed to have been issued shall be determined by dividing
(A)A the total amount, if any, received or receivable by the Company as consideration for the issue of
such options or Convertible Securities, plus the minimum aggregate amount of additional consideration
(as set forth in the instruments relating thereto, without regard to any provision contained therein for a
subsequent adjustment of such consideration) payable to the Company upon the exercise of such options
or the conversion or exchange of such convertible securities, or in the case of options for convertible
securities, the exercise of such options for convertible securities and the conversion or exchange of such
convertible securities by
(A)B the maximum number of equity shares (as set forth in the instruments relating thereto, without
regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such options or the conversion or exchange of such convertible securities.
135.4 Adjustments for Reclassification, Exchange and Substitution
(i) If the equity shares shall be changed into the same or a different number of shares of any other
class or classes of shares, whether by capital reorganization, reclassification or otherwise, or if there is a
bonus issue, split, or consolidation of shares, then, in any such event, the Investors shall be entitled to
such number and class of shares that would place the Investor in the same position relative to all other
shareholders as the Investors were immediately before such reorganization or reclassification.
(ii) The Company shall not, through any amendment of its Articles or Memorandum or any
reorganization, transfer of Assets, merger, dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company but will at all times in good faith assist in the carrying out of all
the provisions of this Article 135, and in the taking of all such action as may be necessary or appropriate
in order to protect the rights of the Investors against impairment.
(iii) Upon the occurrence of each adjustment or readjustment pursuant to this Article 135.4, the
Company at its expense shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and furnish to the Investors a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based along with stock
certificates evidencing such adjustment. The Company shall, upon the written request at any time of the
Investors, furnish or cause to be furnished to such Investors a like certificate setting forth such
adjustments and readjustments and the number of equity shares and the amount, if any, of other property
which at the time would be received upon the adjustment.
14
(iv) The Company and all shareholders shall take all reasonable actions to at all times reserve and
keep available out of its authorized but unissued equity shares solely for the purpose of effecting an
adjustment pursuant to this Article 135.4, such number of its equity shares as shall from time to time be
sufficient to effect an adjustment; and if at any time the number of authorized but unissued Equity
Shares shall not be sufficient to effect an adjustment, the Company and all shareholders shall take such
corporate action as may be necessary to increase its authorized but unissued equity shares to such
number of equity shares as shall be sufficient for such purpose.
136. Preference on the occurrence of a Liquidation Event prior to conversion of CCPS
(i) Subject to applicable Law, upon the occurrence of a Liquidation Event, the Company shall
distribute the proceeds of such Liquidation Event to its Shareholders, provided that the Investors shall be
entitled to receive, together with and at the same time as the other holders of the CCPS, a preferential
payment in accordance with this Article 136 from the Assets of the Company or cash or other property,
for the CCPS held by it.
(ii) In the event of a Liquidation Event occurring at any time after the Closing Date, to the extent of
funds legally available therefore and subject to applicable Law, the Investors shall receive an amount in
accordance with this Section, which is the higher of:
(a) The amount which would be distributed to the Investors, as if the CCPS held by the Investors
have been converted into Equity Shares in accordance with these Articles, if all amounts available to the
Company were distributed among all the Shareholders of the Company (including, the Investor) in
proportion to their shareholding in the Company on a fully diluted basis.
Or
(b) The Investor Subscription Consideration paid by each of the Investors, together with any accrued
but unpaid dividend.
(iii) The Promoter Group hereby covenants that each of them shall hold all amounts received by them
(pursuant to a Liquidation Event) in their capacity as Shareholders, in trust for and on behalf of each of
the Investors and shall immediately, but in any case not later than 15 (fifteen) days from the receipt of
such amount, transfer all proceeds received by them (such that each of the Investors receives the amount
equivalent to the amount provided in Article 136(ii) from the Company in the event of a Liquidation
Event to each of the Investors so as to give effect to the provisions of this Clause.
137. Voting Rights
Subject to provisions of these Articles, the holders of the CCPS shall be entitled to such voting rights as
holders of preference shares under the Companies Act.
138. Other Rights
THE HOLDERS OF THE CCPS AND THE SUBSEQUENT INVESTORS SHALL HAVE OTHER RIGHTS THAT ARE
SET OUT IN THESE ARTICLES AND UNDER LAW.
MANAGEMENT
139. Board Composition of the Company
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(i) The property, business and affairs of the Company shall be managed under the direction of the Board.
The Board may exercise all such powers of the Company and do all such lawful acts and things as are permitted
under applicable Law and the Memorandum of Association and Articles of Association.
(ii) Till such time that either of the Subsequent Investors, collectively with their respective Subsequent
Investors Affiliates, hold atleast 1% (One percent) Shares, the following matters shall specifically require the
prior approval of the Board:
a. transactions, agreements or arrangements between the Company and any of its Related
Parties (which for the sake of clarity shall include the Promoters and their respective
Affiliates and directors), singly or cumulatively in a financial year exceeding a value of
Rs. 1,00,00,000/- (Rupees One Crore only);
b. change in statutory auditor or internal auditors of the Company;
c. change in compliance officer or a designated officer of the Company, designated as the
“officer who is in default” for the purpose of the applicable Laws;
d. termination, or modification of the terms, of existing employment / services of the key
personnel of the Company, including Mr. I Unnikrishnan and Mr. B. N. Raveendra Babu;
(iii) With effect from the Closing Date, the Board of Directors of the Company will consist of not
more than 12 (twelve) Directors or such other number as may be mutually agreed to in writing between
the Parties, including the Investor Director.
(iv) From and with effect from the Closing Date, as long as each of AAIA and Hudson hold at least
1% (one per cent) (six percent) of the Share Capital, each of AAIA and Hudson shall have the right to
appoint 1 (one) non executive Director (the “AAIA Director” and “Hudson Director” respectively) on
the Board of the Company.
(v) From and with effect from the Closing Date, as long as GHIOF holds any Shares, GHIOF shall
have the right to appoint 1 (one) non executive Director (“GHIOF Director”) on the Board of the
Company.
(vi) Each of the Subsequent Investors shall, till such time as they collectively with their respective
Subsequent Investors Affiliates, hold at least 1 % (One percent) of the Share Capital, have the right to
nominate their one representative on the Board (“Subsequent Investors Nominee Director”). Upon
exercise of their respective right to nominate the Subsequent Investors Nominee Director on the Board,
the Company shall cause the appointment of the respective Subsequent Investors Nominee Director on
the Board. The Subsequent Investors Nominee Director shall not be a person who is also a director or
observer on the board of directors of Muthoot Finance Limited or any other Direct Competitor.
(vii) The Investor Director, Subsequent Investors Nominee Directors shall be non-executive
Directors, and shall not be responsible for the day to day affairs of the Company, or in control of the
management. In the event of the resignation, retirement or vacation of office of any of the Investor
Director or the Subsequent Investors Nominee Directors, each of the Investors and the Subsequent
Investors Nominee Directors (as the case may be) shall be entitled to appoint another Director in such
place.
(viii) The Investor Director shall in no event be categorized as an ‘officer in default’ under any Law,
and subject to applicable Law, shall not be liable for acts of the Company committed without his
knowledge, or in respect of which he exercised due diligenceThe Subsequent Investors Nominee
16
Directors shall not be liable for any failure by the Company to comply with applicable Laws, and shall
not be named as an “officer in default” (under any Law), or an “occupier” (of the Company’s premises)
or “a person in charge of and responsible to the Company for the conduct of business of the Company”
under applicable Law.
(ix) The Company shall, at all times (a) nominate a director(s) or any Person (other than the
Subsequent Investors Nominee Directors) as a person in charge who shall be responsible for ensuring
compliance with Law; and (b) appoint a compliance officer(s) or a designated officer(s) of the Company
who shall be the “officer in default” or “occupier” or “person in charge” for the purposes of applicable
Laws.
(x) In the event that any notice or proceedings have been filed against the Subsequent Investors
Nominee Directors in their capacity as a director or officer of the Company, the Company shall, and the
Promoters shall procure that the Company shall, take all necessary steps to, (a) ensure that the name of
the Subsequent Investors Nominee Directors, are excluded; and the charges / proceedings against such
Subsequent Investors Nominee Directors are withdrawn; (b) defend the Subsequent Investors Nominee
Directors, against such proceedings; and (c) pay all reasonable costs, damages, fines that may be
incurred/levied against the Subsequent Investors Nominee Directors.
(xi) The Chairman of the Board shall not have a casting vote.
(xii) The Company shall indemnify its Directors to the maximum extent permitted by applicable Law
and shall obtain Directors and Officers liability insurance to the satisfaction of each of the Investors and
the Subsequent Investors.
(xiii) In the event the Company incorporates any Subsidiary in the future, each of the Investors would
have the right to appoint a Director on each such subsidiary and the provisions of Part II of the Articles
in relation to management of the Company, would apply to the board of directors of each such
Subsidiary.
140. Committees
(i) Subject to applicable Law and as long as each of AAIA and Hudson holds at least 1% (one
percent) of the Share Capital, each of AAIA and Hudson has the right to appoint a member on all
the committees established by the Board of Directors of the Company.
(ii) As long as each of the Subsequent Investors along with their respective Subsequent Investors
Affiliates hold at least 1% (One percent) Shares, each of the Subsequent Investors Nominee
Directors shall be appointed as a member of the audit committee, the corporate governance
committee, the Interim Management Supervisory and Review Committee, and the remuneration
committee of the Board (collectively referred to as the “Committees”).
(iii) Each of the Committees shall act under the supervision of, and in accordance with the powers
and authority delegated to it by the Board, and in accordance with applicable Law.
(iv) As long as each of the Subsequent Investors along with their respective Subsequent Investors
Affiliate hold at least 1% (One percent) Shares, the Company shall, constitute and maintain such
committees at all times, by whatever name called.
141. All provisions of Part II of the Articles in relation to Board of Directors shall apply mutatis
mutandis to committees of the Board of Directors.
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142. ESOP
(i) The Promoters and the Company hereby undertake that the ESOP shall be amended
appropriately, so as to enlarge its size and enhance its scope in order to use the same as an incentive to
reward and retain key personnel within the Company subject however to compliance with applicable
Law.
(ii) The details of the proposed changes to the ESOP shall be determined by the Board of Directors
after Closing.
143. Exercise of Rights
The Promoters and the Investors undertake to take such actions as may be necessary (including
exercising their votes at General Meetings, meeting of the Board of Directors or any committees
thereof), to give effect to the provisions of, and to comply with their obligations under these Articles.
144. Removal/Resignation of Directors
The Promoters, the Investors and the Subsequent Investors may require the removal of any Director
nominated by them to the Company and nominate another individual as a Director in his/her place, and
the other Shareholders shall exercise their rights to ensure the appointment of the individual nominated
as aforesaid, provided, that the Investors, the Subsequent Investors and the Promoters have each
nominated Directors qualified under the requirements of applicable Law, and each such Director has
submitted to the Board any certificate or consent required under the Act to be submitted by him/her in
connection with his/her appointment as a member of the relevant Board of Directors. In the event of the
resignation, retirement or vacation of office of any Director, the Shareholder who has appointed such
Director shall be entitled to appoint another Director in such place and the other Shareholders shall
exercise their rights to ensure the appointment of the individual nominated as aforesaid.
145. Meetings of the Board
(i) The Board of Directors of the Company shall meet at least once every 3 (three) months, with
each such meeting to be held in Valapad, Kerala (unless otherwise agreed to by the Company, Promoters
and each Investor).
(ii) Any meeting of the Board of Directors shall be called, held and convened only upon giving a
prior written notice of not less than 14 (fourteen) Business Days to all the Directors. Each notice of a
meeting of the Board of Directors shall contain, inter alia, an agenda specifying, in reasonable detail, the
matters to be discussed at the relevant meeting and shall be accompanied by all necessary written
information.
GHIOF or the GHIOF Director shall intimate the Company at least 2 (two) days prior to the scheduled
date of the Board meeting whether or not the GHIOF Director shall be attending the meeting of the
Board.
(iii) Subject to the provisions of these Article including Article 149, a decision shall be said to have
been made and/or a resolution shall be said to have been passed at a meeting of the Board of Directors
only if at a validly constituted meeting, such decisions are approved by and/or the resolution is approved
by a majority of the Directors, which unless otherwise mandated by Law in India, shall mean approval
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by a majority of the Directors present and voting at such Board meeting.
(iv) Subject to applicable Law, the Directors or members of any committee of the Board of Directors
may participate in meetings of the Board of Directors or committee of the Board of Directors through
video-conference or telephonic conference.
146. Quorum of the Board
(i) The quorum for a meeting of the Board of Directors of the Company shall be as required under
the Act, subject to the presence of each of the AAIA Director and the Hudson Director being required to
constitute such quorum at a meeting where any business relating to the matters referred to in Article 149
is proposed to be transacted, it being agreed and understood that AAIA and Hudson do not acquire
Control of the Company and there is no change in Control of the Company.
Provided that if such a quorum is not present within 1 (one) hour from the time appointed for the meeting, the meeting shall
adjourn to the same place and time 10 (ten) days later, at which meeting the Directors present shall, subject to their
constituting a valid quorum under the Act, constitute a valid quorum even though the Investor Director is not present,
provided that notice of such adjourned meeting shall have been delivered to all Directors at least 5 (five) days prior to the
date of such adjourned meeting.
(ii) If either of the AAIA Director or Hudson Director notifies the Company that he/she shall be
unable to attend such adjourned meeting, then any matter referred to in Article 149 shall not be taken up
at such adjourned meeting, without obtaining the prior written consent of each of the AAIA Director or
the Hudson Director but shall instead be passed as a resolution by circulation in accordance with Article
148. Provided that if any matter referred to in Article 149 cannot be passed as a resolution by
circulation, and either of AAIA or Hudson has not consented to such resolution, then such matter shall
not be taken up at the adjourned meeting.
Provided further that AAIA or Hudson may, in writing, waive the requirements of quorum specified in
this Article for any meeting.
147. Alternate Director
Each of the Investors shall be entitled to nominate an alternate Director (an “Alternate Director”) in
place of their respective Investor Director originally nominated by it (an “Original Director”) from
time to time and the Board shall appoint such Alternate Director. Upon the appointment of the Alternate
Director, the Company shall ensure compliance with the provisions of the Act, including by filing
necessary forms with the jurisdictional Registrar of Companies. The Alternate Director shall be entitled
to receive notice of all meetings and to attend and vote at such meetings in place of the Original Director
and generally to perform all functions of the Original Director in his or her absence.
148. Resolution by Circulation
A written resolution circulated to all the Directors or members of committees of the Board of Directors,
whether in India or overseas and signed by a majority of them as approved, shall (subject to compliance
with the relevant requirements of the Act) be as valid and effective as a resolution duly passed at a
meeting of the Board of Directors or committee of the Board of Directors, called and held in accordance
with these Articles (provided that it has been circulated in draft form, together with the relevant papers,
if any, to all the Directors); provided however that if the resolution proposed to be passed by circulation
pertains to a matter referred to in Article 149, such circular resolution shall be valid and effective only if
it has received the written consent of each of the AAIA Director and Hudson Director .
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149. Affirmative Rights in the Company
(i) Notwithstanding anything to the contrary contained in these Articles, so long as each of AAIA
and Hudson holds at least 1% (one percent) of the total Share Capital, decisions on the following matters
shall not be taken and/or implemented, and no action in connection with those matters shall be taken by
the Company, whether at meetings of its shareholders and/or its Board of Directors and/or committees of
its Boards of Directors or otherwise, in each case without the affirmative votes or prior written consent
of, each of AAIA and Hudson or each of the AAIA Director and the Hudson Director nominated by
AAIA and Hudson respectively, as the case may be:
(a) Acquisition of shares, assets, business, business organization or division of any other Person,
creation of legal entities, joint ventures or partnerships, mergers, de-mergers, spin-offs and
consolidations, creation of any new Subsidiaries (other than acquisition of shares in the normal course of
business and acquisition of assets in the normal course of business up to an amount of Rs. 30,000,000
(Rupees Thirty Million only), except the proposed merger of MAFIT with and into the Company.
(b) Any changes in class rights for Shares (directly or indirectly).
(c) Entry into or amendments to any exclusive marketing agreements or arrangements (other than
short marketing agreements or arrangements having a validity period not exceeding 1 year).
(d) Commencement of any new line of business, which is unrelated to the business carried on by the
Company as an NBFC including the business of lending against gold pledged, hire purchase, personal
loans, and money transfer services to consumers,.
(e) Any change in the capital structure of the Company including issued, subscribed or paid up
equity or preference share capital of the Company, or re-organization of the Share Capital, including
new issuance of shares or other securities or any other convertible instrument of the Company or
redemption, retirement or repurchase of any shares or other securities, issuance of convertible
debentures or warrants, or grant of any options over its shares by the Company, and the granting of any
rights to the holder of such shares or other securities, convertible debentures or warrants, or options, at
terms more favourable than those given to AAIA or Hudson, or which in any way affect the rights and
remedies of AAIA or Hudson. Provided that an Investor will not be entitled to exercise this veto right in
the event (a) the Company proposes to issue any equity, preference, equity-related or convertible
securities to any Person(s) other than AAIA or Hudson at a pre-money valuation of the Company which
is higher than the post money valuation on the basis of which AAIA or Hudson had subscribed for the
AAIA Subscription Shares and Hudson Subscription Shares respectively, at no better terms than the
terms on which AAIA or Hudson were issued the AAIA Subscription Shares and Hudson Subscription
Shares respectively, and which do not affect the rights of AAIA or Hudson (b) the Company issues non
convertible debentures up to the limits set out in the annual budget/business plan.
(f) Creation of Subsidiaries.
(g) Sale, transfer or other disposition of the Company, any of its Subsidiaries, its joint ventures and
its subsidiaries.
(h) De-listing of Shares of the Company or any of its Subsidiaries on any stock-exchanges.
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(i) Taking of steps towards or appointment of any advisers, including but not limited to, investment
bankers, merchant bankers, underwriters to the issue, in connection with a potential sale or floatation of
Shares of the Company or any of its Subsidiaries including through a Public Offering.
(j) Declaration or payment of dividends or other distributions on any class of Shares of the
Company.
(k) Approval and adoption of the annual budget/ business plan of the Company or any of its
Subsidiaries.
(l) Any amendment or modification or the taking of any action that would be inconsistent with the
budget/ business plan as approved by the Board and then in effect by more than 5% (five percent).
Provided that such permissible limit of 5% (five percent) would however not apply if, in the opinion of
any of AAIA or Hudson, the proposed action is not likely to have an adverse impact on the profitability
and need to raise additional debt or equity capital.
(m) The appointment or removal and determination of the terms of employment including
compensation of Key Management Personnel and any significant changes in the terms of their
employment agreements.
Creation or adoption of any new or additional ESOP, or any change or modification or amendment to any ESOPs of the Company or its Subsidiaries.
(o) The prosecution or settlement of legal actions or claims by or against the Company and/or its
Subsidiaries where the aggregate amount of all claims so prosecuted or settled would exceed Rs.
10,000,000 (Rupees Ten Million only) within any Financial Year.
(p) Dissolution, winding-up or liquidation of the Company or any of its Subsidiaries, whether or not
voluntary, or any restructuring or reorganization that has a similar effect;
(q) Entering into or any amendments to the terms of any Related Party Transactions other than as
disclosed to AAIA and Hudson.
(r) Any amendment, supplement, modification or restatement of the Memorandum or Articles of
Association of the Company or any of its Subsidiaries.
(s) Any changes to accounting or tax policies, procedures or practices or reappointment or change of
internal or statutory auditors of the Company or any of its Subsidiaries.
(t) Change of registered office of the Company or any of its Subsidiaries;
(u) Taking any decision or action, entering into or amending any Contract with any Person in
relation to MIBPL;
(v) Delegation of authority or any of the powers relating to any matter contained in this Article 149
by the Board of the Company and/or its Subsidiaries to any individual or committee and any
commitment or agreement to do any of the foregoing.
(w) Any proposal by the Company to take any decisions or action on matters listed in this Article
149 with respect to its Subsidiaries.
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(x) Any decision to convene a General Meeting to consider any of the foregoing matters.
It is clarified that all financial limits in this Article 149 are indicated on an aggregate basis.
(ii) In the event that the Company proposes to convene a General Meeting to consider any of the
matters listed in Article 149, and if the AAIA Director or the Hudson Director vote against the inclusion
of such resolution in the General Meting, then such matter or resolution shall not be considered in the
General Meeting, and if considered or put to vote, such matter forming part of the resolution shall be
null and void, and deemed to have not been passed and shall not be given effect to. The Company and
the Promoters shall do all acts necessary or required under Law to give effect to this Article 149.
150. Statutory Auditor
Any change in the auditor appointed by the Company shall be made only with the prior written consent
of each of AAIA and Hudson.
INFORMATION AND ACCESS RIGHTS
151. The Company shall furnish to the Investors, all such information as is provided to all other
Directors and to any other shareholders of the Company.
152. Subject to applicable Law, including but not limited to the Securities and Exchange Board of
India (Prohibition of Insider Trading) Regulations, 1992, the Company shall, upon reasonable notice,
provide full access to each of the Investors and their authorized representatives (including lawyers,
accountants, auditors and other professional advisors) to visit and inspect all properties, assets,
corporate, financial and other records, reports, books, Contracts and commitments of the Company, its
Affiliates and joint ventures, and to discuss and consult its business, actions plans, budgets and finances
with the Directors and executive officers of the Company, its Affiliates and joint ventures.
GENERAL MEETINGS
153. An AGM shall be held each calendar year within 6 (six) months following the end of the
previous Financial Year.
154. Prior written notice of a minimum of 21 (twenty one) Business Days for a General Meeting
shall be given to all shareholders of the Company; provided however that any General Meeting may be
held upon shorter notice in accordance with the provisions of the Act. All notices shall be accompanied
by an agenda setting out the particular business proposed to be transacted at such meeting.
155. The Board of Directors shall provide the Company’s previous Financial Year’s audited
financial statements to all Shareholders at least 1 (one) month before the AGM is held to approve and
adopt the audited financial statements. All other General Meetings, other than the AGM, shall be EGMs.
156. The quorum for General Meetings shall be a minimum of 5 (five) members being present,
subject to at least 1 (one) authorized representative representing the Promoters and each of AAIA and
Hudson being present at such meeting; provided, however, that no decision or determination will be
made and no action will be taken by or with respect to the Company in respect of any of the reserved
matters referred to in Article 149 unless approved in accordance with Article 149.
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157. Related Party Transactions
All related party transactions of the company or its affiliates or subsidiaries shall be duly approved by the board
and shareholders of the company or the subsidiaries, as the case may be and shall be made on an arm’s length,
market terms basis.
158. Right to Invest
(i) The Investors and/or any of its Affiliates shall be entitled to invest in any entity engaged in the
same or allied field as that of the Company, its Subsidiaries/ Affiliates, and the Promoters confirm that
that they will have no objection to any of the Investors and/or any of the Investor Affiliate making such
investments. The Company shall provide each of the Investors with a No Objection Certificate to this
effect at or before the Closing Date in the form as required by the Investors.
(ii) If any of the Investors invest in Muthoot Finance Private Limited, Muthoot Fincorp Limited and
Muthoot Capital Services Limited, such Investors shall not nominate a common director on the board of
directors of such investee company and any such company of the Muthoot group.
159. Transfer of Shares by the Promoters
(i) Subject to Article (ii), none of the Promoters shall Transfer any or all of its Shares in the
Company and/ or its Subsidiaries/ Affiliates, and the Company shall not Transfer any of its Shares in
any of its Subsidiaries/ Affiliates, except with the prior written consent of each of AAIA and Hudson.
(ii) Notwithstanding anything contained in Article (i), but subject to this Article, the Promoters shall,
upon expiry of 12 (twelve) months from March 14, 2012, have the right to sell up to 3% (three percent)
(collectively) of the total shareholding of the Promoters in the Company in a Financial Year, without the
prior written consent of each of AAIA and Hudson, provided that the shareholding of the Promoters post
such Transfer shall not be less than 26% (twenty six percent) of the total Share Capital, provided
however that subject to Article 161(iii), a Transfer of Shares by the Promoters under this Article (ii)
shall be subject to the Right of First Offer of AAIA and Hudson under Article 0. It is hereby clarified
that the Tag Along Rights of each of AAIA and Hudson shall not apply to a Transfer of up to 3% (three
percent) (collectively) of the shareholding of the Promoters in the Company in a Financial Year by the
Promoters in compliance with this Article (ii).
(iii) Transfer of Shares by the Promoters within 12 months of the Execution Date
(a) Save and except as provided in this Article 159(iii), the Promoters shall not Transfer any or all of
their Shares in the Company within the first 12 months from the Execution Date, except with the
prior written consent of the Subsequent Investors.
(b) The aggregate Shares transferred or proposed to be transferred by the Promoters during the financial
year ending March 31, 2012, after reckoning the sale of Shares on the Execution Date or within 15 days
of the Execution Date, shall not exceed 4.75% of the Share Capital. Any such transfer of Shares held by
the Promoters in the Company in excess of 4.75% of the Share Capital shall be subject to prior approval
of the Subsequent Investors.
(iv) Transfer of Shares by the Promoters after 12 months of the Execution Date
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(a) After 12 months from the Execution Date, the Promoters can Transfer any or all of their Shares
in the Company, without the prior written consent of the Subsequent Investors, subject to the
restrictions as set out in Articles 159(iii), 159(iv) and 159(v) and provided that the collective
shareholding of the Promoters after such Transfer shall not be less than 26% of the total Share
Capital.
(b) After 12 months from the Execution Date, the Promoters shall have the right to sell up to 3%
(collectively) of the total shareholding of the Promoters on an aggregate basis in a Financial Year
(“Yearly Divestment Limit”), without the prior written consent of the Subsequent Investors,
provided that the shareholding of the Promoters post such Transfer shall not be less than 26% of
the Share Capital, provided however that a Transfer of Shares by the Promoters under this
Article 159(iv)(b) shall be subject to the Right of First Offer of the Subsequent Investors under
Article 161A.
(v) The restrictions set out in Article 159(iii) and Article 159(iv) shall not apply in respect of any
Transfer of Shares by the Promoters to its Affiliates. Any Affiliate of the Promoters to which Shares
have been Transferred, shall execute a deed of adherence in an agreed form; provided that if the Affiliate
of any of the Promoters ceases to be an Affiliate of such Promoter, the Promoters shall ensure that the
Shares held by such Person are transferred to the Promoters, who shall be bound by the terms of these
Articles.
160. Right of First Sale of AAIA and Hudson
(i) After 3 (three) years from the Closing Date, the Promoters shall have the right to sell more than
3% (three percent) of the shareholding of the Promoters in the Company in a Financial Year, subject to
the Right of First Sale as described in Article 196(ii).
(ii) In the event any Promoter (the “Promoter Transferor”) proposes to Transfer any of its Shares
in the Company in excess of the limit of 3% (three percent) of the Shares held by the Promoters
(“Promoter Sale Shares”) to any Person (the “Third Party Transferee”) on terms that satisfy the
conditions set out in Article (i), the Promoter Transferor shall, within 3 (three) Business Days of receipt
of such offer, provide each of AAIA and Hudson a written notice (“Sale Shares Notice”) of its intention
to sell the Promoter Sale Shares, setting out the identity of the Third Party Transferee, the price and
payment terms of such offer received from the Third Party Transferee.
(iii) Upon receipt of the Sale Shares Notice, each of AAIA and Hudson shall have the right to sell to
the Third Party Transferee up to such number of Shares held by each of them which equals the number
of Promoter Sale Shares (the “Sale Shares”) at the price and payment terms offered by the Third Party
Transferee to the Promoter Transferor (the “Right of First Sale”), by providing, within 15 (fifteen)
Business Days of the receipt of the Sale Shares Notice by each of AAIA and Hudson, a written notice to
the Promoter Transferor of its intention to sell the First Sale Shares to the Third Party Transferee (the
“Sale Shares Notice”).
(iv) Upon receipt of the Sale Shares Notice, the Promoter Transferor shall ensure that within 7
(seven) Business Days of receipt of the Sale Shares Notice, the Third Party Transferee informs each of
AAIA and Hudson and the Promoter Transfer in writing (“Sale Shares Acceptance Notice”) of its
intention to purchase all the Sale Shares at the price and payment terms stated in the Sale Shares Notice.
In such an event, the Third Party Transferee shall purchase the Sale Shares within 30 (thirty) Business
Days from the issue of the Sale Shares Acceptance Notice, after obtaining any consents/ approvals or
making any regulatory filings as may be required under applicable Laws, which shall be the
24
responsibility of the Promoters. The Promoter Transferor shall be entitled to sell any of the Promoter
Sale Shares to the Third Party only after the Third Party Transferee has purchased all the Sale Shares in
accordance with these Articles.
(v) In the event that the Third Party Transferee does not agree to purchase the Sale Shares at the
price and payment terms stated in the Sale Shares Notice, the Promoter Transferor shall not be entitled
to sell the Promoter Sale Shares to the Third Party Transferee, unless otherwise agreed to in writing by
each of AAIA and Hudson.
(vi) In the event either of AAIA or Hudson does not exercise the Right of First Sale under this Article
160 or having received the Sale Shares Acceptance Notice, fails to consummate the Transfer of the Sale
Shares within the period of 30 (thirty) Business Days as stated in Article (iv) other than for reasons not
attributable to each of AAIA and Hudson, the Promoter Transferor shall be entitled to Transfer the
Promoter Sale Shares to the Third Party Transferee at the price and on the payment terms mentioned in
the Sale Shares Notice.
(vii) The exercise of the Right of First Sale under Article 160 shall be without prejudice to the Right
of First Offer of AAIA and Hudson under Article 0. Any failure to exercise the Right of First Sale under
this Article 160 with respect to the Transfer of Shares by the Promoters in one instance shall be without
prejudice to the right of each of AAIA and Hudson to exercise the Right of First Sale with respect to any
subsequent offers for purchase of Shares of the Promoters as contained in Article (i).
(viii) In case any of the other shareholders of the Company having a similar right of first sale under the
Articles, decide to exercise such right of first sale, then the Promoter shall forthwith inform AAIA and
Hudson of such decision taken by the relevant shareholder, along with the details thereof.
(ix) Any transferee of the Shares of the Promoters under this Article 159 (other than AAIA and
Hudson and subject to compliance with Article 159(ii), Persons to whom the Promoters sell up to 3%
(three percent) of the total shareholding of the Promoters in the Company in a Financial Year) shall
execute a Deed of Adherence agreeing to be subject to all the obligations of the Promoters, provided that
each of AAIA and Hudson may, on a request made in this regard by the Promoters, waive the
requirement of the transferee of the Shares of the Promoters under this Article 159 executing a Deed of
Adherence.
160A. Right of First Sale of the Subsequent Investors
160A.1 Save and except as provided in Articles 159(iii) and 159(iv), in the event any of the Promoters
(the “Transferring Promoter”) propose to Transfer any of its Shares in the Company in excess
of 3% (collectively) of the total shareholding of the Promoters on an aggregate basis in a
Financial Year (“Yearly Divestment Limit”) (“Promoter Transfer Shares”) to any Person (the
“Third Person Transferee”) on terms that satisfy the conditions set out in Articles 159(iii) and
Article 159(iv), the Transferring Promoter shall, within 3 Business Days of receipt of such offer,
provide each of the Subsequent Investors a written notice (“Transfer Shares Notice”) of its
intention to sell the Promoter Transfer Shares, setting out the identity of the Third Person
Transferee, the price and the payment terms of such offer received from the Third Person
Transferee.
160A.2 Upon receipt of the Transfer Shares Notice, each of the Subsequent Investors shall have the right
(along with the other exiting Investors in accordance with their respective shareholding in the
Company at the relevant time) to sell to the Third Person Transferee up to such number of Shares
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held by them which equals the number of Promoter Transfer Shares (the “Subsequent Investor
Sale Shares”) at the price and payment terms offered by the Third Person Transferee to the
Transferring Promoter (the “Subsequent Investors’ Right of First Sale”), by providing, within
15 Business Days of the receipt of the Transfer Shares Notice by the respective Subsequent
Investors, a written notice to the Transferring Promoter of its intention to sell the Subsequent
Investor Sale Shares to the Third Person Transferee (the “Subsequent Investor Sale Shares
Notice”).
160A.3 Upon receipt of the Subsequent Investor Sale Shares Notice, the Transferring Promoter shall
ensure that within 7 Business Days of receipt of the Subsequent Investor Sale Shares Notice, the
Third Person Transferee informs each of the Subsequent Investors and the Transferring Promoter
in writing (“Transfer Shares Acceptance Notice”) of its intention to purchase all the
Subsequent Investor Sale Shares at the price and payment terms stated in the Transfer Shares
Notice. In such an event, the Third Person Transferee shall purchase the Subsequent Investor
Sale Shares within 30 Business Days from the issue of the Transfer Shares Acceptance Notice,
after obtaining any consents/ approvals or making any regulatory filings as may be required
under applicable Laws, which shall be the responsibility of the Promoters. The Transferring
Promoter shall be entitled to sell any of the Promoter Transfer Shares to the Third Person
Transferee only after the Third Person Transferee has purchased all the Subsequent Investor Sale
Shares in accordance with these Articles.
160A.4 In the event that the Third Party Transferee does not agree to purchase the Subsequent Investor
Sale Shares at the price and payment terms stated in the Transfer Shares Notice, the Transferring
Promoter shall not be entitled to sell the Promoter Transfer Shares to the Third Person
Transferee, unless otherwise agreed to in writing by the relevant Subsequent Investors.
160A.5 In the event the Subsequent Investors do not exercise their Subsequent Investors Right of First
Sale under this Article 160A or having received the Transfer Shares Acceptance Notice, fails to
consummate the Transfer of the Subsequent Investor Sale Shares within the period of 30
Business Days as stated in Article 160A.3 above, for reasons attributable to such Subsequent
Investors, as the case may be, the Transferring Promoter shall be entitled to Transfer the
Promoter Transfer Shares to the Third Person Transferee at the price and on the payment terms
mentioned in the Transfer Shares Notice.
160A.6 The exercise of the Subsequent Investors’ Right of First Sale under Article 160A.3 shall be
without prejudice to the Subsequent Investors’ Right of First Offer of the Subsequent Investors
under Article 161A. Any failure to exercise the Subsequent Investors’ Right of First Sale under
this Article 160A with respect to the Transfer of Shares by the Promoters in one instance shall be
without prejudice to the right of such Subsequent Investors, to exercise their Subsequent
Investors’ Right of First Sale with respect to any subsequent offers for purchase of Shares of the
Promoters as contained in Article 160A.1.
160A.7 Notwithstanding anything contained in these Articles, the Subsequent Investors’ Right of First
Sale of the Subsequent Investors shall at all times be pari pasu inter se each other as well with
the Investors and not in any manner secondary to the right of first sale of the Investors, as
provided under Article 160. In case any of the Investors or the Subsequent Investors decides to
exercise their right of first sale under Articles 160 or 160A (as the case may be), then the
Promoters shall forthwith inform the other Subsequent Investors of such decision taken by the
relevant Investor or the Subsequent Investor, along with the details thereof.
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160A.8 Each Subsequent Investor shall cease to have its respective Subsequent Investors’ Right of First
Sale under this Article 160A as soon as such Subsequent Investor collectively with its
Subsequent Investor Affiliates ceases to hold at least 1.5% of the Share Capital.
161. Right of First Offer of AAIA and Hudson
(i) If any Promoter Transferor proposes to Transfer any or all of its Shares (the “Offered Shares”)
to any Person, each of AAIA and Hudson shall have the right of first offer to purchase such proportion
of the Offered Shares (the “Right of First Offer”) as its shareholding in the Company bears to the
shareholding of other Persons who have a similar right to purchase the Offered Shares. The Promoter
Transferor shall provide each of AAIA and Hudson, a written notice of its intention to sell the Offered
Shares (the “Trigger Notice”). The Trigger Notice shall set out the number of the Offered Shares,
identity of the transferee, the price at which the Promoter Transferor is willing to Transfer such Offered
Shares (“ROFO Price”) on a cash, non contingent basis. Each of AAIA and Hudson shall have the
option to, within 15 (fifteen) Business Days of receipt of the respective Trigger Notice from the
Promoter Transferor, inform the Promoter Transferor in writing (the “Offer Notice”) of its intention to
purchase the Offered Shares and state the price for such purchase (the “Offer Price”) along with the
payment terms. Upon receipt of the respective Offer Notice by the Promoter Transferor, if the Offer
Price by each of AAIA and Hudson is equal to or greater than their respective ROFO Price and payment
terms stated in the respective Offer Notice are acceptable to the Promoter Transferor, it shall, by written
notice (the “Acceptance Notice”), intimate its acceptance of the Offer Price and payment terms to each
of AAIA and Hudson within a period of 5 (five) Business Days from the date of receipt of each of the
Offer Notice.
(ii) Upon the Promoter Transferor sending an Acceptance Notice, the Promoter Transferor and each
of AAIA and Hudson shall consummate the Transfer of the Offered Shares within a period of 30 (thirty)
Business Days from the date of receipt of the Acceptance Notice. Each of AAIA and Hudson shall also
pay a deposit of 5% (five percent) of the respective Offer Price to the Promoter Transferor upon receipt
of the respective Acceptance Notice after obtaining any consents/ approvals or making any regulatory
filings as may be required under applicable Laws which shall be the responsibility of the Promoters.
(iii) In the event that the Promoter Transferor does not receive the Acceptance Notice within 15
(fifteen) Business Days from receipt of the Trigger Notice or after having exercised the Right of First
Offer within 15 (fifteen) Business Days from receipt of the Trigger Notice, each of AAIA and Hudson
fails to purchase the Offered Shares offered by the Promoter Transferor within a period of 30 (thirty)
Business Days from the date of their respective Acceptance Notice other than for reasons not
attributable to it, the Right of First Offer of each of AAIA and Hudson shall be deemed to have lapsed
and the Promoter Transferor shall be entitled to sell the Offered Shares offered to each of AAIA and
Hudson to any Third Party Transferee at a price higher than the respective ROFO Price, within 90
(ninety) days from the expiry of the 15 (fifteen) day or 30 (thirty) day period referred to in this Article
(iii), as the case may be.
(iv) In the event that the Right of First Offer under this Article is exercised and each of AAIA and
Hudson under Article 0issues their respective Offer Notice in accordance with Article (i) to the
Promoter Transferor, the Promoter Transferor shall have the right to reject the offer made by each of
AAIA and Hudson in their respective Offer Notice only in the event that their respective Offer Price is
less than their respective ROFO Price, and the Promoter Transferor shall intimate each of AAIA and
Hudson , within 7 (seven) Business Days from receipt of the respective Offer Notice, by written notice
(the “Rejection Notice”), that the terms of each of the Offer Notice are not acceptable to it. The
Promoter Transferor shall be entitled to sell the Offered Shares in respect of which the Right of First
27
Offer has not been exercised to any Third Party Transferee at any price higher than the ROFO Price and
on payment terms which are no more favourable to the Third Party Transferee than the payment terms
specified in the Offer Notice, and the Promoter Transferor and the Third Party Transferee shall
consummate the Transfer of the Offered Shares within a period of 90 (ninety) days from the date of the
Rejection Notice.
(v) In the event that the Transfer of Offered Shares by the Promoter Transferor to a Third Party
Transferee is not consummated within a period of 90 (ninety) days from the date of the Rejection Notice
as provided in Article (iv), any subsequent proposal to Transfer any Shares including the Offered Shares
shall again be subject to the Right of First Offer under this Article 0.
(vi) Each of AAIA and Hudson shall cease to have the Right of First Offer under this Article 0 as
soon as it ceases to hold 1.5 (one point five per cent) of the Share Capital.
(vii) The Right of First Offer under this Article 0 shall not apply in respect of any Transfer of Shares
by the Promoter Transferor to its Affiliate. Any Affiliate of the Promoters to which Shares have been
Transferred in accordance with these Articles shall execute a Deed of Adherence, provided that if the
Affiliate of any of the Promoters ceases to be an Affiliate of such Promoter, the Promoters shall ensure
that the Shares held by such Person are transferred to the Promoters, who shall be bound by the terms of
these Articles.
(viii) The Right of First Offer under this Article 0 shall apply to all such Shares (such shares the
“Additional Offered Shares”) in respect of which other Persons who have a right of first offer have not
exercised such right. Each of AAIA and Hudson shall have the right of first offer to purchase such
proportion of the Additional Offered Shares as its shareholding in the Company bears to the
shareholding of other Persons who have a similar right to purchase the Additional Offered Shares, and
the provisions of this Article 0 shall apply mutatis mutandis to the Additional Offered Shares.
(ix) In case any of the other shareholders of the Company having a similar right of first offer under
this Article, decide to exercise such right of first offer, then the Promoter shall forthwith inform the
AAIA and Hudson of such decision taken by the relevant shareholder, along with the details thereof.
161A. Right of First Offer of the Subsequent Investors
161A.1 Save and except as provided in Articles 159(iii) and 159(iv) , if any Transferring Promoter
proposes to Transfer any or all of its Shares (the “Promoter Offered Shares”) to any Person, the
Subsequent Investors shall have the right of first offer to purchase by itself or through its
Subsequent Investor Affiliates or through a person designated by the Subsequent Investors,
provided that such transferee Subsequent Investors Affiliate or the person designated by the
Subsequent Investors shall be subject to all the terms and conditions of these Articles by
executing a deed of adherence in the agreed format, such proportion of the Promoter Offered
Shares (the “Subsequent Investors’ Right of First Offer”) as its shareholding in the Company
bears to the shareholding of the Investors, who have a similar right under these Articles to
purchase the Promoter Offered Shares. The Transferring Promoter shall provide the Subsequent
Investors, a written notice of its intention to sell the Offered Shares (the “Subsequent Investor
Trigger Notice”). The Subsequent Investor Trigger Notice shall set out the number of the
Promoter Offered Shares, identity of the transferee, the price at which the Transferring Promoter
is willing to Transfer such Promoter Offered Shares (“Subsequent Investor ROFO Price”) on a
cash, non contingent basis. Each of the Subsequent Investors shall have the option to, within 15
Business Days of receipt of the Subsequent Investor Trigger Notice from the Transferring
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Promoter, inform the Transferring Promoter in writing (the “Subsequent Investor Offer
Notice”) of its intention to purchase the Promoter Offered Shares and state the price for such
purchase (the “Subsequent Investor Offer Price”) along with the payment terms. Upon receipt
of the Subsequent Investor Offer Notice by the Transferring Promoter, if the Subsequent Investor
Offer Price by such Subsequent Investors, is equal to or greater than the Subsequent Investor
ROFO Price, and payment terms stated in the Subsequent Investor Offer Notice are acceptable to
the Transferring Promoter, it shall, by written notice (the “Promoter Acceptance Notice”),
intimate its acceptance of the Subsequent Investor Offer Price and payment terms to such
Subsequent Investor within a period of 5 Business Days from the date of receipt of each of the
Subsequent Investor Offer Notice.
161A.2 Upon the Transferring Promoter sending a Promoter Acceptance Notice, the Transferring
Promoter and the Subsequent Investors or the respective Subsequent Investor Affiliates or their
designees, as the case may be, shall consummate the Transfer of the Promoter Offered Shares
within a period of 30 Business Days from the date of receipt of the Promoter Acceptance Notice.
In such a case, the Subsequent Investors shall also pay a deposit of 5% (five percent) of the
Subsequent Investor Offer Price to the Transferring Promoter upon receipt of the Promoter
Acceptance Notice after obtaining any consents/ approvals or making any regulatory filings as
may be required under applicable Law, which shall be the responsibility of Promoters.
161A.3 In the event that the Transferring Promoter does not receive the Subsequent Investor Offer
Notice within 15 Business Days from receipt of the Subsequent Investor Trigger Notice or after
having exercised the Subsequent Investor Right of First Offer within 15 Business Days from
receipt of the Subsequent Investor Trigger Notice, the Subsequent Investors fail to purchase the
Promoter Offered Shares offered by the Transferring Promoter within a period of 30 Business
Days from the date of the Acceptance Notice for reasons attributable to such Subsequent
Investor, the Right of First Offer of such Subsequent Investor shall be deemed to have lapsed and
the Transferring Promoter shall be entitled to sell the Offered Shares offered to the such
Subsequent Investor to any Third Party Transferee at a price higher than the ROFO Price, within
90 days from the expiry of the 15 day or 30 day period referred to in this Article 161A.3.
161A.4 In the event that the Right of First Offer under this Article 161A is exercised and the Subsequent
Investors issue the Offer Notice in accordance with Article 161A.1 to the Transferring Promoter,
the Transferring Promoter shall have the right to reject the offer made by the Subsequent
Investors in the Subsequent Investor Offer Notice only in the event that the Subsequent Investor
Offer Price is less than the Subsequent Investor ROFO Price, and the Transferring Promoter shall
intimate such Subsequent Investor, within 7 Business Days from receipt of the Subsequent
Investor Offer Notice, by written notice (the “Promoter Rejection Notice”), that the terms of the
Subsequent Investor Offer Notice are not acceptable to it. The Transferring Promoter shall be
entitled to sell the Promoter Offered Shares in respect of which the Subsequent Investors’ Right
of First Offer has not been exercised, to any Third Person Transferee at any price higher than the
Subsequent Investor ROFO Price and on payment terms which are no more favourable to the
Third Person Transferee than the payment terms specified in the Subsequent Investor Offer
Notice, and the Transferring Promoter and the Third Person Transferee shall consummate the
Transfer of the Promoter Offered Shares within a period of 90 days from the date of the
Promoter Rejection Notice.
161A.5 In the event that the Transfer of Promoter Offered Shares by the Transferring Promoter to a
Third Person Transferee is not consummated within a period of 90 days from the date of the
Promoter Rejection Notice as provided in Article 161A.4, any subsequent proposal to Transfer
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any Shares including the Promoter Offered Shares shall again be subject to the Subsequent
Investors’ Right of First Offer under this Article 161A.
161A.6 Each Subsequent Investor shall cease to have its respective Subsequent Investors’ Right of First
Offer under this Article 161A as soon as such Subsequent Investor collectively with its
Subsequent Investor Affiliates ceases to hold at least 1.5% of the Share Capital.
161A.7 The Subsequent Investors’ Right of First Offer under this Article 161A shall apply to all such
Shares (such shares the “Further Offered Shares”) in respect of which other Persons who have
a right of first offer have not exercised such right. The Subsequent Investors shall have the
Subsequent Investors’ Right of First Offer to purchase such proportion of the Further Offered
Shares as its shareholding in the Company bears to the shareholding of other Persons who have a
similar right to purchase the Further Offered Shares under these Articles, and the provisions of
this Article 161A shall apply mutatis mutandis to the Further Offered Shares.
161A.8 Notwithstanding anything contained in these Articles, the Parties agree that the Subsequent
Investors’ Right of First Offer of the Subsequent Investors shall at all times be pari pasu inter se
each other as well with the Investors and not in any manner secondary to the right of first offer of
the other existing Investors in the Company, as provided under Article 161 of these Articles. In
case any of the Investors or the Subsequent Investor decides to exercise their right of first offer
under Articles 161 or 161A (as the case may be), then the Promoters shall forthwith inform the
other Subsequent Investors of such decision taken by the relevant Investor or the Subsequent
Investor, along with the details thereof.
162. Tag Along Rights of AAIA and Hudson
(i) In the event that a Promoter Transferor proposes to Transfer any of its Shares in excess of the
limit of 3% (three percent) of the Shares held by the Promoters to any Third Party Transferee (which
transfer shall be subject to Article 159(ii)) in respect of which the Right of First Sale or the Right of First
Offer has not been exercised, then the Promoter Transferor shall give a notice in writing (the “Promoter
Transfer Notice”) to each of AAIA and Hudson specifying the number of Shares proposed to be
Transferred (the “Promoter Transfer Shares”), the price at which the Promoter Transferor intends to
Transfer such Promoter Transfer Shares, the identity of the Third Party Transferee and any other
material or relevant terms and conditions of the proposed Transfer.
(ii) Upon each of AAIA and Hudson , receiving the Promoter Transfer Notice, each of AAIA and
Hudson may, within 15 (fifteen) Business Days of receipt of the Promoter Transfer Notice (the “Tag
Along Period”), send a written notice to the Promoter Transferor (the “Tag Along Notice”) requiring
the Promoter Transferor to ensure that the Third Party Transferee also purchases such number of Shares
then held by each of AAIA and Hudson in the Company which shall not exceed the pro rata number of
Shares of each of AAIA and Hudson in the issued Share Capital at the relevant time (the “Tag Along
Shares”) at the same price and on the same terms as mentioned in the Promoter Transfer Notice (the
“Tag Along Right”). The Tag Along Right under this Article 0 shall be available in respect of the
proportionate shareholding of each of AAIA and Hudson at the relevant time.
(iii) In the event that each of AAIA and Hudson delivers a Tag Along Notice to the Promoter
Transferor, the Promoter Transferor shall ensure that along with the Promoter Transfer Shares
mentioned in the Promoter Transfer Notice, the Third Party Transferee also acquires the respective Tag
Along Shares of each of AAIA. Hudson as specified in the respective Tag Along Notice for the same
consideration and upon the same terms and conditions as mentioned in the respective Promoter Transfer
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Notice, provided that each of AAIA and Hudson shall, at its option, be entitled to, and the Promoter
Transferor shall procure that each of AAIA and Hudson will, receive the cash equivalent of any non-
cash component of the consideration to be paid by the Third Party Transferee. The value of such non
cash component of the consideration shall be determined by an independent valuation to be caused by
each of AAIA and Hudson by an internationally renowned accounting firm if each of AAIA and Hudson
and Promoter Transferor fail to mutually agree on such value.
(iv) In the event that the Third Party Transferee is unwilling or unable to acquire all of the Promoter
Transfer Shares mentioned in the Promoter Transferor Notice and all the Tag Along Shares upon such
terms, then the Promoter Transferor may elect either to cancel the proposed Transfer to the Third Party
Transferee or, to allocate the maximum number of Shares of the Company which the Third Party
Transferee is willing to purchase among the Promoter Transfer Shares and the Tag Along Shares pro-
rata as calculated above and to complete such Transfer in accordance with the revised terms. In the event
the Promoter Transferor elects to cancel the proposed Transfer to the Third Party Transferee, each of
AAIA and Hudson may, at its option, also cancel the proposed Transfer of its respective Tag Along
Shares.
(v) Notwithstanding anything to the contrary in this Article 0, the Promoter Transferor shall not be
entitled to Transfer any Shares to any Third Party Transferee unless the Third Party Transferee
simultaneously purchases and pays for all the Tag Along Shares or a proportionate number of the Tag
Along Shares determined in accordance with Article (iv) .
(vi) If either of AAIA or Hudson do not deliver their respective Tag Along Notice to the Promoter
Transferor prior to the expiry of their respective Tag Along Period, the Promoter Transferor shall be
entitled to Transfer the respective Promoter Transfer Shares to the Third Party Transferee.
(vii) In the event of the Promoter Transferor Transferring any Shares held by it in violation of the
provisions of this Article 0 (the “Prohibited Promoter Transfer”), then each of AAIA and Hudson
upon exercise of its respective Tag Along Right, shall have the right to sell to the Promoter Transferor
and the Promoter Transferor shall purchase from each of AAIA and Hudson , their respective Tag Along
Shares at a price higher by at least 33% (thirty three percent) to the price at which the Promoter
Transferor Transferred the Promoter Transfer Shares to the Third Party Transferee, without prejudice to
any other rights and remedies that the Promoter Transferor may have in order to restrict the Prohibited
Promoter Transfer or take any other action or exercise any other rights that it may be entitled to under
Law. The Promoter Transferor shall also reimburse each of AAIA and Hudson for any and all fees and
expenses, including legal fees and expenses, incurred pursuant to the exercise of each of AAIA and
Hudson ’s rights under this Article 0. The Promoter Transferor shall purchase the Tag Along Shares
within 90 (ninety) days from the date of notice provided by each of AAIA and Hudson , exercising its
right under this Article (vii).
(viii) In case any of the other shareholders of the Company having a similar tag along right under the
Articles, decide to exercise such tag along right, then the Promoter shall forthwith inform AAIA and
Hudson of such decision taken by the relevant shareholder, along with the details thereof.
162A. Tag Along Rights of the Subsequent Investors
162A.1 Save and except as provided in Articles 159(iii) and 159(iv), in the event that a Transferring
Promoter proposes to Transfer any of its Shares in excess of the Yearly Divestment Limit to any
Third Person Transferee in respect of which the Subsequent Investors’ Right of First Sale or the
Subsequent Investors’ Right of First Offer has not been exercised, then the Transferring
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Promoter shall give a notice in writing (the “Selling Promoter Transfer Notice”) to the
Subsequent Investors, specifying the number of Shares proposed to be Transferred (the “Selling
Promoter Transfer Shares”), the price at which the Transferring Promoter intends to Transfer
such Selling Promoter Transfer Shares, the identity of the Third Person Transferee and any other
material or relevant terms and conditions of the proposed Transfer.
162A.2 Upon the Subsequent Investors receiving the Selling Promoter Transfer Notice, the Subsequent
Investors, within 15 Business Days of receipt of the Selling Promoter Transfer Notice (the
“Subsequent Investor Tag Along Period”), send a written notice to the Transferring Promoter
(the “Subsequent Investor Tag Along Notice”) requiring the Transferring Promoter to ensure
that the Third Person Transferee also purchases such number of Shares then held by the
Subsequent Investors in the Share Capital at the relevant time, which shall not exceed the pro
rata number of Shares of each of the Investors and the Subsequent Investors in the Share Capital
at that time (the “Subsequent Investor Tag Along Shares”) at the same price and on the same
terms as mentioned in the Selling Promoter Transfer Notice (the “Subsequent Investors’ Tag
Along Right”). The Subsequent Investors’ Tag Along Right under this Article 162A shall be
available in respect of the proportionate shareholding of the Subsequent Investors at the relevant
time.
162A.3 In the event that the Subsequent Investors deliver their respective Subsequent Investor Tag
Along Notice to the Transferring Promoter, the Transferring Promoter shall ensure that along
with the Selling Promoter Transfer Shares mentioned in the Selling Promoter Transfer Notice,
the Third Person Transferee also acquires the Subsequent Investor Tag Along Shares of the
Subsequent Investors, as specified in the Subsequent Investor Tag Along Notice for the same
consideration and upon the same terms and conditions as mentioned in the Selling Promoter
Transfer Notice, provided that the Subsequent Investors shall, at their option, be entitled to, and
the Transferring Promoter shall procure that the Subsequent Investors shall, receive the cash
equivalent of any non-cash component of the consideration to be paid by the Third Person
Transferee. The value of such non cash component of the consideration shall be determined by
an independent valuation to be caused by the Subsequent Investors by an internationally
renowned accounting firm if the Subsequent Investors and the Transferring Promoter fail to
mutually agree on such value.
162A.4 In the event that the Third Person Transferee is unwilling or unable to acquire all of the Selling
Promoter Transfer Shares mentioned in the Promoter Transfer Notice and all the Subsequent
Investor Tag Along Shares upon such terms, then the Transferring Promoter may elect either to
cancel the proposed Transfer to the Third Person Transferee or, to allocate the maximum number
of Shares of the Company which the Third Person Transferee is willing to purchase among the
Selling Promoter Transfer Shares and the Subsequent Investor Tag Along Shares pro-rata as
calculated above and to complete such Transfer in accordance with the revised terms. In the
event the Transferring Promoter elects to cancel the proposed Transfer to the Third Person
Transferee, each of the Subsequent Investors may, at their respective option, also cancel the
proposed Transfer of its respective Subsequent Investor Tag Along Shares.
162A.5 Notwithstanding anything to the contrary in this Article 162A, the Transferring Promoter shall
not be entitled to Transfer any Shares to any Third Person Transferee unless the Third Person
Transferee simultaneously purchases and pays for all the Subsequent Investor Tag Along Shares
or a proportionate number of the Subsequent Investor Tag Along Shares determined in
accordance with Article 162A.4.
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162A.6 If the Subsequent Investors do not deliver the Subsequent Investor Tag Along Notice to the
Transferring Promoter prior to the expiry of the Subsequent Investor Tag Along Period, the
Transferring Promoter shall be entitled to Transfer the respective Selling Promoter Transfer
Shares to the Third Person Transferee.
162A.7 In the event of the Transferring Promoter Transferring any Shares in violation of the provisions
of this Article 162A (the “Prohibited Selling Promoter Transfer”), then the Subsequent
Investors, upon exercise of their Subsequent Investors’ Tag Along Right, shall have the right to
sell to the Transferring Promoter and the Transferring Promoter shall purchase from the
Subsequent Investors , subject to Law, the Subsequent Investor Tag Along Shares at a price
higher by at least 33% to the price at which the Transferring Promoter Transferred the Selling
Promoter Transfer Shares to the Third Person Transferee, without prejudice to any other rights
and remedies that the Transferring Promoter may have in order to restrict the Prohibited Selling
Promoter Transfer or take any other action or exercise any other rights that it may be entitled to
under Law. The Transferring Promoter shall also reimburse the Subsequent Investors for any and
all fees and expenses, including legal fees and expenses, incurred pursuant to the exercise of the
Subsequent Investors’ rights under this Article 162A. The Transferring Promoter shall purchase
the Subsequent Investor Tag Along Shares within 90 days from the date of notice provided by
the Subsequent Investors exercising its right under this Article 162A.7.
162A.8 Notwithstanding anything contained in these Articles, the Subsequent Investors’ Tag Along
Right of the Subsequent Investors shall at all times be pari pasu inter se each other and also with
the Investors and not in any manner secondary to the tag along right of the other Investors, as
provided under Article 162, as amended from time to time. In case any of the Investors or the
Subsequent Investor decides to exercise their tag along right under Articles 162 or 162A (as the
case may be), then the Promoters shall forthwith inform the other Subsequent Investors of such
decision taken by the relevant Investor or the Subsequent Investor, along with the details thereof.
162A.9 Each Subsequent Investor shall cease to have its respective Tag Along Right under this Article
162A as soon as such Subsequent Investor collectively with its Subsequent Investor Affiliates
ceases to hold at least 1.5% of the Share Capital.
163. Transfer of Shares by the Investors
(i) The Investors shall be entitled to Transfer all or part of its Shares, along with the right attached
to such Shares, at any time to a Third Party Transferee, without the prior consent of the Promoters or
any other shareholder of the Company.
(ii) Notwithstanding the provisions of Article Error! Reference source not found., the Investors
shall be entitled to Transfer all or any part of its Shares in the Company, along with the right attached to
such Shares, at any time to their respective Investor Affiliate without the prior consent of the Promoters
or any other shareholder of the Company.
163A. Collective Action
(i) Collective Action by Baring Investors
Notwithstanding anything in these Articles, each of the Baring Investors hereby irrevocably authorize
Baring India Private Equity Fund III Listed Investments Limited to take any and all decisions on their
behalf with regard to any matter relating to or contemplated by these Articles, including the exercise of
33
any right or remedy or performance of any obligations or grant of any waiver or consent hereunder.
Exercise of any right or performance of any obligations or grant of any waiver or consent by Baring
India Private Equity Fund III Listed Investments Limited as aforesaid shall be construed to be a joint
exercise, performance or grant by all the Baring Investors, and any such consent, waiver or exercise of
rights or obligations by Baring India Private Equity Fund III Listed Investments Limited can be relied
upon by the Company and the Promoters. The Baring Investors shall collectively exercise all rights and
perform all obligations under these Articles. It is clarified that any limits applicable to the Baring
Investors under these Articles shall apply to them as if Baring Investors were one single entity, and not
separately.
(ii) Collective Action by Sequoia Investors
Notwithstanding anything in these Articles, each of the Sequoia Investors hereby irrevocably authorize
Beaver Holdings Limited to take any and all decisions on their behalf with regard to any matter relating
to or contemplated by these Articles, including the exercise of any right or remedy or performance of
any obligations or grant of any waiver or consent hereunder. Exercise of any right or performance of any
obligations or grant of any waiver or consent by Beaver Holdings Limited as aforesaid shall be
construed to be a joint exercise, performance or grant by all the Sequoia Investors, and any such consent,
waiver or exercise of rights or obligations by Beaver Holdings Limited can be relied upon by the
Company and the Promoters. The Sequoia Investors shall collectively exercise all rights and perform all
obligations under these Articles. It is clarified that any limits applicable to the Sequoia Investors under
these Articles shall apply to them as if Sequoia Investors were one single entity, and not separately.
(iii) It is clarified that wherever any limits are made applicable on Subsequent Investors under these
Articles, such limits shall apply separately to the Sequoia Investors and the Baring Investors, and not
collectively.
ADDITIONAL CAPITAL
164. In the event the Company decides to issue any additional Shares (in excess of the Share Capital
as on the Effective Date) or other securities (the “Additional Shares”), to any Third Party, then within 2
(two) Business Days of such matter being approved by the Board, the Company shall first offer to issue
such number of the Additional Shares to AAIA such that the shareholding of AAIA after issue of the
Additional Shares does not fall below 6% (six percent) of the Share Capital (the “AAIA Offer Shares”)
upon the terms and conditions set out in the offer notice with respect to such further issue (the terms of
such offer to AAIA shall be referred to as the “AAIA Additional Shares Offer Terms”).
In the event the Company decides to issue any additional Shares (in excess of the Share Capital as on the
Effective Date) or other securities (the “Additional Shares”), to any Third Party, then within 2 (two)
Business Days of such matter being approved by the Board, the Company shall first offer to issue such
proportion of the Additional Shares equivalent to Hudson’s then shareholding in the Share Capital to
Hudson (the “Hudson Offer Shares”) upon the terms and conditions set out in the offer notice with
respect to such further issue (the terms of such offer to Hudson shall be referred to as the “Hudson
Additional Shares Offer Terms”).
In the event the Company decides to issue any additional Shares (in excess of the Share Capital as on the
Effective Date) or other securities (the “Additional Shares”), to any Third Party, then within 2 (two)
Business Days of such matter being approved by the Board, the Company shall first offer to issue such
proportion of the Additional Shares equivalent to Sequoia’s then shareholding in the Share Capital to
Sequoia (the “Sequoia Offer Shares”) upon the terms and conditions set out in the offer notice with
34
respect to such further issue (the terms of such offer to Sequoia shall be referred to as the (“Sequoia
Additional Shares Offer Terms”).
165. Upon such offer being made, each of AAIA and Hudson shall have the first right to agree to
subscribe for all or part of the AAIA Offer Shares, Hudson Offer Shares respectively, in accordance
with the AAIA Additional Shares Offer Terms, Hudson Additional Shares Offer Terms Additional
Shares Offer Terms respectively, within a period of 21 (twenty one) Business Days (the “Additional
Shares Offer Period”). If each of AAIA and Hudson agrees to subscribe for the AAIA Offer Shares,
Hudson Offer Shares Offer Shares respectively, in whole or in part within the Additional Shares Offer
Period the Company shall, after receipt of such intimation to subscribe for the AAIA Offer Shares,
Hudson Offer Shares Offer Shares, in whole or in part, by each of AAIA and Hudson respectively,
convene a General Meeting to approve the preferential allotment of the AAIA Offer Shares, Hudson
Offer Shares Offer Shares and thereafter complete the issue and allotment of the AAIA Offer Shares,
Hudson Offer Shares, within the time period prescribed under Law. In the event that either of AAIA or
Hudson does not respond to the notice from the Company within the prescribed time period or declines
to subscribe for the AAIA Offer Shares, Hudson Offer Shares respectively, then the Company shall be
entitled to issue the remainder of the Additional Shares to any Person and the shareholding of each of
AAIA and Hudson , shall be treated as diluted to such extent from the date of issuance of the Additional
Shares.
166. In the event that any future round of financing of the Company involves a secondary purchase
of Shares from the Promoters, each of AAIA and Hudson shall have their respective Right of First Offer
and respective Tag Along Rights set out in Article 0 and Article 0 respectively in respect of the shares of
the Promoters that are proposed to be Transferred in such round of financing. To enable each of AAIA
and Hudson to effectively exercise its right under this Article, the Company and/or the Promoters shall
notify each of AAIA and Hudson in writing of such an opportunity. Such written notice shall be
provided to each of AAIA and Hudson within 2 (two) Business Days of the Company, or any of the
Promoters executing a term sheet, letter of intent, memorandum of understanding, or entering into any
arrangement, whether written or otherwise, and whether binding or non-binding. The written notice shall
set out in reasonable detail all facts necessary for each of AAIA and Hudson to effectively exercise their
right under Article 164 to Article 169.
167. If any future or present investor (other than Hudson under paragraphs 2 and 3 of Article 164
respectively) is granted more favourable rights than the rights granted to each of AAIA and Hudson
under any agreement, each of AAIA and Hudson shall be entitled to be issued a single share in such
round of additional funding upon which each of AAIA and Hudson shall be entitled to all such
additional favourable rights granted in such placement and shall also be entitled to such additional
favourable rights in respect of its then existing Shares in the Company. Each of AAIA and Hudson shall
cease to have the right to be issued a single share in future rounds of funding as set out in this Article as
soon as it ceases to hold 1% (one per cent) of the Share Capital.
168. In addition, each of AAIA and Hudson shall have the rights agreed to in writing under Article
135, relating to the further issue of Shares.
169. Nothing in Article 164 to Article 169 shall apply to any Shares that may be issued pursuant to
any ESOP or a rights issue by the Company or bonus issue of Shares to all the shareholders of the
Company on a pro-rata basis.
EXIT BY AAIA AND HUDSON
35
170. At any time after March 31, 2010, each of AAIA and Hudson shall have the right, subject to
providing a notice of 30 (thirty) days (the “Share Sale Notice”), to cause the Company and the
Promoters to procure the sale of part or all of the Shares held by each of AAIA and Hudson in one or
more private placements of Shares, or by way of a secondary offering of Shares held by each of AAIA
and Hudson to the public (subject to applicable Law) (the “Secondary Offering”), or a combination
thereof and may require the Company and the Promoters to, within a period of 30 (thirty) days from the
date of such request, initiate the process to facilitate such sale of part or all of each of AAIA, Hudson’s
Shares, with the primary purpose of enabling each of AAIA and Hudson to sell its Shares through such
private placement or Secondary Offering on any Stock Exchange, subject to compliance with applicable
Law.
171. In the event that each of AAIA and Hudson serves the Share Sale Notice, the Promoters shall
exercise their voting rights (at the Board and shareholder levels), and cause the Board of Directors of the
Company to take all steps necessary for the Company to undertake such private placement or Secondary
Offering, to enable each of AAIA and Hudson to Transfer its Shares (or any part thereof) through such
offering or sale, including but not limited to, preparing and signing the relevant offer documents,
conducting road shows, entering into such documents, providing all necessary information and
documents necessary for preparing the offer document, obtaining such regulatory or other approvals and
doing such further reasonable acts or deeds as may be necessary to effect such a sale by each of AAIA
and Hudson . The Company shall comply with all the procedures and execute documents in each case as
are customary in transactions of such nature, or do all acts necessary to facilitate the private placement
or Secondary Offering as aforesaid. The Promoters and the Company shall assist each of AAIA and
Hudson to the fullest extent possible to enable the sale of the Shares (or any part thereof) held by each of
AAIA and Hudson through the private placement or Secondary Offering as aforesaid.
172. Rights of AAIA and Hudson in relation to Secondary Sales/Private Placement of Shares of the
Company
(i) Each of AAIA and Hudson shall be entitled to make one or more requests for sale of its Shares
as detailed in Article 170, either in whole or in part, and the Company and the Promoters shall comply
with the requirements of this Article 172 in respect of each such request. Each of AAIA and Hudson
shall be entitled to determine the price and number of Shares held by it to be offered in the Secondary
Offering and each of AAIA and Hudson will have the right to sell up to 100% (one hundred percent) of
its Shares as a part of the Secondary Offering. Each of AAIA and Hudson will consider the
recommendations, if any, of the appointed investment banking firm in this regard in accordance with
Article (ii) and Article (iii).
(ii) The Stock Exchange(s) on which the Shares offered by each of AAIA and Hudson shall be listed
and the appointment of an investment bank as book runner for the offering shall be mutually agreed to
between each of AAIA and Hudson , the Promoters and the Company. Such offering shall be managed
and underwritten by a reputable investment banking firm of recognized high standing in the market in
which the Shares of each of AAIA and Hudson are to be offered, who is acceptable to each of AAIA and
Hudson .
(iii) In the event that the Company, the Promoters and each of AAIA and Hudson do not reach an
agreement with regard to the choice of Stock Exchange(s) on which the Shares are to be listed and/or the
choice of investment banker to be appointed as book runner for the offering, each of AAIA and Hudson
shall have the option, at its sole discretion, to (A) require the listing of the Shares on any Stock
Exchanges as it determines fit, and (B) appoint any one or more investment banks as book runner(s) for
the offering.
36
(iv) In the event that the Company issues American Depository Receipts, Global Depository Receipts
or such other similar instruments (the “Further Securities”) that are listed or are to be listed on any Stock
Exchange, then subject to applicable Law, upon written request by each of AAIA and Hudson the
Company shall re-classify, as may be required, and list the Shares (or other securities arising from such
reclassification) held by each of AAIA and Hudson on the same date (or at a future date, if requested in
writing by each of AAIA and Hudson ) and on the same Stock Exchange(s) on which listing of the
Further Securities occurs. The Company’s obligations to list the Shares held by each of AAIA and
Hudson shall exist irrespective of whether each of AAIA and Hudson sell their Shares pursuant to such
listing or not.
173. The right of each of AAIA and Hudson under this Article 170 to Article 174 cause the
Company and the Promoters to procure the sale of part or all of the Shares held by each of AAIA and
Hudson in one or more Secondary Offering of the Shares, and any Transfer of Shares held by each of
AAIA and Hudson in any Secondary Offering of the Shares shall not be subject to the Promoters Right
of First Offer set out in Article Error! Reference source not found..
174. Upon the occurrence of an Event of Default, each Investor, the Company and the Promoters,
except the Defaulting Party, shall have the option to continue to exercise its rights under Part II of the
Articles, but without being liable to comply with any of its obligations hereunder.
By order of the Board of Directors
Sd/-
Rajesh Kumar. K
Valappad Company Secretary
02-07-2012
37
NOTES:
AMemberentitledtoattendandvoteisentitledtoappointaproxytoattendandvote
insteadofhimself/herselfandtheproxyneednotbeamemberofthecompany.ProxyForm
duly completed must be sent so as to reach the Registered Office of the company not later
than48hoursbeforethecommencementofthemeeting.Ablankproxyformisenclosed?
?? Explanatoiy statement puisuant to Section ?????? of the Companies Act? ???? in iespect of
item Nos? ? to ? aie annexeu heieto anu foims pait of this notice?
?? The Registei of Nembeis anu the Shaie Tiansfei Books of the company will iemain closeu fiom
?????????? to ?????????? ?both uays inclusive?? foi the puipose of annual uiviuenu?
?? Nembeis aie iequesteu to? ?a? intimate changes? if any? in the iegisteieu auuiesses on oi befoie
?????????? ?b? quote leugei folio numbei in all theii coiiesponuence ?c? biing theii copies of
the AnnualRepoit anu the Attenuance Slips with them at the Annual ueneial Neeting.
?? Nembeis holuing shaies in uemateiializeu foim aie iequesteu to wiite theii client IB anu BP IB
numbeis in attenuance slip anu all theii coiiesponuences with the company? Those who holu
shaies in physical foim aie iequesteu to wiite theii folio numbei in the attenuance slip?
?? The uiviuenu on the equity shaies as appioveu by the ueneial Bouy foi the financial yeai enueu
??
st
Naich? ???? will be payable within ?? uays fiom the uate of ueclaiation of uiviuenu to
those shaieholueis whose names will featuie on the Registei of Nembeis of the company on
??????????? Nembeis may please note that the Biviuenu Waiiants aie payable at pai at the
uesignateu Bianches of the Bank piinteu on the ieveise of the waiiant foi an initial peiiou of ?
months only? In oiuei to avoiu unnecessaiy inconvenience? the membeis aie auviseu to encash
Biviuenu Waiiants within the initial valiuity peiiou?
?? The membeis holuing shaies in electionic foim aie heieby infoimeu that? the Bank paiticulais
iegisteieu against theii iespective uepositoiy accounts will be useu by the Company foi the
payment of uiviuenu?
?? Nembeis aie fuithei auviseu to upuate youi bank account anu IFS numbeis in youi uemat
account so that the uiviuenu ueclaieu on the shaies will be electionically cieuiteu insteau of
physical waiiants?
?? Puisuant to the piovisions of Section ???C of the Companies Act? ????? as amenueu? uiviuenu
foi the financial yeai enueu ??
st
Naich? ???? which iemains unpaiu oi unclaimeu foi a peiiou
of seven yeais will be tiansfeiieu to the Investoi Euucation anu Piotection Funu of the Cential
uoveinment? Shaieholueis who have not encasheu the uiviuenu waiiants so fai foi the
financial yeai ????????? aie iequesteu to make theii claim to the company?
?? Nembeis who woulu like to ask questions on Accounts aie iequesteu to senu theii questions to
the Registeieu 0ffice of the company at least ?? uays befoie the Annual ueneial Neeting to
enable the company to piepaie suitable ieplies to such questions?
38
ANNEXURETOTHENOTICE
ExplanatoryStatementPursuanttoSection173(2)oftheCompaniesAct,1956
ItemNo.6.
Ni? Suuhinuai Kiishan Khanna ageu ?? yeais was inuucteu to the Boaiu of the company as an
auuitional uiiectoi unuei Section ??? of the Companies Act? ???? at the meeting helu on
??????????? Be ieceiveu his Bachelois Begiee ?Bonois? in Economics fiom St? Stephen?s college anu
is a Chaiteieu Accountant fiom the Institute of Chaiteieu Accountants of Englanu ? Wales anu is
the Chaiiman of IEP Funu since ?????Be is also the Inuia Piesiuent of WP0? a global oiganization of
???? business leaueis?
The Company has ieceiveu a notice unuei Section ??? of the Companies Act? ???? fiom a membei
togethei with necessaiy fee infoiming his intention to piopose the appointment of Ni?Suuhinuai
Kiishnan Khanna as a uiiectoi of the company? Youi Boaiu iecommenus the iesolution set out in
item no? ? of the Notice foi the Appioval of the membeis? None of the uiiectois except Ni?Suuhinuai
Kiishan Khanna is inteiesteu oi conceineu in the iesolution?
ItemNo7
Ni? E?A?Kshiisagai ageu ?? yeais was inuucteu to the Boaiu of the company as an auuitional
uiiectoi unuei Section ??? of the Companies Act? ???? at the meeting helu on ??????????? Be is a
Fellow of Chaiteieu Accountants of Englanu ? Wales? Ni? E?A?Kshiisagai has a wiue expeiience in
coipoiate stiategy ? stiuctuie? valuation? feasibility stuuies? Bisinvestment? Neigei ? Acquisitions?
Ni? E?A?Kshiisagai Seives on the Boaiu of leauing Inuian Public Companies?
The Company has ieceiveu a notice unuei Section ??? of the Companies Act? ???? fiom a membei
togethei with necessaiy fee infoiming his intention to piopose the appointment of Ni?
E?A?Kshiisagai as a uiiectoi of the company? Youi Boaiu iecommenus the iesolution set out in item
no? ? of the Notice foi the Appioval of the membeis? None of the uiiectois except Ni? E?A?Kshiisagai
is inteiesteu oi conceineu in the iesolution?
ItemNo.8
Company is iequiieu to amenu its Aiticles of Association subject to the applicable laws to ieflect
the teims anu conuitions of the uefinitive agieements enteieu into with the investois? The pioposal
is foi incoipoiating the impoitant iights of the investois in the Aiticles of Association as a sepaiate
PartII?The pioposal is foi the acceptance of the membeis? Youi Boaiu iecommenus the iesolution
set out in item no? ? of the Notice foi the Appioval of the membeis?
By oiuei of the Boaiu
Su??
RajeshKumar.K
CompanySecretary
Place? valapau
Date: 02.07.2012
39
MANAPPURAM FINANCE LIMITED
Regd. Office: V/104, Manappuram House,Valapad P.O., Thrissur - 680 567
ATTENDANCE SLIP
Members Folio No ………………………………..
Client ID No ………………………………..
DP ID No ……………………………….
Name of the Member ……………………………….
Name of Proxy Holder ……………………………….
No.of shares held ……………………………….
I hereby record my presence at the Annual General Meeting of the company held on Thursday the 2
nd
August 2012 at 10.30 AM at
Anugraha Auditorium, Valapad, Thrissur - 680 567.
Signature of Member/Proxy
Notes:
1. Members/proxy holders are requested to produce the attendance slip duly signed for admission to the meeting hall.
2. Members are requested to bring the copy of the notice of Annual General Meeting.
………………………………………………………………………………………………………………………………………………….
MANAPPURAM FINANCE LIMITED
Regd. Office: V/104, Manappuram House, Valapad P.O., Thrissur - 680 567
PROXY FORM
Members Folio No/ Client ID ………………………
I/We……………………………………………………..……..……of…………………………………………………………………in the district
of ……………………………………………being a member/members of Manappuram Finance Limited hereby appoint
…………………………...of ………………………………………..in the district of………………..or failing him/her
…………………………………of ………………of ……………………………………………… in the district of
……………………………………. as my/ our proxy to vote for me/us on my/our behalf at the Annual General Meeting of the
company to be held on Thursday, the 2
nd
day of August 2012 at 10.30 AM and any adjournment thereof.
Signed this ……………………………….day of …………………………2012.
Note:
If it is intended to appoint a proxy the form of proxy should be completed and deposited at the Registered office of the company at
least 48 hours before the commencement of meeting.
MANAPPURAM FINANCE LIMITED
Regd. Office: V/104, Manappuram House, Valapad P.O, Thrissur - 680 567
Ph: (0487) 2391306, 2391892, 2399303. Fax No. (0487) 2399298
E-mail: [email protected], Website: www.manappuram.com
8
th
June, 2012
Dear Shareholder,
I am very happy to inform you that Manappuram Finance Ltd. will annually award five awards
given as below for the children of its shareholders, based on the marks obtained in the
S.S.L.C/equivalent examination.
First Prize : 5000/-
Second prize : 3000/-
Third Prize : 2000/- (3 Nos.)
He/She should pursue higher education. The child also should have a consistently high academic
record. For a child to be eligible for this award; his/her parent should have been a shareholder of
the company as on March 31, 2012.
The prize for the Academic year 2011-12 will be awarded at our Annual General Meeting which
will be held at Anugraha Auditorium, Valapad P.O, Thrissur 680 567 on Thursday, August 2,
2012 at 10.30 A.M.
Interested Shareholders are requested to forward a written application along with copy of the
supporting mark list duly attested by a Gazetted officer to Shri. Rajesh Kumar K, Company
Secretary at the above address. The completed application should reach the registered Office of
the Company Latest by July 25, 2012.
The decision of the Board will be final in this regard.
Yours sincerely
Jagadish Capoor
Sd/-
Chairman
Note
Events at
Manappuram
GZ\^hiZgZYd[ÒXZ
V/104 Manappuram House
Valapad PO, Thrissur 680567, Kerala
www.manappuram.com
doc_835059861.pdf